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crs_R45457

crs_R45457_0

Introduction In the past two decades, increasing global trade liberalization, among other factors, has led to a rise in U.S. agricultural imports. The U.S. Department of Agriculture (USDA) reports that U.S. agricultural imports reached nearly $121 billion in the 2017 calendar year ( Figure 1 ), which was twice the level of such imports in 2000. Consequently, the increasing volume of imports has heightened public concern about the potential for introducing pests and diseases. Most imported agricultural products, such as live animal and plants, are inspected by U.S. government officials and have accompanying documentation—animal and plant health import permits—certifying adherence to U.S. requirements. More than ever, the U.S. government depends on the proper use of these import permits to facilitate U.S. agricultural trade. The USDA's Animal and Plant Health Inspection Service (APHIS) regulates the import, transit, and release of regulated animals, animal products, veterinary biologics, plants, plant products, pests, organisms, soil, and genetically engineered organisms. APHIS-issued import health permits verify that the health status and the production practices of an imported product meet U.S. import standards. APHIS works with foreign exporters, U.S. importers, and foreign governments to interpret and enforce APHIS-issued animal and plant health import permits. Animal and plant health import permits include components from U.S. specific regulations and World Trade Organization (WTO) guidelines. Further, these health import permits are a part of broader agreements between the United States and its trading partners in the WTO that establish sanitary and phytosanitary (SPS) standards. SPS measures aim to protect against diseases, pests, toxins, and other contaminants. Since 2000, the United States has entered into a dozen free trade agreements (FTAs), which include an SPS chapter containing specific U.S. import requirements that the partner country has agreed to recognize. Examples include specific product or processing standards, requirements for products to be produced in disease-free areas, quarantine and inspection procedures, sampling and testing requirements, residue limits for pesticides and drugs in foods, and prohibitions on certain food additives. APHIS works with the Department of Homeland Security's (DHS) Customs and Border Protection (CBP), in addition to other federal agencies (e.g., Food Safety and Inspection Service, Food and Drug Administration), to enforce agricultural import regulations. CBP has authority to enforce APHIS regulations at ports of entry. APHIS and CBP personnel inspect shipments of imported agricultural products and certify that the required animal or plant health import permits and SPS documentation accompany each shipment. APHIS Authority Over Health Import Permits For much of the 20 th century, animal and plant health bureaus within USDA operated independently of one another. The creation of APHIS consolidated these bureaus in 1972. There are a number of statutes (e.g., Table 1 ) that have established APHIS's authority over health import permits. However, the majority of the directives are found in two key legislative actions: 1. The Animal Health Protection Act (AHPA, 7 U.S.C. § § 8301 et seq .) is the primary federal law governing the protection of animal health. It gives APHIS broad authority to detect, control, or eradicate pests or diseases of livestock or poultry. AHPA consolidated all of the animal quarantine and related laws—some dating back to the late 1800s—and replaced them with one statutory framework. While most of the authorities contained in the consolidated AHPA were taken from existing laws, some new provisions were added to fill in gaps in legal authority. 2. The Plant Protection Act of 2000 (PPA, 7 U.S.C. § § 7701 et seq . ) is the primary federal law governing plant pests in foreign and interstate commerce, covering agricultural commodities, plants, biological control organisms, articles that might be infested, means of transportation, and other pathways for moving pests. It authorizes APHIS to prohibit or restrict the importation, exportation, and interstate movement of plants, plant products, certain biological control organisms, noxious weeds, and plant pests. It also authorizes APHIS to inspect foreign plant imports, quarantine any state or premise infested with a new pest or noxious weed, and cooperate with states in certain control and eradication actions. Both AHPA and PPA give APHIS authority to inspect agricultural imports. However, after the events of September 11, 2001, congressional concern about agroterrorism—the deliberate introduction of an animal or plant disease to infect food, causing economic losses and/or undermining social stability—triggered the strengthening of APHIS and other federal agency agricultural inspection activities. Congress passed the Public Health Security and the Bioterrorism Preparedness and Response Act of 2002 (16 U.S.C. §§3371-3378; commonly referred to as the Bioterrorism Act) to bolster protection of the nation's food and water supplies and prevent unauthorized access to certain animal and plant disease organisms in laboratories. Since the enactment of the Bioterrorism Act, APHIS-issued health permits have been required to accompany APHIS-regulated agricultural imports to facilitate trade. Annual Appropriations to Conduct APHIS Health Import Permit Activities Overall, the House and Senate Agriculture Committees maintain jurisdiction over USDA's meat and poultry inspection programs and also other food-safety-related programs administered by other USDA agencies. These House and Senate committees direct APHIS, other federal agencies, states, industry, and professional groups to facilitate international and domestic agricultural trade. The Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies of the House and Senate Appropriations Committees appropriate funds for APHIS. Between FY2014 and FY2018, APHIS's discretionary appropriation has averaged $877 million annually. APHIS's appropriations cover four broad mission areas: (1) Safeguarding and Emergency Preparedness/Response, (2) Agency-Wide Programs, (3) Safe Trade and International Technical Assistance, and (4) Animal Welfare. The Safeguarding and Emergency Preparedness/Response portion of the APHIS budget is responsible for monitoring animal and plant health in the United States and throughout the world and represents roughly 85% of APHIS's annual budget. Most of the animal and plant health import permit activities are housed in this mission area. In May 2018, both the House and Senate appropriations committees reported bills ( H.R. 5961 , S. 2976 , 115 th Congress) that would have provided roughly $1 billion for the APHIS budget for FY2019. This amount was roughly $260 million more than Administration's FY2019 request and would have amounted to an increase of 7% from the FY2018 appropriation of $981.9 million. In August 2018, the Senate passed H.R. 6147 , which would have provided $1 billion for APHIS for FY2019. APHIS-Issued Federal Orders When the APHIS administrator considers it necessary to take emergency action to protect U.S. agriculture or prevent pest or disease entry into the United States, the administrator may issue a Federal Order. Such Federal Orders are effective immediately, contain specific regulatory requirements, and remain in effect until they are revised by another Federal Order or until an interim rule on the subject is published. APHIS issues Federal Orders, under the PPA, which authorizes USDA to prohibit or restrict the importation or entry of any plant, plant part, or article that USDA identifies as necessary to prevent the introduction or dissemination of a plant pest into or within the United States. For example, in June 2018, APHIS released a Federal Order prohibiting the importation of pomegranate arils from Peru into the United States due to concerns about the potential importation of the Mediterranean fruit fly ( Ceratitis capitata ). This Federal Order is still in effect as of January 9, 2019. Obtaining an Animal or Plant Health Import Permit Agricultural imports arrive to the Un ited States through five U.S. Customs Districts ( Figure 2 ). Although APHIS regulations are enforced at the ports of entry, they are typically mediated through health import permits. APHIS's Plant Production Quarantine and Veterinary Services oversee the health import permit process for a "plant health import permit" or "animal health import permit," respectively ( Figure 3 ). APHIS works with several federal agencies to issue import permits. U.S. importers obtain APHIS health import permits via the APHIS website ("ePermit") or in consultation with APHIS or state Department of Agriculture offices. Many U.S. importers use ePermit for the importation of products from abroad as well as for interstate trade. The ePermit system enables federal regulatory officials to issue, track, and verify the validity of import permits online. There is a cost to the importer associated with each ePermit application. APHIS and the state-level authorities often request health import permit submissions alongside supporting documentation ( Figure 4 ). In many cases, a biosafety facility inspection is a part of the review process—where a facility (e.g., laboratory, greenhouse, growth chamber) must demonstrate they can adequately and safely contain certain organisms. Health import permits are normally processed and issued within 10 business days of receipt of the application. After a health import permit is obtained, APHIS and/or CBP must inspect the APHIS-regulated product. One of the flagship programs that APHIS and CBP collaborate on and administer is the Agricultural Quarantine Inspection (AQI) program. AQI ensures that the required health permits, sanitary certificates (for animal products), and phytosanitary certificates (for plant products) accompany each shipment. APHIS transfers funds to CBP to conduct AQI activities. APHIS collects AQI user fees from international airline passengers, operators of commercial vehicles, cruise ship passengers, and importers of shipments requiring phytosanitary treatments. Congress appropriates funding for AQI each year (e.g., operating expenses such as rent, utilities, travel, and supplies to conduct program activities). The AQI user fees recover costs that APHIS and CBP bear to administer the inspections. USDA estimates that in FY2018, AQI collected $765 million in fees, of which it transferred $539 million to DHS and retained $226 million to augment its discretionary appropriation. In a 2013 report, the Government Accountability Office (GAO) identified a gap between fee revenues and total program costs. In its report, GAO recommended aligning the division of fees between APHIS and CBP with their respective costs and that the two agencies ensure that fees are collected when due. In February 2018, APHIS announced it had implemented all of GAO's recommendations. Role of Other Government Entities in Plant and Animal Imports Importers must obtain APHIS-issued health import permits before beginning the inspection process. In addition to APHIS, Congress has directed other federal agencies and state-level Departments of Agriculture (see Table 2 ) to participate in inspecting APHIS-regulated products: The Food and Drug Administration (FDA) has taken steps to protect the public from terrorist attacks on the U.S. food supply and other food-related emergencies in collaboration with DHS. Since 2003, FDA has advised U.S. importers to submit "prior notice" online forms to FDA before food is imported or offered for import into the United States. Unlike APHIS, FDA does not enforce industry guidelines, but FDA does review APHIS-issued import permits to verify the disease or pest status of the agricultural product. The Food Safety Modernization Act (FSMA; P.L. 111-353 ) created new rules governing FDA's food inspection regime of both domestic and imported foods under the agency's jurisdiction. CBP and APHIS inspect agricultural products together through the AQI program. CBP officials require U.S. importers to present an APHIS-issued import permit before conducting inspections. The F ood Safety and Inspection Service (FSIS) has regulatory oversight of meat, poultry, and some egg products. FSIS often requests APHIS-issued health import permits before proceeding with meat inspections. In the case of FSIS-regulated products, FSIS requires APHIS-issued animal health import permits to ensure that the meat and/or poultry ingredients in such food products are prepared under FSIS inspection or in a foreign establishment certified by a foreign inspection system approved by FSIS. S tate-l evel D epartments of A griculture enforce APHIS regulations. States have different animal and plant health import restrictions that apply to interstate trade. Some states have heightened restrictions based on disease and pest detections. Similar to FSIS, state-level regulators typically request APHIS-issued animal or plant health import permits before conducting their inspections. State-level Departments of Agriculture often coordinate with APHIS and CBP directly (e.g., when a state detects a disease outbreak). Congressional Activities Congress has long been involved in efforts to prevent the entry of pest and disease threats into the United States from agricultural imports. This oversight has manifest in various congressional actions, including continuing to provide APHIS with appropriations to monitor pests and diseases, introducing legislation to address invasive species (e.g., Areawide Integrated Pest Management, H.R. 5411 , 115 th Congress), and directing CBP to enforce APHIS regulations to deter agricultural smuggling into the United States. APHIS-issued animal and plant health import permits can be a tool to prevent agricultural import threats to the United States. The sections that follow summarize selected issues that Congress has addressed by directing APHIS to undertake a specific role, assigning the agency with specific responsibilities, or authorizing it carry out certain actions. Pests and Diseases In the event of a U.S. disease outbreak or pest infestation, APHIS is designated to be the lead U.S. agency for informing the international community (such as to the World Organization for Animal Health, also known as "OIE"). Typically, APHIS would directly contact the partner country's scientific authority to explain the nature and extent of the outbreak. In most cases, APHIS and officials of the partner country observe the SPS guidelines agreed upon under the WTO framework or, in some cases, the SPS chapters in individual FTAs. Responses to a pest or disease outbreak can include a complete ban on the importation of U.S. products impacted by the pest/disease. Under certain circumstances, a "regionalization" protocol may be applied in which a specific exporting region within the United States may be recognized as disease- or pest-free. In the event of a trading partner experiencing a disease outbreak or pest infestation, the notification process is similar to a U.S. outbreak (e.g., informing OIE). APHIS informs U.S. importers of the trading partner outbreak. U.S. importers work with APHIS to verify that the health import permit reflects the disease or pest status of the exporting country. APHIS provides guidance to U.S. importers if their health import permits would be accepted (e.g., following SPS protocol of regionalization) or rejected (e.g., ban products from an infected trading partner). Table 3 provides a selected listing of prominent APHIS-monitored diseases and pests that pose a threat to U.S. agriculture. Among these are disease concerns, including avian influenza and foot-and-mouth disease, and invasive plant pests such as the Asian longhorned beetle and the emerald ash borer. In some instances, agricultural imports (or even interstate shipments) can arrive into AQI with pests and diseases that could impact public health or U.S. agricultural production systems. Congress has sometimes directed APHIS to address certain diseases through the annual appropriations process. For example, the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), includes a general provision providing APHIS with an additional $5.5 million—to remain available until the end of FY2019—to fund a multiple-agency response to citrus greening disease. Agroterrorism Agroterrorism is the deliberate introduction of an animal or plant disease with the objective of infecting food, causing economic losses and/or undermining social stability. Requiring U.S. importers to obtain APHIS-issued health import permits is one way that APHIS and the CBP protect against agroterrorism. Permits provide APHIS and CBP inspectors an opportunity to conduct random sampling to assist in disease and pest identification or to detect other potential threats. Congress has taken steps to address potential harmful imports ("select agents") that could impact public health or animal/plant health through the Bioterrorism Act by directing the Department of Health and Human Services's (HHS) Centers for Disease Control and Prevention (CDC) and APHIS to enforce the Select Agents and Toxins List under the Federal Select Agent Program. The agents and toxins on this list have been determined to pose a threat to human and animal health, plant health, or animal and plant products. Some of these agents and toxins are overseen by HHS, others by USDA, and certain ones by both agencies. Invasive Species An invasive species is a nonnative (also known as an alien ) species that does or is likely to cause economic or environmental harm or harm to human health. Invasive species include plants, animals, and microbes. The introduction of invasive species into the United States—whether deliberate or unintentional—can threaten native animal and plant communities, lead to ecosystem disruptions, and contribute to extinctions of native species. Invasive species can also impact biodiversity and alter habitats and can result in the introduction of new pests and diseases. An estimated 50,000 non-native invasive animal and plant species have been introduced to the United States for over a century, with a 2011 study citing total costs exceeding $100 billion annually—including economic costs related to damages as well as management, mitigation, and recovery activities. APHIS collects information on invasive species and monitors their impacts (e.g., on agricultural production, forest lands). The information is updated and shared with AQI and ports of entries. The health import permits provide the APHIS/CBP officials specific guidelines (e.g., identifying specific pests), depending on the origination of the product, that facilitate detection during inspecting or random sampling of the imported agricultural products. U.S. importers also work with APHIS and other federal agencies (e.g., the Environmental Protection Agency) to obtain regulations on preventing an invasive species infestation (e.g., vessel ballast water discharge). Several statutes provide federal agencies with authorities to address invasive species in the United States. Some in Congress have expressed interest in pursuing legislation to reduce the prevalence of invasive species, such as through the introduction of "area-wide integrated pest management" (e.g., H.R. 5411 , 115 th Congress), a pest management strategy that is applied within a geographical area. This bill would have expanded the USDA Integrated Research, Education, and Extension Competitive Grants Program for qualified area-wide integrated pest management projects. Smuggling Over the past 30 years, there has been a steady increase in the movement of people and agricultural products around the world. The volume of smuggled and improperly imported agricultural products entering the United States has been a congressional concern. Products smuggled into the United States can harbor exotic plant and animal pests, diseases, or invasive species that could damage domestic crops, livestock, and the environment. If APHIS identifies an illegally imported product or a regulatory violation, it may seize the item and pursue civil and criminal penalties, if warranted. APHIS encourages distributors and retailers to purchase products that have been imported through legal channels that are typically accompanied by APHIS health import permits. One way that Congress has attempted to prevent agricultural smuggling is through the Lacey Act. The Lacey Act dates from 1900 and prohibits the importation of any plant—with limited exceptions—that is taken or traded in violation of domestic or international laws. The act requires declarations—in addition to the APHIS-issued plant health import permits—for imported shipments of most plants or plant products. APHIS works with CBP, the U.S. Coast Guard (e.g., for fisheries violations), the National Marine Fisheries Service, the Federal Bureau of Investigation, the U.S. Forest Service, and U.S. Immigration and Customs Enforcement to enforce the Lacey Act through inspection or monitoring activities. APHIS's role in this context is to collect APHIS-issued health import permits, manage the declaration requirement, provide guidance to importers regarding the declaration, perform compliance checks, and provide enforcement agencies with information to assist their investigations. The declaration is to be made by the importer at the time of import. According to USDA, both CBP and APHIS activities have contributed to an increase in the number of declarations, with approximately 1 million declarations in FY2017, up roughly 300,000 from FY2016. This increase has coincided with the introduction of the online system in lieu of paper-based declarations.

The Animal and Plant Health Inspection Service (APHIS) of the U.S. Department of Agriculture (USDA) is the U.S. government authority tasked with regulating the import, transit, and release of regulated animals, animal products, veterinary biologics, plants, plant products, pests, organisms, soil, and genetically engineered organisms. APHIS provides scientific authorities in trade partner countries and U.S. importers with animal and plant health import regulations. APHIS requires U.S. importers to obtain animal or plant health import permits, which verify that the items being imported meet U.S. import standards. Animal and plant health import permits certify that imports follow U.S. regulations, World Trade Organization (WTO) guidelines, and/or trading partner specific requirements. These import permits are a part of broader agreements between the United States and its trading partners within the WTO on established sanitary and phytosanitary (SPS) measures. These measures aim to protect against diseases, pests, toxins, and other contaminants. The House and Senate Agricultural Appropriations Committees appropriate funds that allow APHIS to carry out a range of activities, including those involved in issuing import permits. From FY2014 to FY2018, discretionary appropriations for APHIS have averaged nearly $900 million. About 85% of the APHIS budget is allocated to the "Safeguarding and Emergency Preparedness/Response" mission area, which includes the administration of health import permits and other efforts to prevent imports of pests and diseases into the United States. APHIS's authority over agricultural imports is largely provided by the Animal Health Protection Act (7 U.S.C. §§8301 et seq.), the Plant Protection Act (7 U.S.C. §§7701 et seq.), and the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (7 U.S.C. §§8401). These laws authorize APHIS to administer animal and plant health import permits and conduct agricultural import inspections. APHIS works with other federal agencies, such as the Department of Homeland Security's Customs and Border Protection (CBP), to conduct animal and plant health monitoring programs and to determine if new pest or disease management programs are needed. In addition, Congress directs the Food and Drug Administration, the Food Safety and Inspection Service, and state-level Departments of Agriculture to participate in inspecting many products regulated by APHIS. APHIS and CBP personnel inspect shipments of imported agricultural products and certify that the required import health permits and SPS certificates accompany each shipment. One of the major flagship programs that APHIS and CBP administer together is the Agricultural Quarantine Inspection (AQI) program, in which APHIS and CBP technical staff work to ensure that the required animal or plant health permits, sanitary certificates (for animal products), and phytosanitary certificates (for plant products) accompany each shipment. APHIS transfers funds to CBP to conduct AQI activities. The ongoing congressional commitment to preventing plant and animal disease and pests from entering the United States through agricultural imports is evident in annual appropriations Congress provides for APHIS. Congress has directed APHIS to monitor pests and diseases and has assigned APHIS to oversee SPS activities in some free trade agreements. Moreover, legislation introduced in the 115th Congress sought to address invasive species (e.g., Areawide Integrated Pest Management, H.R. 5411) and would have directed CBP to enforce APHIS regulations to deter smuggling of plants and animals into the United States.

crs_R45581

crs_R45581_0

Introduction Many of the disputes involving public education and school choice stem from a fundamental question of whether education is a public or private good. While education has historically been considered a public good, it has characteristics of both a public and a private good. That is, the benefits of education are both private, in that they accrue to individuals, and public, in that they promote a stable and democratic society and a prepared workforce. However, the distinction between education as a private good and a public good may be blurred, as others benefit from the work produced by an individual and an individual benefits from living in a stable and democratic society. As some researchers have argued, "schooling takes place at the intersection of two sets of rights, those of the family and those of the society." Parents have the right to raise their children in the manner they deem most suitable, including making decisions about their education, while a democratic society uses education "as a means to reproduce its most essential political, economic, and social institutions through a common schooling experience." There are many forms of school choice and mechanisms used to facilitate choice, including intradistrict and interdistrict public school choice, public charter schools, magnet schools, vouchers, tax credits/deductions, education savings accounts (ESAs), and homeschooling. School choice efforts in some of these areas are supported by federal programs, such as the programs to support public charter schools and magnet schools that are authorized under the Elementary and Secondary Education Act (ESEA). The most controversial issues regarding publicly funded school choice have involved the provision of direct or indirect support to enable students to attend private schools, especially religiously affiliated private schools. Numerous bills related to the public funding of private school choice have been introduced over the past several Congresses, but most proposals have failed to be enacted. An exception to this has been the District of Columbia Opportunity Scholarship Program (DC OSP). The DC OSP provides scholarships (also known as vouchers) to students in the District of Columbia to attend participating private elementary and secondary schools, including religiously affiliated private schools. It is the only federally funded voucher program in the United States. The Consolidated Appropriations Act, 2004 ( P.L. 108-199 ), which combined six appropriations bills—including the FY2004 District of Columbia Appropriations Act—authorized and appropriated funding for the DC OSP. The DC OSP was established under the DC School Choice Incentive Act of 2003, which was included in P.L. 108-199 . Appropriations were initially authorized for FY2004 through FY2008. The program is administered by the U.S. Department of Education (ED). The FY2004 appropriations act provided funding for the DC OSP for the first time and also, for the first time, provided funding for District of Columbia Public Schools (DCPS) for the improvement of public education, and funding for the District of Columbia State Education Office (SEO) for public charter schools. This approach, commonly known as the "three-pronged approach" to funding elementary and secondary education in the District of Columbia, was initially suggested by Mayor Anthony Williams when he asked for federal assistance for public education in the District of Columbia. The proposal was supported by the George W. Bush Administration and many Members of Congress. While concerns were raised during consideration of the DC School Choice Incentive Act of 2003 that only the DC OSP—not school improvement funding for DCPS or public charter schools—was authorized for five years, the federal government has also provided funds to support school improvement in DC public schools and DC public charter schools for each year that the DC OSP has been funded. The DC OSP has been reauthorized twice. It was first reauthorized by the SOAR Act as authorized under Division C of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ). The SOAR Act replaced the DC School Choice Incentive Act of 2003, reauthorized the DC OSP, and authorized appropriations for DC public schools and DC public charter schools for FY2012 through FY2016. The program was subsequently reauthorized by the SOAR Reauthorization Act ( P.L. 115-31 ), which amended the SOAR Act and extended the authorization of appropriations for the DC OSP, DC public schools, and DC public charter schools through FY2019. Many of the provisions included in the SOAR Act continue to be reflected in current law. Changes to the DC OSP have also been made primarily through appropriations acts in the intervening fiscal years. For FY2019, $52.5 million was appropriated for the SOAR Act, with $17.5 million each provided to the DC OSP, DCPS, and the DC State Education Office. This report begins with a detailed discussion of the provisions of the SOAR Act, as amended. Subsequent sections of the report discuss appropriations for the DC OSP, DC public schools, and DC public charter schools. This is followed by an examination of student and private school participation in the DC OSP. The next two sections discuss the local program management of the DC OSP and related evaluations conducted by the Government Accountability Office (GAO), as well as the DC OSP impact evaluations that have been conducted by ED. The last section of the report examines the potential costs associated with discontinuing the DC OSP. Several appendices are also included. The first appendix provides information on scholarship use ( Appendix A ). This is followed by appendices that provide information on private school participation in the DC OSP ( Appendix B ) and the impact evaluation reports ( Appendix C ), and a summary of the impact evaluation findings ( Appendix D ). This is followed by a glossary of the acronyms used in this report ( Appendix E ). The final appendix provides the legislative history of the program, beginning with initial enactment through FY2018 appropriations ( Appendix F ). While the SOAR Act provides funding for scholarships for students to attend participating private elementary and secondary schools as well as funding for DC public schools and DC public charter schools, the focus of this report is on the DC OSP. Some attention will be given to the current requirements related to the funds provided to DC public schools and DC public charter schools and how much funding has been provided each fiscal year, but no attempt will be made to provide comprehensive information about the use of or requirements related to these funds. Current Legislative Provisions This section of the report provides an overview of the SOAR Act, which was most recently comprehensively reauthorized by the SOAR Reauthorization Act. It includes a discussion of the legislative provisions related to the DC OSP as well as requirements related to funding provided for DC public schools and DC public charter schools. An overview of the legislative history of the DC OSP is included in Appendix F . Findings and Purpose of the Program Section 3002 includes congressional findings related to the SOAR Act that discuss parental school choice, the inadequacy of public school choice in the District of Columbia, student performance on the National Assessment of Educational Progress (NAEP) and per-pupil expenditures in the District of Columbia, the DC School Choice Incentive Act, interest in the DC OSP and evaluation findings, and congressional commitment to continuing the DC OSP as part of a three-pronged funding strategy that also includes DC public schools and DC public charter schools. Section 3003 includes the stated purpose of the SOAR Act. The purpose of the program is to provide low-income parents residing in DC, particularly those with a child attending an elementary or secondary school that has been identified as one of the lowest-performing schools under DC's accountability system, with "expanded options" for enrolling their child in other DC schools. The program is intended to continue to operate until public schools in DC "have adequately addressed shortfalls in health, safety, and security," and DC students are testing at or above the national average in reading and mathematics. For the purposes of the DC OSP, an "eligible student" is a student who is a DC resident and comes from a household that is receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) or whose income does not exceed either (1) 185% of the poverty line, or (2) for a household with a child participating in the DC OSP in the preceding year or under the DC School Choice Incentive Act while it was still in effect, 300% of the poverty line. The DC OSP also uses the term "participating eligible student." This refers to an eligible student who was awarded a scholarship regardless of whether the student uses the scholarship to attend a participating private school. Entities Eligible to Administer DC OSP at the Local Level The Secretary of Education (hereinafter referred to as the Secretary) is required to award a competitive grant to one or more eligible entities with approved applications to implement a program to provide eligible students with expanded school choice options. For the purposes of the DC OSP, an "eligible entity" is defined as a nonprofit organization or consortium of nonprofit organizations. The Secretary may award one grant or multiple grants based on the quality of the applications submitted and the DC OSP's priorities. Grants may be awarded for no more than five years. Since the inception of the DC OSP, the Secretary has only awarded a grant to one eligible entity at a time. For the purposes of this report, the eligible entity is also referred to as the local program administrator. In implementing the DC OSP, the Secretary is prohibited from limiting the number of eligible students receiving scholarships and may not prevent an otherwise eligible student from participating in the program based on any of the following three criteria: 1. The type of school the student previously attended (e.g., a student already enrolled in a private school is eligible to apply for a scholarship). 2. Whether or not a student has previously received a scholarship or participated in the DC OSP, regardless of the number of years since the student was awarded a scholarship or participated in the DC OSP. 3. Whether or not the student was a member of the control group used by the Institute of Education Sciences (IES) to carry out previous DC OSP evaluations. To receive a grant, an eligible entity is required to submit an application that includes a detailed description of how the entity will do the following: address the program priorities (see subsequent discussion); ensure that a random selection process, which gives weight to the priorities discussed below, will be used if more eligible students apply for a scholarship than can be accommodated in the DC OSP; ensure that if more participating eligible students seek enrollment at a participating private school than the school can accommodate, the school will use a random selection process to select participating eligible students; notify parents of eligible students about the availability of expanded choice opportunities to enable parents to make informed decisions; carry out activities to provide parents of eligible students with expanded choice options by awarding scholarships; determine the amount that will be provided to parents for the payment of tuition, fees, and transportation expenses, if applicable; seek out private elementary and secondary schools in DC to participate in the program; ensure that each participating private school will meet the reporting and other program requirements; ensure that each participating private school will submit to site visits by the eligible entities as determined necessary by the eligible entity; ensure that participating schools are financially responsible and will use the funds received effectively; ensure the financial viability of participating private schools in which 85% or more of all students enrolled in the school are participating eligible students that use a scholarship; address the renewal of scholarships for participating eligible students, including continued eligibility; ensure that a majority of its voting board members or governing organization are DC residents; and ensure that it utilizes internal fiscal and quality controls and complies with applicable financial reporting requirements and DC OSP requirements. In its application, the eligible entity must also provide an assurance that it will comply with all requests related to any evaluation carried out in compliance with the DC OSP evaluation requirements. In determining grant awards to eligible entities, the Secretary must give priority to applications that will most effectively do three things. First, in awarding scholarships, the eligible entity must give priority to two types of students—(1) an eligible student who, in the school year preceding the school year for which the eligible student is applying for a scholarship, attended an elementary or secondary school identified as one of the lowest-performing schools under DC's accountability system; and (2) students whose household includes a sibling or other child who is already participating in the program of the eligible entity, regardless of whether such students have previously been assigned to a DC OSP evaluation control group or have previously attended a private school. Second, the eligible entity must effectively target resources to students and families that lack the financial resources to take advantage of educational options. Third, the eligible entity must provide students and families with the widest range of educational options. Use of Funds Section 3007 includes requirements for the use of funds. An eligible entity is required to use the grant funds to provide eligible students with scholarships to pay tuition, fees, and transportation expenses (if applicable) to enable the eligible student to attend the participating private school of his/her choice. The eligible entity is required to ensure that the amount of tuition and fees charged by a participating school for an eligible student participating in the DC OSP does not exceed the amount of tuition and fees charged by such school to students who do not participate in the DC OSP. In using the grant funds to provide scholarships, the eligible entity is required to make scholarship payments to the parent of an eligible student participating in the program in a manner which ensures that the funds will be used to pay tuition, fees, and applicable transportation expenses. With respect to the scholarship amount, in addition to the other DC OSP requirements, the eligible entity is permitted to provide larger scholarships to eligible students with the greatest need. For the 2011-2012 school year, scholarship amounts were capped at $8,000 for kindergarten through 8 th grade and at $12,000 for grades 9-12. The Secretary is required to adjust these amounts annually for inflation. For the 2018-2019 school year, scholarship amounts are up to $8,857 for elementary and middle school and up to $13,287 for high school. The Secretary is required to make $2 million of the amount appropriated for the DC OSP each fiscal year available for the eligible entity to use to cover specific expenses. Funds can be used to cover administrative expenses including, for example, determining student eligibility to participate, selecting eligible students to receive scholarships, determining the scholarship amounts, maintaining records, and conducting site visits. They also include the cost of conducting a study, including a survey of participating parents, on any barriers participating eligible students experienced in gaining admission to or attending their first choice participating private school. The results of this study were required to be submitted to Congress no later than the end of the first full fiscal year after the date of enactment of the SOAR Reauthorization Act. The eligible entity can also use the funds for educating parents about the program and assisting them with the application process, including providing information about the program and participating schools, providing funds to assist parents in meeting expenses that might otherwise preclude the participation of eligible students in the DC OSP, and for streamlining the application process. The eligible entity is also permitted to use up to 1% of the funds appropriated each year for the DC OSP to provide tutoring services to participating eligible students who need additional academic assistance. If funds are insufficient to provide tutoring services to all such students, priority must be given to students who previously attended an elementary or secondary school identified as one of the lowest-performing schools under the DC accountability system. If funds appropriated for the DC OSP for any fiscal year remain available for subsequent fiscal years, the Secretary must make them available to the eligible entity. If the remaining funds were appropriated prior to the enactment of the SOAR Funding Availability Act, the funds must be provided to the eligible entity beginning on the date of enactment of such act. If the remaining funds were appropriated on or after the date of enactment of such act, the Secretary must make the funds available by the first day of the first subsequent fiscal year. If the eligible entity decides to use these additional funds during a fiscal year, the eligible entity must use not less than 95% of the funds to provide scholarships for eligible students or to increase the amount of the scholarships during such year and not more than 5% of such additional funds for administrative expenses, parental assistance, or tutoring. Funds used for administrative expenses, parental assistance, or tutoring must be in addition to the funds made available for these purposes each fiscal year. Requirements for Private Schools Participating in the Program Section 3007 also includes requirements for participating private schools. All participating private schools must meet the following requirements: The school has and maintains a valid certificate of occupancy issued by DC. For all prospective students, the school makes "readily available" information on its accreditation. If the school has been operating for five years or less, the school submits to the eligible agency proof of adequate financial resources. This must reflect the school's ability to maintain operations throughout the school year. The school agrees to submit to site visits as determined to be necessary by the eligible entity. The school has financial systems, controls, policies, and procedures to ensure that funds are used in accordance with the requirements of the DC OSP. The school ensures that participating students are taught core subject matter by a teacher who has a baccalaureate degree or its equivalent. The school conducts criminal background checks on school employees who have direct and unsupervised interaction with students. The school complies with all requests for data and information related to the DC OSP reporting requirements. In addition, Section 3007 requires participating schools to meet accreditation requirements. The specific requirements differ depending on whether a private school was participating in the DC OSP as of the date of enactment of the SOAR Reauthorization Act or not. For private schools that were participating in the DC OSP as of the date of enactment of the SOAR Reauthorization Act, the school must be fully accredited by an accrediting body described in certain parts of the District of Columbia School Reform Act of 1995. If a participating private school does not meet this requirement then not later than one year after the date of enactment of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), the school must be pursuing full accreditation by one of the aforementioned accrediting bodies and be fully accredited by such accrediting body not later than five years after the date on which the school began the process of pursuing full accreditation. If a private school was not participating in the DC OSP as of the date of enactment of the SOAR Reauthorization Act, it must submit documentation that the school has been fully accredited by one of the aforementioned accrediting bodies prior to participating in the DC OSP. All participating private schools are required to submit a certification to the eligible entity that the school has been fully accredited by one of the aforementioned accrediting bodies within five years of the enactment of the SOAR Reauthorization Act. If a participating private school fails to meet the relevant accreditation requirements, the eligible entity is required to assist the participating eligible students in that school to identify, apply to, and enroll in another participating private school. Section 3008 includes additional requirements that participating private schools must meet. In general, participating private schools are prohibited from discriminating against program participants or applicants on the basis of race, color, national origin, religion, or gender. The last prohibition does not apply, however, to single sex schools that are operated by, supervised by, controlled by, or connected to a religious organization to the extent that nondiscrimination based on gender would be inconsistent with the religious tenets or beliefs of the school. In addition, a parent may choose and a participating private school may offer a single sex school, class, or activity. The SOAR Act specifically says that nothing in the act should be construed as altering or amending the Individuals with Disabilities Education Act (IDEA). With respect to sectarian participating private schools, nothing in the SOAR Act prohibits the school from hiring in a manner consistent with the school's religious beliefs, requires the school to alter its mission or remove religious symbols from its building, or prevents the school from retaining religious terms in its name, selecting its board members on a religious basis, or including religious references in its mission statements or other chartering or governing documents. Each participating private school may require eligible students to follow any rules of conduct or other requirements that apply to all other students at the school. All participating private schools are required to comply with requests for data and information with respect to program evaluations required by the SOAR Act. Each participating private school is also required to comply with any testing requirements associated with the aforementioned program evaluations and discussed in detail below. IES will administer relevant assessments to students participating in the evaluation, unless the student is attending a participating private school that is administering the same assessment. If the participating private school is administering the assessment to an eligible student, it must make the assessment results available to the Secretary as necessary for the evaluation of the DC OSP. Any assistance provided to the parents of an eligible student through the DC OSP shall be considered assistance to the student and shall not be considered assistance to the participating private school that enrolls the student. In addition, any assistance provided to the parents of an eligible child under the DC OSP shall not be treated as income of the child or his/her parents for purposes of federal tax laws or for determining eligibility for other federal programs. Data on participating private schools are provided in a subsequent section of this report. In addition, Appendix B provides a list of schools participating in the DC OSP for school year 2018-2019. Evaluation Section 3009 includes the evaluation requirements associated with the SOAR Act. These include requirements related to the DC OSP as well as requirements related to the use of funds by DC public schools and DC public charter schools. As part of the evaluation and monitoring requirements, the Secretary and the Mayor of the District of Columbia (hereinafter referred to as the Mayor) are required to enter into two joint agreements. First, they must jointly enter into an agreement with IES to annually evaluate the DC OSP. Second, they must jointly enter into an agreement to monitor and evaluate the funds authorized and appropriated for DC public schools and DC public charter schools. The Secretary, through a grant, contract, or cooperative agreement, must ensure that the aforementioned annual evaluation of the DC OSP is conducted using "an acceptable quasi-experimental research design" to determine the effectiveness of the DC OSP. The research design is prohibited from using a control study group that includes students who applied for but did not receive a scholarship. The study must evaluate the following issues: A comparison of the academic achievement of participating eligible students in grades 3-8 and at one grade at the high school level with the academic achievement of students with similar backgrounds who are attending DC public schools and DC public charter schools (hereinafter referred to as the comparison group). Participating eligible students must be assessed using the same reading and mathematics assessments used by the DC public schools to comply with the requirements of Section 1111(b) of the ESEA. The success of the program in expanding choice options for parents of participating eligible students and increasing the satisfaction of such parents and students with their choice. The reasons parents of participating eligible students choose to have their child participate in the DC OSP, including important characteristics for selecting private schools. A comparison of the retention rates, high school graduation rates, college enrollment rates, college persistence rates, and college graduation rates of participating eligible students with the rates of students in the comparison group. A comparison of the college enrollment rates, college persistence rates, and college graduation rates of students who participated in the DC OSP in 2004, 2005, 2011, 2012, 2013, 2014, and 2015 after winning the lottery to participate with the rates for students who entered but did not win the lottery in those years and who, as a result, served as the control group for previous DC OSP evaluations. In making such comparisons, nothing prohibits students who entered but did not win the lottery from reapplying for a scholarship. A comparison of the safety of the schools attended by participating eligible students and schools in DC attended by students in the comparison group, based on the perceptions of students and parents. An assessment of student academic achievement at participating private schools in which 85% of the total number of students enrolled in the school are opportunity scholarship recipients. Any other issue applicable to participating eligible students the Secretary considers appropriate such as the impact of the program on DC public elementary and secondary schools. Data collected on the impact of the program on academic achievement and the educational attainment of participating eligible students and on students and schools in DC must be disseminated by the Secretary. IES also has responsibilities with respect to evaluations. IES is required to assess participating eligible students in grades 3-8 and at one grade at the high school level, by supervising the administration of the same reading and mathematics assessments used by the DC public schools to comply with the requirements of Section 1111(b) of the ESEA. In addition, IES is required to measure the academic achievement of all participating eligible students in grades 3-8 and at one grade at the high school level. Finally, IES is also required to work with the eligible entity that receives a grant under the DC OSP to ensure that the parents of each participating eligible student agree to allow their child to participate in the aforementioned evaluations and assessments carried out by IES. In meeting the evaluation requirements included in Section 3009, no personally identifiable information may be discussed in compliance with Section 444 of the General Education Provisions Act (GEPA). With respect to any student who is not attending a public elementary or secondary school, personally identifiable data shall only be disclosed to individuals carrying out the evaluation of the DC OSP, the group of individuals providing information for carrying out the evaluation of such student, and the parents of such student. The Secretary is required to submit to various congressional committees annual interim reports (not later than April 1 of the year after the date of enactment of the act) and each subsequent year through the year in which a final report is submitted, on the progress and preliminary results of the DC OSP evaluation. The Secretary must also submit a final report on the results of the DC OSP evaluation to the same congressional committees no later than one year after the final year for which a grant is made to the eligible entity. All reports and underlying data gathered in compliance with Section 3009 shall be made available to the public upon request, in a "timely manner," following the Secretary's submission of a report to Congress. In making this information public, no personally identifiable information shall be disclosed or made available to the public. The Secretary may not use more than 5% of the funds appropriated for the DC OSP for a given fiscal year for evaluation purposes. Reporting Requirements The reporting requirements associated with the DC OSP are included in Section 3010. The eligible entity that receives funds during a year must submit a report to the Secretary not later than July 30 of the following year that provides information on the activities that were carried out using the funds received during the prior year. Additionally, the eligible entity must submit a report to the Secretary by September 1 of the year during which the second school year of the eligible entity's program is completed and for each of the next two years that includes data on the academic growth and achievement of scholarship participants, the high school graduate rate and college admission rate of scholarship participants, where appropriate, and parental satisfaction with the program. All of these reports are prohibited from including personally identifiable information. The eligible entity is also required to ensure that each participating private school during a given school year reports to the parents of each scholarship participant on the student's academic achievement; the safety of the school, including data on the incidence of school violence, student suspensions, and student expulsions; and the school's accreditation status. With respect to a scholarship participant's academic performance, the school must compare the student's performance with the (1) aggregate academic achievement of other scholarship recipients at the school who are in the same grade or level, and (2) aggregate academic achievement of the student's peers at the school who are in the same grade or level. Except for providing information about a student who is the subject of a report to the student's parent, these reports are prohibited from including personally identifiable information. Finally, the Secretary is required to report to various congressional committees not later than six months after the first appropriation of funds and annually thereafter on the findings from the reports submitted by the eligible entity. DC Public Schools and DC Public Charter Schools As previously discussed, the DC OSP is funded as part of a three-pronged funding arrangement. The other two parts of this three-pronged approach include DC public schools and DC public charter schools. Section 3004(b) requires the Secretary to provide funds to the Mayor if the Mayor agrees to the requirements included in Section 3011 for the DC public schools to improve public education in DC and for the DC public charter schools to improve and expand quality public charter schools in DC. Section 3011 of the SOAR Act specifies the requirements that must be met with respect to the funding provided under the act for public education in the District of Columbia. As a condition of receiving funds for DC public schools and DC public charter schools, the Mayor is required to do three things: 1. ensure that all DC public schools and DC public charter schools provide IES with all of the information that IES requires to carry out the aforementioned assessments and evaluations; 2. enter into an agreement with the Secretary to monitor and evaluate the use of funds provided to DC public schools and DC public charter schools under the SOAR Act; and 3. not later than six months after the first appropriation of funds and annually thereafter, submit to various congressional committees a report on how the funds provided under the SOAR Act for public education were used in the preceding school year and how such funds are contributing to student achievement. If after reasonable notice and an opportunity for a hearing, the Secretary determines that the Mayor has failed to comply with these requirements, the Secretary is authorized to withhold funds appropriated to DC public schools, DC public charter schools, or both, depending on whether the failure relates to DC public schools, DC public charter schools, or both. In addition to specifying requirements that the Mayor must meet, Section 3011 also includes specific requirements pertaining to the provision of funds to DC public charter schools. The Secretary is permitted to direct the funds provided for any fiscal year (or a portion of such funds) to the Office of the State Superintendent of Education (OSSE) in DC. However, by doing so, the Secretary may not affect funding available for the DC OSP. The OSSE is permitted to transfer the funds received to subgrantees that are specific DC public charter schools or networks of such schools or to DC-based nonprofit organizations with experience in successfully providing support or assistance to DC public charter schools or networks of such schools. In addition, the funds provided for DC public charter schools shall be available to any DC public charter school that is in good standing with the DC Public Charter School Board (DCPCSB). Further, OSSE and the DCPCSB are prohibited from restricting the availability of funds to certain types of schools based on the school's location, governing body, or school facilities. Program Appropriations Section 3014 authorizes $60 million to be appropriated for each fiscal year from FY2012 through FY2019. Of the funds appropriated in each of these fiscal years, one-third of the funds must be used for the DC OSP, one-third of the funds must be used for DC public schools, and one-third of the funds must be used for DC public charter schools. If appropriations for these fiscal years do not equal $60 million, the amount that is appropriated must be divided in thirds among the DC OSP, DC public schools, and DC public charter schools. Funds appropriated for FY2012 through FY2019, as well as those previously appropriated and available, are to remain available until expended. Transition Provisions Section 3012 of the SOAR Act includes multiple transition provisions, including the repeal of the DC School Choice Incentive Act of 2003, special rules regarding funding, provisions related to multiyear awards, requirements for a MOU, and orderly transition provisions. With respect to the special rules regarding funding, the SOAR Act makes changes to prior appropriations bills that provided funding for the DC OSP. First, the SOAR Act allows funds provided for the DC OSP for FY2009, FY2010, or any other act to be used to provide opportunity scholarships for the 2011-2012 school year to students who have not previously received such scholarships. Second, the SOAR Act stated that provisions of the FY2010 appropriations act related to a report on the academic rigor and quality of each participating school and a requirement that the Secretary ensure that site inspections are conducted at each participating private school at least twice a year no longer applied. Third, any unobligated amounts that had been reserved to carry out these aforementioned provisos were to be made available to the eligible entity for administrative expenses or to provide scholarships, including providing scholarships for the 2011-2012 school year to students who had previously not received such scholarships. The transition provisions also include a requirement that a recipient of a grant or contract under the DC School Choice Incentive Act of 2003, as such act was in effect on the day prior to the enactment of the SOAR Act, shall continue to receive funds in accordance with the terms and conditions of such grant or contract with certain exceptions. For example, the aforementioned provisos related to the DC OSP that were addressed by the first special rule related to funding shall not apply. In addition, any changes made by the MOU, discussed below, shall apply. The transition provisions require the Secretary and the Mayor to revise the MOU that was entered into under the DC School Choice Incentive Act of 2003, as such act was in effect on the day prior to the enactment of the SOAR Act, to address the implementation of the DC OSP under the SOAR Act. The revised MOU must also address how the Mayor will ensure that DC public schools and DC public charter schools comply with all the "reasonable requests" for information needed to fulfill the evaluation requirements of the DC OSP. Finally, the Secretary is permitted to take such steps as the Secretary determines to be necessary to provide for an orderly transition from the authority of the DC School Choice Incentive Act of 2003 to the authority of the SOAR Act. DC OSP, DCPS, and Charter School Appropriations Funding for the DC OSP has been included with more general funding provided by the federal government to the District of Columbia for school improvement since the program's inception. The FY2004 Consolidated Appropriations Act, which authorized the School Choice Incentive Act, provided funding specifically for school improvement in the District of Columbia that is allocated among three entities: (1) the District of Columbia public schools for the improvement of public education, (2) the State Education Office for the expansion of public charter schools, and (3) ED for the DC OSP. Since FY2004, Congress has continued to provide funding for each of these three entities. From FY2004 though FY2019, over $800 million has been appropriated for these entities. Table 1 details funding allocations for the program's three funding recipients. Student and Private School Participation in the DC OSP This section of the report provides data on student and private school participation in the DC OSP. The data discussed in this section have been taken from publicly available reports or have been provided by the DC OSP local program administrator. Depending on when in each school year the data were collected, there may be some inconsistencies in the data, particularly with respect to student participation. Student Participation Since the program's inception in the 2004-2005 school year through the 2018-209 school year, 24,351 applications have been submitted, and 10,701 scholarships have been awarded. The number of students participating from year to year has ranged from just over 1,000 students to over 1,900 students for a total of 22,493 nonunique students through the 2018-2019 school year ( Table 2 ). From the 2009-2010 school year through the 2017-2018 school year, most student participants used a scholarship to enroll in grades prekindergarten through 8 th grade, but the number of enrollees in these grade levels has fluctuated by year ( Figure 1 ). While a smaller number of students have used a scholarship to attend a high school, the number of students using a scholarship at that level has fluctuated less over this time period, particularly in recent school years. Appendix A includes detailed data on scholarship use by grade level. Data on applications to the program are available for school years 2011-2012 through 2018-2019 but only sporadically in prior years ( Table 3 ). For the first year of the program (2004-2005 school year), almost 2,700 students applied for a scholarship. Four years later (2008-2009 school year), the number of scholarship applications was 726 with the majority of the applications coming from returning students. During the 2012-2013 school year, the number of applications exceeded 1,550 with over 1,000 applications coming from new students. Since that school year, the program has received over 3,000 applications each year. For the 2018-2019 school year, a total of 3,294 applications were received with 1,961 applications submitted by returning students and 1,333 applications submitted by new students. Of these students, 1,645 students—1,329 returning students and 316 new students—used a scholarship in 44 of the 46 participating private schools. Among the students using a scholarship during the 2018-2019 school year, the average annual family income was $23,285. In addition, 43% of the participating students were eligible for SNAP or Temporary Aid for Needy Families (TANF) benefits. The majority of the participating students were African-American/Black (73.7%), followed by Hispanic and/or Latino (17.3%). Private School Participation Since the inception of the DC OSP program, the number of participating schools has ranged from 46 schools to 68 schools ( Table 4 ). With the exception of the first two years of the program, there has been a generally downward trend in the number of participating private schools. As students choose which participating private school they would like to attend and have to meet any relevant admission criteria at such school, not every participating school may enroll a participating eligible student. As shown in Table 4 , there has never been a school year in which all of the participating private schools also enrolled a scholarship recipient. The percentage of participating schools enrolling scholarship recipients has ranged from 78.8% to 98.0%. Appendix B provides more detailed information about participating private schools for the 2018-2019 school year. For the 2018-2019 school year, 46 private schools are participating in the DC OSP. Of these schools, 39 serve students in elementary or middle schools and 20 serve students in high school. For participating private schools that reported data on tuition, the scholarship could fully cover tuition at 11 schools for all or some of the grades served by the school. Of the 46 participating private schools, 33 schools indicated they were accredited, 1 school indicated that it was a candidate for accreditation, and 8 schools did not provide any information on their accreditation status. Program Management and Evaluation Since the enactment of the DC OSP and through each subsequent reauthorization of the DC OSP, statutory language has required ED to award one or more grants to an eligible entity to administer the program. Since the inception of the program, ED has only awarded a grant to one eligible entity through each grant competition. To date, three different organizations have served as the local program administrator for the DC OSP. Washington Scholarship Fund The Washington Scholarship Fund (WSF) was the first organization to serve as the local program administrator for the DC OSP. At the time it was selected, the WSF was the largest and oldest granter of privately financed scholarships in the District of Columbia. WSF's contract to administer the program was for the five-year period that corresponded with the original program authorization of the DC OSP (FY2004 though FY2008). In its first evaluation of the program, the Government Accountability Office found that WSF expanded its operations from "$150,000 in federal and foundation grants in fiscal year 2004 to $12.9 million in 2006 without sufficient accountability mechanisms to govern the use of the OSP funds." GAO also determined that WSF "did not have the capacity to oversee participating private schools and administer a growing scholarship program funded with federal dollars." GAO made several recommendations to ED about directing the grantee to improve internal controls, continue to integrate its financial systems, improve monitoring, and "provide accurate and complete information to parents." The findings from the GAO evaluation are discussed in greater detail below. When the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) extended the DC OSP beyond its original authorization period, ED held a competition in FY2009 to select a local program administrator for a one-year period. WSF was once again selected as the local program administrator. However, WSF was unable to continue administering the program beyond the 2009-2010 school year "because it was unable to obtain the additional funding commitments necessary to serve the participating families and fulfill school oversight responsibilities." The WSF transferred administration of the DC OSP to the DC Children and Youth Investment Trust Cooperation (hereinafter referred to as the Trust) in 2010. DC Children and Youth Investment Trust Cooperation To receive the grant following the transfer of local program administration from WSF to the Trust, the Trust was required to submit a grant transfer agreement to ED that had to address the absolute priority that FY2009 appropriations only be used to provide scholarships to currently enrolled students and that FY2010 and prior-year appropriations only be used to provide scholarships during the 2010-2011 school year to students who received scholarships during the 2009-2010 school year. ED subsequently granted a waiver and extension of the one-year project period to the Trust. ED did not think it would be in the public interest to run another grant competition for FY2010 and FY2011, if funds were appropriated, especially since it was anticipated that the project would only operate for a short period of time and serve a limited population of students. ED did not run another grant competition to select a local program administrator until FY2015. GAO conducted a second evaluation of the DC OSP while the Trust was serving as the local program administrator. It found that the Trust was unable to provide accurate and timely information to parents about participating schools. GAO also found that the Trust lacked the internal controls necessary for effective implementation and oversight of the DC OSP. In addition, GAO found that ED had provided limited assistance to the Trust with respect to several areas outlined in a MOU and made 10 recommendations for how ED could improve the program. A more detailed discussion of the findings from the GAO evaluation is included below. Ultimately, the Trust decided to no longer serve as the program administrator. Serving Our Children On August 19, 2015, ED awarded a grant to Serving Our Children to be the program administrator for the DC OSP. The grant was for a three-year period from October 1, 2015, to September 20, 2018. In January 2018, ED proposed granting a waiver to extend the period of performance for the current grantee for up to two years to allow Serving Our Children to receive additional funds in FY2018 and FY2019 to continue serving DC students. ED proposed the waiver be based on four factors: 1. Extending Serving Our Children's project period would "create stability and continuity" as the DC OSP enters its last two years of its program authorization. 2. Based on the number of eligible applications to serve as the program administrator that were submitted during past DC OSP competitions, ED indicated that "few organizations are eligible for and have the capacity to administer" the DC OSP. 3. Extending Serving Our Children's grant period would allow the organization to "fully implement the new recruitment and marketing strategies designed to significantly increase scholarship usage rates." 4. Extending Serving Our Children's project period would align the next DC OSP competition with the "next anticipated reauthorization of the SOAR Act." ED subsequently issued a final waiver and extension of the project period in April 2018. GAO has not conducted an evaluation of DC OSP program management since Serving Our Children was granted the contract to administer the program. Evaluations Conducted by GAO GAO examines how federal funds are spent. It provides Congress and federal agencies with information on how to save money and work more efficiently. With respect to the DC OSP, GAO has evaluated certain accountability mechanisms and whether they are operating as intended, such as the program's use of funds and general adherence to statutory requirements. GAO also has evaluated how ED and the District of Columbia fulfilled their roles and responsibilities for the DC OSP. As mentioned above, GAO has conducted two evaluations of the DC OSP. The first evaluation was published in 2007 when the DC OSP was administered by the WSF. This evaluation primarily used data collected and reported during the 2005-2006 school year. The second evaluation was published in 2013 when the program was administered by the Trust. This evaluation primarily used data from a performance audit from May 2012 to September 2013, as well as program documentation from 2010 to 2013. Evaluation of the DC OSP under the Washington Scholarship Fund GAO's first evaluation of the DC OSP included an assessment of three program goals: (1) accountability mechanisms governing the use of funds, (2) results of WSF's efforts to meet the program's recruiting priorities and eligibility requirements and inform parents of their choices, and (3) the extent that the evaluation of the DC OSP reflects statutory requirements and the implementation of the program supports the detection of useful and generalizable findings. For the first goal, GAO found that WSF's accountability mechanisms regarding the use of funds were not strong, and WSF did not adhere to its own procedures. For example, WSF used OSP funds to pay tuition for students that attended schools that typically did not charge students tuition, which was not in accordance with statutory requirements. In addition, the WSF used funds to pay before- and after-care fees, and GAO was unable to determine whether this use of funds was in accordance with statutory requirements. WSF's accountability mechanisms were weakened by rapid expansion and limited time to design and implement the internal controls necessary to manage the major increase in operations. WSF also experienced a high rate of staff turnover during the first several years of administering the DC OSP. With regard to WSF's efforts to meet the recruiting priorities, GAO found that WSF was not able to recruit an appropriate number of students from schools in need of improvement. Specifically, the proportion of students from schools in need of improvement that received a scholarship was lower than the proportion of such students attending DC public schools. WSF also had difficulty finding placements for students at the secondary level because there were fewer openings available at participating private schools. WSF also faced challenges in providing parents with accurate information regarding private schools. For example, in some cases, WSF provided inaccurate information on teacher qualifications and tuition for some schools. In terms of meeting statutory evaluation requirements, GAO found that the research design was strong and that the use of random assignment facilitated appropriate comparisons between students who received a scholarship and similar students who attended DC public schools. Over the course of the program evaluation, however, the DC public schools changed the assessment measure used to measure student achievement. The original assessment used to evaluate the DC OSP was chosen in accordance with statutory requirements. However, it became mismatched with the assessment used by DC public schools. The lack of consistency in the assessment measure between the DC OSP students and the DC public school students limited the ability to make comparisons and generalize findings. Evaluation of the DC OSP under the DC Children and Youth Investment Trust Corporation GAO's second evaluation of the DC OSP included an assessment of three program goals: (1) the extent to which the Trust provides information that enables families to make informed school choices, (2) whether the Trust's internal controls ensure accountability for the DC OSP, and (3) how ED and the District of Columbia agencies have performed their stated roles and responsibilities. The Trust made efforts to inform families of their school choices through various outreach activities, including advertising through print, radio, bus ads, newspapers, and flyers posted in public areas. GAO, however, found that the Trust was not able to provide accurate and timely information to parents about participating schools. For example, the participating school directory was published nine months after the start of the school year and lacked key information about tuition, fees, and accreditation. GAO found that the Trust lacked the internal controls necessary for effective implementation and oversight of the DC OSP. For example, the Trust did not have a process for verifying self-reported information from private schools, including eligibility information. Additionally, while there were adequate procedures in place for financial reporting, the Trust did not submit mandatory financial reports on time and in accordance with statutory requirements. In some cases, reports were one or two years late. ED and the District of Columbia have a MOU to clarify roles and responsibilities in the implementation of certain aspects of the DC OSP. These agencies worked in a cooperative agreement with the Trust to meet program goals. GAO found that ED provided limited assistance to the Trust with regard to several areas outlined in the MOU. For example, ED was responsible for helping the Trust make improvements to financial reporting procedures and site visit policies, as well as improving the accuracy of information provided to parents. ED provided general assistance with administrative and operational functions; however, GAO found that ED did not provide assistance in these specific areas of the MOU. In addition, there was a lack of clarity regarding the responsibility of the Trust to conduct building, zoning, health, and safety inspections in participating schools. As a result, inspections were not conducted as described in the MOU. Impact Evaluations In addition to the previously discussed DC OSP evaluations conducted by GAO, which focused largely on program implementation issues, ED has conducted impact evaluations of the participation of schools, parents, and students in the DC OSP, as well as the effectiveness of the program on student achievement and other outcome measures. These evaluations focused on determining the effectiveness of the DC OSP in increasing student achievement, parent and student satisfaction, school safety, and parental involvement. The impact evaluations were designed to provide evidence for whether the DC OSP works to improve academic achievement for students and expand school choice options for parents. Appendix C provides a link to each of these evaluation studies. A summary of the results of each of the impact evaluations is discussed below and more detailed results are presented in Appendix D . Evaluations Conducted by ED IES has conducted six evaluations of the DC OSP . The first two evaluations gathered data on schools, students, and parents that chose to participate in the program. These participation evaluations, however, did not gather achievement data or other outcomes that would allow for the evaluation of the effectiveness of the program. The next four evaluations were impact evaluations that measured the effectiveness of the DC OSP with student achievement data and other outcomes of interest. These six evaluations took place under different legislative requirements over a period of 12 years. A seventh evaluation is beginning with data collected during school year 2018-2019. Table 5 provides a list and descriptive characteristics of evaluations of the DC OSP conducted by ED. It depicts how DC OSP evaluations correspond to the school years in which data were collected. Appendix C provides links to the ED reports corresponding to each evaluation. The four impact evaluations published to date are similar in their design and presentation of results. The first two were conducted under the legislative requirements of P.L. 108-199 and the second two were conducted under the legislative requirements of P.L. 112-10 . While there are some differences between the requirements, both evaluations were required to use the strongest possible research design to determine the effectiveness of the DC OSP and both evaluations used similar outcome measures (e.g., student achievement in reading and mathematics, parent and student satisfaction, perceptions of school safety, and parental involvement). Due to these similarities, results are reported by outcome measure. For each outcome measure, the results of evaluations required by P.L. 108-199 are discussed first and the results of evaluations required by P.L. 112-10 are discussed second. As previously discussed, the evaluations were required to use the strongest possible research design for determining the effects of the DC OSP. The use of lotteries in the DC OSP allowed the evaluation to use the "gold standard" of evaluation, which is randomization. The lottery created two randomly selected groups: students who were selected to receive a scholarship (treatment group) and students who applied for but were not selected to receive a scholarship (control group). For those students who received a scholarship, some students chose to use the scholarship (scholarship use group) and some students chose not to use the scholarship (scholarship offer group). The evaluations use three groups to determine the effectiveness of the program (two treatment groups and one control group): (1) students who were offered a scholarship (scholarship offer group), (2) students who used a scholarship (scholarship use group), and (3) students who were not offered a scholarship (control group). For the purposes of the evaluation, the scholarship offer group and the scholarship use group are considered treatment groups. Treatment groups and the control group were compared on the following outcome measures: (1) reading and mathematics achievement on a grade-appropriate, nationally norm-referenced standardized test; (2) parent and student satisfaction (surveys); (3) parent and student perceptions of school safety (surveys); and (4) parental involvement (surveys). The effects of each outcome measure were disaggregated by several subgroups. Across the four evaluation studies, subgroups included the following: (1) students who previously attended a school in need of improvement (SINI), (2) students who did not attend a SINI (non-SINI), (3) students in elementary school, (4) students in secondary school, (5) students who had lower levels of achievement (below the median) when entering the scholarship program, (6) students who had higher levels of achievement (above the median) when entering the scholarship program, (7) male students, (8) female students, (9) students in cohort 1 (students who applied in 2004), and (10) students in cohort 2 (students who applied in 2005). All subgroups were not examined in all evaluations. The following section discusses the results of the four impact evaluations, comparing the treatment groups (scholarship offer and scholarship use groups) to the control group (scholarship not offered) on the four outcome measures. Results of Impact Evaluations for Scholarship Offer and Use Appendix D provides summary tables describing the results of the four impact evaluations conducted by ED. There is one table for each outcome measure: (1) reading and mathematics achievement ( Table D-1 ), (2) parent and student satisfaction ( Table D-2 ), (3) parent and student perceptions of school safety ( Table D-3 ), and (4) parental involvement ( Table D-4 ). The tables report each outcome measure disaggregated by subgroups (e.g., SINI, non-SINI, elementary, secondary, etc.). Reading and Mathematics Achievement Table D-1 presents the results for reading and mathematics achievement. Evaluations conducted under the requirements of P.L. 108-199 report the following: For reading achievement , students who were offered or used a scholarship scored significantly higher overall than students in the control group in the first impact evaluation; however, the effect was not observed in the second impact evaluation. In the second impact evaluation, the overall effect on reading achievement was not significant, but there were some statistically significant positive effects for subgroups (e.g., students in elementary school, students who had higher levels of achievement entering the year, and female students). For mathematics achievement, students who were offered or used a scholarship did not score significantly differently than students in the control group. Evaluations conducted under the requirements of P.L. 112-10 report the following: For reading achievement , students who were offered or used a scholarship did not score significantly differently overall than students in the control group in both impact evaluations. In some subgroups, there were statistically significant negative effects of scholarship offer and scholarship use. For example, students in secondary schools showed statistically significant negative effects on reading achievement across both impact evaluations. For mathematics achievement , across both impact evaluations, students who were offered or used a scholarship scored statistically significantly lower overall than the control group in both impact evaluations. Parent and Student Satisfaction Table D-2 presents the results for parent and student satisfaction. Evaluations conducted under the requirements of P.L. 108-199 report the following: Parent satisfaction for parents of students who were offered or used a scholarship was significantly higher than parents of students in the control group for both impact evaluations. At the subgroup level, this trend was seen consistently across the evaluations for the subgroups of students from non-SINI schools and students who entered the scholarship program with higher levels of achievement. Student satisfaction for students who were offered or used a scholarship was not significantly different than students in the control group for both impact evaluations. Evaluations conducted under the requirements of P.L. 112-10 report the following: Parent satisfaction for parents of students who were offered or used a scholarship was not significantly different than parents of students in the control group for both impact evaluations. In the second impact evaluation, there were some positive subgroup effects for parents of higher-achieving students, but the effect was not observed in the overall group. Student satisfaction for students who were offered or used a scholarship was not significantly different than students in the control group for both impact evaluations. Parent and Student Perceptions of School Safety Table D-3 presents the results for parent and student perceptions of school safety. Evaluations conducted under the requirements of P.L. 108-199 report the following: Parent perceptions of school safety for parents of students who were offered or used a scholarship were significantly higher compared to parents of students in the control group. In the first impact evaluation, all subgroups of parents reported higher perceptions of safety. In the second impact evaluation, only one subgroup of parents reported higher perceptions of school safety (i.e., parents of students who previously attended non-SINI schools). Student perceptions of school safety for students who were offered or used a scholarship were not significantly different than students in the control group for both impact evaluations. Evaluations conducted under the requirements of P.L. 112-10 report the following: Parent perceptions of school safety for parents of students who were offered or used a scholarship were significantly higher compared to parents of students in the control group. The positive effect was observed across most subgroups in both impact evaluations. Student perceptions of school safety for students who were offered or used a scholarship were not significantly different compared to students in the control group in the first impact evaluation. However, in the second impact evaluation, students reported significantly higher perceptions of school safety if they were offered or used a scholarship. The positive effect was observed for several subgroups of students, including students from SINI schools, students in secondary schools, and students who entered the program with lower levels of mathematics achievement. Parental Involvement Table D-4 presents the results for parental involvement. Evaluations conducted under the requirements of P.L. 108-199 report the following: Parental involvement of parents of students who were offered or used a scholarship was not significantly different from the control group. In some subgroups, the first impact evaluation showed that parental involvement of parents in the treatment group was lower than the control group (i.e., parents of students who previously attended non-SINI schools, parents of secondary students, parents of students who entered the program with higher levels of achievement, and parents of females). Evaluations conducted under the requirements of P.L. 112-10 report the following: Parental involvement of parents of students who were offered or used a scholarship was not significantly different from the control group. In the first impact evaluation, there was one positive effect of parental involvement for one subgroup (i.e., parents of students in secondary school), but the effect was not observed in the overall group. Evaluation-Related Issues The federal government has provided over $245 million since FY2004 to support the DC OSP. These grants have been accompanied by program evaluation results to examine the return on the federal government's investment. The findings from these evaluations over the course of the existence of the program have been mixed (see Appendix D ). This leads to questions about whether the program is successful and how success should be measured. Another question that arises is whether the results of these evaluations can be used to replicate the DC OSP in other locations. Each of these issues is discussed briefly below. Managing Expectations of Impact Evaluation Results When evaluating a new program, some expect immediate positive results. In the evaluation studies of the DC OSP, students who were offered or used a scholarship made some significant gains in reading compared to the control group and had similar or sometimes lower mathematics achievement compared to the control group. While these results may not be overwhelmingly positive, it is difficult to gauge how much achievement gain to expect. To create a context for interpreting the results of the DC OSP evaluation, it may be helpful to consider the results of other impact evaluations of similar scholarship programs. Several states have similar scholarship programs and have conducted impact evaluations. The Louisiana Scholarship Program (LSP), for example, offers publicly funded vouchers for low-performing students to attend private schools if their family income does not exceed 250% of the poverty line. In the first two years, there were significant negative effects for students who participated in the LSP program. The evaluation of the LSP after three years, however, found no statistically significant differences in reading or mathematics. A retrospective analysis of records for the Indiana Choice Scholarship Program found that scholarship recipients scored similarly in reading but significantly lower in math after four years. Based on the results of these evaluations, results from the DC OSP seem to be in line with what is typical for students after several years of participation in this type of scholarship program. Another issue related to evaluating the program is whether the evaluations are focused on the appropriate outcome measures and how much weight should be afforded to a given outcome measure. There is a substantial focus on student academic performance, which is a common focus of the evaluation of education programs, including those offered in public schools. The DC OSP evaluations have also looked at other factors such as perceptions of school safety, parent involvement, and high school graduation rates. As with other academic programs, if academic performance is comparable to or lagging behind that of a comparison group but some gains are seen on other outcome measures, the question becomes one of whether those other gains are sufficient to merit program continuation or possible program expansion. This question is difficult to grapple with, as school voucher advocates may point to any successes as a reason for program continuation, while opponents of school vouchers may point to any shortcomings as a reason for the program to be eliminated. Lack of Direct Comparison for Scholarship Use The "gold standard" in any experimental evaluation is the use of random assignment into treatment and control groups. The evaluations described above required IES to use the strongest possible research design for determining the effectiveness of the opportunity scholarship program. The DC OSP evaluation used random assignment to choose students who would be offered a scholarship and students who would not be offered a scholarship. It was not practical or feasible, however, to randomly assign students to use the scholarship and other students not to use the scholarship. By the nature of the program, parents and students were provided with a choice. As such, the random assignment allows for a direct comparison between students who were offered a scholarship and those who were not offered a scholarship. It did not, however, allow for a direct comparison between students who used the scholarship and those who were not offered a scholarship. To determine the effect on students who used the scholarship, researchers used a mathematical adjustment. The effect of using a scholarship was estimated by dividing the impact of being offered a scholarship by the fraction of the treatment group that used the scholarship. Because researchers are not able to use random assignment of students to require the use of a scholarship in a school choice program, it may be more practical to use quasi-experimental research designs. P.L. 115-31 allows IES to use an acceptable quasi-experimental research design for determining the effectiveness of the DC OSP. This approach does not use a control group of students who applied for but did not receive a scholarship. A well-designed, quasi-experimental approach, however, would allow IES to make reasonable comparisons between students who use a scholarship to students of similar backgrounds in DC public schools and DC public charter schools. Response Rate and Attrition During the impact evaluations, IES was required to work with eligible entities to ensure that parents of each student who applies for a scholarship agree to allow their child to participate in the assessment for the evaluation. Evaluations need a certain level of participation, or "response rate" to have results be considered reliable and valid. Response rates are not typically 100%. For example, the final evaluation report under P.L. 108-199 finds that the effective response rate for reading and mathematics assessments was 69.4% for the control group and 69.5% for the treatment group. That is, approximately 69.5% of students who were offered a scholarship participated in reading and mathematics assessments. The What Works Clearinghouse considers response rates below 70%, or a difference in response rates between treatment and control groups of over 5%, to be a possible attrition problem. Another potential source of attrition is natural attrition as students either graduate or leave secondary education. The DC OSP impact evaluations are part of a longitudinal study that tracks students over time. Some students in the first cohort were in secondary school. Over four years of evaluation under P.L. 108-199 , there was a natural attrition of students who could no longer be part of the study because they "graded-out" or left the K-12 education system. By the final year of the evaluation, 13% of the treatment group could no longer be tracked because they "graded-out" or left. When the sample size of an evaluation is reduced due to attrition, it becomes harder to find an effect of the treatment. That is, an effect of a certain size may be significant in one year, but as the sample size is reduced, that same size of effect may become insignificant in the next year because of a lack of power in the study. Sensitivity of Outcome Measures The likelihood of finding an effect in an impact evaluation is dependent on the sensitivity of outcome measures. To evaluate reading and mathematics achievement in the DC OSP evaluation, IES used both the Stanford Achievement Test, version 9 (evaluations conducted under the requirements of P.L. 108-199 ) and the TerraNova, Third Edition (evaluations conducted under the requirements of P.L. 112-10 ). These assessments were selected because they were considered a grade-appropriate, nationally norm-referenced standardized test for students in grades K-12 with a relatively short administration (90 minutes for the reading and mathematics subtests). These assessments, however, are not aligned with standards and curricula in place at DC private schools, public schools, or public charter schools. It is possible, therefore, that the assessments used in the evaluations were not sensitive to the potential academic gains made by students participating in the evaluation. P.L. 115-31 has changed the assessment requirements such that future evaluations must use the same reading and mathematics assessments used by the DC public schools to comply with the ESEA. DC public schools currently administer assessments developed by the Partnership for Assessment of Readiness for College and Careers (PARCC). PARCC assessments are aligned with academic standards used by the DC public schools. These assessments, however, may not be aligned with the standards in place in DC private schools. The PARCC assessments, therefore, may be more sensitive to changes in achievement for students who attend DC public schools than students who attend DC private schools. It is possible that future evaluations will have a positive bias toward DC public school students since the assessment theoretically measures what they are learning in the classroom. The extent to which the assessments measure what DC private school students are learning in the classroom is unknown. In evaluation terms, therefore, there may be a positive bias toward the control group. If there is a positive bias toward the control group, it would be more difficult to detect a significant effect of the treatment (i.e., the offer or use of a DC opportunity scholarship). Limited Generalizability to Other Voucher Programs Positive results of impact evaluations are often used as evidence to "scale-up" a specific education policy or practice. In some cases, an education policy or practice that works in one setting may also work in another setting. If providing another school choice option to parents and students in the District of Columbia produces positive results, is this evidence that these results would likely be replicated in another state or city? It is difficult to interpret the results of the DC OSP impact evaluations within the context of other school choice programs. DC has a unique structure of governance and a relatively large number of charter schools. If the program has evidence of increasing achievement and expanding choice options for students and their parents, the likelihood that these effects would generalize to other cities remains unknown. Appendix A. DC OSP Scholarship Use by Grade Level, 2009-2010 School Year Through 2017-2018 School Year Appendix B. Private Schools Participating in the DC OSP, 2018-2019 School Year Appendix C. Impact Evaluation Reports Appendix D. Summary of Impact Evaluation Results Appendix E. Glossary of Acronyms Appendix F. Legislative History of the DC Opportunity Scholarship Program This appendix traces the DC OSP from the efforts associated with its initial enactment through its current authorization. With the exception of the SOAR Technical Corrections Act ( P.L. 112-92 ), the enacting legislation and all subsequent amendments related to the DC OSP have been included in appropriations bills. Funding for the DC OSP is provided under the Federal Payment for School Improvement account under the District of Columbia title, which is included in the Financial Services appropriations act. This account was established with the enactment of the DC OSP in FY2004. Other changes to the DC OSP, such as program reauthorizations, have also been included in annual appropriations bills but have been detailed elsewhere in the appropriations bills. This discussion includes each relevant bill that has been enacted since the DC School Choice Incentive Act of 2003. While the discussion includes some information about provisions specifically affecting DC public schools and DC public charter schools, the focus of the discussion is on the DC OSP. Enactment of the Opportunity Scholarship Program In the Bush Administration's FY2004 budget submission, the Administration requested $75 million for a Choice Incentive Fund that would have provided competitive grants to states, local educational agencies (LEAs), and community-based organizations that expanded opportunities for parents of children who attend low-performing schools to attend higher-performing schools, including charter schools and private schools. Under the Administration's proposal, a portion of the funds would have been reserved for school choice programs in the District of Columbia. Both the Mayor of the District of Columbia (hereinafter referred to as the Mayor), Anthony Williams, and the President of the District of Columbia Board of Education, Peggy Cooper Cafritz, endorsed the concept of private school vouchers as a means of improving education options for DC public school students and as a means for transforming the city's faltering public school system. Local supporters of a voucher program insisted that the program had to be federally funded and could not result in a reduction of funds to the city's traditional public schools and public charter schools. Eleanor Holmes Norton, the District of Columbia's Delegate to Congress, subsequently criticized the Mayor's support for a federally funded voucher program, noting that the proposal was an affront to home rule. Other opponents of the voucher program argued that the program would reduce needed funding for public education and be of minimal benefit to most of the city's students. The establishment of a federally supported voucher program met with both support and resistance in Congress. In July 2003, the House Committee on Government Reform passed H.R. 2556 , the DC Parental Choice Incentive Act of 2003, by a vote of 22 to 21. The act would have created a federally funded scholarship program to serve low-income students in the District of Columbia. The program would have established a competitive grant program under which the Secretary of Education would award grants to eligible entities for the operation of one or more scholarship programs. Grantees would have awarded scholarships of up to $7,500 per academic year to students who are residents of the District of Columbia and whose family income did not exceed 185% of the poverty level to enable them to attend private elementary and secondary schools located in the District of Columbia. The program would have been authorized at $15 million for FY2004 and at such sums as may be necessary through FY2008. Later that month, the House Committee on Appropriations reported H.R. 2765 , which would have provided $10 million for a school choice program in the District of Columbia in the FY2004 appropriations bill for the District of Columbia. The program was substantively similar to the program proposed under H.R. 2556 . During floor debate on H.R. 2765 two voucher-related amendments were offered. The first, offered by Delegate Norton, would have eliminated the proposed voucher program. The amendment failed to pass by a vote of 203 to 203. A second amendment was offered by Representative Tom Davis that would have established eligibility criteria for students to receive a voucher and cap the maximum amount of funding a voucher could provide for any given school year. The amendment passed by a vote of 209 to 206. The Senate's version of the FY2004 District of Columbia appropriations bill ( S. 1583 ) included the DC Student Opportunity Scholarship Act of 2003. This bill was substantively similar to H.R. 2556 , and contained the framework on which the final provisions for the DC School Choice Incentive Act were based. It was placed on the Senate calendar but was never considered on the Senate floor. The Senate-passed version of H.R. 2765 , however, did not include funding to establish a scholarship program for low-income students. It did include funding for school improvement for public schools and public charter schools in the District of Columbia. The House-passed version of H.R. 2765 did not include funding for these specific purposes. The DC School Choice Incentive Act, which created the DC Opportunity Scholarship Program, was authorized and funded by the Consolidated Appropriations Act, 2004 ( H.R. 2673 ; P.L. 108-199 ), which included the FY2004 District of Columbia appropriations bill. Specific funding for the DC OSP was provided under the header "Federal Payment for School Improvement," which also included funding for DCPS for the improvement of public education and the SEO for the expansion of public charter schools. This approach, commonly known as the three-pronged approach to funding elementary and secondary education in the District of Columbia, was initially suggested by Mayor Williams when he asked for federal assistance for public education in the District of Columbia. The proposal was supported by the Administration and many Members of Congress. While concerns were raised during consideration of the bill that only the DC OSP—not school improvement funding for DCPS or public charter schools—was authorized for five years, each year the DC OSP has been funded, the federal government has also provided funds to support school improvement in DC public schools and DC public charter schools. DC School Choice Incentive Act (FY2004 Appropriations) The DC School Choice Incentive Act of 2003 ( P.L. 108-199 , Title III) authorized the DC OSP to provide the families of low-income students, particularly students attending elementary or secondary schools identified for improvement, corrective action, or restructuring under the ESEA, as amended by the No Child Left Behind Act (NCLB; P.L. 107-110 ), with expanded opportunities to enroll their children in schools of choice located in the District of Columbia. The program was authorized for FY2004 through FY2008 as a five-year demonstration program. An appropriation of $14 million was specified for FY2004; appropriations for the subsequent fiscal years were for "such sums as may be necessary." Under the DC OSP, the Secretary was permitted to award grants to eligible entities for a period of not more than five years to make scholarships to eligible students. Thus, the eligible entity functions as the local program administrator in practice. An eligible entity was defined as an educational entity of the DC government, a nonprofit organization, or a consortium of nonprofit organizations. In selecting one or more eligible entities to operate the program, the Department of Education (ED) was required to give priority to eligible entities who would most effectively give priority to eligible students who, in the school year preceding the school year for which the student is seeking a scholarship, were attending a school that was identified for improvement, corrective action, or restructuring under the ESEA. In addition, ED was required to give priority to eligible applicants that would target available resources to students and families who lacked the financial resources to take advantage of school choice options and that would provide students and families with the widest range of school options. The eligible entity was permitted to use up to 3% of the funds it receives for administrative expenses. Student eligibility for the program was open to children from families with incomes not exceeding 185% of the poverty line who were entering kindergarten through 12 th grade or who turned five years old by September 30 of the school year for which scholarships are awarded. Eligible students could apply to receive a scholarship valued at up to $7,500 to cover the costs of tuition, fees, and transportation expenses associated with attending participating private elementary and secondary schools located in the District of Columbia. Scholarships provided to students were considered assistance to the student (as opposed to the school) but were not treated as income of the parents for federal tax purposes or for determining eligibility for other federal programs. Students were required to reapply each year to participate in the program. Scholarship recipients remained eligible to continue to participate in the scholarship program, as long as their family income did not exceed 200% of the poverty level. Students enrolled in public schools identified for school improvement, corrective action, or restructuring under Title I-A of the ESEA were given priority in receiving scholarships; however, all students meeting program eligibility criteria were eligible for scholarships regardless of whether they were previously enrolled in a public or private school. In general, private schools participating in the DC OSP were prohibited from discriminating against program participants or applicants on the basis of race, color, national origin, religion, or gender. The latter prohibition did not apply, however, to single sex schools that were operated by, supervised by, controlled by, or connected to a religious organization to the extent that nondiscrimination based on gender would be inconsistent with the religious tenets or beliefs of the school. In addition, nothing in the DC School Choice Incentive Act allowed participating schools to alter or modify the provisions of the Individuals with Disabilities Education Act. With respect to sectarian private schools that accepted scholarship students, nothing in the School Choice Incentive Act prohibited the school from hiring in a manner consistent with the school's religious beliefs or required the school to alter its mission or remove religious symbols from its building. All participating private schools were required to comply with requests for data and information with respect to program evaluations required by the DC School Choice Incentive Act. The DC School Choice Incentive Act required the DC OSP to be evaluated annually. The Secretary and Mayor were required to jointly select an independent entity to conduct these evaluations. The independent entity evaluating the program was required to measure the academic achievement of participating students, use the same measurement to assess participating students as is used to assess students in DC public schools, and work with the eligible entity to ensure that the parents of all students who apply for a scholarship, regardless of whether a scholarship is received, agree that the student will participate in measurements conducted by the independent evaluator for the period for which the student applied for or received a scholarship. The evaluation was required to compare the academic achievement of scholarship recipients with students in the same grades attending DC public schools and the eligible students who applied for but did not receive a scholarship. The evaluation also had to examine the extent to which the program expanded choice options for parents; the reasons parents chose to participate in the program; retention rates, dropout rates, graduation rates, and college admissions rates for participating students with students of similar backgrounds who did not participate in the scholarship program; the impact of the program on students and public elementary and secondary schools in DC; the safety of the participating private schools attended by scholarship recipients compared with schools attended by students who were not participating in the DC OSP; and other issues as designated by the Secretary. FY2004 Appropriations The Consolidated Appropriations Act, 2004 ( P.L. 108-199 ), which authorized the DC School Choice Incentive Act, also appropriated funds for the DC OSP as well as funds for DCPS and the SEO for DC public charter schools. P.L. 108-199 specified that up to $1 million of the funds appropriated for the DC OSP could be used to administer and fund assessments. There were also requirements that applied specifically to DCPS. FY2005 Appropriations The District of Columbia Appropriations Act, 2005 ( P.L. 108-335 ) provided appropriations for the DC OSP, DCPS, and the SEO for DC public charter schools. While several statutory requirements were attached to the funding provided to charter schools and DCPS, with respect to the funds appropriated for the DC OSP, the law required that up to $1 million could be used to administer and fund required assessments. FY2006 Appropriations The Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006 ( P.L. 109-115 ) provided funding for the DC OSP, DCPS, and the SEO for DC public charter schools for FY2006. With respect to the DC OSP, it included a provision that permitted up to $1 million provided for scholarships to be used to administer and fund assessments. FY2007 Appropriations The Revised Continuing Appropriations Resolution, 2007 ( P.L. 110-5 ) authorized a long-term continuing resolution for FY2007 appropriations. This provided funding for the DC OSP, DCPS, and the SEO for DC public charter schools for FY2007. In addition, under the long-term continuing resolution, the provisions included in the FY2006 appropriations act relevant to the DC School Choice Incentive Act remained in effect with the addition of a new requirement related to charter schools. FY2008 Appropriations The Consolidated Appropriations Act, 2008 ( P.L. 110-161 ) provided funding for the DC OSP, DCPS, and the SEO for DC public charter schools for FY2009. With respect to the DC OSP, it permitted up to $1.8 million of the funds provided for the scholarship program to be used to administer and fund assessments. FY2009 Appropriations The Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) provided funding for the DC OSP, DCPS, and the SEO for DC public charter schools. With respect to the DC OSP, it added additional requirements for schools to be eligible to participate in the program and included language limiting the appropriation of funds for the program beyond FY2010. P.L. 111-8 added two requirements for participating private schools. First, participating private schools were required to have and maintain a valid certificate of occupancy issued by the District of Columbia. Second, a core subject matter teacher of scholarship recipients was required to hold a four-year bachelor's degree. Statutory language did not require that the bachelor's degree be held in the subject area of instruction. That is, it was not required, for example, that only a teacher with a four-year bachelor's degree in English can teach English classes for scholarship recipients. P.L. 111-8 further specified that the use of any funds in any act for scholarships after the 2009-2010 school year shall be available only upon reauthorization of the program and the adoption of legislation by the District of Columbia approving such reauthorization. Senator Ensign (NV) offered an amendment ( S.Amdt. 615 ) to strike the requirement that additional funding could only be provided to the program if the program was reauthorized by Congress and subsequently approved by the District of Columbia. He noted that other federal education programs, including the Higher Education Act, continued to receive federal funding despite having expired authorizations. Further, he argued that the final program evaluation had not been completed and ending the program after the 2009-2010 school year would force students, including those who had been scholarship recipients for several years, to find new schools. The amendment failed to pass by a vote of 39-58. The explanatory statement accompanying P.L. 111-8 specified that appropriations provided for opportunity scholarships in the FY2009 Omnibus Appropriations Act could only be used to provide scholarships for students currently participating in the program . That is, the funds could not be used to expand program participation. The explanatory statement also directed the Chancellor of DCPS to take steps to minimize the potential disruption and ensure the smooth transition for any scholarship recipients seeking to enroll in the public school system as a result of changes made to the DC OSP after the 2009-2010 school year. FY2010 Appropriations The Omnibus Appropriations Act, 2010 ( P.L. 111-117 ) provided funding for the DC OSP, DCPS, and the SEO for DC public charter schools. With respect to the DC OSP, it did not apply the provision in P.L. 111-8 that required that DC OSP funds be available only upon reauthorization of the program and the adoption of legislation by the District of Columbia to the FY2010 appropriations. Of the funds available for the DC OSP, the law specified that up to $1 million could be used to administer and fund assessments and up to $1 million could be used to administer student testing to allow for comparisons of the academic performance of participating private schools enrolling scholarship participants. Consistent with the previous year's appropriations language, P.L. 111-117 maintained that the DC OSP funds could only be used to provide opportunities to students who received scholarships in the 2009-2010 school year. P.L. 111-117 also added additional requirements for participating private schools. Participating private schools were required to be in compliance with accreditation and other standards under the District of Columbia compulsory school attendance laws that applied to educational institutions that are not affiliated with DCPS. In addition, the Secretary was required to submit a report to Congress by June 15, 2010, that provided information on the academic rigor and quality of each participating school. To obtain comparable data for the report, the Secretary was required to ensure that all eligible scholarship recipients participated in the same academic performance assessments as students enrolled in DCPS during the 2009-2010 school year. The Secretary was also required to ensure that at least two site inspections are conducted at each participating school on an annual basis. Scholarships for Opportunity and Results (SOAR) Act The SOAR Act was authorized under Division C of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ). The SOAR Act replaced the DC School Choice Incentive Act, reauthorized the DC OSP, and authorized appropriations for DC public schools and DC public charter schools for FY2012 through FY2016. Many of the provisions included in the SOAR Act continue to be reflected in current law (see previous discussion of current law provisions), so they are not discussed in detail in this section. Subsequent acts that amended the SOAR Act are discussed below, including information on the changes they made to the SOAR Act. FY2011 Appropriations The Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) provided FY2011 appropriations for the DC OSP, DC public schools, and DC public charter schools. It specified that up to $1 million could be used to administer and fund assessments and also specified that no funds could be used to administer student testing to allow for comparisons of the academic performance of participating private schools enrolling scholarship participants. In addition, the act removed the requirement that DC OSP funds be used to provide scholarships only to students who had received scholarships during the 2009-2010 school year. It further specified that scholarships could be provided to eligible students regardless of whether they had received a scholarship in any prior school year. The act did continue to require the Secretary to submit a report, detailing the academic rigor and quality of each participating private school and the associated assessments that were included in the FY2010 appropriations. Finally, the act changed the requirement that the Secretary ensure that site visits were conducted at least twice annually at participating private schools to requiring that the Secretary ensure that site visits are conducted annually. FY2012 Appropriations The Consolidated Appropriations Act, 2012 ( P.L. 112-74 ) provided FY2012 appropriations for the three parts of the SOAR Act. The act did not include any DC OSP specific provisions beyond appropriating funds for the program. SOAR Technical Corrections Act The SOAR Technical Corrections Act (SOAR TCA; P.L. 112-92 ) made changes to three sections of the SOAR Act. First, with respect to the Section 3007 requirement that teachers of core academic subjects who are teaching participating students must hold a baccalaureate degree or its equivalent, the SOAR TCA specified that the term "core academic subjects" was to be defined as it was in the ESEA Section 9101(11). Second, the SOAR TCA added requirements to Section 3008 regarding the administration of nationally norm-referenced standardized tests. The act required IES to administer the relevant assessment to students participating in the evaluation, unless the student is attending a participating private school that is administering the same assessment. If the participating private school is administering the assessment to an eligible student, it must make the assessment results available to the Secretary as necessary for the evaluation of the DC OSP. Finally, the SOAR TCA amended the DC OSP evaluation requirements included in Section 3009. With respect to the responsibilities of the Institute of Education Sciences, requirements were added to align the use of a grade appropriate, nationally norm-referenced standardized test with the new provisions added to Section 3008 of the SOAR Act by the SOAR TCA. The SOAR TCA also added language to the provision that IES was required to work with the eligible entity to ensure that each student who applied for a scholarship, regardless of whether a scholarship was received, and the parents of such student agree to participate in the measurements given by the IES to specify that the provision applied only to students asked to participate in the measurements by IES. FY2013 Appropriations The Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ) provided FY2013 appropriations for the three parts of the SOAR Act. The act did not include any DC OSP specific provisions beyond appropriating funds for the program. FY2014 Appropriations The Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) provided FY2014 appropriations for the three parts of the SOAR Act. The act did not include any DC OSP specific provisions beyond appropriating funds for the program. FY2015 Appropriations The Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) provided funding for the three parts of the SOAR Act for FY2015. It also specified that of the funds provided for the DC OSP, $3 million had to be used for administrative expenses, student academic assistance, and evaluation. DC OSP School Certification Requirements Act Section 917 of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), amended the SOAR Act to include new requirements that private schools have to meet to participate in the DC OSP, including accreditation requirements for the first time. A participating private school was required to be provisionally or fully accredited by a national or regional accrediting agency that is recognized in the DC School Reform Act of 1995 or any other body deemed appropriate by the Office of the State Superintendent of Education for the purpose of accrediting an elementary or secondary school. However, if the private school was participating in the DC OSP as of the day prior to the enactment of the DC OSP School Certification Requirements Act and did not meet the aforementioned accreditation requirement, the school could remain eligible to participate in the DC OSP if not later than one year after such date of enactment, the school had to pursue accreditation from one of the aforementioned accrediting agencies and not later than five years after such date of enactment be provisionally or fully accredited by such accrediting agency. The eligible entity was permitted to grant a one-time, one-year extension of this requirement to a participating private school that could demonstrate that it would be awarded accreditation prior to the end of the one-year extension period. A private school that was not participating in the DC OSP prior to the enactment of such act was not permitted to participate in the program unless it was actively pursuing provisional or full accreditation from one of the aforementioned accrediting agencies and met all of the other requirements for participating private schools. The eligible entity was directed to assist the parents of a participating eligible student in identifying, applying to, and enrolling in another participating private school if the student was enrolled in a participating private school that could not meet the requirements of the act or was enrolled in a participating private school that ceases to participate in the DC OSP. The eligible entity was also required to ensure that each participating private school submits within five years after the date of enactment of the DC OSP School Certification Requirements Act, a certification that the school has been awarded provisional or full accreditation or has received a one-year accreditation extension from the eligible entity. In addition to the accreditation requirements, all participating public schools were required to conduct criminal background checks on school employees who have direct and unsupervised interaction with students. The participating private schools were also required to comply with all data and information requests regarding the DC OSP reporting requirements. FY2016 Appropriations The Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) provided funding for all three parts of the SOAR Act for FY2016. With respect to the DC OSP, the statutory language also required that the Secretary follow the priorities for awarding scholarships and make them available to eligible students, including those who were not offered a scholarship during any previous school year. Further, the law required that $3.2 million be used for administrative expenses, student academic assistance, and evaluation. SOAR Funding Availability Act The SOAR Funding Availability Act, Section 162 of the Further Continuing and Security Assistance Appropriations Act, 2017 ( P.L. 114-254 ), amended the SOAR Act in multiple ways. First, it amended Section 3007 of the SOAR Act to require that any funds appropriated for the DC OSP that remained available on the date of enactment of the SOAR Availability Act and any remaining funds appropriated on or after the date of enactment by the first day of the subsequent fiscal year had to be used by the eligible entity administering the program in at least one of two ways. First, the eligible entity was required to use at least 95% of these funds to provide additional scholarships or to increase the amount of the scholarships during such year. Second, the eligible entity was permitted to use not more than 5% of such funds for administrative expenses, parental assistance, or tutoring. If funds were used for the latter purposes, the funds had to be in addition to any funds that the eligible entity was already required to use for those purposes during that year. Further, the law specified that all funds appropriated for scholarships at any time would remain available until expended. FY2017 Appropriations and SOAR Reauthorization Act The Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) provided FY2017 appropriations for the DC OSP, DC public schools, and DC public charter schools. It also reauthorized the SOAR Act. The law continued the same requirements regarding the following of priorities and awarding scholarships to eligible children as well as using $3.2 million for administrative expenses, parental assistance, student academic assistance, and evaluation. The law made numerous changes with respect to reauthorizing the SOAR Act. As these changes are included in the previous discussion of current law provisions, this discussion provides only an overview of the changes made to the SOAR Act by the SOAR Reauthorization Act. The law repealed the DC Opportunity Scholarship Program School Certification Requirements Act included in P.L. 114-113 . The SOAR Reauthorization Act included requirements related to provisions that participating private schools must meet to participate in the DC OSP, including provisions related to accreditation, background checks, and complying with data and information requests. The law added prohibitions on the imposition of limits on eligible students participating in the DC OSP. For example, the Secretary was prohibited from preventing an otherwise eligible student from participating in the DC OSP based on the type of school the student previously attended; whether a student previously received a scholarship or participated in the program, regardless of how many years a student received but did not use a scholarship; and whether a student previously participated in a DC OSP evaluation control group. The law limited the number of site visits at each participating school to one visit. The law required the eligible entity to ensure the financial viability of participating public schools in which 85% or more of the enrolled students were using a scholarship to attend. The law added new requirements related to internal fiscal and quality controls and financial reporting for the eligible entity serving as the local program administrator. The law updated references to the District of Columbia's accountability system used to comply with the requirements of Title I-A of the ESEA and clarified that eligible students who had previously attended a private school could still receive a scholarship. The law also added a definition of "core subject matter" and dropped the reference to "core academic subjects," as the definition was no longer included in the ESEA. The law included accreditation requirements for participating private schools. The law specified that the eligible entity must treat a participating eligible student who received, but did not use, a scholarship in a previous year as a renewal student and not as a new applicant. The law made some changes to administrative expenses and uses of funds. For example, the law changed the requirement that not more than 3% of the funds available for the DC OSP could be reserved for administrative expenses to requiring $2 million to be made available each fiscal year for administrative expenses and parental assistance. The law made numerous changes to the DC OSP program evaluation requirements, including with respect to the duties of the Secretary and Mayor, the duties of IES, and the issues to be evaluated. For example, the law amended the requirement that the Secretary ensure that the DC OSP evaluation was conducted "using the strongest possible research design" to require that an "acceptable quasi-experimental research design" be used. The law included provisions prohibiting the disclosure of personal information. It also included transition provisions requiring the termination of previous evaluations and provisions regarding new evaluations. A provision was also added requiring the Mayor to ensure IES has all the information needed to carry out the evaluation. The law gave the Secretary the authority to withhold funds from DC public schools or DC public charter schools under certain circumstances and included new requirements regarding the distribution of funds to public charter schools. The law required the Secretary and the Mayor to review their MOU in specific ways. FY2018 Appropriations The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) provided FY2018 appropriations for the DC OSP, DC public schools, and DC public charter schools. It included the same requirements as the FY2017 act regarding priorities and the awarding of scholarships to eligible children and using $3.2 million for administrative expenses, parental assistance, student academic assistance, and evaluation. FY2019 Appropriations The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided FY2019 appropriations for the DC OSP, DC public schools, and DC public charter schools. It included the same requirements as the FY2017 act regarding priorities and the awarding of scholarships to eligible children. It allowed up to $1.2 million of the funds provided for the DC OSP to be used for administrative expenses, parental assistance, and student academic assistance, and up to $500,000 of the funds provided for the DC OSP to be used for evaluations.

The District of Columbia Opportunity Scholarship Program (DC OSP) is the only federally funded voucher program for elementary and secondary education. It operates exclusively in the District of Columbia. The Consolidated Appropriations Act, 2004 (P.L. 108-199), which included the FY2004 District of Columbia Appropriations Act, also included the now-repealed DC School Choice Incentive Act of 2003. The DC School Choice Incentive Act initially authorized the DC OSP. Appropriations were authorized for FY2004 through FY2008. The DC OSP provides scholarships to eligible students to attend participating private elementary or secondary schools, and is administered by the U.S. Department of Education (ED). The FY2004 appropriations act provided funding for the DC OSP for the first time and also, for the first time, provided funding for District of Columbia Public Schools (DCPS) for the improvement of public education, and funding for the District of Columbia State Education Office for public charter schools. Funding for DCPS and public charter schools was not addressed in the DC School Choice Incentive Act of 2003. However, for every year that Congress has provided funding for the DC OSP, it has also provided funding for the DC public schools and DC public charter schools. The provision of federal funds for the DC OSP, DC public schools, and public charter schools is commonly referred to as the "three-pronged approach" to supporting elementary and secondary education in the District of Columbia. Reauthorization The DC OSP has been reauthorized twice. It was reauthorized by the Scholarships for Opportunity and Results (SOAR) Act (P.L. 112-10) in 2011, which also repealed the DC School Choice Incentive Act of 2003. The SOAR Act authorized appropriations from FY2012 through FY2016 for the DC OSP, DC public schools, and DC public charter schools. The DC OSP was subsequently reauthorized by the SOAR Reauthorization Act (P.L. 115-31), which amended the SOAR Act and extended the authorization of appropriations for the DC OSP, DC public schools, and DC public charter schools through FY2019. Changes to the DC OSP have also been made primarily through appropriations acts in the intervening fiscal years. For FY2019, $52.5 million was appropriated for the SOAR Act, with $17.5 million each provided to the DC OSP, DCPS, and the DC State Education Office. Participation Based on data available from Serving Our Children, the current local DC OSP administrator, since the program's inception in the 2004-2005 school year, over 21,057 applications have been submitted, and over 8,400 scholarships have been awarded. For the 2017-2018 school year, over 3,900 applications for scholarships were received from new applicants and returning students. Over 1,650 students received and used a scholarship at 44 of 48 participating private schools that school year. While the value of the scholarship has changed over time, for the 2018-2019 school year students may receive up to $8,857 to attend a participating private elementary or middle school and up to $13,287 to attend a participating private high school. Evaluation The DC OSP has been evaluated by two federal agencies: the Department of Education (ED) and the Government Accountability Office (GAO). The evaluations conducted by these two agencies differed considerably in terms of purpose and scope. ED evaluated the participation of schools, parents, and students in the DC OSP, as well as the effectiveness of the program on student achievement and other outcome measures. GAO evaluated certain accountability mechanisms and whether they were operating as intended, such as the program's use of funds and general adherence to statutory requirements. GAO also evaluated how ED and the District of Columbia fulfilled their roles and responsibilities for the DC OSP. The impact evaluations conducted by ED found mixed results. These evaluations focused on four outcome measures: (1) reading and mathematics achievement, (2) parent and student satisfaction, (3) parent and student perceptions of school safety, and (4) parental involvement. The GAO evaluations revealed issues with the way the DC OSP was being administered by the first two local program administrators, as well as concerns about ED's oversight of the program.

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A s the Supreme Court has observed, while the First Amendment protects the "freedom of speech," it "does not protect violence." But when speech promotes violence, a tension can form between the values of liberty and security. In an oft-quoted passage from a dissenting opinion, Justice Robert Jackson argued that the problems this tension creates are not insurmountable but must be confronted with a dose of pragmatism: a government can temper "liberty with order," but to treat free speech as absolute threatens to "convert the constitutional Bill of Rights into a suicide pact." While Justices of the Court have often disagreed over when free speech rights must yield to the government's interests, when it comes to speech promoting violence, the Court has rejected an all-or-nothing approach. Over the past 50 years, the Court has drawn a line between speech that advocates violence in the abstract and speech that facilitates it in a specific way, with the former receiving more robust constitutional protections. It has done so because, in the Court's view, upholding the First Amendment requires preserving "uninhibited, robust, and wide-open" debate on public issues, even if that means allowing individuals to express ideas that are "deeply offensive to many." In more recent years, some have begun to question whether and how the Court's decisions in this area should apply to speech online. The "vast democratic fora of the Internet" have provided ample platforms not only for those seeking to debate issues or express controversial views, but also for individuals and entities planning violent attacks or threatening violence online. Many policymakers and commentators, including some Members of Congress, have expressed concerns about the proliferation of social media content promoting terrorism and violence and the influence such speech can have on other internet users. Some have called on Congress to restrict or even prohibit such content, which raises the question of whether the First Amendment would allow such regulation. A number of legal scholars have explored these issues, and some have proposed recommendations to Congress about how best to address these concerns in accordance with the First Amendment. Although governmental efforts to combat online content promoting terrorism or violence could take a number of forms, this report focuses on the First Amendment implications of imposing civil or criminal liability on individual internet users (i.e., the originators of the content) rather than the social media companies or internet service providers themselves. As such, it focuses on the underlying First Amendment issues that are likely to be common to both forms of government action, but does not discuss the additional considerations attendant to regulating a social media platform, which are the subject of another CRS report. The report begins with some background on the use of the internet by terrorist groups and the reported influence of online content on certain individuals accused of committing violent attacks. It then considers the question of who can invoke the First Amendment by analyzing whether its free speech protections apply to foreign nationals when they post online content from abroad, for example, in circumstances such as U.S. prosecutions where online content is introduced as evidence of a crime. The report then discusses the overarching First Amendment principles that bear on what the government may regulate under the First Amendment, including (1) the distinction between regulating conduct and speech; (2) the presumed invalidity of content-based laws; and (3) relevant "unprotected" categories of speech that generally can be restricted because of their content. The report next discusses the strict scrutiny standard and the overbreadth doctrine, which impose limitations on how the government can regulate by requiring that laws restricting speech be sufficiently tailored and not so broad as to chill protected speech. Finally, the report concludes with some considerations for Congress in evaluating the constitutionality of regulating online content promoting terrorism or violence. Background According to the Federal Bureau of Investigation (FBI), the internet and, in particular, the use of social media are among the key "factors [that] have contributed to the evolution of the terrorism threat landscape" since the September 11, 2001, terrorist attacks. Certain organizations that track or study hate crimes also cite the internet as a tool used to intimidate and harass people because of their race, ethnicity, religion, sexual orientation, or other attributes. At the same time, some commentators have questioned the purported link between what some refer to as "hate speech" and bias-motivated crimes or have expressed concern that focusing on the ideological motivations of speakers has led to calls to criminalize protected speech divorced from any criminal intent or action. While the nature or extent of the relationship between online speech and criminal conduct may be disputed, the use of the internet by terrorist groups is well documented. U.S.-designated terrorist groups such as the Islamic State (also known as ISIS or ISIL), Al Qaeda, Hamas, and Al Shabaab, have long used social media to disseminate their ideologies and recruit new members to their causes. The Islamic State group has used Twitter and YouTube to disseminate videos of its fighters executing prisoners and to claim credit for attacks around the world. Al Shabaab used Twitter to claim credit for the 2013 attack on the Westgate Shopping Mall in Nairobi, Kenya, and to distribute information about the attack while it unfolded. News outlets are also beginning to examine how the alleged perpetrator of the March 2019 terrorist attacks on two mosques in New Zealand may have used social media to announce and promote his actions. In addition, the internet reportedly has played a key role in certain individuals' personal "journey[s] to terrorism" or violent extremism —a process often referred to as "radicalization." For example, the person convicted of killing nine black parishioners in a South Carolina church in 2015 was said to have "self-radicalized" online, adopting a "white supremacy extremist ideology, including a belief in the need to use violence to achieve white supremacy." In 2015, it was reported that "the digital legacy" of Anwar al Awlaki—a U.S. citizen who became closely involved with Al Qaeda's affiliate in Yemen and was targeted and killed by a U.S. drone strike there—influenced the ideologies of certain individuals accused or convicted of terrorist activities, including the Boston Marathon bombers. Speech advocating violence and terrorism is prohibited by the terms of service of Facebook, Twitter, and certain other social media outlets. Such prohibitions are permissible under current judicial interpretations of First Amendment law because these platforms are operated by private actors, and the First Amendment constrains only state (i.e., government) action. Although the more established sites reportedly have increased their efforts to disable accounts that are associated with terrorist groups or remove content promoting terrorism or violence, it is not clear how comprehensive or successful these efforts have been. Moreover, users banned from one platform may move to another online forum that does not have the same restrictions, sometimes finding a community of like-minded individuals who reinforce or escalate their violent rhetoric (sometimes referred to as "echo chambers"). As previously noted, this report focuses on the First Amendment considerations relevant to government regulation of online content promoting terrorism or violence. Because of the global reach of many online platforms, this report begins with the threshold question of the First Amendment's reach, and in particular, whether it applies to foreign nationals posting online content from outside of the United States. The First Amendment and Foreign Speakers While the First Amendment may extend to U.S. citizens speaking abroad or foreign nationals speaking within the United States under some circumstances, the Supreme Court has not directly opined on whether the First Amendment applies to online content that a foreign national posts while located outside of the United States. Nevertheless, the Court's decisions involving the extraterritorial reach of other constitutional protections, as well as lower court decisions involving the First Amendment rights of foreign nationals, suggest that foreign nationals may face barriers in claiming First Amendment protections for such speech. The Supreme Court's decision in United States v. Verdugo-Urquidez —though it involves the Fourth Amendment—is instructive. In that case, the Court held that the Fourth Amendment, which "prohibits 'unreasonable searches and seizures,'" did not extend to the search of a Mexican citizen's home in Mexico by U.S. authorities. The Court reasoned that in contrast to the Fifth and Sixth Amendments, which concern trial rights and procedures, the Fourth Amendment applies regardless of the prospect of trial, and "a violation of the Amendment is 'fully accomplished' at the time of an unreasonable governmental intrusion." As such, any violation would have "occurred solely in Mexico." Four of the five Justices who joined the majority opinion reasoned that the Fourth Amendment reserves its protections to "the people," which they interpreted as a "term of art employed in select parts of the Constitution." In the view of those Justices, a textual analysis of the Constitution suggested that "'the people' protected by the Fourth Amendment, and by the First and Second Amendments," meant "a class of persons who are part of a national community or who have otherwise developed sufficient connection with this country to be considered part of that community." Because the defendant had "no voluntary attachment to the United States" at the time of the search, he could not claim the protections of the Fourth Amendment. At least two sitting Supreme Court justices—Justices Clarence Thomas and Brett Kavanaugh—have suggested that the First Amendment does not apply to foreign nationals abroad, citing to Verdugo-Urquidez . The discussion that more directly addressed the applicability of free speech protections to foreign nationals came from then-Judge Brett Kavanaugh in a 2014 case involving the United States' prosecution of an Al Qaeda associate. In that case, a U.S. military commission convicted a personal assistant to Osama bin Laden for, among other things, conspiracy to commit war crimes. The defendant "claim[ed] that he was unconstitutionally prosecuted for his political speech, including his production of [an] al Qaeda recruitment video celebrating the terrorist attack on the U.S.S. Cole ." When the case, Al Bahlul v. United States , first reached the full U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), the court ruled on a different legal question and remanded the case for consideration of the First Amendment challenge. However, Judge Kavanaugh authored a separate opinion, in part to address the First Amendment's applicability. He stated that "although non-U.S. citizens arguably may have some First Amendment rights at [a U.S. military base in] Guantanamo or in other U.S. territories for any speech they engage in there , non-U.S. citizens have no First Amendment rights abroad in foreign countries." The Supreme Court has applied the Constitution to aliens in the United States and in U.S. territories, but has not extended constitutional rights to aliens in foreign countries. See Boumediene v. Bush , 553 U.S. 723, 768-71 (2008) (applying Article I, Section 9 to U.S. Naval base at Guantanamo, which was "[i]n every practical sense . . . not abroad"); United States v. Verdugo-Urquidez , 494 U.S. 259 (1990) (declining to apply Fourth Amendment to search and seizure of alien's property in Mexico); Johnson v. Eisentrager , 339 U.S. 763 (1950) (declining to apply habeas corpus right to U.S.-controlled military prison in Germany); see also Al Maqaleh v. Hagel , 738 F.3d 312 (D.C. Cir. 2013) (declining to apply habeas corpus right to U.S. military base in Afghanistan); Al Maqaleh v. Gates , 605 F.3d 84 (D.C. Cir. 2010) (same). Therefore, [the defendant] had no First Amendment rights as a non-U.S. citizen in Afghanistan when he led bin Laden's media operation. Two years later, the full D.C. Circuit took up the Al Bahlul case again following remand. This time, the court squarely rejected the defendant's First Amendment challenge, citing the concurring opinions of Judge Kavanaugh, Judge Patricia Millett, and Judge Robert Wilkins, who all concluded that the defendant could not avail himself of the First Amendment's protections. Thus, as the D.C. Circuit phrased it in a prior decision, "aliens beyond the territorial jurisdiction of the United States are generally unable to claim the protections of the First Amendment." Nevertheless, "[i]n a variety of contexts th[e] Court has referred to a First Amendment right to 'receive information and ideas.'" In order to preserve this right, the Court has largely rejected governmental attempts to control information because of how the government views that information. For example, in Lamont v. Postmaster Gen eral , the Court held that a federal statute requiring the Postal Service to withhold foreign mailings classified as "communist political propaganda" from addressees unless they requested delivery of the mailings in writing amounted "to an unconstitutional abridgment of the addressee's First Amendment rights." The Court concluded that the "regime of this Act is at war with the 'uninhibited, robust, and wide-open' debate and discussion that are contemplated by the First Amendment." Whether or when the government must observe the First Amendment in its interactions with foreign nationals in order to preserve the rights of U.S. citizens is uncertain. As then–D.C. Circuit Judge Ruth Bader Ginsburg noted in a dissenting opinion, "[t]he [F]irst [A]mendment secures to persons in the United States the respect of our government for their right to communicate and associate with foreign individuals and organizations." Referring to Lamont , she observed that "the first federal law the Supreme Court ever held violative of the [F]irst [A]mendment involved a condition on international correspondence—a restraint on delivery of mail from abroad." While finding it unnecessary to decide in that case "whether the [F]irst [A]mendment limits the actions of U.S. officials in their dealings with foreign parties," Judge Ginsburg noted the following principle from the Restatement (Third) of Foreign Relations : The provisions of the United States Constitution safeguarding individual rights generally control the United States government in the conduct of its foreign relations as well as in domestic matters, and generally limit governmental authority whether it is exercised in the United States or abroad, and whether such authority is exercised unilaterally or by international agreement. Judge Ginsburg concluded by stating that she "would hesitate long before holding that in a United States-foreign citizen encounter, the amendment we prize as 'first' has no force in court." Based on these principles and decisions, there may be some cases involving social media content posted by foreign nationals that implicate the free speech rights of U.S. citizens, who may be members of the particular online forum or otherwise have access to it. However, there could be prudential limitations on a foreign national's ability to assert those rights. And, even if a court concludes that a particular foreign national has standing in a given case, it is not clear that the First Amendment would protect his or her online activities based solely on the purported interests of other Internet users. In contrast, the Supreme Court has recognized that U.S. citizens regularly exercise First Amendment rights when communicating online, so free speech protections are more directly in play when considering the United States' regulation of its own citizens' online speech. Accordingly, the remainder of this report discusses the principles that bear on the government's ability to regulate online content promoting terrorism or violence when there is no dispute about the First Amendment's applicability. The Conduct Versus Speech Distinction A key initial consideration in evaluating whether a law or a particular application of that law comports with the First Amendment is whether the law at issue regulates conduct or speech . The distinction is sometimes elusive because speech may occur during a course of conduct, and actions themselves can sometimes be inherently expressive or "symbolic" speech protected by the First Amendment. As a potential starting point, a law typically regulates conduct if it dictates what the regulated persons or entities "must [or must not] do . . . not what they may or may not say ." But the touchstone for deciding whether such a law implicates the First Amendment appears to be whether the law targets expression. To determine whether a law targets expression and depending on the facts of the case, a court might consider (1) the express terms (i.e., "the face") of the law, (2) the purpose of the law, or (3) its practical application to see whether the law is directed at certain content or speakers or applies to the challenger's activities solely as a result of what that party seeks to communicate. If a law does not target expression, the First Amendment extends the government more leeway to regulate that activity even if the regulation incidentally burdens speech. As the Supreme Court has explained, [R]estrictions on protected expression are distinct from restrictions on economic activity or, more generally, on nonexpressive conduct. . . . [T]he First Amendment does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech. That is why . . . "an ordinance against outdoor fires" might forbid "burning a flag" . . . . However, the conduct-focused nature of a law does not necessarily preclude First Amendment review where the government seeks to penalize a person under that law because of ideas or messages that person communicated. The Supreme Court applied these principles in its 2010 decision in Holder v. Humanitarian Law Project , which involved the constitutionality of a federal statute concerning the provision of material support to U.S.-designated foreign terrorist organizations (FTOs). The statute imposes criminal penalties on anyone who "knowingly provides material support or resources to [an FTO], or attempts or conspires to do so." It defines "material support or resources" in relevant part as "any property, tangible or intangible, or service, including . . . training, expert advice or assistance, . . . false documentation or identification, communications equipment, . . . personnel (1 or more individuals who may be or include oneself) . . . , except medicine or religious materials." In Humanitarian Law Project , a group of U.S. citizens and domestic organizations brought a preenforcement challenge to the law, arguing that it would be unconstitutional to punish them for the types of support that they wished to provide to two FTOs. Specifically, the plaintiffs sought to (1) train members of one FTO on how to use humanitarian and international law in peaceful dispute resolution; (2) teach that FTO's members how to petition international organizations for relief; and (3) engage in political advocacy for the rights of certain groups, including by supporting one of the FTOs "as a political organization" for this purpose. After concluding that most of these activities clearly constituted "training" or "expert advice or assistance" under the law, the Court proceeded to address the First Amendment implications of applying the statute to the plaintiffs' activities. The Humanitarian Law Project Court rejected the "extreme positions" advanced by both sides. On the one hand, it rejected the plaintiffs' contention that the statute banned their "pure political speech," noting that the law did not prevent the plaintiffs from becoming members of the FTOs, speaking and writing freely about these organizations, or engaging in independent advocacy. The Court reasoned that "Congress has prohibited 'material support,' which most often does not take the form of speech at all. And when it does, the statute is carefully drawn to cover only a narrow category of speech to, under the direction of, or in coordination with foreign groups that the speaker knows to be terrorist organizations." On the other hand, the Court rejected the government's position that applying the law to the plaintiffs' activities implicated only conduct, not speech. It reasoned that the law itself "regulates speech on the basis of its content" because whether plaintiffs are subject to prosecution "depends on what they say." Referring to the statutory definitions of "training" and "expert advice or assistance," the Court noted that if the plaintiffs' speech to the organizations "imparts a 'specific skill' or communicates advice derived from 'specialized knowledge'—for example, training on the use of international law or advice on petitioning the United Nations—then it is barred." Even if the law " generally functions as a regulation of conduct," the Court reasoned, in these circumstances, "as applied to plaintiffs the conduct triggering coverage under the statute consists of communicating a message." As discussed in more detail infra , the Court ultimately held that the material support statute did not violate the First Amendment as applied to the plaintiffs' proposed activities because the challenged statutory prohibitions were necessary to further the government's asserted interests in combating terrorism. Unlike a law involving "material support," which, in the Court's view, "most often" takes the form of conduct rather than speech, a law that expressly prohibits or restricts, for example, social media posts promoting terrorism or violence would more clearly involve speech because of its central focus on communications. Although the Supreme Court has not had many occasions to consider laws that expressly restrict online content, in a First Amendment challenge to a federal law that restricted the online transmission of certain "indecent" and "patently offensive" content, both the parties and the Court evaluated the law as regulating speech, not conduct. Content-Based Laws Once it is established that a law regulates speech, the next consideration is whether it does so on the basis of content. First Amendment law historically has distinguished between laws that restrict speech because of its content or viewpoint and those that do not draw content-based distinctions or that have a content-neutral justification. Although the Justices of the Court have sometimes disagreed over whether a particular law is content-based for First Amendment purposes, the Court has largely settled on the following definition: Government regulation of speech is content based if a law applies to particular speech because of the topic discussed or the idea or message expressed. This commonsense meaning of the phrase "content based" requires a court to consider whether a regulation of speech "on its face" draws distinctions based on the message a speaker conveys. Some facial distinctions based on a message are obvious, defining regulated speech by particular subject matter, and others are more subtle, defining regulated speech by its function or purpose. Courts scrutinize content-based distinctions because of the potential for the government to silence speech with which it disagrees by prohibiting or imposing special burdens on an entire category of speech: "content discrimination 'raises the specter that the Government may effectively drive certain ideas or viewpoints from the marketplace.'" Justice Anthony Kennedy wrote in a case involving federal restrictions on the transmission of sexually explicit cable programming: "The history of the law of free expression is one of vindication in cases involving speech that many citizens may find shabby, offensive, or even ugly. It follows that all content-based restrictions on speech must give us more than a moment's pause." The Supreme Court has repeatedly stated that content-based laws are "presumptively unconstitutional" and subject to the Court's most stringent review, at least insofar as they involve fully protected speech. In current First Amendment parlance, such laws must survive "strict scrutiny," meaning that the government must demonstrate that they are narrowly tailored to serve compelling governmental interests. Under the Court's current formulation, a law that expressly regulates what topics can be discussed in a social media post would likely be considered a "content-based" restriction on speech, as the regulation "applies to particular speech because of the topic discussed or the idea or message expressed." As such, as a general matter, such a law would likely be subject to strict scrutiny and presumptively invalid. However, this level of scrutiny may not apply if the regulated content falls within a category of speech that the Court has said is not fully protected, as discussed in the next section. Protected and Unprotected Speech If a law regulates speech, the next consideration in the First Amendment analysis is whether that speech is considered protected (sometimes referred to as "fully protected" ) or instead falls within one of the narrow categories of so-called "unprotected" speech (sometimes referred to as the First Amendment's "exceptions" ) recognized by the Supreme Court. Such categories are not determinative of whether a law is constitutional, but the government generally has greater leeway to regulate unprotected speech based on its content. The Supreme Court has long considered political and ideological speech to be at the "core" of the First Amendment and the ability to exchange ideas to be integral to a functioning democracy. Our cases have often noted the close connection between our Nation's commitment to self-government and the rights protected by the First Amendment. . . . The First Amendment creates "an open marketplace" in which differing ideas about political, economic, and social issues can compete freely for public acceptance without improper government interference. The government may not prohibit the dissemination of ideas that it disfavors, nor compel the endorsement of ideas that it approves. These principles extend even to speech that many would consider to be deeply offensive or hateful. Accordingly, a law that restricts speech concerning "politics, nationalism, religion, or other matters of opinion" generally receives strict scrutiny. But the First Amendment does not just protect core political and ideological speech. Even in cases involving speech historically considered to have lower "social value," the government generally "has no power to restrict expression because of its message, its ideas, its subject matter, or its content." The same is generally true for speech that the legislature considers "too harmful to be tolerated," as the government generally may not proscribe speech based on its content unless that speech falls within one of the narrow categories of unprotected speech recognized by the Supreme Court. Three of those categories are of particular relevance in the context of online speech that promotes terrorism or violence. (1) Brandenburg's Incitement Standard In 1969, in Brandenburg v. Ohio , the Supreme Court considered a state law that prohibited "advocat[ing] . . . the duty, necessity, or propriety of crime, sabotage, violence, or unlawful methods of terrorism as a means of accomplishing industrial or political reform." The state convicted a Ku Klux Klan leader of violating the statute based on films of a Klan rally that showed, among other things, hooded figures carrying firearms burning a cross and included, in the Court's words, "scattered phrases . . . that were derogatory of Negroes and, in one instance, of Jews." During a speech, the defendant stated, "We're not a revengent organization, but if our President, our Congress, our Supreme Court, continues to suppress the white, Caucasian race, it's possible that there might have to be some revengeance taken." The Supreme Court reversed the defendant's conviction, concluding that the statute, by punishing "mere advocacy and [forbidding], on pain of criminal punishment, assembly with others merely to advocate the described type of action" violated the First Amendment. Effectively establishing a three-part test, the Court held that "the constitutional guarantees of free speech and free press do not permit a State to forbid or proscribe advocacy of the use of force or of law violation except where such advocacy is [1] directed to inciting or producing [2] imminent lawless action and [3] is likely to incite or produce such action." The Court reiterated that "the mere abstract teaching . . . of the moral propriety or even moral necessity for a resort to force and violence, is not the same as preparing a group for violent action and steeling it to such action." Supreme Court cases since Brandenburg have helped to elucidate its "directed to," "imminence," and "likelihood" requirements to some degree—though not in the specific context of internet speech. Hess v. Indiana involved a conviction for disorderly conduct stemming from an anti-war rally at which the defendant shouted, "We'll take the [expletive] street later." The Court overturned the defendant's conviction because his statement, though made to a crowd of people, "was not directed to any person or group of persons" and "amounted to nothing more than advocacy of illegal action at some indefinite future time." In the Court's words, "there was no evidence, or rational inference from the import of the language, that his words were intended to produce, and likely to produce, imminent disorder." Some argue that the Hess decision suggests that the Court views the "imminence" requirement to mean that violence must be likely to occur immediately as a result of the speech at issue. State and federal courts have not always applied Hess or the imminence requirement of Brandenburg so strictly. For example, in People v. Rubin , a California state court ruling, the defendant was charged with solicitation of murder. During a press conference to protest an upcoming march by the American Nazi Party through Skokie, IL, the defendant offered money to anyone who "kills, maims, or seriously injures a member of the American Nazi Party." He added, "This is not said in jest, we are deadly serious." The trial court concluded that his speech was protected by the First Amendment, but the state appeals court reversed in a split decision with one judge dissenting. Analogizing criminal solicitation to incitement, the appeals court applied Brandenburg 's imminence and likelihood requirements and concluded that both were satisfied even though the march in Skokie was not scheduled to take place until five weeks after the defendant had spoken. The court wrote that "time is a relative dimension and imminence a relative term, and the imminence of an event is related to its nature. . . . We think solicitation of murder in connection with a public event of this notoriety, even though five weeks away, can qualify as incitement to imminent lawless action." Supreme Court decisions after Hess suggest that whether strong rhetoric is directed to inciting or producing imminent lawless action depends on the context in which the statements at issue were made—and to some degree, whether violence actually resulted. In NAACP v. Claiborne Hardware Co. , "17 white merchants" filed suit against the NAACP, its Field Secretary in Mississippi, and over a hundred other individuals involved in a "boycott of white merchants in Claiborne County, [Mississippi]," that was organized to protest racial discrimination, alleging tortious interference with trade. In relevant part, at issue were claims arising from certain speeches that the Field Secretary, Charles Evers, made during the middle of the boycott. In the wake of the shooting and killing of "a young black man . . . during an encounter with two Port Gibson police officers," which led to mounting "[t]ension in the community" and "sporadic acts of violence," Evers allegedly stated that "boycott violators would be 'disciplined'" and that if anyone was caught entering the boycotted stores, "we're gonna break your damn neck." The Claiborne Hardware Court held that Evers was not liable to the boycotted store owners for their economic losses because his speech was protected under the First Amendment. The Court acknowledged that "[i]n the passionate atmosphere in which the speeches were delivered, they might have been understood as inviting an unlawful form of discipline or, at least, as intending to create a fear of violence whether or not improper discipline was specifically intended." Still, the Court held, "[t]he emotionally charged rhetoric . . . did not transcend the bounds of protected speech set forth in Brandenburg " because the "strong language" used was part of "lengthy addresses" that "generally contained an impassioned plea for black citizens to unify, to support and respect each other, and to realize the political and economic power available to them ." Of potential significance, the Court noted that "a substantial question [as to the defendant's liability] would be presented" if that language "had been followed by acts of violence," but there was no evidence of violence occurring after the challenged statements. In a later case, Texas v. Johnson , involving a criminal defendant's First Amendment challenge to his prosecution for burning a flag during a political protest, the Supreme Court ruled for the defendant, finding it notable that despite the allegedly "disruptive behavior of the protestors during their march . . . no actual breach of the peace occurred at the time of the flagburning or in response to the flagburning." The Court added that in such circumstances, the "likel[ihood]" of imminent lawless action under Brandenburg cannot be inferred merely because an audience may take "serious offense" to particular expression. The Court explained, [A] principal "function of free speech under our system of government is to invite dispute. It may indeed best serve its high purpose when it induces a condition of unrest, creates dissatisfaction with conditions as they are, or even stirs people to anger." Terminiello v. Chicago , 337 U.S. 1, 4 (1949). It would be odd indeed to conclude both that "if it is the speaker's opinion that gives offense, that consequence is a reason for according it constitutional protection," FCC v. Pacifica Foundation , 438 U.S. 726, 745 (1978) (opinion of Stevens, J.), and that the government may ban the expression of certain disagreeable ideas on the unsupported presumption that their very disagreeableness will provoke violence. Thus, the Court reasoned, to equate the potential for violence with speech "directed to" and "likely to" incite or produce such action would be to "eviscerate [the Court's] holding in Brandenburg ." Scholars and commentators have noted the limits of the Brandenburg incitement doctrine when it comes to regulating content on social media. In particular, many have questioned what constitutes "imminence" when speech is made in an online forum rather than in connection with a specific event where violence or unrest might be anticipated. Others have questioned how the "directed to" or "likelihood" prongs of the test operate when speech is made to an unknown audience of internet users rather than an assembled group in person. In applying Brandenburg to internet speech, a few lower courts have identified certain types of content that may not constitute incitement but might constitute a true threat, another category of unprotected speech discussed below. For example, the Third Circuit has stated that "merely posting information on unlawful acts that have already occurred, in the past, does not incite future, imminent unlawful conduct," but held that under the circumstances of that case, the defendants' use of "past incidents to instill fear in future targets" amounted to unprotected speech. That circuit also observed in dicta in another case that Brandenburg might allow the government to obtain an injunction to "restrain a website published by a hate group naming specific groups or individuals as targets, or specifying instructions for committing a crime." (2) "True Threats" As with incitement of the Brandenburg variety, the government may prohibit some forms of intimidation such as "true" threats. True threats occur when the speaker "means to communicate a serious expression of an intent to commit an act of unlawful violence to a particular individual or group of individuals," even if the speaker does not "actually intend to carry out the threat." In this way, the doctrine focuses on the harms related to the message the speaker communicates rather than the possibility that it will stir others to commit violent acts. Like the line between incitement and "mere advocacy" that the Court drew in Brandenburg , the Supreme Court has distinguished true threats from "political hyperbole." In Watts v. United States —the 1969 decision coining the phrase "true threat"—the Court held that a statute that prohibited any person from "knowingly and willfully . . . [making] any threat to take the life of or to inflict bodily harm upon the President of the United States" was "constitutional on its face." But the Court ruled that it was improperly applied to an individual who, in the course of expressing opposition to the draft during a public rally, stated, "If they ever make me carry a rifle the first man I want to get in my sights is L.B.J. . . . They are not going to make me kill my black brothers." The Court reasoned that this "kind of political hyperbole" was not a "true 'threat'" within the meaning of the statute because "[the Court] must interpret the language Congress chose 'against the background of a profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials.'" Nearly 35 years later, in Virginia v. Black , the Supreme Court applied the true threats doctrine in a case involving a state law prohibiting cross burning with the intent to intimidate. The Court explained that "[i]ntimidation in the constitutionally proscribable sense of the word is a type of true threat, where a speaker directs a threat to a person or group of persons with the intent of placing the victim in fear of bodily harm or death." The Court held that "[t]he First Amendment permits [a state] to outlaw cross burnings done with the intent to intimidate because burning a cross is a particularly virulent form of intimidation." A plurality of the Court went on to conclude that the particular statute before it was unconstitutional insofar as it included a presumption making cross burning "prima facie evidence of an intent to intimidate a person or group of persons." They reasoned that such a presumption would likely result in convictions in any cross-burning case regardless of the purpose of the cross burning and therefore chill protected speech. While some scholars have cited the true threats doctrine as one avenue for the government to regulate social media content promoting terrorism or violence, others have argued that the Supreme Court's decisions in this area may provide inadequate guidance for distinguishing between real threats online and protected expression, particularly in cases where judges do not share the same linguistic frame of reference as members of a particular online community. This year, the Supreme Court declined to review the Pennsylvania Supreme Court's interpretation of the true threats doctrine in a case involving alleged "terroristic threats" posted to social media. In Commonwealth v. Knox , the state court considered whether the defendant had a First Amendment right to publish "a rap-music video containing threatening lyrics directed to named law enforcement officers," including two officers who were scheduled to testify against him in a pending criminal case. The defendant argued that he never intended for the video to be uploaded to social media (in that case, YouTube and Facebook) and that the song was a way to express himself and was not meant to be taken literally. Several organizations filed briefs in support of the defendant, noting, among other things, the defendant's status as a semiprofessional rap artist and the First Amendment protections accorded to speech about violence in other forms of media. The Pennsylvania Supreme Court held that the song constituted a true threat. It began by observing that although "First Amendment freedoms apply broadly to different types of expression," and while the government "generally lacks the authority to restrict expression based on its message, topic, ideas, or content," speech that "threatens unlawful violence can subject the speaker to criminal sanction" under the true threats doctrine. The court explained that while the Watts decision suggested that courts should use a "contextual," "objective" standard in determining whether speech constituted a "true threat," courts since Virginia v. Black "have disagreed over whether the speaker's subjective intent to intimidate is relevant in a true-threat analysis." For its part, the Pennsylvania Supreme Court read the opinions in the Black case to mean that the "First Amendment necessitates an inquiry into the speaker's mental state," which can be discerned from context. After reviewing the lyrics in the defendant's song, the court concluded that certain "aspects of the song tend to detract from any claim that [the defendant's] words were only meant to be understood as an artistic expression of frustration"; namely, that the song "mentions [two police officers] by name, stating that the lyrics are 'for' them," and "proceeds to describe in graphic terms how [the defendant] intends to kill those officers." The court also noted that the lyrics were "tied to interactions which had recently taken place between [the defendant and the named officers]," and that the named officers responded to hearing them by taking measures to enhance their safety. With respect to the song's publication online, the court stated that "although the song was not communicated directly to the police and a third party uploaded it to YouTube, this factor does not negate an intent on [the defendant's] part that the song be heard by the officers." The court accepted the lower courts' findings that the defendant "either intended for the song to be published or knew publication was inevitable," particularly where a link to the YouTube video was later posted on a Facebook page thought to belong to a codefendant who helped to write and record the song. The case law to date on online communications demonstrates that not all forms of alleged intimidation are analyzed under the true threats doctrine. In a lower court case involving state tort claims for invasion of privacy and intentional infliction of emotional distress, a federal district court in Montana rejected the First Amendment arguments of the defendant, an "alt-right website" publisher accused of launching an anti-Semitic "troll storm" against the plaintiff after publishing several articles accusing her of "extortion" in business discussions with the "mother of [a] prominent neo-Nazi." The defendant allegedly published the plaintiff's "phone numbers, email addresses, and social media profiles, as well as those of her husband, twelve-year-old son, friends, and colleagues" after which she and her family "received more than 700 disparaging and/or threatening messages over phone calls, voicemails, text messages, emails, letters, social media comments, and Christmas cards." According to the court, the defendant had "called for 'confrontation' and 'action,' but he also told readers to avoid illegal activity." In denying the defendant's motion to dismiss, the court did not analyze the defendant's speech as a true threat or any other category of unprotected speech, reasoning that "there is no categorical exception to the First Amendment for harassing or offensive speech." Instead, it considered whether it was clear from the pleadings that the defendant was speaking on a matter of public concern, which might give rise to a First Amendment defense under Supreme Court precedent. The court concluded that the plaintiff had "made a plausible claim that [the defendant's] speech involved a matter of strictly private concern." The court reasoned that although the defendant "drew heavily on his readers' hatred and fear of ethnic Jews, rousing their political sympathies, there is more than a colorable claim that he did so strictly to further his campaign to harass [the plaintiff]" because of "a perceived conflict" between the plaintiff and his friend's mother. (3) Speech Integral to Criminal Conduct Like incitement and true threats, speech that is integral to criminal conduct is considered unprotected under the Court's First Amendment jurisprudence. This exception has sometimes been used to explain why the government may proscribe so-called "inchoate crimes—acts looking toward the commission of another crime" such as conspiracy, solicitation, and attempt. Although these acts typically involve speech, the speech is "intended to induce or commence illegal activities" and thus is "undeserving of First Amendment protection." Once again, the Supreme Court has distinguished in this context between "proposal[s] to engage in illegal activity" and "the abstract advocacy of illegality," extending the First Amendment's protections to the latter type of speech. However, as one district court has observed, the "line between advocacy and action" can be "a hazy one," particularly in the case of inchoate offenses where the "action" that the law criminalizes "may be minor or look benign." Some courts have cited the speech integral to criminal conduct doctrine in rejecting First Amendment challenges to criminal convictions based on online communications. However, the scope of the doctrine, particularly as it applies in the internet context, is not clear. One scholar has suggested that "[h]aving to show that something on social media is 'integral' to criminal activity seems like a tall order" except perhaps in "the case of a Tweet or Facebook posting along the lines of 'the bomb is in location x. Here is what you need to do to detonate it in location y at time z.'" In contrast, another scholar has suggested that it is too easy, particularly in the context of federal terrorism statutes, to prosecute someone for conspiracy based on online speech and thereby avoid Brandenburg 's requirements. More broadly, others have proposed ways to cabin the doctrine's reach so that it is not used in a circular fashion to criminalize speech because of its content without "serious First Amendment analysis." In view of these considerations, this category of unprotected speech appears to be less well-defined (and thus susceptible to broader application) than the standards for incitement and true threats. Strict Scrutiny and Overbreadth Whether the government seeks to regulate protected speech, unprotected speech, or both, the First Amendment imposes some limitations on the means the government may use to achieve its regulatory objectives. When a law regulates protected speech, courts generally apply strict scrutiny and require the government to show that the law is narrowly tailored to achieve a compelling governmental interest. In contrast, laws that primarily regulate nonexpressive conduct or unprotected speech normally are not subjected to strict scrutiny. However, such laws can sometimes be challenged as unduly overbroad on the grounds that a "substantial number of [their] applications are unconstitutional, judged in relation to the statute's plainly legitimate sweep." This section examines the strict scrutiny test and the overbreadth doctrine, as well as applications of those doctrines in the context of terrorism-related offenses and criminal prosecutions involving online speech, as those standards and precedents are likely to affect how the government may regulate online speech promoting terrorism or violence. Strict Scrutiny As previously noted, when a law regulates protected speech—especially on the basis of its content—courts generally require the government to prove: (1) a compelling governmental interest, and (2) that the law is narrowly tailored to achieve that interest. As discussed below, not all of the government's interests in regulating speech promoting violence may rise to the level of compelling. In addition, even if the government can demonstrate a compelling interest, it would still have to show that the law is sufficiently tailored to that interest. Governmental Interests The Supreme Court has held that the government does not have a compelling interest—or even a substantial one —in shielding listeners from messages that they might find offensive. In addition, where the government has deemed certain speech harmful, the Court has in some cases required the government to demonstrate actual harms that the regulation can redress. In contrast, the Court has repeatedly recognized the government's compelling interests in maintaining national security and combating terrorism. It has also acknowledged that Congress and the executive branch are uniquely positioned—both as a constitutional matter and in terms of their expertise—to safeguard the nation's security and regulate foreign affairs. Accordingly, it has recognized some situations in which the First Amendment must yield to the "exclusive[]" authority of the political branches to "maintain[] normal international relations and defend[] the country against foreign encroachments and dangers." Narrow Tailoring Once the government has established a compelling interest, the focus of the First Amendment inquiry is on whether the law is sufficiently tailored to achieve that interest. Under a strict scrutiny standard, narrow tailoring typically means that the law has to be the least speech-restrictive means of advancing the government's interest. For example, in Reno v. ACLU , the Supreme Court struck down two provisions of the Communications Decency Act of 1996 (CDA) that banned the knowing transmission of "indecent" messages, and the knowing sending or display of "patently offensive" messages, to minors over the internet. The CDA contained affirmative defenses for persons who took "good faith, reasonable, effective, and appropriate actions" to restrict minors' access to the prohibited communications or who restricted access through certain age-verification measures such as requesting a verified credit card. The Court first concluded that the terms "indecent" and "patently offensive" were vague and thus threatened to "silence[] some speakers whose messages would be entitled to constitutional protection." Moving to the narrow tailoring analysis, the Court then explained that the CDA's "burden on protected speech cannot be justified if it could be avoided by a more carefully drafted statute." The Court recounted the district court's findings regarding the technological limitations of restricting minors' access to such content and the cost-prohibitive nature of age-verification solutions. In contrast, the district court had found that available software for parental controls could curtail minors' access in a reasonably effective way. The Court concluded that the government failed to "explain why a less restrictive provision would not be as effective as the CDA," and thus the challenged provisions were not narrowly tailored. Deference to Political Branches While a court may examine the availability and effectiveness of less speech-restrictive alternatives under some circumstances, it may exercise some deference in evaluating the policy judgments of Congress and the Executive in certain areas such as national security and foreign affairs. The Humanitarian Law Project decision discussed above is one case in which the Court applied stringent scrutiny but deferred in some measure to the means that Congress chose to combat terrorism. In that case, the Supreme Court construed the federal material support statute to ban "only material support coordinated with or under the direction of" an FTO, not "[i]ndependent advocacy that might be viewed as promoting the group's legitimacy." It concluded that the statute was "carefully drawn" insofar as it reached speech rather than conduct. The Court then considered whether the law, as applied to the plaintiffs' proposed activities, was "necessary to further" the government's compelling interest in combating terrorism. In this regard, the Court examined the plaintiffs' contention that they sought to advance only the "legitimate activities of the [FTOs], not their terrorism." Reasoning that whether FTOs "meaningfully segregate support of their legitimate activities from support of terrorism is an empirical question," the Court gave "significant weight" to "the considered judgment of Congress and the Executive that providing material support to [an FTO]—even seemingly benign support—bolsters the terrorist activities of that organization." The Court then provided examples of how the plaintiffs' support could potentially further the terrorist objectives of the organizations. In upholding the statute as applied to the plaintiffs' activities, the Court cabined its decision in three respects. First, it held that it was not opining on the constitutionality of "any future applications of the material-support statute to speech or advocacy" or "any other statute relating to speech and terrorism." Second, it suggested that "a regulation of independent speech" may not "pass constitutional muster, even if the Government were to show that such speech benefits [FTOs]." And third, it expressly disclaimed any suggestion "that Congress could extend the same prohibition on material support at issue here to domestic organizations." The Humanitarian Law Project decision was criticized by several dissenting Justices and some outside commentators for a perceived departure from settled First Amendment standards. The three dissenting Justices agreed that the government has a "compelling" interest "in protecting the security of the United States" by "denying [FTOs] financial and other fungible resources." However, they argued that the government failed to show how applying the statute to the plaintiffs' activities would " help achieve that important security-related end," which is typically required under any level of heightened scrutiny. Legal scholars have disagreed as to whether the decision is consistent with the protections accorded to political advocacy in other contexts such as campaign finance. Others have argued that the Court erred in prohibiting "mere advocacy" without asking whether the plaintiffs' activities amounted to proscribable incitement under Brandenburg. At least one commentator has emphasized the context of the decision, suggesting that the serious national security concerns presented by terrorism may have weighed on the Justices in the majority. Lower courts have applied the Court's reasoning in Humanitarian Law Project in cases involving material support prosecutions where key evidence included the defendant's online activities. In United States v. Mehanna , the First Circuit considered the defendant's appeal from his convictions for conspiring to provide material support to Al Qaeda and providing material support for terrorism. As the court described it, his indictment on the terrorism-related charges was "based on two separate clusters of activities": (1) the defendant's travel to Yemen in search of a terrorist training camp; and (2) the year after his return to the United States, the defendant's translations of "Arab-language materials into English," which he posted "on a website . . . that comprised an online community for those sympathetic to al-Qa'ida and Salafi-Jihadi perspectives," and at least some of which "constituted al-Qa'ida-generated media and materials supportive of al-Qa'ida and/or [violent] jihad." On appeal, the defendant argued that the government's theory of guilt centered on the translations and that the jury's guilty verdict was improperly based on protected First Amendment speech. The trial court had instructed the jury that it need not consider "the scope or effect of the guarantee of free speech contained in the First Amendment" because "activity that is proven to be the furnishing of material support" because it was undertaken at the direction of or in coordination with an FTO rather than independent advocacy "is not activity that is protected by the First Amendment." The First Circuit held that the trial court's instructions were proper because they "captured the essence of the controlling decision" in Humanitarian Law Project and "already accounted for [free speech] protections." The court further held that "[i]t makes no difference that the absence of facts showing coordination with al-Qa'ida [in the defendant's translation activities] might have resulted in constitutionally protected conduct," because the jury had ample evidence to convict him on the basis of his travel to Yemen and associated activities. In United States v. Elshinawy , the defendant, a U.S. citizen, was indicted for providing and conspiring to provide material support to ISIL in the form of personnel (i.e., himself), services, and financial services. Many of the allegations were based on social media communications between the defendant and a childhood friend who was a member of ISIL and resided outside of the United States. These conversations allegedly included the defendant's "pledge[ of] his allegiance to ISIL" and "plans to obtain or make some sort of explosive device." In addition, the defendant received funds transfers from overseas allegedly for the purpose of conducting a terrorist attack on ISIL's behalf. The defendant challenged the indictment on First Amendment grounds, arguing that the government sought to criminalize protected speech and association; namely, his independent interest in ISIL's cause. The district court, while suggesting that the defendant's characterizations of his communications could be raised in his defense at trial, largely rejected his First Amendment argument, stating that it "distort[ed] the allegations and misapprehend[ed] the [material support] statute." The court noted that in interpreting the same statute in Humanitarian Law Project , the Supreme Court drew a line between independent advocacy and operating under an FTO's "direction and control." The court reasoned that the indictment's allegations included "more than just an expression of support during a conversation over social media" because the defendant pledged his allegiance to ISIL. Moreover, the court held, to the extent that any statements were mere expressions of support, those statements could not be considered "in isolation" and must be viewed "along with defendant's conduct." In United States v. Nagi , a U.S. citizen charged with attempting to provide material support to ISIL in the form of personnel (i.e., himself) moved to dismiss the indictment on First Amendment grounds. The defendant argued that the government could not prosecute him merely because he allegedly traveled to Turkey with the intent of entering Syria and joining ISIL because such a prosecution would violate his First Amendment right of association. The district court disagreed, based on the Supreme Court's reasoning in Humanitarian Law Project . In particular, the court rejected the defendant's argument that his charges were based on "something that § 2339B does not prohibit: simple membership in a terrorist organization." In the court's view, "the anticipated trial evidence show[ed] that the Defendant attempted to work 'under the direction of, or in coordination with' ISIL," not merely to associate with the group. Among other things, the government planned to introduce the defendant's Twitter pledge to support ISIL's leader and his purchase of combat gear. The court explained that although the Twitter pledge itself was protected under the First Amendment, the government could use it to show the defendant's intent. As the examples above illustrate, the First Amendment has not greatly restricted material support prosecutions concerning online speech, particularly when courts have contextualized the speech within a course of conduct. However, these cases may be of limited utility in evaluating the government's authority to regulate speech promoting terrorism in a prophylactic way, because they did not present scenarios involving online speech exclusively; in other words, the government proffered or introduced evidence that the defendant took some other step in coordination with an FTO. The Overbreadth Doctrine Although a law directed at unprotected speech is unlikely to trigger strict scrutiny, the overbreadth doctrine may nonetheless limit Congress's ability to regulate online speech. The Supreme Court has said that "a law may be invalidated as overbroad if 'a substantial number of its applications are unconstitutional, judged in relation to the statute's plainly legitimate sweep.'" This rule, called the overbreadth doctrine, "prohibits the Government from banning unprotected speech if a substantial amount of protected speech is prohibited or chilled in the process." Because the doctrine can result in a court declaring a law invalid on its face rather than in the specific context before it, the Court has called the overbreadth doctrine "strong medicine" to be used "sparingly and only as a last resort" when the statute cannot be construed in a more limited manner. According to the Court, "[r]arely, if ever, will an overbreadth challenge succeed against a law or regulation that is not specifically addressed to speech or to conduct necessarily associated with speech (such as picketing or demonstrating)." At least one circuit court has upheld the material support statute against an overbreadth challenge—albeit in circumstances in which the defendant failed to allege any circumstances in which the statute might be applied to protected speech. Overbreadth challenges have also arisen more generally in the context of other statutes that implicate online communications. In United States v. Ackell , a defendant convicted under a federal law prohibiting stalking challenged the statute as facially overbroad on appeal. In relevant part, the law makes it a crime to (1) use "any interactive computer service or electronic communication service" or other facility of interstate commerce; (2) "to engage in a course of conduct" that "causes, attempts to cause, or would be reasonably expected to cause substantial emotional distress" to that person or certain other individuals; (3) with the "intent to kill, injure, harass, [or] intimidate . . . [that] person." Construing the statute, the First Circuit reasoned that the law "targets conduct rather than speech" because, "[b]y its own terms," it regulates a "course of conduct." Although the court acknowledged that the statute refers to interactive computer services and other facilities of interstate commerce that "are commonly employed to facilitate communication," it concluded that the statute "covers countless amounts" of nonexpressive conduct such as mailing unknown substances to another person or repeatedly infecting a person's computer with viruses. Turning to whether the statute in practice might nonetheless apply to a substantial amount of protected speech in relation to its plainly legitimate sweep, the court construed the law to primarily implicate two categories of unprotected speech: true threats and speech integral to criminal conduct. Beyond those categories, the court identified only one case in which the government had prosecuted a defendant under the statute for protected speech and rejected the defendant's proffered hypothetical applications as either too speculative or falling outside the statutory proscription. The court acknowledged that the statute " could have an unconstitutional application," but declined to "administer the 'strong medicine' of holding the statute facially overbroad." Conclusion As the discussion above illustrates, regulating online content in accordance with the First Amendment—even online content promoting terrorism or violence—presents challenges. These challenges are due in large part to the complexities of free speech jurisprudence and the lack of controlling authority about how doctrines developed nearly 50 years ago—many in the context of statements made by identifiable speakers at political or ideological rallies—apply to speech on the internet where the lines between advocacy, incitement, threats, and conduct can be even more blurred. Nevertheless, the cases and scholarship to date suggest some general guideposts for evaluating the free speech implications of scholarly or legislative proposals to restrict online content promoting terrorism or violence. First, a law that primarily regulates conduct online as opposed to speech may not trigger heightened First Amendment scrutiny. Likewise, a general regulatory scheme that incidentally regulates online content is unlikely to trigger heightened scrutiny. However, if a law expressly regulates certain types of online communications based on the words used or their effect on other internet users, it may be assumed to regulate speech rather than conduct. Second, a law that is narrowly drafted to prohibit online speech that falls within one of the so-called unprotected categories of speech may not trigger heightened First Amendment scrutiny. In this regard, speech on the internet advocating violence as an abstract proposition would likely be considered protected, while speech that incites imminent violence, constitutes a true threat, or is integral to criminal conduct may be deemed unprotected. Third, even if alaw is directed at nonexpressive conduct or unprotected speech on the internet, it may still be subject to an overbreadth challenge if, in practice, it prohibits a substantial amount of protected speech in relation to its plainly legitimate sweep. Fourth, except under some circumstances involving unprotected speech, a law that regulates online speech on the basis of its content would likely be subject to strict scr utiny. A law that regulates online content on the basis of the viewpoints expressed would likely present a clearer case of content discrimination and would be presumptively invalid regardless of whether the underlying speech is protected. Finally, the government may have more leeway to regulate online content when asserting its interests in national security and foreign affairs; however, such laws, to the extent they restrict or burden protected speech, would likely have to withstand heightened (if not strict) First Amendment scrutiny. In addition to the considerations listed above, close attention to legal challenges regarding the enforcement of existing laws as applied to online activities may provide guidance to lawmakers seeking to balance the First Amendment interests of internet users with the safety and security of U.S. citizens on and offline.

Recent acts of terrorism and hate crimes have prompted a renewed focus on the possible links between internet content and offline violence. While some have focused on the role that social media companies play in moderating user-generated content, others have called for Congress to pass laws regulating online content promoting terrorism or violence. Proposals related to government action of this nature raise significant free speech questions, including (1) the reach of the First Amendment's protections when it comes to foreign nationals posting online content from abroad; (2) the scope of so-called "unprotected" categories of speech developed long before the advent of the internet; and (3) the judicial standards that limit how the government can craft or enforce laws to preserve national security and prevent violence. At the outset, it is not clear that a foreign national (i.e., a non-U.S. citizen or resident) could invoke the protections of the First Amendment in a specific U.S. prosecution or litigation involving online speech that the foreign national posted from abroad. The Supreme Court has never directly opined on this question. However, its decisions regarding the extraterritorial application of other constitutional protections to foreign nationals and lower court decisions involving speech made by foreign nationals while outside of the United States suggest that the First Amendment may not apply in that scenario. In contrast, free speech considerations are likely to be highly relevant in evaluating the legality of (1) proposals for the U.S. government to regulate what internet users in the United States can post, or (2) the enforcement of existing U.S. laws where the government seeks to hold U.S. persons liable for their online speech. Although the government typically can regulate conduct without running afoul of the First Amendment, regulations that restrict or burden expression often do implicate free speech protections. In such circumstances, courts generally distinguish between laws that regulate speech on the basis of its content (i.e., the topic discussed or the message expressed) and those that do not, subjecting the former to more stringent review. A law that expressly restricts online communications or media promoting violence or terrorism is likely to be deemed a content-based restriction on speech; whereas a law that primarily regulates conduct could be subject to a less stringent standard of review, unless its application to speech turns on the message expressed. Whether such laws would survive First Amendment scrutiny depends on a number of factors. Over the past 50 years, the Supreme Court has generally extended the First Amendment's free speech protections to speech that advocates violence in the abstract while allowing the government to restrict or punish speech that threatens or facilitates violence in a more specific or immediate way. The subtle distinctions that have developed over time are reflected in the categories of speech that the court has deemed unprotected, meaning that the government generally can prohibit speech in these areas because of its content. These include incitement to imminent lawless action, true threats, and speech integral to criminal conduct. Although judicial decisions have helped to define the scope of some of these categories, open questions remain as to how they apply in the context of online speech. For instance, legal scholars have questioned what it means for speech to incite "imminent" violence when posted to social media. They have also asked how threats should be perceived when made in the context of online forums where hyperbolic speech about violence is common. The extent to which the government can regulate speech promoting violence or terrorism also depends on whether its law or action satisfies the applicable level of scrutiny that the Court has developed to evaluate measures that restrict or burden speech. In general, laws that regulate protected speech on political or ideological matters are subject to strict scrutiny, a test that requires the government to demonstrate that its law is narrowly tailored to achieve a compelling governmental interest. Nevertheless, in some cases, courts have concluded that the government's national security interests justify restrictions on protected speech, such as in 2010 when the Supreme Court upheld certain applications of a federal statute prohibiting providing material support to U.S.-designated foreign terrorist organizations.

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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 $15.8 billion for FY2018. 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 estimated FY2018 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 . Methodology Under Title I-A, funds are allocated to LEAs via state educational agencies (SEAs) using the four Title I-A formulas. Annual appropriations bills specify portions of each year's Title I-A appropriation to be allocated to LEAs and states under each of the formulas. In FY2018, 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—funds 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. FY2018 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 formula. FY2018 Title I-A Grants Table 1 provides each state's estimated grant amount and percentage share of funds allocated under each of the Title I-A formulas for FY2018. Total Title I-A grants for each state, 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 (12.76%) of Title I-A grants. Wyoming received the smallest total Title I-A grant amount ($35.9 million) and, as a result, the smallest percentage share (0.23%) 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 estimated 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 estimated to receive a higher estimated 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 under which the state's share of funds is below its overall share of Title I-A funds. For example, Florida, Nevada, New York, and Texas are estimated to receive 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. At the same time, all four states are estimated to receive a smaller percentage share of Basic Grants than of overall Title I-A funds, indicating that the Basic Grant formula is less favorable to them than other Title I-A formulas may be. In states that are estimated to receive a minimum grant under all four formulas (North Dakota, 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 $15.8 billion for FY2018. 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 FY2018 state grant amounts under each of the four formulas used to determine Title I-A grants. Overall, California received the largest FY2018 Title I-A grant amount ($2.0 billion, or 12.76% of total Title I-A grants). Wyoming received the smallest FY2018 Title I-A grant amount ($35.9 million, or 0.23% of total Title I-A grants).

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Introduction Several hundred informal Member organizations exist within the House of Representatives, Senate, or between both the chambers; these organizations typically reflect Members' shared legislative objectives or representational interests. These groups may commonly be described as congressional caucuses, working groups, or task forces, but in this report, will be identified, collectively, as informal Member organizations , to avoid confusion with official party caucuses. An additional distinction between informal Member organizations may be drawn. In the House of Representatives, some groups may register with the Committee on House Administration to form a Congressional Member Organization (CMO). CMOs registered with the Committee on House Administration can include groups exclusively for House Members or bicameral groups that include House Members and Senators. Informal Member organizations that are not registered with the Committee on House Administration are called informal Member groups ; these include groups exclusive to the Senate, which does not have any formal registration process for informal Member organizations. These distinctions are described in greater detail in the sections below. The Appendix provides some considerations for House Members seeking to form a CMO. Some of these considerations that are not exclusive to the House process, such as determining a group's objective and possible membership, may also be of interest to Senators or House Members seeking to form an informal Member group. Types of Informal Member Organizations There are two types of informal Member organizations: Congressional Member Organizations (CMOs) and informal Member groups. Congressional Member Organizations (CMOs) The term C ongressional Member O rganization refers to a group of Members that is registered with the Committee on House Administration to support a common legislative objective. CMOs may be composed of House Members exclusively, or they may include House Members and Senators. The requirements to register a group as a CMO, as well as guidelines governing how official resources under the control of the Member may be available to use for CMO activities, are provided on the website of the Committee on House Administration. To become a CMO, the Committee on House Administration requires that at least one of the officers associated with the group must be a Member of the House. A group seeking identification as a CMO must also register electronically with the Committee on House Administration by submitting a letter on official letterhead containing the name of the CMO, its statement of purpose, names of its officers, and contact information for staff designated to work on issues related to the CMO. If a group's application complies with the Committee on House Administration's guidelines for CMOs and is approved by the committee, the group will be included in the online list of registered CMOs for the current Congress. A registered CMO may request use of internal House mail, House intranet site, and a postbox at House Postal Operations. A CMO must reregister with the Committee on House Administration in every Congress to maintain its status as such. House Members may have personal office staff (including shared employees) assist a CMO with its legislative objectives. CMOs are not employing authorities, nor do they have separate corporate or legal identities. House Members may also utilize some official resources for CMO activities, subject to limitations established by the Committee on House Administration. CMOs cannot be assigned office space, host a separate website, send franked mail, or use official funds to print or pay for stationery. The Members' Representational Allowance (MRA) may not be used to directly support a CMO as an independent entity, nor can individual Members use their franking privilege on behalf of a CMO. Members may use official resources for communications related to a CMO, to prepare materials related to CMO issues for dissemination, or to publicize CMO issues on a section of their official House website. Neither CMOs nor individual Members may accept funds, goods, or services from private individuals or organizations to support the CMO. Members may, however, use personal funds to support a CMO. House Members who join CMOs must conduct their activities in accordance with applicable provisions in law, the House Ethics Manual , Members' Congressional Handbook , and Rules of the House (including House Rule XXIII, the House Code of Official Conduct). Some additional guidance addressing CMO and informal Member group funding is available on the House Committee on Ethics website. In general, unless otherwise specified, the same regulations applicable to House Members as individuals also apply to their participation in CMOs. Members can contact the Committee on House Administration; the Commission on Congressional Mailing Standards (also known as the Franking Commission); and the Office of Advice and Education of the House Committee on Ethics for information and guidance. Additional regulations may apply to shared employees. Eligible Congressional Member Organizations (ECMOs) Beginning in the 114 th Congress, the House amended its rules to allow certain CMOs to be designated as E ligible Congressional Member Organizations (ECMOs). Members may assign personal office staff to work on behalf of an ECMO and transfer associated MRA funds for salaries and expenses for those employees to a dedicated House account administered by the ECMO. H.Res. 6 directs the Committee on House Administration to promulgate relevant regulations regarding the use of MRA funds, shared employees, and access of House services. To qualify for ECMO status, a group must have been a registered CMO in the preceding Congress, with shared employees from at least 15 House Member offices; register as a CMO in the 116 th Congress; designate a single House Member as administrator of the group; and have at least three House employees assigned to perform work on its behalf. The Committee on House Administration provides further information about the eligibility and disclosure requirements, registration process, and other regulations for ECMOs. Informal Member Groups in the House and Senate In addition to registered CMOs, informal Member groups exist in the House, Senate, and across the chambers. Some informal groups with House Members may be loosely organized associations of like-minded Members; others may be more structured and operate similarly to CMOs but are not registered with the Committee on House Administration. In general, the rules and regulations that apply to House Members as individuals apply to their participation in informal Member groups, including applicable provisions in law, the House Ethics Manual , Members' Congressional Handbook , and Rules of the House (including House Rule XXIII, the House Code of Official Conduct). The Committee on House Administration and House Committee on Ethics can provide further guidance for Members. The Senate does not have a registration process for informal Member groups. Historically, Senate informal groups have drawn upon resources available to Senators for materials and services, without dedicating any additional funding to the organization. Because of their traditional, nonofficial status and informal nature, specific regulation of such groups in the Senate has not been deemed necessary. As in the House, informal groups of Senators are collectively subject to the same regulations applicable to Senators as individuals as indicated in the Senate Ethics Manual , Rules of the Senate, and the Senate Code of Official Conduct. Further guidance may be available to Senators from the Senate Committee on Ethics and Committee on Rules and Administration. Separate regulations expressly recognizing them and prescribing their operations have never been implemented in the Senate. Number of Informal Member Organizations Over Time The number of identified informal Member organizations since the 92 nd Congress (1971-1972) is provided in Table 1 , which shows how an increase began in the 1970s and has increased more markedly since the 1990s. The Committee on House Administration lists 518 registered CMOs for the 115 th Congress, which includes House-only organizations and some bicameral organizations. It is more challenging to tally the number of informal Member groups because they are not officially tracked by the House or Senate. Self-reported information from House Members' offices in the Congressional Yellow Book identifies an additional 158 groups, some of which may be House-only and some of which may be bicameral groups. Self-reported information from Senators' offices in the Congressional Yellow Book identifies 178 groups, some of which may be Senate-only and some of which may be bicameral groups. Purpose of Informal Member Organizations Informal Member organizations typically exist as forums to discuss ideas and potential activities related to public policy or representational considerations. Groups may engage in direct legislative advocacy for a particular issue or concern, provide opportunities to educate Members and staff on policy matters, or generate broader public awareness on these topics. Groups often hold regular Member or staff meetings to exchange information and develop legislative strategy. Many informal Member organizations also invite outside speakers and groups to make presentations to their Members. Some informal Member organizations may have a relatively narrow legislative interest or objective. Other groups may have a broader focus and address multiple issues of concern for a particular geographic region, economic sector, or generalized policy area. Many Members view their participation in informal group or CMO activities as a means to realize both electoral and policy objectives. An informal Member organization can be readily established as circumstances and issues warrant without first enacting legislation or changing House, Senate, or party rules; open or limit its membership as it deems necessary to accomplish its goals; expand Members' opportunities to specialize on issues because there is no limit on the number of groups that can exist or on the number of groups that a Member can join; serve as a vehicle for the resolution of issue and policy differences between committees, parties, or the two houses; provide an opportunity for a comprehensive and coordinated approach to issues over which committee jurisdiction is unclear or fragmented; conduct briefings and use other means to provide Members information and analysis on issues of interest; attract attention to issues that the group members believe need to be addressed; and enhance Members' relations and standing with particular constituencies. In addition to the benefits that informal Member organizations may provide, some observers have noted certain limitations or disadvantages to these groups. Specifically, they have argued that informal Member organizations have become so numerous that their significance has been diminished, as nearly every cause or issue has a Member organization; compete with the formal leadership and committee structure and functions; undermine or even impede the legislative process by further fragmenting the congressional policymaking process; may facilitate certain special interests in attaining undue attention in the legislative process; create a perception of conflict of interest for Members who may have formal legislative responsibilities within the same subject areas covered by the informal Member organization (i.e., by appearing to be an advocate and adjudicator of an issue at the same time); and present the possibility of Congress being viewed negatively by the public as overly influenced by special interests. Ethical considerations have arisen related to the nature and extent of Member participation on governing bodies of outside, nonprofit, tax-exempt organizations with informal ties to CMOs, particularly with regard to Members' participation in fundraising for these outside foundations. Under the current House ethics rules, House Members are permitted to serve on the boards of certain outside groups, including nonprofit foundations and institutes, so long as they do not serve for compensation and their service does not conflict with a Member's general obligation to the public. House Members are also permitted to raise funds for certain nonprofit organizations, but they are prohibited from raising money for any organization that is "established or controlled by Members (or staff)" without receiving permission from the House Committee on Ethics. Questions as to whether a nonprofit organization's activities are related to a Member's official duties can be directed to the House Committee on Ethics. Types of Informal Member Organizations In addition to the distinction between CMOs and informal Member groups, informal Member organizations may be broadly categorized by the purpose of the group. In general, six categories can serve as a classification system for informal Member organizations, although some informal Member organizations may be difficult to fit into any category or may fit into multiple categories. The six categories of informal Member organizations are 1. intraparty (promoting the policy views of like-minded Members within a political party); 2. personal interest (typically focused on a broad, single concern, such as the environment or children, that is often under the jurisdiction of more than one committee); 3. industry (advocating the interests of a particular industry); 4. regional (championing the interests of a particular region); 5. state/district (advocating the interests of a particular state or district); and 6. national constituency (advocating the interests of particular groups of constituents, such as women, minorities, and veterans). Members who join intraparty Member organizations, such as the Blue Dog Coalition and the Republican Study Committee, tend to use their membership as a forum to exchange information and develop legislative strategy with party colleagues who share their political ideology. They tend to work on a wide range of issues and "have been important factors in agenda setting" by attracting attention to issues. Personal interest Member organizations, such as the Congressional Diabetes Caucus and the Congressional Sportsmen's Caucus, tend to focus on increasing public and congressional awareness of issues, offer new solutions for addressing them, and attempt to influence the congressional agenda. CMOs that focus on issues of interest to particular industries, such as the Congressional Automotive Caucus, Congressional Shipbuilding Caucus, and Congressional Steel Caucus, tend to attract Members who are strongly committed to promoting that industry's interests. Members often view their membership as a means to increase congressional awareness of the industry's concerns, develop legislative strategy, and signal to constituents that they are actively promoting their interests. Regional CMOs, such as the Northeast-Midwest Congressional Coalition and Congressional Western Caucus, and state/district CMOs, such as the California Democratic Congressional Delegation, tend to focus on promoting legislative provisions that they believe will assist their region or state/district. National constituency CMOs, such as the Congressional Black Caucus, Congressional Hispanic Caucus, and Congressional Hispanic Conference, tend to have broad concerns that often fall under the jurisdiction of more than one committee. In addition to engaging in a wide range of agenda-setting activities, such as testifying before congressional committees and drafting bills and amendments, national constituency CMOs are more likely than other CMOs to attempt to place issues on the legislative agenda. Members tend to join national constituency CMOs to raise public and congressional awareness of their issues, exchange information, and develop legislative strategy. Historical Development of Informal Member Organizations Since the earliest Congresses, Members have gathered to promote their mutual interests in ad hoc, informal settings, outside of the formal committee and political party systems. This section provides examples of some of these early groups, followed by the developments that shaped the modern system of informal Member organizations. Two key changes for informal Member organizations in the House are also discussed: the development of Legislative Service Organizations (LSOs), which operated from 1979 to 1994, and the creation of congressional Member organizations in 1995. Examples of Early Informal Member Organizations When Congress first convened in Washington, DC, many Members resided in local boardinghouses and spent considerable time discussing legislation and building coalitions after-hours with their colleagues who also resided in their house. Historians have noted that there was a close correlation in the voting records among those Members who boarded together, often forming boardinghouse voting blocs. In 1812, the efforts of two informal congressional groups, the War Hawks and the Invisibles, were instrumental in the declaration of war against Great Britain in the War of 1812. In 1833, several Members of Congress formed the Congressional Temperance Society to advocate abstinence from intoxicating beverages, and the group remained active until 1899. In the 1840s, the Abolitionist Group, an informal congressional group, worked in opposition to slavery. Mid-20th Century Informal Member Organizations One prominent Member group from the mid-20 th century was the Chowder and Marching Society, which was founded in 1949 by 15 Republican House Members, including future Presidents Richard M. Nixon and Gerald R. Ford. It was initially formed to oppose legislation providing monthly bonuses for war veterans, which the Members considered too costly. As its membership increased over time, it served as a somewhat exclusive social forum for leading Republican Members of Congress to discuss pending legislation and legislative strategy. In 1957, several freshman House Republicans formed the Acorns, which served both as a social group and as a forum to discuss legislative issues. The Democratic Study Group (DSG), established in 1959, is considered by many observers to be the first modern informal Member organization. It was formed by moderate and liberal House Democrats to counter the influence of southern conservative Democrats who chaired many of the House's committees at the time. Forty Members attended its organizational meeting in 1959. Over time, the dues-paying membership of the DSG increased, ranging from 115 to 170 Members during the early 1970s, to around 225 during the mid-1970s, and 250 in 1980. Membership then fell to around 200 dues-paying Members during the remainder of the 1980s. Initially, DSG meetings focused on providing legislative briefings for Members and developing strategy concerning pending floor legislation. Later, the DSG gained influence in the House by establishing a whip system and using paid staff to create research and policy analyses. DSG staff briefing papers and information on scheduled floor votes became essential reading material for many Members, especially for those who were not serving on the committee of jurisdiction. A leading congressional scholar described the DSG's influence on the legislative process as follows: Operating out of an office on the top floor of the Longworth House Office Building, DSG staff briefing papers and information on scheduled floor legislation filled an information gap left open by party leaders. Even Republicans subscribed to the DSG Legislative Report for its detailed, balanced descriptions of bills and proposed amendments scheduled for floor action and for information on the rules setting the terms of floor debate. By 1977, 37 percent of House Members and 66 percent of legislative assistants surveyed by the House Commission on Administrative Review reported relying heavily on DSG material for information on legislation scheduled for floor action. Even a higher proportion of legislative assistants used DSG information for committee work and to keep up-to-date on public issues. In 1963, 14 moderate and liberal House Republican freshmen, led by Representative F. Bradford Morse (R-MA), formed the Wednesday Group to serve as a forum for the exchange of information on pending legislation. Its membership later grew to about 30 Members. In 1966, Senators Jacob Javits (R-NY), Joseph Clark (D-PA), and George McGovern (D-SD), and Representative Robert Kastenmeier (D-WI) formed the nonpartisan Members of Congress for Peace Through Law (MCPL) to advocate their views on foreign affairs and defense policy and concerns about the escalating Vietnam conflict. One of its Members, Representative Paul McCloskey (R-CA), declared [t]he beauty of the MCPL, the great function that it performs, is that it gives us a source of knowledge and an opportunity for self-information outside the formal committee work.... Essentially, it's a rebel organization. We're rebelling against the close ties between the Administration and committee chairmen who have a monopoly on information. For several years, the DSG, Wednesday Group, and MCPL were the only informal Member groups within Congress that achieved a visible and enduring status within the institution. Growth of Informal Member Organizations Beginning in the 1970s As shown in Table 1 , the number of informal Member groups increased during the 1970s. The establishment of the Conference of Great Lakes Congressmen in 1970 and the Congressional Black Caucus (CBC) in 1971 increased the number of informal Member organizations to five. By 1980, the number of informal Member organizations had grown to 59, not counting class clubs. During the 1970s, scholars note that Members were largely expected to follow and respect the norms of seniority, apprenticeship, and legislative specialization within the committee system. For Members who felt that these institutional arrangements inhibited their personal or policy objectives, informal Member organizations may have provided an alternative system for policy work that provided greater opportunities for individual policy specialization, representation of constituent interests, and working with like-minded colleagues. House Regulation of Groups as Legislative Service Organizations (LSOs) As the number of informal Member organizations grew throughout the 1970s, several Members and political organizations called for regulation of these groups, arguing that they operated largely beyond the reach of congressional ethics rules and were not subject to any direct congressional oversight. In September 1977, the Commission on Administrative Review of the House of Representatives recommended that informal Member groups "should be held accountable for the spending of public monies." To accomplish this goal, the commission made recommendations for informal Member organizations, generally, and created recommended criteria for groups seeking recognition by the House as Legislative Service Organizations. The commission's recommendations were never considered by the full House, however, because the rule providing for their consideration, H.Res. 766 , was defeated in the House, 160-252, on October 12, 1977. A report from the House Select Committee on Ethics from January 3, 1979, found that informal Member groups were exempt from language in House Rule XLV, which prohibited the establishment of unofficial office accounts. On April 4, 1979, the Committee on Standards of Official Conduct issued an advisory opinion that determined that informal Member groups were exempt from House Rule XLIII, clause 11, which prohibited Members of the House from authorizing or allowing a non-House individual, group, or organization from using the words "Congress of the United States," "House of Representatives," "Official Business," or any combination thereof on any letterhead or envelope. Given continuing concerns that, without congressional oversight, informal Member groups might be used to circumvent House ethics rules, on July 18, 1979, the Committee on House Administration issued the first regulations governing their activities. It required informal Member groups receiving disbursements from a Member's clerk-hire allowance or allowance for official expenses, office space controlled by the House Office Building Commission, or furniture, supplies, or equipment to register with the Clerk of the House as an LSO; provide the Clerk a summary of their finances semi-annually, including, among other information, a listing of their officers and staff, a summary of funds received and disbursed, and an itemization of all receipts and disbursements if $1,000 or more in the aggregate; have its chair, or senior House Member certify the amount of employee salaries, the physical location of each employee, and the regular performance of official duties; and make a monthly certification of the amount of clerk-hire fees disbursed and identify the LSO employees receiving the funds, with the salary amounts issued directly by the Clerk. Because LSOs were not subject to House rules concerning how House Members and committees could spend public funds, however, several organizations argued that LSOs could bring the House into public disrepute if they were used to circumvent House spending rules. One outside organization told the Committee on House Administration that what legislators and their staffs were prohibited from doing as individuals, they can now do by acting as a group. Specifically, informal House groups can receive an unlimited amount of funds from special interest lobbying groups; they have not reported the proceeds from fundraising events as campaign contributions; one caucus has received contributions from foreign governments; and caucus related institutes have accepted hundreds of thousands of dollars in non-bid grants from federal agencies. All of these activities, if conducted by a Member acting individually, would clearly be prohibited by House rules or federal law. On September 22, 1981, the Committee on House Administration formed the Ad hoc Subcommittee on Legislative Service Organizations. In October 1981, the subcommittee held a hearing and adopted several recommendations regarding the regulation of LSOs. The full committee adopted these recommendations on October 21, 1981, which included the following regulations: LSOs could not receive income or contributions, either in cash or in-kind, from any source other than Congress or its Members from their personal accounts, except that they may take advantage of educational intern, fellowship, or volunteer programs when the programs are primarily of educational benefit to the participating interns, fellows, or volunteers and they may distribute any report, analysis, or other research material prepared by others so long as the identity of the person or organization authoring the work is fully disclosed. Any informal Member group receiving contributions or any form of income from any source other than Congress or its Members (except as noted above) could not be located in space under control of the House and could not receive other support from the House or from Members of the House via their allowances. The Clerk of the House would disburse salary payments to an employee authorized by a Member to work for an LSO, dependent upon receiving a monthly certification by the employing Member and by the chair or ranking Member of the LSO. Each LSO would submit a quarterly report to the Clerk of the House no later than 30 days after the end of the reporting period, which would be publicly available and contain (1) the name, business address, officers, and number of Members of the organization; (2) total receipts for the quarter with a summary of receipts by category (e.g., clerk-hire, or dues); (3) total disbursements for the quarter plus a listing of the recipient, purpose, and amount of all disbursements in excess of $200 in the aggregate during the quarter; (4) a listing of the name, business address, and job title of all persons employed by the organization, their total compensation during the quarter, and the dates of their employment; (5) name and sponsor of all interns, fellows, or volunteers associated with the LSO; (6) a general description of the legislative services or other assistance associated with the LSO provided to its Members during the quarter; (7) a listing of all reports, analyses, or other material provided to Members during the quarter provided by the LSO; and (8) a copy of the sponsorship statement required to be filed with the Committee on House Administration at establishment and May 1 of each even-numbered year thereafter. The Committee on House Administration's requirement to submit quarterly financial reports was effective January 1, 1982, and the other regulations were effective January 1, 1983. Abolishment of LSOs and Creation of CMOs During the 1980s and into the early 1990s, the number of informal House Member organizations generally continued to increase, although the number of LSOs remained fairly stable. In 1990 (101 st Congress), for example, there were 30 registered LSOs and 63 informal House Member groups. In these years, some Members and political organizations questioned the financial integrity of certain LSOs, arguing that the quarterly financial reports they submitted were incomplete, misleading, or habitually late, and that these groups did not face any sanctions for violating House LSO regulations. At a hearing on May 6, 1993, for example, a member of the Committee on House Administration delivered the following critique of LSO accounting procedures: The big picture is the House LSOs with millions of dollars in Federal tax dollars missing and unaccounted for. These are an embarrassment to the Congress. I think it could be a national disgrace. It could rival last year's bank, restaurant, and post office scandals. My independent 10 year review involves surprising and alarming figures. It shows that Members of Congress have funneled more than $34 million in tax funds on LSO operations. Those LSOs in turn report spending of $26.8 million.... $7.7 million are absent. They have simply disappeared. One out of every $5 is missing, unreported, and unaccounted for. Some Members and political organizations also objected to certain LSOs' links with external groups and affiliated foundations, arguing that those relationships raised suspicions of impropriety. In addition, media reports suggested that some LSO spending and staffing decisions raised ethical questions concerning possible nepotism and cronyism, and accused some LSOs of using taxpayer funds for expenses that normally were prohibited or required preapproval for Members and committees. Also, some congressional scholars raised concerns about LSOs' decentralizing effect on the congressional policymaking process. In response to concerns about lax filing of LSO financial reports, on August 5, 1993, the Committee on House Administration issued new LSO financial accounting requirements, effective January 1, 1994. The new regulations placed financial management of LSOs under the House Finance Office (eliminating individual LSO bank accounts outside Congress), including payroll and expense vouchers; required LSOs to file proposed budgets starting in January, including a statement of purpose and a list of all employees and Members; subjected LSO employees to House ethics rules; and required LSOs to file annual, year-end statements disclosing cash-on-hand, expenses, and receipts. The change in House leadership and party control following the 1994 elections ushered in further changes for House Member organizations through the elimination of LSOs and the creation of CMOs. At that time, there were 28 LSOs, and 16 of them had House office space, primarily in the Ford House Office Building. On December 6, 1994, incoming House Speaker-elect Newt Gingrich announced that the House Republican Conference had adopted a resolution to prohibit LSOs. House Members could still form groups for similar purposes, but institutional funding would no longer be available. Some congressional scholars have suggested that the elimination of LSOs, in part, helped Speaker Gingrich centralize control in the House. One scholar, for example, argues eliminating LSOs removed one institutional impediment to achieving a more hierarchical congressional structure in which party leaders and conferences assume an enhanced political importance.... The removal of autonomous and entrepreneurial actors such as LSOs was fully consonant with achieving a more centralized and rationalized House. Members from the new minority party and Members of established LSOs, including the Democratic Study Group, Congressional Black Caucus, Congressional Hispanic Caucus, and Congressional Caucus for Women's Issues, opposed the dissolution of LSOs. More than 150 members of the Democratic Study Group, which had 18 full-time employees and a $1.6 million budget in 1993, signed a letter in December 1994 to the incoming Speaker, alleging that the prohibition on LSOs was "an effort to censor opposing views, and to deny the primary source of information to the minority party as we embark upon a furious legislative schedule." LSOs were eliminated through the adoption of the House Rules for the 104 th Congress on January 4, 1995. The Committee on House Oversight (now the Committee on House Administration) subsequently revoked previous certifications of all LSOs, effective January 11, 1995. LSOs were instructed to stop spending money and vacate their offices by January 31, 1995. They were given until March 30, 1995, to pay all outstanding bills; any balances in LSO accounts after April 3, 1995, were to be returned to the U.S. Treasury to reduce the national debt. On February 8, 1995, the committee issued regulations defining CMOs and governing their activities: A CMO is an informal organization of Members who share official resources to jointly carry out activities.... [It has] no separate corporate or legal identity apart from the Members who comprise it.... [It] is not an employing authority, and no staff may be appointed by, or in the name of a CMO. A CMO may not be assigned separate office space. CMO organizers were required to provide the CMO's name, a statement of purpose, the names and titles of officers, and the name of any personal staff member (including shared employees) designated to work on the CMO's issues when they registered with the committee, and as changes in information warranted. Members could not use funds from their official allowances to support CMO activities or lend their frank to a CMO. CMOs could not accept funds or resources from outside groups or individuals to support their operations. However, Members could use their own personal funds for that purpose. Most (23) of the 28 LSOs reorganized and continued operating either as an informal Member group (8) or as a CMO (15). Four LSOs disbanded, including one that became a private, nonprofit organization and another that transferred its research responsibilities to the House Republican Conference. Another LSO was absorbed by the House Democratic Caucus. Some contemporary political observers believed that the demise of LSOs in 1995 might have signaled the end, or at least a significant reduction, of the number, role, and influence of informal Member organizations in Congress. Instead, the number of CMOs and informal Member groups continued to increase in the late 1990s, suggesting that, despite the limitations imposed on the options available to House Members to support these organizations, they have retained an important role in the congressional policymaking process. Since the 2000s, the number of informal member organizations has continued to grow. Concluding Observations Informal Member organizations have become an enduring part of modern Congresses, and they have grown in number markedly since the 1970s. House or Senate regulations broadly pertaining to individual Members' activities generally apply to their participation with informal Member organizations, and certain additional House regulations from the Committee on House Administration affect a subset of informal Member organizations known as CMOs. The independence of these groups from more formal institutions within the House and Senate can provide certain advantages, such as facilitating collaboration among Members and providing leadership opportunities outside of one's party or committee assignments. At times, this relative independence has also led to concerns about oversight for informal Member organizations, as well as concerns over the fractionalization of the legislative process and competition with formal leadership and committee functions. Some groups may share legislative or representational interests with the House or Senate at large, certain party leaders, or particular committees; yet Member organizations can also create forums for differing viewpoints, new policy ideas, or more particularized constituent concerns. Informal Member organizations can facilitate deliberation and policy development in Congress by providing opportunities for Members to exchange information and can contribute to public awareness on a variety of topics. Appendix. Initiating a CMO This appendix covers some considerations that may be of interest to House Members seeking to form a CMO. Current requirements from the Committee on House Administration are noted, where applicable. Define the Objective First, clearly state the group's objective(s). What is its purpose? Determine the Level of Interest The founding Member(s) determines whether there is sufficient interest to warrant organizing the group. A number of methods may be used in making this determination. These include informal discussions with colleagues; communications with constituents (individuals and organizations); and the Member's personal judgment and interest. The extent to which an issue or interest is fragmented within the committee system may also be a factor. In an effort to bring the various aspects of an issue under one entity, a number of groups have been organized around issues that were widely dispersed among several committees and subcommittees. Consult Prospective "Core" Members Sometimes, the organizing Member(s) selects a few colleagues with an interest in the issue, consults with them about the group, and enlists their support in organizing it. In many instances, these Members serve as the group's executive officers, coordinators, or sponsors, and are the activists who lay the group's foundation and shape its policy. This informal gathering of "core" Members may occur before the group is actually established or shortly thereafter. Consider Internal Institutional Concerns In an effort to avoid the appearance of rivalry or duplication with party or committee positions and policy, group organizers may wish to consult with party and committee leadership, or inform them of the intent to form the organization. Similar consideration may also be given to any existing groups that handle relevant aspects of the issue(s) or policy. Organizers will likely want to give careful consideration to the group's name in order to avoid confusion with other existing entities (whether formal or informal). Identify Likely Membership CMO membership is voluntary. Eligibility criteria for membership are determined by the group itself. Membership may be open to all Members who are willing to join, or it may be limited to invitees only. Membership may be open to one party only or both parties; the House only or both the House and the Senate; regions that share specific economic concerns; districts or states; Members who share personal characteristics; Members whose constituents share personal or occupational characteristics; or Members who share issue interests. Membership may also be based upon committee and subcommittee assignments. Similarly, the membership lists of the committees and subcommittees with primary jurisdiction over the relevant issue(s) can be used to identify prospective CMO members. This procedure can provide an indication of whether, how, and by whom the issue is handled. It may also identify some Members who would either support or oppose the group. Seek Necessary Guidance and Information The Committee on House Administration has issued specific regulations governing groups that register as CMOs. The regulations appear in the Members' Congressional Handbook, which is available online at http://cha.house.gov/handbooks/members-congressional-handbook#Members-Handbook-Organizations . After reviewing these regulations, House Members may wish to contact the Committee on House Administration, the House Commission on Congressional Mailing Standards (also known as the Franking Commission), the Committee on Standards of Official Conduct's Office of Advice and Education, and any other authorities, as appropriate, for guidance. Notify or Announce the CMO's Formation There are instances where formation of a CMO has been announced on the House floor, in the Congressional Record , by the media (through press releases, news articles, newsletters, television interviews, etc.), and internally, through circulation of "Dear Colleague" letters to Members. The "Dear Colleague" letter and announcement usually invite Members to join the group and explain its goals, anticipated activities, and reason(s) for being formed. Sometimes, notification of a group's formation also includes language aimed at assuring that the group is not being established to supplant the structure or operations of any committee or party organizations. Register with the Committee on House Administration As mentioned previously, any informal group of House Members that wishes to use personal staff to work on behalf of an informal Member group, discuss their membership in the group in official communications, or mention their membership on their official House website must register the group with the Committee on House Administration as a CMO. The registration form is available at https://cha.house.gov/member-services/congressional-memberstaff-organizations/cmocso-registration-form#cmo . CMO Organizational Structure Each CMO determines its own organizational structure. All CMOs are required to have at least one identifiable leader who is designated as the group's sponsor when it is registered with the Committee on House Administration. That Member, or Members if there is more than one sponsor, is listed as the CMO's chair, or co-chairs, on the committee's web page. Beyond that, many CMOs have little or no formal organizational structure. Often, the founding Member or Members serve as the group's officers or coordinators, without formal election or designation. Leadership responsibilities (e.g., coordinating the group's activities, scheduling meetings, distributing information on group issues and actions, etc.) are undertaken by Members who volunteer, and group business usually is handled by staff in an individual Member's office as part of their regular office duties. Several groups have a structure that includes any combination of the following elements: officers (e.g., chair, co-chair, vice chair, secretary); an executive committee (alternatively called an executive board, steering committee, or advisory panel); and subunits (usually called task forces or working groups). The chair usually is a Member who is highly interested in the issue(s) surrounding the group's organization. More often than not, he or she "steps forth" to serve in that role or agrees to accept the position when recruited. Usually, he or she also designates staff to serve as (the) key contact person(s) for the group and to provide assistance on group business. Most bipartisan or bicameral CMOs have had more than one chair (i.e., co-chairmen) to emphasize the bipartisan or bicameral aspect of the organization. For example, a CMO might have two co-chairs, one from each party. Or, the CMO might have a chair, who may be a Member of either party in either house, as well as a Senate co-chair and a House co-chair, while prescribing that all three officers cannot be members of the same party. Several CMOs have a chair, vice chair, and secretary. A few have opted for an even more stratified structure, one that might include whips and an executive committee. Class groups (i.e., freshmen in a particular Congress) usually have a structure that includes a president, vice president, and secretary. Most of the bicameral groups are also bipartisan, and their organizational structure usually reflects these characteristics. Thus, many bicameral CMOs require that the group's leadership be composed of Members from both parties and both houses. Current CMO regulations provide that "Members of both the House and Senate may participate in CMO, but at least one of the Officers of the CMO must be a Member of the House." Executive Committee/Steering Committee/Advisory Board For most CMOs, the officers or executive committee administer the group's activities and set its agenda. Often, the executive committee also serves as the CMO's source of expertise, and it advises the group on certain issues. An executive committee serving in this advisory capacity sometimes comprises Members who serve on the committees and subcommittees with primary jurisdiction over the issue(s) of concern to the group. Other bases for advisory or executive committee membership might be the Member's state or region, common characteristic(s) of Members' constituents or congressional districts, or shared characteristics among the Members themselves, including their "class" group, knowledge, or interest. Some CMOs have separated the administrative and advisory roles of the executive committee by creating an advisory committee, apart from the executive committee. How Are the Chairs and Other Officers Selected? Like other internal operational matters, the manner by which the CMO's chair(s) is selected is left to the discretion of each CMO. A CMO may use an informal method of selection, whereby Members volunteer to serve as chair. If more than one Member expresses such interest, a co-chair arrangement may be used. Or, the interested Members themselves may work out an agreement as to who will serve, perhaps so that some Members serve during the first session and others during the second session. Alternatively, a group may choose a more formal process whereby interested Members must be nominated and then stand for election by the total membership or the executive committee. In many instances, the initial chair(s) is the CMO's founder. Often, he or she continues to serve until no longer a Member or until he or she relinquishes the position. However, in some instances, tenure as CMO chair is limited, either by custom or by rule (in the CMO's bylaws). Staff Currently, CMOs cannot employ staff. It is the individual Members and not the CMO who are the employing entities. Thus, CMO business is handled by staff of individual Members (often the group's chair(s)) as part of their regular duties. Frequently, the staff member works in an area related to the group's issue(s). Beginning in the 114 th Congress, the House amended its rules to allow certain CMOs (Eligible Congressional Member Organizations, or ECMOs) to enter into agreements with individual Members to contribute employment slots and a portion of the Members' Representational Allowance to a dedicated account of the ECMO. Members interested in registering a CMO as an ECMO can consult with the Committee on House Administration regarding the eligibility requirements and registration process.

This report examines the historical development and contemporary role of Congressional Member Organizations (CMOs) in the House, as well as informal Member groups in the House, Senate, and across the chambers. Commonly, these groups are referred to as caucuses, but they will be referred to collectively as informal Member organizations in this report to avoid confusion with official party caucuses. Some examples of groups that modern observers would consider informal Member organizations date back as far as the early 1800s, but the number of groups has grown substantially since the 1990s. Members of the House and Senate may form these groups and participate in their activities for a variety of reasons. Often the objectives of these groups coincide with Members' policy objectives or representational considerations. These groups enable Members to exchange information and ideas with colleagues, and can facilitate interactions among Members who might not otherwise have opportunities to work with one another. Some groups may be eligible to register with the Committee on House Administration as a Congressional Member Organization (CMO), which enables House Members to utilize some personal office resources in support of CMO legislative activities. CMOs may include Senators among their members, but the Senate has no registration process for Member groups. Informal Member organizations that are not registered with the Committee on House Administration (including those in the Senate) are called informal Member groups. The term informal Member organization is used when referring to both CMOs and informal Member groups. Since the 1970s, the House has issued various regulations governing informal Member organizations. This history provides some additional background on existing CMO regulations and can provide further insights about some of the perceived benefits and shortcomings of these groups. To increase accountability and transparency in an era when Member groups had greater access to institutional resources, the House created its first regulations in 1979 for Member groups registered with the Committee on House Administration as Legislative Service Organizations (LSOs). In 1995, LSOs were abolished and CMOs were created, with limited abilities to use official resources in support of Member groups. Beginning in 2015, the Committee on House Administration created a designation of Eligible Congressional Member Organizations (ECMOs) for certain CMOs, which enables Members to assign personal office staff to work on behalf of an ECMO; four CMOs in the 115th Congress were designated as ECMOs. In recent years, the number of CMOs and informal Member groups has increased, more than doubling from the 108th Congress (350) to the 115th Congress (854). This increase has taken place even though (with limited exceptions in certain specific circumstances) House Members can no longer use their Members' Representational Allowance (MRA) to directly support a CMO or informal Member group as an independent entity; provide congressional office space for these organizations; use the congressional frank to support their activities; or accept goods, funds, or services from private organizations or individuals to support their activities. Despite these limits imposed on the options available to House Members to support informal Member organizations, CMOs and other informal Member organizations have retained an ongoing role in the congressional policymaking process. Their influence has endured largely because many Members continue to consider their participation in informal Member groups and CMOs as advantageous in achieving their legislative and representational goals.

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What Is a Small Business? The Small Business Act of 1953 (P.L. 83-163, as amended) authorized the U.S. Small Business Administration (SBA) and justified the agency's existence on the grounds that small businesses are essential to the maintenance of the free enterprise system. In economic terms, the congressional intent was to assist small businesses as a means to deter monopoly and oligarchy formation within all industries and the market failures caused by the elimination or reduction of competition in the marketplace. Congress decided to allow the SBA to establish size standards to ensure that only small businesses were provided SBA assistance. Specifically, the Small Business Act of 1953 defines a small business as one that is organized for profit; has a place of business in the United States; operates primarily within the United States or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials, or labor; is independently owned and operated; and is not dominant in its field on a national basis. The business may be a sole proprietorship, partnership, corporation, or any other legal form. The SBA conducts an analysis of various economic factors, such as each industry's overall competitiveness and the competitiveness of firms within each industry, to determine its size standards. The analysis is designed to ensure that only small businesses receive SBA assistance and that these small businesses are not dominant in their field on a national basis. The SBA currently uses two types of size standards to determine SBA program eligibility: (1) industry-specific size standards and (2) alternative size standards based on the applicant's maximum tangible net worth and average net income after federal taxes. The SBA's industry-specific size standards are also used to determine eligibility for federal small business contracting purposes. The SBA's industry-specific size standards determine program eligibility for firms in 1,036 industrial classifications (hereinafter industries) in 23 sub-industry activities described in the 2017 North American Industry Classification System (NAICS). Given its mandate to promote competition in the marketplace, the SBA includes an economic analysis of each industry's overall competitiveness and the competitiveness of firms within the industry in its size standards methodology. The size standards are based on four measures: (1) number of employees (505 industries), (2) average annual receipts in the previous three (may soon be the previous five) years (526 industries), (3) average asset size as reported in the firm's four quarterly financial statements for the preceding year (5 industries), or (4) a combination of number of employees and barrel per day refining capacity (1 industry). Overall, about 97% of all employer firms qualify as small. These firms represent about 30% of industry receipts. In the absence of precise statutory guidance and consensus on how to define small, the SBA's size standards have often been challenged, typically by industry representatives seeking to increase the number of firms eligible for assistance. The size standards have also been challenged by Members of Congress concerned that the size standards may not adequately target federal assistance to firms that they consider to be truly small. This report provides a historical examination of the SBA's size standards and assesses competing views concerning how to define a small business. It also discusses P.L. 111-240 , the Small Business Jobs Act of 2010, which authorized the SBA to establish an alternative size standard using maximum tangible net worth and average net income after federal taxes for both the 7(a) and 504/CDC loan guaranty programs; established, until the SBA acted, an interim alternative size standard for the 7(a) and 504/CDC programs of not more than $15 million in tangible net worth and not more than $5 million in average net income after federal taxes (excluding any carry-over losses) for the two full fiscal years before the date of the application; and required the SBA to conduct a detailed review of not less than one-third of the SBA's industry size standards every 18 months beginning on the new law's date of enactment (September 27, 2010) and ensure that each size standard is reviewed at least once every five years. P.L. 112-239 , the National Defense Authorization Act for Fiscal Year 2013, which directs the SBA not to limit the number of size standards and to assign the appropriate size standard to each NAICS industrial classification. This provision addressed the SBA's practice of limiting the number of size standards it used and combining size standards within industrial groups as a means to reduce the complexity of its size standards and to provide greater consistency for industrial classifications that have similar economic characteristics. P.L. 114-328 , the National Defense Authorization Act for Fiscal Year 2017, which authorizes the SBA to establish different size standards for agricultural enterprises using existing methods and appeal processes. Previously, the small business size standard for agricultural enterprises was set in statute as having annual receipts not in excess of $750,000. P.L. 115-324 , the Small Business Runway Extension Act of 2018, which directs federal agencies proposing a size standard (and, based on report language accompanying the act, presumably the SBA as well) to use the average annual gross receipts from at least the previous five years, instead of the previous three years, when seeking SBA approval to establish a size standard based on annual gross receipts. Legislation introduced during the 112 th Congress ( H.R. 585 , the Small Business Size Standard Flexibility Act of 2011), 113 th Congress ( H.R. 2542 , the Regulatory Flexibility Improvements Act of 2013, and included in H.R. 4 , the Jobs for America Act), 114 th Congress ( H.R. 527 , the Small Business Regulatory Flexibility Improvements Act of 2015, and its Senate companion bill, S. 1536 ), and 115 th Congress ( H.R. 33 , the Small Business Regulatory Flexibility Improvements Act of 2017, and its Senate companion bill, S. 584 , and included in H.R. 5 , the Regulatory Accountability Act of 2017) to authorize the SBA's Office of Chief Counsel for Advocacy to approve or disapprove a size standard requested by a federal agency for purposes other than the Small Business Act or the Small Business Investment Act of 1958. The SBA's Administrator currently has that authority. How Big Is Small? In 2016 (the most recent available data), there were over 5.95 million employer firms and over 24.8 million nonemployer (self-employed) firms. As Table 1 indicates, there were 5,954,684 employer firms in the United States employing 126,752,238 people and providing total payroll of $6.43 trillion in 2016. Most employer firms (61.6%) had 4 or fewer employees, 78.6% had fewer than 10 employees, 89.1% had fewer than 20 employees, 98.1% had fewer than 100 employees, and 99.7% had fewer than 500 employees in 2016. The table also provides data concerning other economic factors that might be used to define a small business: an employer firm's number of employees as a share (cumulative percentage) of the total number of employer firms, as a share of employer firm total employment, and as a share of employer firm total annual payroll. As will be discussed, the SBA has traditionally applied economic factors to specific industries, not to cumulative statistics for all employer firms, to determine which firms are small businesses. Nonetheless, the data in Table 1 illustrate how the selection of economic factors used to define small business affects the definition's outcome. For example, for illustrative purposes only, if the mid-point (50%) for these three economic factors was used to define what is a small business, three different employee firm sizes would be used to designate firms as small: Businesses would be required to have no more than 4 employees to be defined as small if the definition for small used the mid-point (50%) share of the total number of employer firms (employer firms with no more than four employees accounted for 61.6% of the total number of employer firms in 2016). Businesses would be required to have no more than 999 employees to be defined as small if the definition for small used the mid-point (50%) share of employer firm total employment (employer firms with no more than 999 employees accounted for 52.6% of employer firm total employment in 2016). Businesses would be required to have no more than 1,999 employees to be defined as small if the definition for small used the mid-point (50%) share of employer firm total annual payroll (employer firms with no more than 1,999 employees accounted for 51.8% of employer firm total annual payroll in 2016). Other economic factors that might be used to define a small business include the value of the employer firm's assets or its market share, expressed as a firm's sales revenue from that market divided by the total sales revenue available in that market or as a firm's unit sales volume in that market divided by the total volume of units sold in that market. Who Makes the Call? The Small Business Act of 1953 (P.L. 83-163, as amended) authorized the SBA to establish size standards for determining eligibility for SBA assistance. More than sixty years have passed since the SBA established its initial small business size standards on January 1, 1957. Yet, decisions made then concerning the rationale and criteria used to define small businesses established precedents that continue to shape current policy. Moreover, as mentioned previously, the SBA relies on an analysis of various economic factors, such as each industry's overall competitiveness and the competitiveness of firms within each industry, in its size standards methodology to ensure that businesses receiving SBA assistance are not dominant in their field on a national basis. However, in the absence of precise statutory guidance and consensus on how to define small, the SBA's size standards have often been challenged, typically by industry representatives seeking to increase the number of firms eligible for assistance and by Members of Congress concerned that the size standards do not adequately target the SBA's assistance to firms that they consider to be truly small. Over the years, the SBA typically reviewed its size standards piecemeal, reviewing specific industries when the SBA determined that an industry's market conditions had changed or the SBA was asked to undertake a review by an industry claiming that its market conditions had changed. On five occasions, in 1980, 1982, 1992, 2004, and 2008, the SBA proposed a comprehensive revision of its size standards. The SBA did not fully implement any of these proposals, but the arguments presented, both for and against the proposals, provide a context for understanding the SBA's current size standards, and the rationale and criteria that have been presented to retain and replace them. As mentioned previously, P.L. 111-240 requires the SBA to conduct a detailed review of not less than one-third of the SBA's industry size standards during the 18-month period beginning on the date of enactment (September 27, 2010) and during every 18-month period thereafter. The act also requires the SBA to review each size standard at least once every five years. The SBA completed its first five-year review of all SBA industry size standards in 2016. As a result of its five-year review, the SBA estimates that more than 72,000 small businesses gained SBA eligibility. Early Definitions of Small Business Vary in Approach and Criteria There is no uniform or accepted definition for a small business. Instead, several criteria are used to determine eligibility for small business spending and tax programs. This was also the case when Congress considered establishing the SBA during the early 1950s. For example, in 1952, the House Select Committee on Small Business reviewed federal statutes, executive branch directives, and the academic literature to serve as a guide for determining how to define small businesses. The Select Committee began its review by asserting that the need to define the concept of small business was based on a general consensus that assisting small business was necessary to enhance economic competition, combat monopoly formation, inhibit the concentration of economic power, and maintain "the integrity of independent enterprise." It noted that the definition of small businesses in federal statutes reflected this consensus by taking into consideration the firm's size relative to other firms in its field and "matters of independence and nondominance." For example, the War Mobilization and Reconversion Act of 1944 defined a small business as either "employing 250 wage earners or less" or having "sales volumes, quantities of materials consumed, capital investments, or any other criteria which are reasonably attributable to small plants rather than medium- or large-sized plants." The Selective Service Act of 1948 classified a business as small for military procurement purposes if "(1) its position in the trade or industry of which it is a part is not dominant, (2) the number of its employees does not exceed 500, and (3) it is independently owned and operated." The Select Committee also found that, for data-gathering purposes, the executive branch defined small businesses in relative, as opposed to absolute, terms within specific industries. For example, the Bureau of Labor Statistics "defined small business in terms of an average for each industry based on the volume of employment or sales. All firms which fall below this average are deemed to be small." The U.S. Census Bureau also used different criteria for different industries. For example, manufacturing firms were classified as small if they had fewer than 100 employees, wholesalers were considered small if they had annual sales below $200,000, and retailers were considered small if they had annual sales below $50,000. According the Census Bureau, in 1952, small businesses accounted for "roughly 92 percent of all business establishments, 45 percent of all employees, and 34 percent of all dollar value of all sales." The Select Committee also noted that in 1951, the National Production Authority's Office of Small Business proposed defining all manufacturing firms with fewer than 50 employees as small and any with more than 2,500 employees as large. Manufacturers employing between these numbers of employees would be considered large or small depending on the general structure of the industry to which they belonged. The larger the percentage of total output produced by large firms, the larger the number of employees a firm could have to be considered small. Using this definition, most manufacturing firms with fewer than 50 employees would be classified as small, but others, such as an aircraft manufacturer, could have as many as 2,500 employees and still be considered small. For procurement purposes, the Select Committee found that executive branch agencies defined small businesses in absolute, as opposed to relative, terms, using 500 employees as the dividing line between large and small firms. Federal agencies defended the so-called 500 employee rule on the grounds that it "had the advantage of easy administration" across federal agencies. In reviewing the academic literature, the Select Committee reported that Abraham Kaplan's Small Business: Its Place and Problems defined small businesses as those with no more than $1 million in annual sales, $100,000 in total assets, and no more than 250 employees. Applying this definition would have classified about 95% of all business concerns as small, and would have accounted for about half of all nonagricultural employees. Based on its review of federal statutes, executive branch directives, and the academic literature, the Select Committee decided that it would not attempt "to formulate a rigid definition of small business" because "the concept of small business must remain flexible and adaptable to the peculiar needs of each instance in which a definition may be required." However, it concluded that the definition of small should be a relative one, as opposed to an absolute one, that took into consideration variations among economic sectors: This committee is also convinced that whatever limits may be established to the category of small business, they must vary from industry to industry according to the general industrial pattern of each. Public policy may demand similar treatment for a firm of 2,500 employees in one industry as it does for a firm of 50 employees in another industry. Each may be faced with the same basic problems of economic survival. The Small Business Act of 1953's Definition of Small Provides Room for Interpretation Reflecting the view that formulating a rigid definition of small business was impractical, the Small Business Act of 1953 provided leeway in defining small businesses. It defined a small firm as "one that is independently owned and operated and which is not dominant in its field of operation." The SBA was authorized to establish and subsequently alter size standards for determining eligibility for federal programs to assist small business, some of which are administered by the SBA. The act specifies that the size standards "may utilize number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors." It also notes that the concept of small is to be defined in a relative sense, varying from industry to industry to the extent necessary to reflect "differing characteristics" among industries. The House Committee on Banking and Currency's report accompanying H.R. 5141, the Small Business Act of 1953, issued on May 28, 1953, provided the committee's rationale for not providing a detailed definition of small: It would be impractical to include in the act a detailed definition of small business because of the variation between business groups. It is for this reason that the act authorizes the Administration to determine within any industry the concerns which are to be designated small-business concerns for the purposes of the act. The report did not provide specific guidance concerning what the committee might consider to be small, but it did indicate that data on industry employment, as of March 31, 1948, "reveals that on the basis of employment, small business truly is small in size. Of the approximately 4 million business concerns, 87.4% had fewer than 8 employees and 95.2% of the total number of concerns, employed fewer than 20 people." Industry Challenges the SBA's Initial Size Standards, Claiming They Are Too Restrictive Initially, the SBA created two sets of size standards, one for federal procurement preferences and another for the SBA's loan and management training services. At the request of federal agencies, the SBA adopted the then-prevailing small business size standard used by federal agencies for procurement, which was no more than 500 employees. The SBA retained the right to make exceptions to the no more than 500 employee procurement size standard if the SBA determined that a firm having more than 500 employees was not dominant in its industry. For the SBA's loan and management training services, the SBA's staff reviewed economic data provided by the Census Bureau to arrive at what Wendell Barnes, SBA's Administrator, described at a congressional hearing in 1956 as "a fairly accurate conclusion as to what comprises small business in each industry." Jules Abels, SBA's economic advisor to the Administrator, explained at that congressional hearing how the SBA's staff determined what constituted a small business: There are various techniques for the demarcation lines, but in a study of almost any industry, you will find a large cluster of small concerns around a certain figure.... On the other hand, above a certain dividing line you will find relatively few and as you map out a picture of an industry it appears that a dividing line at a certain point is fair. On January 5, 1956, the SBA published a notice of proposed rulemaking in the Federal Register announcing its first proposed small business size standards. During the public comment period, representatives of several industries argued that the proposed standards were too restrictive and excluded too many firms. In response, Mr. Abels testified that the SBA decided to adjust its figures to make them "a little bit more liberal because there was some feeling on the part of certain industries that they were too tight and that they excluded too many firms." The SBA published its final rule concerning its small business size standards on December 7, 1956, and they became effective on January 1, 1957. The SBA decided to use number of employees as the sole criterion for determining if manufacturing firms were small and annual sales or annual receipts as the sole criterion for all other industries. Mr. Abels explained at the congressional hearing the SBA's rationale for using number of employees for classifying manufacturing firms as small and annual sales or annual receipts for all other firms: in the absence of automation which would give one firm in an industry a great advantage over another, roughly speaking if the firms were mechanized to the same extent, a firm with 400 employees would have an output which would be twice as large as the output of a firm with 200 employees.... However when you depart from the manufacturing field and go into, say, a distributive field or trade, it then becomes necessary to discard the number of employees, because it is a matter of judicial notice, that one man for example in the distributive trades can sell as much as 100 men can sell. One small construction firm possibly can do a lot more business than one with a lot more employees. A service trade again has its volume geared to something other than the number of employees. So I think that one can say with reasonable certainty that it is only within the manufacturing field that the employee standard is the uniform yardstick, but that other than manufacturing the dollar volume is the appropriate yardstick. The SBA's initial size standards defined most manufacturing firms employing no more than 250 employees as small. In addition, the SBA considered manufacturing firms in some industries (e.g., metalworking and small arms) as small if they employed no more than 500 employees, and in some others (e.g., sugar refining and tractors) as small if they employed no more than 1,000 employees. To be considered small, wholesalers were required to have annual sales volume of $5 million or less; construction firms had to have average annual receipts of $5 million or less over the preceding three years; trucking and warehousing firms had to have annual receipts of $2 million or less; taxicab companies and most firms in the service trades had to have annual receipts of $1 million or less; and most retail firms had to have annual sales of $1 million or less. Mr. Abels testified that the SBA experienced "continual" protests of its size standards by firms denied financial or support assistance because they were not considered small. He also testified that in each case, the SBA denied the protest and determined, in his words, that the standard was "valid and accurate." GAO and Several Members of Congress Challenge the SBA's Size Standards, Claiming They Are Too Broad In 1977, the U.S. General Accounting Office (GAO, now the U.S. Government Accountability Office) was asked by the Senate Select Committee on Small Business to review the SBA's size standards. At that time, most of the SBA's size standards remained at their original 1957 levels, other than a one-time upward adjustment for inflation in 1975 for industries using annual sales and receipts to restore eligibility to firms that may have lost small-business status due solely to the effect of inflation. GAO's report, issued in 1978, found that the SBA's size standards "are often high and often are not justified by economic rationale." Specifically, GAO reported that many size standards may not direct assistance to the target group described in SBA regulations as businesses "struggling to become or remain competitive" because the loan and procurement size standards for most industries were established 15 or more years ago and have not been periodically reviewed; SBA records do not indicate how most standards were developed; and the standards often define as small a very high percentage of the firms in the industries to which they apply. GAO recommended that the SBA reexamine its size standards "by collecting data on the size of bidders on set-aside and unrestricted contracts, determining the size of businesses which need set-aside protection because they cannot otherwise obtain Federal contracts" and then consider reducing its size standards or "establishing a two-tiered system for set-aside contracts, under which certain procurements would be available for bidding only to the smaller firms and others would be opened for bidding to all businesses considered small under present standards." Citing the GAO report, several Members objected to the SBA's size standards at a House Committee on Small Business oversight hearing conducted on July 10, 1979. Representative John J. LaFalce, chair of the House Committee on Small Business Subcommittee on General Oversight and Minority Enterprise, stated that "what we have faced from 1953 to the present is virtually nothing other than acquiescence to the demands of the special interest groups. That is how the size standards have been set." Representative Tim Lee Carter, the subcommittee's ranking minority member, stated that "it seems to me that we may be fast growing into just a regular bank forum not just to small business but to all business." At that time, approximately 99% of all firms with employees were classified by the SBA as a small business. Roger Rosenberger, SBA's associate administrator for policy, planning and budgeting, testified at the hearing that the SBA would undertake a comprehensive economic analysis of industry data to determine if its size standards should be changed. However, he also defended the validity of the SBA's size standards, arguing that the task of setting size standards was a complicated and difficult one because of "how market structure and size distribution of firms vary from industry to industry." He testified that some industries are dominated by a few large firms, some are comprised almost entirely of small businesses, and others "can be referred to as a mixed industry." He argued that each market structure presents unique challenges for defining small businesses within that industry group. For example, he argued that it was debatable whether the SBA should provide any assistance to any of the businesses within industries where "smaller firms are flourishing." SBA Proposes More Restrictive Size Standards Based on Industry Competitiveness On March 10, 1980, the SBA issued a notice of proposed rulemaking designed to "reduce administrative complexity" by replacing its two sets of size standards, one for procurement preferences and another for its loan and consultative support services, with a single set of size standards for both purposes. The SBA also proposed to use a single factor, the firm's number of employees, for definitional purposes for nearly all industries instead of using the firm's number of employees for some industries, the firm's assets for others, and the firm's annual gross receipts for still others. The SBA argued that when size standards are denominated in dollars, i.e., annual revenues, its ability to help the small business sector is undermined by inflation. Using employment, as opposed to dollar sales, will provide greater stability for SBA and its clients; will remove inter-industry distortions generated by differential inflation rates; and reduce the need for SBA to make frequent revisions in the size standards merely to reflect price increases. In setting its proposed new size standards for each industry (ranging from no more than 15 to no more than 2,500 employees), the SBA first placed each industry into one of three groups: concentrated (characterized by a highly unequal distribution of sales among the firms in the industry), competitive (characterized by a more equal distribution of sales in the industry), or mixed (industries that do not meet the criteria of competitive or concentrated industries). The SBA determined that there were 160 concentrated industries, 317 competitive industries, and 249 mixed industries. The SBA argued that establishing a size standard for the 160 concentrated industries was a "straight-forward task—simply identify and exclude those few firms which account for a disproportionately large share of the industry's sales." For competitive industries, the SBA argued that the size standard should be set "relatively low, so as to support entry and moderate growth." The SBA argued that mixed industries require "relatively high size standards ... to reinforce competition and offset the pressures to increase the degree of concentration in these industries." The proposed new SBA size standards would have had the net effect of reducing the number of firms classified as small by about 225,000. In percentage terms, the number of firms classified as small would have been reduced from about 99% of all employer firms to 96%. Over 86% of the more than 1,500 public comments received by the SBA concerning its proposed new size standards criticized it. Most of the criticism was from firms that would no longer be considered small under the new size standards. In addition, several federal agencies indicated that the proposed size standards in the services and construction industries were set too low, reducing the number of small firms eligible to compete for procurement contracts below levels they deemed necessary to ensure adequate competition to prevent agency costs from rising. On October 21, 1980, Congress required the SBA to take additional time to consider the consequences of the proposed changes to the size standards by adopting the Small Business Export Expansion Act of 1980 ( P.L. 96-481 ). It prohibited "the SBA from promulgating any final rule or regulation relating to small business size standards until March 31, 1981." In the meantime, the Reagan Administration entered office, and, as is customary when there is a change in Administration, replaced the SBA's senior leadership. The SBA's new Administrator, Michael Cardenas, was sympathetic to the concerns of federal agencies that the proposed size standards in the services and construction industries were set too low to meet those agencies' procurement needs. As a result, he indicated that the SBA would modify its size standards proposal by (1) increasing the proposed size standards for 51 industries, mostly in the services and construction industries; (2) lowering the proposed size standards in 157 manufacturing industries (typically from no more than 2,500 employees to no more than 500 employees) to prevent one or more of the largest producers in those industries from being classified as small; and (3) increasing the SBA's proposed lowest size standard from no more than 15 employees to no more than 25 employees (affecting 93 service and trade industries). The net effect of these changes would have restored eligibility for approximately 60,000 of the 225,000 firms expected to lose eligibility under the previous Administration's proposal. The SBA subsequently met with various trade organizations and federal agency procurement officials to discuss the proposal. As these consultations took place, the SBA experienced another turnover in its senior leadership. The SBA, headed by the new appointee, James C. Sanders, issued a notice of proposed rulemaking concerning its size standards on May 3, 1982. The proposal differed from its March 10, 1980, predecessor in three ways: First, the range of size standards was narrowed to a range of 25 employees to 500 employees. This reflected a widespread view that 15 employees was too low a cutoff while 2,500 employees was too high. Second, SBA proposed a 500-employee ceiling, focusing on smaller firms. Third, SBA responded to sentiments within many procurement-sensitive industries that the proposed size standards in some cases were too low to accommodate the average procurement currently being performed by small business. Therefore, SBA proposed higher size standards in a number of procurement-sensitive industries, while maintaining the 500-employee cap. The SBA received over 500 comments on the proposed rule, with about 72% of those comments opposing the rule. Taking those comments into consideration, the SBA reexamined its size standards once again, and, after a year of further consultation with various trade organizations and federal agency procurement officials, issued another notice of proposed rulemaking on May 6, 1983. The 1983 proposal (1) replaced the use of two sets of size standards, one for procurement and another for the SBA's loan and consultative support services, with a single set for all programs; (2) retained most of the size standards that were expressed in terms of average annual sales or receipts; (3) adjusted those size standards for inflation (an upward adjustment of 81%); (4) retained most of the size standards for manufacturing; and (5) made relatively minor changes to the size standards in other industries, with a continued emphasis on a 500-employee ceiling for most industries. The SBA received 630 comments on the proposed rule, with almost 70% supporting it. SBA Administrator Sanders characterized the SBA's revised size standard proposal as "a fine-tuning of current standards which has the basic support of both the private sector and the Federal agencies that use the basic size standards to achieve their set-aside procurement goals." He also added that "since almost no size standard is proposed to decrease, and most will in fact increase, very few firms will lose their small business status. We estimate that about 39,000 firms will gain small business status." He testified that in percentage terms, in 1983, 97.9% of the nation's 5.2 million firms with employees were classified by the SBA as small. Under the SBA's proposal, 98.6% of all firms with employees would be classified as small. The final rule was published in the Federal Register on February 9, 1984. Representative Parren J. Mitchell, chair of the House Committee on Small Business, expressed disappointment in the SBA's final rule, stating at a congressional oversight hearing on July 30, 1985, that "the government and the business community are still victimized by that same ad hoc, sporadic system that the SBA promised to fix some six years ago." He introduced legislation ( H.R. 1178 , a bill to amend the Small Business Act) that would have required the SBA to adjust its size standard for an industrial classification downward by at least 20% if small business' share of that market equaled or exceeded 60%, and at least 40% of the market share was achieved through the receipt of federal procurement contracts. The bill also mandated a minimum 10% increase in the SBA's size standard for an industrial classification if small business' share of that market was less than 20% and less than 10% of the market share was achieved through the receipt of federal procurement contracts. The bill was opposed by various trade associations, the SBA, and federal agency procurement officials, and was not reported out of committee. SBA Proposes to Streamline Its Size Standards On December 31, 1992, the SBA issued a notice of proposed rulemaking "to streamline its size standards" by reducing the number of fixed size standard levels from 30 to 9. The nine proposed size standards were no more than 100, 500, 750, 1,000, or 1,500 employees; and no more than $5 million, $10 million, $18 million, or $24 million in annual receipts. The annual receipts levels reflected an upward adjustment of 43% for inflation. The SBA argued that the proposed changes would make the size standards more user-friendly for small business owners and restore eligibility to nearly 20,000 firms that were no longer considered small solely because of the effects of inflation. The proposed rule was later withdrawn as a courtesy to allow the incoming Clinton Administration time to review it. The SBA ultimately decided not to pursue this approach because it felt that converting "receipts based size standards in effect at that time to one of four proposed receipts levels created a number of unacceptable anomalies." Over the subsequent decade, the SBA reviewed the size standards for some industries on a piecemeal basis and, in 1994, adjusted for inflation its size standards based on firm's annual sales or receipts (an upward adjustment of 48.2%). The SBA estimated that the adjustment would restore eligibility to approximately 20,000 firms that lost small-business status due solely to the effects of inflation. In 2002, the SBA adjusted for inflation its annual sales and receipts based size standards for the fourth time (an upward adjustment of 15.8%). The SBA estimated that the adjustment would restore eligibility to approximately 8,760 firms that lost small-business status due solely to the effects of inflation. The rule also included a provision that the SBA would assess the impact of inflation on its annual sales and receipts based size standards at least once every five years. Then, on March 19, 2004, the SBA, once again, issued a notice of proposed rulemaking to streamline its size standards. The proposed rule would have established size standards based on the firm's number of employees for all industries, avoiding the need to adjust for inflation size standards based on sales or receipts. At that time, the SBA size standards consisted of 37 different size levels: 30 based on annual sales or receipts, 5 on the number of employees (both full- and part-time), 1 on financial assets, and 1 on generating capacity. Under the proposed rule, the SBA would use 10 size standards, 5 new employee size standards (adding no more than 50, 150, 200, 300, and 400 employees), and the existing 5 employee size standards (no more than 100, 500, 750, 1,000, and 1,500 employees). The proposed rule would not have changed any existing size standards based on number of employees. The SBA argued that the use of a single size standard would "help to simplify size standards" and "tends to be a more stable measure of business size" than other measures. It added that the proposed rule would change 514 size standards and that, after the proposed conversion to the use of number of employees, of the "approximately 4.4 million businesses in the industries with revised size standards, 35,200 businesses could gain and 34,100 could lose small business eligibility, with the net effect of 1,100 additional businesses defined as small." A majority (51%) of the more than 4,500 comments on the proposed rule supported it, but with "a large number of comments opposing various aspects of SBA's approach to simplifying size standards." In addition, the chairs of the House Committee on Small Business and Senate Committee on Small Business and Entrepreneurship opposed the proposed rule, largely because they were concerned about potential job losses resulting from more than 34,000 small businesses losing program eligibility. The SBA withdrew the proposed rule on July 1, 2004. In 2005, the SBA adjusted for inflation size standards based on firms' annual sales or receipts (an upward adjustment of 8.7%). The SBA estimated that the adjustment restored eligibility to approximately 12,000 firms that lost small-business status due solely to inflation. In 2008, the SBA made another adjustment for inflation to its annual sales and receipts based standards (another upward adjustment of 8.7%). The SBA estimated that the adjustment restored eligibility for approximately 10,400 firms that lost small-business status due solely to inflation. SBA Adopts a Targeted Approach and Reduces the Number of Receipt Based Size Standards In June 2008, the SBA announced that it would undertake a comprehensive, two-year review of its size standards, proceeding one industrial sector at a time, starting with Retail Trade (NAICS Sector 44-45), Accommodations and Food Services (NAICS Sector 72), and Other Services (NAICS Sector 81). The SBA argued that it was concerned that "not all of its size standards may now adequately define small businesses in the U.S. economy, which has seen industry consolidations, technological advances, emerging new industries, shifting societal preferences, and other significant industrial changes." It added that its reliance on an ad hoc approach "scrutinizing the limited number of specific industries during a year, while worthwhile, leaves unexamined many deserving industries for updating and may create over time a set of illogical size standards." The SBA announced that it would begin its analysis of its size standards by assuming that "$6.5 million [later increased to $7.5 million] is an appropriate size standard for those industries with receipts size standards and 500 employees for those industries with employee size standards." It would then analyze the following industry characteristics: "average firm size; average asset size (a proxy for startup costs); competition, as measured by the market share of the four largest firms in the industry; and, the distribution of market share by firm size—that is, are firms in the industry generally very small firms, or dominated by very large firms." Then, before making its final determination on the size standard, it would "examine the participation of small businesses in federal contracting and SBA's guaranteed loan program at the current size standard level. Depending on the level of small business participation, additional consideration may be given to the level of the current size standard and the analysis of industry factors." In April 2009, the SBA announced that was simplifying the administration and use of its size standards by reducing the number of receipts based size standards from 31 to 8 when establishing a new size standard or reviewing an existing size standard: For many years, SBA has been concerned about the complexity of determining small business status caused by a large number of varying receipts based size standards (see 69 FR 13130 (March 4, 2004) and 57 FR 62515 (December 31, 1992)). At the start of current comprehensive size standards review, there were 31 different levels of receipts based size standards. They ranged from $0.75 million to $35.5 million, and many of them applied to one or only a few industries. The SBA believes that to have so many different size standards with small variations among them is unnecessary and difficult to justify analytically. To simplify managing and using size standards, SBA proposes that there be fewer size standard levels. This will produce more common size standards for businesses operating in related industries. This will also result in greater consistency among the size standards for industries that have similar economic characteristics. Under the current comprehensive size standards review, SBA is proposing to establish eight "fixed-level" receipts based size standards: $5.0 million, $7.0 million, $10.0 million, $14.0 million, $19.0 million, $25.5 million, $30.0 million, and $35.5 million. These levels are established by taking into consideration the minimum, maximum and the most commonly used current receipts based size standards. These eight receipts based size standards were increased to $5.5 million, $7.5 million, $11.0 million, $15.0 million, $20.5 million, $27.5 million, $32.5 million, and $38.5 million in 2014 to account for inflation. The SBA also announced that it would use eight employee based size standards when establishing a new size standard or reviewing an existing size standard (no more than 50, 100, 150, 200, 250, 500, 750, and 1,000 employees) instead of seven (no more than 50, 100, 150, 500, 750, 1,000, and 1,500 employees); and continue to use one asset based size standard, one megawatt hours size standard (based on electrical output over the preceding fiscal year), and one size standard based on a combination of the number of employees and barrel per day refining capacity. The SBA also announced that "to simplify size standards further" it "may propose a common size standard for closely related industries." The SBA argued although the size standard analysis may support a separate size standard for each industry, SBA believes that establishing different size standards for closely related industries may not always be appropriate. For example, in cases where many of the same businesses operate in the same multiple industries, a common size standard for those industries might better reflect the Federal marketplace. This might also make size standards among related industries more consistent than separate size standards for each of those industries. Because SBA size standards remain in force until after they are reviewed, the number of size standards did not immediately drop from 41 to 19 in 2009. Instead, the number of size standards began to decline gradually as new size standard final rules were issued. In addition, from 2010 through 2016, the SBA decided, in most instances, not to lower size standards (which would have made it more difficult for businesses to qualify) even if the data supported lowering them because unemployment at that time was relatively high and doing so would "run counter to numerous Congressional and Administration's initiatives and programs to create jobs and boost economic growth." As a result of this policy decision, several size standards that would have otherwise been eliminated remained in place. Also, in 2016, the SBA added a new employee based size standard (no more than 1,250 employees) and reinstated the use of another (no more than 1,500 employees) when establishing a new, or revising an existing, size standard. The SBA's decisions in 2009 to reduce the number of receipts based size standards and to propose a common size standard for closely related industries were opposed by some industry groups. They argued that these policies could lead to the SBA to classify an industry "for the sake of convenience" into a size standard that the agency's own economic analysis indicates should be in a different (easier to qualify) size standard. Congress adopted legislation in 2013 ( P.L. 112-239 , National Defense Authorization Act for Fiscal Year 2013) that included provisions directing the SBA not to limit the number of size standards and to assign the appropriate size standard to each NAICS industrial classification. The SBA currently has 27 SBA industry size standards in effect (16 receipts based size standards, 9 employee based sized standards, 1 asset based size standard, and 1 size standard based on a combination of the number of employees and barrel per day refining capacity). That number is expected to increase given the SBA's directive not to limit the number of size standards. Congress Requires Periodic Size Standard Reviews As mentioned previously, P.L. 111-240 requires the SBA to conduct a detailed review of not less than one-third of the SBA's industry size standards during the 18-month period beginning on the date of enactment (September 27, 2010) and during every 18-month period thereafter. The act directs the SBA to "make appropriate adjustments to the size standards" to reflect market conditions, and to report to the House Committee on Small Business and the Senate Committee on Small Business and Entrepreneurship and make publicly available "not later than 30 days" after the completion of each review information regarding the factors evaluated as part of each review, the criteria used for any revised size standard, and why the SBA did, or did not, adjust each size standard that was reviewed. The act also requires the SBA to ensure that each industry size standard is reviewed at least once every five years. On July 7, 2011, the SBA announced that its "comprehensive review of all small business size standards" would begin with the following six industries: Educational Services (final rule was issued on September 24, 2012); Health Care and Social Assistance Services (final rule was issued on September 24, 2012); Real Estate Rental and Leasing (final rule was issued on September 24, 2012); Administrative and Support, Waste Management and Remediation Services (final rule was issued on December 6, 2012); Information (final rule was issued on December 6, 2012); and Utilities (final rule was issued on December 23, 2013). The SBA subsequently completed size standard reviews for all industries in January 2016 (listed by when the final rule was issued): Professional, Scientific and Technical Services (final rule was issued on February 24, 2012); Transportation and Warehousing (final rule was issued on February 24, 2012); Agriculture, Forestry, Fishing and Hunting (final rule was issued on June 20, 2013); Arts, Entertainment, and Recreation (final rule was issued on June 20, 2013); Finance and Insurance (final rule was issued on June 20, 2013); Management of Companies (final rule was issued on June 20, 2013); Support Activities for Mining (final rule was issued on June 20, 2013); Construction (final rule was issued on December 23, 2013); Wholesale Trade (final rule was issued on January 25, 2016); Industries with Employee Based Size Standards not Part of Manufacturing, Wholesale Trade, or Retail Trade (final rule was issued on January 26, 2016); and Manufacturing (final rule was issued on January 26, 2016). A summary of the final rules issued for each industry is provided in Table A-1 . During the first five-year review cycle, the SBA increased 621 size standards, decreased 3 (to exclude potentially dominant firms from being considered small), and retained 388 at their pre-existing levels. Of the 388 retained size standards, 214 were retained based on the results of the SBA's economic analysis and 174 were retained based on the SBA's policy of generally not lowering any size standard, even though the results of the economic analysis supported lowering them, due to national economic conditions. The SBA has started its second five-year review of its size standards and anticipates issuing its first final rules in the second five-year review cycle in 2019, using new size standard methodology announced in April 2018 (discussed in the next section). The SBA also announced in April 2018 that its policy of generally not lowering size standards when the analysis indicates that a lower standard is justified would no longer be in force, at least initially, during the second five-year review cycle: the decision to raise, lower, or retain a size standard will primarily be driven by analytical results, with due considerations of public comments, impacts of changes on the affected businesses, and other factors SBA considers important. All of these decisions will be detailed in individual rulemakings. It will take several years to complete the five-year review of all size standards … during which the state of the economy may change. It is, therefore, not possible to state now … what impact, if any, the future economic environment would have on the SBA's policy decision regarding size standards. SBA's Definitions for Small Business As mentioned earlier, the SBA, relying on statutory language, defines a small business as a concern that is organized for profit; has a place of business in the United States; operates primarily within the United States or makes a significant contribution to the economy through payment of taxes or use of American products, materials, or labor; is independently owned and operated; and is not dominant in its field on a national basis. The business may be a sole proprietorship, partnership, corporation, or any other legal form. The SBA uses two measures to determine if a business is small: industry specific size standards or a combination of the business's net worth and net income. For example, the SBA's Small Business Investment Company (SBIC) program allows businesses to qualify as small if they meet the SBA's size standard for the industry in which the applicant is primarily engaged, or an alternative net worth and net income based size standard which has been established for the SBIC program. The SBIC's alternative size standard is currently set as a maximum net worth of not more than $19.5 million and average after-tax net income for the preceding two years of not more than $6.5 million. All of the company's subsidiaries, parent companies, and affiliates are considered in determining if it meets the size standard. The SBA decided to apply the net worth and net income measures to the SBIC program "because investment companies evaluate businesses using these measures to decide whether or not to make an investment in them." Businesses participating in the SBA's 504/Certified Development Company (504/CDC) loan guaranty program are to be deemed small if they did not have a tangible net worth in excess of $8.5 million and did not have an average net income in excess of $3 million after taxes for the preceding two years. As discussed below, P.L. 111-240 increased these threshold amounts on an interim basis to not more than $15 million in tangible net worth and not more than $5 million in average net income after federal taxes for the two full fiscal years before the date of the application. All of the company's subsidiaries, parent companies, and affiliates are considered in determining if it meets the size standard. Also, before May 5, 2009, businesses participating in the SBA's 7(a) loan guaranty program, including its express programs, were deemed small if they met the SBA's size standards for firms in the industries described in NAICS. Alternative Size Standards Using authority provided under P.L. 111-5 , the American Recovery and Reinvestment Act of 2009, the SBA temporarily applied the 504/CDC program's size standards as an alternative for 7(a) loans approved from May 5, 2009, through September 30, 2010. Firms applying for a 7(a) loan during that time period qualified as small using either the SBA's industry size standards or the 504/CDC program's size standard. The provision's intent was to enhance the ability of small businesses to access the capital necessary to create and retain jobs during the economic recovery. P.L. 111-240 made the use of alternative size standards for the 7(a) program permanent. The act directs the SBA to establish an alternative size standard for both the 7(a) and 504/CDC programs that uses maximum tangible net worth and average net income as an alternative to the use of industry standards. The act also establishes, until the date on which the alternative size standard is established, an interim alternative size standard for the 7(a) and 504/CDC programs of not more than $15 million in tangible net worth and not more than $5 million in average net income after federal taxes (excluding any carry-over losses) for the two full fiscal years before the date of the application. Industry Size Standards The SBA Administrator has the authority to establish and modify size standards for particular industries. Overall, about 97% of all employer firms qualify as small under the SBA's size standards. These firms account for about 30% of industry receipts. The SBA generally "prefers to use average annual receipts as a size measure because it measures the value of output of a business and can be easily verified by business tax returns and financial records." However, historically, the SBA has used the number of employees to determine if manufacturing and mining companies are small. Before a proposed change to the size standards can take effect, the SBA's Office of Size Standards (OSS) undertakes an analysis of the change's likely impact on the affected industry, focusing on the industry's overall degree of competition and the competitiveness of the firms within the industry. The analysis includes an assessment of the following four economic factors: "average firm size, average assets size as a proxy of start-up costs and entry barriers, the 4-firm concentration ratio as a measure of industry competition, and size distribution of firms." The SBA also considers the ability of small businesses to compete for federal contracting opportunities and, when necessary, several secondary factors "as they are relevant to the industries and the interests of small businesses, including technological change, competition among industries, industry growth trends, and impacts of size standard revisions on small businesses." The specifics of SBA's size standards methodology have evolved over the years with the availability of new industry and federal procurement data and staff research. For example, the SBA previously presumed less than $7.0 million (increased to less than $7.5 million in 2014 to account for inflation) as an appropriate "anchor" size standard for the services, retail trade, construction, and other industries with receipts based size standards; 500 or fewer employees as an appropriate anchor size standard for the manufacturing, mining and other industries with employee based size standards; and 100 or fewer employees as an appropriate anchor size standard for the wholesale trade industries. These three anchor size standards were used as benchmarks or starting points for the SBA's economic analysis. To the extent an industry displayed "differing industry characteristics," a size standard higher, or in some cases lower, than an anchor size standard was used. In April 2018, the SBA replaced the "anchor" approach with a "percentile" approach, primarily because the anchors were no longer representative of the size standards being used (just 24% of industries with receipt-based size standards and 22% of those with employee based size standards have the anchor size standards) and the anchor approach entails "grouping industries from different NAICS sectors thereby making it inconsistent with section 3(a)(7) of the [Small Business] Act," which limits the SBA's ability to create common size standards by grouping industries below the 4-digit NAICS level. Specifically, when assessing the appropriateness of the current size standards, the SBA now evaluates the structure of each industry in terms of four economic characteristics or factors, namely average firm size, average assets size as a proxy of start-up costs and entry barriers, the 4-firm concentration ratio as a measure of industry competition, and size distribution of firms using the Gini coefficient. For each size standard type ... SBA ranks industries both in terms each of the four industry factors and in terms of the existing size standard and computes the 20 th percentile and 80 th percentile values for both. SBA then evaluates each industry by comparing its value for each industry factor to the 20 th percentile and 80 th percentile values for the corresponding factor for industries under a particular type of size standard. If the characteristics of an industry under review within a particular size standard type are similar to the average characteristics of industries within the same size standard type in the 20 th percentile, SBA will consider adopting as an appropriate size standard for that industry the 20 th percentile value of size standards for those industries. For each size standard type, if the industry's characteristics are similar to the average characteristics of industries in the 80 th percentile, SBA will assign a size standard that corresponds to the 80 th percentile in the size standard rankings of industries. A separate size standard is established for each factor based on the amount of differences between the factor value for an industry under a particular size standard type and 20 th percentile and 80 th percentile values for the corresponding factor for all industries in the same type. Specifically, the actual level of the new size standard for each industry factor is derived by a linear interpolation using the 20 th percentile and 80 th percentile values of that factor and corresponding percentiles of size standards. Each calculated size standard will be bounded between the minimum and maximum size standards levels [see Table 2 ] ... the calculated value for a receipts based size standard for each industry factor is rounded to the nearest $500,000 and the calculated value for an employee based size standard is rounded to the nearest 50 employees for Manufacturing and industries in other sectors (except Wholesale and Retail Trade) and to the nearest 25 employees for employee based size standards for Wholesale Trade and Retail Trade. The SBA anticipates that its shift from using the anchor approach to the percentile approach will have minimal impact, both in terms of the direction and magnitude of changes, to its industry size standards. Any changes to size standards must follow the rulemaking procedures of the Administrative Procedure Act. A proposed rule changing a size standard is first published in the Federal Register , allowing for public comment. It must include documentation establishing that a significant problem exists that requires a revision of the size standard, plus an economic analysis of the change. Comments from the public, plus any other new information, are reviewed and evaluated before a final rule is promulgated establishing a new size standard. The SBA currently uses employment size to determine eligibility for 505 of 1,036 industries (48.6%), including all 360 manufacturing industries, 24 mining industries, and 71 wholesale trade industries. As of October 1, 2017, 98 manufacturing industries have an upper limit of 500 employees (27.2%); 91 have an upper limit of 750 employees (25.2%); 89 have an upper limit of 1,000 employees (24.7%); 56 have an upper limit of 1,250 employees (15.6%); and 26 have an upper limit of 1,500 employees (7.2%). 3 of the 24 mining industries have an upper limit of 250 employees (12.5%), 7 have an upper limit of 500 employees (29.2%), 7 have an upper limit of 750 employees (29.2%), 2 have an upper limit of 1,000 employees (8.3%), 3 have an upper limit of 1,250 employees (12.5%), and 2 have an upper limit of 1,500 employees (8.3%). 25 of the 71 wholesale trades industries have an upper limit of 100 employees (35.2%), 16 have an upper limit of 150 employees (22.5%), 21 have an upper limit of 200 employees (29.6%), and 9 have an upper limit of 250 employees (12.7%). The SBA currently has nine employee based industry size standards in effect (no more than 100, 150, 200, 250, 500, 750, 1,000, 1,250, and 1,500 employees). The SBA uses average annual receipts over the three (soon to be five) most recently completed fiscal years to determine program eligibility for most other industries (526 of 1,036 industries, or 50.8%). The SBA also uses average asset size as reported in the firm's four quarterly financial statements for the preceding year to determine eligibility for five finance industries, and a combination of number of employees and barrel per day refining capacity for petroleum refineries. The SBA currently has 16 receipts based industry size standards in effect. In some instances, there is considerable variation in the size standards used within each industrial sector. For example, the SBA uses 11 different size standards to determine eligibility for 66 industries in the retail trade sector. In general, most administrative and support service industries have an upper limit of either $15.0 million or $20.5 million in average annual sales or receipts; most agricultural industries have an upper limit of $0.75 million in average annual sales or receipts; most construction of buildings and civil engineering construction industries have an upper limit of $36.5 million in average annual sales or receipts, and most construction specialty trade contractors have an upper limit of $15.0 million in average annual sales or receipts; most educational services industries have an upper limit of either $7.5 million or $11.0 million in average annual sales or receipts; most health care industries have an upper limit of either $7.5 million or $15.0 million in average annual sales or receipts; most social assistance industries have an upper limit of $11.0 million in average annual sales or receipts; there is considerable variation within the professional, scientific, and technical service industries, ranging from an upper limit of $7.5 million in average annual sales or receipts to $38.5 million; there is considerable variation within the transportation and warehousing industrial sector, ranging from an upper limit of $7.5 million in average annual sales or receipts to $38.5 million for 43 industries and from an upper limit of 500 employees to 1,500 employees for 15 industries); and most finance and insurance industries have an upper limit of $38.5 million in average annual sales or receipts. The SBA also applies a $550 million average asset limit (as reported in the firm's four quarterly financial statements for the preceding year) to determine eligibility in five finance industries: commercial banks, saving institutions, credit unions, other depository credit intermediation, and credit card issuing. Other Federal Agency Size Standards Many federal statutes provide special considerations for small businesses. For example, small businesses are provided preferences through set-asides and sole source awards in federal contracting and pay lower fees to apply for patents and trademarks. In most instances, businesses are required to meet the SBA's size standards to be considered a small business. However, in some cases, the underlying statute defines the eligibility criteria for defining a small business. In other cases, the statute authorizes the implementing agency to make those determinations. Under current law, a federal agency that decides that it would like to exercise its authority to establish its own size standard through the federal rulemaking process is required to, among other things, (1) undertake an initial regulatory flexibility analysis to determine the potential impact of the proposed rule on small businesses, (2) transmit a copy of the initial regulatory flexibility analysis to the SBA's Chief Counsel for Advocacy for comment, and (3) publish the agency's response to any comments filed by the SBA's Chief Counsel for Advocacy in response to the proposed rule and a detailed statement of any change made to the proposed rule in the final rule as a result of those comments. In addition, the federal agency must provide public notice of the proposed rule and an opportunity for the public to comment on the proposed rule, typically through the publication of an advanced notice of proposed rulemaking in the Federal Register and notification of interested small businesses and related organizations. Also, prior to issuing the final rule, the federal agency must have the approval of the SBA's Administrator. Under current practice, the SBA's Administrator, through the SBA's Office of Size Standards, consults with the SBA's Office of Advocacy prior to making a final decision concerning such requests. The Office of Advocacy is an independent office within the SBA. During the 112 th Congress, H.R. 585 , the Small Business Size Standard Flexibility Act of 2011, was reported by the House Committee on Small Business on November 16, 2011, by a vote of 13 to 8. The bill would have retained the SBA's Administrator's authority to approve or disapprove size standards for programs under the Small Business Act of 1953 (as amended) and the Small Business Investment Act of 1958 (as amended). The Office of Chief Counsel for Advocacy would have assumed the SBA Administrator's authority to approve or disapprove size standards for purposes of any other act. Similar legislative provisions have been introduced during the 113 th Congress ( H.R. 2542 , the Regulatory Flexibility Improvements Act of 2013, and included in H.R. 4 , the Jobs for America Act), 114 th Congress ( H.R. 527 , the Small Business Regulatory Flexibility Improvements Act of 2015, and its Senate companion bill, S. 1536 ), and 115 th Congress ( H.R. 33 , the Small Business Regulatory Flexibility Improvements Act of 2017, and its Senate companion bill, S. 584 , and included in H.R. 5 , the Regulatory Accountability Act of 2017). Advocates of splitting the SBA Administrator's small business size standards' authority between the Office of Chief Counsel for Advocacy and the SBA's Administrator have argued that Should an agency wish to draft a regulation that adopts a size standard different from the one already adopted by the Administrator in regulations implementing the Small Business Act, the agency must obtain approval of the Administrator. However, that requires the Administrator to have a complete understanding of the regulatory regime of that other act—knowledge usually outside the expertise of the SBA. However, the Office of the Chief Counsel for Advocacy, an independent office within the SBA, represents the interests of small businesses in rulemaking proceedings (as part of its responsibility to monitor agency compliance with the Regulatory Flexibility Act, 5 U.S.C. 601-12, (RFA)) does have such expertise. Therefore, it is logical to transfer the limited function on determining size standards of small businesses for purposes other than the Small Business Act and Small Business Investment Act of 1958 to the Office of the Chief Counsel for Advocacy…. the Administrator is not the proper official to determine size standards for purposes of other agencies' regulatory activities. The Administrator is not fluent with the vast array of federal regulatory programs, is not in constant communication with small entities that might be affected by another federal agency's regulatory regime, and does not have the analytical expertise to assess the regulatory impact of a particular size standard on small entities. Furthermore, the Administrator's standards are: very inclusive, not developed to comport with other agencies' regulatory regimes, and lack sufficient granularity to examine the impact of a proposed rule on a spectrum of small businesses. Opponents have argued that When an agency is seeking to use a size standard other than those approved by the SBA, the agency may consult with the Office of Advocacy. Such consultation is sensible, as the Office of Advocacy has significant knowledge of the regulatory environment outside of the canon of SBA law. However, the SBA's Office of Size Standards, with its historical involvement, expertise, and staff resources in this area, remains the appropriate entity to approve such size standards…. While the legislation permits the SBA to continue to approve size standards for its enabling statutes, it removes SBA's authority to do so for other statutes. The result would be to create a duplicate size standard authority in both the SBA and the Office of Advocacy. Both the SBA and the Office of Advocacy would have personnel who would analyze and evaluate size standards. Through the bifurcation of these responsibilities, taxpayers would effectively be forgoing the economies of scale that are currently enjoyed by the operation of a single Office of Size Standards in the SBA…. Having two such entities that have the same mission is not a transfer of function, but an inefficient and duplicative reorganization.… Instead of having one central office, there will now be two—further muddling small businesses' relationship with the federal government. Other Recent Legislation Two bills were introduced during the 114 th Congress ( H.R. 3714 , the Small Agriculture Producer Size Standards Improvements Act of 2015, and H.R. 4341 , the Defending America's Small Contractors Act of 2016) to authorize the SBA to establish size standards for agricultural enterprises not later than 18 months after the date of enactment. The size standard for agricultural enterprises was, at that time, set in statute as having annual receipts not in excess of $750,000. H.R. 4341 , among other provisions, would have also limited an industry category to a greater extent than provided under the North American Industry Classification codes for small business procurement purposes if further segmentation of the industry category is warranted. H.R. 4341 was introduced on January 7, 2016, and ordered to be reported with amendment by the House Committee on Small Business on January 13, 2016. H.R. 3714 was introduced on October 8, 2015, considered by the House under suspension of the rules on April 19, 2016, and agreed to by voice vote. P.L. 114-328 , the National Defense Authorization Act for Fiscal Year 2017, includes a provision which authorizes the SBA to establish different size standards for agricultural enterprises using existing methods and appeal processes. Also, as mentioned previously, P.L. 115-324 , the Small Business Runway Extension Act of 2018, directs federal agencies proposing a size standard (and, based on report language accompanying the act, presumably the SBA as well) to use the average annual gross receipts from at least the previous five years, instead of the previous three years, when seeking SBA approval to establish a size standard based on annual gross receipts. The SBA has not announced if it will continue to use the average annual gross receipts over three years to determine receipts-based size standards or if it will use the average annual gross receipts from the previous five years. Congressional Policy Options Historically, the SBA has relied on economic analysis of market conditions within each industry to define eligibility for small business assistance. On several occasions in its history, the SBA attempted to revise its small business size standards in a comprehensive manner. However, because (1) the Small Business Act provides leeway in how the SBA is to define small business; (2) there is no consensus on the economic factors that should be used in defining small business; (3) federal agencies have generally opposed size standards that might adversely affect their pool of available small business contractors; and (4) the SBA's initial size standards provided program eligibility to nearly all businesses, the SBA's efforts to undertake a comprehensive reassessment of its size standards met with resistance. Firms that might lose eligibility objected. Federal agencies also objected. As a result, in each instance, the SBA's comprehensive revisions were not fully implemented. The SBA's congressionally mandated requirement to conduct a detailed review of at least one-third of the SBA's industry size standards every 18 months was imposed by P.L. 111-240 , the Small Business Jobs Act of 2010, to prevent small business size standards from becoming outdated. More frequent reviews of the size standards were expected to increase their accuracy and, generally speaking, result in (1) increased numbers of small businesses found to be eligible for SBA assistance and (2) an increase in the number and amount of federal contracts awarded to small businesses (primarily by preventing large businesses from being misclassified as small and by increasing the number of small businesses eligible to compete for federal contracts). As expected, the SBA's economic analyses during the recent five-year review cycle often supported an increase in the size standards for many industries. However, the SBA's economic analyses also occasionally supported a decrease in the size standards for some industries. Despite the SBA's decision to, in most circumstances, make no changes when their economic analyses indicated that a decrease was warranted, it could be argued that the increased frequency of the reviews has generally prevented the SBA's size standards from becoming outdated. This, in turn, has, at least to a certain extent, improved the accuracy of the size standards (as measured by the extent to which the size standard is in alignment with the SBA's economic analyses). In a related matter, the SBA continues to adjust its receipts based size standards for inflation at least once every five years, or more frequently if inflationary circumstances warrant, to prevent firms from losing their small business eligibility solely due to the effects of inflation. The most recent adjustment for inflation took place on July 14, 2014. Prior to that, the last adjustment for inflation took place in 2008. The SBA also continues to review size standards within specific industries whenever it determines that market conditions within that industry have changed. Congress has several options related to the SBA's ongoing review of its size standards. For example, as part of its oversight of the SBA, Congress can wait for the agency to issue its proposed rule before providing input or establish a dialogue with the agency, either at the staff level or with Members involved directly, prior to the issuance of its proposed rule. Historically, Congress has tended to wait for the SBA to issue proposed rules concerning its size standards before providing input, essentially deferring to the agency's expertise in the technical and methodological issues involved in determining where to draw the line between small and large firms. Congress has then tended to respond to the SBA's proposed rules concerning its size standards after taking into consideration current economic conditions and input received from the SBA and affected industries. Waiting for the SBA to issue its proposed rule concerning its size standards before providing congressional input has both advantages and disadvantages. It provides the advantage of insulating the proposed rule from charges that it is influenced by political factors. It also has the advantage of respecting the separation of powers and responsibilities of the executive and legislative branches. However, it has the disadvantage of heightening the prospects for miscommunication, false expectations, and wasted effort, as evidenced by past proposed rules concerning the SBA's size standards that were either rejected outright, or withdrawn, after facing congressional opposition. Another policy option that has not received much congressional attention in recent years, but which Congress may choose to address, is the targeting of the SBA's resources. When the SBA reviews its size standards, it focuses on the competitive nature of the industry under review, with the goal of removing eligibility of firms that are considered large, or dominant, in that industry. There has been relatively little discussion of the costs and benefits of undertaking those reviews with the goal of targeting SBA resources to small businesses in industries that are struggling to remain competitive. GAO recommended this approach in 1978 and Roger Rosenberger, then SBA's associate administrator for policy, planning, and budgeting, testified at a congressional hearing in 1979 that it was debatable whether the SBA should provide any assistance to any of the businesses within industries where "smaller firms are flourishing." Revising the SBA's size standards using this more targeted approach would likely reduce the number of firms eligible for assistance. It would also present the possibility of increasing available benefits to eligible small firms in those industries deemed "mixed" or "concentrated" by the SBA without necessarily increasing overall program costs. Perhaps because previous proposals that would result in a reduction in the number of firms eligible for assistance have met with resistance, this alternative approach to determining program eligibility has not received serious consideration in recent years. Nonetheless, it remains an option available to Congress should it decide to change current policy. Appendix. SBA Size Standard Reviews, 2011-2016

Small business size standards are of congressional interest because they have a pivotal role in determining eligibility for Small Business Administration (SBA) assistance as well as federal contracting and, in some instances, tax preferences. Although there is bipartisan agreement that the nation's small businesses play an important role in the American economy, there are differences of opinion concerning how to define them. The Small Business Act of 1953 (P.L. 83-163, as amended) authorized the SBA to establish size standards to ensure that only small businesses receive SBA assistance. The SBA currently uses two types of size standards to determine SBA program eligibility: industry-specific size standards and alternative size standards based on the applicant's maximum tangible net worth and average net income after federal taxes. The SBA's industry-specific size standards determine program eligibility for firms in 1,036 industrial classifications in 23 sub-industry activities described in the 2017 North American Industry Classification System (NAICS). The size standards are based on one of four measures: (1) number of employees, (2) average annual receipts in the previous three (may soon be the previous five) years, (3) average asset size as reported in the firm's four quarterly financial statements for the preceding year, or (4) a combination of number of employees and barrel per day refining capacity. Overall, about 97% of all employer firms qualify as small under the SBA's size standards. These firms represent about 30% of industry receipts. The SBA conducts an analysis of various economic factors, such as each industry's overall competitiveness and the competitiveness of firms within each industry, to determine its size standards. However, in the absence of precise statutory guidance and consensus on how to define small, the SBA's size standards have often been challenged, typically by industry representatives seeking to increase the number of firms eligible for assistance and by Members concerned that the size standards may not adequately target assistance to firms that they consider to be truly small. This report provides a historical examination of the SBA's size standards and assesses competing views concerning how to define a small business. It also discusses P.L. 111-240, the Small Business Jobs Act of 2010, which authorized the SBA to establish an alternative size standard using maximum tangible net worth and average net income after federal taxes for both the 7(a) and 504/CDC loan guaranty programs; established, until the SBA acted, an interim alternative size standard for the 7(a) and 504/CDC programs of not more than $15 million in tangible net worth and not more than $5 million in average net income after federal taxes (excluding any carry-over losses) for the two full fiscal years before the date of the application; and required the SBA to conduct a detailed review of not less than one-third of the SBA's industry size standards every 18 months beginning on the new law's date of enactment (September 27, 2010) and ensure that each size standard is reviewed at least once every five years. P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, which directed the SBA not to limit the number of size standards and to assign the appropriate size standard to each NAICS industrial classification. This provision addressed the SBA's practice of limiting the number of size standards it used and combining size standards within industrial groups as a means to reduce the complexity of its size standards and to provide greater consistency for industrial classifications that have similar economic characteristics. P.L. 114-328, the National Defense Authorization Act for Fiscal Year 2017, which authorizes the SBA to establish different size standards for agricultural enterprises using existing methods and appeal processes. Previously, the small business size standard for agricultural enterprises was set in statute as having annual receipts not in excess of $750,000. P.L. 115-324, the Small Business Runway Extension Act of 2018, which directs federal agencies proposing a size standard (and, based on report language accompanying the act, presumably the SBA as well) to use the average annual gross receipts from at least the previous five years, instead of the previous three years, when seeking SBA approval to establish a size standard based on annual gross receipts. Legislation introduced during recent Congresses (including H.R. 33, the Small Business Regulatory Flexibility Improvements Act of 2017, and its Senate companion bill, S. 584, during the 115th Congress) to authorize the SBA's Office of Chief Counsel for Advocacy to approve or disapprove a size standard requested by a federal agency for purposes other than the Small Business Act or the Small Business Investment Act of 1958. The SBA's Administrator currently has that authority.

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Introduction to LIHEAP The Low Income Home Energy Assistance Program (LIHEAP) is a block grant program administered by the Department of Health and Human Services (HHS) under which the federal government gives annual grants to states, the District of Columbia, U.S. territories and commonwealths, and Indian tribal organizations to operate multi-component home energy assistance programs for needy households. Established in 1981 by Title XXVI of P.L. 97-35 , the Omnibus Budget Reconciliation Act, LIHEAP has been reauthorized and amended a number of times, most recently in 2005, when P.L. 109-58 , the Energy Policy Act, authorized annual regular LIHEAP funds at $5.1 billion per year from FY2005 through FY2007. The federal LIHEAP statute has very broad guidelines, with many decisions regarding the program's operation made by the states. Recipients may be helped with their heating and cooling costs, receive crisis assistance, have weatherizing expenses paid, or receive other aid designed to reduce their home energy needs. Households with incomes up to 150% of the federal poverty income guidelines or, if greater, 60% of the state median income, are federally eligible for LIHEAP benefits. States may adopt lower income limits, but no household with income below 110% of the poverty guidelines may be considered ineligible. The LIHEAP statute provides for two types of program funding: regular funds—sometimes referred to as block grant funds—and emergency contingency funds. Regular funds are allotted to states on the basis of the LIHEAP statutory formula, which was enacted as part of the Human Services Reauthorization Act of 1984 ( P.L. 98-558 ). The way in which regular funds are allocated to states depends on the amount of funds appropriated by Congress. The second type of LIHEAP funds, emergency contingency funds, last appropriated in FY2011, may be released and allotted to one or more states at the discretion of the President and the Secretary of HHS. The funds may be released at any point in the fiscal year to meet additional home energy assistance needs created by a natural disaster or other emergency. For more information on LIHEAP more generally, see CRS Report RL31865, LIHEAP: Program and Funding , by Libby Perl. The remainder of this report discusses only the history and methods of distributing regular LIHEAP funds to the states. Funds for tribes are included in each state's formula allocations and are distributed at the state level based on eligible tribal members. Territories receive funds separately as a percentage set aside of regular funds, so neither tribes nor territories are included in the formula discussion. LIHEAP Formula Basics The current statutory LIHEAP formula was enacted in 1984 as part of P.L. 98-558 , the Human Services Reauthorization Act. The statutory formula replaced a formula from a predecessor program to LIHEAP, the Low Income Energy Assistance Program (LIEAP), which was active for one year (FY1981) prior to enactment of LIHEAP. The LIEAP formula emphasized the heating needs of cold-weather states. When Congress changed the LIHEAP formula in 1984, there were two primary differences from the previous formula: home heating needs were not emphasized to the same degree, and the law provided that HHS use the most recent data available to calculate allotments (the LIEAP formula used static data to distribute funds to the states). For more information about both the history of energy assistance formulas from the 1970s through enactment of LIHEAP as well as the enactment of the statutory formula, see Appendix D . What Is the "Old" LIHEAP Formula? The term "old" LIHEAP formula refers to the way in which regular funds were distributed using the formula under LIEAP, which was then adopted by LIHEAP when it was enacted. Congress directed that LIEAP state allocations be determined using a complex combination of alternate formulas and factors that included residential energy expenditures, a measure of "coldness" called heating degree days, and household income. Further, as specified in law, the data for each factor were either from a particular year or measured a change over a particular period of time, so the data inputs did not change. See Table D-2 for LIEAP formula data. The result of the LIEAP combination of formulas was that each state was assigned a static percentage of funds that did not change from one year to the next. For example, Minnesota received approximately 4.0% of total LIHEAP funds under this formula, and Florida received not-quite 1.4% of the total. See column (a) of Table 1 for each state's share of funds under the "old" LIHEAP formula. What is the "New" LIHEAP Formula? The term "new" LIHEAP formula refers to the way in which funds are to be distributed via the statutory formula enacted as part of P.L. 98-558 . The statute provides that each state's share of funds is to be based on low-income household expenditures on home energy in the state. See the statutory language in the text box, below. Based on the statutory language, HHS calculates heating and cooling consumption and expenditures by low-income households in each state, with the numbers updated each year. (See " Calculating the New Formula Percentages ," later in this report, for more details about how the formula rates are calculated.) Each state's share is then based on the ratio of low-income household expenditures on home energy for the state to all expenditures of low-income households in the country. For example, when formula data were updated in FY2019, Minnesota's share of funds under the "new" formula was approximately 1.9% of the total and Florida's was about 4.4%. See column (b) of Table 1 for FY2019 formula shares. However, unlike under the "old" formula, states do not necessarily receive their "new" formula percentage share of funds. As can be seen from the Minnesota and Florida examples, the implementation of the "new" LIHEAP formula meant that some states saw their share of funding reduced, while others saw their share increased. As a result, Congress included in the statutory formula two "hold harmless" provisions to make sure that states that saw their shares of total funds decrease were prevented from dramatic drops in funding. The hold harmless provisions operate so that states that gain the most funding have their share reduced to compensate states that lose funding. See " Using the "New" Formula Percentages to Allocate Funds to the States ," later in this report, for a more detailed description about how the hold-harmless provisions operate. The LIHEAP Formula and Congressional Appropriations In the 25 years after the enactment of the "new" LIHEAP formula, Congress, with few exceptions, did not appropriate sufficient regular funds to require use of "new" formula data. Because of the hold-harmless provisions in the statutory formula, appropriations must exceed approximately $2 billion before the "new" formula percentages are used. During these years, the "old" formula percentages (found in column (a) of Table 1 ) were used to distribute LIHEAP funds to the states. Starting in FY2009, appropriations for LIHEAP regular funds have exceeded $2 billion, ranging from $3.3 billion to $4.5 billion over the last 10 years. However, the "new" formula has not operated as is provided for in the statute. Instead, Congress has directed, in appropriations language, that a portion of funds be distributed using the "new" formula, and the remainder using the "old" formula. For example, in FY2019 P.L. 115-245 provided that $716 million be distributed according to the "new" formula, and the remainder, about $2.96 billion (after deducting funds for the territories and training and technical assistance), distributed using the "old" formula percentages. For allocations to the states from FY2009-FY2019, see Appendix C . The next section of this report (" Determining State LIHEAP Allotments Using the "New" Formula ") goes into additional detail about how the "new" formula operates, while Appendix D explains more about the history of the "old" LIHEAP formula. Determining State LIHEAP Allotments Using the "New" Formula The LIHEAP statutory formula provides for three different methods to calculate each state's allotment of regular LIHEAP funds. The calculation method used to determine state allotments depends upon the size of the appropriation in a particular year. If the annual appropriation level is at or below the equivalent of a hypothetical FY1984 appropriation of $1.975 billion, then the "old "LIHEAP formula percentages apply. If appropriations exceed a hypothetical FY1984 appropriation of $1.975 billion, then "new" formula percentages apply and are used to calculate state allotments. To calculate the new formula percentages, HHS determines the heating and cooling costs of low-income households in each state. If the appropriation is less than $2.25 billion, the new formula percentages are used together with a hold-harmless level that prevents states from falling below the amount they would have received at the hypothetical FY1984 appropriations level. Finally, if appropriations equal or exceed $2.25 billion, the "new" percentages apply, as does the hold-harmless level, and, in addition, a hold-harmless rate increases the "new" formula percentage for certain states. This section describes the steps involved in allocating LIHEAP funds to the states under each of the appropriations triggers. Calculating the New Formula Percentages The LIHEAP formula uses the home energy expenditures of low-income households in each state as a first step in determining the amount of total regular funds that each state will receive. Specifically, this means estimating the amount of money that all low-income households (as defined by the LIHEAP statute) in each state spend on heating and cooling from all energy sources. This method accounts for variations in heating and cooling needs of the states, the types of energy used, energy prices, and the low-income population and their heating and cooling methods. Further, as mentioned in the previous section, the "new" formula requires HHS to determine allocations "on the basis of the most recent satisfactory data available to the Secretary." HHS updates these data annually. The most recent data were provided to CRS in 2019. The process for capturing the expenditures of low-income households involves the following steps: Total Residential Energy Consumption. The first step in calculating new formula rates is determining total residential energy consumption for each heating and cooling source in every state. Residential energy consumption is usually measured in terms of the total amount of British Thermal Units (Btus) used in private households and generally captures energy used for space and water heating, cooling, lighting, refrigeration, cooking, and the energy needed to operate appliances. The most recent data used in calculating LIHEAP formula rates come from the 2016 Energy Information Administration (EIA) State Energy Data System consumption estimates. Temperature Variation. The next step in determining the formula rates involves adjusting the amount of energy consumed for each fuel source by temperature variation in each state. This is done by using a ratio consisting of the 30-year average heating and cooling degree day data to each state's share of the most recent year's average heating and cooling degree days. A heating degree day measures the extent to which a day's average temperature falls below 65°F and a cooling degree day measures the extent to which a day's average temperature rises above 65°F. For example, a day with an average temperature of 50°F results in a measure of 15 heating degree days; a day with an average temperature of 80°F results in a measure of 15 cooling degree days. The purpose of the adjustment to fuel consumption is to account for abnormally warm or cool years, where energy usage might attain extreme values. This information is collected by the National Oceanic and Atmospheric Administration. The most recent year's average heating and cooling degree day data are from 2016, and the 30-year average was computed from 1971 to 2000. Heating and Cooling Consumption. As mentioned above, total residential energy consumption encompasses other uses in addition to heating and cooling (e.g., operation of appliances). So the next step in calculating LIHEAP formula rates is to derive the portion of fuel consumed specifically to heat and cool homes as opposed to other uses. The EIA, as part of the Residential Energy Consumption Survey (RECS), uses an "end use estimation methodology" to estimate the amount of fuel used for heating and cooling (among other uses). The most recent information on heating and cooling consumption comes from the 2009 RECS. HHS adjusts the EIA heating and cooling consumption estimates using heating degree day and cooling degree day data. Low-Income Household Heating and Cooling Consumption. After estimating heating and cooling consumption for all households, the next step is to calculate heating and cooling consumption in Btus for low-income households. HHS uses Census data to determine fuel sources used by low-income households. The most recent information on low-income households and the fuel sources they use comes from the American Community Survey five-year estimates for 2012-2016. In addition, low-income consumption data are adjusted to account for the fact that low-income households might use more or less of a fuel source than is used by households on average. This is done using consumption data from the 2009 RECS. Total Spending on Heating and Cooling. To arrive at the amount of money that low-income households spend on heating and cooling, the number of Btus used by low-income households that were estimated in the previous step are multiplied by the average fuel price for each fuel source. The total amount spent on heating and cooling by low-income households for each fuel source is then added together to arrive at total spending for each state. Regional energy price variation can be significant, and the formula takes expected expenditure differences into account. This information is collected by the EIA and published in the State Energy Data System Consumption, Price, and Expenditure Estimates. The most recent price data used to calculate formula rates are from 2016. New Formula Percentage. Finally, these expenditure data are used to estimate the amount spent by low-income households on heating and cooling in each state relative to the amount spent by low-income households on heating and cooling in all states. The calculated proportion becomes the new formula percentage for each state. Table 1 at the end of this section shows both the percentages under the "old" formula (column (a)) and the most recent "new" formula percentages (column (b)), received by CRS from HHS in 2019. To see how the formula rates for each state have changed in recent years, see Table 2 . These new formula percentages are used to allocate LIHEAP funds to the states if the annual appropriation exceeds the equivalent of a hypothetical FY1984 appropriation of $1.975 billion. However, they do not represent the exact percentage of funds that all states will receive under the new formula. The ultimate allotments are determined after application of both the hold-harmless level and hold-harmless rate, described in the next section. The new percentages are the starting point for determining how funds will be allocated to the states. Using the "New" Formula Percentages to Allocate Funds to the States The LIHEAP "new" formula percentages that HHS calculates using the most recent satisfactory data available do not necessarily represent the percentage of funds that states will receive. State allotments depend upon the application of the two hold-harmless provisions in the LIHEAP statute. Some states must have their share of funds ratably reduced in order to hold harmless those states that would, but for the hold-harmless provisions, lose funds. Other states see a gain in their share of funds because they benefit from the hold-harmless provisions. The application of the hold-harmless provisions depends upon the size of the appropriation for a given fiscal year. These appropriation level triggers are described below. "Old" Formula: Appropriations at or Below $1.975 Billion The LIHEAP statute does not contain an explicit trigger for the "new" formula rates to be used. However, the statute specifies that states must receive no less than "the amount of funds the State would have received in fiscal year 1984 if the appropriations for this subchapter for fiscal year 1984 had been $1,975,000,000." As a result, up to this appropriation level, states receive the same percentage of funds that they would have received at a given appropriation level under the "old" LIHEAP formula. The FY1984 appropriation of $1.975 billion referred to in the LIHEAP statute is hypothetical because this was not the amount actually appropriated in FY1984. The actual FY1984 appropriation was $2.075 billion. In addition, the current year appropriation that is "equivalent to" a hypothetical FY1984 appropriation of $1.975 billion is not exactly $1.975 billion. In FY1984, with the exception of funds provided to the territories, all LIHEAP regular funds were distributed to the states. Since then, two other funds have become part of the regular fund distribution. These are funds for training and technical assistance (TTA) and for the leveraging incentive (LI) grants (which includes REACH grants) to the states. This means that an appropriation that is equivalent to a hypothetical FY1984 appropriation of $1.975 billion must account for these new funds. For example, in FY2019, Congress appropriated $2.988 million for TTA and no funding for LI /REACH, so the equivalent of an FY1984 appropriation of $1.975 billion is approximately $1.978 billion. The LIHEAP formula in FY1984 distributed funds by giving states the same percentage of funds that they received in FY1981 under the predecessor program, the Low Income Energy Assistance Program (LIEAP). Table 1 shows rates under the old formula in column (a). For example, at an appropriation at or below the equivalent of a hypothetical FY1984 appropriation of $1.975 billion, Alabama would receive 0.86% of total funds, Alaska would receive 0.55% of total funds, and so on. Table A-1 , column (a), reports the dollar amount of funds that each state would have received in FY1984 had the regular fund appropriation been $1.975 billion. For comparison purposes, the dollar amounts also assume that funds for the territories would be 0.5% of the total, a change made by HHS beginning with the FY2014 appropriation. "New" Formula with Hold-Harmless Level: Appropriations Between $1.975 Billion and $2.25 Billion If the regular LIHEAP appropriation exceeds the equivalent of a hypothetical FY1984 appropriation of $1.975 billion for the fiscal year, all funds are to be distributed under a different methodology, using the new set of percentages described earlier. In addition, a hold-harmless level applies to ensure that certain states do not fall below the amount of funds they would have received at the equivalent of a hypothetical FY1984 appropriation of $1.975 billion. Table 1 shows whether a state benefits from the hold-harmless level. This is indicated by a "Y" in column (c), while the dollar amount of funds those states receive by being held harmless appears in column (d). For example, Alabama is not held harmless, while Colorado is held harmless. The dollar amount of funds that Colorado receives pursuant to the hold-harmless level is $31.613 million. But for the hold-harmless level, Colorado would receive less than this dollar amount at its new formula percentage at certain appropriation levels. Eventually, when appropriations increase sufficiently, the percentage of funds under the new formula for hold-harmless states will exceed their hold harmless amounts and they will begin to receive their new percentage of funds. This appropriation level varies for each state. For example, at lower appropriation levels, the $31.613 million hold-harmless level for Colorado exceeds the state's new percentage share of 1.438% of total funds. However, by the time appropriations reach $2.25 billion, Colorado's new percentage share exceeds $31.613 million and the state begins to receive funds at the new percentage. Eventually, many states will receive the percentage of funds at their new percentage. The hold-harmless level is achieved by reducing the allocation of funds to states with the greatest proportional gains under the new formula percentages. For example, under the most recent LIHEAP formula percentages, states with the greatest proportional gains were Nevada, Arizona, and Texas. Depending on the appropriation level, these states (and others with the greatest gains) may then have their allotments reduced to hold harmless the states that would otherwise see reduced benefits. So although these states with the greatest proportional gains will see their LIHEAP allotments increase under the new formula, their allotments may not increase to reach their new formula rates (column (b) of Table 1 ). Columns (b) and (c) of Table A-1 show estimated allotments to the states at hypothetical appropriations levels between $1.975 billion and $2.25 billion. Column (b) shows the estimated allotment of funds that each state would receive when the regular fund appropriation is at $2.14 billion and column (c) shows the estimated allotment of funds when the regular fund appropriation is just under $2.25 billion ($2,249,999,999). "New" Formula with Hold-Harmless Level and Rate: Appropriations At or Above $2.25 Billion The LIHEAP statute stipulates additional requirements in the method for distributing funds when the appropriation is at or above $2.25 billion. At this level, the hold-harmless level still applies, but, in addition, a new hold-harmless rate is applied. Specifically, for all appropriation levels at or above $2.25 billion, states that would have received less than 1% of a total $2.25 billion appropriation must be allocated the percentage they would have received at a $2.14 billion appropriation level. (This assumes the percentage at $2.14 billion is greater than the percentage originally calculated at the hypothetical $2.25 billion appropriation; this is not true for all states that receive less than 1% of the $2.25 billion appropriation.) Then that state will receive the percentage share of funds it would have received at $2.14 billion for all appropriation levels at or above $2.25 billion. This hold-harmless rate ensures a state specific share of the total available funds. As with the hold-harmless level, the allocations to the states with the greatest proportional gains are then ratably reduced again until there is no funding shortfall. Column (e) of Table 1 shows which states benefit from the hold-harmless rate, indicated by a "Y," while column (f) shows the proportion of funds that those states receive. For example, Idaho benefits from the hold-harmless rate and receives 0.580% of the total appropriation when appropriations are at or above $2.25 billion. The application of the hold-harmless rate creates another layer of discontinuity in the allocation rates. States that are ratably reduced see their allocations at $2.25 billion fall below the amount they would receive at $2.249 billion, while states that benefit from the hold-harmless rate see their funding jump up slightly. Columns (d) through (i) of Table A-1 in Appendix A show estimated allotments to states at various hypothetical appropriations levels at or above $2.25 billion. Implementation of the "New" LIHEAP Formula Until FY2006, appropriations for regular LIHEAP funds had only exceeded the equivalent of a hypothetical FY1984 appropriation of $1.975 billion in 1985 and 1986; thereafter, from FY1987 through FY2005, and again in FY2007, states continued to receive the same percentage of LIHEAP funds that they received under the program's predecessor, LIEAP (see column (a) of Table 1 for these percentages). In FY2006, funds were distributed under the "new" LIHEAP formula when Congress appropriated $2.48 billion in regular funds for the program. In FY2008, perhaps due to an oversight, the new formula was again used to distribute funds. The FY2008 Consolidated Appropriations Act ( P.L. 110-161 ) failed to authorize a set-aside called leveraging incentive grants. As a result, the funds for those grants were added to the LIHEAP regular funds, triggering use of new formula data. In FY2009, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act ( P.L. 110-329 ) appropriated $4.51 billion in regular funds. However, the law further specified that $840 million be distributed according to the "new" LIHEAP formula, with the remaining $3.67 billion distributed according to the percentages of the "old" formula established by LIEAP. From FY2010 through the present, Congress has continued to appropriate funds using a version of a split between the "old" and "new" formulas. See Table C-1 in Appendix C of this report for the distribution of funds to the states from FY2009 through FY2019. Appendix A. Estimated Allotments to the States Under Various Hypothetical Appropriations Levels Table A-1 , below, shows estimated allocations to the states at various hypothetical appropriations levels. In column (a) are allotments at the equivalent of a hypothetical FY1984 appropriation of $1.975 billion—under recent LIHEAP practice where funds are set aside for training and technical assistance, the equivalent appropriation level is approximately $1.978 billion. The remaining columns show estimated allotments at appropriations of $2.14 billion, just under $2.25 billion, $2.25 billion, $3.0 billion, $3.69 billion (the amount appropriated in FY2019), $4.0 billion, and $5.1 billion, the amount at which the LIHEAP program was last authorized in P.L. 109-58 . In each case, the estimates assume that 0.5% would be set aside for the territories, the amount set aside by HHS starting in FY2014. Appendix B. Further Depiction of How State Allotments Depend Upon Appropriation Levels Figure B-1 graphically illustrates the interplay of the hold harmless provisions in state allotments for three types of states over a range of appropriations from $0 to $5.1 billion. Represented are (1) a hold-harmless level state, (2) a state whose increased allocations are ratably reduced in order to maintain allocations for the hold-harmless level and rate states, and (3) a hold-harmless level and rate state. These three states are not representative of all states in the three categories; see Table A-1 for the range of individual state allocations. In the figure, there are three vertical areas. These areas separate the three levels of appropriations that are triggers under current law and were explained previously in this report. The figure also graphs the three types of states. These three types of states are as follows. Hold-Harmless Level Only State . This state is depicted with a blue line running from $0 to point G. States with "new" formula percentages that start out lower than their "old" formula percentages are subject to only the hold-harmless level provision. They do not qualify for the hold-harmless rate because each state's share of the regular funds at $2.25 billion is greater than 1%. The hold-harmless level is evident from point A to point F. Here, despite increases in the appropriations level, the state allotment remains fixed. In Table 1 , these are the states that have a "Y" in column (c) and an "N" in column (e).Ratable Reduction State. This state is depicted with a purple line running from $0 to point H. States with "new" formula percentages that are higher than their "old" formula percentages are subject to a ratable reduction. Their new formula percentage is greater than their old (FY1984) percentage. There is a small decrease in state allotments at point D that is attributable to the increased shortfall on the distribution of funds that the hold-harmless rate imposes. In Table 1 , these are the states that have an "N" in both column (c) and column (e).Hold-Harmless Level and Rate State. This state is depicted with a red line running from $0 to point I. States have lower new formula percentages and are subject to both the hold-harmless level and the hold harmless rate provisions. The hold-harmless level is evident by the fixed state allotment from point C to point E. However, the (subtle) jump at exactly $2.25 billion (point E) signals that this state is subject to the hold-harmless rate provision. After the allotment jump at $2.25 billion, the state's allotment continues to increase (at a rate lower than the old rate, but higher than the new rate). In Table 1 , these are the states that have a "Y" in column (c) and a "Y" in the column (e). Appendix C. LIHEAP Formula Fund Allocations to the States, FY2010-FY2019 Since FY2009, Congress, through appropriations language, has directed that a portion of the regular funds appropriated be distributed to the states via the "new" LIHEAP formula, and the remainder using the "old" formula percentages. The portion of funds distributed via the new formula has ranged from 14% to nearly 20% of regular funds appropriated, depending on the year. Table C-1 , below, shows actual LIHEAP regular fund allocations to the states from FY2009 through FY2019. In each year, funds for the territories, training and technical assistance (TTA), and leveraging incentive grants (if appropriated) are first subtracted from the total appropriation. The remainder of funding is distributed to the states via formula as directed in appropriations language. For example, in FY2019 Congress directed that $716 million be distributed via the "new" LIHEAP formula, and the remainder via the "old" LIHEAP formula percentages. The column header in Table C-1 for each year shows the total regular funds appropriated for LIHEAP (including funds that were not distributed via the formula such as rescissions and transfers). Total funding distributed to the states via formula is in the final row of the table for each year. The table notes describe the division between "new" and "old" formulas, and any other relevant information. Appendix D. History of the LIHEAP Formula Predecessor Programs to LIHEAP The mid- to late-1970s, a time marked by rapidly rising fuel prices, also marked the beginning of federal energy assistance funding for low-income households. The first national program to help low-income households was created in early 1975 to assist families with energy conservation primarily through home weatherization. This assistance was provided through a new Emergency Energy Conservation Program (EECP), enacted as part of the Headstart, Economic Opportunity, and Community Partnership Act of 1974 ( P.L. 93-644 ). The funds were administered by the Community Services Administration (CSA), the successor agency to the Office of Economic Opportunity, which was responsible for many of the programs created as part of the 1964 war on poverty. Beginning in 1977, funds were also made available through the CSA to help families directly pay for fuel (as opposed to weatherization expenses) via a variety of programs. Each of these programs had in common a focus on the need for heating assistance (versus cooling assistance). Congress continued to appropriate funds for energy assistance programs through FY1980, at which point a new program, the Low Income Energy Assistance Program (LIEAP), was enacted as part of the Crude Oil Windfall Profits Tax Act of 1980 ( P.L. 96-223 ). LIEAP, which was administered by the Department of Health and Human Services (HHS), was funded for one year, FY1981, before the creation of LIHEAP. Like the CSA programs, LIEAP emphasized heating over cooling needs. This preference was reflected in both the CSA program formulas and the LIEAP set of formulas, which used variables that benefitted cold-weather states to determine how funds would be distributed. The LIEAP set of formulas continues to have relevance for the way in which LIHEAP funds are distributed. This section of the report describes these predecessor programs to LIHEAP and their distribution formulas. Community Services Administration Energy Assistance Programs On January 4, 1975, President Ford signed into law the Headstart, Economic Opportunity, and Community Partnership Act of 1974 ( P.L. 93-644 ), which contained funds for a new program, called the Emergency Energy Conservation Program (EECP). The program was to be administered by the Community Services Administration (CSA), and its purpose was to enable low-income individuals and families, including the elderly and the near poor, to participate in energy conservation programs designed to lessen the impact of the high cost of energy ... and to reduce ... energy consumption. The law governing EECP listed a number of eligible activities in which states could participate, including energy conservation and education programs; weatherization assistance; loans and grants for the purchase of energy conservation technologies; alternative fuel supplies; and fuel voucher and stamp programs. Despite the variety of activities that could be funded through the program, the first CSA funding notice regarding the program limited eligible activities to "winterizing" homes and to giving emergency assistance "to prevent hardship or danger to health due to utility shutoff or lack of fuel." During the four years the EECP was funded, the majority of funds were used for weatherization expenses. EECP funds were distributed to states via a formula that benefitted those states with high heating costs. One formula variable in particular, a measure of "coldness" called heating degree days, benefitted cold-weather states. Heating degree days measure the extent to which a day's average temperature falls below 65° Fahrenheit. For example, a day with an average temperature of 50° results in a measure of 15 heating degree days. Because heating degree days are higher in cold-weather states, including the heating degree day variable in a formula favors states with greater heating needs. Squaring the heating degree days magnifies this effect. The EECP formula took the number of population-weighted heating degree days in each state, squared them, and multiplied the result by the number of households in poverty that owned their homes to determine how funds would be allocated. The CSA acknowledged the emphasis on heating needs in its formula, stating that the FY1975 allocation "was heavily weighted to the coldest areas." In the three fiscal years that followed the first appropriation for the EECP, from FY1976 through FY1978, the CSA changed somewhat the way in which it allocated funds to the states; however, the factors continued to favor cold-weather states through use of either heating degree days or heating degree days squared. The first year that Congress specifically appropriated funds for direct assistance to help low-income households (those at or below 125% of poverty) pay their energy costs (instead of funds that went primarily for weatherization and conservation activities) was FY1977. The FY1977 Supplemental Appropriations Act ( P.L. 95-26 ) provided $200 million for a Special Crisis Intervention Program to be administered by CSA. States could use funds to make direct payments to fuel providers on behalf of low-income families lacking the financial resources to pay their energy bills. The CSA directed states to target households where utilities had been shut off (or were threatened with shut off) or who could prove "dire financial need" as the result of paying large energy bills. Although the law did not reserve funds exclusively for heating costs, the way in which funds were allocated to the states emphasized heating need. Funds were distributed to the states based on a formula that used (1) heating degree days squared, (2) the number of households in poverty, (3) the number of persons above age 65 with incomes below 125% of poverty, and (4) the relative cost of fuel in the region. Congress again appropriated $200 million for crisis intervention in both FY1978 and FY1979. In FY1978, funds were available to households with the need for assistance as the result of an energy-related emergency such as lack of fuel, a natural disaster, fuel shortages, and widespread unemployment. In FY1979, funds were made available to assist families facing "substantially increased energy costs and/or life- or health-threatening situations caused by winter-related energy emergencies." In FY1980, Congress appropriated a total of $1.6 billion for energy assistance. Of this amount, $400 million was appropriated for the Energy Crisis Assistance Program (ECAP, a CSA program similar to the Special Crisis Intervention Program) through two separate appropriations. The remainder, $1.2 billion, was appropriated as part of the FY1980 Department of the Interior Appropriations Act ( P.L. 96-126 ) to the Department of Health, Education, and Welfare (HEW, the predecessor to HHS) for cash assistance and crisis intervention due to high energy costs. This appropriation to HEW is sometimes referred to as Low Income Supplemental Energy Allowances. Of this $1.2 billion, $400 million was to be distributed specifically to recipients of Supplemental Security Income (SSI). The rest of the funds appropriated to HEW, approximately $800 million, as well as the ECAP funds, were distributed to states on the basis of three factors: heating degree days squared, the number of households below 125% of poverty, and the difference in home heating energy expenditures between 1978 and 1979. The formula used to distribute the $400 million for SSI recipients used these same factors but also included the number of SSI recipients in each state relative to the national total. The Low Income Energy Assistance Program (LIEAP) Formula In April 1980, Congress replaced the patchwork energy assistance programs of the late 1970s with one program, the Low Income Energy Assistance Program (LIEAP). LIEAP, the direct predecessor program to LIHEAP, was established as part of the Crude Oil Windfall Profits Tax Act of 1980 ( P.L. 96-223 ). The program was introduced in the Senate as the Home Energy Assistance Act ( S. 1724 ) and was incorporated into H.R. 3919 , the bill that would become the Crude Oil Windfall Profits Tax Act, on the Senate floor. Like the energy assistance programs of the late 1970s such as the Special Crisis Intervention Program and the Low Income Supplemental Energy Allowances, LIEAP allocated funds to states in order to help low-income households pay their home energy costs. Also like these predecessor programs, LIEAP allocated funds to states using a method that put more emphasis on the heating needs of cold-weather states than it did on cooling needs. The formula developed under LIEAP continues to be relevant in several ways: (1) it has been used to distribute LIHEAP funds as recently as FY2007, (2) the percentage shares of funds that states received continue to be the benchmark for the way in which states are held harmless under the current LIHEAP formula, and (3) from FY2009 through the present, Congress has distributed the bulk of LIHEAP funds using the LIEAP formula percentages (for more information, see Appendix C ). As a result, the variables used are important in understanding the current formula and the way in which it is used to distribute funds. Ultimately, Congress developed the LIEAP formula through two different laws: P.L. 96-223 , the law that authorized LIEAP, and P.L. 96-369 , a continuing resolution enacted six months later. The following two subsections describe the elements of the formula developed through each. Formula Under P.L. 96-223 The formula developed as part of S. 1724 , and subsequently incorporated into P.L. 96-223 , reflected, in part, the concern that the problem of rising energy costs were "most critical in areas with high home heating costs." The formula for LIEAP arose from a Senate compromise over three different proposals. The debate centered around the degree to which heating should be emphasized over energy expenditures generally. Some Members wanted a formula that accounted for all energy uses and was not based solely on geographic location, while others saw the program's purpose as solely to provide heating assistance. The debate on the Senate floor was, at times, contentious, with Senator Edmund Muskie (Maine) resolved to filibuster in order to support the heating needs of northern states. Primarily at issue was the measure of heating degree days, particularly the extent to which they would be weighted and whether they would be squared. Under the final compromise LIEAP formula in P.L. 96-223 , states received funds under one of four different alternatives used to measure home energy need, depending on which one benefitted a state the most. Three of the four options contained different combinations of several formula factors: residential energy expenditures; heating degree days or heating degree days squared; and the number of low-income households in the state. Under the first formula alternative, 50% of the allocation was based on residential energy expenditures and 50% on heating degree days squared multiplied by the number of households at or below the Bureau of Labor Statistics (BLS) lower living standard. Under the second formula alternative, 25% of the allocation was based on residential energy expenditures and 75% based on heating degree days squared multiplied by the number of households at or below the BLS lower living standard. Under the third formula alternative, 50% of the allocation was based on residential energy expenditures and 50% based on heating degree days (not squared) multiplied by the number of households with incomes at or below the BLS lower living standard. The fourth option guaranteed states a minimum benefit of $120 for each household that received Aid to Families with Dependent Children (AFDC), SSI, or Food Stamp benefits. The option was added to S. 1724 at the Finance Committee level in recognition of the fact that (in general) funds were not being provided for cooling costs. (See Table D-2 for a breakdown of these formulas.) While the focus of the formula was on heating assistance, the LIEAP law did allow states to provide for cooling when households could demonstrate medical necessity. Congress authorized LIEAP for one year, FY1981, at $3 billion, but funds were not appropriated as part of P.L. 96-223 . Formula Under P.L. 96-369 Before the formula in P.L. 96-223 could be used to allocate funds, Congress introduced an alternative method for computing the state distribution rates. It did so when it appropriated $1.85 billion in LIEAP funds for FY1981 in a continuing resolution ( P.L. 96-369 ), in October of 1980, six months after enactment of the Crude Oil Windfall Profits Tax Act. The new allocation method was not described in P.L. 96-369 , however. Instead, the continuing resolution referred to a House Appropriations Committee report (H. Rept. 96-1244) accompanying another bill—the FY1981 Departments of Labor, Health and Human Services and Education Appropriations Act. It was in this committee report that the additional formula components for LIEAP were laid out. The additional formula components appeared to be intended to act as a counter to the formula developed in P.L. 96-223 , which some argued benefitted warmer weather states more than was necessary. The first step in the new set of formulas was to determine each state's share of funds using two calculations set out in H. Rept. 96-1244 and assign states the greater of the two amounts. Under the first formula alternative, 50% of the allocation was based on the increase in home heating expenditures, and 50% was based on the number of heating degree days squared times the population with income less than or equal to 125% of poverty. This was the same formula used for the Low-Income Supplemental Energy Allowances Program. Under the second formula alternative, 25% of the allocation was based on total residential energy expenditures, and 75% was based on heating degree days squared multiplied by the number of low-income households in the state. The greater of the two percentages calculated using the formula in H. Rept. 96-1244 was then assigned to each state. After adjusting state allotments proportionately so that the total allocation reached 100% of funds available, the second step in the amended formula was to compare these state allotments to 75% of the amount each state would receive under the formula in P.L. 96-223 . States would then receive the greater of these two amounts. To see the percentage of funds that each state received under the LIEAP formula, see Table 1 , column (a). Although the alternative formulas under H.Rept. 96-1244 used factors similar to those in P.L. 96-223 , the original set of formulas was somewhat more favorable to warm-weather states. For example, the BLS lower living standard, used in all of the P.L. 96-223 formulas but only one of those in H.Rept. 96-1244, was higher than 125% of poverty for most household sizes, which benefitted the South, where the low-income population was higher. The original set of formulas in P.L. 96-223 also provided for a minimum benefit to states on the basis of the number of AFDC, SSI, and Food Stamp recipient households, unconditioned on their household heating expenditures. In addition, the inclusion of the increase in home heating expenditures in H. Rept. 96-1244 benefitted Northeastern states, where heating oil prices had increased substantially. Enactment of LIHEAP In August 1981, the Omnibus Budget Reconciliation Act, P.L. 97-35 , created LIHEAP, replacing its predecessor, LIEAP. The new program was not substantially different from the previous program. Some of the changes to the program included less restrictive federal rules and more state flexibility in determining how to operate their LIHEAP programs. The program was authorized at $1.85 billion for FY1982-FY1984. In FY1982, Congress appropriated $1.875 billion for LIHEAP; in FY1983, it appropriated $1.975 billion; and in FY1984, $2.075 billion. Continued Use of the LIEAP Formula When the formula for LIEAP was initially created in 1980 under the Crude Oil Windfall Profits Tax Act ( P.L. 96-223 ), it brought about a good deal of debate on the floor of the Senate, where the formula provisions were added to the legislation. Discussion over the formula also occurred leading up to the enactment of P.L. 96-369 , the FY1981 continuing resolution that funded LIEAP and amended the formula. Despite these earlier disagreements over formula allocations, the process to enact LIHEAP in 1981 did not engender the same level of debate or result in a different formula. Instead, the law creating LIHEAP provided that the allotment percentages for each state would remain the same as they had been in FY1981 under the LIEAP formula as amended by P.L. 96-369 . From FY1982 through FY1984, then, states continued to receive the same percentage of funds that they received under the LIEAP formula. The 1984 LIHEAP Reauthorization: A New Formula Formula Discussions When Congress began to consider reauthorizing LIHEAP in 1983, two aspects of the formula were debated. First, some legislators recognized that the multi-step LIEAP formula benefitted cold-weather states relative to warm-weather states. The second debated aspect of the formula centered on the appropriateness and timeliness of the data used in formula calculations. In 1983, the energy information used to calculate state allotments was not the most current data available. For example, the most recent data the formula used were the change in the cost of energy between 1978 and 1980, or the cost of energy in 1980, depending on the sub-formula one chose to apply. No aspect of the formula took account of increased costs after 1980. Legislative sentiment in favor of changing the formula was evident, when, in September 1983, the House adopted an amendment to the Emergency Immigration Education Act ( H.R. 3520 ) that would have adjusted the LIHEAP formula and resulted in a change in allocations to the states. The amendment's formula took into account the energy expenditures of poor families, which, according to the amendment's sponsor, Representative Carlos Moorhead (California), would result in lower percentage allocations for 23 states, mostly in the Northeast and Midwest, gains for 27, primarily in the South, and the same allocation for one state. The amendment was eventually dropped from H.R. 3520 in conference with the Senate. Introduction of a Hold-Harmless Level Efforts to reauthorize LIHEAP began in April 1983 with the introduction of the Low-Income Home Energy Assistance Amendments of 1984 ( H.R. 2439 ). The bill was referred to two committees: Education and Labor and Energy and Commerce. Within the Energy and Commerce committee, two subcommittees held markups: Fossil and Synthetic Fuels and Energy Conservation and Power. As introduced, H.R. 2439 did not contain changes to the LIHEAP formula. The Subcommittees on Fossil and Synthetic Fuels and Energy Conservation and Power worked together to arrive at a formula change, which had the effect of shifting funds from states in the Northeast to the South and West. Unlike the previous set of formulas developed under LIEAP, the new formula directed the Department of Health and Human Services to determine states' allotments "using data relating to the most recent year for which data is available." Because the cost of heating oil remained steady between 1981 and 1983, and the price of natural gas rose 33%, this meant that states in the Northeast—where heating oil was the primary source of energy—would lose LIHEAP dollars, while states in the South and the Midwest would gain under this provision. In addition, population growth in the South (as well as its higher poverty rates) meant that southern states would benefit from the use of more recent population data. To offset the losses to certain states resulting from the use of current data, H.R. 2439 also included a hold-harmless provision, or hold-harmless level; this provision ensured that if appropriations were less than or equal to $1.875 billion, states would receive no less than their allotment would have been under the old formula at this appropriations level. The bill additionally increased the LIHEAP authorization level to $2.075 billion for FY1984, $2.26 billion for FY1985, $2.5 billion in FY1986, $2.625 billion for FY1987, and $2.8 billion for FY1988. Introduction of a Hold-Harmless Rate After the House Energy and Commerce Committee reported H.R. 2439 to the House floor—but before the full House could act on the bill—the Senate passed its version of LIHEAP reauthorization as part of the Human Services Reauthorization Act ( S. 2565 ) on October 4, 1984. The Senate bill contained language very similar to H.R. 2439 , but made several changes and additions to the formula. S. 2565 specified that states' shares of LIHEAP funds would be based on the home energy expenditures of low-income households, not on expenditures of all households. The hold-harmless level was altered. S. 2565 directed that no state in FY1985 would receive less funding than it received in FY1984, and for FY1986 and thereafter, no state would receive less than the amount they would have received in FY1984 if the appropriations level had been $1.975 billion. A second hold-harmless provision, or hold-harmless rate, was created. The provision maintained the percentage allocated rather than a total funding level allocated to each affected state. The hold-harmless rate provision guaranteed that certain states would receive increased allotments when appropriations reached $2.25 billion. States would qualify for this increase if their total allotment percentage at an appropriation of $2.25 billion were less than 1%. These states would instead receive the allotment rate they would have received at an appropriation of $2.14 billion if that allotment rate were higher than the rate at $2.25 billion. In their debate about S. 2565 , Senators referred to the hold-harmless rate as the "small States hold harmless," as the intent was to protect the small (population) states' shares of LIHEAP funds. Otherwise, the concern was that appropriations might have to increase significantly before small state allotments would increase above their hold-harmless levels, with the states' percentage shares of funds declining even as total appropriations increased. The Senate bill also included different authorization amounts for LIHEAP, $2.14 billion for FY1985 and $2.275 billion for FY1986. After S. 2565 passed the Senate, the House debated and passed the bill on October 9, 1984, retaining all the provisions included in the Senate version. The bill became P.L. 98-558 , the Human Services Reauthorization Act, on October 30, 1984.

The Low Income Home Energy Assistance Program (LIHEAP) provides funds to states, the District of Columbia, U.S. territories and commonwealths, and Indian tribal organizations (collectively referred to as grantees) primarily to help low-income households pay home energy expenses. The LIHEAP statute provides for two types of funding: regular funds (sometimes referred to as block grant funds) and emergency contingency funds. Regular funds are allocated to grantees based on a formula, while emergency contingency funds may be released to one or more grantees at the discretion of the Secretary of the Department of Health and Human Services (HHS) based on emergency need. This report focuses on the way in which regular funds are distributed. Regular LIHEAP funds are allocated to the states according to a formula that has a long and complicated history. (Tribes receive a share of state funding, while a percentage of regular funds is set aside for territories.) Prior to enactment of LIHEAP, in 1981, a series of predecessor energy assistance programs focused on the heating needs of cold weather states. This focus was in part the result of high heating oil prices throughout the 1970s. When LIHEAP was enacted, it adopted the formula of its immediate predecessor program, the Low Income Energy Assistance Program (LIEAP). Funds under LIEAP were distributed according to a multi-step formula that was more favorable to colder-weather states. The LIHEAP statute specified that states would continue to receive the same percentage of regular funds that they did under the LIEAP formula. This is sometimes referred to as the "old" LIHEAP formula. After several years, when Congress reauthorized LIHEAP in 1984 it changed the program's formula by requiring the use of more recent population and energy data (data were not updated under the "old" formula) and reducing the emphasis on heating needs. The effect of these changes meant that, in general, some funding would be shifted from colder-weather states to warmer-weather states. (Using FY2019 formula data, the figure below shows which states receive a greater share of funds under the "new" and "old" formulas.) To prevent a dramatic shift of funds, Congress added two "hold-harmless" provisions to the formula. The percentage of funds that states receive under the formula enacted in 1984 is sometimes referred to as the "new" formula. New formula data is used to calculate state allotments when appropriations for LIHEAP regular funds exceed approximately $2 billion. In the years following the enactment of the "new" LIHEAP formula, appropriations did not reach this level, so until the mid-2000s funds were largely distributed according to the "old" formula percentages. However, in FY2006, and in FY2009 through FY2019, regular fund appropriations have ranged from $2.5 billion to $4.5 billion, and the "new" formula has been incorporated into the way in which funds are distributed to the states. Notably, however, since FY2009 Congress has limited the operation of the "new" formula by requiring that the majority of regular funds be distributed using "old" formula percentages. For distributions to the states from FY2009-FY2019, see Table C-1.

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Background Firefighting activities are traditionally the responsibility of states and local communities. As such, funding for firefighters is provided mostly by state and local governments. During the 1990s, shortfalls in state and local budgets, coupled with increased responsibilities of local fire departments, led many in the fire community to call for additional financial support from the federal government. Although federally funded training programs existed (and continue to exist) through the National Fire Academy, and although federal money was available to first responders for counterterrorism tra ining and equipment through the Department of Justice, there did not exist a dedicated program, exclusively for firefighters, which provided federal money directly to local fire departments to help address a wide variety of equipment, training, and other firefighter-related needs. Assistance to Firefighters Grant Program During the 106 th Congress, many in the fire community asserted that local fire departments require and deserve greater support from the federal government. The Assistance to Firefighters Grant Program (AFG), also known as fire grants or the FIRE Act grant program, was established by Title XVII of the FY2001 Floyd D. Spence National Defense Authorization Act ( P.L. 106-398 ). Currently administered by the Federal Emergency Management Agency (FEMA) in the Department of Homeland Security (DHS), the program provides federal grants directly to local fire departments and unaffiliated Emergency Medical Services (EMS) organizations to help address a variety of equipment, training, and other firefighter-related and EMS needs. AFG also supports fire prevention projects and firefighter health and safety research and development through the Firefighter Prevention and Safety (FP&S) grant program, which is funded at not less than 10% of the annual appropriation for AFG. Since its establishment, the Assistance to Firefighters Grant program has been reauthorized three times. The first reauthorization was Title XXXVI of the FY2005 Ronald W. Reagan National Defense Authorization Act ( P.L. 108-375 ), which authorized the program through FY2009. The second reauthorization was Title XVIII, Subtitle A of the FY2013 National Defense Authorization Act ( P.L. 112-239 ), which authorized the program through FY2017 and modified program rules for disbursing grant money. The third and current reauthorization is the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 ( P.L. 115-98 ), which authorizes the program through FY2023. Fire Grants Reauthorization Act of 2012 On January 2, 2013, President Obama signed P.L. 112-239 , the FY2013 National Defense Authorization Act. Title XVIII, Subtitle A is the Fire Grants Reauthorization Act of 2012, which authorized the fire grant program through FY2017 and made significant changes in how grant money would be disbursed. Table 1 provides a summary of key provisions of the 2012 reauthorization, and provides a comparison with the previously existing statute. Fire Grants Reauthorization in the 115th Congress With the authorizations of both the AFG and SAFER programs expiring on September 30, 2017, and with sunset dates for both programs of January 2, 2018, the 115 th Congress considered reauthorization legislation. Senate On April 5, 2017, S. 829 , the AFG and SAFER Program Reauthorization Act of 2017 was introduced by Senator McCain and referred to the Committee on Homeland Security and Governmental Affairs. On May 17, 2017, the committee ordered S. 829 to be reported ( S.Rept. 115-128 ) with an amendment in the nature of a substitute. On August 2, 2017, the Senate passed S. 829 by unanimous consent. House On July 12, 2017, the House Subcommittee on Research and Technology, Committee on Science, Space and Technology, held a hearing entitled U.S. Fire Administration and Fire Grant Programs Reauthorization: Examining Effectiveness and Priorities . Testimony was heard from the USFA acting administrator and from fire service organizations. On December 15, 2017, H.R. 4661 , the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017, was introduced by Representative Comstock. H.R. 4661 was identical to the Senate-passed S. 829 , except that while S. 829 repealed the sunset provisions for AFG and SAFER, H.R. 4661 extended the sunset dates to September 30, 2024. Additionally, H.R. 4661 reauthorized the USFA through FY2023. On December 18, 2017, the House passed H.R. 4661 by voice vote under suspension of the rules. On December 21, 2017, the Senate passed H.R. 4661 without amendment by unanimous consent. Other legislation related to the fire act reauthorization included H.R. 3881 , the AFG and SAFER Program Reauthorization Act of 2017, introduced by Representative Pascrell, which was identical to S. 829 as passed by the Senate; and H.R. 1571 , the Fire Department Proper Response and Equipment Prioritization Act, which was introduced by Representative Herrera-Beutler and would amend the FIRE Act statute to direct FEMA to give high-priority consideration to grants providing for planning, training, and equipment to firefighters for crude oil-by-rail and ethanol-by-rail derailment and incident response. United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 (P.L. 115-98) On January 3, 2018, the President signed the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 ( P.L. 115-98 ). P.L. 115-98 extends the AFG and SAFER authorizations through FY2023; extends the sunset provisions for AFG and SAFER through September 30, 2024; extends the USFA authorization through FY2023; provides that the U.S. Fire Administration in FEMA may develop and make widely available an online training course on AFG and SAFER grant administration; expands SAFER hiring grant eligibility to cover the conversion of part-time or paid-on-call firefighters to full-time firefighters; directs FEMA, acting through the Administrator of USFA, to develop and implement a grant monitoring and oversight framework to mitigate and minimize risks of fraud, waste, abuse, and mismanagement related to the AFG and SAFER grant programs; and makes various technical corrections to the AFG and SAFER statute. Appropriations From FY2001 through FY2003, the Assistance to Firefighters Grant (AFG) Program (as part of USFA/FEMA) received its primary appropriation through the VA-HUD-Independent Agencies Appropriation Act. In FY2004, the Assistance to Firefighters Program began to receive its annual appropriation through the House and Senate Appropriations Subcommittees on Homeland Security. The fire grant program is in its 19 th year. Table 2 shows the appropriations history for firefighter assistance, including AFG, SAFER, and the Fire Station Construction Grants (SCG) provided in the American Recovery and Reinvestment Act of 2009 (ARRA). Table 3 shows recent and proposed appropriated funding for the AFG and SAFER grant programs. FY2017 For FY2017, the Obama Administration requested $335 million for AFG and $335 million for SAFER, a reduction of $10 million for each program from the FY2016 enacted level. The budget justification stated that the proposed reduction in AFG and SAFER "reflects FEMA's successful investments in prior year grants awarded." Under the proposed budget, the AFG and SAFER grant accounts would be transferred to the Preparedness and Protection activity under FEMA's broader "Federal Assistance" account. According to the budget request, Federal Assistance programs will "assist Federal agencies, States, Local, Tribal, and Territorial jurisdictions to mitigate, prepare for and recover from terrorism and natural disasters." On May 26, 2016, the Senate Appropriations Committee approved S. 3001 , the Department of Homeland Security Act, 2017. The Senate bill would provide $680 million for firefighter assistance, including $340 million for AFG and $340 million for SAFER. The committee maintained a separate budget account for Firefighter Assistance and did not transfer that budget account to the Federal Assistance account as proposed in the Administration budget request. In the accompanying report ( S.Rept. 114-68 ), the committee directed DHS to continue the present practice of funding applications according to local priorities and those established by the USFA, and to continue direct funding to fire departments and the peer review process. The committee stated its expectation that funding for rural fire departments remain consistent with their previous five-year history, and directed FEMA to brief the committee if there is a fluctuation. On June 22, 2016, the House Appropriations Committee approved its version of the Department of Homeland Security Appropriations Act, 2017. Unlike the Senate, the House Committee did transfer the Firefighter Assistance budget account into a broader Federal Assistance account in FEMA. The bill provided $690 million for firefighter assistance, including $345 million for AFG and $345 million for SAFER. In the committee report, the committee directed FEMA to continue administering the fire grants programs as directed in prior year committee reports, and encouraged FEMA to ensure that the formulas used for equipment accurately reflect current costs. The Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) provided $690 million for firefighter assistance in FY2017, including $345 million for AFG and $345 million for SAFER. Money is to remain available through September 30, FY2018. The firefighter assistance account was transferred to FEMA's broader Federal Assistance account. FY2018 For FY2018, the Administration requested $688.688 million for firefighter assistance, including $344.344 million for AFG and $344.344 million for SAFER, slightly below the FY2017 level. AFG and SAFER are under Grants in the Federal Assistance budget account. On July 18, 2017, the House Appropriations Committee approved the Department of Homeland Security Appropriations Act, 2018 ( H.R. 3355 ; H.Rept. 115-239 ). The bill provided $690 million for firefighter assistance under the Federal Assistance budget account, including $345 million for AFG and $345 million for SAFER. In the bill report, the committee encouraged FEMA to give high-priority consideration to grants providing for planning, training, and equipment to firefighters for crude oil-by-rail and ethanol-by-rail derailment and incident response. On September 14, 2017, the House passed H.R. 3354 , a FY2018 omnibus appropriations bill that includes funding for AFG and SAFER. During floor consideration, the House adopted an amendment offered by Representative Kildee that added $20 million to SAFER; thus H.R. 3354 would provide $345 million for AFG and $365 million for SAFER. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) provided $700 million for firefighter assistance in FY2018, including $350 million for AFG and $350 million for SAFER. Money is to remain available through September 30, 2019. FY2019 For FY2019, the Administration requested $688.688 million for firefighter assistance, including $344.344 million for AFG and $344.344 million for SAFER. On June 21, 2018, the Senate Appropriations Committee approved S. 3109 , the Department of Homeland Security Act, 2019 ( S.Rept. 115-283 ). The Senate bill would have provided $700 million for firefighter assistance, including $350 million for AFG and $350 million for SAFER. On July 25, 2018, the House Appropriations Committee approved its version of the FY2019 Homeland Security appropriations bill ( H.R. 6776 ; H.Rept. 115-948 ). The House bill would also have provided $700 million for firefighter assistance, including $350 million for AFG and $350 million for SAFER. In the bill report, the committee encouraged FEMA to give high priority consideration to grants providing for planning, training, and equipment to firefighters for crude oil-by-rail and ethanol-by-rail derailment and incident response. The committee also encouraged FEMA to "provide technical assistance, and work more closely with those communities that are underserved or underrepresented," and to rate Source Capture Exhaust Extraction Systems as "high priority" under the AFG program. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided $700 million for firefighter assistance in FY2019, including $350 million for AFG and $350 million for SAFER, with funds to remain available through September 30, 2020. FY2020 For FY2020, the Administration requested $688.688 million for firefighter assistance, including $344.344 million for AFG and $344.344 million for SAFER. This is the same amount the Administration requested in its FY2019 budget proposal and a 1.6% reduction from the FY2019 appropriation. Fire Station Construction Grants in the ARRA Since its inception, the traditional fire grant program has provided money specifically for health- and safety-related modifications of fire stations, but has not funded major upgrades, renovations, or construction. The American Recovery and Reinvestment Act (ARRA) of 2009 ( P.L. 111-5 ) provided an additional $210 million in firefighter assistance grants for modifying, upgrading, or constructing state and local nonfederal fire stations, provided that 5% be set aside for program administration, and provided that no grant shall exceed $15 million. The conference report ( H.Rept. 111-16 ) cited DHS estimates that this spending would create 2,000 jobs. The ARRA also included a provision (§603) that waived the matching requirement for SAFER grants funded by appropriations in FY2009 and FY2010. The application period for ARRA Assistance to Firefighters Fire Station Construction Grants (SCG) opened on June 11 and closed on July 10, 2009. There is no cost share requirement for SCG grants. Eligible applicants are nonfederal fire departments that provide fire protection services to local communities. Ineligible applicants include federal fire departments, EMS or rescue organizations, airport fire departments, for-profit fire departments, fire training centers, emergency communications centers, auxiliaries and fire service organizations or associations, and search and rescue teams or similar organizations without fire suppression responsibilities. DHS/FEMA received 6,025 SCG applications for $9.9 billion in federal funds. As of October 1, 2010, 119 SCG grants were awarded, totaling $207.461 million to fire departments within the United States. A complete list of SCG awards is available at http://www.fema.gov/rules-tools/assistance-firefighters-station-construction-grants . SAFER Grants In response to concerns over the adequacy of firefighter staffing, the 108 th Congress enacted the Staffing for Adequate Fire and Emergency Response (SAFER) Act as Section 1057 of the FY2004 National Defense Authorization Act ( P.L. 108-136 ; signed into law November 24, 2003). The SAFER grant program is codified as Section 34 of the Federal Fire Prevention and Control Act of 1974 (15 U.S.C. 2229a). The SAFER Act authorizes grants to career, volunteer, and combination fire departments for the purpose of increasing the number of firefighters to help communities meet industry minimum standards and attain 24-hour staffing to provide adequate protection from fire and fire-related hazards. Also authorized are grants to volunteer fire departments for activities related to the recruitment and retention of volunteers. For more information on the SAFER program, see CRS Report RL33375, Staffing for Adequate Fire and Emergency Response: The SAFER Grant Program , by Lennard G. Kruger. Program Evaluation On May 13, 2003, the U.S. Fire Administration (USFA) released the first independent evaluation of the Assistance to Firefighters Program. Conducted by the U.S. Department of Agriculture's Leadership Development Academy Executive Potential Program, the survey study presented a number of recommendations and concluded overall that the program was "highly effective in improving the readiness and capabilities of firefighters across the nation." Another evaluation of the fire grant program was released by the DHS Office of Inspector General in September 2003. The report concluded that the program "succeeded in achieving a balanced distribution of funding through a competitive grant process," and made a number of specific recommendations for improving the program. At the request of DHS, the National Academy of Public Administration conducted a study to help identify potential new strategic directions for the Assistance to Firefighters Grant program and to provide advice on how to effectively plan, manage, and measure program accomplishments. Released in April 2007, the report recommended consideration of new strategic directions related to national preparedness, prevention vs. response, social equity, regional cooperation, and emergency medical response. According to the report, the "challenge for the AFG program will be to support a gradual shift in direction without losing major strengths of its current management approach—including industry driven priority setting and its well-respected peer review process." The Consolidated Appropriations Act of 2008 ( P.L. 110-161 ), in the accompanying Joint Explanatory Statement, directed the Government Accountability Office (GAO) to review the application and award process for fire and SAFER grants. Additionally, FEMA was directed to peer review grant applications that best address the program's priorities and criteria as established by FEMA and the fire service. Those criteria necessary for peer-review must be included in the grant application package. Applicants whose grant applications are not reviewed must receive an official notification detailing why the application did not meet the criteria for review. Applications must be rank-ordered, and funded following the rank order. In October 2009, GAO sent a report to Congress finding that FEMA has met most statutory requirements for awarding fire grants. GAO recommended that FEMA establish a procedure to track EMS awards, ensure that grant priorities are better aligned with application questions and scoring values, and provide specific feedback to rejected applicants. During 2014 and 2015, the DHS Office of the Inspector General (OIG) conducted an audit of AFG grants for fiscal years 2010 through 2012. On June 9, 2016, the DHS OIG released its report finding that 64% of AFG grant recipients over that period did not comply with grant guidance and requirements to prevent waste, fraud, and abuse of grant funds. The report recommended that FEMA's Grant Programs Directorate develop and implement an organizational framework to manage the risk of fraud, waste, abuse, and mismanagement. According to the report, FEMA has concurred with the OIG findings and has taken corrective actions to resolve the recommendations. Meanwhile, the Fire Grants Reauthorization Act of 2012 ( P.L. 112-239 ) directed GAO to prepare a report to Congress that includes an assessment of the effect of the changes made by P.L. 112-239 on the effectiveness, relative allocation, accountability, and administration of the fire grants. GAO was also directed to evaluate the extent to which those changes have enabled grant recipients to mitigate fire and fire-related and other hazards more effectively. In September 2016, GAO released its report, entitled Fire Grants: FEMA Could Enhance Program Administration and Performance Assessment. The report concluded that FEMA's fire grant policies and the awards made in FY2013 and FY2014 generally reflected the changes to the fire grant statute made by P.L. 112-239 , and that FEMA enhanced its assessment of program performance by establishing and reporting on measures of effectiveness of the grants. However, GAO also concluded that those performance measures do not include measurable performance targets linked to AFG and SAFER program goals, and that "aligning the fire grants programs' use of data on, and definitions of, critical infrastructure to award fire grants and assess program performance with the more objective, quantitative approach used by DHS and GPD [the Grants Program Directorate] for other programs and nonfire preparedness grants could enhance GPD's efforts to integrate the fire grants program into larger national preparedness efforts and more objectively assess the impact of fire grants." In November 2016, the National Fire Protection Association (NFPA) released its Fourth Needs Assessment of the U.S. Fire Service , which seeks to identify gaps and needs in the fire service, and assesses the extent to which fire grants target those gaps and needs. According to the study: For respondent departments, fire service needs are extensive across the board, and in nearly every area of need, the smaller the community protected, the greater the need. While some needs have declined, many others have been constant or have shown an increase. Gaps remain across the board in staffing, training, facilities, apparatus, personal protective equipment, and health and wellness. Evidence of the need for staffing engines; training for structural firefighting, Hazmat and wildland firefighting; and updated SCBA and personal protective clothing is concerning. Roles and responsibilities of the fire service are expanding apparently at the same time appears that resources are being cut. EMS and Hazmat are now common responsibilities while active shooter response, enhanced technical rescue and wildland-urban interface firefighting are up and coming challenges for many departments. AFG and SAFER grant funds are targeted towards areas of need. As other resources are cut back, more departments turn towards these grants for support. If anything, these grant programs should grow in order to address the considerable multifaceted need that continues in the fire service. Distribution of Fire Grants The AFG statute prescribes different purposes for which fire grant money may be used. These are training firefighting personnel; creating rapid intervention teams; certifying fire inspectors and building inspectors whose responsibilities include fire safety inspections and who are associated with a fire department; establishing wellness and fitness programs, including mental health programs; funding emergency medical services (EMS) provided by fire departments and nonaffiliated EMS organizations; acquiring firefighting vehicles; acquiring firefighting equipment; acquiring personal protective equipment; modifying fire stations, fire training facilities, and other facilities for health and safety; educating the public about arson prevention and detection; providing incentives for the recruitment and retention of volunteer firefighters; and supporting other activities as FEMA determines appropriate. FEMA has the discretion to decide which of those purposes will be funded for a given grant year. This decision is based on a Criteria Development Panel, composed of fire service and EMS representatives, which annually recommends criteria for awarding grants. Since the program commenced in FY2001, the majority of fire grant funding has been used by fire departments to purchase firefighting equipment, personal protective equipment, and firefighting vehicles. Eligible applicants are limited primarily to fire departments (defined as an agency or organization that has a formally recognized arrangement with a state, local, or tribal authority to provide fire suppression, fire prevention, and rescue services to a population within a fixed geographical area). Emergency Medical Services (EMS) activities (at least 3.5% of annual AFG funding) are eligible for fire grants, including a limited number (no more than 2%) to nonfire department EMS organizations not affiliated with hospitals. Additionally, a separate competition is held for fire prevention and firefighter safety research and development grants, which are available to fire departments; national, state, local, tribal, or nonprofit organizations recognized for their fire safety or prevention expertise; and to institutions of higher education, national fire service organizations, or national fire safety organizations to establish and operate fire safety research centers. For official program and application guidelines, frequently asked questions, the latest awards announcements, and other information, see the Assistance to Firefighters Grant program web page at http://www.fema.gov/welcome-assistance-firefighters-grant-program . The FIRE Act statute provides overall guidelines on how fire grant money will be distributed. Previously, the law directed that volunteer and combination departments receive a proportion of the total grant funding that is not less than the proportion of the U.S. population that those departments protect (34% for combination, 21% for all-volunteer). Reflecting concerns that career fire departments (which are primarily in urban and suburban areas) were not receiving adequate levels of funding, the Fire Grants Authorization Act of 2012 altered the distribution formula, directing that not less than 25% of annual AFG funding go to career fire departments, not less than 25% to volunteer fire departments, not less than 25% to combination and paid-on-call fire departments, and not less than 10% for open competition among career, volunteer, combination, and paid-on-call fire departments. Additionally, P.L. 112-239 raised award caps (up to $9 million) and lowered matching requirements for fire departments serving higher population areas. There is no set geographical formula for the distribution of fire grants—fire departments throughout the nation apply, and award decisions are made by a peer panel based on the merits of the application and the needs of the community. However, in evaluating applications, FEMA may take into consideration the type of department (paid, volunteer, or combination), geographic location, and type of community served (e.g., urban, suburban, or rural). In an effort to maximize the diversity of awardees, the geographic location of an applicant (using states as the basic geographic unit) is used as a deciding factor in cases where applicants have similar qualifications. Table 4 shows a state-by-state breakdown of fire grant funding for FY2001 through FY2017, while Table 5 shows a state-by-state breakdown of SAFER grant funding for FY2005 through FY2017. Table 6 shows the percentage distribution of AFG grant funds by type of department (career, combination, volunteer, paid-on-call) for FY2009 through FY2014, while Table 7 shows the percentage distribution of AFG grant funds by community service area (urban, suburban, rural) for FY2009 through FY2014. Impact of 2018-2019 Government Shutdown Firefighter assistance grants were impacted by the partial government shutdown. FEMA personnel who administer the grants were furloughed. For all three grant programs (AFG, SAFER, and FP&S) the application and awards process was delayed. For the 2018 awards round, the application windows for AFG and FP&S closed in October and December 2018, respectively, but the processing of those applications could not move forward. The opening of the 2018 round application window for SAFER grants was also delayed. For grants already awarded (in the 2017 and previous rounds), grant recipients periodically draw down funds, either to reimburse expenditures already incurred, or in immediate advance of those expenditures. Grant recipients were unable to draw down funds during the shutdown, which may have disrupted the ability of the grantees to continue grant-funded activities, including personnel costs covered by SAFER grant awards, which extend for three years. This disruption may continue after the government shutdown has resolved due to a backlog of payment requests that need to be processed once furloughed FEMA grant personnel return to work. Issues in the 116th Congress AFG assistance is distributed to career, volunteer, combination, and paid-on-call fire departments serving urban, suburban, and rural areas. A continuing issue is how equitably and effectively grants are being distributed and used to protect the health and safety of the public and firefighting personnel against fire and fire-related hazards. Another issue for Congress is whether AFG should be expanded to allow additional eligible uses of AFG grants. For example, H.R. 1823 , the Help Ensure Responders Overdosing Emerge Safely Act of 2019, would amend the Federal Fire Prevention and Control Act of 1974 to include as an eligible use of AFG grants, "to provide opioid receptor antagonists, including naloxone, to firefighters, paramedics, emergency medical service workers, and other first responders for personal use." Finally, a continuing issue is budget appropriations for AFG and SAFER. As is the case with many federal programs, concerns over the federal budget deficit could impact budget levels for AFG and SAFER. At the same time, firefighter assistance budgets will likely receive heightened scrutiny from the fire service community, given the local budgetary shortfalls that many fire departments may face.

The Assistance to Firefighters Grant (AFG) Program, also known as fire grants or the FIRE Act grant program, was established by Title XVII of the FY2001 National Defense Authorization Act (P.L. 106-398). Currently administered by the Federal Emergency Management Agency (FEMA), Department of Homeland Security (DHS), the program provides federal grants directly to local fire departments and unaffiliated Emergency Medical Services (EMS) organizations to help address a variety of equipment, training, and other firefighter-related and EMS needs. AFG also supports fire prevention projects and firefighter health and safety research and development through the Firefighter Prevention and Safety (FP&S) grant program. A related program is the Staffing for Adequate Fire and Emergency Response Firefighters (SAFER) program, which provides grants for hiring, recruiting, and retaining firefighters. The fire grant program is now in its 19th year. AFG assistance is distributed to career, volunteer, combination, and paid-on-call fire departments serving urban, suburban, and rural areas. There is no set geographical formula for the distribution of fire grants—fire departments throughout the nation apply, and award decisions are made by a peer panel based on the merits of the application and the needs of the community. On January 3, 2018, the President signed the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 (P.L. 115-98). P.L. 115-98 extends the AFG and SAFER authorizations through FY2023; extends the sunset provisions for AFG and SAFER through September 30, 2024; provides that the U.S. Fire Administration (USFA) may develop and make widely available an online training course on AFG and SAFER grant administration; expands SAFER hiring grant eligibility to cover the conversion of part-time or paid-on-call firefighters to full-time firefighters; directs FEMA, acting through the Administrator of USFA, to develop and implement a grant monitoring and oversight framework to mitigate and minimize risks of fraud, waste, abuse, and mismanagement related to the AFG and SAFER grant programs; and makes various technical corrections to the AFG and SAFER statute. The Consolidated Appropriations Act, 2019 (P.L. 116-6) provided $700 million for firefighter assistance in FY2019, including $350 million for AFG and $350 million for SAFER. For FY2020, the Administration requested $688.688 million for firefighter assistance, including $344.344 million for AFG and $344.344 million for SAFER. This is the same amount the Administration requested in its FY2019 budget proposal and a 1.6% reduction from the FY2019 appropriation. A continuing issue for the 116th Congress is how equitably and effectively grants are being distributed and used to protect the health and safety of the public and firefighting personnel against fire and fire-related hazards. Another continuing issue is budget appropriations for AFG and SAFER. As is the case with many federal programs, concerns over the federal budget deficit could impact budget levels for AFG and SAFER. At the same time, firefighter assistance budgets will likely receive heightened scrutiny from the fire service community, given the local budgetary shortfalls that many fire departments may face.

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Background Congressional rules establish a general division of responsibility under which questions of policy are kept separate from questions of funding. Broadly, the term authorization is used to describe legislation that establishes, continues, or modifies the organization or activities of a federal entity or program. By itself, such legislation does not provide funding for such purposes. Instead, the authority to obligate payments from the Treasury is left to separate appropriations measures. This distinction between appropriations and general legislation as two separate classes of measures, and their consideration in separate legislative vehicles, is a construct of congressional rules and practices. It has been developed and formalized by the House and Senate pursuant to the constitutional authority for each chamber to "determine the Rules of its Proceedings." This power permits each chamber of Congress to enforce, modify, waive, repeal, or ignore its rules as it sees fit. Because the two chambers exercise this rulemaking authority independently, they have developed differing (albeit generally similar) rules and practices. This report addresses solely developments in the House. According to Hinds' Precedents , the origin of a formal rule mandating the separation of general legislation from appropriations can be traced to 1835, when the House debated the increasing problem of delay in enacting appropriations due to the inclusion of "debatable matters of another character, new laws which created long debates in both Houses" and suggested that the Committee on Ways and Means should "strip the appropriation bills of every thing but were legitimate matters of appropriation." In the following Congress (25 th Congress, 1837-1839), language was added to House rules that stated: No appropriation shall be reported in such general appropriation bills, or be in order as an amendment thereto, for any expenditure not previously authorized by law. This rule was applied broadly on occasion to exclude legislative provisions authorizing new expenditures as well, such as a case in 1838 when it was used to exclude an amendment that included a provision for refurnishing the White House. Gradually, the rule "became construed through a long line of decisions to admit amendments increasing salaries but as excluding amendments providing for decreases." Development of the Holman Rule As a consequence of this, in 1876, the language was expanded (at the suggestion of Representative William Holman of Indiana) to further state: Nor shall any provision in any such bill or amendment thereto, changing existing law, be in order except such as, being germane to the subject matter of the bill, shall retrench expenditures. As described by one scholar, this provision effectively granted the Appropriations Committee authority to include virtually any legislative provision in an appropriations measure so long as it reduced the number and salary of federal officials, the compensation of any person paid out of the Treasury, or the amounts of money covered in an appropriation bill. According to one contemporary account, a broad initial construction of the rule by the House resulted in "putting a great mass of general legislation upon the appropriation bills." The rule was retained in this form until 1880 (46 th Congress), when it was modified to define retrenchments as the reduction of "the number and salary of officers of the United States, the reduction of compensation of any person paid out of the Treasury of the United States, or the reduction of the amounts of money covered by the bill." That form of the rule remained a part of House rules until the 49 th Congress eliminated it in 1885. It was reinserted in the rules for the 52 nd and 53 rd Congresses (1891-1895) but was again dropped for the 54 th through 61 st Congresses (1895-1911) before being readopted in the 62 nd Congress. Although the Holman rule has remained a part of House rules since that time, its language was amended at the start of the 98 th Congress (1983-1984). At that time, it was restructured to narrow the exception to the general prohibition against legislation to allow only retrenchments reducing amounts of money covered by the bill. In addition, the House rules for the 98 th Congress changed when retrenchment amendments could be offered. Amendments that only alter the items or amounts in an appropriation bill are generally in order when the measure is read for amendment and must be offered as the relevant paragraph or section of the bill is read. The new version of the rule provided, however, that germane amendments to retrench expenditures (as well as limitation amendments) would be in order only after the reading of a general appropriation bill and if a preferential motion that the Committee of the Whole rise and report (essentially ending consideration of the bill) were rejected. Further stylistic changes were made when the House recodified its rules in the 106 th Congress (1999-2000) to make explicit that retrenchment amendments are in order if the motion to rise and report is not offered—as well as if the motion is rejected. It also clarified that the effect of a point of order against legislation in an appropriations bill (and, by extension, the application of the Holman rule exception) is surgical so that it lies against an offending provision in the text and not against consideration of the entire bill. The Holman rule currently states the following: A provision changing existing law may not be reported in a general appropriation bill, including a provision making the availability of funds contingent on the receipt or possession of information not required by existing law for the period of the appropriation, except germane provisions that retrench expenditures by the reduction of amounts of money covered by the bill [emphasis added]. The Holman rule, thus, does not circumscribe Congress's lawmaking authority but rather provides a limited exception to the general prohibition in House rules against legislation in appropriation measures. For the 115 th Congress, the House included a separate order as Section 3(a) of H.Res. 5 , adopting the rules of the House, that provides the following: During the first session of the One Hundred Fifteenth Congress, any reference in clause 2 of rule XXI to a provision or amendment that retrenches expenditures by a reduction of amounts of money covered by the bill shall be construed as applying to any provision or amendment (offered after the bill has been read for amendment) that retrenches expenditures by— (1) the reduction of amounts of money in the bill; (2) the reduction of the number and salary of the officers of the United States; or (3) the reduction of the compensation of any person paid out of the Treasury of the United States. As stated in a section-by section summary included in the Congressional Record by Representative Pete Sessions, the chairman of the House Rules Committee, the purpose of this provision is "to see if the reinstatement of the Holman rule will provide Members with additional tools to reduce spending during consideration of the regular general appropriation bill." The applicability of this separate order was extended under Section 5 of H.Res. 787 (115 th Congress) which provided that "Section 3(a) of House Resolution 5 is amended by striking 'the first session of.'" This separate order was not adopted for the 116 th Congress, so the application of the rule reverts to being guided by prior precedents rather than this language. Application Since the period immediately after the initial adoption of the rule in the 19 th century, the House has interpreted it through precedents that have tended to incrementally narrow its application. For example, early precedents established that while it was not always necessary that a retrenchment specify the amount of a reduction of expenditures, it must appear as a necessary result of the legislation to be in order and that it is not sufficient that such reduction would probably (or would in the opinion of the chair) result therefrom. For example, legislation that would simply confer discretionary authority to terminate employment of federal employees is not in order under the Holman exception because any resulting savings would be speculative. The reduction also may not be contingent on an event. Furthermore, the rule is not applicable to funds other than those appropriated in the pending general appropriations bill. The Holman rule then is intended to apply only when an obvious reduction of funds in a general appropriations bill is achieved by the provision in question, such as the cessation of specific government activities, or through a specific reduction of total appropriations in the bill. In addition, the exception does not apply to limitations (on the grounds that such language is not legislative) or legislative language unaccompanied by a reduction of funds in the bill. Legislation that is too broad has also typically not been allowed under the Holman rule exception. The House has held, for example, that a provision that stated no part of an appropriation could be expended for a specific, designated purpose qualified as a retrenchment. However, a proposal that effectively repealed the law under which appropriations for that purpose were authorized was held not to come within the exception. In another case, the House held that even when a provision does reduce expenditures, it may not be accompanied by additional legislative provisions not directly contributing to the reduction. Separate Order for the 115th Congress The separate order for the 115 th Congress effectively reinstated language that had been stricken from the rule in 1983. While the full scope of amendments might be in order as a consequence of this language, it is possible to analyze its potential impact based on past precedents and the limited experience of the 115 th Congress. The additional language opened the door to the consideration of retrenchments resulting from a reduction of the number and salary of the officers of the United States or the reduction of the compensation of any person paid out of the Treasury of the United States. There are precedents regarding provisions allowed under the older, pre-1983 form of the rule that may be illustrative for understanding what might be in order. For example, a proposal that pay for a class of employees be limited to a smaller number of employees than authorized by law was allowed, as were proposals that would reduce the number of officers. The Holman rule also allowed proposals that would consolidate or eliminate offices. On at least one occasion, the Holman rule was the basis for allowing a proposal to replace civilian employees with lower paid U.S. Army enlisted personnel. In another case, the rule allowed for an amendment that capped the salaries of certain employees. In the 115 th Congress, one amendment was considered in order based on a plain reading of the text of the separate order to allow for "the reduction of the compensation of any person paid out of the Treasury of the United States." Although the amendment failed of passage, it would have provided that: The salary of Mark Gabriel, the Administrator of the Western Area Power Administration, shall be reduced to $1. As cited above, however, neither the rule nor the separate order allows for retrenchments that would be applicable to funds other than those appropriated in the pending general appropriations bill. In addition, the application of the broader exceptions in the separate order were still subject to the general requirement for germaneness. The Holman rule is not intended to open the door for legislative provisions that would expand the scope of the bill. As a consequence, even with the additional scope provided by the language of the separate order, it would likely not be in order to include broad legislative provisions in, or amendments to, a specific appropriation bill that would apply to the salary or number of federal employees funded through appropriations in other measures. Furthermore, House precedent establishes that simply providing for a reduction of the number and salaries of officers in a paragraph when it is complicated by other elements does not necessarily bring a proposition within the exception. The Holman rule was also cited as the basis for allowing the consideration of one additional amendment during the 115 th Congress. That amendment also failed to pass, but it would have abolished the Budget Analysis Division of the Congressional Budget Office, comprising 89 employees with annual salaries aggregating $15 million, transferring responsibility for any duties imposed by law and regulation to the Office of the Director of the Congressional Budget Office. When discussing the application of rules and precedents, it is important to note that the House Parliamentarian is the sole definitive authority on questions relating to the chamber's precedents and procedures and should be consulted if a formal opinion on any specific parliamentary question is desired.

Although congressional rules establish a general division of responsibility under which questions of policy are kept separate from questions of funding, House rules provide for exceptions in certain circumstances. One such circumstance allows for the inclusion of legislative language in general appropriations bills or amendments thereto for "germane provisions that retrench expenditures by the reduction of amounts of money covered by the bill." This exception appears in clause 2(b) of House Rule XXI and is known as the Holman rule, after Representative William Holman of Indiana, who first proposed the exception in 1876. Since the period immediately after its initial adoption, the House has interpreted the Holman rule through precedents that have tended to incrementally narrow its application. Under current precedents, for a legislative provision or amendment to be in order, the legislative language in question must be both germane to other provisions in the measure and must produce a clear reduction of appropriations in that bill. In addition, the House adopted a separate order during the 115th Congress that provided for retrenchments of expenditures by a reduction of amounts of money covered by the bill to be construed as applying to: any provision or amendment that retrenches expenditures by— (1) the reduction of amounts of money in the bill; (2) the reduction of the number and salary of the officers of the United States; or (3) the reduction of the compensation of any person paid out of the Treasury of the United States. This separate order was not readopted for the 116th Congress. This report provides a history of this provision in House rules and an analysis of precedents that are illustrative of its possible application.

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Introduction Oman is located along the Arabian Sea, on the southern approaches to the Strait of Hormuz, across from Iran. Except for a brief period of Persian rule, Omanis have remained independent since expelling the Portuguese in 1650. The Al Said monarchy began in 1744, extending Omani influence into Zanzibar and other parts of East Africa until 1861. Sultan Qaboos bin Sa'id Al Said, born in November 1940, is the eighth in the line of the monarchy; he became sultan in July 1970 when, with British support, he forced his father, Sultan Said bin Taymur Al Said, to abdicate. The United States has had relations with Oman from the early days since American independence. The U.S. merchant ship Ramber made a port visit to Muscat in September 1790. The United States signed a Treaty of Amity and Commerce with Oman in 1833, one of the first of its kind with an Arab state. This treaty was replaced by the Treaty of Amity, Economic Relations, and Consular Rights signed at Salalah on December 20, 1958. Oman sent an official envoy to the United States in 1840. A U.S. consulate was maintained in Muscat during 1880-1915, a U.S. embassy was opened in 1972, and the first resident U.S. Ambassador arrived in July 1974. Oman opened its embassy in Washington, DC, in 1973. Sultan Qaboos was accorded formal state visits in 1974, by President Gerald Ford, and in 1983, by President Ronald Reagan. President Bill Clinton visited Oman in March 2000. Career diplomat Marc Sievers has been Ambassador to Oman since late 2015. Democratization, Human Rights, and Unrest Oman remains a monarchy in which decisionmaking still is concentrated with Sultan Qaboos. Throughout his reign, Qaboos has also formally held the position of Prime Minister, as well as the positions of Foreign Minister, Defense Minister, Finance Minister, and Central Bank Governor. Other officials serve as "Ministers of State" for those portfolios and serve de-facto as ministers. Qaboos's government, and Omani society, reflects the diverse backgrounds of the Omani population, many of whom have long-standing family connections to parts of East Africa that Oman once controlled, and to the Indian subcontinent. Some senior Omanis argue that a formal position of Prime Minister is needed to organize the functions of the government and enable the Sultan to focus on larger strategic decisions. Should such a post be established, potential candidates include the deputy prime minister for cabinet affairs, Fahd bin Mahmud Al Said (who Omanis already widely refer to as "Prime Minister"); the secretary general of the Foreign Ministry, Sayyid Badr bin Hamad Albusaidi; Salim bin Nasir al-Ismaily, a businessman and economic adviser to the Sultan who reportedly brokered 2013 U.S.-Iran meetings; and Royal Office head General Sultan bin Mohammad al-Naamani. Along with political reform issues, the question of succession has long been central to observers of Oman. Qaboos's brief marriage in the 1970s produced no children, and the sultan, who was born in November 1940, has no heir apparent. According to Omani officials, succession would be decided by a "Ruling Family Council" of his relatively small Al Said family (about 50 male members). If the family council cannot reach agreement within three days, it is to select the successor recommended by Qaboos in a sealed letter to be opened upon his death; there are no confirmed accounts of whom Qaboos has recommended. The succession issue has come to the fore since he underwent cancer treatment in Germany during 2014-15. Since returning to Oman, he has appeared in public only on major occasions or to meet visiting foreign leaders. Potential Successors . The leading contenders to succeed Qaboos include three brothers who are cousins of the Sultan and whose sister was the woman who was briefly married to Qaboos. They are Minister of Heritage and Culture Sayyid Haythim bin Tariq Al Said, whom some assess indecisive; Asad bin Tariq Al Said, a former military officer who has the title "Representative of the Sultan" and was appointed deputy prime minister for international relations and cooperation affairs in early 2017; and Shihab bin Tariq Al Said, the former commander of Oman's Navy. All are in their 60s. Another potential choice is Fahd bin Mahmud, above. Representative Institutions, Election History, and Unrest Many Omanis, U.S. officials, and international observers credit Sultan Qaboos for establishing consultative institutions and electoral processes before there was evident public pressure to do so. Under a 1996 "Basic Law," Qaboos created a bicameral "legislature" called the Oman Council, consisting of the existing Consultative Council ( Majlis As Shura ) and an appointed State Council ( Majlis Ad Dawla ), established by the Basic Law. The Consultative Council was formed in 1991 to replace a 10-year-old all-appointed advisory council. A March 2011 decree expanded the Oman Council's powers to include questioning ministers, selecting its own leadership, and reviewing government-drafted legislation, but it still does not have the power to draft legislation or to overturn the Sultan's decrees or government regulations. As in the other GCC states, formal political parties are not allowed. But, unlike Bahrain or Kuwait, well-defined "political societies" (de-facto parties) that compete within the electoral process have not developed in Oman. The electoral process has broadened consistently. The Consultative Council was initially chosen through a selection process in which the government had substantial influence over the body's composition, but this process was gradually altered to a full popular election. When it was formed in 1991, the body had 59 seats, and was gradually expanded to its current 85 seats. Prior to 2011, the Sultan selected the Consultative Council chairman; since then, the chairman and a deputy chairman have been elected by the Council membership. Also in 2011, Qaboos instituted elections for municipal councils. Each province with a population of more than 30,000 elects two members, whereas a province with fewer than that elects one. The electorate for the Consultative Council has gradually expanded. In the 1994 and 1997 selection cycles for the council, "notables" in each of Oman's districts nominated three persons and Qaboos selected one of them to occupy that district's seat. The first direct elections were held in September 2000, but the electorate was limited (25% of all citizens over 21 years old). For the October 4, 2003, election, voting rights were extended to all citizens, male and female, over 21 years of age. About 195,000 Omanis voted in that election (74% turnout). The same 2 women were elected as happened in the 2000 vote (out of 15 women candidates). In the October 27, 2007, election (after changing to a four-year term), public campaigning was allowed for the first time and about 250,000 people voted (63% turnout). None of the 21 females (out of 631 candidates) won. The more recent Consultative Council elections are discussed below. Appointed State Council . The government considers the State Council as a counterweight to the Consultative Council, and it remains all-appointed. The Council, which had 53 members at inception, has been expanded to 84 members. By law, it cannot have more members than the Consultative Council. Appointees are usually former high-ranking government officials, military officials, tribal leaders, and other notables. Unrest Casts Doubt on Satisfaction with Pace of Political Reform The expansion of the electoral process did not satisfy those Omanis, particularly those younger and well-educated, who consider the pace of liberalization too slow, or those dissatisfied with the country's economic performance and apparent lack of job opportunities. In July 2010, 50 prominent Omanis petitioned Sultan Qaboos for a "contractual constitution" that would provide for a fully elected legislature. In February 2011, after protests in Egypt toppled President Hosni Mubarak, protests broke out in the northern industrial town of Sohar, Oman, and later spread to the capital, Muscat. Although most protesters asserted that their protests were motivated primarily by economic factors, some echoed calls for a fully elected legislature. One person was killed in February 2011 by security forces. But, many protestors carried posters lauding his rule. And, many older Omanis apparently did not support the protests, apparently comparing the existing degree of "political space" favorably with that during the reign of Qaboos's father, Sultan Said bin Taymur. During his father's reign, Omanis needed the sultan's approval even to wear spectacles or to import cement, for example. Some experts argue that Sultan Said kept Oman isolated in an effort to insulate it from leftist extremism that gained strength in the region during the 1960s. By mid-2012, the government had calmed the unrest through a combination of reforms and punishments, including expanding the powers of the Oman Council; appointing several members of the Consultative Council as ministers; giving the office of the public prosecutor autonomy and consumers additional protections; naming an additional woman minister; ordering that additional public sector jobs be created; increasing the minimum wage; making grants to unemployed job seekers; and arresting journalists, bloggers, and other activists for "defaming the Sultan," "illegal gathering," or violating the country's cyber laws. Twenty-four of those arrested went on a hunger strike in February 2013 and the Sultan pardoned virtually all. Omanis who had been dismissed from public and private sector jobs for participating in unrest were reinstated. The U.S. reaction to the unrest in Oman was muted, possibly because Oman is a key ally of the United States and perhaps because the unrest appeared relatively minor. Small demonstrations occurred again for two weeks in January 2018. Protesters generally cited a perceived lack of job opportunities rather than a demand for political reform. In response, the government reiterated an October 2017 plan to create 25,000 jobs for Omani citizens and banned the issuance of new visas for expatriate workers in 87 private sector professions. Recent Elections The October 15, 2011, Consultative Council elections went forward despite the unrest. The enhancement of the Oman Council's powers generated additional interest in the vote—1,330 candidates applied to run, a 70% increase from the 2007 vote. A record 77 were women. However, voter turnout (about 60%) was not higher than in past elections. The expectation of several female victors was not realized: only one was elected. Some reformists were heartened by the victory of two political activists—Salim bin Abdullah Al Oufi, and Talib Al Maamari. A relatively young entrepreneur was selected speaker of the Consultative Council (Khalid al-Mawali). In the State Council appointments, the Sultan appointed 15 women, bringing the total female participation in the Oman Council to 16—over 10%. The government did not permit outside election monitoring. In 2012, the government also initiated elections for 11 municipal councils. Previously, only one such council, all appointed, had been established—for the capital region. The elected "councilors" make recommendations to the government on development projects, but do not make final funding decisions. The chairman and deputy chairman of each municipal council are appointed by the government. In the December 22, 2012, municipal elections, there were 192 seats up for election. There were more than 1,600 candidates, including 48 women. About 546,000 citizens voted. Four women were elected. 2015 Consultative Council Election and 2016 Municipal Elections Elections to the Consultative Council (expanded by one seat, to 85) were last held on October 25, 2015. A total of 674 candidates applied to run, although 75 candidates were barred, apparently based on their participation in the 2011-2012 unrest. There were 20 female candidates. Turnout was estimated at 56% of the 612,000 eligible voters. The one woman on the Council was reelected and no other female was elected. As happened in 2011, only one woman was elected. Khalid al-Mawali was reelected Consultative Council chairman. On November 8, 2015, Qaboos appointed the 84-seat State Council, of whom 13 were women. On December 25, 2016, the second municipal elections were held to choose 202 councilors—an expanded number from the 2012 municipal elections. There were 731 candidates, of whom 23 were women. Turnout was about 40% of the 625,000 eligible voters, according to the government. Seven women were elected, more than were elected in 2012 but still a small percentage of the 202 seats up for vote. The next Consultative Council elections are due to be held in the fall of 2019. No date has been announced. Broader Human Rights Issues4 According to the most recent State Department report on human rights, the principal human rights problems in Oman, other than the political structure, are limits on freedom of speech, assembly, and association; torture of prisoners and detainees; censorship of Internet content; and criminalization of LGBT conduct. U.S. and other reports generally credit the government with holding accountable security personnel and other officials for abuses, including prosecuting multiple corruption cases. The law provides for an independent judiciary, but the Sultan chairs the country's highest legal body, the Supreme Judicial Council, which can review judicial decisions. An "Oman Human Rights Commission," a quasi-independent but government-sanctioned body, investigates and monitors prison and detention center conditions through site visits. State Department funds (Middle East Partnership Initiative, Near East Regional Democracy account, and other accounts) have been used in past fiscal years to promote Omani civil society, judicial reform, election management, media independence, and women's empowerment. The U.S. Commerce Department's Commercial Law Development Program has worked to improve Oman's legislative and regulatory frameworks for business. Freedom of Expression, Media, and Association Omani law provides for limited freedom of speech and press, but the government generally does not respect these rights. A 2014 royal decree stipulates that citizens joining groups deemed "harmful to national interests" could be subject to revocation of citizenship. No revocations on those grounds have been announced. Press criticism of the government is tolerated, but criticism of the Sultan and, by extension, senior government officials, is not. In October 2015, Oman followed the lead of many of the other GCC states in issuing a new royal decree prohibiting disseminating information that targets "the prestige of the State's authorities or aimed to weaken confidence in them." The government has prosecuted dissident bloggers and cyber-activists under that decree and other laws. In 2017, Oman permanently shuttered the Al Zaman independent daily newspaper for 2016 articles accusing senior judicial officials of corruption. Private ownership of radio and television stations is not prohibited, but there are few privately owned stations. Satellite dishes have made foreign broadcasts accessible to the public. Still, there are some legal and practical restrictions to Internet usage, and only a minority of the population has subscriptions to internet service. Many Internet sites are blocked, primarily for sexual content, but many Omanis are able to bypass restrictions by accessing the Internet by cell phone. Omani law provides for freedom of association for "legitimate objectives and in a proper manner"—language that enables the government to restrict such rights in practice. A 2014 decree by the Sultan imposed a new nationality law that stipulates that citizens who join groups deemed harmful to national interests could be subject to citizenship revocation. Associations must register with the Ministry of Social Development. Registered associations for foreign nationalities include the Indian Social Group. Trafficking in Persons and Labor Rights Oman is a destination and transit country for men and women primarily from South Asia and East Africa who are subjected to forced labor and, to a lesser extent, sex trafficking. In October 2008, President George W. Bush directed that Oman be moved from a "Tier 3" ranking on trafficking in persons (worst level) by the State Department Trafficking in Persons report for 2008 to "Tier 2/Watch List." The upgrade was based on Omani pledges to increase efforts to counter trafficking in persons (Presidential Determination 2009-5). Oman was rated Tier 2 in the 2009-2015 Trafficking in Persons reports, but the report for 2016 and 2017 downgraded Oman back to Tier 2: Watch List on the basis that, in the aggregate, it did not increase its anti-trafficking efforts during the reporting periods. The 2018 Trafficking in Persons report upgraded Oman to Tier 2. The upgrade was based on the government's demonstrating increased efforts against trafficking by investigating, prosecuting, and convicting more suspected traffickers and standing up a specialized antitrafficking prosecutorial unit. The government also identified more victims and provided them with robust care. The government also developed, funded, and began implementing a new five-year national action plan, which included funding a full-time liaison between relevant agencies to facilitate a whole-of-government effort. On broader labor rights, Omani workers have the right to form unions and to strike (except in the oil and gas industry). However, only one government-backed federation of trade unions exists—the General Federation of Oman Trade Unions. The calling of a strike requires an absolute majority of workers in an enterprise. The labor laws permit collective bargaining and prohibit employers from firing or penalizing workers for union activity. Labor rights are regulated by the Ministry of Manpower. Some occupations and businesses are exempt from paying the minimum wage for citizens ($845 per month). Religious Freedom7 Oman has historically had a high degree of religious tolerance. An estimated 45%-75% (government figure) of Omanis adhere to the Ibadhi sect, a relatively moderate school of Islam centered mostly in Oman, East Africa, and in parts of Algeria, Libya, and Tunisia. Ibadhism has been sometimes misrepresented as a Sunni sect. Ibadhi religious and political dogma generally resembles basic Sunni doctrine, although the Ibadhis are neither Sunni nor Shiite. Ibadhis believe strongly in the existence of a just Muslim society and argue that religious leaders should be chosen by community leaders for their knowledge and piety, without regard to race or lineage. A long-term rebellion led by the Imam of Oman, leader of the Ibadhi sect, ended in 1959. About 5% of Oman's population are Shiite Muslims. Oman's Shiites are allowed to resolve family and personal status cases according to Shiite jurisprudence outside the court system. Recent State Department religious freedom reports have noted no reports of societal abuses or discrimination based on religious affiliation, belief, or practice. Non-Muslims are free to worship at temples and churches built on land donated by the government, but there are some limitations on non-Muslims' proselytizing and on religious gatherings in other than government-approved houses of worship. All religious organizations must be registered with the Ministry of Endowments and Religious Affairs (MERA). Among non-Muslim sponsors recognized by MERA are the Protestant Church of Oman; the Catholic Diocese of Oman; the al Amana Center (interdenominational Christian); the Hindu Mahajan Temple; and the Anwar al-Ghubairia Trading Co. Muscat (for the Sikh community). Buddhists have been able to worship in private spaces. Members of all religions and sects are free to maintain links with coreligionists abroad and travel outside Oman for religious purposes. To address crowded conditions in some non-Muslim places of worship, MERA has made plans to use land donated by Sultan Qaboos for construction of a new building for Orthodox Christians, with separate halls for Syrian, Coptic, and Greek Orthodox Christians. The government has also approved new worship space for Baptists. The Church of Jesus Christ of Latter Day Saints (Mormons) reportedly did not receive approval to register with MERA because it had not identified a sponsor in the Christian community, but its representatives have met with the MERA and are working toward a solution. There is no indigenous Jewish population. Private media have occasionally published anti-Semitic editorial cartoons. Advancement of Women Sultan Qaboos has emphasized that he considers Omani women vital to national development. Women now constitute over 30% of the workforce. The first woman of ministerial rank in Oman was appointed in March 2003, and, since then, there have been several female ministers in each cabinet. Oman's ambassadors to the United States and to the United Nations are women. The number of women in Oman's elected institutions was discussed above, but campaigns by Omani women's groups failed to establish a minimum number of women elected to the Consultative Council. Below the elite level, however, Omani women continue to face social discrimination, often as a result of the interpretation of Islamic law. Allegations of spousal abuse and domestic violence are fairly common, with women finding protection primarily through their families. Omani nationality can be passed on only by a male Omani parent. Foreign Policy/Regional Issues Under Sultan Qaboos, Oman has pursued a foreign policy that sometimes diverges from that of Oman's GCC allies Saudi Arabia and the UAE. Oman has generally sought to mediate resolution of regional conflicts and refrain from direct military involvement in them. Oman joined the U.S.-led coalition against the Islamic State, but did not conduct any airstrikes against that group. Oman did not join the Saudi-led Arab coalition fighting the Iran-backed Houthi forces in Yemen and is one of the countries seeking to negotiate a solution to that conflict. Oman did not supply forces to the GCC's "Peninsula Shield" 2011 deployment to Bahrain to help the Al Khalifa regime counter the uprising there. Oman strongly opposed the Saudi-led move in June 2017 to isolate Qatar over a number of policy disagreements. Oman's top diplomat Yusuf Alawi has visited Washington, DC, several times, most recently in late July 2018, in part to work with U.S. officials seeking to resolve the rift. Omani diplomats were hopeful that the annual GCC summit during December 5-6, 2017, would make progress on the dispute, but that meeting adjourned on December 5, 2017, after only two hours of talks. Qaboos, primarily because of his fragile health, has not attended any of the annual GCC summits since 2013. Oman opposed a 2012 Saudi proposal for political unity among the GCC states as a signal of GCC solidarity against the Iran, even threatening to withdraw from the GCC if the plan were adopted. Other GCC leaders are similarly concerned about surrendering any of their sovereignty, and the plan has not been dropped entirely but neither has it advanced. In 2007, Oman was virtually alone within the GCC in balking at a plan to form a monetary union. Lingering border disputes also have plagued Oman-UAE relations; the two finalized their borders in 2008, nearly a decade after a tentative border settlement in 1999. Iran Omani leaders assert that engagement with Iran better mitigates the potential threat from that country than confrontation—a stance that has positioned Oman as a mediator in several regional conflicts in which Iran or its proxies are involved. Omani leaders have not expressed concerns about potential Iranian meddling in Oman's affairs because Oman's citizens are mostly Ibadhis (see above) and not generally receptive to either Sunni or Shiite Islamist extremist appeals. There are positive sentiments among the Omani leadership for the Shah of Iran's support for Qaboos's 1970 takeover and its provision of troops to help Oman end the leftist revolt in Oman's Dhofar Province during 1962-1975, a conflict in which 700 Iranian soldiers died. Exemplifying Oman's policy toward Iran, Sultan Qaboos bucked U.S. and GCC criticism by visiting Tehran in August 2009 at the time of protests in Iran over alleged governmental fraud in declaring the reelection of President Mahmoud Ahmadinejad in the June 2009 election. He visited again in August 2013, after Iran's President Hassan Rouhani first took office. Rouhani visited Oman in 2014 and again in February 2017, as part of an Iranian effort to begin a political dialogue with the GCC. Following the Rouhani visit, Oman and Kuwait undertook a joint, but unsuccessful, attempt to enlist the other GCC countries in a dialogue with Iran. In July 2017, during a visit by Oman's de-facto Foreign Minister Yusuf Alawi to Tehran, Iran and Oman announced plans to strengthen their ties—a statement interpreted as an Omani signal of disagreement with the Saudi-led move to isolate Qatar. Iran's Foreign Minister visited Oman and met with Sultan Qaboos in October 2017 to discuss regional issues. As a further overture toward Iran, Oman did not immediately join the December 2015 Saudi assembly of a Muslim-nation "counterterrorism coalition" that excludes Iran and Iran's allies, although Oman finally did join that initiative in December 2016. And, Oman was the only GCC state not to downgrade relations with Iran in January 2016 in solidarity with Saudi Arabia when the Kingdom broke relations with Iran in connection with the dispute over the Saudi execution of dissident Shiite cleric Nimr Al Nimr. In February 2016, all the GCC states declared Lebanese Hezbollah a terrorist group, but Oman did not also restrict travel by its citizens to Lebanon. Some experts and GCC officials argue that Oman-Iran relations, particularly their security cooperation, are undermining GCC defense solidarity. In 2009, Iran and Oman agreed to cooperate against smuggling across the Gulf of Oman, which separates the two countries. On August 4, 2010, Oman signed a security pact with Iran to cooperate in patrolling the Strait of Hormuz, an agreement that reportedly committed the two to hold joint military exercises. The two countries expanded that agreement by signing a Memorandum of Understanding on military cooperation in 2013. The two countries have held joint exercises under these agreements, most recently a December 2015 joint naval exercise. Omani leaders have sought to ensure that the country's relations with Iran do not harm relations with the United States. In the course of his January 2019 regional trip, Secretary of State Michael Pompeo met with Sultan Qaboos to discuss regional issues, and he praised Oman for enforcing the sanctions that the Trump Administration reimposed on Iran. Still, Iran and Oman conduct significant volumes of civilian trade, in keeping with historic patterns in the Gulf region. A number of Iran-Oman joint ventures are active or pending. Most notably, Iran reportedly envisions the joint expansion of Oman's port of Al Duqm as providing Tehran with a major trading hub to interact with the global economy. Oman and Iran's Khodro Industrial Group are conducting a feasibility study of a t a $200 million car production plant there. China, Britain, and numerous other powers are also large investors in Oman's Al Duqm development, and in February 2018 India reportedly signed an agreement with Oman granting the Indian navy certain rights at the port. In March 2019, Oman agreed to grant the United States military access to Al Duqm port as well, as discussed further below. Iran and Oman have jointly developed the Hengham oilfield in the Persian Gulf, a field that will eventually produce about 80 million cubic feet of natural gas per day. The two countries have also discussed potential investments to further develop Iranian offshore natural gas fields that adjoin Oman's West Bukha oil and gas field in the Strait of Hormuz. The field began producing oil and gas in 2009. During Iranian President Hassan Rouhani's 2014 visit to Oman, the two countries signed a deal to build a $1 billion undersea pipeline to bring Iranian natural gas from Iran's Hormuzegan Province to Sohar in Oman, where it will be converted to liquefied natural gas (LNG) and then exported. Several major international energy firms are reportedly involved in the project, but the reimposition of U.S. sanctions in 2018 appear to have slowed progress on the concept. Oman, Iran, and Yemen In neighboring Yemen, Oman and Iran's interests in some ways conflict. A GCC-wide initiative helped organize a peaceful transition from the rule of Ali Abdullah Saleh in 2011-2012. However, Saleh's successor, Abdu Rabu Mansur Al Hadi, was driven out of Sanaa in 2015 by Zaidi Shiite Houthi rebels who are increasingly supported by Iran. The Yemeni affiliate of Al Qaeda, Al Qaeda in the Arabian Peninsula (AQAP), also continues to operate there. Oman has closely patrolled the border with Yemen since 2015, has built some refugee camps near the border, and has sought to improve ties with tribes and residents just over the border to ensure that the conflict in Yemen does not spill over into Oman. The current instability in Yemen builds on a long record of difficulty in Oman-Yemen relations. The former People's Democratic Republic of Yemen (PDRY), considered Marxist and pro-Soviet, supported Oman's Dhofar rebellion. Oman-PDRY relations were normalized in 1983, but the two engaged in occasional border clashes later in that decade. Relations improved after 1990, when PDRY merged with North Yemen to form the Republic of Yemen. As the only GCC state that has not joined the Saudi-led Arab coalition fighting to restore the Hadi government and with its ties to Iran, Oman has become a mediator of the Yemen conflict. The U.N. Special Envoy for Yemen, Martin Griffiths, has described Oman as "playing a pivotal role in all our efforts to help people in Yemen." Oman has hosted talks between U.S. diplomats and Houthi representatives, and brokered the release of several captives there, including the November 2016 release of a U.S. Marine veteran who was detained by the Houthis in April 2015. During 2015-2017, Omani mediation also secured the release in Yemen of another American, a French national, an Australian national, and an Indian priest. In late 2018, Oman attempted to secure the release of Yemen's Defense Minister, Mahmoud al-Subaihi, who has been held captive by the Houthis since 2014. In December 2018, Oman received several wounded Houthi fighters for treatment, fulfilling a Houthi condition to attend peace talks in Sweden. Iran's interference in Yemen has brought more international scrutiny to Oman's relations with Iran. Since 2016, media reports have indicated that Iran has used Omani territory to smuggle weapons into Yemen, taking advantage of the porous and sparsely populated 179-mile border between the two countries. Smuggled materiel allegedly includes anti-ship missiles (some of which have reportedly been used to target U.S. warships), surface-to-surface short-range missiles, small arms, and explosives. Some reports indicate that Iran-made unmanned aerial vehicles (UAVs) used by Houthi forces in Yemen may have transited through Oman. Successive U.N. reports from the Panel of Experts established pursuant to resolution 2140 (2014) have identified both land routes that stretch from the Omani border to Houthi-controlled areas in the west and Omani ports with road access to Yemen as possible channels for weapons smuggling. Omani officials deny these allegations, and some observers assert that the allegations "appear implausible given the long distance the weapons would have to be transported overland through territory the Houthis do not control." In March 2018, then-Defense Secretary James Mattis stated that the Omanis "have security concerns that we share. I'm going there to listen ... and find out how they assess any trafficking that's going on at all. What is their assessment? What is their view of routes and that sort of thing?" Since that visit, Omani officials have asserted that the "file" of Iran smuggling weaponry to the Houthis via Omani territory is "closed," suggesting that Oman has stopped any such trafficking through it. In May 2018, the State Department notified Congress of its intention to obligate FY2017 Nonproliferation, Anti-Terrorism, Demining and Related Programs (NADR) funds for counterterrorism programming in Yemen and Oman, including the Oman Border Security Enhancement Program, a "program focused on developing and enhancing Omani border security capabilities along the Oman-Yemen border." The FY2019 National Defense Authorization Act (NDAA, H.R. 5515 , P.L. 115-232 ) extends the authority to provide funds to Oman under Section 1226 of the FY2016 NDAA (22 U.S.C. 2151) to secure the border with Yemen. Oman as a Go-Between for the United States and Iran U.S. officials have used the Oman-Iran relationship to reach out to Iranian officials when doing so has been deemed in the U.S. interest. Press reports indicate that then-Deputy Secretary of State William Burns and other U.S. officials began secretly meeting with Iranian officials in early 2013—before the June 2013 election of the moderate Hassan Rouhani as Iran's president—to explore the possibility of a nuclear deal. The U.S-Iran meetings accelerated after Sultan Qaboos's August 25-27, 2013, visit to Iran. In November 2014, then-Secretary of State John Kerry met with Iranian Foreign Minister Mohammad Javad Zarif in Muscat to accelerate the negotiations, followed by a meeting between the entire P5+1 and Iranian negotiators. An additional round of P5+1-Iran talks was held in Oman, and the JCPOA was finalized in July 2015. In December 2015, Oman hosted a meeting between Energy Secretary Ernest Moniz and head of Iran's Atomic Energy Organization Ali Akbar Salehi, to discuss JCPOA implementation. In November 2016, Iran exported 11 tons of heavy water to Oman, reducing Iran's stockpile below that allowed. Omani banks, some of which operate in Iran, were used to implement some of the financial arrangements of the JPA and JCPOA. As a consequence, a total of $5.7 billion in Iranian funds had built up in Oman's Bank Muscat by the time of implementation of the JCPOA in January 2016. In its efforts to easily access these funds, Iran obtained from the Office of Foreign Assets Control (OFAC) of the Treasury Department a February 2016 special license to convert the funds (held as Omani rials) to dollars as a means of easily converting the funds into Euros. Iran ultimately used a different mechanism to access the funds as hard currency, but the special license issuance resulted in a May 2018 review by the majority of the Senate Permanent Subcommittee on Investigation to assess whether that license was consistent with U.S. regulations barring Iran access to the U.S. financial system. Oman also has been an intermediary through which the United States and Iran have exchanged captives. Oman brokered a U.S. hand-over of Iranians captured during U.S.-Iran skirmishes in the Persian Gulf in 1987-1988. In 2007, Oman helped broker Iran's release of 15 sailors from close U.S. ally the United Kingdom, who Iran had captured in the Shatt al Arab waterway. U.S. State Department officials publicly confirmed that Oman helped broker the 2010-2011 releases from Iran of three U.S. hikers (Sara Shourd, Josh Fattal, and Shane Bauer), in part by paying their $500,000 per person bail to Iran. In April 2013, Omani mediation obtained the release to Iran of an Iranian scientist, Mojtaba Atarodi, imprisoned in the United States in 2011 for procuring nuclear equipment for Iran. U.S. officials also have sought Oman's help to determine the fate of retired FBI agent Robert Levinson, who disappeared on Iran's Kish Island in 2007. The October 25, 2018, visit to Oman by Israeli Prime Minister Benjamin Netanyahu might have represented an Israeli effort to indirectly communicate with Iran over Syria, Lebanon, and other issues of significant dispute. If so, Israel might have been seeking to take advantage of Oman's ties to Iran in ways similar to those used by the United States, as discussed above. Cooperation against the Islamic State Organization and on Syria and Iraq Oman, along with the other GCC states, joined the U.S.-led coalition to counter the Islamic State in 2014. Oman offered the use of its air bases for the coalition but, unlike several GCC states, Oman did not conduct airstrikes against the group. In the Syria internal conflict, possibly because of its relations with Iran, Oman has refrained from backing rebel groups against Iran's close ally, Syrian President Bashar Al Assad, and instead focused on mediation. Oman joined other Arab states in 2011 in suspending Syria's membership in the Arab League or closing Oman's embassy in Damascus. In August 2015, Oman hosted Syria's foreign minister for talks on possible political solutions to the Syria conflict, and in October 2015, Omani Minister of State for Foreign Affairs Yusuf Alawi visited Damascus to convey a U.S. message to Asad. Oman attended multilateral meetings in Vienna on the Syria conflict in late 2015, and Oman hosted Russian Foreign Minister Sergei Lavrov in February 2016 to discuss Syria. On Iraq, no GCC state undertook air strikes against the Islamic State fighters there. The GCC states have tended to resist helping the Shiite-dominated government in post-Saddam Iraq. Oman opened an embassy in Iraq after the 2003 ousting of Saddam but then closed it for several years following a shooting outside it in November 2005 that wounded four, including an embassy employee. The embassy reopened in 2007 but Oman's Ambassador to Iraq, appointed in March 2012, is resident in Jordan, where he serves concurrently. Oman provided a small amount of funds for Iraq's post-Saddam reconstruction. Policies on Other Conflicts Libya . Oman did not play an active a role in supporting the 2011 Libyan uprising that overthrew Mu'ammar Al Qadhafi. In March 2013, Oman granted asylum to Qadhafi's widow and her and Qadhafi's daughter, Aisha, and sons Mohammad and Hannibal, who had entered Oman in October 2012. Omani officials said they were granted asylum on the grounds that they not engage in any political activities. Egypt. The GCC has been divided on post-Mubarak Egypt. Qatar supported the 2012 election of Muslim Brotherhood leader Mohammad Morsi as the first elected post-Mubarak president, but Saudi Arabia and the UAE oppose the Brotherhood and supported the Egyptian military's ouster of Morsi in 2013. Oman criticized a post-coup crackdown on Brotherhood supporters but, in November 2017, Oman hosted a visit by Egyptian leader Abdel Fattah Al Sisi, who is supported by Saudi Arabia and the UAE. Israeli-Palestinian Dispute and Related Issues Oman was the one of the few Arab countries not to break relations with Egypt after the signing of the U.S.-brokered Egyptian-Israeli peace treaty in 1979. The GCC states participated in the multilateral peace talks established by the 1991 U.S.-sponsored Madrid peace process, and Oman hosted an April 1994 session of the multilateral working group on water that resulted in the establishment of a Middle East Desalination Research Center in Oman. Participants in the Center include Israel, the Palestinian Authority, the United States, Japan, Jordan, the Netherlands, South Korea, and Qatar. In September 1994, Oman and the other GCC states renounced the secondary and tertiary Arab boycott of Israel. In December 1994, it became the first Gulf state to officially host a visit by an Israeli prime minister (Yitzhak Rabin), and it hosted then Prime Minister Shimon Peres in April 1996. In October 1995, Oman exchanged trade offices with Israel, essentially renouncing the primary boycott of Israel. However, there was no move to establish diplomatic relations. The trade offices closed following the September 2000 Palestinian uprising. In an April 2008 meeting in Qatar, de-facto Foreign Minister Alawi informed his Israeli counterpart (visiting Doha for a conference) that the Israeli trade office in Oman would remain closed until agreement was reached on a Palestinian state. Several Israeli officials reportedly visited Oman in November 2009 to attend the annual conference of the Desalination Center and to hold talks with Omani officials on the margins of the conference. Oman offered to resume trade contacts with Israel if it halted settlement construction in the West Bank—a condition Israel has not met. Oman publicly supports the Palestinian Authority (PA) drive for full U.N. recognition. In February 2018, Foreign Minister Alawi visited the Al Aqsa Mosque in east Jerusalem, which required coordination with Israeli authorities. He also met Palestinian officials in Ramallah during that trip. On October 25, 2018, Israel's Prime Minister Benjamin Netanyahu visited Oman and met with Sultan Qaboos. The visit, which came a few weeks after a visit to Oman by Palestinian leader Mahmoud Abbas, was announced by both countries after Netanyahu had returned to Israel. Analysts and press reports suggested that the two leaders discussed possible ways forward on the Israeli-Palestinian peace process and on indirect Israeli communication with Iran via Oman. The visit represented confirmation of the burgeoning ties between Israel and the GCC states on security and other regional issues. In early November 2018, Israel's Minister of Transportation and Minister of Intelligence Yisrael Katz visited Oman to attend an international conference during which he presented a concept for a railway between Israel, Jordan, and the Gulf states. In February 2019, White House adviser Jared Kushner, Special Representative for International Negotiations Jason Greenblatt, and the State Dept. special representative for Iran Brian Hook met with Qaboos in Muscat to discuss the administration's Middle East peace proposals and U.S. policy toward Iran. Defense and Security Issues Sultan Qaboos, who is Sandhurst-educated, is respected by his fellow Gulf rulers as a defense strategist. He has long asserted that the United States is the security guarantor of the region. Oman's approximately 43,000-person armed force—collectively called the "Sultan of Oman's Armed Forces"—is the third largest of the GCC states and widely considered one of the best trained. However, in large part because of Oman's limited funds, it is one of the least well equipped of the GCC countries. Oman's annual defense budget is about $9 billion out of government expenditures of about $30 billion. Sultan Qaboos has always supported close defense cooperation with the United States. In the wake of Iran's 1979 Islamic revolution, Oman signed a "facilities access agreement" that allows U.S. forces access to Omani military facilities on April 21, 1980. Days after the signing, the United States used Oman's Masirah Island air base to launch the failed attempt to rescue the U.S. Embassy hostages in Iran, although Omani officials assert that they were not informed of that operation in advance. Under the agreement, which was last renewed in 2010, the United States reportedly can use—with advance notice and for specified purposes—Oman's military airfields in Muscat (the capital), Thumrait, Masirah Island, and Musnanah. Some U.S. Air Force equipment, including lethal munitions, is reportedly stored at these bases. According to February 2018 testimony of CENTCOM commander General Joseph Votel, each year Omani military forces participate in several exercises, and Oman allows 5,000 overflights and 600 landings by U.S. military aircraft and hosts 80 port calls by U.S. naval vessels. A few hundred U.S. military personnel are stationed in Oman, mostly Air Force. 2019 Port Access Agreement . On March 24, 2019, Oman and the United States signed a "Strategic Framework Agreement" that expands the U.S.-Oman facilities access agreements by allowing U.S. forces to use the ports of Al Duqm (see above) and Salalah. Al Duqm, in particular, is large enough to handle U.S. aircraft carriers, and the agreement was seen by the United States as improving the U.S. ability to counter Iran in the region. Oman reportedly views the accord as bringing in additional investment to Al Duqm. Participation in Middle East Strategic Alliance . Omani leaders express willingness to join a U.S.-backed "Middle East Strategic Alliance" of the GCC states and Jordan and Egypt, envisioned as countering Iran. That coalition was to be formalized at a U.S.-GCC summit planned for spring 2018 but, because of the intra-GCC rift, has been repeatedly postponed. The intra-GCC rift, as well as Yemen, Iran, and other issues, was discussed during the January 2019 visit to Oman of Secretary of State Michael Pompeo, according to a State Department announcement. On January 9, 2019, Sultan Qaboos hosted meetings on the "economic and energy pillars of the Middle East Strategic Alliance," according to the Secretary's readout of his meeting with Qaboos on January 15, 2019. Oman has shown its support for major U.S. operations in the region by making its facilities available consistently. Oman's facilities contributed to U.S. major combat operations in Afghanistan (Operation Enduring Freedom, OEF) and, to a lesser extent, Iraq (Operation Iraqi Freedom, OIF). According to the Defense Department, during major combat operations of OEF (late 2001) there were about 4,300 U.S. personnel in Oman, mostly Air Force, and U.S. B-1 bombers, indicating that the Omani facilities were used extensively for strikes during OEF. The U.S. military presence in Oman fell to 3,750 during OIF (which began in March 2003) because facilities closer to Iraq were used more extensively. Oman did not contribute forces either to OEF or OIF. After 2004, Omani facilities were not used for U.S. air operations in Afghanistan or Iraq. Because of his historic ties to the British military, Qaboos early on relied on seconded British officers to command Omani military services, and Oman bought British weaponry. Over the past two decades, British officers have become mostly advisory and Oman has shifted its arsenal mostly to U.S.-made major combat systems. Still, as a signal of the continuing close defense relationship, in April 2016 Britain and Oman signed a memorandum of understanding to build a base near Al Duqm port, at a cost of about $110 million, to support the stationing of British naval and other forces in Oman on a permanent basis. U.S. Arms Sales and Other Security Assistance to Oman45 Oman is trying to expand and modernize its arsenal primarily with purchases from the United States. However, Oman is one of the least wealthy GCC states and cannot buy U.S. arms as readily as the wealthier GCC states. Oman has received small amounts of Foreign Military Financing (FMF) that have been used to help purchase U.S. equipment, and Oman is eligible for grant U.S. excess defense articles (EDA) under Section 516 of the Foreign Assistance Act. The United States has not provided Oman with any FMF since FY2017 and none is requested for FY2020. Nonetheless, General Votel testified on February 5, 2019, that Oman "will continue to develop an FMS (foreign military sales) portfolio that already includes over $2.7 billion in open FMS cases, though budgetary constraints may significantly slow new acquisitions in coming years." Some of the pending and prior FMS cases are discussed below. F-16s . In October 2001, Oman purchased (with its own funds) 12 U.S.-made F-16 C/D aircraft. Along with associated weapons (Harpoon and AIM missiles), a podded reconnaissance system, and training, the sale was valued at about $825 million; deliveries were completed in 2006. In 2010, the United States approved a sale to Oman of 18 additional F-16s, with a value (including associated support) of up to $3.5 billion. Oman signed a contract with Lockheed Martin for 12 of the aircraft in December 2011, and deliveries were completed in 2016. Oman's Air Force also possesses 12 Eurofighter "Typhoon" fighter aircraft. Precision-Guided Munitions . Oman has bought associated weapons systems, including "AIM" advanced medium-range air-to-air missiles (AIM-120C-7, AIM-9X Sidewinder), 162 GBU laser-guided bombs, and other equipment. Countermeasures for Head of State Aircraft . In 2010 and 2013, the United States sold Oman equipment to protect the aircraft that Oman uses to transport Qaboos. Surface-to-Air and Air-to-Air Missiles . On October 19, 2011, DSCA notified Congress of a potential sale to Oman of AVENGER and Stinger air defense systems, asserted as helping Oman develop a layered air defense system. Missile Defense . In May 2013, then-Secretary of State John Kerry visited Oman reportedly in part to help finalize a sale to Oman of the THAAD (Theater High Altitude Area Defense system), the most sophisticated land-based missile defense system the U.S. exports. A tentative agreement by Oman to purchase the system, made by Raytheon, was announced on May 27, 2013, with an estimated value of $2.1 billion. However, a sale has not been announced. Several other GCC states have bought or are in discussions to buy the THAAD. Tanks as Excess Defense Articles . Oman received 30 U.S.-made M-60A3 tanks in September 1996 on a "no rent" lease basis (later receiving title outright). In 2004, it turned down a U.S. offer of EDA U.S.-made M1A1 tanks, but Oman asserts that it still requires armor to supplement the 38 British-made Challenger 2 tanks and 80 British-made Piranha armored personnel carriers it bought in the mid-1990s. Oman has also bought some Chinese-made armored personnel carriers and other gear, and it reportedly is considering buying 70 Leopard tanks from Germany with a value of $2.2 billion. Patrol Boats/ Maritime Security . Oman has bought U.S.-made coastal patrol boats ("Mark V") for counternarcotics, antismuggling, and antipiracy missions, as well as aircraft munitions, night-vision goggles, upgrades to coastal surveillance systems, communications equipment, and de-mining equipment. EDA grants since 2000 have gone primarily to help Oman monitor its borders and waters and to improve interoperability with U.S. forces. Oman has bought some British-made patrol boats. The United States also has sold Oman the AGM-84 Harpoon anti-ship missile. Anti t ank Weaponry . The United States has sold Oman antitank weaponry to help it protect from ground attack and to protect critical infrastructure. In December 2015, DSCA notified a potential sale to Oman of more than 400 TOW (tube-launched, optically tracked, wire-guided) antitank systems. The sale has an estimated value of $51 million. The United States also has provided to Oman 400 "Javelin" antitank guided missiles. Professionalizing Oman's Forces: IMET Program and Other Programs The International Military Education and Training program (IMET) program is used to promote U.S. standards of human rights and civilian control of military and security forces, as well as to fund English language instruction, and promote interoperability with U.S. forces. About 100 Omani military students participate in the program each year, studying at 29 different U.S. military institutions. Cooperation Against Terrorism/Illicit Activity48 Oman cooperates with U.S. legal, intelligence, and financial efforts against various cross-border threats, particularly those posed by terrorist groups including Al Qaeda, Al Qaeda in the Arabian Peninsula (AQAP, headquartered in neighboring Yemen), and the Islamic State organization. No Omani nationals were part of the September 11, 2001, attacks and no Omanis have been publicly identified as senior members of any of those groups. According to recent State Department reports on terrorism, Oman is actively trying to prevent terrorist groups from conducting attacks and using the country for safe haven or transport. As shown in the table above, the United States provides funding—primarily through Nonproliferation, Antiterrorism, Demining, and Related (NADR) and other programs—to help Oman counter terrorist and related activity and combat trafficking of WMD-related equipment. NADR funding falls into three categories: Export Control and Related Border Security (EXBS) funds, Anti-Terrorism Assistance (ATA) funds, and Terrorism Interdiction Program funding. These programs enhance the capabilities of the Royal Oman Police (ROP), the ROP Coast Guard, the Directorate General of Customs, the Ministry of Defense, the Ministry of Foreign Affairs, the Ministry of Transportation, the Ministry of Commerce and Industry, the Ministry of Transportation and Communication, and the Royal Army of Oman to interdict weapons of mass destruction (WMD), advanced conventional weapons, or illegal drugs at official Ports of Entry on land and at sea ports and along land and maritime borders. ATA funds are used to train the Royal Army of Oman and several Omani civilian law enforcement agencies on investigative techniques, maritime border security, cybersecurity, and to enhance their ability to detect and respond to the entry of terrorists into Oman. In 2017, a 10-week EXBS training course helped the government of Oman establish a port control at the Port of Sohar. On December 13, 2018, the Administration notified Congress that up to $220,000 in FY2018 ATA funds would be provided to Oman to support training designed to enhance Oman's capabilities to reduce the flow of foreign terrorist fighters and related goods at points of entry, including through courses such as fraudulent travel document and behavioral analysis. In 2005, Oman joined the U.S. "Container Security Initiative," agreeing to pre-screening of U.S.-bound cargo from its port of Salalah to prevent smuggling of nuclear material, terrorists, and weapons. However, the effect of some U.S. programs on Omani performance is sometimes hindered by the lack of clear delineation between the roles and responsibilities of Oman's armed forces and law enforcement agencies. There are no Omani nationals currently held in the U.S. prison for suspected terrorists in Guantanamo Bay, Cuba. During 2015-17, Oman accepted the transfer of 23 non-Omani nationals from Guantanamo Bay as part of an effort to support U.S. efforts to close the facility. Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) Oman is a member of the Middle East and North Africa Financial Action Task Force (MENA-FATF). Recent State Department terrorism reports credit Oman with transparency regarding its anti-money laundering and counterterrorist financing enforcement efforts and say that it has the lowest risk for terrorism financing or money laundering of any of the GCC countries. Oman does not permit the use of hawalas , or traditional money exchanges, in the financial services sector, and Oman has on some occasions shuttered hawala operations entirely. A 2010 Royal Decree was Oman's main legislation on anti-money laundering and combatting terrorism financing but, in 2016, Royal Decree 30/2016 increased efforts to counter terrorism financing by requiring financial institutions to screen transactions for money laundering or terrorist financing. In 2015, Oman signed an agreement with India to improve cooperation on investigations, prosecutions, and counterterrorism efforts. In May 2017, Oman joined with the other GCC states and the United States to form a Riyadh-based "Terrorist Finance Target Center." Countering Violent Extremism The State Department report on terrorism for 2017, referenced earlier, characterizes Oman's initiatives to address domestic radicalization and recruitment to violence as "unclear" in nature and scope. Oman's government, through the Ministry of Endowments and Religious Affairs (MERA), has conducted advocacy campaigns designed to encourage tolerant and inclusive Islamic practices, including through an advocacy campaign titled "Islam in Oman." The Grand Mufti of Oman, Shaykh Ahmad al-Khalili, calls on Muslims to reject terrorism in his widely broadcast weekly television program. Economic and Trade Issues Oman is in a difficult economic situation. It ran a budget deficit of $13 billion in 2016, and about $8 billion in 2017. Oman has addressed the shortfalls—without drawing down its estimated $24 billion in sovereign wealth reserves—by raising capital internationally. Since the beginning of 2017, Oman has raised over $10 billion by selling government bonds and receiving loans from Chinese and other banks. The government has cut subsidies substantially and has reduced the size of the government. Despite Oman's efforts to diversify its economy, oil exports still generate over 70% of government revenues and nearly 50% of its gross domestic product (GDP). Oman has a relatively small 5.5 billion barrels (maximum estimate) of proven oil reserves, enough for about 15 years at current production rates. It exports approximately 820,000 barrels of crude oil per day. In part because it is a small producer, Oman is not a member of the Organization of the Petroleum Exporting Countries (OPEC). Oman has announced a "Vision 2020" strategy to reduce its dependence on the oil and gas sector. Oman has in recent years expanded its liquefied natural gas (LNG) exports, for which Oman has a large market in Asia. Oman is part of the "Dolphin project," operating since 2007, under which Qatar is exporting natural gas to UAE and Oman through undersea pipelines, freeing up Oman's own natural gas supplies for sale to other customers. In December 2013, Oman signed a $16 billion agreement for energy major BP to develop Oman's natural gas reserves. Oman is trying to attract foreign investment by positioning itself as a trading hub. The key to that strategy is the $60 billion project—with some investment funding coming from Iran, Kuwait, China, the United Kingdom, and the United States—build up Al Duqm (see Figure 1 ) as a transportation, energy, and military hub. Oman's plans for the port include a refinery ($6 billion alone), a container port, a dry dock, and other facilities for transportation of petrochemicals. A planned transit hub would link to the other GCC states by rail and enable them to access the Indian Ocean directly, bypassing the Persian Gulf. China's investments in Al Duqm are part of its "Belt and Road Initiative" to build a continuous trade link between China and Europe. Its $11 billion investment in Al Duqm is to build the "Sino-Oman Industrial City" there. The Chinese investments in Oman help China secure its oil supplies; Oman is China's fourth-largest source of oil. U.S.-Oman Economic Relations The United States is Oman's fourth-largest trading partner. In 2018, the United States exported about $2 billion in goods to Oman, and imported about $1.1 billion in goods from it—figures roughly equal to those of 2017. The largest U.S. export categories to Oman are automobiles, aircraft (including military) and related parts, drilling and other oilfield equipment, and other machinery. Of the imports, the largest product categories are fertilizers, industrial supplies, and oil by-products such as plastics. In part because of expanded U.S. oil production, the United States imports almost no Omani oil. Oman was admitted to the WTO in September 2000. The U.S.-Oman Free Trade Agreement was signed on January 19, 2006, and ratified by Congress ( P.L. 109-283 , signed September 26, 2006). According to the U.S. Embassy in Muscat, the FTA has led to increased partnerships between Omani and U.S. companies. General Cables and Dura-Line Middle East are two successful examples of joint ventures between American and Omani firms. These ventures are not focused on hydrocarbons, suggesting the U.S.-Oman trade relationship is not focused only on oil. The United States phased out development assistance to Oman in 1996. At the height of that development assistance program in the 1980s, the United States was giving Oman about $15 million per year in Economic Support Funds (ESF) for conservation and management of Omani fisheries and water resources. On January 23, 2016, the United States and Oman signed an agreement on cooperation in science and technology. The agreement paves the way for exchanges of scientists, joint workshops, and U.S. training of Omani personnel in those fields.

The Sultanate of Oman has been a strategic ally of the United States since 1980, when it became the first Persian Gulf state to sign a formal accord permitting the U.S. military to use its facilities. Oman has hosted U.S. forces during every U.S. military operation in the region since then, and it is a partner in U.S. efforts to counter regional terrorism and related threats. Oman's ties to the United States are unlikely to loosen even after its ailing leader, Sultan Qaboos bin Sa'id Al Said, leaves the scene. Qaboos underwent cancer treatment abroad during 2014-2015, and his frail appearance in public appearance fuels speculation about succession. He does continue to meet with visiting leaders, including Israeli Prime Minister Benjamin Netanyahu on October 25, 2018, the first such visit by Israeli leadership to Oman in more than 20 years. Oman has tended to position itself as a mediator of regional conflicts, and generally avoids joining its Gulf allies of the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, UAE, Bahrain, Qatar, and Oman) in regional military interventions such as that in Yemen. Oman joined the U.S.-led coalition against the Islamic State organization, but it did not send forces to that effort, nor did it support groups fighting Syrian President Bashar Al Asad's regime. It refrained from joining a Saudi-led regional counterterrorism alliance until a year after that group was formed in December 2015, and Oman opposed the June 2017 Saudi/UAE isolation of Qatar. Oman also has historically asserted that engaging Iran is the optimal strategy to reduce the potential threat from that country. It was the only GCC state not to downgrade its relations with Iran in connection with a January 2016 Saudi-Iran dispute. Oman's ties to Iran have enabled it to broker agreements between the United States and Iran, including the release of U.S. citizens held by Iran as well as U.S.-Iran direct talks that later produced the July 14, 2015, nuclear agreement between Iran and the international community (Joint Comprehensive Plan of Action, JCPOA). Yet, U.S. officials credit Oman with enforcing re-imposed U.S. sanctions and with taking steps to block Iran's efforts to ship weapons across Oman's borders to Houthi rebels in Yemen. Prior to the 2011 wave of Middle East unrest, the United States consistently praised Sultan Qaboos for gradually opening the political process even in the absence of evident public pressure to do so. The liberalization allows Omanis a measure of representation through elections for the lower house of a legislative body, but does not significantly limit Qaboos's role as paramount decisionmaker. The public support for additional political reform, and resentment of inadequate employment opportunities produced protests in several Omani cities for much of 2011, and for two weeks in January 2018, but government commitments to create jobs helped calm the unrest. Oman has followed policies similar to the other GCC states since 2011 by increasing press censorship and arresting critics of the government who use social media. The periodic economy-driven unrest demonstrates that Oman is having difficulty coping with the decline in the price of crude oil since mid-2014. Oman's economy and workforce has always been somewhat more diversified than some of the other GCC states, but Oman has only a modest financial cushion to invest in projects that can further diversify its revenue sources. The U.S.-Oman free trade agreement (FTA) was intended to facilitate Oman's access to the large U.S. economy and accelerate Oman's efforts to diversify. Oman receives small amounts of U.S. security assistance, and no economic aid.

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Background Iran's nuclear program began during the 1950s. Construction of a U.S.-supplied research reactor, called the Tehran Research Reactor (TRR), located in Tehran began in 1960; the reactor went critical in 1967. During the 1970s, Tehran pursued an ambitious nuclear power program. According to contemporaneous U.S. documents, Iran wanted to construct 10-20 nuclear power reactors and produce more than 20,000 megawatts of nuclear power by 1994. Iran also began constructing a light-water nuclear power reactor near the city of Bushehr, and it considered obtaining uranium enrichment and reprocessing technology. Proliferation Concerns Iran took steps to demonstrate that it was not pursuing nuclear weapons. For example, Tehran signed the nuclear Nonproliferation Treaty (NPT) in 1968 and ratified it in 1970. Iran also submitted a draft resolution to the U.N. General Assembly in 1974 that called for establishing a nuclear-weapons-free zone in the Middle East. Nevertheless, mid-1970s U.S. intelligence reports expressed concern that Iran might pursue a nuclear weapons program. Although Iran cancelled its nuclear program after its 1979 revolution, a 1981 Department of State draft paper argued that Iran might develop a nuclear weapons program in response to a then-suspected Iraqi nuclear weapons program, although Iran was not one of several countries of "near to medium term proliferation concern" cited in the paper. Tehran "reinstituted" its nuclear program in 1982. According to International Atomic Energy Agency (IAEA) reports, Iran conducted experiments during the 1980s and early 1990s related to uranium conversion, heavy-water production, and nuclear reactor fuel fabrication. A 1985 National Intelligence Council report, which cited Iran as a potential "proliferation threat," stated that Tehran was "interested in developing facilities that ... could eventually produce fissile material that could be used in a [nuclear] weapon." The report, however, added that it "would take at least a decade" for Iran to do so. A 1986 CIA report went further, citing "the advantage of long-range missiles to deliver warheads quickly, virtually without warning, and-unlike aircraft-without facing any defense" as a "factor" that would incentivize Iranian development of nuclear weapons "in the late 1990s." A 1995 U.S. intelligence report stated that Iran was "aggressively pursuing a nuclear weapons capability and, if significant foreign assistance were provided, could produce a weapon by the end of the decade." Somewhat less urgently, an Arms Control and Disarmament Agency report covering 1995 observed that "Iran's rudimentary program has apparently met with limited success so far, [but] we believe Iran has not abandoned its efforts to expand its nuclear capabilities with a view to supporting nuclear weapons development." In 1996 congressional testimony, then-Director of Central Intelligence John Deutch described Iranian efforts to acquire from the former Soviet Union fissile material for a nuclear weapon: In an attempt to shorten the timeline to a weapon, Iran has launched a parallel effort to purchase fissile material, mainly from sources in the former Soviet Union. Iranian agents have contacted officials at nuclear facilities in Kazakhstan on several occasions, attempting to acquire nuclear-related materials. For example, in 1992, Iran unsuccessfully approached the Ulba Metallurgical Plant to obtain enriched uranium. In 1993, three Iranians believed to have had connections to Iran's intelligence service were arrested in Turkey while seeking to acquire nuclear material from smugglers from the former Soviet Union. More recently, the Iranian government has said that it plans to expand its reliance on nuclear power to generate electricity. This program will, Tehran says, reduce Iran's oil and gas consumption and allow the country to export additional fossil fuels; the previous Iranian regime also made this argument. Iran has begun to operate the Bushehr reactor, and Tehran says it intends to build additional reactors to generate 20,000 megawatts of power within the next 20 years. The 2015 Joint Comprehensive Plan of Action (JCPOA) requires Iran to refrain from building heavy-water-moderated reactors for 15 years. Pursuant to the agreement, Iran has pledged to refrain from constructing any such reactors indefinitely. Iranian officials say that Tehran has begun design work on its first indigenously produced light-water reactor, to be constructed at Darkhovin. According to official U.S. and Iranian sources, France agreed to construct the reactor during the 1970s but ended the project after the 1979 revolution in Iran. Atomic Energy Organization of Iran (AEOI) President Ali Akbar Salehi stated in September 2016 that "we are almost about to sign a contract for designing" the reactor, "but it will take a rather long time." Scope and Purpose of Iran's Nuclear Program Iranian officials have repeatedly asserted that the country's nuclear program is exclusively for peaceful purposes (see Appendix A ). Nevertheless, prior to the JCPOA, the United States and other governments argued that Iran may be pursuing, at a minimum, the capability to produce nuclear weapons. Discerning a peaceful nuclear program from a nuclear weapons program can be difficult because much nuclear technology is dual-use. In addition, military nuclear programs may coexist with civilian programs, even without an explicit governmental decision to produce nuclear weapons. Jose Goldemberg, Brazil's former secretary of state for science and technology, observed that a country developing the capability to produce nuclear fuel does not have to make an explicit early [political] decision to acquire nuclear weapons. In some countries, such a path is supported equally by those who genuinely want to explore an energy alternative and by government officials who either want nuclear weapons or just want to keep the option open. Some analysts argue that several past nuclear programs, such as those of France, Sweden, and Switzerland, illustrate this approach. A Swedish official involved in that country's nuclear weapons program "argued that the main aim should be the generation of nuclear energy, with plutonium production, which would make possible the manufacture of nuclear weapons as a side-effect." Moreover, a 1975 U.S. intelligence assessment argued that countries might develop an "unweaponized" nuclear explosive device "to further their political, and even military, objectives." The main source of proliferation concern generated by Iran's nuclear program has been Tehran's construction of gas centrifuge uranium-enrichment facilities. Gas centrifuges enrich uranium by spinning uranium hexafluoride gas at high speeds to increase the concentration of the uranium-235 isotope. Such centrifuges can produce both low-enriched uranium (LEU), which can be used in nuclear power reactors, and highly enriched uranium (HEU), which is one of the two types of fissile material used in nuclear weapons. HEU can also be used as fuel in certain types of nuclear reactors. Iran also has a uranium-conversion facility, which converts uranium ore concentrate into several compounds, including uranium hexafluoride. This program is currently constrained by the JCPOA. German Minister of State Niels Annen argued in a February 19, 2019, speech that the JCPOA "effectively prevents Iran from acquiring a nuclear weapon for as long as the agreement stands." However, following the May 8, 2018, U.S. announcement that the United States would no longer participate in the JCPOA and would reimpose sanctions that had been suspended pursuant to the agreement, Iranian President Hassan Rouhani ordered the AEOI to "go ahead with adequate preparations to resume enrichment at the industrial level without any limit." A year later, Rouhani announced additional Iranian responses. (see Appendix C , "Multilateral Diplomacy Concerning Iran's Nuclear Program"). Iranian officials have asserted that the country can rapidly reconstitute its fissile material production capability, although Tehran has adhered to the JCPOA-specified limits. Iran claims that it wants to produce LEU fuel for its planned light-water nuclear power reactors, as well as the Tehran Research Reactor (TRR) and other planned future research reactors. The latter reactors will be used to produce isotopes for medical purposes, according to Tehran. Although Iran has expressed interest in purchasing nuclear fuel from other countries, the government asserts that the country should have an indigenous enrichment capability as a hedge against possible fuel supply disruptions. President Rouhani ordered AEOI President Salehi on December 13, 2016, to provide a plan "for designing and manufacturing nuclear-propulsion system to be used in maritime transportation," as well as producing fuel for such a system. However, Iranian officials have indicated that Tehran would not produce enriched uranium exceeding JCPOA-established enrichment limits. In a January 2018 letter, Iran informed the IAEA of the government's "decision … to construct naval nuclear propulsion in future." Tehran explained in an April 2018 letter to the agency that "[f]or the first five years, no [nuclear] facility will be involved" and the "[n]uclear fuelled engines/reactors will be used for civilian purpose." Salehi stated in early February 2019 that at the project will take "at least 15 years" to complete. A reactor moderated by heavy water, which Iran was constructing at Arak, has also been a source of concern. Although Tehran says that the reactor is intended for the production of radioisotopes for medical purposes, the reactor previously under construction was a proliferation concern because its spent fuel would have contained plutonium well-suited for use in nuclear weapons. Spent nuclear fuel from nuclear reactors contains plutonium, the other type of fissile material used in nuclear weapons. In order to be used in nuclear weapons, however, plutonium must be separated from the spent fuel—a procedure called "reprocessing." Iran has said that it will not engage in reprocessing. This reactor is designed to use natural uranium fuel, which does not require enrichment. Iran has rendered the Arak reactor's original core inoperable pursuant to the JCPOA, which also commits Tehran to redesign and rebuild the reactor based on a design agreed to by the P5+1. In addition to the dual-use nature of the nuclear programs described above, Iran's inconsistent cooperation with the IAEA contributed to suspicions that Tehran had a nuclear weapons program. In the past, Iran has taken actions that interfered with the agency's investigation of its nuclear program, including concealing nuclear activities and providing misleading statements. Then-IAEA Director-General Mohamed ElBaradei explained in a 2008 interview that Iran's cooperation lagged behind IAEA demands: [T]hey [the Iranians] have concealed things from us in the past, but that doesn't prove that they are building a bomb today. They continue to insist that they are interested solely in using nuclear power for civilian purposes. We have yet to find a smoking gun that would prove them wrong. But there are suspicious circumstances and unsettling questions. The Iranians' willingness to cooperate leaves a lot to be desired. Iran must do more to provide us with access to certain individuals and documents. It must make a stronger contribution to clarifying the last unanswered set of questions—those relating to a possible military dimension of the Iranian nuclear program. Consistent with ElBaradei's statement, IAEA Director-General Yukiya Amano explained in a 2012 interview that the IAEA did not claim that "Iran [has] made a decision to obtain nuclear weapons." Notably, Tehran has implemented various restrictions on, and provided the IAEA with additional information about, its uranium enrichment program and heavy-water reactor program pursuant to the JCPOA. Iran and the IAEA agreed in August 2007 on a work plan to clarify the outstanding questions regarding Tehran's nuclear program, most of which concerned possible Iranian procurement activities and research directly applicable to nuclear weapons development. A December 2015 report to the IAEA Board of Governors from agency Director-General Amano contains the IAEA's "final assessment on the resolution" of these outstanding issues. Iran also has extensive programs to develop ballistic missiles and cruise missiles. (For more details on Iran's ballistic missile program, see CRS Report R42849, Iran's Ballistic Missile and Space Launch Programs , by Steven A. Hildreth.) Recent Nuclear Controversy The public controversy over Iran's nuclear program began in August 2002, when the National Council of Resistance on Iran (NCRI), an Iranian exile group, revealed information during a press conference (some of which later proved to be accurate) that Iran had built nuclear-related facilities at Natanz and Arak that it had not revealed to the IAEA. The United States had been aware of at least some of these activities, according to knowledgeable former officials. During the mid-1990s, Israel's intelligence services detected Iranian "efforts to develop a military nuclear industry," according to a 2004 Israeli Knesset committee report. Iran ratified the nuclear Nonproliferation Treaty (NPT) in 1970. States-parties to the treaty are obligated to conclude a comprehensive safeguards agreement with the IAEA; Tehran concluded such an agreement in 1974. In the case of nonnuclear-weapon states-parties to the treaty (of which Iran is one), such agreements are designed to enable the IAEA to detect the diversion of nuclear material from peaceful purposes to nuclear weapons uses, as well as to detect undeclared nuclear activities and material. As a practical matter, however, the IAEA's ability to inspect and monitor nuclear facilities, as well as obtain relevant information, pursuant to a comprehensive safeguards agreements is limited to facilities that have been declared by the government. Additional Protocols (see text box below) to IAEA safeguards agreements increase the agency's authority to inspect certain facilities and demand additional information from states-parties, thereby augmenting the agency's ability to investigate clandestine nuclear facilities and activities . The IAEA's statute requires the agency's Board of Governors to refer cases of noncompliance with safeguards agreements to the U.N. Security Council. Prior to the NCRI's revelations, the IAEA had expressed concerns that Iran had not been providing the agency with all relevant information about its nuclear programs, but the IAEA had never found Iran in violation of its safeguards agreement. In fall 2002, the IAEA began to investigate Iran's nuclear activities at Natanz and Arak; inspectors visited the sites the following February. During a June 2003 meeting, the IAEA board first expressed "concern" about Iran's past undeclared nuclear activities and urged Tehran to cooperate with the agency's investigation. The IAEA board's first resolution, which was adopted during a September 2003 meeting, called on Tehran to increase its cooperation with the agency's investigation and to suspend its uranium enrichment activities. (For more detail about Iran's nuclear organization, see Appendix B ). President Rouhani identified the Atomic Energy Organization of Iran (AEOI) as "the authority that was," prior to the June 2003 IAEA board meeting, "basically handling all political and technical issues concerning" the agency's investigation of Iran's nuclear program. Following that meeting, Iran's Supreme National Security Council created the Supreme Nuclear Committee, which was composed of officials from various agencies, including the AEOI and the ministries of defense, foreign affairs, and intelligence. After the IAEA board adopted its September 2003 resolution, the government placed Rouhani, who was the head of the Supreme National Security Council at the time, in charge of the negotiations concerning Iran's nuclear program. Rouhani explained the resulting nuclear decisionmaking process in 2011: Even though some people thought the nuclear team was operating with complete prerogatives, the facts were otherwise. The work procedure for every issue was that we first had to discuss the matter in the Supreme Nuclear Committee, then we took that result to the Meeting of Leaders, and finally we acted in accordance with the decision of the leaders. In October 2003, Iran concluded an agreement with France, Germany, and the United Kingdom, collectively known as the "E3," to suspend its enrichment activities, sign and implement an Additional Protocol to its IAEA safeguards agreement, and comply fully with the IAEA's investigation. As a result, the IAEA board decided to refrain from referring the matter to the U.N. Security Council, despite U.S. advocacy for such a referral. Statements from current and former Iranian officials indicate that, during fall 2003, Tehran feared that the United States might use Security Council referral as a means to undertake military action or other coercive measures against Iran. Rouhani argued in February 2005 that the United States would not take such action as long as Iran was cooperating with the IAEA and negotiating with the E3. After October 2003, Iran continued some of its enrichment-related activities, but Tehran and the E3 agreed in November 2004 to a more detailed suspension agreement. During negotiations between fall 2003 and summer 2005, both Iran and the E3 offered a number of proposals, although the two sides never reached agreement. The IAEA's investigation, as well as information Tehran provided after the October 2003 agreement, ultimately revealed that Iran had engaged in a variety of clandestine nuclear-related activities, some of which violated Iran's safeguards agreement. These activities included plutonium separation experiments, uranium enrichment and conversion experiments, and importing various uranium compounds. Current and former Iranian officials have depicted a government deeply divided during this time over diplomatic approaches regarding its nuclear program. For example, Seyed Hossein Mousavian, who was Iran's spokesperson during the government's 2003-2005 negotiations with France, Germany, and the United Kingdom (collectively known as the "E3"), explained that in 2003 "there were two schools of thought in Iran. One group advocated engagement with the West, while others were proponents of resistance." President Rouhani, who headed the 2003-2005 negotiations, explained during a July 2005 interview that certain parts of the Iranian government opposed the diplomatic track, adding that "[t]he problems included both disharmony and sabotage." Indeed, Rouhani later argued that Iran's Supreme National Security Council took charge of the diplomacy concerning the nuclear program because the Foreign Ministry was not able to be responsible for this task in a good way because some organizations did not pay sufficient attention to this ministry's decisions, especially since there had been disagreements for months between the Foreign Ministry and the Atomic Energy Organization. In a 2005 article, an Iranian Foreign Ministry official explained that the decision to delegate responsibility for the nuclear issue to the Supreme National Security Council was aimed at creating domestic consensus and preventing any possible discrepancies in the decision making process and its implementation at the national level. It was demonstrated in practice that this decision was crucial in preventing the friction between the government, parliament and all other relevant agencies. Iran resumed uranium conversion in August 2005 under the leadership of then-President Ahmadinejad, who had been elected two months earlier. On September 24, 2005, the IAEA Board of Governors adopted a resolution that, for the first time, found Iran to be in noncompliance with its IAEA safeguards agreement. The board, however, did not refer Iran to the Security Council, choosing instead to give Tehran additional time to comply with the board's demands. Iran announced in January 2006 that it would resume research and development on its centrifuges at Natanz. In response, the IAEA board adopted a resolution on February 4, 2006, that referred Iran's case to the Security Council. Two days later, Tehran announced that it would stop implementing its Additional Protocol. In March 2006, the U.N. Security Council President issued a statement, which was not legally binding, that called on Iran to "take the steps required" by the February IAEA board resolution. The council subsequently adopted six resolutions concerning Iran's nuclear program: 1696 (July 2006), 1737 (December 2006), 1747 (March 2007), 1803 (March 2008), 1835 (September 2008), and 1929 (June 2010). The second, third, fourth, and sixth resolutions imposed a variety of restrictions on Iran. In addition, these resolutions required Iran to cooperate fully with an ongoing IAEA investigation of its nuclear activities, suspend its uranium enrichment program, suspend its construction of a heavy-water reactor and related projects, and ratify the Additional Protocol to Iran's IAEA safeguards agreement. Resolution 1929 also required Tehran to refrain from "any activity related to ballistic missiles capable of delivering nuclear weapons" and to comply with a modified provision (called code 3.1) of Iran's subsidiary arrangement to its IAEA safeguards agreement. Beginning in June 2006, Iran later held multiple rounds of talks with China, France, Germany, Russia, the United Kingdom, and the United States, collectively known as the "P5+1," concerning various proposals for resolving the nuclear dispute. Saeed Jalili, then-head of Iran's Supreme National Security Council, conducted Iran's nuclear negotiations. Following his June 2013 election, Iranian President Rouhani delegated the "nuclear negotiations portfolio" to the Foreign Ministry, he explained in a September 2013 interview. The AEOI continued to be responsible for Tehran's negotiations with the IAEA. Supreme Leader Ayatollah Ali Khamene'i was the ultimate decisionmaker regarding Iran's diplomacy concerning the Joint Comprehensive Plan of Action. Then-Under Secretary of State for Political Affairs Wendy Sherman explained during a December 2013 hearing that Khamene'i "is the only one who really holds the nuclear file—makes the final decisions about whether Iran will reach a comprehensive agreement to forego much of what it has created in return for the economic relief it seeks." The Supreme Leader remained in charge of decisions regarding the nuclear program following Rouhani's 2013 election. Deputy Foreign Minister Seyed Abbas Araqchi explained in July 2016 that the nuclear issue was "under the senior management" of Khamene'i, adding that With regards the major foreign policy issues the more the decision making progresses and enters important levels the higher the level of engagement; it moves up from the ministry to the administration level and from the administration to the level of Supreme National Security Council and at the end to the supreme leader. Iran and the P5+1 met three times before concluding the Joint Plan of Action (JPA) on November 24, 2013. This agreement placed certain limitations on Iran's nuclear program and established an approach toward reaching a long-term comprehensive solution to international concerns regarding Iran's nuclear program. The two sides began implementing the JPA on January 20, 2014. The P5+1 and Iran reached a framework of a Joint Comprehensive Plan of Action (JCPOA) on April 2, 2015, and finalized the JCPOA on July 14, 2015. The parties began implementing the JCPOA on January 16, 2016. On that day, all of the previous Security Council resolutions' requirements were terminated. The NPT and U.N. Security Council Resolution 2231 compose the current legal framework governing Iran's nuclear program. On May 8, 2018, President Donald Trump announced that the United States would no longer participate in the JCPOA. The United States subsequently reimposed sanctions that had been suspended pursuant to the agreement. Other P5+1 countries immediately reiterated their support for the JCPOA and announced that they intend to fulfill their JCPOA commitments and protect their companies from the effects of any U.S.-imposed sanctions. President Rouhani has pledged to continue implementing the accord, provided Iran continues to receive the economic benefits of the agreement. (For more information about multilateral diplomacy concerning Iran's nuclear program, including the JCPOA's status, see Appendix C . For more information about the Trump administration's JCPOA policy, see Appendix D .) Iran's Cooperation with the IAEA As noted, the IAEA investigation of Iran's nuclear program began in 2002. Iran and the IAEA agreed in August 2007 on a work plan to clarify the outstanding questions regarding Tehran's nuclear program. Most of these issues, which had contributed to suspicions that Iran had been pursuing a nuclear weapons program, were essentially resolved by June 2008.However, then-IAEA Director-General ElBaradei told the IAEA Board of Governors on June 2, 2008, that there is "one remaining major [unresolved] issue," which concerns questions regarding "possible military dimensions to Iran's nuclear programme." Possible Military Dimensions Iran and the IAEA subsequently held a series of discussions regarding these issues. The agency provided Iran with documents or, in some cases, descriptions of documents, which had been provided to the IAEA by several governments. The documents indicated that Iranian entities may have conducted studies related to nuclear weapons development. The subjects of these studies included uranium conversion, missile reentry vehicles for delivering nuclear warheads, and conventional explosives used in nuclear weapons. Iranian officials have claimed that the documents are not authentic, but ElBaradei told the IAEA board on June 17, 2009, that there was "enough in these alleged studies to create concern in the minds of our professional inspectors." Iranian officials acknowledged that some of the information in the documents is accurate, but they argued that the activities described were exclusively for nonnuclear purposes. Tehran has provided some relevant information about these matters to the IAEA, but ElBaradei reported in August 2009 that the government should "provide more substantive responses" to the IAEA, as well as "the opportunity to have detailed discussions with a view to moving forward on these issues, including granting the agency access to persons, information and locations identified in the documents." IAEA Director-General Amano issued a report to the IAEA board in November 2011 stating that Iran had not "engaged with the agency in any substantive way" on the alleged studies since August 2008. According to this report, which provided the most detailed account to date of the IAEA's evidence regarding Iran's suspected nuclear weapons-related activities, the agency has "credible" information that Iran has carried out activities "relevant to the development of a nuclear explosive device," including acquisition of "nuclear weapons development information and documentation," work to develop "an indigenous design of a nuclear weapon including the testing of components," efforts "to procure nuclear related and dual use equipment and materials by military related individuals and entities," and work to "develop undeclared pathways for the production of nuclear material." Although some of these activities have civilian applications, "others are specific to nuclear weapons," the report notes. Most of these activities were conducted before the end of 2003, though some may have continued. (See Appendix E and " Nuclear Weapon Development Capabilities " for more details.) The IAEA Board of Governors adopted a resolution on November 18, 2011, stating that "it is essential" for Iran and the IAEA "to intensify their dialogue aiming at the urgent resolution of all outstanding substantive issues." IAEA and Iranian officials met 10 times between January 2012 and May 2013 to discuss what the agency termed a "structured approach to the clarification of all outstanding issues related to Iran's nuclear programme." However, during an October 2013 meeting, IAEA officials and their Iranian counterparts decided to adopt a "new approach" to resolving these issues. Iran signed a joint statement with the IAEA on November 11, 2013, describing a "Framework for Cooperation." According to the statement, Iran and the IAEA agreed to "strengthen their cooperation and dialogue aimed at ensuring the exclusively peaceful nature of Iran's nuclear programme through the resolution of all outstanding issues that have not already been resolved by the IAEA." Tehran subsequently provided the IAEA with information about several of the outstanding issues and later agreed in May 2014 to provide information to the agency by August 25, 2014, about five additional issues, including alleged Iranian research on high explosives and "studies made and/or papers published in Iran in relation to neutron transport and associated modelling and calculations and their alleged application to compressed materials." Iran subsequently provided information about four of these issues. Road Map to Assessing Possible Military Dimensions The July 2015 JCPOA states that Tehran was to "complete" a series of steps set out in an Iran-IAEA "Roadmap for Clarification of Past and Present Outstanding Issues." According to IAEA Director-General Amano, this road map, which the two sides concluded in July 2015, set out "a process" under the November 2013 JPA "to enable the Agency, with the cooperation of Iran, to make an assessment of issues relating to possible military dimensions to Iran's nuclear programme." According to a December 2, 2015, report to the IAEA Board of Governors from Amano, "[a]ll the activities contained in the road-map were implemented in accordance with the agreed schedule." The road map required Amano to present this report, which contains the agency's "final assessment on the resolution" of the aforementioned outstanding issues. In response, the board adopted a resolution on December 15, 2015, that notes Iran's cooperation with the road map and "further notes that this closes the Board's consideration" of the "outstanding issues regarding Iran's nuclear programme." Because the IAEA has verified that Iran has taken the steps required for Implementation Day to take effect, the board is no longer focused on either Iran's compliance with past Security Council resolutions or past issues concerning Iran's safeguards agreement. Instead, the board is focused on monitoring and verifying Iran's JCPOA implementation "in light of" United Nations Security Council Resolution 2231, which the council adopted on July 20, 2015. The December 2015 IAEA resolution requests the Director General to issue quarterly reports to the board regarding Iran's "implementation of its relevant commitments under the JCPOA for the full duration of those commitments." The Director General is also to report to the IAEA Board of Governors and the Security Council "at any time if the Director General has reasonable grounds to believe there is an issue of concern" regarding Tehran's compliance with its JCPOA or safeguards obligations. Parchin Parchin is an Iranian military site. As part of its investigation into "possible military dimensions" of Iran's nuclear program, the IAEA requested that Tehran respond to information which the agency obtained from unnamed governments regarding activity at the military site. Information provided to IAEA indicated that in 2000 "Iran constructed a large explosives containment vessel" at Parchin to conduct experiments related to the development of nuclear weapons, according to Amano's November 2011 report. The report did not say whether Iran actually built the vessel or conducted these experiments. IAEA inspectors visited the site twice in 2005, but they did not visit the location "believed to contain the building which houses the explosives chamber." The agency requested access to this latter building in February 2012, but Iran did not provide such access until September 2015 as part of the road map described above. At that time, IAEA officials conducted and supervised verification activities, including "visual observation and environmental sampling," but they "did not observe a chamber or any associated equipment inside the building." Iranian officials told their IAEA counterparts in October 2015 that the building in question "had always been used for the storage of chemical material for the production of explosives," but the "information available" to the IAEA, "does not support Iran's statements on the purpose of the building." Beginning in February 2012, Iran apparently undertook efforts to remove evidence of past nuclear-related activities at the site. These efforts, which included landscaping, refurbishing buildings, demolishing buildings, and removing and replacing external wall structures, "seriously undermined the Agency's ability to conduct effective verification," according to Amano's December 2, 2015, report. Iranian officials have implied that the government's refusal to allow IAEA post-2005 access to Parchin was due to Defense Ministry resistance. Fereydoun Abbasi-Davani, then-AEOI President, indicated in 2012 that allowing inspectors to the site was the Iranian military's decision. Rouhani in 2011 described a contentious internal debate regarding access to Parchin: In the area of Agency inspections and especially the inspections of military centers such as Parchin, this was debated for months inside the country and this issue was therefore raised in various meetings over the circumstances in which these inspections would take place. There was serious opposition to the Agency's request to inspect Parchin; the nation's domestic political climate was vigorously opposed to inspectors inspecting Parchin and military centers in general. For more information about the Parchin site, see Appendix E . Other IAEA Cooperation Issues Iran cooperated with the IAEA in other respects, albeit with varying consistency. The IAEA was (and still is) able to verify that Iran's declared nuclear facilities and materials have not been diverted for military purposes. Moreover, Tehran provided the agency with "information similar to that which Iran had previously provided pursuant to the Additional Protocol," ElBaradei reported to the IAEA board in February 2008, adding that this information clarified the agency's "knowledge about Iran's current declared nuclear programme." Iran, however, provided this information "on an ad hoc basis and not in a consistent and complete manner," the report said. Indeed, the IAEA requested in April 2008 that Iran provide "as a transparency measure, access to additional locations related ... to the manufacturing of centrifuges, research and development (R&D) on uranium enrichment, and uranium mining." Tehran provided such access pursuant to the 2013 JPA. ElBaradei's February 2008 report underscored the importance of full Iranian cooperation with the IAEA investigation, as well as Tehran's implementation of its Additional Protocol: Confidence in the exclusively peaceful nature of Iran's nuclear programme requires that the Agency be able to provide assurances not only regarding declared nuclear material, but, equally importantly, regarding the absence of undeclared nuclear material and activities in Iran.... Although Iran has provided some additional detailed information about its current activities on an ad hoc basis, the Agency will not be in a position to make progress towards providing credible assurances about the absence of undeclared nuclear material and activities in Iran before reaching some clarity about the nature of the alleged studies, and without implementation of the Additional Protocol. The IAEA also asked Iran to "reconsider" its March 2007 decision to stop complying with a portion of the subsidiary arrangements for its IAEA safeguards agreement. That provision (called code 3.1), to which Iran agreed in February 2003, requires Tehran to provide design information for new nuclear facilities "as soon as the decision to construct, or to authorize construction, of such a facility has been taken, whichever is earlier." Previously, Iran was required to provide design information for a new facility 180 days before introducing nuclear material into it. Iran invoked the March 2007 decision when it withheld from the IAEA until September 2009 "preliminary design information" for the planned Darkhovin reactor; the agency first requested the information in December 2007. Although Iran provided the agency with preliminary design information about the Darkhovin reactor in a September 22, 2009, letter, the IAEA requested Tehran to "provide additional clarifications" of the information. Amano reported in September 2010 that Iran had "provided only limited design information with respect to" the reactor. Arak Reactor Tehran also refused to provide updated design information for the Arak reactor—a decision which, according to a May 2013 report from Amano, had "an adverse impact on the Agency's ability to effectively verify the design of the facility." As part of the JPA, Iran submitted this information to the IAEA on February 12, 2014. Pursuant to the JCPOA, Iran has committed to redesign and rebuild the Arak reactor based on a design agreed to by the P5+1 so that it will not produce weapons-grade plutonium. Iran has rendered the reactor's original core inoperable. Iran had also refused to allow IAEA officials to conduct an inspection of the Arak reactor in order to verify Iranian-provided design information. ElBaradei argued in a June 2009 report to the IAEA board that this continued refusal "could adversely impact the Agency's ability to carry out effective safeguards at that facility," adding that satellite imagery was insufficient because Iran has completed the "containment structure over the reactor building, and the roofing for the other buildings on the site." However, IAEA inspectors visited the reactor facility in August 2009 to verify design information, according to ElBaradei's report issued the same month. IAEA inspectors had last visited the reactor in August 2008. Inspectors have visited the facility several more times, according to reports from Amano. Fordow Fuel Enrichment Plant In addition, Iran failed to notify the IAEA until September 2009 that it was constructing a uranium enrichment facility, called the Fordow Fuel Enrichment Plant, near the city of Qom. Iran revealed in September 2009 that it had been constructing the facility and provided some details about it to the IAEA in a September 21, 2009, letter. Four days after the IAEA received the letter, British, French, and U.S. officials revealed that they had previously developed intelligence on the facility. The three governments provided a detailed intelligence briefing to the IAEA after the agency received Iran's letter. U.S. officials have said that, despite its letter to the agency, Iran intended for the facility to be kept secret. Tehran placed the facility under IAEA safeguards after its September 2009 letter. (For more details, see the " Fordow Enrichment Facility " section below.) Pursuant to the JCPOA, Iran has begun to convert its Fordow enrichment facility into "a nuclear, physics, and technology centre" in which no nuclear material will be present. In a letter published on October 1, 2009, the IAEA asked Iran to provide additional information about the facility, including "further information with respect to the name and location of the pilot enrichment facility, the current status of its construction and plans for the introduction of nuclear material into the facility." The letter also requested that Tehran provide IAEA inspectors with access to the facility "as soon as possible." IAEA officials inspected the facility and met with Iranian officials in late October 2009. According to a November 2009 report from ElBaradei to the IAEA board, Tehran "provided access to all areas of the facility," which "corresponded with the design information provided by Iran" a week before the visit. IAEA officials have since conducted regular inspections of the facility. Although Iran provided additional design information about the facility to the IAEA, the agency still had questions about the facility's "purpose and chronology" and wished to interview other Iranian officials and review additional documentation, according to ElBaradei's report. Amano reported in May 2012 that Iran had provided the IAEA with some requested information regarding the Fordow construction decision, but the agency still wanted more information from Tehran. Tehran, according to Amano's November 2015 report, has not yet provided all of this information. Subsequent reports from Amano have not addressed the issue. Heavy-Water Reactor The IAEA has also requested additional information about Iran's production of heavy water. As noted, Iran is constructing a heavy-water nuclear reactor. ElBaradei's November 2009 report states that, during an inspection of Iran's uranium conversion facility the previous month, IAEA inspectors "observed 600 50-litre drums said by Iran to contain heavy water." The inspectors visited the facility to verify updated design information submitted by Iran in August 2009. The inspectors observed the drums after gaining access to an area of the facility that agency inspectors had not previously visited. Tehran told the IAEA that the water originated in Iran and permitted agency inspectors to count the number of drums and weigh a "small number of randomly selected drums." For a time, Tehran did not permit the agency to take samples of the heavy water, but the government did allow such access in February 2014. Similarly, Iran for some time did not grant repeated IAEA requests for "further access" to the country's heavy-water production plant since agency inspectors visited the facility in August 2011. However, Iran granted such access in December 2013. The IAEA apparently resolved a discrepancy discovered during an August 2011 inspection of an Iranian research laboratory that had been used to conduct uranium conversion experiments. IAEA measurements revealed that Iran had overstated the amount of material in the facility, described in Amano's November 2011 report as "natural uranium metal and process waste," by almost 20 kilograms. Iran and the IAEA appear to have resolved the issue in 2013. Status of Iran's Nuclear Facilities Some nongovernmental experts and former U.S. officials have argued that, rather than producing fissile material for nuclear weapons indigenously, Iran could obtain such material from foreign sources. A November 2007 National Intelligence Estimate (NIE) states that the intelligence community "cannot rule out that Iran has acquired from abroad—or will acquire in the future—a nuclear weapon or enough fissile material for a weapon." A senior intelligence official characterized such acquisition as "an inherent option" for Iran. However, Tehran's potential ability to produce its own fissile material is a greater cause of concern; the official explained that "getting bits and pieces of fissile material from overseas is not going to be sufficient" to produce a nuclear arsenal. As noted, uranium enrichment facilities can produce highly enriched uranium (HEU), which is one of the two types of fissile material used in nuclear weapons. The other type is plutonium, which is separated from spent nuclear reactor fuel. According to a November 14, 2013, IAEA report, Iran had generally stopped expanding its enrichment and heavy-water reactor programs during the negotiations leading up to the JPA, which the parties finalized later that month. That agreement essentially froze most aspects of Iran's nuclear program to allow time to negotiate the July 2015 JCPOA. When the JPA went into effect in January 2014, Iran had enough uranium hexafluoride containing up to 5% uranium-235 to yield—if further enriched—weapons-grade HEU for as many as eight nuclear weapons. If it had been further enriched, the total amount of Iranian uranium hexafluoride containing 20% uranium-235 would have been sufficient for a nuclear weapon. Pursuant to the JCPOA, Iran has restricted and/or dismantled various portions of its nuclear program. Iran currently lacks enough low-enriched uranium hexafluoride to produce a nuclear weapon. Since the JCPOA's Implementation Day, Iran has imported items for its nuclear program via a JCPOA-established "procurement channel," which, according to the agreement, is to last for a duration of 10 years. A Procurement Working Group, which is part of the JCPOA-established Joint Commission, reviews proposals for nuclear-related transfers to Iran. The working group provides its recommendations to the UN Security Council, which approves any exports. The JCPOA requires Iran to provide the IAEA with "access to the locations of intended use of all items, materials, equipment, goods and technology" listed in the NSG's "Guidelines for Nuclear Transfers." Tehran is also to permit exporting governments to "verify the end-use of all items, materials, equipment, goods and technology" listed in the NSG's "Guidelines for Transfers of Nuclear-Related Dual-Use Equipment, Materials, Software, and Related Technology." According to a December 6, 2018, report by U.N. Secretary-General António Guterres, the Security Council had received 42 nuclear-related export proposals since Implementation Day; the council approved 28 of those proposals and disapproved four. Nine proposals were withdrawn by the submitting states and one was under review. Uranium Enrichment Facilities Iran has used three centrifuge facilities to enrich uranium: a pilot centrifuge facility and a larger commercial facility, both located at Natanz, and the Fordow centrifuge facility located near the city of Qom. Iran also has a variety of facilities and workshops involved in the production of centrifuges and related components. (See Appendix F and CRS Report R42443, Israel: Possible Military Strike Against Iran's Nuclear Facilities , coordinated by Jim Zanotti.) During a July 31 , 2015, press briefing about possible Iranian undeclared nuclear facilities, U.S. Secretary of Energy Ernest Moniz stated that "we feel pretty confident that we know their current configuration." Natanz Commercial Facility This facility was to have held approximately 50,000 centrifuges. Former Vice President Gholamreza Aghazadeh, who also headed the AEOI until July 2009, explained in February 2009 that Iran intended to install all of the centrifuges by 2015. Iran began enriching uranium in the facility after mid-April 2007; as of November 5, 2013, the facility had produced 10,357 kilograms of low-enriched uranium hexafluoride containing up to 5% uranium-235. This quantity of LEU, if it had been further enriched, would have yielded enough weapons-grade HEU for as many as eight nuclear weapons. As of October 31, 2015, the facility had produced 15,525 kilograms of uranium hexafluoride containing up to 5% uranium-235. However, Iran had only approximately 8,305 kilograms of this material because the rest had been converted into various other chemical forms. Individual centrifuges are linked together in cascades; each cascade in the commercial facility contained either 164 or 174 centrifuges. As of May 17, 2015, Tehran had installed about 15,400 first generation (IR-1) centrifuges, approximately 9,150 of which were enriching uranium. Iran had also installed about 1,000 centrifuges of greater efficiency, called IR-2m centrifuges, in the facility. The IR-2m centrifuges were not enriching uranium. Amano reported in February 2017 that, pursuant to its JCPOA commitments, Iran had 5,060 IR-1 centrifuges installed in the facility and had removed all other centrifuges. Iran had been producing enriched uranium hexafluoride continuing no more than 3.67% uranium-235 but also shipped out most of its LEU to Russia on December 28, 2015, to reduce its stockpile to the required levels. Iran's total stockpile of this material has not exceeded 300 kilograms since Tehran began implementing its JCPOA commitments. Natanz Pilot Facility Iran began enriching uranium up to 20% uranium-235 in the Natanz pilot facility in February 2010. Iranian officials stated that this enriched uranium was to serve as fuel in Iran's Tehran Research Reactor (TRR), as well as future such research reactors. Construction of the U.S.-supplied TRR began in 1960, and it went critical in 1967. Initially fueled by U.S.-supplied HEU, the reactor was converted to use LEU fuel in 1994 after Argentina agreed to supply the reactor with such fuel in 1987. Fereydun Abbasi-Davani, then-President of the Atomic Energy Organization of Iran, stated in a 2012 interview that once Iran had "enough" uranium enriched to this level, the country would use its enrichment facilities to produce enriched uranium containing 3.5% uranium-235. Centrifuge Research and Development Iran has tested several types of more-advanced centrifuges in the pilot facility; these centrifuges could increase the other enrichment facilities' capacity. Tehran has altered this facility to comply with the JCPOA's limits on Iranian centrifuge research and development. Iran's development of new centrifuges has apparently been less successful than development of the IR-1 centrifuge; past estimates from Iranian officials regarding the deployment of more-advanced centrifuges have been excessively optimistic. According to a 2012 report from a U.N. panel of experts, the advanced centrifuge program's lack of success may have been "the result of sanctions limiting" Tehran's "ability to procure items necessary for its centrifuge programme," as well as "[o]ther variables, including design and manufacturing limitations, or a shortage of other necessary materials." The JCPOA contains a detailed description of centrifuge research and development (R&D) that Iran is permitted to conduct under the agreement. Iran is to conduct centrifuge R&D with uranium only at the Natanz pilot facility and will conduct mechanical testing of centrifuges only at the pilot facility and the Tehran Research Centre. Iran submitted an "enrichment R&D plan" to the IAEA in January 2016 as part of Tehran's initial declaration for its Additional Protocol. Iranian adherence to that plan is a JCPOA requirement. Fordow Enrichment Facility118 In December 2011, Iran began enriching uranium up to 20% uranium-235 in the Fordow Fuel Enrichment Plant, according to IAEA reports. As of November 1, 2013, Iran was feeding uranium hexafluoride into four cascades (696 centrifuges) of IR-1 centrifuges and had installed a total of 2,710 IR-1 centrifuges in the facility. Tehran had planned to install a total of 16 cascades containing approximately 3,000 centrifuges. Tehran told the IAEA that the facility would be configured to produce both uranium enriched to 5% uranium-235 and 20% uranium-235. Iran also told the IAEA that "the facility could be reconfigured to contain centrifuges of more advanced types should Iran take a decision to use such centrifuges in the future." Iran agreed under the JCPOA to convert the facility into "a nuclear, physics, and technology centre." The facility will not contain any nuclear material. Pursuant to this commitment, Iran has decreased the number of IR-1 centrifuges to 1,044, and it has removed all nuclear material from the facility. In addition, Iran has modified two cascades "for the production of stable isotopes" for medical and industrial uses. As noted, Iran revealed in September 2009 that it had been constructing the facility. That same month, Tehran provided some details about the facility to the IAEA. The United States had been "observing and analyzing the facility for several years," according to September 25, 2009, Obama Administration talking points, which added that "there was an accumulation of evidence" earlier in 2009 that the facility was intended for enriching uranium. Some of this evidence apparently indicated that "Iran was installing the infrastructure required for centrifuges earlier" in 2009. U.S. officials have not said exactly when Iran began work on the facility, which is "located in an underground tunnel complex on the grounds of an Islamic Revolutionary Guard Corps" base near the Iranian city of Qom. Nevertheless, the Atomic Energy Organization of Iran (AEOI), rather than the Iranian military, is responsible for the development and management of the facility, according to the September 2009 U.S. talking points described above. According to a November 2009 report from then-IAEA Director-General ElBaradei, Iran informed the IAEA that construction on the site began in the second half of 2007. However, citing information in its possession that appears to contradict Tehran's claim, the IAEA asked Iran to provide more information about the facility's chronology. U.S. officials suggested that the facility may have been part of a nuclear weapons program. President Obama stated on September 25, 2009, that "the size and configuration of this facility is inconsistent with a peaceful program." But the Administration's talking points were somewhat more vague, stating that the facility "is too small to be viable for production of fuel for a nuclear power reactor," although it "could be used" for centrifuge research and development or "configured to produce weapons-grade uranium." The facility "would be capable of producing approximately one weapon's worth" of HEU per year, according to the talking points. Iran's failure to inform the IAEA of the Fordow plant's existence until well after Tehran had begun constructing it raised concerns that the country may have had other covert nuclear facilities. A November 2009 IAEA Board of Governors resolution stated that Iran's declaration of the Fordow facility "reduces the level of confidence in the absence of other nuclear facilities and gives rise to questions about whether there are any other [undeclared] nuclear facilities under construction in Iran." Furthermore, then-UK Foreign Office Minister Alistair Burt told Parliament in February 2012 that the Fordow facility "which Iran initially kept secret from the IAEA, also raises our concerns that there may also be other, undeclared sites in Iran that could be engaged in work" related to nuclear weapons. Tehran's shifting explanations regarding the facility's purpose also raised concerns that Iran would, in the future, use the facility to produce fissile material for nuclear weapons. Iran's 2009 letter to the IAEA described the Fordow facility as a "new pilot fuel enrichment plant" that would produce uranium enriched to no higher than 5% uranium-235. Tehran subsequently changed the plant's stated purpose several times. For example, Tehran, as noted, later told the IAEA that the facility would be configured to produce both uranium enriched to 5% uranium-235 and 20% uranium-235. Apparently suggesting that Iran might later produce uranium containing higher levels of uranium-235, a U.S. official told the IAEA Board of Governors on March 8, 2012, that "[w]e cannot help but wonder ... whether Iran has finally informed us of the ultimate purpose of this facility." For its part, Iran has asserted that the facility is for peaceful purposes and that the government has acted in accordance with its international obligations. As noted, Tehran argued that it was producing enriched uranium containing up to 20% uranium-235 for use as fuel in research reactors, to be used to produce isotopes for medical purposes. Regarding the facility's secret nature, Iranian officials argued that Tehran was not previously obligated to disclose it to the IAEA and stated on several occasions that the facility was concealed to protect it from military attacks. Iran told the IAEA in 2009 that the Fordow facility was to serve as a "contingency enrichment plant, so that the enrichment activities shall not be suspended in the case of any military attack." The Natanz commercial facility "was among the targets threatened with military attacks," Iran explained. Iranian officials stated during a June 2012 meeting with the P5+1 that the Fordow facility is "not a military base" and is "not located on a military base." Enriched Uranium Containing Up To 20% Uranium-235 As noted, Iran argued that it was producing LEU containing nearly 20% uranium-235 for use in research reactors; as of January 20, 2014, when the JPA went into effect, Tehran had used the Natanz pilot facility and the Fordow facility to produce a total of 447.8 kilograms of uranium hexafluoride containing up to 20% uranium-235. Iran's production of uranium enriched to this level has caused concern because such production requires approximately 90% of the effort necessary to produce weapons-grade HEU, which contains about 90% uranium-235. If further enriched, this amount of material would have been sufficient for a nuclear weapon. Iran would need approximately 215 kilograms of uranium hexafluoride containing 20% uranium-235 to produce approximately 27.8 kilograms of uranium containing 90% uranium-235—a sufficient amount of weapons-grade HEU for a nuclear weapon. This is a conservative estimate; the specific characteristics of Iran's enrichment facilities may necessitate using more than 215 kilograms of such material. Then-Director of National Intelligence James Clapper suggested during a February 16, 2012, Senate Armed Services Committee hearing that "a number of factors" could impede Tehran's ability to produce weapons-grade HEU from uranium enriched to 20% uranium-235. As of January 20, 2014, approximately 160 kilograms of the LEU described above was in the form of uranium hexafluoride and, therefore, available to be further enriched in the near term. Since that date, Iran has either converted much of that material for use as fuel in the Tehran Research Reactor or prepared it for that purpose. Iran diluted the rest of that stockpile so that it contained no more than 5% uranium-235. AEOI spokesperson Behrouz Kamalvandi said in February 2014 that Iran had "the necessary reservoirs of fuel for 5 years for the Tehran research reactor." Future Centrifuge Facilities Iranian officials indicated in the past that Tehran intended to construct 10 additional centrifuge plants—a goal that many analysts argued was virtually unachievable. Then- Atomic Energy Organization President Ali Akbar Salehi stated in 2009 that Iran is investigating locations for the sites. (Salehi was president of the organization from 2009 to 2010; he became president again in August 2013.) In 2012, then-Atomic Energy Organization President Abbasi argued that "mastering" centrifuge enrichment technology would enable Iran to "develop [centrifuge] sites in various locations to avoid any threat by foreign enemies." According to the JCPOA, Iran is to enrich uranium only at the Natanz commercial facility for 15 years. Expiration of the JCPOA enrichment restrictions will be "followed by gradual evolution, at a reasonable pace" of Iran's enrichment program. According to the JCPOA, Iran's centrifuge-testing program may proceed under strict limits, which will begin to ease approximately eight years after the beginning of the agreement's implementation. An AEOI spokesperson stated in January 2016 that Iran's nuclear program "will begin to accelerate from the 13 th or 14 th year onwards," adding that Tehran plans to increase its enrichment capacity by approximately "20-fold" by the end of the 15 th year. Iran plans to produce enough enriched uranium to fuel five or six nuclear reactors, Deputy Foreign Minister Araqchi stated in August 2015. AEOI spokesperson Kamalvandi explained in June 2018 that Iran would begin the process of "manufacturing and assembly of centrifuge rotors," which are critical components of such machines. Iran "will begin building a centrifuge rotor plant," he noted. In addition, Salehi announced in June that Iran has completed building a centrifuge assembly center in the Natanz facility; Tehran had not previously disclosed this facility publicly. The facility's completion "does not mean that we are going to produce these centrifuges now," Salehi said in September 2018, adding that the facility provides Iran with the capability to mass-produce such centrifuges, should the government decide to do so. Inconsistent Progress A senior U.S. intelligence official said in 2007 that a country needs to be able to "operate large numbers of centrifuges for long periods of time with very small failure rates" in order to be able to "make industrial quantities of enriched uranium." Iran's record indicates that the country has not always met this standard. The 2007 National Intelligence Estimate stated that Iran still faced "significant technical problems operating" its centrifuges. Although a 2008 report to Congress submitted by the Deputy Director for National Intelligence described the amount of LEU that Iran produced in 2008 as a "significant improvement" over the amount it had produced during the previous year, data from an August 2015 Institute for Science and International Security report indicate that the average per-centrifuge performance at that facility peaked in 2010 and subsequently fluctuated. The extent to which Iran's progress is sustainable is open to question. Former Pakistani nuclear official Abdul Qadeer Khan described Pakistan's first-generation centrifuges as "unsuccessful" in a 1998 interview. Furthermore, Mark Fitzpatrick of the International Institute for Strategic Studies observed that "[i]t can be years before it is clear whether an enrichment programme is working well," observing that centrifuges at a Japanese enrichment facility "started to crash seven years after installation." And, as noted, Iran has struggled to develop and deploy more-advanced centrifuges. Nevertheless, historical experience indicates that sustained operation of gas centrifuges appears to be a manageable task for governments with even modest technical capabilities. According to a U.S. Nuclear Regulatory Commission document, some centrifuges of simple design "have operated 30 years with a failure rate of less than one percent." (See also " Effects of Sanctions and Sabotage on Iran's Enrichment Program .") Uranium Conversion As noted, uranium conversion is a process whereby uranium ore concentrate is converted into several compounds, including uranium hexafluoride—the feedstock for Iran's centrifuges. Iran produced approximately 541 metric tons of uranium hexafluoride between March 2004 and August 10, 2009, using both imported uranium ore concentrate and domestically produced uranium ore concentrate. Iran has not produced any uranium hexafluoride since August 2009, according to IAEA reports, although Tehran has transferred domestically produced uranium ore concentrate to the uranium conversion facility. The 2012 U.N. Panel of Experts report concluded that, based on data from Amano's February 2012 report, Iran had "an ample supply of uranium hexafluoride to maintain current levels of enrichment for the foreseeable future." On June 27, 2018, Iran's official news agency announced that Iran has resumed operations at the conversion facility. According to a report from the Director of National Intelligence to Congress covering 2011, Iran had "almost exhausted" its supply of imported uranium ore concentrate. Tehran apparently did not import any more such material prior to December 2015. According to the 2012 U.N. Panel of Experts report, "a number" of governments believed that Tehran was "seeking new sources of uranium ore to supply its enrichment efforts"; the report added that "the Panel is not aware of any confirmed cases of actual transfers." British Foreign and Commonwealth Office official Tobias Ellwood informed Parliament in June 2015 that the British government was "not aware of" any recent reports that Iran had attempted to purchase foreign uranium. Former State Department official Richard Nephew wrote in September 2015 that there had "not been any verified transfer of uranium to Iran aside from fuel for the Bushehr power reactor." In late December 2015, Iran imported between 200 and 220 metric tons of uranium ore concentrate in exchange for LEU that Iran shipped to Russia in order to reduce its stockpile to JCPOA-required levels. The IAEA verified Iran's receipt in February 2017 of approximately 125 metric tons of uranium ore concentrate. During March 2017, Iranian officials stated that the country had imported between 382 and 384 metric tons of this material since concluding the JCPOA. The imported uranium ore concentrate is to serve as fuel for the Bushehr reactors, according to Iranian officials. Prior to 2009, Tehran apparently improved its ability to produce centrifuge feedstock of sufficient purity for light-water reactor fuel; information in a 2010 IAEA report indicated that Iran was purifying its centrifuge feedstock. Whether Iran is currently able to produce feedstock pure enough for weapons-grade HEU is unclear, however. Plutonium Iran acknowledged to the IAEA in 2003 that it had conducted plutonium-separation experiments—an admission that contributed to suspicions that Iran could have a program to produce plutonium for nuclear weapons. The IAEA, however, continued to investigate the matter; then-IAEA Director-General ElBaradei reported in August 2007 that the agency had resolved its questions about Iran's plutonium activities. As noted above, Iran has said that it does not plan to engage in reprocessing, and IAEA Director-General Amano's November 2011 report described an "absence of any indicators that Iran is currently considering reprocessing irradiated nuclear fuel to extract plutonium." Amano's November 2015 report states that the agency could "confirm that there are no ongoing reprocessing related activities" at the Iranian facilities to which the agency has access. The JCPOA prohibits Iran from reprocessing spent reactor fuel, except to produce "radio-isotopes for medical and peaceful industrial purposes." The JCPOA text states that Iran "does not intend" to engage in reprocessing after the 15-year period expires and specifies Iran's intention to "ship out all spent fuel for all future and present nuclear power and research reactors, for further treatment or disposition as provided for in relevant contracts to be concluded consistent with national laws with the recipient party." According to the IAEA, Iran has adhered to this requirement. Arak Reactor and Redesign174 Iran says that its reactor under construction at Arak is intended for the production of medical isotopes and various other purposes. According to a 2008 presentation by Ambassador Soltanieh, the reactor, which was originally designed to be moderated by heavy water, is to substitute for the "outdated" Tehran Research Reactor (TRR), which has been in operation since 1967. As noted, Iran subsequently decided to refuel the TRR. According to a 2012 AEOI report, the reactor has several objectives: a suitable replacement for the aging Tehran Research Reactor using local engineers and scientist [sic] with the least dependency to foreign countries; medical, industrial and research radioisotope production of [sic] the country; performing research in the fields of neutron physics, reactor chemistry, thermal-hydraulics, and health physics; obtaining technological and scientific experience in design and construction of nuclear reactors using local experts within the country; training of specialists in the nuclear field; and enhancing the technological levels of the local industries in design and manufacturing of various components such as reactor vessels, heat exchangers, pumps, etc. using nuclear standards. Iran told the IAEA in 2012 that the reactor was scheduled to begin operating during the second half of 2013. The project was about 75% complete as of July 2011. Iran suspended several aspects of the reactor's construction pursuant to the 2013 Joint Plan of Action. The originally designed Arak reactor was a proliferation concern because its spent fuel would have contained plutonium better suited for nuclear weapons than the plutonium produced by light-water moderated reactors, such as the TRR and Bushehr reactor. The original Arak reactor, if it had been completed, could have produced enough plutonium for between one and two nuclear weapons per year. In addition, Iran would have been able to operate the reactor with natural uranium and, therefore, would not have been dependent on supplies of enriched uranium. The JCPOA requires Tehran to render the Arak reactor's original core inoperable. Iran has met this requirement. The agreement also commits Tehran to redesign and rebuild the Arak reactor based on a design agreed to by the P5+1 so that the reactor will not produce weapons-grade plutonium. Tehran is "trying to complete the project in five years," an AEOI spokesperson said in January 2016. AEOI President Salehi stated in September 2016 that China will supply the reactor's first fuel load "in the next five-year time." Iran will subsequently produce the reactor fuel, he said. Iran is to export the spent fuel from this reactor and all other nuclear reactors. In addition, the JCPOA requires Iran to refrain from building heavy-water-moderated reactors for 15 years, and Tehran has pledged to refrain from constructing any such reactors indefinitely. According to IAEA reports and Iranian officials, Iran began to operate its heavy-water production plant located near Arak in August 2006. Reports from Amano since the start of JCPOA implementation indicate that the plant, which is to produce heavy water for the reactor and deuterated solvents, is operating. Pursuant to the JCPOA, Tehran has committed to refrain from accumulating heavy water "beyond Iran's needs." Iran is to "sell any remaining heavy water on the international market for 15 years." According to the agreement, these "needs" are 130 metric tons of "nuclear grade heavy water or its equivalent in different enrichments" prior to commissioning the redesigned Arak reactor and 90 metric tons after the reactor is commissioned. Iran's stock of heavy water has exceeded 130 metric tons on two occasions since the JCPOA began implementation. On February 17, 2016, the IAEA verified that Tehran's heavy-water stock had exceeded 130 metric tons; on November 8, 2016, the IAEA verified that Iran's stock of heavy water had again exceeded the JCPOA limit. Iran resolved the issue on both occasions by exporting the excess heavy water. Tehran sent this material to Russia and the United States, shipping at least some of it via Oman. Iran told the IAEA on June 18, 2017, that it had transferred 19.1 metric tons of heavy water to a destination outside the country. According to an April 2018 State Department report covering 2017, "[m]ost Iranian excess heavy water has been sold and delivered to international buyers; the remainder is awaiting sale and is stored in a location outside Iran, under IAEA seal, though it remains Iranian property." Tehran has continued to ship heavy water outside Iran, according to the three most recent IAEA reports. the IAEA reported in August and November 2018. The IAEA verified on February 16, 2019, that Iran had 122.8 metric tons of heavy water. Bushehr Reactor Iran is also operating a 1,000-megawatt nuclear power reactor, moderated by light water, near the city of Bushehr. The original German contractor, which began constructing the reactor in 1975, abandoned the project following Iran's 1979 revolution. Russia agreed in 1995 to complete the reactor, but the project subsequently encountered repeated delays; both Russian and Iranian officials attributed those delays to technical issues. In February 2005, Moscow and Tehran concluded an agreement stating that Russia would supply fuel for the reactor for 10 years. Atomstroyexport, a subsidiary of Rosatom, the Russian company, sent the first shipment of LEU fuel to Iran on December 16, 2007, and the reactor received the last shipment near the end of January 2008. The fuel, which is under IAEA seal, will contain no more than 3.62% uranium-235, according to an Atomstroyexport spokesperson. An August 2014 IAEA inspection revealed that the reactor "was operating at 100% of its nominal power." Before 2002, the United States had previously urged Moscow to end the project, citing concerns that it could aid an Iranian nuclear weapons program by providing the country with access to nuclear technology and expertise. However, U.S. officials said in 2002 that Washington would drop these public objections if Russia took steps to mitigate the project's proliferation risks. The 2005 deal requires Iran to return the spent nuclear fuel to Russia. This measure is designed to ensure that Tehran will not separate plutonium from the spent fuel. Moscow argues that the reactor will not pose a proliferation risk because it will operate under IAEA safeguards. It is worth noting that light-water reactors are generally regarded as more proliferation-resistant than other types of reactors. Although the U.N. Security Council resolutions restricted the supply of nuclear-related goods to Iran, they did permit the export of nuclear equipment and fuel related to light-water reactors. Experts have expressed strong doubts regarding Iran's ability to produce fuel for the reactor. According to a July 2014 Iranian government report, Russia and Iran may renew the fuel supply agreement, but they are also "engaged in negotiations ... to engage in cooperative arrangements for the domestic manufacturing of fuel for the facility after the expiration of the current contract." According to an interview published in April 2017, AEOI Deputy Director Pezhman Rahimian stated that the two governments had almost completed a "road map" for such manufacturing. AEOI President Salehi expressed "hope" in September 2018 that a second power reactor at the Bushehr plant "will become operational in the next six years." A Rosatom official told the IAEA General Conference in September 2018 that "[p]ractical work to build the second and third" Bushehr power plant units "has begun." Salehi told the same conference that "the first concrete pouring" for the second Bushehr reactor "has been planned for the third quarter of 2019." Possible Future Reactors Iran and Russia signed a contract in November 2014 for the construction of two additional light-water nuclear power reactors in Bushehr, according to Rosatom, the Russian company. The project's construction began in September 2016 and is expected to take 10 years to complete. Iran was "negotiating with China for building two 100 megawatt power plants," Salehi stated in a July 2015 speech. Iran informed the IAEA in an October 2017 letter that Tehran had decided to "design and construct a critical facility (Light Water Critical Reactor) … for research purposes in near future." Iran "provided preliminary design information for the facility," which indicates that the reactor fuel is to contain "up to 3.67%" uranium-235. Fuel Manufacturing Facilities Iran intended its fuel manufacturing plant to produce fuel for the Arak and Darkhovin reactors. The plant started the process of producing fuel for the pre-JCPOA Arak reactor. Iran's Fuel Plate Fabrication Plant has produced fuel for the Tehran Research Reactor. Uranium Mines and Mills Iran has a uranium mill and a uranium mine located at a site called Bandar Abbas, which is sometimes referred to as Gchine. Iran also has a uranium mine at a site called Saghand and an associated uranium mill called the Ardakan Yellowcake Production Plant. Salehi stated in a January 30, 2019, interview that Tehran plans to construct several more such mills. Iranian officials acknowledge that the country's uranium deposits are insufficient for its planned nuclear power program. These reserves are sufficient, however, to produce 250-300 nuclear weapons, according to a past U.S. estimate. Salehi indicated in February 2019 that Iran continues to explore for uranium. Effects of Sanctions and Sabotage on Iran's Enrichment Program A number of governments employed sanctions and, apparently, sabotage to impede Iran's nuclear program. Sanctions Iran has tried to improve its capabilities to produce materials and components for its centrifuge program, according to former IAEA Deputy Director General Olli Heinonen. Some Iranian officials have claimed that the country can manufacture centrifuges on its own. For example, then-Iranian Ambassador to the IAEA Ali Asghar Soltanieh said in 2012 that Iran "has 'fully mastered' the nuclear energy technology and can produce all the 90 pieces of a centrifuge machine on its own and without foreign assistance." However, a 2014 U.N. Panel of Experts report observed that the "quality of such [Iranian-produced] equipment is not known." Furthermore, other Iranian officials have suggested that Tehran is not yet able to produce all of the necessary centrifuge components. Then-President of Iran's Atomic Energy Organization Abbasi stated during a 2012 television broadcast that "Iran could not claim that it did not need other countries" for its enrichment program, adding that "domestic production of all items was not economically viable." AEOI Director Salehi stated in 2014 that Iran was purchasing some items for its nuclear program "from some developing and growing Eastern countries." Moreover, then-Principal Deputy Assistant Secretary of State for International Security and Nonproliferation Vann Van Diepen said that Iran in 2014 was still attempting to "procure items" for the nuclear program. Nevertheless, according to the 2014 Panel of Experts report, several governments told the panel that, since mid-2013, there had been a "been a decrease in the number of detected [Iranian] attempts ... to procure items for prohibited programmes, and related seizures." A 2015 Panel of Experts report states that the panel had not "identified cases of procurement for activities prohibited" by Security Council resolutions in force at the time. No governments reported any such cases, the report adds. According to various sources, international sanctions made it difficult for Iran to obtain components and materials for its centrifuge program. For example, the U.N. Panel of Experts 2011 report stated that "sanctions are constraining Iran's procurement of items related to prohibited nuclear and ballistic missile activity and thus slowing development of these programmes." Similarly, the 2012 U.N. Panel of Experts report observed that "[s]anctions are slowing the procurement by the Islamic Republic of Iran of some critical items required for its prohibited nuclear programme." A June 2013 report suggested that this condition still existed, arguing that "Iran's reliance on procurement abroad continues to provide the international community with opportunities to limit Iran's ability to maintain and expand certain activities." Then-UK Foreign Secretary William Hague wrote in 2013 that "[w]e judge that sanctions have been effective in slowing the nuclear programme to some degree." U.S. officials have argued that the sanctions have impeded Iran's ability to acquire technology for its nuclear programs. Then-State Department Special Advisor for Nonproliferation and Arms Control Robert Einhorn told a Washington audience in 2011 that "[w]e believe Iran has had difficulty in acquiring some key technologies and we judge this has had an effect of slowing some of its programs." Similarly, then-National Security Adviser Tom Donilon argued in 2011 that "[s]anctions and export control efforts have made it more difficult and costly for Iran to acquire key materials and equipment for its enrichment program, including items that Iran can't produce itself." However, the extent to which sanctions slowed Tehran's program is unclear. Donilon also cited "mistakes and difficulties in Iran" as obstacles to the program's progress. Former IAEA Deputy Director General Heinonen stated that "[w]e do not know" whether Iran's delays in deploying advanced centrifuges are attributable to "lack of raw materials or design problems," according to a 2012 press report. Furthermore, reports from the Office of the Director of National Intelligence covering 2009-2011 stated that "some obstacles slowed" the progress of Iran's nuclear program during those years, but the report did not name those obstacles. Sabotage The extent to which alleged efforts by the United States and other governments, including Israel's, to sabotage Iran's centrifuge program have affected Tehran's nuclear program is unclear. The New York Times reported in 2009 that such efforts have included "undermin[ing] electrical systems, computer systems and other networks on which Iran relies," according to unnamed senior U.S. and foreign government officials. One effort involved foreign intelligence services sabotaging "individual power units that Iran bought in Turkey" for Tehran's centrifuge program. "A number of centrifuges blew up," according to the Times . Western governments have reportedly made other efforts to sabotage centrifuge components destined for Iran, according to some nongovernmental experts. Iranian officials have asserted that Western countries have tampered with components in transit to Iran's enrichment facilities, directly sabotaged those facilities, and conducted espionage in the country. In addition, New York Times reporter James Risen wrote in 2006 that, according to unnamed U.S. officials, the United States engaged in a covert operation to provide Iran with flawed blueprints for a device designed to trigger a nuclear explosion. The United States and Israel have also reportedly executed cyberattacks on Iran's nuclear facilities. Perhaps the best known of these used the Stuxnet computer worm, which was discovered in 2010 and probably developed by a government to attack Iran's enrichment facilities. Some governments have reportedly assassinated Iranians associated with Iran's nuclear program. The United States also may have obtained information from Iranian officials who defected as part of a CIA program to induce them to do so. Nuclear Weapon Development Capabilities Statements from the U.S. intelligence community indicate that Iran has the technical capability to produce nuclear weapons. For example, the 2007 National Intelligence Estimate (NIE) assessed that "Iran has the scientific, technical and industrial capacity eventually to produce nuclear weapons if it decides to do so." More recently, then-Director of National Intelligence Clapper stated during a February 2016 Senate Armed Services Committee hearing that Iran "does not face any insurmountable technical barriers to producing a nuclear weapon." Obtaining fissile material is widely regarded as the most difficult task in building nuclear weapons. As noted, Iran is enriching uranium, but whether and to what extent Tehran has taken the other steps necessary for producing a nuclear weapon is unclear. A 2008 report from former IAEA Director-General ElBaradei points out that the IAEA, with the exception of a document related to uranium metal, has "no information ... on the actual design or manufacture by Iran" of components, nuclear or otherwise, for nuclear weapons. However, according to IAEA Director-General Amano's November 2011 report, the IAEA has "credible" information that Iran has carried out activities "relevant to the development of a nuclear explosive device." These include acquisition of "nuclear weapons development information and documentation" and work to develop "an indigenous design of a nuclear weapon including the testing of components." Although some of these activities have civilian applications, "others are specific to nuclear weapons," the report notes. Most of the report provides additional details about Iranian activities applicable to nuclear weapons development that were described in previous IAEA reports, although it does contain some previously unreported material. The program's purpose was "to develop a nuclear warhead for the Shahab-3 missile," a senior Administration official stated during a November 8, 2011, briefing about Amano's November 2011 report. A 2012 Department of Defense report described Amano's report as containing "extensive evidence of past and possibly ongoing Iranian nuclear weapons-related research and development work." (See Appendix E for more details about the IAEA's information regarding suspected military aspects of Iran's nuclear program.) Amano's November 2011 report states that, according to information available to the IAEA, Iranian activities related to building a nuclear explosive device "took place under a structured programme" prior to the end of 2003. That program, however, "was stopped rather abruptly pursuant to a 'halt order' instruction issued in late 2003 by senior Iranian officials," the report says. The weapons-related activities were consolidated under the "AMAD Plan" and "appear to have been conducted during 2002 and 2003." Nevertheless, "[t]here are also indications that some activities relevant to the development of a nuclear explosive device continued after 2003, and that some may still be ongoing," according to the report. According to an August 2014 State Department announcement, Iran established the Organization of Defensive Innovation and Research (SPND), which "is primarily responsible for research in the field of nuclear weapons development," in 2011. The SPND "took over some of the activities related to Iran's undeclared nuclear program," the announcement said. According to a 2012 Israeli intelligence report, the SPND was established for the purposes of preserving the technological ability and the joint organizational framework of Iranian scientists in the area of R&D of nuclear weapons, and for the purposes of retaining the skills of the scientists. This is [to] allow renewal of the activity necessary to produce weapon immediately when the Iranian leadership decides to do so. This report also indicates that Iran had not restarted the nuclear weapons program. During an March 2019 press briefing, a senior U.S. official described the SPND as an organization, chunks of which seem to have been created precisely in order to employ people on dual-use things that could easily be repurposed into the very kind of work that was being done before on the weapons program and…in a sense, to keep their skills sharp and available to the Iranian clerical regime. Amano's December 2, 2015, report assesses that Iran conducted "a range of activities relevant to the development of a nuclear explosive device ... prior to the end of 2003 as a coordinated effort," adding that "some [nuclear weapons-related] activities took place after 2003," but "were not part of a coordinated effort." The report concludes that "these activities did not advance beyond feasibility and scientific studies, and the acquisition of certain relevant technical competencies and capabilities." The IAEA "has no credible indications of activities in Iran relevant to the development of a nuclear explosive device after 2009," the report explains. Iran presented a written assessment of Amano's report on January 7, 2016. The document apparently acknowledges Iranian "scientific studies of dual-use technologies" for "peaceful civilian or conventional military uses," but also reiterated previous Iranian claims that the country has done no work on nuclear weapons and that some of the evidence underlying the agency's concerns is inauthentic. A May 1, 2018, IAEA statement reiterated the December 2015 report's conclusions following Israeli Prime Minister Benjamin Netanyahu's disclosure of documents concerning Iran's past nuclear weapons program, though the agency did not comment on the documents specifically. Similarly, Nicole Shampaine, the Chargé d'Affaires at the U.S. Mission to International Organizations in Vienna UNVIE, stated on June 5, 2018, that the Israeli disclosure "further reaffirms" the IAEA's December 2015 conclusion that Iran had conducted such research in the past. U.S. Ambassador Jackie Wolcott discussed the Israeli-disclosed documents in a March 2019 statement: The troubling question remains of why Iran sought to preserve this information and expertise. Iran's retention of the archive not only underscores the key weakness of the temporary restrictions in the JCPOA, but strikes at the heart of longstanding concerns that Iran continues to keep its nuclear options open. As we move forward, Iran must end its longstanding efforts to deny and conceal the reality of past nuclear weapons work. Our interest in resolving these issues is not to score political points, but to address critical verification issues with direct relevance to how we move forward. The facts of Iran's past nuclear weapons activities continue to have bearing on current questions about the possibility of undeclared nuclear material and activities in Iran. These issues must be addressed in a clear and straightforward manner, without further delay. The United States supports the IAEA's "continued, careful assessment of the nuclear archive materials," Wolcott added. According to some nongovernmental organization reports, the IAEA has assessed that Iran "has sufficient information to be able to design and produce a workable implosion nuclear device based upon HEU as the fission fuel." However, these reports cite information from an internal 2009 IAEA document that ElBaradei has described as a rolling text complied by the Agency's Department of Safeguards that included all the various pieces of information that had come in from different intelligence organizations, most of which IAEA inspectors had been unable to verify or authenticate ... by definition, it was a series of best guesses. The IAEA Deputy Director General for Safeguards at the time had neither "assessed" nor "signed off on" the document, ElBaradei added. For its part, the U.S. government has assessed that Iran has not mastered "all the necessary technologies" for building a nuclear weapon, a senior Administration official stated in November 2011. During the same briefing, a senior Administration official explained that "the fact that some activities have apparently continued after the full-scale program was shut down in 2003 suggests that there's been some advancement" in Iran's ability to develop nuclear weapons, but "since it appears to be relatively uncoordinated and sporadic activity ... the advancement probably hasn't been that dramatic." Perhaps reinforcing this point, Director Clapper stated during the February 2012 Senate Armed Services Committee hearing that "there are certain things" that Iran has not yet done to develop a nuclear weapon, but he did not elaborate. Ambassador Stephen D. Mull, then-Coordinator for Implementation of the JCPOA, told a Washington audience on January 21, 2016, that "there was a portion of the Iranian Government working in a very organized, systematic way to develop the capability to build a nuclear weapon. We don't know to the extent to which that knowledge has been tested or even survived." Amano's November 2011 report states that, according to a member of a "clandestine nuclear supply network" run by former Pakistani official Abdul Qadeer Khan, Iran "had been provided with nuclear explosive design information." However, this information may not be sufficient to produce a nuclear weapon. Although Khan's network supplied Libya with "documents related to the design and fabrication of a nuclear explosive device," according to the IAEA, these documents lacked "important parts" for making a nuclear weapon, according to ElBaradei. In addition to the documents supplied to Tripoli, members of the Khan network had computer files containing "drawings for the components of two smaller, more advanced nuclear weapons." However, according to former IAEA Deputy Director-General Olli Heinonen, these "detailed designs" were not "complete sets" of weapons design information. Other members of the network could have possessed more complete nuclear weapons designs, he said. The JCPOA indefinitely prohibits specific activities "which could contribute to the design and development of a nuclear explosive device." Neither Iran's comprehensive safeguards agreement nor its additional protocol explicitly prohibit these activities. As noted, the U.S. government assesses that Tehran has not mastered all of the necessary technologies for building a nuclear weapon. In addition, for 15 years Iran is to refrain from "producing or acquiring plutonium or uranium metals or their alloys" and "conducting R&D on plutonium or uranium (or their alloys) metallurgy, or casting, forming, or machining plutonium or uranium metal." Producing uranium or plutonium metals is a key step in producing nuclear weapons. Timelines A senior intelligence official explained during a December 2007 press briefing that the "acquisition of fissile material ... remains the governing element in any timelines" regarding Iran's production of a "nuclear device." The 2007 NIE argued that "centrifuge enrichment is how Iran probably could first produce enough fissile material for a weapon" and added that "the earliest possible date Iran would be technically capable of producing enough HEU for a weapon is late 2009." However, it was "very unlikely" that Iran would attain such a capability by that date, the estimate says, adding that "Iran probably would be technically capable of producing enough HEU for a weapon sometime during the 2010-2015 time frame." But the State Department Bureau for Intelligence and Research, the estimate says, judged that Tehran "is unlikely to achieve this capability before 2013" and all intelligence agencies recognized "the possibility that this capability may not be attained until after 2015." The frequently-cited benchmark for determining the minimum sufficient amount of weapons-grade HEU for a nuclear weapon is 27.8 kilograms of uranium containing 90% uranium-235, but the amount assumed by U.S. government estimates is unclear. To produce its first nuclear weapon, Tehran would likely need to produce more uranium-235. According to a 2011 International Institute for Strategic Studies report, "the fabrication of an initial bomb would involve an amount of unavoidable wastage." Then-Deputy Assistant Secretary of Defense Colin Kahl explained during a November 15, 2011, hearing that "the time to actually complete a testable [Iranian nuclear] device could shrink over time." Then-Secretary of Defense Leon Panetta told 60 Minutes in 2012 that, if Iran were to decide to build a nuclear weapon, "it would probably take them about a year to be able to produce a bomb and then possibly another one to two years in order to put it on a deliverable vehicle of some sort in order to deliver that weapon." Although, as noted, the United States estimated that Iran's Fordow enrichment facility "would be capable of producing approximately one weapon's worth" of HEU per year, whether and how that assessment factored into the U.S. timelines for Iranian nuclear weapons development is unclear. Then-Under Secretary of State for Political Affairs Wendy Sherman explained during an October 3, 2013, Senate Foreign Relations Committee hearing that Iran would need as much as one year to produce a nuclear weapon if the government made the decision to do so. At the time, Tehran would have needed two to three months to produce enough weapons-grade HEU for a nuclear weapon. Iran's December 28, 2015, JCPOA-mandated shipment of LEU to Russia lengthened this time to one year, according to February 9, 2016, congressional testimony from then-Director of National Intelligence Clapper. Current Director of National Intelligence Daniel Coats reiterated this assessment in several congressional hearings. A senior U.S. official followed suit in a March 2019 press briefing. Declared Versus Undeclared Nuclear Facilities The U.S. estimates described above apparently assume that Iran would use its declared nuclear facilities to produce fissile material for a weapon. However, the 2007 NIE states that Iran "probably would use covert facilities—rather than its declared nuclear sites—for the production of highly enriched uranium for a weapon." Similarly, a CIA report covering 2004 concluded that "inspections and safeguards will most likely prevent Tehran from using facilities declared to the IAEA directly for its weapons program as long as Iran remains a party to the NPT." Director Clapper echoed this assessment in a March 2015 interview. Iran would probably prefer to avoid using its safeguarded facilities, partly because the IAEA would likely detect an Iranian attempt to use them for producing weapons-grade HEU. According to former Deputy Assistant Secretary Kahl, Tehran "is unlikely to dash for a bomb in the near future because IAEA inspectors would probably detect Iranian efforts to divert low-enriched uranium and enrich it to weapons-grade level at declared facilities." Similarly, then-Deputy Assistant Secretary of Defense for Media Operations John Kirby told reporters on December 21, 2011, that were Iran to begin producing a nuclear weapon, IAEA inspectors would likely give sufficient warning for the United States to take action. Former IAEA Deputy Director-General Heinonen observed in 2010 that Iran would probably be caught if it attempted to divert more than "small quantities" of nuclear material from its safeguarded nuclear facilities. It would be extremely difficult to reconfigure the cascades in the Natanz facility without detection and, in any case, IAEA inspectors measure the isotopic content of enriched uranium and would thereby detect Iranian production of weapons-grade HEU. More recently, Clapper testified that the JCPOA has also enhanced the transparency of Iran's nuclear activities ... [a]s a result, the international community is well postured to quickly detect changes to Iran's declared nuclear facilities designed to shorten the time Iran would need to produce fissile material. Although Iran could eject IAEA inspectors and/or withdraw from the NPT, such a move would be "an incredibly provocative action and very risky for Iran to undertake," then-Department of State Special Advisor Einhorn argued in 2011, adding that Iran was unlikely to take such a risk because its operating first-generation centrifuges are inefficient. It is worth noting that such an action would be virtually unprecedented. A senior intelligence official explained in December 2007 that Iran could use knowledge gained from its Natanz facilities at covert enrichment facilities. According to the NIE, a "growing amount of intelligence indicates Iran was engaged in covert uranium conversion and uranium enrichment activity," but Tehran probably stopped those efforts in 2003. U.S. officials have argued that Iran currently does not appear to have any nuclear facilities unknown to the United States. Then- CIA Director John Brennan stated during a March 2015 interview that the United States has "a good understanding of what the Iranian nuclear program entails." During a July 31 , 2015, press briefing about possible Iranian undeclared nuclear facilities, U.S. Secretary of Energy Ernest Moniz stated that "we feel pretty confident that we know their current configuration." U.S. officials have express ed confidence in the ability of U.S. intelligence to detect Iranian covert nuclear facilities . Does Iran Have a Nuclear Weapons Program? In addition to the possible nuclear weapons-related activities discussed above, Iran has continued to develop ballistic missiles, which could potentially be used to deliver nuclear weapons. It is worth noting, however, that then-Director of National Intelligence Dennis Blair indicated during a 2009 Senate Armed Services Committee hearing that Iran's missile developments do not necessarily indicate that the government is also pursuing nuclear weapons, explaining that "I don't think those missile developments ... prejudice the nuclear weapons decision one way or another. I believe those are separate decisions." Iran is developing missiles and space launch vehicles "for multiple purposes," he added. Similarly, in a June 2015 statement to Parliament, British Foreign and Commonwealth Office official Tobias Ellwood stated that "we are not aware of any current links between Iran's ballistic missile programme and nuclear programme." In any case, Tehran's nuclear program raised concerns for various other reasons. First, Iran was secretive about the program. For example, Tehran hindered the IAEA investigation by failing to disclose numerous nuclear activities, destroying evidence, and making false statements to the agency. Moreover, although Iran's cooperation with the agency improved, the IAEA still repeatedly criticized Tehran for failing to cooperate fully with the agency's investigation of certain issues concerning Iran's nuclear program. Second, many observers have questioned Iran's need for nuclear power, given the country's extensive oil and gas reserves. The fact that Tehran resumed its nuclear program during its 1980-1988 war with Iraq has also cast doubt on the energy rationale. Furthermore, many countries with nuclear power reactors purchase nuclear fuel from foreign suppliers—indeed, Russia has provided fuel for the Bushehr reactor—a fact that calls into question Iran's need for an indigenous enrichment capability. Moreover, Iranian officials acknowledge that Iran lacks sufficient uranium deposits for its planned nuclear power program. Some government officials have expressed skepticism regarding Iran's stated rationale for its Arak reactor. Tehran says that the reactor is necessary to produce medical isotopes and to replace the Tehran Research Reactor (TRR). However, the TRR is capable of producing such isotopes and has unused capacity. Furthermore, as noted, Iran expressed the desire to obtain more fuel for the TRR. In addition, nonproliferation experts have argued that a new heavy-water reactor would be unnecessary for producing such isotopes. As noted, Iran has rendered the Arak reactor's original core inoperable pursuant to the JCPOA, which also commits Tehran to redesign and rebuild the reactor based on a design agreed to by the P5+1. Iran has maintained that its nuclear program has always been exclusively for peaceful purposes. As noted, the Iranian government says that it plans to expand its reliance on nuclear power in order to generate electricity. Indeed, some experts have documented Tehran's projected difficulty in exporting oil and natural gas without additional foreign investment in its energy infrastructure. Iran has argued that its covert nuclear procurement efforts were necessary to counter Western efforts to deny it nuclear technology—a claim that appears to be supported by a 1997 CIA report. Tehran argues that it cannot depend on foreign suppliers for such fuel because such suppliers have been unreliable in the past. At least one expert has described Iran's inability to obtain nuclear fuel from an international enrichment consortium called Eurodif. During the 1970s, Iran had reached an agreement with Eurodif that entitled Iran to enriched uranium from the consortium in exchange for a loan. Former AEOI President Aghazadeh also argued that although Iran does not need to produce fuel for the Bushehr reactor, the government needed to complete the Natanz facility to provide fuel for the planned Darkhovin reactor. Other factors also suggest that Iran may not have had an active nuclear weapons program after 2003. First, as noted, the IAEA has resolved the outstanding issues described in the August 2007 Iran-IAEA work plan, and the agency has not discovered significant undeclared Iranian nuclear activities for a number of years. Second, Tehran, beginning in 2003, has been willing to disclose previously undeclared nuclear activities to the IAEA. Third, Iran made important changes to the administration of its nuclear program in the second half of 2003—changes that produced greater openness with the IAEA and may have indicated a decision to stop a nuclear weapons program. Fourth, as noted above, Iranian officials have stated numerous times that Tehran is not seeking nuclear weapons, partly for religious reasons—indeed, Khamene'i has issued a fatwa declaring that "the production, stockpiling, and use of nuclear weapons are forbidden under Islam," according to Iranian officials. A change in this stance could damage Iranian religious leaders' credibility. In 2013, an Iranian Foreign Ministry spokesperson described the fatwa as the "operational instruction" for Iran's government. A senior Iranian official stated in February 2019 that "according to the fatwa (religious verdict) of Ayatollah Khamenei, which is based on the hadith of the Prophet, Iran has no intention to make an atomic bomb." Mark Fitzpatrick of the International Institute for Strategic Studies has argued that "given the pervasive religiosity of the regime, it is unlikely that Iran's supreme leader would be secretly endorsing military activity in explicit contradiction of his own religious edict." Fifth, Iranian officials argued that nuclear weapons would not improve the country's security, arguing that Iran would not be able to compete with the nuclear arsenals of larger countries, such as the United States. Moreover, the Iranian government has asserted that "Iran today is the strongest country in its immediate neighborhood. It does not need nuclear weapons to protect its regional interests." The U.S.-led spring 2003 invasion of Iraq, which overthrew Iraqi leader Saddam Hussein and thereby eliminated a key rival of Iran, may also have induced Tehran to decide that it did not need nuclear weapons. The government has also argued that a nuclear weapons program "would be prohibitively expensive, draining the limited economic resources of the country." In any case, since Iran has implemented its JCPOA commitments, which, as noted, include significant limits on Iran's nuclear program and transparency requirements with respect to that program, U.S. officials have argued that the Iranian nuclear program poses a less severe proliferation threat. For example, then-Secretary of Defense Ashton Carter testified in March 2016 that the agreement "places significant limitations on Iran that will effectively cut off its pathways to the fissile material for a nuclear bomb." Government Estimates Since at least 2007, the U.S. intelligence community has issued unclassified assessments that Iran has not decided whether to develop nuclear weapons. According to the 2007 NIE, "Iranian military entities were working under government direction to develop nuclear weapons" until fall 2003, after which Iran halted its nuclear weapons program "primarily in response to international pressure." The NIE defines "nuclear weapons program" as "Iran's nuclear weapon design and weaponization work and covert uranium conversion-related and uranium enrichment-related work." The NIE adds that the intelligence community also assessed "with moderate-to-high confidence that Tehran at a minimum is keeping open the option to develop nuclear weapons." The NIE also states that, because of "intelligence gaps," the Department of Energy and the National Intelligence Council assessed "with only moderate confidence that the halt to those activities represents a halt to Iran's entire nuclear weapons program." The NIE added that "[s]ince fall 2003, Iran has been conducting research and development projects with commercial and conventional military applications—some of which would also be of limited use for nuclear weapons." The NIE also states that "Tehran's decision to halt its nuclear weapons program suggests it is less determined to develop nuclear weapons than we have been judging since 2005." The change in assessments, a senior intelligence official said in December 2007, was the result of "new information which caused us to challenge our assessments in their own right, and illuminated previous information for us to be able to see it perhaps differently than we saw before, or to make sense of other data points that didn't seem to self-connect previously." According to press accounts, this information included various written and oral communications among Iranian officials indicating that the program had been halted. As noted, the United States may also have obtained information from Iranian officials who defected as part of a CIA program to induce them to do so, as well as from penetration of Iran's computer networks. In addition, the NIE incorporated open-source information, such as photographs of the Natanz facility that became available after members of the press toured the facility. According to the 2007 NIE, the intelligence community assessed "with moderate-to-high confidence that Iran [did] not have a nuclear weapon." The community assessed "with low confidence that Iran probably [had] imported at least some weapons-usable fissile material," but still judged "with moderate-to-high confidence" that Tehran still lacked sufficient fissile material for a nuclear weapon. On several occasions, the U.S. intelligence community has reaffirmed the 2007 NIE's assessment that Iran halted its nuclear weapons program but is keeping its options open. The late-September 2009 revelation of the Fordow facility increased suspicions that Iran may have restarted its nuclear weapons program. As noted, some U.S. officials indicated that the facility was likely intended for a nuclear weapons program. Nevertheless, Administration talking points made public on September 25, 2009, stated that the intelligence community still assessed that "Iran halted its nuclear weapons program in 2003." More recently, then-Director of National Intelligence Clapper testified in February 2016 that [w]e continue to assess that Iran's overarching strategic goals of enhancing its security, prestige, and regional influence have led it to pursue capabilities to meet its nuclear energy and technology goals and give it the ability to build missile-deliverable nuclear weapons, if it chooses to do so. Its pursuit of these goals will dictate its level of adherence to the JCPOA over time. We do not know whether Iran will eventually decide to build nuclear weapons." Director of National Intelligence Coats reiterated the last sentence in May 2017 testimony. He testified in January 2019 that the U.S. intelligence community "continue[s] to assess that Iran is not currently undertaking the key nuclear weapons-development activities we judge necessary to produce a nuclear device." Additional recent statements from U.S. officials indicate that Iran has not resumed its nuclear weapons program. Any decision to produce nuclear weapons "will be made by the Supreme Leader," Clapper stated in April 2013. The November 2011 report from IAEA Director-General Amano appears to support the U.S. assessment. As noted, the report states that Iranian activities related to building a nuclear explosive device "took place under a structured programme," but senior Iranian officials ordered a halt to the program in late 2003. Echoing the judgment of the 2007 NIE, Amano's report mentions "indications that some activities relevant to the development of a nuclear explosive device continued after 2003," adding that some such activities "may still be ongoing." Most of the activities listed in the report occurred before the end of 2003. During a briefing about Amano's report, a senior Administration official described Iran's post-2003 weapons-related work as "a much less coordinated ... more sporadic set of research activities," some of which "are sort of related to nuclear weapons development." As noted, an April 2012 Department of Defense report described Amano's report as containing "extensive evidence of past and possibly ongoing Iranian nuclear weapons-related research and development work." Amano's December 2, 2015, report assesses that "before the end of 2003, an organizational structure was in place in Iran suitable for the coordination of a range of activities relevant to the development of a nuclear explosive device." S ome Iranian nuclear weapons-related activities " took place after 2003," the report adds, noting that these activities "were n ot part of a coordinated effort. " The IAEA "has no credible indications of activities in Iran relevant to the development of a nuclear explosive device after 2009," the report explains. (See also " Nuclear Weapon Development Capabilities .") Some foreign intelligence agencies have apparently concurred with the U.S. assessment that Iran has not yet decided to build nuclear weapons. Director of the French General Directorate of External Security Erard Corbin de Mangoux stated in an interview published in 2010 that "[w]e do not yet know whether Tehran's objective is to enable itself to acquire such a capability (so-called 'threshold status') or actually to possess it." In 2012, Israeli Foreign Minister Avigdor Lieberman appeared to confirm reports that Israeli intelligence shares this U.S. assessment. Moreover, according to a 2012 Israeli intelligence report, "until 2003," Iran had a "set nuclear program ... for R&D of nuclear weapons." However, the report indicates that Iran had not restarted the nuclear weapons program. German intelligence assessments have also reportedly concurred with this assessment. It is worth noting that the February 2018 Nuclear Posture Review asserts that "Iran's development of increasingly long-range ballistic missile capabilities, and its aggressive strategy and activities to destabilize neighboring governments, raises questions about its long-term commitment to foregoing nuclear weapons capability." National Security Adviser John Bolton stated during a January 6, 2019, press conference that "we have little doubt that Iran's leadership is still strategically committed to achieving deliverable nuclear weapons." Living with Risk Other findings of the NIE indicate that the international community may, for the foreseeable future, have to accept some risk that Iran will develop nuclear weapons. According to the 2007 NIE, "only an Iranian political decision to abandon a nuclear weapons objective would plausibly keep Iran from eventually producing nuclear weapons—and such a decision is inherently reversible." As noted, the U.S. intelligence community assesses that Iran has the capacity to produce nuclear weapons at some point. This is not to say that an Iranian nuclear weapons capability is inevitable. As noted above, Iran does not yet have such a capability. But Tehran adherence to the JCPOA is probably necessary to provide the international community with confidence that it is not pursuing a nuclear weapon. Other Constraints on Nuclear Weapons Ambitions325 The production of fissile material is widely considered the most difficult step in nuclear weapons development. However, even if it had the ability to produce weapons-grade HEU, Iran would still face challenges in producing nuclear weapons, such as developing a workable physics package and effective delivery vehicles. A 1978 CIA report points out that there is a great difference between the development and testing of a simple nuclear device and the development of a nuclear weapons system, which would include both relatively sophisticated nuclear designs and an appropriate delivery system. Moreover, Iran would face significant challenges if it were to attempt to develop and produce HEU-based nuclear weapons covertly; although, as noted, covert production would probably be Tehran's preferred option. Covert centrifuge facilities are notoriously difficult for intelligence agencies to detect, but Iran may not be able to complete a covert centrifuge facility without detection. A 2005 International Institute for Strategic Studies report concluded that "an Iranian planner would have little basis for confidence that significant nuclear facilities could be kept hidden." Tehran would need to hide a number of activities, including uranium conversion, the movement of uranium from mines, and the movement of centrifuge feedstock. Alternatively, Iran could import uranium ore or centrifuge feedstock, but the government would also need to do so covertly. Tehran's implementation of the JCOA has further decreased the probability that the government could successfully conceal a nuclear weapons program. The difficulty of the above task becomes clearer when one considers that foreign intelligence agencies apparently possess a significant amount of information about the Iran's enrichment program. First, both the Natanz and Fordow facilities were discovered by foreign governments before they became operational. Second, the development of the Stuxnet computer worm, discussed above, indicates that at least one foreign government possesses a large amount of information about Iran's centrifuge program, which could not have been obtained via IAEA reporting, according to some experts. As noted, U.S. officials have express ed confidence in the ability of U.S. intelligence to detect Iranian covert nuclear facilities . It is worth noting that, without conducting explosive nuclear tests, Iran could produce only fairly simple nuclear weapons, which are not deliverable by longer-range missiles. Such tests, many analysts argue, would likely be detected. Francois Geleznikoff, director of military applications at Le Commissariat à L'Energie Atomique et aux Énergies Alternative in France, described during a 2018 National Assembly hearing his directorate's monitoring of Iran's and North Korea's nuclear programs: This monitoring depends primarily on the detection of any nuclear tests that they may carry out. Thanks to the international detection system established by the Comprehensive Nuclear Test Ban Treaty, in which France participates actively, and thanks to our own analysis, we are able to alert the French authorities within 30 minutes of a North Korean test, and the same would apply in the event of an Iranian test, for instance. Moreover, moving from the production of a simple nuclear weapon to more sophisticated nuclear weapons could take several additional years. Appendix A. Iranian Statements on Nuclear Weapons Iranian officials have repeatedly asserted that the country's nuclear program is exclusively for peaceful purposes. For example, Supreme Leader Ayatollah Ali Khamene'i declared during a June 3, 2008, speech that Iran is opposed to nuclear weapons "based on religious and Islamic beliefs as well as based on logic and wisdom." He added, "Nuclear weapons have no benefit but high costs to manufacture and keep them. Nuclear weapons do not bring power to a nation because they are not applicable. Nuclear weapons cannot be used." Similarly, then-Iranian Foreign Ministry spokesperson Hassan Qashqai stated on November 10, 2008, that "pursuance of nuclear weapons has no place in the country's defense doctrine." Khamene'i stated in 2012 that Ideologically and religiously speaking, we believe that it is not right [to have nuclear weapons]. We believe that this move [making nuclear weapons] and the use of such weapons are a great sin. We also believe that stockpiling such weapons is futile, expensive and harmful; and we would never seek this. Asked in 2012 if Iran is trying to develop the capability to produce a nuclear weapon, Ambassador Mohammad Chasee, Iran's Permanent Representative to the United Nations, stated that "[w]e are not going to develop the capacity to be able to make any weapon of mass destruction." Iranian Foreign Minister Javad Zarif argued in 2014 that Khamene'i "has explicitly declared his opposition with regard to the manufacture, stockpile and use of nuclear weapons," and observed that "nuclear weapons have no place in Iran's defense doctrine." More recently, President Hassan Rouhani stated in 2018 that "we are not thinking about developing nuclear weapons, nor will we think about it. The Supreme Leader [Ali Khamenei] has banned it and said that it is not appropriate." Appendix B. Organization of Iran's Nuclear Program The Atomic Energy Organization of Iran (AEOI), which the government established in 1974, operates Iran's declared nuclear program and has a variety of peaceful programs in areas such as agriculture, medicine, and basic nuclear research and development. According to the U.S. Department of the Treasury, the AEOI "has operational and regulatory control over Iran's nuclear program," "reports directly to the Iranian President," and is the "main Iranian organization responsible for research and development activities in the field of nuclear technology." Iran's Minister of Science, Research and Technology stated in January 2019 that "the AEOI acts upon decisions made by the country's Supreme National Security Council." The AEOI has been Tehran's main interlocutor with the IAEA. According to an August 2008 Institute for Science and International Security (ISIS) report, the AEOI controls the country's centrifuge program, but that program is operated by an AEOI entity called the Kalaye Electric Company. AEOI officials have told the IAEA that Iran decided to begin its centrifuge enrichment program in 1985. The program consisted of three phases: activities during the first phase, from 1985 until 1997, had been located mainly at the AEOI premises in Tehran; during the second phase, between 1997 and 2002, the activities had been concentrated at the Kalaye Electric Company in Tehran; during the third phase, 2002 to the present, the R&D and assembly activities were moved to Natanz. Gholamreza Aghazadeh's term as AEOI president, which began in 1997, marked an acceleration of Iran's enrichment program. According to President Hassan Rouhani, who headed the 2003-2005 negotiations concerning the nuclear program, the government in 1998 formed the Supreme Council for New Technologies, chaired by then-President Mohammad Khatami, which focused on the nuclear program. Beginning around 1999, Iran's central government gave the AEOI "authorities that it did not have before," Rouhani stated in a 2004 speech, explaining that we gave the agency a freer hand with new credits and a more liberal spending procedure, new facilities, and special regulations. This allowed them to become more active, without being forced to go through bureaucratic and regulatory labyrinths. Nuclear Weapons Program Beginning in the late 1980s, Iran's nuclear weapons program was coordinated by entities connected with Iran's Ministry of Defense Armed Forces Logistics (MODAFL). The AMAD Plan took over these activities several years later; the projects were "allegedly managed through the 'Orchid Office.'" After Iran ended the nuclear weapons program in 2003, "staff remained in place to record and document the achievements of their respective projects," according to information provided to the IAEA by unnamed governments. Later, "equipment and work places were either cleaned or disposed of so that there would be little to identify the sensitive nature of the work which had been undertaken." Tehran established an organization called the Organization of Defensive Innovation and Research (SPND) in 2011 by an individual who had "managed activities useful in the development of a nuclear explosive device" as part of the Amad Plan and associated entities. The SPND "is completely separate from Iran's civil nuclear program," a senior U.S. official explained during a March 2019 press briefing. According to a 2012 Israeli intelligence document, Iran established the SPND "for the purposes of preserving the technological ability and the joint organizational framework of Iranian scientists in the area of R&D in nuclear weapons, and for the purposes of retaining the skills of the scientists." These activities were to "allow renewal of the activity necessary to produce weapons immediately when the Iranian leadership decides to do so." During an March 2019 press briefing, a senior U.S. official described the SPND as an organization, chunks of which seem to have been created precisely in order to employ people on dual-use things that could easily be repurposed into the very kind of work that was being done before on the weapons program and … in a sense, to keep their skills sharp and available to the Iranian clerical regime. Nevertheless, the IAEA reported in December 2015 that, despite the SPND's establishment in 2011, the post-2003 activities "were not part of a coordinated effort" and the agency "has no credible indications of activities in Iran relevant to the development of a nuclear explosive device after 2009." (For more details, see Appendix E .) The AEOI had links with some entities that were apparently connected to the Amad Plan. For example, a company called Kimia Maadan "was a cover company for chemical engineering operations under the AMAD Plan while also being used to help with procurement for the [AEOI]." The organization contracted with the same company to design and build the Gchine mill. Furthermore, Tehran's AEOI-run centrifuge program had connections to entities controlled by Iran's MODAFL, which controlled the Amad Plan. For example, Iran fabricated some components for its second-generation centrifuge in a workshop located on a site belonging to Iran's Defence Industries Organization, which was part of MODAFL. Nevertheless, several factors indicate that the AEOI's illicit nuclear activities were not necessarily part of the nuclear weapons program. First, the NIE appeared to exclude the AEOI-run enrichment program. Explaining that the U.S. intelligence community defined the weapons activities as "nuclear weapon design and weaponization work and covert uranium conversion-related and uranium enrichment-related work," the estimate added that "Iran's declared civil work related to uranium conversion and enrichment" was not part of the weapons program. Moreover, a November 2011 IAEA description of the suspected past nuclear weapons program's management structure omits the AEOI. Lastly, September 2009 U.S. intelligence community talking points regarding the September 2009 joint British, French, and U.S. revelation of Iran's Fordow centrifuge facility state that the plant's existence did "not contradict" the 2007 NIE's conclusions regarding Iran's nuclear weapons program. One reason for this assessment, the talking points suggest, was that the Fordow facility was developed by the AEOI. U.S. and British officials have stated that Iranian missile development is not currently linked to the nuclear program. Iran's MODAFL oversees Iran's ballistic missile program. The Aerospace Industries Organization, a MODAFL subsidiary, oversees the country's missile production. Although some Islamic Revolutionary Guard Corps (IRGC) entities are associated with MODAFL and the IRGC Air Force operates Iran's ballistic missiles, these entities do not appear to be associated with the AEOI. A State Department official explained in October 2016 that the IRGC "was not responsible for" activities related to the possible military dimensions of Iran's nuclear program. Appendix C. Multilateral Diplomacy Concerning Iran's Nuclear Program In fall 2002, the IAEA began to investigate Iran's nuclear activities at Natanz and Arak. Inspectors visited the sites the following February. The IAEA board adopted its first resolution, which called on Tehran to increase its cooperation with the agency's investigation and to suspend its uranium enrichment activities, in September 2003. The next month, Iran concluded an agreement with France, Germany, and the United Kingdom, collectively known as the "E3," to suspend its enrichment activities, sign and implement an Additional Protocol to its IAEA safeguards agreement, and comply fully with the IAEA's investigation. As a result, the IAEA board decided to refrain from referring the matter to the U.N. Security Council, despite U.S. advocacy for such a referral. Statements from current and former Iranian officials indicate that during fall 2003, Tehran feared that the United States might use Security Council referral as a means to undertake military action or other coercive measures against Iran. The IAEA's investigation, as well as information Tehran provided after the October 2003 agreement, ultimately revealed that Iran had engaged in a variety of clandestine nuclear-related activities, some of which violated Iran's safeguards agreement. These included plutonium separation experiments, uranium enrichment and conversion experiments, and importing various uranium compounds. After October 2003, Iran continued some of its enrichment-related activities, but Tehran and the E3 agreed in November 2004 to a more detailed suspension agreement. During negotiations between fall 2003 and summer 2005, both Iran and the E3 offered a number of proposals, although the two sides never reached agreement. According to one former British official involved in the negotiations, a chief obstacle was E3 opposition to a 2005 Iranian proposal that would have included a limited Iranian enrichment program. A former Iranian official argued that the perceived lack of success of Iranian officials who had participated in negotiations with the E3 discredited those officials in the eyes of other Iranian officials. The United States influenced several aspects of the E3 negotiations during this time. For example, the George W. Bush Administration opposed an E3 request to ease sanctions on certain U.S. goods. The United States also persuaded the E3 to refrain from agreeing to any arrangement with Iran that included even a limited Iranian enrichment program, according to accounts from E3 officials directly involved in the diplomacy. Former President George W. Bush has written that the United States' "ultimate goal" was "stopping Iranian enrichment." Iran resumed uranium conversion in August 2005 under the leadership of President Mahmoud Ahmadinejad, who had been elected two months earlier. On September 24, 2005, the IAEA Board of Governors adopted a resolution that, for the first time, found Iran to be in noncompliance with its IAEA safeguards agreement. The board, however, did not refer Iran to the Security Council, choosing instead to give Tehran additional time to comply with the board's demands. Iran announced in January 2006 that it would resume research and development on its centrifuges at Natanz. In response, the IAEA board adopted a resolution on February 4, 2006, that referred the matter to the Security Council. Two days later, Tehran announced that it would stop implementing its Additional Protocol. In June 2006, China, France, Germany, Russia, the United Kingdom, and the United States, collectively known as the "P5+1," presented a proposal to Iran that offered a variety of incentives in return for Tehran taking several steps to assuage international concerns about its enrichment and heavy-water programs. The proposal called on the government to address the IAEA's "outstanding concerns ... through full cooperation" with the agency's ongoing investigation of Tehran's nuclear programs, to "suspend all enrichment-related and reprocessing activities," and to resume implementing its Additional Protocol. Then-European Union High Representative for Common Foreign and Security Policy Javier Solana presented a revised version of the 2006 offer to Iran in June 2008. P5+1 representatives discussed the new proposal with Iranian officials the next month. Iran provided a follow-up response in August 2008, but the six countries deemed it unsatisfactory. Tehran told the IAEA that it would implement its Additional Protocol "if the nuclear file" were "returned from the Security Council" to the agency. It is not clear that the council could have met this condition. The 2006 offer's requirements were also included in several U.N. Security Council resolutions, including Resolution 1929, which was adopted on June 9, 2010. Iran issued another proposal in early September 2009, which described a number of economic and security issues as potential topics for discussion but only obliquely mentioned nuclear issues and did not explicitly mention Iran's nuclear program. Tehran Research Reactor Discussions After an October 1, 2009, meeting in Geneva with the P5+1 and High Representative Solana, Iranian officials repeatedly stated that Tehran wanted future discussions about its September 2009 proposal. Nevertheless, during that meeting, Iranian officials agreed in principle to a proposal that would provide LEU fuel containing about 20% uranium-235 for Iran's U.S.-supplied Tehran Research Reactor (TRR), which produces medical isotopes and operates under IAEA safeguards. Iran asked the IAEA in a June 2, 2009, letter to provide fresh fuel for its U.S-supplied TRR. Initially fueled by U.S.-supplied HEU, the reactor was converted to use LEU fuel in 1994 after Argentina in 1987 agreed to supply the reactor with such fuel, which contained about 20% uranium-235. Subsequent to Iran's June 2009 request, the United States and Russia presented a proposal to the IAEA (which the agency conveyed to Iran) for providing fuel for the reactor. According to the proposal, Iran would have transferred approximately 1,200 kilograms of its low-enriched uranium hexafluoride to Russia, which would have either enriched the uranium to about 20% uranium-235 or produced such LEU from Russian-origin uranium. Moscow would then have transferred the low-enriched uranium hexafluoride to France for fabrication into fuel assemblies. Finally, Paris would have transferred the assemblies to Russia for shipment to Iran. France would have delivered the fuel within about one year. As of October 30, 2009, Iran had produced 1,763 kilograms of low-enriched uranium hexafluoride containing less than 5% uranium-235. Beginning on October 19, 2009, Iranian officials met with officials from the IAEA, France, Russia, and the United States to discuss details of implementing the proposal, such as the fuel price, contract elements, and a timetable for shipping the fuel. Two days later, then-IAEA Director-General Mohamed ElBaradei announced the conclusion of a "draft agreement," which was drafted by the IAEA. Iran, France, Russia, and the United States held further discussions regarding the proposal's implementation, but they did not reach agreement with Tehran. Iran resisted transferring all 1,200 kilograms of low-enriched uranium hexafluoride out of the country before receiving the reactor fuel, arguing that the proposal needed more credible assurances that the fuel would actually be delivered. During the last few months of 2009, Iranian officials suggested different compromises, such as shipping its low-enriched uranium hexafluoride out of the country in phases or simultaneously exchanging that material for the TRR fuel on an Iranian island or in a third country, but these proposals were not accepted by the United States, France, and Russia. Further details about the French, Russian, and U.S. proposals later became public. For example, the IAEA had agreed to take formal custody of any Iranian low-enriched uranium hexafluoride transferred pursuant to a TRR agreement. In addition, France, Russia, and the United States had agreed to a "legally binding Project and Supply Agreement"; agreed to "support technical assistance through the IAEA to ensure" that the TRR would operate safely; and expressed support for allowing Iran to transfer its low-enriched uranium hexafluoride to a third country, which would hold that material in escrow until the TRR fuel was fabricated. The United States also offered "substantial political assurances that the agreement would be fulfilled." An April 20, 2010, letter from then-President Obama to then-President Brazilian President Luis Inácio Lula da Silva stated that the United States had expressed its willingness to "potentially even play a more direct role in the fuel production process," but did not elaborate. The October 2009 IAEA draft did not include an explicit prohibition on Iranian production of uranium enriched to about 20% uranium-235. Instead, the agreement's proponents argued that the supply of fuel for the TRR would obviate the need for Tehran to produce the fuel on its own. The escrow proposal described in the previous paragraph was not contained in the October 2009 IAEA draft. Whether the other provisions described above were explicitly contained in that draft is unclear because no public official copy of it exists. Following a November 20, 2009, meeting, the P5+1 issued a joint statement expressing disappointment with Tehran's failure to respond positively to the TRR proposal. "We have agreed to remain in contact and expect a further meeting soon to complete our assessment of the situation and to decide on our next steps," the statement said. Although some subsequent Iranian statements suggested that Iran was still open to some version of the IAEA proposal, Tehran never officially accepted it. Following a May 17, 2010, meeting of Iranian President Ahmadinejad, Turkish Prime Minister Recep Tayyip Erdogan, and Brazilian President Lula, Iran accepted a proposal, known as the Tehran Declaration, for supplying the TRR with fuel. Iran conveyed its acceptance of the declaration in a May 24, 2010, letter to the IAEA. The Tehran Declaration contained some of the same elements as the October 2009 IAEA draft proposal and other elements described in a February 12, 2010, letter to the IAEA. For example, the declaration stated that Iran would be willing to "deposit" 1,200 kilograms of LEU in Turkey. Iran would deposit the fuel, which would be subject to IAEA monitoring in Turkey, "not later than one month" after reaching an agreement regarding the details of the exchange with France, Russia, the United States, and the IAEA. However, unlike the IAEA draft proposal, the declaration did not mention an ultimate destination for the LEU to be deposited in Turkey. As noted, Tehran had resisted transferring all 1,200 kilograms of LEU out of the country before receiving fuel for the TRR. IAEA Director-General Amano told the agency's Board of Governors on June 7, 2010, that he had "immediately conveyed Iran's letter" to France, Russia, and the United States "and asked for their views." Those three governments responded to the IAEA two days later with letters and a joint paper titled "Concerns about the Joint Declaration Conveyed by Iran to the IAEA." The paper conveyed several reservations about the Tehran Declaration, but did not reject it outright. One reason for the U.S. refusal to accept the proposal was fear that the proposal would disrupt efforts to persuade the Security Council to adopt a resolution imposing additional sanctions on Iran (the council adopted Resolution 1929 in June 2010). Further Talks Iran and the P5+1 met in December 2010 and January 2011, but the two meetings, held in Geneva and Istanbul, respectively, produced no results. In April 2012, the two sides resumed talks in Istanbul. Iran and the P5+1 subsequently held two rounds of talks—a May meeting in Baghdad and a June meeting in Moscow. In addition, the two sides held expert-level discussions in Istanbul in July 2012. Former U.S. officials involved in the JCPOA negotiations have stated that the U.S. decision, articulated to Iran during 2013, to drop its previous insistence that Iran end its enrichment program was decisive for reaching a final agreement. Iranian and Russian officials have made similar claims. Following the April 2012 talks, the P5+1 stated that the process of inducing Iranian compliance with "all its international obligations" would be "guided by the principle of the step-by-step approach and reciprocity." The P5+1 presented their proposal the next month during the Baghdad meeting. The six governments demanded that Tehran end its production of enriched uranium containing approximately 20% uranium-235; ship to a third country Iran's stockpile of uranium enriched to this level (this uranium would be under IAEA monitoring); halt enriching uranium, as well as installing centrifuges and centrifuge components, at the Fordow facility; and cooperate fully with the IAEA's investigation. Then-European Union High Representative Catherine Ashton for Common Foreign and Security Policy stated on May 24, 2012, that the P5+1 "put ideas on the table on reciprocal steps we would be prepared to take." These included refraining from imposing new sanctions on Iran; facilitating Iranian access to spare aircraft parts, as well as safety and repair inspections; providing fuel for the TRR; supporting IAEA technical cooperation regarding the TRR's safety; providing medical isotopes to Tehran; potentially reviewing suspended IAEA technical cooperation projects with Iran; and cooperating on Tehran's acquisition of a light-water reactor for producing radioisotopes. The two sides again held talks in February 2013. Technical experts from the P5+1 and Iran met the next month, and another round of talks at the political director level took place in April 2013. Following the June 2013 election of Iranian President Hassan Rouhani, many observers expressed optimism that these negotiations would produce an agreement. After Rouhani took office in August 2013, Iran and the P5+1 met twice later that year (once in October and once in November). The two sides met again on November 20, 2013, and agreed to an accord called the Joint Plan of Action (JPA) on November 24. This agreement set out an approach toward reaching a long-term comprehensive solution to international concerns regarding Iran's nuclear program. The two sides began implementing the JPA on January 20, 2014. The P5+1 and Iran agreed on a framework for a Joint Comprehensive Plan of Action (JCPOA) on April 2, 2015, and finalized the JCPOA on July 14, 2015. JCPOA Status On May 8, 2018, President Donald Trump announced that the United States would no longer participate in the JCPOA. The United States subsequently reimposed sanctions that had been suspended pursuant to the agreement. (For more information about the Trump Administration's JCPOA policy, see Appendix D .) The U.S. withdrawal attracted broad criticism among the other parties to the JCPOA, which states that the P5+1 and Iran "commit to implement" the agreement "in good faith and in a constructive atmosphere, based on mutual respect, and to refrain from any action inconsistent with the letter, spirit and intent of this JCPOA that would undermine its successful implementation." Whether the U.S. withdrawal violates UN Security Council Resolution 2231 is unclear; U.S. officials have argued that the JCPOA is not legally binding, but a European Union official told CRS in a November 30, 2016, email that "the commitments under the JCPOA have been given legally binding effect through UNSC Resolution 2231 (2015)." Following the initial reactions to the U.S. exit from the accord, Iran and the other parties began negotiations on concrete steps that would continue to provide Iran with the economic benefits of the JCPOA. On May 16, 2018, in an apparent effort to meet Iran's demands for remaining in the agreement, the EU announced "practical measures" for continued implementation of the JCPOA, including the following: maintaining and deepening economic relations with Iran; the continued sale of Iran's oil and gas condensate petroleum products and petrochemicals and related transfers; effective banking transactions with Iran; continued sea, land, air, and rail transportation relations with Iran; provision of export credit and special provisions in financial banking to facilitate economic and financial cooperation and trade and investment; further memoranda of understanding and contracts between European companies and Iranian counterparts; further investments in Iran; the protection of European Union economic operators and ensuring legal certainty; and further development of a transparent, rules-based business environment in Iran. Several E3 officials asserted in a November 2, 2018, statement with EU High Representative for Foreign Affairs and Security Policy Federica Mogherini that [i]t is our aim to protect European economic operators engaged in legitimate business with Iran…. As parties to the JCPoA, we have committed to work on, inter alia, the preservation and maintenance of effective financial channels with Iran, and the continuation of Iran's export of oil and gas. On January 31, 2019, France, Germany, and the United Kingdom, announced the creation of "a Special Purpose Vehicle aimed at facilitating legitimate trade between European economic operators and Iran." Called the Instrument for Supporting Trade Exchanges (INSTEX SAS), the vehicle "will support legitimate European trade with Iran, focusing initially on the sectors most essential to the Iranian population—such as pharmaceutical, medical devices and agri-food goods," according to the January 31 announcement. It added that the E3 should reaffirm that its "efforts to preserve the economic provisions of the JCPOA are conditioned upon Iran's full implementation of its nuclear-related commitments, including full and timely cooperation with the IAEA." In a May 9 statement with Mogherini, the E3 Foreign Ministers responded to an Iranian announcement the previous day that Tehran would stop performing some of its JCPOA commitments. "We remain fully committed to the preservation and full implementation of the JCPOA," the statement explained, adding that the participants "strongly urge Iran to continue to implement its [JCPOA] commitments … and to refrain from any escalatory steps." The statement also reiterated the participants' determination "to continue pursuing efforts to enable the continuation of legitimate trade with Iran." Iranian Reaction Iranian officials have repeatedly stated that Tehran would fulfill its JCPOA commitments as long as the United States did, and they repeatedly have rejected renegotiating the JCPOA or negotiating a new agreement, such as the sort described by U.S. officials. Amano told the IAEA Board of Governors on March 4, 2019, that "Iran is implementing its nuclear-related [JCPOA] commitments." Iran "is fully prepared to return to the pre-JCPOA situation or even [to conditions] more robust than that if the US reneges on its promises to the extent that the JCPOA's continuation harms our national interests," Iranian Foreign Minister Javad Zarif asserted the previous month. Deputy Foreign Minister Seyed Abbas Araqchi claimed that Iran "will be able to reach the industrial enrichment phase in less than two years"; other Iranian officials have asserted that the country can rapidly reconstitute its fissile material production capability. "Iran will remain committed to the nuclear deal if the remaining signatories to the JCPOA abide by their commitments," Araqchi stated in late January 2019. Atomic Energy Organization of Iran (AEOI) spokesperson Behrouz Kamalvandi stated about two weeks later that, should the remaining JCPOA parties fail to fulfill their JCPOA obligations, the AEOI will accelerate the nuclear program with "dazzling speed." Iranian officials have described a number of possible responses to a U.S. decision to reimpose U.S. sanctions, including resuming uranium enrichment, referring the matter to the Joint Commission, decreasing cooperation with the IAEA, and withdrawing from the NPT. These responses do not include the possible Iranian development of nuclear weapons, Iranian officials have said. Asked on April 21, 2018, if Iran will continue to meet its JCPOA obligations if all P5+1 parties except for the United States continue to uphold their obligations, Zarif replied, "I believe that's highly unlikely." He added that it is important for Iran receive the benefits of the agreement. And there is no way that Iran would do a one-sided implementation of the agreement. And it would require a major effort because right now, with the United States ostensibly in the agreement, a lot has been lacking in terms of Iran benefiting from the deal. Following Trump's May 2018 announcement, Iranian officials rejected negotiating any new agreements. In a May 10, 2018, letter to U.N. Secretary General António Guterres, Foreign Minister Zarif wrote that "[i]f JCPOA is to survive, the remaining JCPOA Participants and the international community need to fully ensure that Iran is compensated unconditionally through appropriate national, regional and global measures." He added that Iran has decided to resort to the JCPOA mechanism in good faith to find solutions in order to rectify the United States' multiple cases of significant non-performance and its unlawful withdrawal, and to determine whether and how the remaining JCPOA Participants and other economic partners can ensure the full benefits that the Iranian people are entitled to derive from this global diplomatic achievement. Supreme Leader Ayatollah Ali Khamene'i stated on May 23 that Iran will continue to participate in the JCPOA only if Europe provides "concrete guarantees" that it maintains Iran's existing revenue stream from oil sales to the EU countries. He also demanded that Europe not raise the issues of Iran's missiles programs or regional influence, adding that "Iran has the right to resume its nuclear activities." President Rouhani expressed a similar view in a July 4 speech. According to Iranian officials, Tehran has begun preparations for expanding its uranium enrichment program, albeit within the parameters of the JCPOA for the time being. AEOI spokesperson Kamalvandi stated on June 5, 2018, that the organization "will start the process of boosting the capacity of the country's uranium enrichment," by increasing Iran's capacity to produce uranium hexafluoride. On June 27, Iran's official news agency announced that Iran has resumed operations at its uranium conversion facility, which Iran has used to produce this material. Kamalvandi explained that Iran would begin the process of "manufacturing and assembly of centrifuge rotors," which are critical components of such machines. Iran "will begin building a centrifuge rotor plant," he noted. In addition, AEOI head Ali Akbar Salehi stated that Tehran will begin using an "advanced centrifuge assembly centre in the Natanz nuclear facility," which Iran had not disclosed publicly. Kamalvandi noted that Iran would continue to operate within the constraints of its JCPOA commitments, but added that, should the JCPOA collapse, Iran would produce centrifuges beyond those constraints. As noted, Iran remains subject to its obligations pursuant to the JCPOA and Resolution 2231 and could be subject to the reimposition of multilateral sanctions if Tehran violates these obligations. Several multilateral meetings since the U.S. withdrawal have not produced a firm Iranian commitment to the JCPOA. At Iran's request, the Joint Commission held meetings, attended by all of the JCPOA parties except for the United States, on May 25 and July 6. At the conclusion of the July 6 meeting, the Joint Commission participants reaffirmed their commitment to the EU "practical measures" enumerated above. However, President Rouhani reacted to the pledges by saying that "[u]nfortunately, the EU's package of proposals lacked an operational solution and a specific method for cooperation." Reacting to the January 2019 E3 announcement of the Special Purpose Vehicle, Foreign Minister Zarif warned on February 17, 2019, that "INSTEX falls short of the commitments by the E3 to 'save' the JCPOA," adding that "Europe needs to be willing to get wet if it wants to swim against the dangerous tide of U.S. unilateralism." In May 8 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, Iran will not transfer LEU or heavy water out of the country in order to maintain those stockpiles below the JCPOA-mandated limits described above. The Iranian government has stated that it will resume full compliance with the JCPOA if the remaining JCPOA participants agree during a 60-day period following the May 8 announcement to meet Tehran's "main demands, specifically in the banking and oil sectors." Absent such an agreement, Iran will cease to accept any constraints on the amount of uranium-235 contained in any Iranian-produced enriched uranium. Iran may then also resume work on the Arak reactor according to the JCPOA-mandated design. Iran will "take other steps," should Tehran fail to reach an agreement with the remaining JCPOA participants during a 60-day period to begin after Iran takes this second set of steps. Iran has also announced that Tehran "will show a strong and immediate response" if the remaining JCPOA participants respond to the May 8 action by referring Iran's case to the Security Council or imposing additional sanctions on Iran. Appendix D. Trump Administration Joint Cooperative Plan of Action Policy On May 8, 2018, President Donald Trump announced that the United States would no longer participate in the Joint Cooperative Plan of Action (JCPOA) and would reimpose U.S. sanctions that had been suspended pursuant to the agreement. President Trump ordered Secretary of State Michael Pompeo to "take all appropriate steps to cease the participation of the United States in the JCPOA," and, along with Secretary of the Treasury Steven Mnuchin, to immediately "begin taking steps to reimpose all United States sanctions lifted or waived in connection" with the agreement. The United States has notified the other P5+1 states that it will no longer attend meetings of the Joint Commission, the working group concerning the Arak reactor, or the procurement working group, all of which were established pursuant to the JCPOA. Secretary Pompeo detailed a new U.S. approach with respect to Iran during a May 21, 2018, speech as applying "unprecedented financial pressure on the Iranian regime," working "with the Department of Defense and our regional allies to deter Iranian aggression," and advocating "tirelessly for the Iranian people." He asserted that, in exchange for "major changes" in Iran's behavior, the United States is "prepared to end the principal components of every one of our sanctions against the regime …, re-establish full diplomatic and commercial relationships with Iran ..., [a]nd support the modernization and reintegration of the Iranian economy into the international economic system." Pompeo listed a number of essential elements for any new agreement: First, Iran must declare to the IAEA a full account of the prior military dimensions of its nuclear program, and permanently and verifiably abandon such work in perpetuity. Second, Iran must stop enrichment and never pursue plutonium reprocessing. This includes closing its heavy-water reactor. Third, Iran must also provide the IAEA with unqualified access to all sites throughout the entire country. Iran must end its proliferation of ballistic missiles and halt further launching or development of nuclear-capable missile systems. Iran must release all U.S. citizens, as well as citizens of our partners and allies, each of them detained on spurious charges. Iran must end support to Middle East terrorist groups, including Lebanese Hizballah, Hamas, and the Palestinian Islamic Jihad. Iran must respect the sovereignty of the Iraqi Government and permit the disarming, demobilization, and reintegration of Shia militias. Iran must also end its military support for the Houthi militia and work toward a peaceful political settlement in Yemen. Iran must withdraw all forces under Iranian command throughout the entirety of Syria. Iran, too, must end support for the Taliban and other terrorists in Afghanistan and the region, and cease harboring senior al-Qaida leaders. Iran, too, must end the IRGC [Islamic Revolutionary Guard Corps] Qods Force's support for terrorists and militant partners around the world. And too, Iran must end its threatening behavior against its neighbors—many of whom are U.S. allies. This certainly includes its threats to destroy Israel, and its firing of missiles into Saudi Arabia and the United Arab Emirates. It also includes threats to international shipping and destructive ... cyberattacks. On May 21, 2018, State Department Director for Policy Planning Hook stated that "the plan is to continue working with our allies, as we have been over the last few months, to create a new security architecture." During a July 2, 2018, press briefing, Hook explained that following Trump's May 8, 2018, announcement, Secretaries Pompeo and Mnuchin "decided to create joint teams of senior officials to visit every region of the world. These teams were launched on June 4." The United States has reimposed sanctions on Iran in two tranches: the first in May 2018 and the second in November 2018. The Administration waived sanctions in November 2018 for non-U.S. persons participating in a number of Iranian nuclear activities: the JCPOA-mandated projects at Arak, Bushehr, and Fordow; transfers from Iran of enriched uranium for the purpose of preventing Iran's low-enriched uranium (LEU) stockpile from exceeding 300 kilograms and exports of natural uranium to Iran in exchange for such transfers; authorized transfers to Iran of LEU fuel for the Tehran Research Reactor; transfers from Iran of "nuclear fuel scrap," which "cannot be fabricated into fuel plates" for the reactor; transfers from Iran of spent nuclear reactor fuel; and storage of Iranian heavy water exported before November 5, 2018. In May 2019, the United States renewed waivers for these activities except for the transfers of LEU out of Iran, the "storage for Iran of heavy water" that Tehran has "produced in excess of current limits," and "assistance to expand" the Bushehr plant "beyond the existing reactor unit." On February 14, 2019, Vice President Michael Pence called on the E3 "to withdraw from the Iran nuclear deal." Trump Administration officials continue to insist that the current U.S. policy is not "regime change" in Tehran. Instead, they describe a policy that threatens the Iranian government with the prospect of sanctions-induced political unrest and economic collapse, should Tehran refuse to make certain concessions. State Department Director for Policy Planning Brian Hook explained in a November 2, 2018, press briefing that the reimposition of sanctions is "designed to do two things: deny the regime the revenue it needs to fund violent wars abroad, and also to change the cost-benefit analysis in our favor so that Iran decides to come back to the negotiating table." Hook told National Public Radio on November 9, 2018 that [w]e're not talking about regime change. The future of this regime is up to the Iranian people. What we have been looking for is a change in their behavior, and we are very hopeful that our campaign of maximum economic pressure on this regime is going to help accelerate the path to reform that not only we want but the Iranian people want. Assistant Secretary of State Christopher Ford explained in a December 18, 2018, speech that the U.S. reimposition of sanctions is "setting the stage for a diplomatic process that can resolve the crisis created by Iran's extraordinary range of malign acts in the Middle East and beyond." Trump Administration officials have threatened Iran with possible military action, should Tehran violate its JCOPA nuclear commitments. Pompeo himself stated, during a June 22 television interview, that if Iran were to "ramp up" work on its nuclear program, "the wrath of the entire world will fall upon" the government, explaining that "wrath" referred to "moral opprobrium and economic power," rather than military action. Several months later, Pompeo wrote that [e]conomic pressure is one part of the U.S. campaign. Deterrence is another. President Trump believes in clear measures to discourage Iran from restarting its nuclear program or continuing its other malign activities. With Iran and other countries, he has made it clear that he will not tolerate attempts to bully the United States; he will punch back hard if U.S. security is threatened. Chairman Kim has felt this pressure, and he would never have come to the table in Singapore without it. The president's own public communications themselves function as a deterrence mechanism. The all-caps tweet he directed at Iranian President Hassan Rouhani in July, in which he instructed Iran to stop threatening the United States, was informed by a strategic calculation: the Iranian regime understands and fears the United States' military might. In September, militias in Iraq launched life-threatening rocket attacks against the U.S. embassy compound in Baghdad and the U.S. consulate in Basra. Iran did not stop these attacks, which were carried out by proxies it has supported with funding, training, and weapons. The United States will hold the regime in Tehran accountable for any attack that results in injury to our personnel or damage to our facilities. America will respond swiftly and decisively in defense of American lives. Appendix E. Possible Military Dimensions of Iran's Nuclear Program Then-International Atomic Energy Agency (IAEA) Director-General Mohamed ElBaradei told the agency's Board of Governors on June 2, 2008, that questions regarding "possible military dimensions" to Iran's nuclear program constituted the "one remaining major issue" concerning the IAEA's investigation of the program. A November 2011 report by current IAEA Director-General Yukiya Amano to the IAEA board contains the most detailed account to date of the IAEA's evidence regarding Iran's suspected nuclear weapons-related activities. Unless otherwise noted, this appendix is based on Amano's November 2011 report. The IAEA has "credible" information that Iran has carried out activities "relevant to the development of a nuclear explosive device." Although some of these activities have civilian applications, "others are specific to nuclear weapons," the report notes. Most of these activities were conducted before the end of 2003, though some may have continued. The Iranian government managed these activities via a program structure that included "senior Iranian figures." Amano's report contains a detailed description of the program's structure, which was established in the late 1980s. The program's activities were managed by an institution called the Physics Research Center and were overseen by an Iranian Ministry of Defense entity. About a decade later, the center's activities were consolidated under a new entity called the AMAD Plan. After the Iranian regime halted the AMAD Plan's work in 2003, "staff remained in place to record and document the achievements of their respective projects," according to information provided to the IAEA by unnamed governments. Later, "equipment and work places were either cleaned or disposed of so that there would be little to identify the sensitive nature of the work which had been undertaken." The IAEA has "other information" from governments that "indicates that some activities previously carried out under the AMAD Plan were resumed later." Some of these activities "would be highly relevant to a nuclear weapon programme." A December 2015 report from Amano assesses that although s ome Iranian nuclear weapons-related activities " took place after 2003," these activities "were n ot part of a coordinated effort. " The IAEA "has no credible indications of activities in Iran relevant to the development of a nuclear explosive device after 2009," the report explains. The IAEA has information that the AMAD Plan either obtained or attempted to obtain dual-use "equipment, materials and services which ... would be useful in the development of a nuclear explosive device." In addition, the program may have conducted studies on uranium conversion, missile reentry vehicles for delivering nuclear warheads, and conventional explosives used in nuclear weapons. Nuclear Explosive Device Components The IAEA has information indicating that Iran may have conducted work on components for nuclear weapons. Iran possesses a document "describing the procedures" for reducing uranium hexafluoride to uranium metal, as well as "machining ... enriched uranium metal into hemispheres," which are "components of nuclear weapons." Tehran has previously told the IAEA that it was offered equipment for casting uranium but never actually received it. Moreover, a member of a clandestine nuclear supply network run by former Pakistani official Abdul Qadeer Khan told the IAEA that Iran "had been provided with nuclear explosive design information." However, this information may not be sufficient to produce a nuclear weapon. (See " Nuclear Weapon Development Capabilities .") The IAEA has received information from an unnamed government that Iran carried out "preparatory work, not involving nuclear material, for the fabrication of natural and high enriched uranium metal components for a nuclear explosive device." As noted, the AMAD Plan may have conducted studies on conventional explosives used in nuclear weapons. Implosion-type nuclear explosive devices use conventional explosives to compress a core of highly enriched uranium or plutonium to start a nuclear chain reaction. Specifically, Iran developed detonators that have limited nonnuclear applications but also could be used in a nuclear explosive device. In addition, Tehran may have experimented with a multipoint initiation system, which could be used in conjunction with the detonators. Furthermore, Iran may have conducted high explosive testing, possibly in association with nuclear materials, at the Parchin military site (see below). Lastly, Iran may have worked on neutron initiators, which are used in implosion-type nuclear weapons. Reentry Vehicle As noted, the IAEA has assessed that the AMAD Plan may have conducted studies on missile reentry vehicles for delivering nuclear warheads. These efforts possibly included "engineering studies to examine" integrating a payload into the reentry vehicle of Iran's Shahab-3 ballistic missile. Although these activities "may be relevant to the development of a non-nuclear payload, they are highly relevant to a nuclear weapon programme." Tehran also may have conducted work on a "prototype firing system" that would enable a missile's nuclear payload "to explode both in the air above a target, or upon impact of the re-entry vehicle with the ground." Parchin Parchin is an Iranian military site. The Institute for Science and International Security described the complex in a 2004 report as "a huge site dedicated to the research, development, and production of ammunition, rockets, and high explosives," adding that the site "is owned by Iran's military industry and has hundreds of buildings and test sites." IAEA inspectors investigated the Parchin site in 2005 after receiving "information ... from a Member State in the early 2000s alleging that Iran was conducting high explosive testing, possibly in association with nuclear materials." Such testing could contribute to the development of implosion-type nuclear explosive devices. IAEA inspectors visited the site twice in 2005, but they "did not uncover anything of relevance." Parchin was not under IAEA safeguards. However, the IAEA requested that Tehran respond to information obtained from unnamed governments indicating that "Iran constructed a large explosives containment vessel" in 2000 at Parchin "in which to conduct hydrodynamic experiments." Such experiments are conducted to validate the design of an implosion-type nuclear weapon and are "strong indicators of possible weapon development." The IAEA has not publicly reported whether Iran actually conducted these experiments. The inspectors in 2005 did not visit the building that the IAEA identified as housing the containment vessel. The agency requested access to this building in February 2012, but Iran did not provide such access until September 2015. At that time, IAEA officials "did not observe a chamber or any associated equipment inside the building." Iranian officials told their IAEA counterparts in October 2015 that the building in question "had always been used for the storage of chemical material for the production of explosives," but the "information available" to the IAEA, "does not support Iran's statements on the purpose of the building." Other Issues The IAEA asked Tehran about other indications, some of which do not appear in Amano's November 2011 report, suggesting that the country may have pursued nuclear weapons. These include "information about a high level meeting in 1984 on reviving Iran's pre-revolution nuclear programme"; "the scope of a visit by officials" associated with Iran's Atomic Energy Organization "to a nuclear installation in Pakistan in 1987"; information on meetings in 1993 between Iranian officials and members of a clandestine procurement network run by former Pakistani official Khan; information about work done in 2000 that apparently related to reprocessing; Iranian scientists' mathematical research with nuclear weapons applications; and information indicating that Iran "may have planned and undertaken preparatory experimentation which would be useful were Iran to carry out a test of a nuclear explosive device." Appendix F. Iranian Centrifuge Workshops and Related Entities This appendix lists Iranian entities that appear to have manufactured centrifuges or related components, as well as those that appear to have conducted work closely related to these activities. The appendix excludes entities that have been identified as solely involved in procuring materials or components for Iran's centrifuge program. This list is not exhaustive, and some of the publicly available information about Iran's centrifuge workshops may be outdated. International Atomic Energy Agency (IAEA) inspectors had access to Iranian centrifuge workshops until early 2006, in order to verify the October 2003 agreement under which Iran suspended its enrichment program. However, the agency's knowledge of Iran's workshops deteriorated after Tehran ended this access in early 2006. Iran may have subsequently moved centrifuge-related work to other locations and likely built more such workshops. Tehran has provided the IAEA with access to some centrifuge workshops pursuant to the Joint Plan of Action and the Joint Comprehensive Plan of Action. The latter agreement requires Iran to declare specific types of equipment for producing certain centrifuge components, as well as the locations where such production takes place. Kalaye Electric U.N. Security Council Resolution 1737 describes Kalaye Electric, which is located in Tehran, as a "provider" to Iran's pilot centrifuge facility located at Natanz. According to an August 2008 Institute for Science and International Security (ISIS) report, Kalaye Electric, an Atomic Energy Organization of Iran (AEOI) entity, operates the country's centrifuge program, but the AEOI controls the program. A December 2011 European Union Council regulation describes several entities as current suppliers to Kalaye Electric, suggesting that the company was still involved in Iran's centrifuge program at that time. 7 th of Tir Resolution 1737 describes 7 th of Tir, located in Esfahan, as "directly involved" in Iran's nuclear program. This facility was involved in manufacturing centrifuge components, according to the ISIS report, which added that Iran moved "the key centrifuge manufacturing equipment and components to Natanz and other AEOI sites" when the IAEA began monitoring the 2003 suspension agreement. Whether and to what extent the facility is still involved in manufacturing centrifuge components is unknown, the report says. Farayand Technique Resolution 1737 describes this entity, which is located in Esfahan, as "involved in" Iran's centrifuge program. The facility was involved in "making and assembling" centrifuge components, according to the 2008 ISIS report. According to a 2010 European Council regulation, another entity, called the Iran Centrifuge Technology Company, "has taken over the activities of Farayand Technique," which include "manufactur[ing] uranium enrichment centrifuge parts." Iran Centrifuge Technology Company As noted, this entity, which is apparently located in Esfahan, took over "the activities of Farayand Technique," which have included "manufactur[ing] uranium enrichment centrifuge parts," according to the 2010 European Council regulation. Pars Trash Resolution 1737 describes this Tehran-based entity as "involved in" Iran's centrifuge program. According to the ISIS report, the company manufactured centrifuge components. The report does not say whether Pars Trash is still involved in Iran's centrifuge program. Kaveh Cutting Tools Company This entity, according to the 2008 ISIS report, manufactured centrifuge components. The company is "part of" Khorasan Metallurgy Industries, the ISIS report says. Both of these entities are located in Mashad. Khorasan Metallurgy Industries is "involved in the production of centrifuge components," according to the 2010 European Council regulation. Khorasan Metallurgy Industries This entity, which is located in Mashad, has been "involved in the production of centrifuge components," according to the 2010 European Council regulation. Sanam Electronic Industry Group Located in Tehran, this entity was, according to ISIS, "involved in making centrifuge components." Abzar Boresh Kaveh Company U.N. Security Council Resolution 1803 describes this company as "[i]nvolved in the production of centrifuge components." Parto Sanat Company The 2010 European Council regulation describes this company, located in Tehran, as a "[m]anufacturer of frequency changers ... capable of developing/modifying imported foreign frequency changers in a way that makes them usable in gas centrifuge enrichment." Eyvaz Technic The 2011 European Council regulation states that, as recently as 2011, this Tehran-based company supplied Iran's Natanz and Fordow centrifuge facilities with equipment relevant to centrifuge operations. Ghani Sazi Uranium Company According to the 2011 European Council regulation, this company, which is located in Tehran, had "production contracts" with Kalaye Electric and Iran Centrifuge Technology Company. Iran Pooya The 2011 European Council regulation describes this Tehran-based entity as "a major manufacturer of aluminium cylinders for centrifuges whose customers" included the AEOI and Iran Centrifuge Technology Company. Mohandesi Toseh Sokht Atomi Company The 2011 European Council regulation describes this company, located in Tehran, as "contracted to" Kalaye Electric "to provide design and engineering services across the nuclear fuel cycle." Saman Nasb Zayendeh Rood The 2011 European Council regulation describes this company, located in Esfahan, as a "[c]onstruction contractor that has installed piping and associated support equipment at the uranium enrichment site at Natanz." The company "has dealt specifically with centrifuge piping," according to the regulation. Jelvesazan Company This company, located in Esfahan, was a possible supplier of vacuum pumps to the Iran Centrifuge Technology Company, according to a December 2012 European Council regulation. Iran Aluminium Company According to the December 2012 European Council regulation, this company, located in Arak, was a supplier to the Iran Centrifuge Technology Company as of mid-2012. Simatec Development Company The December 2012 European Council regulation identified this company, apparently located in Tehran, as a supplier of inverters for centrifuges to the Kalaye Electric Company. Sharif University of Technology This university, located in Tehran, has provided laboratories for use by the entity Kalaye Electric Company and the Iran Centrifuge Technology Company, according to the December 2012 European Council regulation. Zirconium Production Plant A 2012 report from the AEOI identified this plant, located in Esfahan, as a "provider of pipes and aluminum sheets used in different parts of centrifuge machines." Aluminat This Tehran-based company had a contract in 2012 to supply aluminum to the Iran Centrifuge Technology Company, according to the December 2012 European Council regulation. Pishro Systems Research Company This company, according to a 2013 State Department announcement, was "responsible for research and development efforts across the breadth of Iran's nuclear program," including Iran's enrichment program. The company "likely has or will have a facility" in Tehran, the State Department said. Fulmen Group This company "was involved in procuring goods" and installing "electrical equipment" for Iran's Fordow enrichment facility prior to 2009, according to the State Department and the European Union. The company also worked with Kalaye Electric "on the construction of elements of the Natanz Uranium Enrichment Plant." Appendix G. Post-2003 Suppliers to Iran's Uranium Enrichment Program Iran has obtained components, expertise, and material for its nuclear program from a variety of foreign sources. Tehran sought assistance for the program from the Russian and Chinese governments, but it also obtained relevant components, expertise, and material via deceptive procurement techniques. Perhaps Iran's best-known source was a clandestine procurement network run by former Pakistani official Abdul Qadeer Khan. This network began supplying Iran's centrifuge program in 1987, but U.S. and Pakistani officials have characterized the network as defunct since Pakistan publicly revealed the network in early 2004. It is worth noting that, according to former Deputy Director General of the International Atomic Energy Agency (IAEA) Olli Heinonen, the IAEA has not determined the source of material that Iran obtained for its advanced centrifuges. (CRS has not found additional information on this subject.) Methodology Because the original Khan network appears to be defunct, this appendix focuses on post-2003 suppliers to Iran's enrichment program. To obtain the information for this appendix, CRS reviewed official U.S. government reports, as well as lists of entities sanctioned by the United States and the European Union since early 2004. CRS also reviewed public information from the Department of Justice, reports from a U.N. Panel of Experts, and selected nongovernmental reports. To identify suppliers germane to this appendix, CRS excluded Iranian entities or nationals, Iranian ships under foreign flags, and entities associated with the Khan network. This methodology has limitations. Official reports generally do not provide enough information to identify specific suppliers to Iran's enrichment program and Federal Register announcements of the imposition of sanctions generally do not explain the specific transactions that warranted the sanctions. Even if official reports do identify suppliers to Iran's nuclear program, they often do not say whether those entities were supplying Iran's enrichment program. For example, an October 2008 Justice Department fact sheet stated that the sales director of a California-based corporation attempted to illegally export to Iran "machinery and software to measure the tensile strength of steel," explaining that these items "can make a contribution to nuclear activities of concern." The fact sheet, however, did not provide additional information, and neither 2007 testimony from a Department of Commerce official nor a 2008 Commerce Department announcement explained whether the exports were intended for Iran's enrichment program. Similarly, a 2008 report from the Czech Republic's Security Information Service stated that an Iranian company "subject to sanctions because of its involvement in the Iranian nuclear program" attempted to acquire "specific machinery" from a Czech supplier, but the report did not specify further. Suppliers to Iran's Enrichment Program The information reviewed for this appendix indicates that Iranian-owned entities were using deceptive means in attempts to acquire enrichment technology from foreign entities. However, the sources described above contain no evidence that foreign governments are currently supplying Iran's enrichment program. According to a 2009 State Department report, "all major suppliers, apart from Russia which is providing assistance to Iran's Bushehr Nuclear Power Plant, have agreed not to provide nuclear technology to Iran." In addition, State Department reports covering countries' compliance with international nonproliferation agreements between 2004 and 2010 indicate that the Chinese government is not involved in supplying Iran's suspected nuclear weapons program. Chinese Entities Robert J. Einhorn, then-State Department Special Advisor for Nonproliferation and Arms Control, stated in March 2011 that the United States continued "to have concerns about the transfer of proliferation-sensitive equipment and materials to Iran by Chinese companies." Similarly, the State Department compliance reports mentioned above indicate that unspecified non-Chinese entities have attempted to acquire "nuclear-related" materials and equipment from Chinese entities. Furthermore, a CIA report covering 2007 stated that "private Chinese businesses continue to sell materials, manufacturing equipment, and components suitable for use in ballistic missile, chemical weapon and nuclear weapon programs to North Korea, Iran and Pakistan." The report did not specify further. It is worth noting that Chinese entities may have supplied Iran with enrichment-related equipment obtained from Western suppliers. According to court documents made public in July 2012, an Iranian national attempted to obtain U.S.-origin components for Iran's enrichment program using entities in China and the Philippines. More recently, a Chinese citizen pleaded guilty in December 2015 to exporting U.S.-origin components used for uranium enrichment to Iranian entities via China. Other Suppliers Iran has reportedly established front companies in Turkey in order to obtain nuclear-related items. Notably, Turkish entities were involved with the Khan network. Iranian entities have also attempted to obtain nuclear-related items from companies in the Czech Republic, according to reports from that government's Security Information Service. Iran has also attempted to obtain enrichment-related equipment from U.S. suppliers. For example, according to a January 2012 Justice Department fact sheet, a man was sentenced in 2010 for attempting in March 2009 to export pressure transducers, which he had purchased in the United States, to Iran via Canada and the United Arab Emirates. "Pressure transducers have applications in the production of enriched uranium," according to the fact sheet. Also, the Justice Department announced in January 2016 that a Chinese citizen was sentenced in the United States for exporting U.S.-origin pressure transducers to Iran from 2009 to 2012.  In addition, a California-based firm exported "vacuum pumps and pump-related equipment to Iran through a free trade zone located in the United Arab Emirates [UAE]" between December 2007 and November 2008. This equipment has "a number of applications, including in the enrichment of uranium," according to the Justice Department fact sheet. In July 2013, an Iranian national pleaded guilty to arranging the illegal export of carbon fiber in 2008 to an Iranian entity. The individuals obtained the material from a U.S. supplier and shipped it to Iran via Europe and the UAE. Carbon fiber "has nuclear applications in uranium enrichment as well applications in missiles," according to an October 2014 Justice Department fact sheet. Declassified documents from the Canada Services Border Agency state that Iranian entities were also attempting to acquire items from Canada for Iran's nuclear program, though the documents do not specifically mention Tehran's enrichment program. The documents also state that "Iranian procurement agents have ... been able to export items [from Canada]," international sanctions notwithstanding. The documents, however, do not specify whether exported items were destined for Iran's nuclear program. Moreover, as noted, court documents made public in July 2012 state that an Iranian national attempted to obtain U.S.-origin components via Canada for Iran's enrichment program. Entities in the UAE were part of the Khan network and have been cited as shippers for enrichment-related technology to Iran. Einhorn described the UAE in March 2011 as a "trans-shipment hub for Iran," but added that the UAE "has also taken strong steps in recent months to curtail illicit Iranian activities." A 2011 European Council regulation identified two UAE entities, Modern Technologies FZC and Qualitest FZE, as "[i]nvolved in procurement of components for [the] Iranian nuclear programme," although the regulation did not specify whether the components were for uranium enrichment.

Iran's nuclear program began during the 1950s. The United States has expressed concern since the mid-1970s that Tehran might develop nuclear weapons. Iran's construction of gas centrifuge uranium enrichment facilities is currently the main source of proliferation concern. Gas centrifuges can produce both low-enriched uranium (LEU), which can be used in nuclear power reactors, and weapons-grade highly enriched uranium (HEU), which is one of the two types of fissile material used in nuclear weapons. Is Iran Capable of Building Nuclear Weapons? The United States has assessed that Tehran possesses the technological and industrial capacity to produce nuclear weapons. But Iran has not yet mastered all of the necessary technologies for building such weapons. Whether Iran has a viable design for a nuclear weapon is unclear. A National Intelligence Estimate made public in 2007 assessed that Tehran "halted its nuclear weapons program" in 2003. The estimate, however, also assessed that Tehran is "keeping open the option to develop nuclear weapons" and that any decision to end a nuclear weapons program is "inherently reversible." U.S. intelligence officials have reaffirmed this judgment on several occasions. Obtaining fissile material is widely regarded as the most difficult task in building nuclear weapons. As of January 2014, Iran had produced an amount of LEU containing up to 5% uranium-235, which, if further enriched, could theoretically have produced enough HEU for as many as eight nuclear weapons. Iran had also produced LEU containing nearly 20% uranium-235; the total amount of this LEU, if it had been in the form of uranium hexafluoride and further enriched, would have been sufficient for a nuclear weapon.. After the Joint Plan of Action, which Tehran concluded with China, France, Germany, Russia, the United Kingdom, and the United States (collectively known as the "P5+1"), went into effect in January 2014, Iran either converted much of its LEU containing nearly 20% uranium-235 for use as fuel in a research reactor located in Tehran, or prepared it for that purpose. Iran has diluted the rest of that stockpile so that it contained no more than 5% uranium-235. In addition, Tehran has implemented various restrictions on, and provided the IAEA with additional information about, its nuclear program pursuant to the July 2015 Joint Comprehensive Plan of Action (JCPOA), which Tehran concluded with the P5+1. Although Iran claims that its nuclear program is exclusively for peaceful purposes, the program has generated considerable concern that Tehran is pursuing a nuclear weapons program. The U.N. Security Council responded to Iran's refusal to suspend work on its uranium enrichment program by adopting several resolutions that imposed sanctions on Tehran. Despite evidence that sanctions and other forms of pressure have slowed the program, Iran continued to enrich uranium, install additional centrifuges, and conduct research on new types of centrifuges. Tehran has also worked on a heavy-water reactor, which was a proliferation concern because its spent fuel would have contained plutonium—the other type of fissile material used in nuclear weapons. However, plutonium must be separated from spent fuel—a procedure called "reprocessing." Iran has said that it will not engage in reprocessing. Who Is Monitoring Iran's Nuclear Program? The International Atomic Energy Agency (IAEA) monitors Iran's nuclear facilities and has verified that Tehran's declared nuclear facilities and materials have not been diverted for military purposes. The agency has also verified that Iran's compliance with the JCPOA. On the JCPOA's Implementation Day, which took place on January 16, 2016, all of the previous Security Council resolutions' requirements were terminated. The nuclear Nonproliferation Treaty (NPT) and U.N. Security Council Resolution 2231, which the council adopted on July 20, 2015, compose the current legal framework governing Iran's nuclear program. Iran has continued to comply with the JCPOA and Resolution 2231. Iran and the IAEA agreed in 2007 on a work plan to clarify outstanding questions regarding Tehran's nuclear program, most of which concerned possible Iranian procurement activities and research directly applicable to nuclear weapons development. A December 2015 report to the IAEA Board of Governors from agency Director-General Yukiya Amano contains the IAEA's "final assessment on the resolution" of these outstanding issues. How Soon Could Iran Produce a Nuclear Weapon? Then-Under Secretary of State for Political Affairs Wendy Sherman explained during an October 2013 hearing of the Senate Committee on Foreign Relations that Iran would need as much as one year to produce a nuclear weapon if the government decided to do so. At the time, Tehran would have needed two to three months to produce enough weapons-grade HEU for a nuclear weapon. Iran's compliance with the JCPOA has increased that time frame to one year, according to U.S. officials. These estimates apparently assume that Iran would use its declared nuclear facilities to produce fissile material for a weapon. However, Tehran would probably use covert facilities for this purpose; Iranian efforts to produce fissile material for nuclear weapons by using its known nuclear facilities would almost certainly be detected by the IAEA.

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Introduction This report provides historical documents and other resources related to past government shutdowns, along with brief annotations that describe the contents of the documents. The report includes links to full-text documents when available. There is limited information and guidance related to shutdowns, and it is difficult to predict what might happen in the event of one, but information about past events may help inform future deliberations. The following annotated resources are meant to guide readers to relevant materials from governmental and selected nongovernmental sources. Congressional Research Service Products The following select CRS products include information related to past government shutdowns. CRS Products CRS Report RL34680, Shutdown of the Federal Government: Causes, Processes, and Effects , coordinated by Clinton T. Brass. This report discusses the causes, processes, and effects of federal government shutdowns, including potential issues for Congress. CRS Report RS20348, Federal Funding Gaps: A Brief Overview , by James V. Saturno This report provides a discussion of funding gaps in recent decades and a more detailed chronology of legislative actions and funding gaps that led to the two shutdowns of FY1996 and the single shutdown of FY2014. CRS Report R43292, The FY2014 Government Shutdown: Economic Effects , by Marc Labonte This report discusses the effects of the FY2014 government shutdown on the economy and financial markets. It also reviews third-party estimates of the effects of the shutdown on the economy. CRS Report R43250, CRS Resources on the FY2014 Funding Gap, Shutdown, and Status of Appropriations , by Justin Murray This brief report includes short annotations and links to CRS products related to the October 2013 government shutdown. CRS Legal Sidebar LSB10243, How a Government Shutdown Affects Government Contracts, by David H. Carpenter This Legal Sidebar briefly covers potential effects of a shutdown on new and existing contracts. CRS In Focus, IF11079, National Park Service: Issues Related to a Government Shutdown, by Laura B. Comay and Carol Hardy Vincent This In Focus covers the National Parks Service and topics such as the accessibility and funding for limited operations during a government shutdown. CRS Insight, CRS Insight IN11011, Economic Effects of the FY2019 Government Shutdown, by Marc Labonte This Insight briefly covers the FY2019 shutdown and its effects on economic activity and employment. CRS Insight, CRS Insight IN11020, Federal Grants to State and Local Governments: Issues Raised by the Partial Government Shutdown, by Natalie Keegan This Insight briefly covers the FY2019 shutdown and its effect on the timing and payment of grant awards. Government Accountability Office The U.S. Government Accountability Office (GAO) has published reports related to past and potential shutdowns. The following documents investigate possible issues and provide historical context surrounding government shutdowns. U.S. Government Accountability Office, Government Shutdown: Three Departments Reporting Varying Degrees of Impacts on Operations, Grants, and Contracts , GAO-15-86, November 14, 2014, available at https://www.gao.gov/products/GAO-15-86 . GAO reviewed how the 2013 shutdown affected some operations and services at three departments: the Departments of Energy, Health and Human Services (HHS), and Transportation (DOT). GAO selected these three departments for review based on the value of grants and contracts, the percentage of employees expected to be furloughed, and the potential for longer-term effects. GAO recommended that the Office of Management and Budget (OMB) instruct agencies to document lessons learned in planning for and implementing a shutdown, as well as for resuming activities following a shutdown should a funding gap longer than five days occur in the future. OMB staff did not state whether they agreed or disagreed with the recommendation. U.S. General Accounting Office, Cost of the Recent Partial Shutdown of Government Offices , PAD-82-24, December 10, 1981, available at http://www.gao.gov/products/PAD-82-24 . According to GAO, this report was completed "in response to congressional requests," for which "GAO contacted 13 cabinet departments and 12 selected agencies and offices to obtain information about the costs of a 1981 partial shutdown of government offices." It includes cost estimates, background information about the costs, and GAO recommendations to Congress concerning agency operations in the event of a government shutdown. U.S. General Accounting Office, Funding Gaps Jeopardize Federal Government Operations , PAD-81-31, March 3, 1981, available at http://www.gao.gov/products/PAD-81-31 . According to GAO, as of March 1981, "interruptions in federal agency funding at the beginning of the fiscal year (FY) and operations on continuing resolutions have become the norm rather than the exception." For years, many federal agencies continued to operate during a funding gap, while "minimizing all nonessential operations and obligations, believing that Congress did not intend that agencies close down" while waiting for the enactment of annual appropriations acts or continuing resolutions. During the FY1981 appropriations process, the President requested opinions on the Antideficiency Act from the then-U.S. Attorney General, Benjamin Civiletti. In two memoranda issued in 1980 and 1981, the Attorney General stated that the act required agencies to terminate all operations when their current appropriations expired. According to GAO, agencies were uncertain how to respond to the Attorney General's opinion and what activities they would be able to continue if appropriations expired. This GAO report outlines some of the problems surrounding late appropriations and funding gaps. It also includes Attorney General Civiletti's opinions within Appendices IV and VIII. U.S. General Accounting Office, Government Shutdown: Funding Lapse Furlough Information , GGD-96-52R, December 1, 1995, available at http://www.gao.gov/products/GGD-96-52R . GAO was asked to provide available information on the numbers of federal employees who might have been subject to furlough in the event of a second shutdown in 1995. GAO provided numbers that were based on plans provided by the Office of Management and Budget (OMB) to GAO in October 1995. The numbers included within this document do not represent actual furloughs. The numbers represent planned furloughs in advance of the two shutdowns, which occurred later in November and December–January. U.S. General Accounting Office, Government Shutdown: Permanent Funding Lapse Legislation Needed , GGD-91-76, June 6, 1991, available at http://www.gao.gov/products/GGD-91-76 . In 1990, GAO issued a questionnaire to government agencies in an attempt to measure the effects of a partial shutdown which occurred on Columbus Day weekend. This report also includes estimates on the effects of a hypothetical three-day shutdown during a nonholiday workweek. House and Senate Committee Prints and Hearings Committee Prints The following committee print includes historical information on a past government shutdown. U.S. Congress, House Committee on Post Office and Civil Service, Cost of Shutting Down Federal Government on November, 23, 1981 , committee print, 97 th Congress, 2 nd session, March 25, 1982 (Washington: GPO, 1982), available at http://hdl.handle.net/2027/pur1.32754077662413 . This committee print assessed the cost of the November 23, 1981, shutdown of federal offices resulting from a presidential veto of a continuing resolution for FY1982. The committee print includes individual federal departments' and agencies' shutdown impact assessments that were collected by GAO (pp. 73-212). It also includes cost estimates, an OMB memorandum, and a presidential veto statement. Hearings The following are congressional hearings that include historical information on past shutdowns. Some of these hearings include items for the record such as OMB memoranda. U.S. Congress, House and Senate Committees on the Budget, Effects of Potential Government Shutdown , hearing, 104 th Congress, 1 st session, September 19, 1995 (Washington: GPO, 1995), available at http://www.archive.org/stream/effectsofpotenti00unit . This hearing took place before the November 1995 shutdown, and it examined potential scenarios if a shutdown were to occur. The hearing includes testimony from Walter Dellinger, Assistant Attorney General, U.S. Department of Justice, and Alice M. Rivlin, Director, OMB. The hearing includes additional materials such as articles, letters from the Federal Reserve System, and a memo from Walter Dellinger to Alice Rivlin. U.S. Congress, House Committee on Government Reform and Oversight, Subcommittee on Civil Service, Government Shutdown I: What's Essential ?, hearings, 104 th Congress, 1 st session, December 6, and 14, 1995 (Washington: GPO 1997), available at http://www.gpo.gov/fdsys/pkg/CHRG-104hhrg23275/pdf/CHRG-104hhrg23275.pdf . These hearings were held in December 1995 and generally covered the November 1995 shutdown. Because the hearings were not published until 1997, some additional information related to the December 1995-January 1996 government shutdown is included. U.S. Congress, House Committee on Resources, State Service Donations in Budgetary Shutdowns , hearing, 104 th Congress, 1 st session, December 5, 1995 (Washington: GPO 1996), available at http://www.archive.org/stream/stateservicedona00unit . The hearing was held to consider legislation that would have directed the Department of the Interior to accept donations of assistance from state governments' employee services for operating national parks and wildlife refuges during federal government shutdowns. U.S. Congress, House Committee on Oversight and Government Reform, As Difficult As Possible: The National Park Service's Implementation of the Government Shutdown , hearing, 113 th Congress, 1 st session, October 16, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg88621/pdf/CHRG-113hhrg88621.pdf . The hearing was held during the October 2013 shutdown and looked at the National Park Service's implementation of the government shutdown. U.S. Congress, House Committee on Veterans' Affairs. Effect of Government Shutdown on VA Benefits and Services to Veteran s , hearing, 113 th Congress, 1 st session, October 9, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85863/pdf/CHRG-113hhrg85863.pdf . The hearing was held during the October 2013 shutdown and focused on the impact of the shutdown on benefits payments and services for veterans. U.S. Congress, Senate Committee on Commerce, Science, and Transportation. Impacts of the Government Shutdown on Our Economic Security , hearing, 113 th Congress, 1 st session, October 11, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113shrg93946/pdf/CHRG-113shrg93946.pdf . The hearing was held during the October 2013 shutdown and focused on the possible and emerging economic and other impacts related to the shutdown. U.S. Congress, Senate Committee on Small Business and Entrepreneurship. Small Businesses Speak: Surviving the Government Shutdown? , hearing, 113 th Congress, 1 st session, October 15, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113shrg87989/pdf/CHRG-113shrg87989.pdf . The hearing was held during the October 2013 shutdown and it examined the impacts the shutdown was having on small businesses. U.S. Congress, House Committee on Armed Services, Subcommittee on Readiness. The Interpretation of H.R. 3210 : 'Pay Our Military Act', hearing, 113 th Congress, 1 st session, October 10, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85325/pdf/CHRG-113hhrg85325.pdf . The hearing was held during the October 2013 shutdown, and it examined interpretations of H.R. 3210 , the Pay Our Military Act, which ultimately was enacted as P.L. 113-39 . U.S. Congress, Senate Joint Economic Committee. The Way Forward: Long-Term Fiscal Responsibility and Economic Growth , hearing, 113 th Congress, 1 st session, October 11, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113shrg85408/pdf/CHRG-113shrg85408.pdf . The hearing was held during the October 2013 shutdown. The hearing examined policy options for ending the shutdown and addressing the debt ceiling, and it also reviewed potential solutions to promote fiscal sustainability and economic growth. Office of Management and Budget Guidance Documents for Agencies OMB documents and guidance regarding potential or actual funding gaps and shutdowns may provide insights into current and future practices. The Office of Personnel Management (OPM) has provided links to copies of previous OMB bulletins and memoranda for reference. This website, entitled Pay & Leave Furlough Guidance: Shutdown Furlough , is available at http://www.opm.gov/policy-data-oversight/pay-leave/furlough-guidance/#url=Shutdown-Furlough . Some of the OMB documents include the following. OMB Bulletin No. 80-14, Shutdown of Agency Operations Upon Failure by the Congress to Enact Appropriations , August 28, 1980 (citing the 1980 Civiletti opinion and requiring agencies to develop shutdown plans); OMB Memorandum, Agency Operations in the Absence of Appropriations , November 17, 1981 (referencing OMB Bulletin No. 80-14; stating the 1981 Civiletti opinion remains in effect; and providing examples of "excepted activities" that may be continued under a funding gap); OMB Bulletin No. 80-14, Supplement No. 1, Agency Operations in the Absence of Appropriations , August 20, 1982 ("updating" OMB Bulletin No. 80-14 and newly requiring agencies to submit contingency plans for review by OMB); OMB Memorandum M-91-02, Agency Operations in the Absence of Appropriations , October 5, 1990 (referencing OMB Bulletin No. 80-14; stating that OMB Bulletin No. 80-14 was "amended" by the OMB Memorandum of November 17, 1981; stating the 1981 Civiletti opinion remains in effect; and directing agencies how to respond to an anticipated funding gap that would begin during the weekend); OMB Memorandum M-95-18, Agency Plans for Operations During Funding Hiatus , August 22, 1995 (referencing OMB Bulletin No. 80-14, as amended; citing the 1981 Civiletti opinion; transmitting to agencies a 1995 Office of Legal Counsel opinion as an "update" to the 1981 Civiletti opinion; and directing agencies to send updated contingency plans to OMB); and OMB Memorandum M-13-22, Planning for Agency Operations during a Potential Lapse in Appropriations , September 17, 2013 (citing Section 124 of Circular A-11 and providing guidance and coordinating efforts to facilitate contingency planning in accordance with the Antideficiency Act). OMB Memorandum M-18-05, Planning for Agency Operations during a Potential Lapse in Appropriations , January 19, 2018 (citing Section 124 of Circular A-11 and providing guidance and coordinating efforts to facilitate contingency planning in accordance with the Antideficiency Act). OMB also provides agencies with annual instructions in Circular No. A-11 on how to prepare for and operate during a funding gap. U.S. Executive Office of the President, Office of Management and Budget, Circular No. A-11: Preparation, Submission, and Execution of the Budget , June 2018, Section 124, available at https://www.whitehouse.gov/wp-content/uploads/2018/06/s124.pdf . The circular establishes two "policies" regarding the absence of appropriations: (1) a prohibition on incurring obligations unless the obligations are otherwise authorized by law and (2) permission to incur obligations "as necessary for orderly termination of an agency's functions," but prohibition of any disbursement (i.e., payment). The circular also directs agency heads to develop and maintain shutdown plans, which are to be submitted to OMB at a minimum every two years starting August 1, 2015, and also when revised to reflect certain changes in circumstances. Agency heads are to use the Civiletti opinions, a 1995 Department of Justice, Office of Legal Counsel opinion, and the circular to "decide what agency activities are excepted or otherwise legally authorized to continue during a lapse in appropriations." Agency Contingency Plans OMB has a website with links to agency shutdown contingency plans arranged by agency. This website, entitled "Agency Contingency Plans," is available at https://www.whitehouse.gov/omb/information-for-agencies/Agency-Contingency-Plans . Impacts and Costs of Shutdowns FY1996 The hearing entitled Government Shutdown I: What's Essential ?, includes some estimates related to the December 1995–January 1996 shutdowns. The hearing includes an OMB letter with information about the effects of the shutdowns and counts of employees who were excepted and not excepted from furlough, pp. 266-270 and 272-274. This hearing is available at http://www.gpo.gov/fdsys/pkg/CHRG-104hhrg23275/pdf/CHRG-104hhrg23275.pdf . FY2014 OMB released a report on November 7, 2013, with some estimates on the cost of the October 2013 shutdown. The report includes information on federal employee furloughs, economic effects of the shutdown, and some impact estimates related to select programs. This report is available at http://web.archive.org/web/20140701035515/http://www.whitehouse.gov/sites/default/files/omb/reports/impacts-and-costs-of-october-2013-federal-government-shutdown-report.pdf . FY2019 The Congressional Budget Office (CBO) released a report on January 28, 2019, with some estimates of effects of the December-January partial government shutdown. The report includes estimates related to the shutdown's effect on discretionary spending, economic activity and GDP. The report is available at https://www.cbo.gov/publication/54937 . Office of Personnel Management OPM has some information publicly available on the internet related to government shutdowns and furloughs. U.S. Office of Personnel Management, Pay & Leave Furlough Guidance , available at https://www.opm.gov/policy-data-oversight/pay-leave/furlough-guidance/#url=Shutdown-Furlough . This website includes links to guidance related to administrative and shutdown furloughs. The shutdown portion of this website includes the following additional references to historical guidance including U.S. Office of Personnel Management, Memorandum to Agencies on Retroactive Pay and Other Matters , October 17, 2013; U.S. Office of Personnel Management, Information on Paychecks for September 22 through October 5, 2013 Pay Period; U.S. Office of Personnel Management, Guidance for Shutdown Furloughs , September 2015; U.S. Chief Human Capital Council, Memorandum for Heads of Executive Departments and Agencies . Fact Sheet: Pay and Benefits Information for Employees Affected by the Lapse in Appropriations. January 23, 2019; U.S. Chief Human Capital Council, Memorandum for Heads of Executive Departments and Agencies. Government Fair Treatment Act of 2019 , January 23, 2019; U.S. Chief Human Capital Council, Memorandum for Heads of Executive Departments and Agencies. Telework and other Workplace Flexibilities for Excepted Employees during a Lapse in Appropriations . January 23, 2019. Presidential Materials The following documents are from the National Archives and Records Administration (NARA) and current Administration websites. These documents cover statements made by Presidents and Administration officials during government shutdowns and are arranged by date. Presidential Statements Related to FY1996 Shutdowns The November 1995 Shutdown Historical Context . The November 1995 shutdown began on November 14, 1995, and ended on November 19, 1995. An estimated 800,000 federal employees were furloughed during the five full days of the shutdown. The furlough action was due to the expiration of a continuing resolution ( P.L. 104-31 ), which funded the government through November 13, 1995. On November 13, President William Clinton vetoed a second continuing resolution ( H.J.Res. 115 ) and a debt limit extension bill ( H.R. 2586 ) and instructed agencies to begin shutdown operations. The following presidential statements occurred during this time period. U.S. President (Clinton), November 13, 1995, President's Message to Congress on Continuing Resolution Veto , available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-13-president-message-to-congress-on-continuing-res-veto.html . U.S. President (Clinton), November 14, 1995, Statement by the President on Government Shutdown , available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-14-for-the-record-president-on-government-shutdown.html . U.S. President (Clinton), November 17, 1995, Transmittal to Congress of Presidential C.R ., available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-17-transmittal-to-congress-of-presidential-cr.html . U.S. President (Clinton), November 18, 1995, Radio Address by the President to the Nation , available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-18-radio-address-by-the-president-to-the-nation.html . U.S. President (Clinton), November 19, 1995, Statement by the President on Budget Agreement , available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-19-statement-by-the-president-on-budget-agreement.html . The December 1995-January 1996 Shutdown Historical Context . The December 1995-January 1996 shutdown began on December 16, 1995, and ended on January 6, 1996. The shutdown was triggered by the expiration of a continuing funding resolution enacted on November 20, 1995 ( P.L. 104-56 ), which funded the government through December 15, 1995. This shutdown officially ended on January 6, with the passage of three continuing resolutions (CRs) ( P.L. 104-91 , P.L. 104-92 , and P.L. 104-94 ). There were five additional short-term continuing resolutions needed to prevent further funding gaps from occurring through April 26, 1996, when the Omnibus Consolidated Rescissions and Appropriations Act of 1996 ( P.L. 104-134 ) was enacted to fund any agencies or programs not yet funded through FY1996. The following presidential statements occurred during the time period of December 15, 1995, through January 6, 1996. U.S. President (Clinton), December 15, 1995, Statement by the President on Budget Negotiations , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-15-president-statement-on-budget-negotiations.html . U.S. President (Clinton), December 16, 1995, Radio Address by the President to the Nation , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-16-radio-address-by-the-president-to-the-nation.html . U.S. President (Clinton), December 18, 1995, Statement by the President on the Budget , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-18-statement-by-the-president-on-the-budget.html . U.S. President (Clinton), December 22, 1995, Statement by the President on Signing House Joint Res. 136 , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-22-president-statement-on-signing-house-joint-res.html . U.S. President (Clinton), December 23, 1995, Radio Address by the President to the Nation , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-23-radio-address-by-the-president-to-the-nation.html . U.S. President (Clinton), January 4, 1996, Statement by the President on House Joint Resolution 153 , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-04-president-statement-on-house-joint-resolution.html . U.S. President (Clinton), January 6, 1996, Statement by the President on Balanced Budget Proposal , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-06-president-remarks-on-balanced-budget-proposal.html . U.S. President (Clinton), January 6, 1996, Statement by the President in Signing H.R. 1358 , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-06-president-statement-in-signing-hr.html . U.S. President (Clinton), January 6, 1996, Statement by the President in Signing H.R. 1643 , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-06-president-statement-in-signing-hr-a.html . U.S. President (Clinton), January 6, 1996, Radio Address by the President to the Nation , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-06-radio-address-by-the-president-to-the-nation.html . Presidential Statements Related to FY2014 Shutdown Historical Context . A shutdown occurred at the beginning of FY2014 (October 1, 2013) and lasted for a total of 16 full days. At the beginning of the fiscal year, none of the 12 regular appropriations bills for FY2014 were enacted. In addition, a continuing resolution to provide temporary funding for the previous year's projects and activities had also not been enacted. On September 30, however, an automatic continuing resolution was enacted that covered FY2014 pay and allowances for (1) certain members of the Armed Forces, (2) certain Department of Defense (DOD) civilian personnel, and (3) other specified DOD and Department of Homeland Security contractors ( P.L. 113-39 ). A continuing resolution was signed into law ( P.L. 113-46 ) on October 17, 2013, which ended the shutdown and allowed government departments and agencies to reopen. The following presidential statements occurred during the time period of September 30, 2013, through October 19, 2013, and included discussion of the shutdown. U.S. President (Obama), September 30, 2013, Statement by the President , available at https://obamawhitehouse.archives.gov/the-press-office/2013/09/30/statement-president . U.S. President (Obama), September 30, 2013, Weekly Address: Averting a Government Shutdown and Expanding Access to Affordable Healthcare , available at https://obamawhitehouse.archives.gov/blog/2013/09/28/weekly-address-averting-government-shutdown-and-expanding-access-affordable-healthca . U.S. President (Obama), October 1, 2013, Remarks by the President on the Affordable Care Act and the Government Shutdown , available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/01/remarks-president-affordable-care-act-and-government-shutdown . U.S. President (Obama), October 3, 2013, Remarks by the President on the Government Shutdown, available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/03/remarks-president-government-shutdown . U.S. President (Obama), October 5, 2013, Weekly Address: End This Government Shutdown , available at https://obamawhitehouse.archives.gov/blog/2013/10/05/your-weekly-address-end-government-shutdown . U.S. President (Obama), October 7, 2013, Remarks by the President at FEMA Headquarters, available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/07/remarks-president-fema-headquarters . U.S. President (Obama), October 12, 2013, Weekly Address: Let's Get Back to the Work of the American People , available at https://obamawhitehouse.archives.gov/blog/2013/10/12/weekly-address-let-s-get-back-work-american-people . U.S. President (Obama), October 16, 2013, Statement by the President of the United States, available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/16/statement-president-united-states . U.S. President (Obama), October 17, 2013, Remarks by the President on the Reopening of the Government , available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/17/remarks-president-reopening-government . U.S. President (Obama), October 19, 2013, Weekly Address: Working Together on Behalf of the American People, available at https://obamawhitehouse.archives.gov/blog/2013/10/19/weekly-address-working-together-behalf-american-people . Presidential and Administration Statements Related to the FY2018 Shutdown Historical Context. At the beginning of FY2018, none of the 12 regular appropriations bills had been enacted, so the federal government operated under a series of CRs. The first, P.L. 115-56 , provided government-wide funding through December 8, 2017. The second, P.L. 115-90 , extended funding through December 22, and the third, P.L. 115-96 , extended it through January 19, 2018. In the absence of agreement on legislation that would further extend the period of these CRs, a funding gap began with the expiration of P.L. 115-96 at midnight on January 19. A furlough of federal personnel began over the weekend and continued through Monday of the following week, ending with enactment of a fourth CR, P.L. 115-120 , on January 22. The following presidential and Trump Administration statements occurred during the time period of January 19, 2018, through January 22, 2018, and included discussion of the shutdown. January19, 2018, Press Briefing by OMB Director Mick Mulvaney and Legislative Affairs Director Marc Short on the Potential Government Shutdown, available at https://www.whitehouse.gov/briefings-statements/press-briefing-by-omb-director-mick-mulvaney-and-legislative-affairs-director-marc-short-on-the-potential-government-shutdown01192018/ . January 20, 2018, Press Briefing by OMB Director Mick Mulvaney and Legislative Affairs Director Marc Short on the Government Shutdown , available at https://www.whitehouse.gov/briefings-statements/press-briefing-omb-director-mick-mulvaney-legislative-affairs-director-marc-short-government-shutdown/ . U.S. President (Trump) January 22, 2018, Statement from President Donald J. Trump , available at https://www.whitehouse.gov/briefings-statements/statement-president-donald-j-trump-8/ . January 22, 2018, Press Briefing by Press Secretary Sarah Sanders available at https://www.whitehouse.gov/briefings-statements/press-briefing-press-secretary-sarah-sanders-012218/ . Presidential Statements Related to FY2019 Shutdown Historical Context. The December 2018-January 2019 partial government shutdown began on December 22, 2018, and ended on January 25, 2019. At the beginning of FY2019 (October 1, 2018), five of the 12 regular appropriations bills had been enacted in consolidated appropriations bills and the other seven appropriations bills were funded under two CRs. The first CR , P.L. 115-245 , provided funding for these remaining seven appropriations bills through December 7, 2018. The second CR, P.L. 115-298 , extended funding for these seven appropriations bills through December 21, 2018. When no agreement was reached on legislation to further extend the period of these CRs for the remaining seven appropriations bills, a funding gap began with the expiration of the funding in P.L. 115-298 at midnight at the end of the day on December 21, 2018. The funding gap ended when a CR was signed into law on January 25, 2019, which ended the partial government shutdown and allowed government departments and agencies to reopen. The partial government shutdown lasted 35 days making it the longest shutdown in history, compared with other shutdowns that have occurred since key Department of Justice opinions were issued in 1980 and 1981. The following presidential statements occurred during the time period of December 21, 2019, through January 25, 2019, and included discussion of the shutdown. U.S. President (Trump), December 27, 2018, Remarks by President Trump in Christmas Video Teleconference with Members of the Military , available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-christmas-video-teleconference-members-military/ . U.S. President (Trump), January 4, 2019, Remarks by President Trump After Meeting with Congressional Leadership on Border Security , available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-meeting-congressional-leadership-border-security/ . U.S. President (Trump), January 8, 2019, President Donald J. Trump's Address to the Nation on the Crisis at the Border , available at https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-address-nation-crisis-border/ . U.S. President (Trump), January 11, 2019, Remarks by President Trump During Briefing at the Rio Grande Valley U.S.-Mexico Border , available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-briefing-rio-grande-valley-u-s-mexico-border/ . January 11, 2019, Remarks by Vice President Pence Before Meet-and-Greet with U.S. Customs and Border Patrol Employees , available at https://www.whitehouse.gov/briefings-statements/remarks-vice-president-pence-meet-greet-u-s-customs-border-patrol-employees/ . U.S. President (Trump), January 25, 2019, Remarks by President Trump on the Government Shutdown , available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-government-shutdown/ .

When federal government agencies and programs lack budget authority after the expiration of either full-year or interim appropriations, they experience a "funding gap." Under the Antideficiency Act (31 U.S.C. §§1341 et seq.), they must cease operations, except in certain circumstances when continued activities are authorized by law. When there is a funding gap that affects many federal entities, the situation is often referred to as a government shutdown. In the past, there have occasionally been funding gaps that led to government shutdowns, one of which lasted 21 days, from December 16, 1995, to January 6, 1996. A shutdown occurred at the beginning of FY2014 (October 1, 2013) and lasted for a total of 16 days. Subsequently, two comparatively brief shutdowns occurred during FY2018, in January and February 2018, respectively. The longest shutdown occurred in FY2019—beginning at the end of the day on December 21, 2018, and lasting 35 days. The relevant laws that govern shutdowns have remained relatively constant in recent decades. However, agencies and officials may exercise some discretion in how they interpret the laws, and circumstances that confront agencies and officials may differ over time. Consequently, it is difficult to predict what might happen in the event of a future shutdown. Still, information about past events may offer some insight into possible outcomes and help inform future deliberations. This report provides an annotated list of historical documents and other resources related to several past government shutdowns. Sources for these documents and resources include the Congressional Research Service (CRS), Government Accountability Office (GAO), House and Senate Committees, Office of Management and Budget (OMB), Office of Personnel Management (OPM), and Executive Office of the President. When possible, the report includes links to full-text documents. For more information about federal government shutdowns and funding gaps, see CRS Report RL34680, Shutdown of the Federal Government: Causes, Processes, and Effects, coordinated by Clinton T. Brass. For more information about funding gaps, see CRS Report RS20348, Federal Funding Gaps: A Brief Overview, by James V. Saturno. This report will be updated as additional resources are identified.

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Overview The federal government owns roughly 640 million acres, more than a quarter of the land in the United States. These lands are heavily concentrated in 12 western states (including Alaska), where t he federal government owns roughly half of the overall land area. Four federal agencies—the National Park Service (NPS), Fish and Wildlife Service (FWS), and Bureau of Land Management (BLM), all in the Department of the Interior (DOI), and the U.S. Forest Service (FS) in the Department of Agriculture—administer about 95% of those lands. No single law provides authority for these four agencies to acquire and/or disposal of lands. Rather, Congress provided various acquisition and disposal authorities through laws enacted over more than a century. This report describes the primary authorities of the four agencies. The extent to which each of the agencies has authority to acquire and dispose of land, and the nature of the authorities, varies considerably. Some of the agencies have relatively broad authority to acquire and/or dispose of land. Most notably, the BLM has relatively broad authority for both acquisitions and disposals. By contrast, the NPS has no general authority to acquire land to create new park units or to dispose of park lands. The extent of the acquisition and disposal authorities for the FS and the FWS are not nearly as broad as the BLM's but not nearly as restrictive as the NPS's. The FS authority to acquire lands is mostly limited to lands within or contiguous to the boundaries of a national forest. The agency has various authorities to dispose of land, but they are relatively constrained and infrequently used. The FWS has various authorities to acquire lands but no general authority to dispose of its lands. The acquisition authorities differ as to the circumstances in which they apply, and the disposal authorities likewise differ as to their purposes. Thus, where a specific acquisition or disposal by an agency is contemplated, the particular authority at issue should be consulted. In general, the acquisition authorities are designed to allow federal agencies to acquire lands that could be viewed as benefitting from federal management. Among other circumstances, acquisition might be authorized to bring inholdings or lands adjacent to federal lands into federal ownership to improve or simplify management of federal lands. Acquisitions also might be authorized to conserve species, protect natural and cultural resources, and increase opportunities for recreation. The disposal authorities generally are designed to allow federal agencies to dispose of land that is no longer required for a federal purpose, might be inefficient to manage, or might be chiefly valuable for another purpose. For instance, disposal might be authorized to allow lands to be used for agriculture, community development, mineral extraction, or educational purposes. Agencies also acquire and dispose of federal land in exchanges. Exchanges are not discussed separately in this report, as often the authorities to acquire and dispose of lands also apply to land exchange. However, there are provisions of law particularly applicable to exchanges. The exchange authorities for the NPS and the FWS are relatively narrow. The Federal Land Policy and Management Act of 1976 (FLPMA; 43 U.S.C. §§1701-1781) provides broader exchange authority and is the main authority governing exchanges by the BLM and the FS. Issues for Congress Congress often faces questions on the adequacy of existing acquisition and disposal authorities; the nature, extent, and location of their use; the extent of federal land ownership overall; and the sources and levels of land acquisition funds, among other issues. The suitability of the acquisition and disposal authorities, and the extent and circumstances of their use by the agencies, forms the backdrop for congressional consideration of measures to establish, modify, or eliminate the use of authorities. With regard to the establishment of new authorities, for instance, some 115 th Congress proposals would authorize states to exchange land grant parcels for federal lands. Other measures would authorize the BLM and FS to convey small tracts to adjacent landowners and to govern the use of proceeds from these conveyances. Proposals to modify authorities include measures in the 115 th Congress to reauthorize and amend BLM authority to sell or exchange land under the Federal Land Transaction Facilitation Act (FLTFA; 43 U.S.C. §§2301 et seq.), as well as bills to amend the Small Tracts Act (16 U.S.C. §521e) regarding the type and value of FS lands that can be disposed of and the use of related proceeds. Among the provisions to eliminate the use of authorities are those to prevent the disposal of federal land under the General Mining Law of 1872, which have been contained in annual Interior appropriations laws since FY1995. In addition, Congress frequently considers legislation authorizing and governing the acquisition or disposal of specific parcels. For example, Title XXX of P.L. 113-291 contained various provisions to authorize the acquisition and/or disposal of land. Congress may consider such legislation to provide an agency with acquisition or disposal authority in a particular instance because it is lacking. In other cases, Congress directs a particular acquisition or disposal to facilitate the action. For instance, the legislation may seek to direct an acquisition based on Congress's assessment of public needs and priorities. It may expedite the process for acquiring a parcel of land, such as by limiting the assessments and evaluations that ordinarily would be required under law. The legislation also might authorize actions not ordinarily permitted, such as the conveyance of land at reduced or no cost rather than at fair market value. Congress also addresses acquisition and disposal policy in the context of deliberations on the role and goals of the federal government in owning and managing land generally. The extent to which the federal government should own land remains controversial. Many westerners contend that there is excessive federal influence over their lives and economies and that the federal government should divest itself of many lands. Many others support the policy of retaining lands in federal ownership on behalf of the public and sometimes advocate adding more lands to enhance protection. Recent Congresses considered diverse bills pertaining to the extent of federal land ownership. Among others, 115 th Congress measures would authorize or direct the Secretary of the Interior and the Secretary of Agriculture to offer to sell a certain percentage of land in each of several fiscal years. Other bills provide that where a land management agency acquires land, an equal number of acres is to be offered for sale. Acquisition Funding Another set of issues pertains to the sources and levels of funds for land acquisition. The principal financing mechanism for federal land acquisition is discretionary appropriations under the Land and Water Conservation Fund (LWCF). Provisions of the Land and Water Conservation Fund Act of 1965 (LWCF Act; 54 U.S.C. §§200301 et seq.) had provided for $900 million in specified revenues to be deposited in the LWCF annually. These provisions expired September 30, 2018. Each year, Congress determines the level of appropriations from the LWCF for federal land acquisition. Total appropriations for land acquisition and the amount provided to each of the federal land management agencies have varied substantially since the program's origin in 1965. In the 115 th Congress, some measures propose permanent reauthorization of the LWCF and/or mandatory appropriations at the authorized level. Advocates of such bills typically seek stable, predictable funding to promote a strong federal role in acquiring and managing sensitive resources. Other measures would direct a portion of funding to particular purposes, such as acquisitions in areas with restricted access for fishing, hunting, and other types of recreation. Still other proposals would allow LWCF to be used for a broader array of purposes, including nonacquisition purposes, due to concerns about the extent of federal land ownership and the availability of funding for other federal activities. Additional sources of funding are available for some agencies or under certain authorities. For instance, the FWS has a mandatory source of funds for land acquisition through the Migratory Bird Conservation Fund, as discussed below. As another example, the BLM also has mandatory spending authorities that allow the agency to keep the proceeds of land sales and use these proceeds for subsequent acquisitions and other purposes. These authorities are discussed below. The application of mandatory spending authorities, including the uses of the proceeds, has been the subject of congressional debate. Federal Land Acquisition Authorities As noted above, various laws authorizing and governing specific land acquisitions have been enacted. In addition, the four federal land management agencies have different standing authorities for acquiring lands. In general, all four agencies are authorized to accept land as gifts and bequests. In addition, each generally is authorized to use eminent domain —taking private property, through condemnation, for public use—while compensating the landowner. However, this practice is controversial, and it is rarely used by the land management agencies. The primary land acquisition authorities are described below for each of the four federal land management agencies. In general, the agencies are presented in the order of the breadth of their authorities, with the NPS (the narrowest authorities) first and the BLM (the broadest authorities) last. National Park Service The NPS does not have standing authority to acquire lands for new or existing units of the National Park System, except in limited circumstances. Rather, most units have been created by Congress, and the law creating a park unit typically includes specific authority for the NPS to acquire nonfederal inholdings within the identified boundaries of that park. The Secretary of the Interior is authorized to make certain boundary adjustments of park units for "proper preservation, protection, interpretation, or management" and to acquire the nonfederal lands within the adjusted boundary, under specified provisions and conditions (54 U.S.C. §100506(c)). Some of these conditions have been interpreted to apply particularly to boundary adjustments requiring land purchases, as opposed to those in which added lands are acquired by donation, transfer, or exchange. The President has authority to create national monuments on federal lands under the Antiquities Act of 1906 (54 U.S.C. §§320301 et seq.). In total, 158 monuments have been created by presidential proclamation. Most are managed by the NPS, but some are managed by the BLM and other agencies. Under law, the Secretary of the Interior and the NPS have responsibilities related to the potential acquisition of lands for the National Park System. Among other requirements, the Secretary is directed "to investigate, study, and continually monitor the welfare of" areas that could potentially be added to the system and to report to Congress on possible additions (54 U.S.C. §100507). Furthermore, the general management plan for each unit is to include potential changes to the boundaries of the unit and the reasons for such changes (54 U.S.C. §100502). The Secretary also is to conduct a "systematic and comprehensive review of certain aspects of the National Park System" and to submit a related report to Congress at least every three years (54 U.S.C. §100505(a)) that includes a list of all authorized but unacquired lands within the boundaries of park units and a priority listing of these unacquired parcels (54 U.S.C. §100505(c)). Forest Service The Secretary of Agriculture has various authorities to acquire lands for the National Forest System (NFS). The NFS consists of 284 units covering 232.4 million acres of federal and nonfederal land, including national forests, national grasslands, purchase units, land utilization projects, and other areas. Today, only an act of Congress can create new NFS units, but the Secretary may acquire lands within or contiguous to the proclaimed exterior boundaries of an NFS unit. The NFS contains substantial acreage of nonfederal lands within the proclaimed boundaries of the system, particularly in the east, where national forests were established after extensive settlement. NFS units in the Eastern and Southern Regions average about 46% nonfederal land within their boundaries, while Western Region NFS units average about 10%. The FS has very limited regulatory authority over the uses of the 39.5 million acres of nonfederal land within the NFS. The FS's primary land acquisition authority is the Weeks Act of 1911 (16 U.S.C. §515), which was used to acquire many of the lands that became the eastern national forests. The Weeks Act authority continues to be the agency's primary authority to acquire lands; however, acquisitions are now limited to lands within (or adjacent to) established NFS unit boundaries. The Weeks Act also authorizes the Secretary to modify the NFS unit boundary as needed to encompass new acquisitions. Other laws authorize the FS to acquire lands for the national forests, typically in specific areas or for specific purposes. For example, Section 205 of the Federal Land Policy and Management Act (FLPMA; P.L. 94-579 ) authorizes the acquisition of access corridors—including easements—to national forests across nonfederal lands (43 U.S.C. §1715(a)). Another example is the Act of August 3, 1956 (7 U.S.C. §428(a)), which authorizes the FS to acquire lands without any geographical limitations but does require a provision be made in a specific appropriation or other law. Another law authorizes proceeds from certain land sales or exchanges to be used for acquisitions, including for administrative sites and enhancement of recreational access. However, the acquisitions are limited to the state in which FS previously conveyed NFS land under specific disposal authorities, as discussed later in this report. Several other acquisition authorities apply to specific national forests, such as the Act of June 11, 1940, which authorizes the purchase of lands within the Angeles National Forest in California. In addition, the Secretary of Agriculture and the secretary of a military department that has lands within or adjacent to proclaimed NFS land may interchange lands, without reimbursement or transfer of funds. Many of the acquisition authorities also allow the FS to accept donations of land as specified. Within the NFS, the Secretary of Agriculture also is authorized to acquire privately owned lands within or adjacent to designated wilderness areas (16 U.S.C. §1134(c)), Wild and Scenic River corridors (16 U.S.C. §1277), and certain segments of designated National Trails (16 U.S.C. §1244), as specified by the law creating the trail. Fish and Wildlife Service Lands may be added to the National Wildlife Refuge System (NWRS) in a number of ways, including through congressional and administrative actions and donations. A principal FWS land acquisition authority is the Migratory Bird Conservation Act of 1929 (MBCA; 16 U.S.C. §§715 et seq.). This act authorizes the Secretary of the Interior to recommend areas "necessary for the conservation of migratory birds" to the Migratory Bird Conservation Commission, after consulting with the relevant governor (or state agency) and appropriate local government officials (16 U.S.C. §715a and §715c). In addition, the state in which the purchase is located must have consented to the acquisition by law (16 U.S.C. §715f and §715k-5). The Secretary may then purchase or rent areas or interests therein approved by the commission and acquire by gift or devise any area or interest therein (16 U.S.C. §715d). The MBCA authority is used frequently because of the availability of funding through the Migratory Bird Conservation Fund (MBCF, 16 U.S.C. §718d). The MBCF is supported by multiple sources of funding, including three major sources: the sale of hunting and conservation stamps (commonly known as duck stamps); import duties on arms and ammunition; and a portion of certain refuge entrance fees. MBCF funds are permanently appropriated to the extent of receipts and, after paying certain administrative costs, may be used for the "location, ascertainment, and acquisition of suitable areas for migratory bird refuges ..." (16 U.S.C. §718d(b)). The predictability of funding and permanent authority for use makes the MBCF, and thus the MBCA, particularly important for FWS land acquisition and unique among the four agencies. Other laws provide general authority to expand the NWRS, including the Fish and Wildlife Coordination Act of 1934 (16 U.S.C. §§661-667a), the Fish and Wildlife Act of 1956 (16 U.S.C. §§742a et seq.), and the Endangered Species Act of 1973 (16 U.S.C. §§1531-1544). The National Wildlife Refuge System Administration Act of 1966 (16 U.S.C. §§668dd-668ee) authorizes the Secretary of the Interior to acquire land or interests therein through donated funds or exchange (16 U.S.C. §668dd(b)). Further, FLPMA authorizes the Secretary of the Interior to withdraw lands from the public domain for creating or adding to refuges (which would be an interagency transfer), although withdrawals exceeding 5,000 acres are subject to congressional approval (43 U.S.C. §1714(c)). In contrast to NPS and FS land acquisition, where the lands generally must be within the boundaries of established units, the FWS can acquire new lands to create a new refuge or to expand an existing one under the general FWS authorities cited above, as well as under certain other laws. Some national wildlife refuge (NWR) units have been created by specific acts of Congress, such as Protection Island NWR (WA) and Bayou Sauvage Urban NWR (LA) (16 U.S.C. §668dd note). Units also can be created by executive order; for example, the Midway Atoll NWR was created by President Clinton in Executive Order 13022. Bureau of Land Management The BLM has broad, general authority to acquire lands, principally under Section 205 of FLPMA. Specifically, the Secretary of the Interior is authorized to acquire, by purchase, exchange, donation, or use of eminent domain, lands or interests therein (43 U.S.C. §1715(a)). The BLM acquires land or interests in land, including inholdings, for a variety of reasons. These include to protect natural and cultural resources, to increase opportunities for public access and recreation, and to improve management of lands. Federal Land Disposal Authorities As noted above, various laws directing the disposal of particular lands sometimes have been enacted. In addition, the four federal land management agencies have different standing authorities for disposing of lands. The specific disposal authorities are discussed below for each of the four agencies in the order of their apparent breadth, with the NPS (the narrowest authorities) first and the BLM (the broadest authorities) last. National Park Service The NPS does not have general authority to dispose of National Park System lands. Units and lands of the Park System that were established by acts of Congress can be disposed of only by acts of Congress. Preservation of park units is a management goal and provisions of law limit the power of the Secretary of the Interior to dispose of land in changing park boundaries. Although the Secretary can, under specified conditions, make boundary changes that concurrently add and remove land within the boundary, minor boundary revisions solely to remove NPS acreage can be made only by Congress. Also, the Secretary can acquire by exchange lands that are adjacent to a boundary revision, but the Secretary cannot dispose of NPS land to do so (54 U.S.C. §100506(c)). Presidents have modified the boundaries of national monuments established by previous presidential proclamations, in some cases reducing the size of the monument. However, no president has terminated a monument established by proclamation. Fish and Wildlife Service The FWS does not have general authority to dispose of its lands. With certain exceptions, wildlife refuge lands administered by the FWS can be disposed only by an act of Congress (16 U.S.C. §§668dd(a)(5) and (6)). For refuge lands reserved from the public domain, FLPMA prohibits the Secretary of the Interior from modifying or revoking any withdrawal which added lands to the NWRS (43 U.S.C. §1714(j)). For acquired lands, disposal is allowed only if: (1) the disposal is part of an authorized land exchange (16 U.S.C. §§668dd(a)(6) and (b)(3)); or (2) the Secretary determines the lands are no longer needed and the Migratory Bird Conservation Commission approves the disposal (16 U.S.C. §668dd(a)(5)). In the latter case, the disposal must recover the acquisition cost or be at the fair market value (whichever is higher), and the receipts must be deposited in the Migratory Bird Conservation Fund. Forest Service The Secretary of Agriculture has numerous authorities to convey lands within proclaimed NFS boundaries out of federal ownership—through sale or exchange—although previous, broader authorities have been modified or revoked. Many of the authorities put constraints on land disposal, such as applying only to a specific geographical area or to the disposal of particular administrative properties or facilities. Many of the authorities are used in conjunction with FLPMA and other federal law and as such may place requirements on the sale or exchange of land. This includes obtaining at least fair market value for the sale of federal lands; requiring that nonfederal land exchanged for federal land be in the same state; and requiring exchanged lands to be of equal value, although value may be partially equalized with a cash payment (43 U.S.C. §1716). The General Exchange Act of 1922 (16 U.S.C. §485) authorizes the exchange of NFS land or timber that was reserved from the public domain if the Secretary determines it will be in the public interest. The nonfederal land must be within the same state and within the exterior boundary of a national forest, and it must be chiefly valuable for national forest purposes, among other provisions. The Weeks Act of 1911 allows for similar exchanges for acquired NFS lands (16 U.S.C. §516). The 1983 Small Tracts Act authorizes the Secretary to dispose of NFS land by sale or exchange, generally up to certain specified acreage limits. The disposal may be To improve management efficiencies where NFS lands are interspersed with nonfederal mineral rights owners, or if the Secretary determines the parcels to be inaccessible, physically isolated from other federal land, or to have lost national forest character (40 acres maximum); To relieve encroachments including due to erroneous surveys, or encroachments by a permanent habitable improvement if there is no evidence that the encroachment was intentional or due to negligence (10 acres maximum); To dispose of unneeded federal rights-of-way substantially surrounded by nonfederal lands (no specified acreage limitation); and If the parcel is used as a cemetery, landfill, or sewage plant pursuant to a special use authorization for the use and occupancy of NFS land (no specified acreage limitation) (16 U.S.C. §521e). The conveyance must be determined to be in the public interest and the tracts may not be valued at more than $500,000. The land can be disposed of for cash, lands, interests in land (such as an easement), or any combination thereof for at least the value of the land being sold or exchanged (16 U.S.C. §521d) plus "all reasonable costs of administration, survey, and appraisal incidental to such conveyance" (16 U.S.C. §521f). In some cases, the proceeds may be used for specified land acquisition purposes. The 1958 Townsites Act authorizes the Secretary to transfer up to 640 acres of NFS land adjacent to communities in Alaska or the 11 western states for townsites, if the "indigenous community objectives ... outweigh the public objectives and values which would be served by maintaining such tract in Federal ownership" (16 U.S.C. §478a). Public notice of the application for such transfer is required, and upon a "satisfactory showing of need," the Secretary may offer the land to a local governmental entity at "not less than the fair market value." The Education Land Grant Act, also known as the Sisk Act (16 U.S.C. §479a), authorizes the Secretary to transfer up to 80 acres of NFS land for a nominal cost upon written application of a public school district. It provides for reversion of the title to the federal government if the lands are not used for the educational purposes for which they were acquired. There are a few other specific authorities that allow for the disposal of NFS lands. For example, the 1911 Weeks Act authorizes the disposal of NFS lands that are "chiefly valuable for agriculture" but were acquired inadvertently or otherwise, if agricultural use will not injure the forests or streamflows and the lands are not needed for public purposes. The lands can be sold as homesteads in parcels of up to 80 acres (16 U.S.C. §519). The Bankhead-Jones Farm Tenant Act of 1937 (7 U.S.C. §§1010-1012) also authorizes the disposal of lands acquired under its authority, although the FS has adopted regulations stating that the Bankhead-Jones lands comprising the national grasslands will be held permanently (36 C.F.R. §213.1(b)). Bureau of Land Management The BLM can dispose of land under several authorities. They include (1) exchanges and sales under FLPMA, (2) sales or exchanges under the FLTFA, (3) transfers to other governmental units or nonprofit entities for public purposes, (4) patents under the General Mining Law of 1872, and (5) geographically limited sale authorities. With regard to exchanges under FLPMA, the exchanges must serve the public interest, and the federal and nonfederal lands in the exchange must be located in the same state and be of equal value (with cash equalization payments possible), among other requirements (43 U.S.C. §1716). With regard to sales under FLPMA, the BLM is authorized to sell certain tracts of public land that are identified through the land-use planning process. Such tracts must meet specific criteria (43 U.S.C. §1713(a)): (1) such tract because of its location or other characteristics is difficult and uneconomic to manage as part of the public lands, and is not suitable for management by another Federal department or agency; or (2) such tract was acquired for a specific purpose and the tract is no longer required for that or any other Federal purpose; or (3) disposal of such tract will serve important public objectives, including but not limited to, expansion of communities and economic development, which cannot be achieved prudently or feasibly on land other than public land and which outweigh other public objectives and values, including, but not limited to, recreation and scenic values, which would be served by maintaining such tract in Federal ownership. The size of the tracts for sale is determined by "the land use capabilities and development requirements." Proposals to sell tracts of more than 2,500 acres first must be submitted to Congress and can be disapproved by Congress. Lands may not be sold at less than their fair market value. They generally must be sold through competitive bidding, although modified competition and noncompetitive sales are allowed. FLTFA provides for the sale or exchange of BLM lands identified for disposal under BLM land- use plans. The law create s a separate Treasury account for most of the proceeds (96%) from the sale or exchange, and it provide s for the use of those funds by the Secretary of the Interior and the Secretary of Agriculture. The Secretaries may acquire nonfederal lands, specifically inholdings , lands adjacent to federal lands that contain exceptional resources , and areas adjacent to inaccessible lands that are open to recreation. Up to 20% of the funds in the account may be used for administrative costs, and at least 80% of the funds for acquisition are to be in the state in which the funds are generated . The Recreation and Public Purposes Act (43 U.S.C. §869) authorizes the Secretary, upon application by a qualified applicant, to dispose of any public lands to a State, Territory, county, municipality, or other State, Territorial, or Federal instrumentality or political subdivision for any public purposes, or to a nonprofit corporation or nonprofit association for any recreational or any public purpose consistent with its articles of incorporation or other creating authority. The lands can be sold or leased, and the act specifies conditions, qualifications, and acreage limitations for transfer. The price of the land depends on the type of entity that will receive it, for instance, whether a state government or a nonprofit organization. The price also depends on the intended use of the land, with some sales and leases made at no cost. Although the BLM can dispose of lands through patents under the General Mining Law of 1872, since FY1995 a series of annual moratoria on issuing mineral patents has been enacted into law. These moratoria, contained in the annual Interior appropriations laws, have effectively prevented this means of federal land disposal. Specifically, the Mining Law allows access to and development of hardrock minerals on federal lands that have not been withdrawn from entry. With evidence of valuable minerals and sufficient developmental effort, the Mining Law allows mining claims to be patented, with full title (of surface and mineral rights) transferred to the claimant upon payment of the appropriate fee. Nonmineral lands used for associated milling or other processing operations can also be patented (30 U.S.C. §42). Patented lands may be used for purposes other than mineral development. The BLM also has geographically limited land sale authorities. The program with the largest revenue stream has been the Southern Nevada Public Land Management Act of 1998, which allows the Secretary of the Interior to sell or exchange certain lands around Las Vegas. The BLM and the local government unit jointly decide on the lands to be offered for sale or exchange. In general, 85% of the proceeds are deposited into a special account, and are available to the Secretary of the Interior for land acquisition in Nevada and other purposes in the state, such as certain capital improvements and development of parks, trails, and natural areas. The other 15% of the proceeds are for state or local purposes, specifically the State of Nevada General Education Fund (5%) and the Southern Nevada Water Authority (10%). Other provisions of law similarly provide for BLM land sales in particular areas (mostly in Nevada), with specific allocations of the proceeds. Further, the BLM continues to dispose of land in Alaska as required by law, such as through transfers to the state of Alaska and to Alaska native corporations. A total of about 150 million acres in Alaska will be transferred from federal to state and private ownership.

The federal government owns roughly 640 million acres, heavily concentrated in 12 western states. Four agencies—the National Park Service (NPS), Fish and Wildlife Service (FWS), and Bureau of Land Management (BLM) in the Department of the Interior, and the U.S. Forest Service (FS) in the Department of Agriculture—administer about 95% of those lands. The extent to which each of these four federal agencies have authority to acquire and dispose of land varies considerably. The BLM has relatively broad authority for both acquisitions and disposals under the Federal Land Policy and Management Act of 1976 (FLPMA). The agency also has other authorities for disposing of land, including two laws that allow the agency to retain the proceeds for subsequent land acquisition, among other purposes, and a law that allows transfers to governmental units and other entities for public purposes. By contrast, the NPS has no general authority to acquire land to create new park units or to dispose of park lands. The FS authority to acquire lands is mostly limited to lands within or contiguous to the boundaries of a national forest. The agency has various authorities to dispose of land, but they are relatively constrained and infrequently used. The FWS has various authorities to acquire lands but no general authority to dispose of its lands. The agency frequently uses acquisition authority under the Migratory Bird Conservation Act of 1929 because of the availability of funding through the Migratory Bird Conservation Fund. The nature of the acquisition and disposal authorities of the four federal agencies also varies. In general, the acquisition authorities are designed to allow the four agencies to bring into federal ownership lands that many contend could benefit from federal management. Disposal authorities generally are designed to allow agencies to convey land that is no longer needed for a federal purpose or that might be chiefly valuable for another purpose. Some of the authorities specify particular circumstances where they can be used, such as the conveyance of FS land for educational purposes and the disposal of BLM land for recreation and public purposes. Congress often faces questions on the adequacy of existing acquisition and disposal authorities; the nature, extent, and location of their use; and the extent of federal land ownership overall. The current acquisition and disposal authorities form the backdrop for consideration of measures to establish, modify, or eliminate authorities, or to provide for the acquisition or disposal of particular lands. In some cases, Congress enacts bills to provide authority to acquire or dispose of particular parcels where no standing authority exists and, in other cases, to direct or facilitate land transactions. Congress also addresses acquisition and disposal policy in the context of debates on the role and goals of the federal government in owning and managing land generally, and it has considered broader measures to dispose of lands or to promote acquisition. Other issues for Congress pertain to the sources and levels of funds for land acquisition. The Land and Water Conservation Fund (LWCF) is the primary source of funding for land acquisition. Congress has considered diverse measures related to the LWCF, such as legislation to make LWCF funding permanent and bills to direct LWCF monies to additional, nonacquisition purposes. Additionally, the FWS has the Migratory Bird Conservation Fund, an account with mandatory spending authority supported by revenue from three sources. The BLM also has mandatory spending authorities that allow the proceeds from land sales to be used for land acquisition, among other purposes.

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

Iraq's government declared military victory against the Islamic State organization (IS, also ISIS/ISIL) in December 2017, but insurgent attacks by remaining IS fighters continue to threaten Iraqis as they shift their attention toward recovery and the country's political future. Approximately 5,000 U.S. troops remain in Iraq at the invitation of the Iraqi government and provide advisory and training support to Iraqi security forces. However, some Iraqi political groups are calling for U.S. and other foreign troops to depart, and they may seek to force Iraqi government action on this question during 2019. Elections and Politics. Iraqis held national elections in May 2018, electing members to Iraq's unicameral legislature, the 329-seat Council of Representatives (COR). Political factions spent months negotiating in a bid to identify a majority bloc of legislators to form the next government, but the distribution of seats and alignment of actors precluded the emergence of a dominant coalition. Meanwhile, protests and violence in southern Iraq highlighted some citizens' outrage with poor service delivery, lack of economic opportunity, and corruption. In October, the COR chose former Kurdistan Regional Government (KRG) Prime Minister and former Iraqi Deputy Prime Minister Barham Salih as Iraq's President. Salih, in turn, named former Oil Minister Adel Abd al Mahdi as Prime Minister-designate and directed him to assemble a slate of cabinet officials for COR approval. Abd al Mahdi is a consensus figure acceptable to rival factions, but he does not lead a party or parliamentary group of his own. COR members have confirmed most of Abd al Mahdi's cabinet nominees, but key political groups are at an impasse over certain ministries, including the Ministry of Interior and the Ministry of Defense. Iraqi politicians have increasingly reached across sectarian political and economic lines in recent years in an attempt to appeal to disaffected citizens, but ethnic and religious politics remain relevant and Iraqi citizens remain frustrated with government performance. Iraq's neighbors and other outsiders, including the United States, are pursuing their respective interests in Iraq, and their competition creates additional challenges for Iraqi leaders. Paramilitary forces have grown stronger and more numerous in Iraq since 2014, and have yet to be fully integrated into national security institutions. Some figures associated with the volunteer Popular Mobilization Forces (PMF) that were organized to fight the Islamic State participated in the 2018 election and won COR seats, including critics of U.S. policy who have ties to Iran and are demanding the United States withdraw its military forces. The Kurdistan Region. The Kurdistan Region of northern Iraq (KRI) enjoys considerable administrative autonomy under the terms of Iraq's 2005 constitution, and the KRG held legislative elections on September 30, 2018. The KRG had held a controversial advisory referendum on independence in September 2017, amplifying political tensions with the national government, which then moved to reassert security control of disputed areas that had been secured by Kurdish forces after the Islamic State's mid-2014 advance. National government security forces and Kurdish peshmerga are deployed along contested lines of control, as leaders negotiate a host of sensitive issues. Stabilization and Reconstruction. Daunting resettlement, stabilization, and reconstruction needs face Iraqi citizens and leaders as they look to the future. More than 4 million Iraqis uprooted during the war with the Islamic State group have returned to their home communities, but many of the estimated 1.7 million Iraqis who remain internally displaced face significant political, economic, and security barriers to safe and voluntary return. Stabilization efforts in areas recaptured from the Islamic State are underway with United Nations and other international support, but many immediate post-IS stabilization priorities and projects are underfunded. Iraqi authorities have identified $88 billion in broader reconstruction needs to be met over the next decade. U.S. Policy and Issues for Congress. In general, U.S. engagement in Iraq since 2011 has sought to reinforce unifying trends and avoid divisive outcomes. The Trump Administration seeks to continue to train and support Iraqi security forces, while hoping to limit negative Iranian influence. The 116th Congress is considering Administration requests for funding to provide security assistance, humanitarian relief, and foreign aid in Iraq and may debate authorities for and provide oversight of the U.S. military presence in Iraq and security cooperation and aid programs. For background, see CRS Report R45025, Iraq: Background and U.S. Policy.

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F ederal agricultural conservation assistance began in the 1930s with a focus on soil and water issues ass ociated with production and environmental concerns on the farm. During the 1980s, agricultural conservation policies were broadened to include environmental issues beyond soil and water concerns, especially issues related to production, such as erosion and wetlands loss that had effects beyond the farm. Many of the current agricultural conservation programs were enacted as part of the Food Security Act of 1985 (1985 farm bill; P.L. 99-198 , Title XII). These programs have been reauthorized, modified, and expanded, and several new programs have been created, particularly in subsequent omnibus farm bills. While the number of programs has increased and new techniques to address resource challenges continue to emerge, the basic federal approach has remained unchanged—voluntary farmer participation encouraged by financial and technical assistance, education, and basic and applied research. The U.S. Department of Agriculture (USDA) administers the suite of agricultural conservation programs through two primary agencies—the Natural Resources Conservation Service (NRCS) and the Farm Service Agency (FSA). Figure 1. Common Conservation Program AbbreviationsSource: CRS. The conservation title of the Agriculture Improvement Act of 2018 (2018 farm bill; P.L. 115-334 , Title II) reauthorized and amended many of the largest conservation programs and created a number of new pilot programs, carve-outs, and initiatives. The House- and Senate-passed farm bills ( H.R. 2 ) each included a number of amendments to existing conservation programs, many of which did not overlap. This generally resulted in the inclusion of a mix of amendments from each chamber being in the enacted bill. The Congressional Budget Office (CBO) projects that total mandatory spending for the title will increase by $555 million during the first five years of the 2018 farm bill (FY2019-FY2023), compared to a continuation of funding levels authorized in the Agricultural Act of 2014 (2014 farm bill; P.L. 113-79 ). Mandatory spending for the title over 10 years (FY2019-FY2028) is projected by CBO to be reduced by $6 billion, relative to the 2014 farm bill authorized levels . Generally, the bill reallocates funding within the conservation title among the larger programs and pays for increases in the short term with reductions in the long term. Conservation Program Changes The 2018 farm bill reauthorized and amended all of the major USDA agricultural conservation programs. Generally, farm bill conservation programs can be grouped into the following types based on similarities: working lands, land retirement, easement, conservation compliance, and partnership and grants (see Figure 1 and Figure 2 for a list of conservation programs). Most of these programs are authorized to receive mandatory funding (i.e., they do not require an annual appropriation), and include funding authorities that expire with most other farm bill programs at the end of FY2023. Other types of conservation programs—such as watershed programs, emergency programs, and technical assistance—are authorized in legislation other than the farm bill. Most of these programs have permanent authorities and receive appropriations annually through the discretionary appropriations process. These programs are not generally addressed in the context of a farm bill and are not covered in detail in this report, except for cases where the 2018 farm bill made amendments to the program. This section provides a general discussion of programmatic-specific amendments made to various conservation programs and subprograms. For a detailed section-by-section analysis of amendments in the 2018 farm bill, including statutory and U.S. Code citations, see Appendix . Unless otherwise noted, conservation programs discussed in this section are authorized to receive mandatory funding through the borrowing authority of the Commodity Credit Corporation (CCC). For additional analysis of conservation program funding, see the " Budget and Baseline " section. Land Retirement Land retirement programs authorize USDA to make payments to private landowners to voluntarily retire land from production for less-resource intensive uses. The primary land retirement program is the Conservation Reserve Program (CRP). CRP includes a number of subprograms, many of which were codified or reauthorized in the 2018 farm bill. The farm bill also authorizes a number of initiatives and pilot programs. Conservation Reserve Program (CRP) CRP was originally authorized in the 1985 farm bill and has been reauthorized and amended a number of times since. The program provides financial compensation for landowners, through an annual rental rate, to voluntarily remove land from agricultural production for an extended period (typically 10 to 15 years) to improve soil and water quality and wildlife habitat. CRP operates under two types of enrollment—general and continuous. General enrollment provides an opportunity for landowners to enroll in CRP through a nationwide competition during a specific period of time. Continuous enrollment is designed to enroll the most environmentally desirable land into CRP through specific conservation practices or resource needs. Unlike general enrollment, under continuous enrollment, land is typically enrolled at any time and is not subject to competitive bidding. Many of the 2018 farm bill amendments apply to continuous enrollment contracts, including the creation of new pilot programs and amendments to existing subprograms. A detailed analysis of amendments to CRP may be found in Table A-2 . Congressional debate over CRP in the 2018 farm bill centered on how to increase enrollment limits, while not increasing overall cost. As such, the enacted bill incrementally increases the enrollment cap while reducing various rental rates, cost-share payments, and incentive payments. The 2018 farm bill increases the enrollment limit in annual increments from 24 million acres in FY2019 to 27 million acres in FY2023. This increase in enrollment is partly offset by reducing rental rates for general contracts to 85% of the county average rental rate and to 90% of the county average rental rate for continuous contracts. Cost-share payments are limited to the actual cost of establishing the approved practices, including not more than 50% for seed mix costs. The enacted bill also establishes minimum enrollment levels for continuous contracts (8.6 million acres by FY2022) and grassland contracts (2 million acres by FY2021). Conservation Reserve Enhancement Program (CREP) CREP was originally created as a CRP initiative in 1997, but was not codified into statute as a CRP subprogram until the 2018 farm bill. The provision in the 2018 farm bill is similar to the original version of CREP in that it authorizes USDA to enter into agreements with states to target designated project areas with continuous CRP enrollment contracts. Projects are designed to address specific environmental objectives through targeted continuous, noncompetitive, CRP enrollment that typically provides additional financial incentives beyond annual rental payments and cost-share assistance. The new language in the 2018 farm bill allows existing CREP agreements to remain in force, but allows them to be modified if mutually agreed upon. CREP agreements are generally with states, but the 2018 farm bill expands eligible partners to include nongovernmental organizations (NGO). The enacted bill formalizes agreement requirements with partners, including matching fund contributions (previously not less than 20% of the project cost) and possible waiver of such contributions. The enacted bill requires the matching fund contribution to be a negotiated part of the agreement, or not less than 30% if most of the funds are provided by an NGO. Payments from an eligible partner may be in cash, in-kind, or through technical assistance. Additional requirements for select cost-share payments, incentive payments, and maintenance payments are also included. Specific requirements are included related to grazing, forested riparian buffers, and drought and water conservation agreements. Farmable Wetlands (FW) program The FW program was created in the Farm Security and Rural Investment Act of 2002 (2002 farm bill; P.L. 107-171 ) as a pilot within CRP to enroll farmable or prior converted wetlands into CRP in exchange for additional financial incentives. The 2018 farm bill reauthorized FW program at the current 750,000 acre enrollment limit. CRP Grassland Contracts The 2014 farm bill authorized grassland contracts under CRP, which enrolls grassland, rangeland, and pastureland into 14 to 15 year CRP contracts. Only select grazing practices are allowed under the contract in exchange for annual and cost-share payments. The 2018 farm bill reauthorizes the contracts and increases the enrollment limit to not less than 2 million acres by FY2021 from the previous limit of not more than 2 million acres. USDA may not use unenrolled grassland acres for other types of CRP enrollment. The enacted bill also prioritizes the enrollment of expiring CRP land, land at risk of development, or land of ecological significance. Other CRP Initiatives CLEAR 30 The 2018 farm bill creates a new pilot program referred to as CLEAR 30, which enrolls expiring CRP land into 30-year contracts devoted to practices that improve water quality. CLEAR refers to the Clean Lakes, Estuaries, And Rivers initiative that is authorized to enroll land in continuous contracts that would reduce sediment and nutrient loading, and harmful algal blooms. Under a CLEAR 30 contract, the landowner must maintain the land in accordance with an approved plan and adhere with the terms and conditions of the contract. Contract holders receive compensation in thirty annual cash payments similar to those calculated under general CRP contracts. Technical assistance is required for each contract and agreement. USDA must create the CRP plan for a contract, but management, monitoring, and enforcement may be delegated to another federal agency, state, or local government, or to a conservation organization. Soil Health and Income Protection Pilot (SHIPP) The 2018 farm bill also creates a new SHIPP pilot program under CRP to remove less productive farm land from production in exchange for annual rental payments and to plant low-cost perennial cover crops. Eligible land is limited to (1) land in states selected by the Secretary within the prairie pothole region, (2) land that has a cropping history in the three years prior to enrollment, but which was not enrolled in CRP during that time period, and (3) land that is considered to be less productive than other land on the farm. No more than 15% of a farm may be enrolled in the pilot and no more than 50,000 acres of the CRP may be used for the pilot. Under a SHIPP contract, a participant would be required to plant a USDA-approved, low-cost, perennial, conserving-use cover crop at the participant's expense. In return the participant would receive an annual rental payment that is 50% of the general CRP annual rental payment, or higher for beginning, limited-resource, socially disadvantaged or veteran participants. Contracts are three to five years in duration, but can be terminated early if considered necessary by USDA; or if the participant agrees to pay back the annual rental payments. Harvesting, haying, and grazing are allowed outside of the local nesting and brood-rearing period, subject to additional conditions. Working Lands Programs Working lands conservation programs allow private land to remain in production, while implementing various conservation practices to address natural resource concerns specific to the area. Program participants receive some form of conservation planning and technical assistance to guide the decision on the most appropriate practices to apply, given the natural resource concerns and land condition. Participants receive federal financial support to defray a portion of the cost to install or maintain the vegetative, structural, or management practices agreed to in the terms of the contract. The two main working lands programs are the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP). Combined, both programs account for more than half of all conservation program funding. The 2018 farm bill amended both programs, but in different ways and to different degrees. A detailed analysis of amendments to EQIP and CSP is provided in Table A-3 and Table A-4 , respectively. Environmental Quality Incentives Program (EQIP) EQIP is reauthorized and expanded in the enacted bill. The program provides financial and technical assistance to producers and private landowners to plan and install structural, vegetative, and land management practices on eligible lands to alleviate natural resource problems. Eligible producers enter into contracts with USDA to receive payment for implementing conservation practices. Approved activities are carried out according to an EQIP plan approved by USDA and developed with the producer that identifies the appropriate conservation practice(s) to address identified resource concerns on the eligible land. The program is reauthorized through FY2023 with a graduating level of mandatory funding—$1.75 billion in FY2019 and FY2020; $1.8 billion in FY2021; $1.85 billion in FY2022; and $2.025 billion in FY2023. The new law includes a number of amendments to EQIP that focus on water quality and quantity-related practices, soil health improvement, and wildlife habitat improvement. The law also reduces the funding allocation for livestock-related practices from 60% to 50%, and increases the allocation for wildlife-related practices from 5% to 10%. One of the larger changes the 2018 farm bill makes to EQIP is that water conservation system payments are expanded to include irrigation and drainage entities that were previously ineligible. Eligible entities may be states, irrigation districts, groundwater management districts, acequias, land-grant mercedes, or similar entities. Practices must be implemented on eligible land of the producer, land adjacent to a producer's eligible land, or land under the control of the eligible entity. Adjusted Gross Income (AGI) and payment limits may be waived for eligible entities, but USDA may impose additional payment and eligibility limits. Priority is given to applications that reduce water use. It is unclear how this expansion in eligibility, compared with the previous producer-only policy, may affect implementation of the program. Conservation Stewardship Program (CSP) CSP provides financial and technical assistance to producers to maintain and improve existing conservation systems and to adopt additional conservation activities in a comprehensive manner on a producer's entire operation. CSP contracts must meet or exceed a stewardship threshold for at least two priority resource concern at the time of application and meet or exceed at least one additional priority resource concern by the end of the contract. The House-passed bill would have repealed CSP and created a stewardship contract within EQIP, whereas the Senate-passed bill would have reauthorized CSP and reduced program enrollment. The enacted 2018 farm bill creates a mix of both the House- and Senate-passed bills with amendments. The enacted bill reauthorizes CSP, but amends how the program limits future enrollment. The new law shifts CSP from a program limited by acres (10 million acres annually under prior law; approximately $1.4 billion in FY2018) to one limited by total funding ($700 million in FY2019 in mandatory funding, increasing to $1 billion in FY2023). CBO projects this change from prior law will reduce the program by more than $12.4 billion total over ten years (see Table 2 ) for a total cost of $5.1 billion. Reduced spending from this reduction offset increased mandatory spending in other conservation programs (see Figure 3 ). In addition to the amended funding structure of CSP, the enacted bill also made a number of amendments to the program. CSP's ranking criteria is amended to focus on an application's actual and expected increase of conservation benefits, and to add a cost competitive selection criteria for similar applications. Contract renewal options are amended to require renewal applicants to compete with new applications, whereas previously their acceptance was guaranteed. Additionally, payments for adopting cover crops, grazing management, and comprehensive conservation plan development are amended to include higher and more comprehensive payment options. Other EQIP and CSP Initiatives and Subprograms Conservation Innovation Grants (CIG) CIG is a subprogram under EQIP that awards competitive grants to state and local agencies, nongovernmental organizations, tribes, and individuals to implement innovative conservation techniques and practices. The 2018 farm bill expands project eligibility to include community colleges, urban farming, and monitoring practices. A new on-farm conservation innovation trial is authorized at $25 million annually from total EQIP funding. The new on-farm trial funds projects through producers or eligible entities that test new or innovative conservation approaches, such as those related to precision agriculture technologies, nutrient management, soil health, water management, crop rotations, cover crops, irrigation systems, and other USDA approved approaches. EQIP Conservation Incentive Contract The House-passed farm bill would have repealed CSP and created a stewardship contract within EQIP. While the 2018 farm bill retained CSP and also authorized a new Conservation Incentive Contract under EQIP. The new EQIP incentive contracts are limited to select priority resource concerns within specific geographic regions. No more than three priority resource concerns may be identified in each geographic region. EQIP incentive contracts extend for five to ten years and provide annual payments to incentivize increased conservation stewardship and the adoption, installation, management, and maintenance of conservation practices. In determining payment amounts, USDA is required to consider the level and extent of the practice being adopted, the cost of adoption, income forgone due to adoption, and compensation ensuring the longevity of the practice. The new EQIP incentive contracts exhibit some similarities with CSP contracts, including addressing priority resource concerns; and providing annual payments for adopting, maintaining, and improving practices. The EQIP incentive contracts also include notable differences from CSP, including a no stewardship threshold for entry; no comprehensive requirement for addressing resource concerns; no whole-farm enrollment; and no limit on payments. Pending implementation of EQIP incentive contracts, it is unclear what impact they may have on CSP enrollment or on general EQIP contracts. CSP Grassland Conservation Initiative Amendments under the commodities title (Title I) of the 2018 farm bill changed how base acres are used to calculate eligibility for certain commodity support programs. Base acres not planted to a commodity program-eligible crop within the last ten years are ineligible for select commodity support programs. Under the 2018 farm bill, these acres are now eligible for a one-time enrollment into a new Grassland Conservation Initiative under CSP. While the new grassland initiative is within CSP, it has separate requirements from other CSP contracts. Unlike CSP, the grassland initiative would not require whole-farm enrollment. The initiative has no required stewardship threshold for entry, requiring the participant to only meet or exceed one priority resource concern by the end of the contract. Whereas CSP contracts must meet or exceed a stewardship threshold for at least two priority resource concern at the time of application and meet or exceed at least one additional priority resource concern by the end of the contracts. Grassland initiative contracts are short term—five years with no renewal or reenrollment option, and a participant may terminate the contract without penalty at any time. Payments under the initiative are not subject to the CSP payment limit, but cannot provide more than $18 per acre. Easement Programs Easement programs impose a permanent land-use restriction that is voluntarily placed on the land in exchange for a government payment. The primary conservation easement program is the Agricultural Conservation Easement Program, which provides financial and technical assistance through two types of easements (1) agricultural land easements (ALE) that limit nonagricultural uses on productive farm or grass lands, and (2) wetland reserve easements (WRE) that protect and restore wetlands. The other conservation easement program—the Healthy Forests Reserve Program (HFRP)—was reauthorized in the forestry title (Title VIII) of the 2018 farm bill and is not covered in this report. Agricultural Conservation Easement Program (ACEP) The 2018 farm bill reauthorizes and amends ACEP. Most of the changes made to ACEP in the 2018 farm bill focus on the ALE. Under ALE, USDA enters into partnership agreements with eligible entities to purchase agricultural land easements from willing landowners to protect the agricultural use and conservation values of the land. The enacted bill provides additional flexibilities to ACEP-eligible entities, including the eligibility of "buy-protect-sell" transactions in which an eligible entity purchases land prior to the acquisition of an ALE, agrees to hold an ALE on the land, and then transfer the land within a select time period to a farmer or rancher. The bill also amends the nonfederal cost share requirements by removing the requirement that an eligible entity's contribution be equal to the federal share, or at least 50% of the federal share if the entity includes contributions from the private landowner. The nonfederal portion contributed by the eligible entity may include cash, a landowner's donation, costs associated with the easement, or other costs as determined by USDA. Other flexibilities provided eligible entities include the consideration of geographical differences, terms and conditions of easements, and certification criteria of eligible entities. Several amendments reduce the roll of USDA in the administration of ALE, including amendments to the certification of eligible entities, the right of easement enforcement, and planning requirements. For a detailed analysis of amendments to ACEP see Table A-7 . By comparison, the 2018 farm bill made fewer changes to WRE. Most of the amendments to WRE center on compatible use and vegetative cover requirements. Compatible use authorization is expanded to include consultation with the state technical committee, consideration of land management requirements, and improving the functions and values of the easement. Requirements for a WRE plan were amended to allow for the establishment or restoration of an alternative vegetative community that is hydraulically appropriate on the entirety of the WRE if it would benefit wildlife or meet local resource needs. In other amendments to ACEP, Congress specified new directions regarding USDA's handling of the subordination, exchange, modification, or termination of any ACEP easement. The enacted farm bill increases mandatory funding for ACEP from the FY2018 authorized level to $450 million annually for FY2019 through FY2023. Other Conservation Programs and Provisions Regional Conservation Partnership Program (RCPP) The 2014 farm bill created RCPP from four repealed programs. The 2018 farm bill reauthorized RCPP and made a number of amendments to the program (see Table A-8 for a detailed analysis of RCPP amendments). Prior the 2018 farm bill, RCPP utilized 7% of existing conservation programs (referred to as covered programs ) through RCPP projects that were defined by eligible partners. Eligible partners would define the project's area, goals, and resource concerns to be addressed through the use of covered programs. Partners would enter into project agreements with USDA, in which they would provide a "significant portion" of the overall cost of the project. USDA issued no regulations for RCPP and instead utilized funding notices and operated it with the regulations of the covered programs. Amendments enacted in the 2018 farm bill shift RCPP away from using contracts from covered programs to establishing RCPP as a stand-alone program with its own contracts. Prior to the 2018 farm bill, USDA would enter into agreements with a partner on a project that would target covered program contracts in an agreed upon area for a defined resource goal. The actual contract with the farmer or rancher, however, would be an EQIP, CSP, ACEP, or HFRP contract. The enacted bill no longer uses this framework; instead it requires USDA to use a contract specific to RCPP that will fund eligible activities similar to those available under covered programs, but not using the funds of those programs. The list of covered programs is also expanded under the bill to include EQIP, ACEP, CSP, HFRP, CRP, and Watershed and Flood Prevention Operations (WFPO). The 2018 farm bill maintains RCPP's broad partner-focused goal of creating opportunities to leverage federal conservation funding for partner-defined projects. Additionally, the revised program provides additional flexibilities to partners, including the make-up of a partner's project contribution, guidance and reporting requirements, agreement renewals, and in the application process. Mandatory funding for the program is increased to $300 million annually for FY2019 through FY2023 from $100 million annually under prior law. However, RCPP no longer receives a percentage of funding from covered programs, which could change the overall scale of RCPP depending on how this change is implemented. The allocation of funding is also amended to provide 50% to state and multi-state projects and 50% to projects in critical conservation areas (CCA) as selected by USDA. Watershed and Flood Prevention Operations (WFPO) The WFPO program provides technical and financial assistance to state and local organizations to plan and install measures to prevent erosion, sedimentation, and flood damage and to conserve, develop, and utilize land and water resources. Project costs are shared with local partners. Smaller projects may be authorized by the Chief of the NRCS, whereas larger projects must be approved by Congress. The 2018 farm bill made few amendments to WFPO, the most substantial being the authorization of permanent mandatory funding of $50 million annually. Historically, the program received discretionary funding through the annual appropriations process—most recently $150 million in FY2018. Conservation Compliance Two farm bill provisions require that in exchange for certain USDA program benefits, a producer agrees to maintain a minimum level of conservation on highly erodible land and not to convert wetlands to crop production. These provisions were originally authorized in the 1985 farm bill as highly erodible land conservation ( Sodbuster ) and wetland conservation ( Swampbuster ). They are collectively referred to as conservation compliance . The 2018 farm bill amends wetland conservation provisions to specify that (1) benefits cannot be denied if an exemption applies and (2) affected landowners must have the opportunity to be present during an on-site inspection. The enacted bill also authorizes annual discretionary appropriations for wetland mitigation banking. For a detailed analysis of amendments to the wetland conservation provisions, see Table A-1 . A third type of compliance requirement introduced in the Food, Conservation, and Energy Act of 2008 (2008 farm bill; P.L. 110-246 ) addressed crop production on native sod ( Sodsaver ). While Sodsaver is not included in the conservation title of the farm bill, it operates in a manner similar to conservation compliance requirements in that benefits are reduced if production occurs on native sod. Policy Issues That Shaped the Conservation Title Beginning with the Agriculture and Food Act of 1981 (1981 farm bill; P.L. 97-98 ), agricultural conservation has been a stand-alone title in all farm bills. The breadth of the conservation title has grown with each passing omnibus farm bill. Debate over the 2018 farm bill focused on the differences within the conservation title of the House- and Senate-passed bills ( H.R. 2 ). The conference agreement resolved these differences to create a final version of the title in the enacted law that represents a mix of proposals from the two versions. Overarching themes of the conservation title include (1) targeting of funds or acres in existing programs, (2) a shifting of funds among the different types of conservation programs, including a continued emphasis on working lands programs, and (3) provisions that address environmental regulations through voluntary conservation measures. Directed Policies Within Existing Programs The 2014 farm bill focused on simplifying and consolidating programs within the conservation title. Conversely, the 2018 farm bill does not create new programs, but it does require that a number of existing programs direct a specific level of funding or acres, or percentage of a program's funding, to a resource- or interest-specific issue, initiative, or subprogram. Table 1 highlights some of the directed policies created by the 2018 farm bill and compares them with prior law. Some of these policies existed prior to the 2018 farm bill, but did not include a specified funding or acreage level. Through these directed policies Congress has specified a level of support or required investment that USDA is to achieve through program implementation. One potential consequence of these directed policies may be reduced flexibility of the implementing agency to allocate funding based on need, as well as reduced total funds or acres available for activities of the larger program that may not meet a resource-specific provision. Most of the conservation programs in the 2018 farm bill are authorized to receive mandatory funding, so these directed policies also have funding, unless Congress subsequently directs otherwise. Budget and Baseline Most farm bill conservation programs are authorized to receive mandatory funding. According to CBO, the conservation title makes up 7% of the total projected 2018 farm bill spending over 10 years, which is $60 billion of the total $867 billion (see Table 2 and Figure 3 ). Historically, funding for the conservation title has experienced both increases and decreases within farm bills. The 2018 farm bill conservation title is budget neutral over the 10-year baseline; however, it is projected to increase funding in the first five years (+$555 million over FY2019-FY2023) and decrease funding in the last five years (-$561 million over FY2024-FY2028). While most titles received an increase in authorized mandatory funding over the projected 10-year baseline, three titles, including conservation, did not. Historical and Programmatic Shifts in Conservation Funding The bulk of mandatory spending for conservation is authorized for working lands and land retirement activities. While recent farm bills have increased funding for easement and partnership programs, they remain relatively small compared to three main programs—EQIP, CSP, and CRP (see Table 2 and Figure 4 ). The 2018 farm bill conservation title is considered budget neutral over the ten-year baseline and generally reallocates funding among the larger existing programs. Over time, periods of high commodity prices, changing land rental rates, and new conservation technologies have led to a shift in farm bill conservation policy away from land retirement and toward an increased focus on working lands programs. Much of this shift occurred following the 2008 farm bill and continued in the 2014 farm bill as the level of total mandatory program funding for land retirement programs declined relative to working lands programs (see Figure 4 ). Increasingly, the separation between land retirement programs and working lands programs has become blurred by an increase in compatible use allowances for grazing and pasture use under land retirement programs. Most conservation and wildlife organizations support both land retirement and working lands programs; however, the appropriate "mix" continues to be a subject of debate. Additionally, some conservation program supporters are divided over the relative benefits of shorter-term land retirement programs (CRP) versus longer-term easement programs (ACEP). Unlike land retirement programs, easement programs impose a permanent or longer-term land-use restriction that the land owner voluntarily places on the land in exchange for a government payment. Supporters of easement programs cite a more cost-effective investment in sustainable ecosystems for long-term wildlife and land preservation benefits. Supporters of short-term land retirement programs cite the increased flexibility and broader participation compared with permanent or long-term easement programs. The 2018 farm bill did not amend the duration of ACEP easements, but did create two new subprograms under CRP that would provide additional options for longer-term CRP contracts (30 years under CLEAR30) and shorter-term CRP contracts (3-5 years under SHIPP). In recent years, Congress has placed greater emphasis on programs that partner with state and local communities to target conservation funding to local resource concerns. These partnership programs leverage private funding with federal funding to multiply the level of assistance in a selected area. The 2014 farm bill repealed a number of these partnership programs and replaced them with RCPP. The 2018 farm bill amends and expands the number of partnering opportunities under RCPP, CREP, and CIG. However, based on available funding, these programs remain relatively small compared to others in the conservation title. Environmental Regulation and Voluntary Conservation USDA has cited voluntary conservation practices as a way to address environmental concerns and potentially reduce the need for traditional regulatory programs. A number of provisions in the conservation title speak to the relationship between voluntary conservation measures and environmental regulation. One such provision is regulatory certainty. Regulatory certainty refers to using voluntary measures to address a specific resource concern in exchange for the "certainty" that additional measures will not be required under future regulations. A new regulatory certainty section in the 2018 farm bill (§2503(f)) authorizes USDA to provide technical assistance under the farm bill conservation programs to support regulatory assurances for producers and landowners, under select conditions. The 2018 farm bill also makes existing regulatory certainty measures permanent, including the Working Lands for Wildlife Initiative, which was created in 2012 as a partnership between NRCS and the U.S. Fish and Wildlife Service (FWS). Under this partnership agreement, private landowners who voluntarily make wildlife habitat improvements on their land through NRCS conservation programs, and agree to maintain them for 15-30 years, receive in return a level of certainty they will be exempted from potential future regulatory actions related to at-risk species under the Endangered Species Act. The 2018 farm bill makes this partnership agreement permanent and allows for the initiative to be expanded to include CRP. Another environmental regulatory-related provision in the enacted 2018 farm bill (§2410) is a sense of Congress statement encouraging watershed-level partnerships between nonpoint sources and regulated point sources to advance the goals of the Federal Water Pollution Control Act (Clean Water Act, 33 U.S.C. §1251 et seq.). Appendix. Comparison of Conservation Provisions Enacted in the 2018 Farm Bill to Prior Law This appendix includes a series of tables, arranged by subtitle, included in Title II of the Agriculture Improvement Act of 2018 ( P.L. 115-334 ). U.S. Code citations are included in brackets in the "Prior Law" column. Corresponding section numbers in the 2018 farm bill are included in brackets in the "Enacted 2018 Farm Bill" column. Funding for most Title II programs is covered in the "Funding and Administration" subtitle (Subtitle E, see Table A-6 ). Where appropriate, funding levels are repeated within a program's corresponding subtitle table. Tables are generally organized by section number of the 2018 farm bill, except where it is appropriate to cross-references relevant amendments to provide a complete picture of the program.

The Agriculture Improvement Act of 2018 (2018 farm bill, P.L. 115-334, Title II) included a number of changes to agricultural conservation programs, including reauthorizing and amending existing programs, directing existing program activities to specific resource concerns, shifting funds within the title, and authorizing a budget-neutral level of funding. Debate over the conservation title in the 2018 farm bill focused on a number of issues in the different versions in the House- and Senate-passed bills (H.R. 2). These differences were resolved in a House-Senate conference to create the enacted bill, which is a mix of both versions that were passed by both chambers. The enacted bill reauthorizes and amends portions of most all conservation programs; however, the general focus is on the larger programs, namely the Conservation Reserve Program (CRP), Environmental Quality Incentives Program (EQIP), and Conservation Stewardship Program (CSP). Most farm bill conservation programs are authorized to receive mandatory funding and are not subject to appropriation. According to the Congressional Budget Office (CBO), the conservation title of the 2018 farm bill makes up 7% of the bill's total projected mandatory spending over 10 years, which is $60 billion of the total $867 billion. The conservation title is budget neutral over the 10-year baseline; however, the 2018 farm bill is projected to increase funding in the first five years (+$555 million over FY2019-FY2023) and decrease funding in the last five years (-$561 million over FY2024-FY2028). Generally, the 2018 farm bill reallocates mandatory funding within the conservation title among the larger programs. The two largest working lands programs—EQIP and CSP—were reauthorized and amended under the enacted bill, but in different ways. The House-passed bill would have repealed CSP and created a stewardship contract within EQIP, whereas the Senate-passed bill would have reauthorized CSP and reduced program enrollment. The enacted bill creates a mix of both the House- and Senate-passed bills by reauthorizing CSP and reducing program enrollment, as well as creating a new incentive contract within EQIP. Funding for CSP is shifted away from an acreage limitation under prior law to limits based on funding. EQIP is expanded and reauthorized with increased funding levels. The largest land retirement program—CRP—is reauthorized and expanded by increasing the CRP enrollment limit in annual increments from 24 million acres in FY2019 to 27 million by FY2023. To offset this increased enrollment level, the enacted bill reduces payments to participants, including cost-share payments, annual rental payments, and incentive payments. The 2018 farm bill also reauthorized and amended the Agricultural Conservation Easement Program (ACEP). Most of the changes to ACEP focus on the agricultural land easements by providing additional flexibilities to ACEP-eligible entities and authorize an increase in overall funding. The Regional Conservation Partnership Program (RCPP) is reauthorized and amended by shifting the program away from enrolling land through existing conservation programs to a standalone program with separate contracts and agreements. Under the revised program, USDA is to continue to enter into agreements with eligible partners, and these partners are to continue to define the scope and location of a project, provide a portion of the project cost, and work with eligible landowners to enroll in RCPP contracts. While the 2018 farm bill does not create new conservation programs, it does require that a number of existing programs direct a dollar amount or percentage of a program's funding to a resource-specific issue, initiative, or subprogram. Through these directed policies Congress has established a level of support, or required investment, to be carried out through implementation to target specific issues such as nutrient runoff or groundwater protection. The directed policy may also reduce the implementing agency's flexibility to allocate funding based on need, as well as reducing the amount available for activities under the larger program that may not meet a resource-specific provision. High commodity prices in years past, changing land rental rates, and new conservation technologies have led over time to a shift in farm bill conservation policy away from programs that retire land from production (CRP) toward programs that provide assistance to lands still in production (EQIP and CSP). Much of this shift occurred following the 2008 farm bill (FY2009-FY2013) and continued under the 2014 farm bill (FY2014-FY2018) as the level of total mandatory program funding for CRP was reduced relative to EQIP and CSP. Funding for easement programs (ACEP) also declined somewhat under the 2014 farm bill, but is projected to level off under the 2018 farm bill. Partnership program (RCPP) funding has also increased in recent farm bills, but remains relatively small compared to the other categories of programs.

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Introduction Congress has been active in establishing federal policy for the agricultural sector on an ongoing basis since the 1930s. Over the years, as economic conditions and technology have evolved, Congress has regularly revisited agricultural policy through periodic farm legislation. Across these decades, the breadth of policy areas addressed through such farm bills has expanded beyond providing support for a limited number of agricultural commodities to include establishing programs and policies that address a broad spectrum of related areas. These include agricultural conservation, credit, rural development, domestic nutrition assistance, trade and international food aid, organic agriculture, forestry, and support for beginning and veteran farmers and ranchers, among others. The Agriculture Improvement Act of 2018 ( P.L. 115-334 ), known as the "2018 farm bill," was enacted on December 20, 2018, approximately eight months after the bill was introduced ( Table 1 ). In the House, the Agriculture Committee reported the bill on April 18, 2018, by a vote of 26-20. An initial floor vote on May 18, 2018, failed in the House by a vote of 198-213, but floor procedures allowed that vote to be reconsidered ( H.Res. 905 ). The House passed H.R. 2 in a second vote of 213-211 on June 21, 2018. In the Senate, the Agriculture Committee reported its bill ( S. 3042 ) on June 13, 2018, by a vote of 20-1. The Senate passed its bill as an amendment to H.R. 2 by a vote of 86-11 on June 28, 2018. Conference proceedings to resolve the differences between the House- and Senate-passed versions of H.R. 2 officially began on September 5, 2018, and concluded in December 2018 with Senate passage of H.R. 2 on a vote of 87-13 and House passage by a vote of 369-47 ( H.Rept. 115-1072 ). The enacted 2018 farm bill continues a tradition of multi-year farm bills that would establish policy for a broad array of agriculture and nutrition assistance programs. To this end, P.L. 115-334 addresses agriculture and food policy across 12 titles. These titles cover commodity support programs, agricultural conservation, trade and international food aid, domestic nutrition assistance, credit, rural development, research and extension, forestry, horticulture, crop insurance, and a variety of other policies and initiatives. The Congressional Budget Office (CBO) projected at enactment that outlays of the 2018 farm bill will amount to $428 billion over the five-year life of the law (FY2019-FY2023). Most of this projected spending—$326 million, or 76%—is in the nutrition title for the Supplemental Nutrition Assistance Program (SNAP). The remaining 24%—$102 billion of projected outlays—stems primarily from agricultural programs, including crop insurance, farm commodity programs, and conservation. CBO estimated that the conference agreement for the 2018 farm bill will be budget neutral over a 10-year period (FY2019-FY2028). CBO estimated that in its first five years, the enacted 2018 farm bill will increase spending by $1.8 billion, compared with a simple extension of the 2014 farm bill, but that this initial increase will be entirely offset in the second five years of the budget window. The " Budgetary Impact " section of this report provides additional detail at the level of individual titles and major programs. The policymaking environment for the 2018 farm bill differed materially from that of the 2014 farm bill, reflecting lower farm income levels in recent years and disruptions to agricultural exports beginning in 2018. The U.S. Department of Agriculture (USDA) forecasts that for 2018, net cash farm income—a measure of the profitability of farming—will be about one-third below the levels of 2012 and 2013, which were the highest in the last 40 years adjusted for inflation. The decline in net cash farm income over this period reflects lower farm prices for many commodities. U.S. farm exports, which provide critical support to U.S. agricultural commodity prices and farm profitability, have been disrupted since early 2018 by a series of trade disputes involving major U.S. agricultural export markets—including China, Canada, Mexico, and the European Union—that has led to the imposition of tariffs by these trading partners on a range of U.S. farm product exports. The decline in farm income, coupled with uncertainty about prospects for agricultural exports, may well have played a role in shaping a set of policies in the enacted farm bill that provide farmers and ranchers with a degree of continuity for the next five years. This report provides an analysis of the budgetary implications of both bills, followed by summaries identifying some of the changes contained in the enacted 2018 farm bill compared with prior law. These summaries are followed by tables containing a title-by-title analysis of all of the policies and provisions in the enacted 2018 farm bill compared to the House- and Senate-passed versions of H.R. 2 and with the expired 2014 farm bill . Budgetary Impact5 The allocation of federal spending is one way to measure the activities covered by a farm bill, both by how much is spent in total and by how a new law changes policy. CBO estimates are the official measures when bills are considered and are based on long-standing budget laws and rules. A farm bill authorizes funding in two ways: It authorizes and pays for mandatory outlays with multi-year budget estimates when the law is enacted. It also sets the parameters for discretionary programs and authorizes them to receive future appropriations but does not provide funding. Mandatory programs often dominate farm bill policy and the debate over the farm bill budget. Figure 1 illustrates the $428 billion, five-year total of projected mandatory outlays at enactment for the life of the 2018 farm bill (FY2019-FY2023). Figure 2 shows program-level detail for agriculture-specific programs, particularly the farm commodity and conservation titles. The nutrition title is the largest component of the farm bill budget, followed by crop insurance, farm commodity programs, and conservation. Baseline The budgetary impact of mandatory spending proposals is measured relative to an assumption that certain programs continue beyond the end of the farm bill. The benchmark is the CBO baseline —a projection at a particular point in time of future federal spending on mandatory programs under current law. The baseline provides funding for reauthorization, reallocation to other programs, or offsets for deficit reduction. Generally, many programs (such as the farm commodity programs or supplemental nutrition assistance) are assumed to continue in the baseline as if there were no change in policy and the program did not expire. However, some programs are not assumed to continue beyond the end of a farm bill. The CBO baseline used to develop the 2018 farm bill was released in April 2018. It projected that if the 2014 farm bill, as amended as of April 2018, were extended, farm bill programs would cost $867 billion over the next 10 years, FY2019-FY2028. Most of that amount, 77%, was in the nutrition title for the Supplemental Nutrition Assistance Program (SNAP). The remaining 23%, $203 billion baseline (the first and fourth data columns in Table 3 ), was for agricultural programs, mostly in crop insurance, farm commodity programs, and conservation. Other titles of the farm bill contributed about 1% of the baseline, some of which are funded primarily with discretionary spending. Score When a new bill is proposed that would affect mandatory spending, CBO estimates the score (cost impact) in relation to the baseline. Changes that increase spending relative to the baseline have a positive score; those that decrease spending relative to the baseline have a negative score. Budget enforcement rules use these baselines and scores to follow "PayGo" and other budget rules (that in part may require no increase to the federal deficit). The score (change) of the enacted 2018 farm bill is shown by title in the second and fifth columns in Table 3 . Figure 3 shows the title-level scores that are made by the enacted 2018 farm bill and the House and Senate bills that preceded the conference agreement. Table 4 contains the more detailed section-by-section CBO score of the enacted 2018 farm bill. Relative to the baseline, the overall score of the 2018 farm bill is budget neutral over a 10-year period. The farm bill increases spending in the first five years by $1.8 billion ( Table 3 ). The House-passed bill would have decreased 10-year outlays by $1.8 billion; the Senate-passed bill was budget neutral ( Figure 3 ). Scores of separate titles show both increases and decreases. Generally, the enacted farm bill follows the score of the Senate bill more closely than the House bill ( Figure 3 ). In the enacted law, most of the reductions are from changes in the Rural Development title. Six titles have increased outlays over the 10-year period, including farm Commodities, Trade, Research, Energy, Horticulture, and Miscellaneous. The Conservation and Nutrition titles have increases over the first five years but are budget neutral over the 10-year period ( Table 3 ). Within some titles, the net score may be a combination of increases and decreases across provisions. This is particularly notable in the Conservation title, which reallocates spending across programs more than in other titles ( Table 4 ). For several of the "programs without baseline" from the 2014 farm bill, the 2018 farm bill provides continuing funding and, in some cases, permanent baseline. Twenty-three of the 39 such programs received continued mandatory funding in the 2018 farm bill (see footnotes in Table 4 ). Fourteen of the programs without baseline received mandatory funding during FY2019-FY2023 but no baseline beyond the end of the farm bill. Nine of the programs without baseline received mandatory funding and permanent baseline beyond the end of the farm bill. Three of these programs were combined with six others into six provisions in the 2018 farm bill. In addition, five provisions in the 2018 farm bill created new programs without baseline for the next farm bill. Projected Outlays at Enactment When a new law is passed, the projected cost at enactment equals the baseline plus the score (the third and sixth columns of Table 3 ). This sum becomes the foundation of the new law and may be compared to future CBO baselines as an indicator of how actual costs transpire as the law is implemented and market conditions change. As presented above, Figure 1 illustrates the projected outlays at enactment for the life of the 2018 farm bill (FY2019-FY2023). Figure 2 shows program-level detail for agriculture-specific programs, particularly the Farm Commodity and Conservation titles. Most of $428 billion five-year total amount (76%) is in the Nutrition title for SNAP. The remaining 24%, $102 billion of projected outlays, is for agricultural programs, mostly in crop insurance (8.9%), farm commodity programs (7.3%), and conservation (6.8%). Title-by-Title Summaries Commodities14 Title I of the 2018 farm bill authorize support programs for dairy, sugar, and covered commodities—including major grain, oilseed, and pulse crops—as well as agricultural disaster assistance. Major field-crop programs include the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs and the Marketing Assistance Loan (MAL) program (see Table 5 ). The dairy program involves protecting a portion of the margin between milk and feed prices. The sugar program provides a combination of price support, limits on imports, and processor/refiner marketing allotments. Four disaster assistance programs that focus primarily on livestock and tree crops were permanently authorized in the 2014 farm bill. These disaster assistance programs provide federal assistance to help farmers recover financially from natural disasters, including drought and floods. Title I also includes several administrative provisions that suspend permanent farm law from 1938 and 1949 that would otherwise impose antiquated and potentially disruptive price support programs; assign payment limits for individuals, joint ventures or partnerships, and corporations; specify the adjusted gross income (AGI) threshold for program payment eligibility; and identify other details regarding payment attribution and eligibility. The 2018 farm bill extends authority for most current commodity programs but with some modifications to the ARC, PLC, and MAL programs; dairy; sugar; and agricultural disaster assistance. Under the 2014 farm bill, producers were allowed a one-time choice between ARC and PLC on a commodity-by-commodity basis, with payments made on 85% of each commodity's base acres (i.e., historical program acres that are eligible for ARC and PLC payments). To increase producer flexibility, the 2018 farm bill provides 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. Producers may remotely and electronically sign annual contracts for ARC and PLC. Producers also have the option to sign a multi-year contract for the ARC and PLC programs. If no initial choice is made, then the program defaults to whichever program was in effect under the 2014 farm bill. Base acres that have not been planted to a commodity eligible to participate in these programs during the 2009-2017 period are not eligible to receive ARC and PLC payments under the 2018 farm bill. However, as a concession to the affected farms, these base acres may be enrolled in the Conservation Stewardship Program for five years at an annual program payment rate of $18 per acre. Two changes to the PLC program include the option for producers to update their program yields (used in the PLC payment formula) based on 90% of the average yield for 2013-2017, using a yield plug of 75% of the county average for each year where the farm program yield is less, excluding any years with zero yields, and adjusting downward for any national trend yield growth. In addition, an escalator provision was added that could potentially raise a covered commodity's effective reference price (used to determine the PLC per-unit 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. The 2018 farm bill also specifies several changes to the ARC program. Under the 2014 farm bill, USDA's National Agricultural Statistics Service (NASS) data for county average yields was used for calculating both ARC benchmark and actual revenues. Under the 2018 farm bill, data from USDA's Risk Management Agency (RMA) will be the primary source for county average yield data. Where RMA data is not available, USDA will determine the data source considering data from NASS or the yield history of representative farms in the state, region, or crop-reporting district. This data reprioritization is intended to improve the integrity of the ARC program and avoid the disparity in ARC payments that some neighboring counties experienced in recent years. Also, up to 25 counties nationwide that meet certain criteria—larger than 1,400 square miles and with more than 190,000 base acres—may subdivide for purposes of calculating the ARC benchmark and actual revenue. This change is expected to allow ARC calculations to better reflect significant yield deviations within a county. Also, ARC will use a trend-adjusted yield, as is done by RMA for the federal crop insurance program. This has the potential to raise ARC revenue guarantees for producers. Finally, 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. Marketing assistance loan rates are increased for several program crops, including barley, corn, grain sorghum, oats, extra-long-staple cotton, rice, soybeans, dry peas, lentils, and small and large chickpeas. Commodities excluded from the loan rate increase are upland cotton, peanuts, minor oilseeds, nongraded wool, mohair, and honey. Marketing assistance loan rates are used to establish the maximum payment under PLC. Thus, raising the loan rate for a commodity lowers its potential PLC program payment rate. No changes were made to the "actively engaged in farming" criteria used to determine whether an individual is eligible for farm program payments. With respect to payment limits and the AGI limit, the 2018 farm bill leaves both the payment limit of $125,000 per individual ($250,000 per married couple) and the AGI limit of $900,000 unchanged, but it modifies the eligibility criteria for commodity program payment eligibility. However, MAL program benefits are exempted from inclusion under payment limits. Thus, payment limits apply only to combined ARC and PLC payments. Also, 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. The enacted bill also amends the permanent agricultural disaster assistance programs. The law expands payments for livestock losses caused by disease and for losses of unweaned livestock that occur before vaccination. The law also expands the definition of eligible producer to include Indian tribes or tribal organizations and increases replanting and rehabilitation payment rates for beginning and veteran orchardists. The law amends the limits on payments received under select disaster assistance programs—of the four disaster assistance programs, only the livestock Forage Program (LFP) is not subject to the $125,000/person payment limit. The AGI requirements are left unchanged. The Noninsured Crop Disaster Assistance Program (NAP) is also amended. The enacted bill amends crop eligibility to include crops that may be covered by select forms of crop insurance but only under whole farm plans or weather index policies. It also amends the payment calculation to consider the producer's share of the crop, raises the service fees and creates separate payment limits for catastrophic ($125,000/person) and buy-up ($300,000/person) coverage. The law makes buy-up coverage permanent, and adds data collection and program coordination requirements. The 2018 farm bill significantly revises the Margin Protection Program (MPP) for milk producers that was established in the 2014 farm bill. The new dairy program—Dairy Margin Coverage (DMC)—provides lower producer-paid premium rates for milk coverage of 5 million pounds or less (Tier I), adds margin coverage at higher levels of coverage, and allows producers to cover a larger quantity of milk production. DMC is authorized through December 31, 2023. The DMC program will pay participating dairy producers the difference (when positive) between a producer-selected margin and the national milk margin (calculated as the all-milk price minus an average feed cost ration). The feed ration formula is unchanged from MPP. For a $100 administrative fee, participating dairy producers are automatically covered at the $4.00 per hundredweight (cwt) margin level. Producers may buy additional margin coverage from $4.50/cwt to $9.50/cwt on the first 5 million pounds of production, compared with $5.50/cwt to $8.00/cwt under MPP. Also, producers may now cover from 5% to 95% of their production history, compared with 25% to 90% under MPP. Under DMC, premiums for Tier I coverage above $4.00/cwt are significantly reduced from MPP to incentivize dairy producers to buy higher levels of margin coverage. For example, under MPP, an $8.00 margin cost $0.142/cwt, but under DMC, the cost is $0.10/cwt. The premiums for the newly available coverage for margins of $8.50, $9.00, and $9.50 are established at $0.105/cwt, $0.11/cwt, and $0.15/cwt, respectively. For production of over 5 million pounds (Tier II coverage), the premium rates for $4.50 and $5.00 margins are also reduced compared with MPP, but margin coverage is only available up to $8.00, and the premium rates are generally higher than under MPP. Another change under the 2018 farm bill is that dairy producers will receive a 25% discount on premiums if they select and lock in their margin and production coverage levels for the entire five years of the DMC program. Otherwise, producers may continue to select coverage levels annually. Also under DMC, dairy producers may apply for repayment of the premiums, less any payments received, that were paid under MPP during 2014-2017. If dairy producers opt to apply repayments to future DMC premiums, they are to receive credit for 75% of the eligible repayment. Otherwise, they may opt for a direct cash payment of 50% of the eligible repayment. Unlike MPP, the DMC program allows dairy producers to participate in both margin coverage and the Livestock Gross Margin-Dairy (LGM-D) insurance program that insures the margin between feed costs and a designated milk price. In addition, producers who were excluded from participating in MPP in 2018 because their milk production was enrolled in LGM-D may retroactively participate in MPP. The 2018 farm bill reauthorizes the Dairy Forward Pricing Program, the Dairy Indemnity Program, and the Dairy Promotion and Research Program through FY2023. The act repeals the Dairy Product Donation Program enacted in the 2014 farm bill. It also establishes a milk donation program designed to simplify donations of fluid milk that producers, processors, and cooperatives make to food banks and feeding organizations. The donation program is funded at $9 million for FY2019 and $5 million in each following fiscal years. Also, the act amends the formula for the Class I skim milk price used for calculating the Class I price under Federal Milk Marketing Orders. The farm bill requires USDA to conduct studies on whether the national feed cost ration is representative of actual feed costs used in the margin calculation and on the cost of corn silage versus the feed cost of corn, and it directs USDA to report alfalfa hay prices in the top five milk-producing states. Conservation17 USDA administers a number of agricultural conservation programs that assist private landowners with natural resource concerns. These can be broadly grouped into working lands programs, land retirement and easement programs, watershed programs, emergency programs, technical assistance, and other programs. The enacted bill amends portions of programs in all of these categories (see Table 6 ). However, the general focus of the enacted 2018 farm bill is on the larger working lands, land retirement, and easement programs. All major conservation programs were reauthorized with varying degrees of amendments. Farm bill conservation programs are authorized to receive mandatory funding through the Commodity Credit Corporations (CCC). Generally, the law reallocates mandatory funding within the title among the larger programs and pays for increases in the short term with reductions in the long term. CBO projects that the enacted bill would increase funding for conservation by $555 million in the short term (FY2019-FY2023) and reduce funding by $6 million in the long term (FY2019-FY2028). Working Lands Programs In general, working lands programs provide technical and financial assistance to help farmers improve land management practices. The two largest working lands programs—Environmental Quality Incentives Program (EQIP) and Conservation Stewardship Program (CSP)—account for more than half of all conservation program funding. Total funding for both programs is reduced under the enacted bill, compared with prior law, but in different ways and to different degrees. CSP provides financial and technical assistance to producers to maintain and improve existing conservation systems and to adopt additional conservation activities in a comprehensive manner on a producer's entire operation. The House bill would have repealed CSP and created a stewardship contract within EQIP, whereas the Senate bill would have reauthorized CSP and reduce program enrollment. The enacted bill creates a mix of both the House and Senate proposals with amendments. The law reauthorizes CSP but amends how the program limits future enrollment. The program is shifted away from an acreage limitation under prior law (10 million acres annually) to limits based on funding ($700 million in FY2019 increasing to $1 billion in FY2023), a reduction from prior law. The savings from limiting CSP in this manner are redistributed to EQIP and other farm bill conservation programs within the title. The enacted bill also amends CSP's ranking criteria; contract renewal requirements; payments for cover crops, grazing management, and comprehensive conservation plan development; and organic certification allocations. A new grassland conservation initiative is also added to CSP. EQIP is reauthorized and expanded in the enacted bill. EQIP provides financial and technical assistance to producers and land owners to plan and install structural, vegetative, and land management practices on eligible lands to alleviate natural resource problems. The enacted bill increases EQIP funding in annual increments from $1.75 billion in FY2019 to $2.025 billion in FY2023. A number of amendments to EQIP focus on water quality and quantity-related practices, soil health improvement, and wildlife habitat improvement. The bill reduces the allocation for livestock-related practices from 60% to 50% and increases the allocation for wildlife-related practices from 5% to 10%. Water conservation system payments are expanded to irrigation and drainage entities with limitations. Conservation Innovation Grants, a subprogram under EQIP, is expanded to include community colleges, on-farm innovation, and soil health trials. Land Retirement and Easement Programs Land retirement and easement programs provide federal payments to private agricultural landowners for accepting permanent or long-term land-use restrictions. The largest land retirement program—the Conservation Reserve Program—is reauthorized and expanded under the enacted 2018 farm bill. CRP provides annual rental payments to producers to replace crops on highly erodible and environmentally sensitive land with long-term resource-conserving plantings. Under the new law, annual CRP enrollment is increased incrementally from 24 million acres in FY2019 to 27 million by FY2023. Within this limit, CRP is required to enroll up to 2 million acres in grasslands contracts and up to 8.6 million acres in continuous contracts. To offset this increased enrollment level, the enacted bill reduces payments to participants, including cost-share payments, annual rental payments, and incentive payments. Annual rental payments are limited to 85% of the county average for general enrollment and 90% for continuous enrollment. The enacted bill also makes a number of other changes that would further expand grazing and commercial uses on CRP acres as well as transition options for new and limited resource producers. Under CRP, new pilot programs are created, such as CLEAR 30 (Clean Lakes, Estuaries, and Rivers and Soil Health and Income Protection Pilot), while existing subprograms are reauthorized and codified (e.g., Conservation Reserve Enhancement Program and Farmable Wetlands Program). The Agricultural Conservation Easement Program (ACEP) is reauthorized and amended in the 2018 farm bill. ACEP provides financial and technical assistance through two types of easements: (1) agricultural land easements that limit nonagricultural uses on productive farm or grasslands and (2) wetland reserve easements that protect and restore wetlands. Most of the changes to ACEP focus on the agricultural land easements in which USDA enters into partnership agreements with eligible entities to purchase agricultural land easements from willing landowners. Additional flexibilities are provided to ACEP-eligible entities, including amendments to nonfederal cost share requirements, consideration of geographical differences, terms and conditions of easements, and certification criteria of eligible entities. Several amendments reduce the roll of USDA in the administration of ACEP agricultural land easements, including amendments to the certification of eligible entities, the right of easement enforcement, and planning requirements. Changes to wetland reserve easements center on compatible use and vegetative cover requirements. The enacted bill increases overall funding from $250 million in FY2018 to $450 million annually for FY2019-FY2023. Other Conservation Programs The new farm bill reauthorizes and amends the Regional Conservation Partnership Program (RCPP) by shifting the program away from enrolling land through existing conservation programs to a standalone program with separate contracts and agreements. The program is to continue to enter into agreements with eligible partners, and these partners are to continue to define the scope and location of the project, provide a portion of the project cost, and work with eligible landowners to enroll in RCPP contracts. The scope of eligible activities under RCCP is expanded to include activities that may be carried out under additional covered programs. RCPP funding is increased to $300 million annually for FY2019-FY2023 from $100 million annually under prior law. The enacted bill provides additional flexibilities to partners, including the makeup of a partner's project contribution, guidance and reporting requirements, agreement renewals, and the application process. The enacted bill also includes amendments to conservation programs and provisions with originating authorities outside of farm bill legislation, primarily various watershed and emergency conservation programs. The law also requires reports be provided to Congress on natural resources and on various pilot programs and trials. Trade18 The trade title—Title III of the enacted 2018 farm bill—addresses statutes concerning U.S. international food aid and agricultural export programs (see Table 7 ). Under the farm bill authority, U.S. international food assistance is distributed through three main programs: (1) Food for Peace (emergency and nonemergency food aid), (2) Food for Progress (agricultural development programs), and (3) the McGovern-Dole International Food for Education and Child Nutrition program (school lunch and feeding programs). The largest of these, the Food for Peace (FFP) program, receives about $1.5 billion in annual appropriations. Traditionally, these three programs have relied on donated U.S. agricultural commodities as the basis for their activities. However, recent farm bills have increasingly added flexibility to purchase food in local markets or to directly transfer cash or vouchers to needy recipients. The U.S. Agency for International Development administers FFP, while the Foreign Agricultural Service of USDA administers the other two programs. The bill reauthorizes all international food aid programs as well as certain operational details such as prepositioning of agricultural commodities and micronutrient fortification programs. P.L. 115-334 also adds a provision requiring that food vouchers, cash transfers, and local and regional procurement of non-U.S. foods avoid market disruption in the recipient country. Under prior law, this requirement applied only to U.S. commodities. The enacted law amends FFP by eliminating the requirement to monetize —sell on local markets to fund development projects—at least 15% of FFP commodities. It also increases the minimum level of FFP funds allocated for nonemergency assistance from $350 million to $365 million each year while maintaining the maximum annual allocation of 30% of FFP funds. P.L. 115-334 amends the McGovern-Dole program by authorizing up to 10% of annual appropriated funds to be used to purchase food in the country or region where it will be distributed. Prior law required all commodities provided under the program be produced in the United States. The bill also extends authority for several related international programs, including the Farmer-to-Farmer program, Bill Emerson Humanitarian Trust, and Global Crop Diversity Trust, as well as two associated fellowship programs: Cochran Fellowships and Borlaug Fellowships. P.L. 115-334 consolidates the existing U.S. export promotion programs—the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), and Technical Assistance for Specialty Crops (TASC)—into one section, establishing permanent mandatory funding for those programs. It also establishes a Priority Trade Fund, from which the Secretary can provide additional funding to the export promotion programs. The programs are authorized to receive $255 million in annual mandatory CCC funds for FY2019-FY2023. Of that money, not less than $200 million is to be spent on MAP, not less than $34.5 million on FMDP, not more than $8 million on EMP, not more than $9 million on TASC, and $3.5 million on the Priority Trade Fund. While the MAP and FMDP funding reflects 2014 farm bill funding levels for those programs, EMP and TASC are each authorized at $1 million less than in the 2014 farm bill. Another change is that MAP and FMDP funds can now also be spent on authorized programs in Cuba. The law also reauthorizes direct credits or export credit guarantees for the promotion of agricultural exports to emerging markets of not less than $1 billion in each fiscal year through 2023. Further, the new law authorizes the appropriation of up to $2 million annually through 2023 to assist with the removal of nontariff and other trade barriers to U.S. agricultural products produced with biotechnology and other agricultural technologies. And the law adds a requirement that USDA facilitate the inclusion of more tribal food and agricultural products in federal trade-related activities and international trade missions. Nutrition19 The enacted farm bill's Nutrition title amends a variety of aspects of SNAP and related nutrition assistance programs (see Table 8 ). While the enacted provisions incorporate some of the SNAP policies included in the House- and/or Senate-passed bills, the Nutrition title does not include the House-passed bill's expansion of work requirements and SNAP employment and training (E&T) programs. The law reauthorizes SNAP and related programs for five years through the end of FY2023. CBO estimates the Nutrition title's impact on direct spending (in outlays) is cost-neutral over the 10-year period (FY2019-FY2028). While certain policies are estimated to increase spending by approximately $1.1 billion, all others total to an estimated decrease in spending by approximately $1.1 billion. SNAP Eligibility and Benefit Calculation. The enacted 2018 farm bill's Nutrition title largely maintains current SNAP eligibility and benefit calculation rules. After debate over work requirements for SNAP, the enacted conference report maintains both the existing general work requirements and the time limit for nondisabled adults without dependents to receive SNAP, with a few amendments While prior law allowed states to exempt up to 15% of those subject to the time limit from the time limit, the 2018 farm bill reduces such exemptions to 12%. The conference report expands the SNAP E&T activities that a state may provide and emphasizes supervised job search over unsupervised job search programs. The new law increases one stream of mandatory E&T funding by approximately $14 million and prioritizes specified E&T activities for receiving any reallocated funding. On benefit calculation, the new law requires states to conduct a simplified calculation for homeless households and also requires certain updates or studies of certain aspects of benefit calculation. Among other eligibility-related provisions that were not adopted, the House-passed bill would have limited categorical eligibility while amending asset limits, limited how utilities may have been calculated in benefit calculation, expanded work requirements to include individuals 50-59 years old and individuals with children over the age of six, made it more difficult for states to qualify for waivers from work requirements, and increased the earned income deduction. ( Table 8 expands upon the eligibility and benefit calculation differences between the bills.) SNAP fraud, errors, and related state administration . The enacted 2018 farm bill includes policies intended to reduce errors and fraud in SNAP. The enacted farm bill establishes a nationwide National Accuracy Clearinghouse to identify concurrent enrollment in multiple states and requires state action on information that could change benefit amounts. It increases USDA's oversight of state systems and the quality control system. The enacted bill also repeals funding for state performance awards. Electronic Benefit Transfer (EBT) and retailers . The enacted Nutrition title contains policy changes for SNAP's EBT system and benefit redemption. It places limits on the fees EBT processors may charge, shortens the time frame for storing and expunging unused benefits, changes the authorization requirements for farmers' market operators with multiple locations, and requires USDA to conduct other specified retailer and EBT system oversight. The new law requires the nationwide implementation of the online acceptance of SNAP benefits and authorizes a pilot project to test SNAP recipients' use of mobile technology to redeem their SNAP benefits. Other SNAP- related grants . The enacted 2018 farm bill makes changes to other SNAP-related funding (E&T, a type of SNAP-related grants, is discussed above). The enacted Nutrition title reauthorizes the Food Insecurity Nutrition Incentive (FINI) grant program, renaming it the Gus Schumacher FINI, and provides for evaluation, training, and technical assistance. As added by the 2014 farm bill, this program funds projects that incentivize participants to purchase fruits and vegetables. The 2018 farm bill expands these SNAP incentive programs, increasing mandatory funding, and, within FINI's funding, establishes grants for produce prescription projects to serve individuals eligible for SNAP or Medicaid in households with or at risk of developing a diet-related health condition. The new law increases FINI funding by $417 million over 10 years. In addition to FINI's fruit and vegetable incentives or prescriptions, the Nutrition title also includes policies—but not federal funding—for retailer incentive programs and authorizes, with discretionary funding, pilot projects to focus on milk consumption. On nutrition education (SNAP-Ed), the new law makes some policy changes, such as requiring an electronic reporting system, but it does not change the program's funding. Food distribution programs . The Nutrition title reauthorizes and makes some policy changes to the nutrition assistance programs that distribute USDA foods to low-income households. The law includes changes to the Food Distribution Program on Indian Reservations, including requiring the federal government to pay at least 80% of administrative costs and creating a demonstration project for tribes to purchase their own commodities. The Nutrition title reauthorizes the Commodity Supplemental Food Program and increases the length of certification periods. The enacted bill also increases funding for The Emergency Food Assistance Program. CBO estimates that the increases will amount to an additional $206 million over 10 years. Included in this cost estimate is $4 million for each of FY2019-FY2023 for newly authorized projects to facilitate the donation of raw/unprocessed commodities by agricultural producers, processors, and distributors to emergency feeding organizations. Other nutrition programs and policies . The enacted 2018 farm bill also continues the Senior Farmers' Market Nutrition Program and its mandatory funding. The enacted bill reduces funding for the Community Food Projects competitive grant program, providing $5 million per year instead of $9 million. Though generally the school meals programs are reauthorized outside of the farm bill, the 2018 farm bill continues the $50 million set-aside for USDA's fresh fruit and vegetable purchases for schools and requires USDA to take certain actions to enforce school meals' Buy American requirements. The enacted bill also authorizes new programs and discretionary funding for Public-Private Partnerships and Micro-Grants for Food Security. Credit20 The Credit title (Title V) of the 2018 farm bill reauthorizes and makes several changes to provisions in the Consolidated Farm and Rural Development Act that governs the USDA farm loan programs (7 U.S.C. 1921 et seq. ). It also modifies the Farm Credit Act that governs the Farm Credit System (12 U.S.C. 2001 et seq. ) and reauthorizes the State Agricultural Loan Mediation Program (7 U.S.C. 5101; see Table 9 ). For the USDA farm loan programs, the 2018 farm bill adds specific criteria (e.g., coursework, military service, mentoring) that the Secretary may use to reduce the requirement for three years of farming experience in order for beginning farmers to qualify for loans. It also raises the maximum loan size for guaranteed loans (both farm ownership and farm operating) to $1.75 million per borrower in 2019, adjusted for inflation thereafter, from a lower statutory base of $700,000 established in 1996 ($1.4 million in 2018 after adjusting for inflation). For direct loans, the new farm bill increases the farm ownership loan limit to $600,000 and the farm operating loan limit to $400,000, both from $300,000 under prior law. For beginning and socially disadvantaged farmers, it increases the percentage of loans that may be guaranteed to 95%, generally from 80%-90%. The State Agricultural Loan Mediation Program is reauthorized through FY2023, and the range of issues covered by the program is expanded. For the government-chartered cooperative Farm Credit System (FCS), the 2018 farm bill eliminates obsolete references to outdated names and transition periods from the 1980s and 1990s. It clarifies that FCS entities may share privileged information with the Farm Credit Administration (FCA) for regulatory purposes without altering the privileged status elsewhere, and it expands FCA's jurisdiction to hold accountable "institution-affiliated parties" (including agents and independent contractors). It also repeals a compensation limit for FCS bank boards of directors. For the Federal Agricultural Mortgage Corporation (FarmerMac), the new farm bill increases the acreage exception—subject to a study by FCA—from 1,000 acres to 2,000 acres for the dollar limit to remain a qualified loan. For the Farm Credit System Insurance Corporation (FCSIC), which insures repayment of certain FCS debt obligations, the 2018 farm bill provides greater statutory guidance regarding the powers and duties of the FCSIC when acting as a conservator or receiver of a troubled FCS institution and the rights and duties of parties affected by an FCS institution being placed into a conservatorship or receivership. These are largely modeled after provisions that apply to depository institutions that are insured by the Federal Deposit Insurance Corporation. The enacted 2018 farm bill also directs four studies about agricultural credit: (1) an annual FSA report about its farm loan program that includes various performance characteristics, demographics, and participation by beginning and socially disadvantaged farmers; (2) an FCA study about the risks and capitalization of loans in the portfolios of FCS and FarmerMac and the feasibility of increasing the acreage for FarmerMac qualified loans; (3) a Government Accountability Office (GAO) study about credit availability for socially disadvantaged farmers; and (4) a GAO study about the credit needs of Indian tribes and members of Indian tribes. Rural Development21 The Rural Development title of the enacted 2018 farm bill ( P.L. 115-334 ) addresses rural development policies including broadband deployment, opioid abuse and rural health, and business and infrastructure development (see Table 10 ). The law adds a new section to the Rural Development Act of 1972 authorizing the Secretary to temporarily prioritize assistance under certain USDA Rural Development loan and grant programs to respond to a public health emergency. P.L. 115-334 also directs the Secretary to prioritize assistance under certain programs between FY2019 and FY2025 to combat substance use disorder. It directs the Secretary to make available 20% of Distance Learning and Telemedicine Program funds for telemedicine projects that provide substance use disorder treatment services. It also gives priority for assistance under the Community Facilities Program and Rural Health and Safety Education Program to entities providing substance use prevention, treatment, and recovery services. The new law also allows loans or loan guarantees provided to a community facility or rural entity to be used to refinance a rural hospital's debt obligation. P.L. 115-334 includes provisions that address access to broadband in rural communities. The law amends the Rural Broadband Access Loan and Loan Guarantee Program to allow USDA to provide grants, in addition to loans and loan guarantees, to fund broadband deployment projects. It increases authorized appropriations for broadband projects from $25 million to $350 million annually for FY2019-FY2023. Prior law established minimum acceptable levels of broadband service for a rural area for the purposes of this program as 4 megabits per second (Mbps) download and 1 Mbps upload. P.L. 115-334 increases these minimum acceptable levels to 25 Mbps download and 3 Mbps upload. The new law also reauthorizes the Rural Gigabit Network Pilot Program established in the 2014 farm bill ( P.L. 113-79 ) and renames the program Broadband Innovative Advancement. It also codifies the Community Connect Grant Program and authorizes discretionary funding for the program of $50 million annually for FY2019-FY2023. The new law also establishes a Rural Broadband Integration Working Group to identify barriers and opportunities for broadband deployment in rural areas. The enacted 2018 farm bill directs the Northern Border Regional Commission to establish a new State Capacity Building Grant Program to provide grants to support economic and infrastructure development in commission states. P.L. 115-334 also establishes a Council on Rural Community Innovation and Economic Development to enhance federal efforts to address the needs of rural areas by creating working groups within the council to focus on job acceleration and integration of smart technologies in rural communities and making recommendations to the Secretary of Agriculture. P.L. 115-334 reauthorizes the Rural Energy Savings Program and amends the program to allow financing of off-grid and renewable energy and energy storage systems. It increases authorized discretionary funding for the Emergency and Imminent Community Assistance Water Program from $35 million per year to $50 million per year for FY2019-FY2023. It also decreases authorized discretionary funding to capitalize revolving water and wastewater loan funds from $30 million per year to $15 million per year for FY2019-FY2023. P.L. 115-334 amends the definition of rural in the ConAct (P.L. 92-419) to exclude from population-based criteria individuals incarcerated on a "long-term or regional basis" and to exclude the first 1,500 individuals who reside in housing located on military bases. It also amends the Housing Act of 1949 to allow any area defined as a rural area between 1990 and 2020 to remain classified as such until receipt of the 2030 decennial census. Among its other changes, the enacted 2018 farm bill establishes a new technical assistance and training program to assist communities in accessing programs offered through the Rural Business-Cooperative Service. In addition, it amends the Cushion of Credit Payments Program to cease new deposits and modify the interest rate structure that borrowers receive. It also allows borrowers to withdraw deposits from cushion of credit accounts to prepay loans under USDA's Rural Utilities Service without a prepayment penalty through FY2020. The new law amends the Rural Economic Development Loan and Grant Program to authorize $10 million per year in discretionary funding for FY2019-FY2023 and $5 million per year in mandatory funding for FY2022-FY2023. The law also repeals several unfunded programs, including the Rural Telephone Bank, the Rural Collaborative Investment Program, and the Delta Region Agricultural Development Grants Program. Research22 USDA is authorized under four major laws to conduct agricultural research at the federal level and to provide support for cooperative research, extension, and postsecondary agricultural education programs in the states through formula funds and competitive grants to land-grant universities (see Table 11 ). The enacted Agriculture Improvement Act of 2018 ( P.L. 115-334 , Title VII) reauthorizes funding for these activities through FY2023 with either mandatory funding or discretionary funding that is subject to annual appropriations. Several new research areas in the High Priority Research and Extension program are designated as high priorities: macadamia tree health, national turfgrass research, fertilizer management, cattle fever ticks, and laying hen and turkey research. The law also reauthorizes the Organic Agriculture Research and Extension Initiative (OREI) and increases mandatory funding levels to $30 million annually for FY2019-FY2023. The Specialty Crop Research Initiative (SCRI) is reauthorized through FY2023 and will continue to include carve-out funding for the Emergency Citrus Disease Research and Extension Program. SCRI also expands program eligibility to include "size-controlling rootstock systems for perennial crops" and "emerging and invasive species," among other production practices and technologies. The enacted law provides new programs for the 1890 land-grant institutions and 1994 tribal colleges of agriculture, authorizes new support for urban and indoor agricultural production, authorizes new funding for industrial hemp research and development, and authorizes an initiative supporting advanced agricultural research. Other provisions reauthorize and extend national genetic resources programs, OREI, and SCRI. The research title also makes changes to the Foundation for Food and Agriculture Research and reauthorizes several programs relating to agricultural biosecurity. The law creates a new scholarship program for students attending 1890 land-grant universities (Historically Black Colleges and Universities). Authorized grants are for young African American students who commit to pursuing a career in the food and agricultural sciences. Another provision of the law also establishes at least three Centers of Excellence, each to be led by an 1890 institution. The centers are to concentrate research and extension activities in one or more defined areas, including nutrition, wellness and health, farming systems and rural prosperity, global food security and defense, natural resources, energy and the environment, and emerging technologies. A similar program, New Beginnings for Tribal Students, is to offer competitive grants to 1994 tribal agriculture colleges to support recruiting, tuition, experiential learning, student services, counseling, and academic advising to increase the retention and graduation rates of tribal students at 1994 land-grant colleges. Another provision will make 1994 tribal colleges that offer an associate's degree or a baccalaureate eligible to participate in McIntire-Stennis forestry research support. Several provisions authorize research and development funding for industrial hemp production. Under the Critical Agricultural Materials Act, hemp will now be included as an industrial product eligible for support. In amending and expanding a provision in the 2014 farm bill (Section 7606, P.L. 113-79 ), the Secretary is directed to conduct a study of hemp production pilot programs to determine the economic viability of domestic production and sale of hemp. A new provision creates a "Hemp Production" subtitle under the Agricultural Marketing Act of 1946, expanding the existing statutory definition of hemp and expanding eligibility to other producers and groups, including tribes and territories. States or Indian tribes wanting primary regulatory authority over hemp production will be required to implement a plan with specific requirements to further monitor and regulate their production of hemp. A provision of the research title creates new programs supporting advanced agricultural research and urban, indoor, and emerging agricultural production systems. A new Agriculture Advanced Research and Development Authority (AGARDA) is established as a component of the Office of the Chief Scientist to examine the applicability for advanced research and development in food and agriculture through a pilot program that targets long-term and high-risk research. Focal areas include acceleration of novel, early-stage innovative agricultural research; prototype testing; and licensing and product approval under the Plant Protection Act and the Animal Health Protection Act, among other innovative research tools that might be used in the discovery, development, or manufacture of a food or agricultural product. The Secretary is to develop and make publicly available a strategic plan setting forth the agenda that AGARDA will follow and provide for consultation with other federal research agencies; the National Academies of Sciences, Engineering, and Medicine; and others. There are provisions in the AGARDA program to expedite contract and grant awards and the appointments of highly qualified scientists and research program managers without regard to certain statutes governing appointments in the competitive federal service. The fund will have an authorized appropriation of $50 million each year for FY2019-FY2023. The program terminates at the end of FY2023. The enacted bill also authorizes a new Urban, Indoor, and Emerging Agricultural Production, Research, Education, and Extension Initiative. The provision authorizes the Secretary to make competitive grants to facilitate development of urban and indoor agricultural production systems and emerging harvesting, packaging, and distribution systems and new markets. The grants could also support methods of remediating contaminated urban sites (e.g., brownfields); determining best practices in pest management; exploring new technologies to minimize energy, lighting systems, water, and other inputs for increased food production; and studying new crop varieties and agricultural products to connect to new markets. The provision provides mandatory and discretionary spending of $4 million and $10 million, respectively, for each year for FY2019-FY2023. In addition, there is authorization of $14 million for a study of urban and indoor agriculture production under the 2017 Census of Agriculture, including data on community gardens, rooftop gardens, urban farms, and hydroponic and aquaponic farm facilities. Forestry23 Similar to previous farm bills, the forestry title in the enacted 2018 farm bill ( P.L. 115-334 , Title VIII) includes provisions related to forestry research and establishes, modifies, or repeals several programs to provide financial and technical assistance to nonfederal forest landowners (see Table 12 ). The forestry title also includes several provisions addressing management of the National Forest System (NFS) lands managed by the USDA Forest Service and the public lands managed by the Bureau of Land Management (BLM) in the Department of the Interior. Forestry assistance and research programs are primarily authorized under three main laws: the Cooperative Forestry Assistance Act, the Forest and Rangeland Renewable Resources Research Act, and the Healthy Forests Restoration Act. Many forestry programs are permanently authorized to receive such sums as necessary in annual discretionary appropriations and thus do not require reauthorization in the farm bill. Some programs, however, are not permanently authorized and expired at the end of FY2018. The 2018 farm bill reauthorizes, through FY2023, four such programs: the Healthy Forests Reserve Program, Rural Revitalization Technology, National Forest Foundation, and funding for implementing statewide forest resource assessments. The 2018 farm bill also provides explicit statutory authorization and congressional direction for current programs that were operating under existing, but broad, authorizations. For example, the farm bill authorizes the Landscape Scale Restoration program to provide financial assistance for large restoration projects that cross landownership boundaries, providing statutory direction for an assistance program that has been operating since FY2015 based on authorities provided in the 2014 farm bill. The 2018 farm bill also modifies or repeals some existing assistance programs. For example, the bill amends the permanent authorization for the Semiarid Agroforestry Research Center and establishes an FY2023 expiration. The forestry title also addresses issues related to the accumulation of biomass in many forests and the associated increased risk for uncharacteristic wildfires on both federal and nonfederal land. In Part III of Subtitle F, the Timber Innovation Act incorporates provisions from both the House- and Senate-passed bills to establish, reauthorize, and modify assistance programs to promote wood innovation for energy use and building construction and to facilitate the removal of forest biomass. The law also authorizes up to $20 million in annual appropriations to provide financial assistance to states for hazardous fuel reduction projects that cross landownership boundaries. The law also reduces the annual authorization for the Forest Service's hazardous fuels management program from $760 million annually to $660 million annually and adds a sunset date of FY2023 to the authorization. In addition, the law repeals other biomass-related programs, such as the Biomass Commercial Utilization Program, a biomass energy demonstration project, and a wood fiber recycling research program. The 2018 farm bill contains a provision that changes how the Forest Service and BLM comply with the requirements under the National Environmental Policy Act for management activities involving sage grouse and/or mule deer habitat. The law establishes a categorical exclusion for specified activities under which projects up to 4,500 acres would not be subject to the requirements to prepare an environmental assessment or environmental impact statement. This provision was in the Senate-passed version of the bill. The House-passed version would have established 10 other categorical exclusions for various activities and would have also changed some of the consultation requirements under the Endangered Species Act. The enacted farm bill also includes provisions from the House bill related to the Forest Service's authority to designate insect and disease treatment areas on NFS lands and procedures intended to expedite the environmental analysis for specified priority projects within those areas. Specifically, the enacted farm bill adds hazardous fuels reduction as a priority project category and authorizes larger projects. The enacted farm bill also addresses miscellaneous federal and tribal forest management issues. For example, the law expands the availability of Good Neighbor Agreements to include federally recognized Indian tribes and county governments and authorizes tribes to enter into contracts to perform specified forest management activities on tribal land. The enacted bill also reauthorizes the Collaborative Forest Landscape Restoration Program to receive appropriations through FY2023, raises the authorized level to $80 million, and authorizes the Secretary to issue waivers to extend projects beyond the initial 10 years. In addition, the enacted farm bill also authorizes the conveyance of NFS land through lease, sale, or exchange. The enacted bill expands the Small Tracts Act, reauthorizes the Facility Realignment and Enhancement program, authorizes the Forest Service to lease administrative sites, and includes provisions for specific parcels. The law also establishes two watershed protection programs on NFS lands and authorizes the Secretary to accept cash or in-kind donations from specified nonfederal partners to implement projects associated with one of those programs. Energy32 The Energy title (Title IX) supports agriculture-based renewable energy. In the 2018 farm bill, the energy title extends eight programs and one initiative through FY2023 (see Table 13 ). It repeals one program and one initiative—the Repowering Assistance Program and the Rural Energy Self-Sufficiency Initiative. It establishes one new grant program, the Carbon Utilization and Biogas Education Program, which is focused on the education and utilization of carbon sequestration as well as biogas systems. The title also amends the eligible material definition for the Biomass Crop Assistance Program to include algae. Further, the law modifies the definitions of biobased product (to include renewable chemicals), biorefinery (to include the conversion of an intermediate ingredient or feedstock), and renewable energy systems (to include ancillary infrastructure such as a storage system). Mandatory program funding is less than what was provided in earlier farm bills. The 2018 farm bill authorizes a total of $375 million in mandatory funding for FY2019-FY2023. The 2014 farm bill authorized a total of $694 million in mandatory funding over its five-year life. Mandatory funding is provided for the Biobased Markets Program ($15 million over five years), the Biorefinery Assistance Program ($75 million over five years), the Bioenergy Program for Advanced Biofuels ($35 million over five years), the Rural Energy for America Program ($250 million over five years), and the Feedstock Flexibility Program for Bioenergy Producers, which is authorized for such sums as necessary for five years but with outlays projected to amount to $0 according to CBO. Mandatory funding is not provided for the Biodiesel Fuel Education Program, the Biomass Research and Development Initiative, the Biomass Crop Assistance Program, or the new Carbon Utilization and Biogas Education Program. The farm bill also authorizes discretionary appropriations, subject to annual appropriations action. Horticulture33 The 2018 farm bill reauthorizes many of the existing farm bill provisions supporting farming operations in the specialty crop, certified organic agriculture, and local foods sectors. These provisions cover several programs and policies benefitting these sectors, including block grants to states, support for farmers markets, data and information collection, education on food safety and biotechnology, and organic certification, among other market development and promotion initiatives (see Table 14 ). Provisions affecting the specialty crop and certified organic sectors are not limited to the Horticulture title (Title X) but are contained within several other titles. Among these are programs in the Research, Nutrition, and Trade titles, among others. Related programs outside the Horticulture title include SCRI and OREI in the research title, as well as the Fresh Fruit and Vegetable Program and Section 32 purchases for fruits and vegetables under the Nutrition title, among other farm bill programs. The new law makes changes both to farmers markets and local foods promotion programs, combining and expanding the Farmers Market Promotion Program and Local Food Promotion Program, along with the Value-Added Agricultural Product Market Development Grants program, to create a new "Local Agriculture Market Program" with an expanded mission and mandatory funding of $50 million for FY2019 and each year thereafter, plus authorized appropriations. The law also includes several provisions from S. 3005 (Urban Agriculture Act of 2018) supporting urban agriculture development (including new programs and authorization for both mandatory and discretionary funding in the Miscellaneous, Research, Conservation, and Crop Insurance titles). The new law also makes changes to USDA's National Organic Program (NOP) and related programs, addressing concerns about organic import integrity by including provisions that strengthen the tracking, data collection, and investigation of organic product imports, including certain provisions in H.R. 3871 (Organic Farmer and Consumer Protection Act of 2017). It also amends the eligibility and consultation requirements of the National Organic Standards Board, among other changes. The law reauthorizes NOP appropriations above current levels while reauthorizing current funding for the Organic Production and Market Data Initiatives and for technology upgrades to improve tracking and verification of organic imports. It also expands mandatory funding for the National Organic Certification Cost Share Program. The new law also includes a number of provisions that further facilitate the commercial cultivation, processing, and marketing of industrial hemp in the United States. These provisions were in the Senate-passed bill and contained within the Horticulture title as well as the Research, Crop Insurance, and Miscellaneous titles of the enacted farm bill. Many of these provisions originated from introduced versions of the Hemp Farming Act of 2018 ( S. 2667 ; H.R. 5485 ). Chief among these provisions is an amendment to the Controlled Substances Act (21 U.S.C. 802(16)) to exclude hemp from the statutory definition of marijuana as redefined in the 2018 farm bill, provided it contains not more than a 0.3% concentration of delta-9 tetrahydrocannabinol—marijuana's primary psychoactive chemical. The law also creates a new hemp program under the Agricultural Marketing Act of 1946 (7 U.S.C. Section 1621 et seq. ) establishing a regulatory framework for hemp production (under USDA's oversight), expands the statutory definition of hemp , and expands eligibility to produce hemp to a broader set of producers and groups, including tribes and territories. States or Indian tribes that seek primary regulatory authority over hemp production would be required to implement a "plan" to further monitor and regulate hemp production. States and tribal governments without USDA-approved plans would be subject to plans established by USDA to monitor and regulate hemp production. Without a license issued by USDA, it is unlawful to produce hemp in a state or tribal domain. Other provisions in the law's crop insurance title make hemp producers eligible to participate in federal crop insurance programs, while provisions in the Research title of the law make hemp production eligible for certain USDA research and development programs. Crop Insurance34 The federal crop insurance program offers subsidized crop insurance policies to farmers. Farmers can purchase policies that pay indemnities when their yields or revenues fall below guaranteed levels. While the majority of federal crop insurance policies cover yield or revenue losses, the program also offers policies with other types of guarantees, such as index policies that trigger an indemnity payment based on weather conditions. The Federal Crop Insurance Corporation (FCIC), a government corporation within USDA, pays part of the premium (about 63% on average in crop year 2017) while policy holders—farmers and ranchers—pay the balance. Private insurance companies, known as Approved Insurance Providers, deliver the policies in return for administrative and operating subsidies from FCIC. Approved Insurance Providers also share underwriting risk with FCIC through a mutually negotiated Standard Reinsurance Agreement. The USDA Risk Management Agency administers the federal crop insurance program. The Crop Insurance title (Title XI) of the enacted 2018 farm bill ( P.L. 115-334 ) makes several modifications to the existing federal crop insurance program ( Table 15 ). CBO projects that the 2018 farm bill will decrease outlays for crop insurance relative to baseline levels by $104 million during the FY2019-FY2028 period. This projected reduction represents around 0.1% of projected crop insurance outlays over the same time period, during which outlays are projected to total about $78 billion. Within the 2018 farm bill's Crop Insurance title, the section with the highest projected increase in outlays ($90 million increase over FY2019-FY2028, Section 11109) expands coverage for forage and grazing by authorizing catastrophic level coverage for insurance plans covering grazing crops and grasses It also allows producers to purchase separate crop insurance policies for crops that can be both grazed and mechanically harvested on the same acres during the same growing season and to receive independent indemnities for each intended use. Two other sections of the 2018 farm bill have projected outlay increases compared with prior law. One modifies the FCIC board's research and development authority in several ways, including redefining beginning farmer or rancher as an individual having actively operated and managed a farm or ranch for less than 10 years, thus making these individuals eligible for federal subsidy benefits available for the purposes of research, development, and implementation of whole-farm insurance plans ($13 million increase over FY2019-FY2028, Section 11122). The other section that is projected to result in higher outlays authorizes FCIC to waive certain viability and marketability requirements in considering proposals from private submitters to develop a policy or pilot program relating to the production of hemp ($8 million increase over FY2019-FY2028, Section 11113). The 2018 farm bill adds hemp to the definition of eligible crops for federal crop insurance subsidies (Sections 11101 and 11119) and also adds hemp to the list of crops whose policies may cover post-harvest losses (Section 11106). Most federal crop insurance policies do not cover post-harvest losses. Prior to the 2018 farm bill, coverage of post-harvest losses was limited to potatoes, sweet potatoes, and tobacco. The section in the 2018 farm bill with the highest projected reduction in outlays ($125 million over FY2019-FY2028, Section 11110) raises the administrative fee for catastrophic level coverage from $300 to $655 per crop per county. Four other sections also scored projected reductions in outlays, according to CBO. These sections relate to consolidation and reduction of funding for certain research and development contracts and partnerships ($40 million over FY2019-FY2028, Section 11123); the expansion of enterprise units across county lines ($27 million over FY2019-FY2028, Section 11111); the reduction of funds available for review, compliance, and program integrity ($18 million over FY2019-FY2028, Section 11118); and modifications to how producer benefits are reduced when producing crops on native sod ($4 million over FY2019-FY2028, Section 11114). Miscellaneous35 The Miscellaneous title (Title XII) of the Agriculture Improvement Act of 2018 covers a wide array of issues across six subtitles, including livestock, agriculture and food defense, historically underserved producers, Department of Agriculture Reorganization Act of 1994 Amendments, other miscellaneous provisions, and general provisions. The enacted provisions are organized by subtitle in Table 16 . Those provisions that were located in the Miscellaneous titles of the House- and Senate-passed bills but were moved to other titles in the enacted bill, along with those provisions that were not enacted, are listed at the end of Table 16 . The livestock subtitle of the enacted 2018 farm bill establishes the National Animal Disease Preparedness Response Program (NADPRP) and the National Animal Vaccine and Veterinary Countermeasures Bank (NAVVCB), both under the National Animal Health Laboratory Network (NAHLN) in the Animal Health Protection Act (7 U.S.C. Section 8308a). The NADPRP is to address risks to U.S. livestock associated with the introduction of animal diseases and pests. The new law directs the NAVVCB to maintain significant quantities of vaccine and diagnostic products to respond to animal disease outbreaks. It also directs the NAVVCB is to prioritize foot-and-mouth disease. The act authorizes mandatory funding of $120 million for FY2019-FY2022 and $30 million for FY2023 and for each fiscal year thereafter. In addition, $30 million is authorized to be appropriated annually for FY2019-FY2023 for NAHLN, with as such sums as necessary appropriated for the NADPRP and NAVVCB. Among other livestock provisions, the act authorizes appropriations for the Sheep Production and Marketing Grant Program; provides for a study on a livestock dealer statutory trust; adds llamas, alpacas, live fish, and crawfish to the list of covered animals under the Emergency Livestock Feed Assistance Act; calls for a report on the guidance and outreach USDA's Food Safety and Inspection Service provides to small meat processors; and establishes regional cattle and carcass grading centers. Within the Agriculture and Food Defense subtitle of the enacted bill, the USDA Office of Homeland Security, as authorized in the 2008 farm bill ( P.L. 110-246 ), is repealed and reestablished under the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. Section 6901 et seq. ). Under the new authorities, USDA is required to conduct Disease and Pest of Concern Response Planning, establish a National Plant Diagnostic Network to monitor threats to plant health, and establish a National Plant Disease Recovery System for long-term planning. The section also amends the criteria for considering the impact on research performance when biological agents or toxins are added to the Biological Agents and Toxins List. The Historically Underserved Producers subtitle expands USDA activities for beginning, socially disadvantaged, and veteran farmers and ranchers. It prioritizes youth agricultural employment and volunteer programs and promotes the role of youth-serving organizations and school-based agricultural education programs. It also establishes a Tribal Advisory Committee to advise USDA on tribal and Indian affairs. The new law authorizes $50 million in discretionary funding for FY2019-FY2023 for the Farming Opportunities Training and Outreach program and provides mandatory funding for the program that increases from $30 million in FY2019 to $50 million in FY2023. The act also establishes within USDA an Office of Urban Agriculture and Innovative Production to promote urban, indoor, and emerging agricultural practices. The 2018 farm bill includes conforming amendments that address USDA reorganizational changes that created the Under Secretary for Trade and Foreign Agricultural Affairs, the Under Secretary for Farm Production and Conservation, and the Assistant to the Secretary for Rural Development. For one, the act requires USDA to re-establish the position of Under Secretary of Agriculture for Rural Development that USDA abolished and replaced with an Assistant to the Secretary for Rural Development in its May 2017 reorganization. The new law amends the duties and provisions of the USDA Military Veterans Agricultural Liaison and the Office of Chief Scientist and creates a Rural Health Liaison. It further requires USDA to conduct a civil rights analysis on actions, policies, or decisions that may impact employees, contractors, or beneficiaries of USDA programs based on membership in a federally protected group. The Other Miscellaneous Provisions and General Provisions subtitles contain 40 provisions that address a wide variety of issues. For example, the Protecting Animals with Shelter provision authorizes USDA—in consultation with the Departments of Justice, Housing and Urban Development, and Health and Human Services—to provide grants for emergency and transitional shelter for victims of domestic and dating violence, sexual assault, and stalking and their pets. Other animal-related provisions ban the slaughter of dogs and cats, impose a ban on animal fighting in U.S. territories, and require a report on the importation of dogs. The enacted 2018 farm bill reauthorizes the Pima Cotton; the Wool Apparel Manufacturers; and the Wool Research, Development, and Promotion trust funds. It also establishes the Emergency Citrus Disease Research and Development Trust Fund to address invasive citrus diseases and pests. The act extends for 10 years the National Oilheat Research Alliance. It further establishes a Commission on Farm Transition to study issues affecting transitioning farms to the next generation and establishes a Century Farms program to recognize farms that have been owned by the same family and in operation for at least 100 years. In addition, the enacted bill requires USDA to conduct and issue various studies and reports on a variety of topics, among which are food waste; the business centers of the Natural Resources Conservation Service, the Farm Service Agency, and the Risk Management Agency; the number of personnel in USDA agencies each year; the effect of absentee landlords; the level of funding that would allow the National Institute of Food and Agriculture to address evolving research and extension needs in rural and farming communities; an FDA food labeling regulation (81 Fed. Reg. 33742); and the impact of rice ratooning and post-disaster flooding on migratory birds. The enacted 2018 farm bill directs USDA to restore exemptions for weighing and inspection services that were included in the United States Grain Standards Act (USGSA) in 2003 that were revoked when the USGSA was reauthorized in 2015. The act requires the U.S. Fish and Wildlife Service to clarify that the green sea urchin is exempt from the export permission requirements of the Endangered Species Act (16 U.S.C. Section 1538(d)(1) and its licensing regulations. The act also amends the Controlled Substance Act (21 U.S.C. Section 802(16)) to exclude industrial hemp from the statutory definition of marijuana . Provisions of the 2018 Farm Bill by Title Compared with the House- and Senate-Passed Bills (H.R. 2) and with Prior Law

Congress sets national food and agriculture policy through periodic omnibus farm bills that address a broad range of farm and food programs and policies. The 115th Congress established the direction of farm and food policy for five years through 2023 by enacting the Agricultural Improvement Act of 2018, which the President signed into law on December 20, 2018, as P.L. 115-334. The Congressional Budget Office (CBO) has scored the cost of programs with mandatory spending—such as nutrition programs, commodity support programs, major conservation programs, and crop insurance—in the enacted 2018 farm bill at $867 billion over a 10-year budget window of FY2019-FY2028. This amount is budget neutral compared with CBO's baseline scenario of an extension of 2014 farm bill (P.L. 113-79) programs with no changes. CBO estimates that over the five-year life of the law (FY2019-FY2023), outlays will amount to $428 billion, or $1.8 billion above the baseline scenario. In general, the new law largely extends many major programs through FY2023, thereby providing an overlay of continuity with the existing framework of agriculture and nutrition programs even as it modifies numerous programs, alters the amount and type of program funding that certain programs receive, and exercises discretion not to reauthorize some others. The enacted 2018 farm bill extends agricultural commodity support programs largely along existing lines while modifying them in various ways. For instance, producers acquire greater flexibility, compared with prior law, to switch between the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) revenue support programs. Producers may update program yields that factor into payments under PLC, while a newly added escalator could raise a commodity's reference price under the program. The law also makes several modifications to ARC, including introducing a trend-adjusted yield that has the potential to raise ARC revenue guarantees for producers. Other changes include an increase in marketing assistance loan rates for a number of crops and revising the definition of family farm to include nephews, nieces, and cousins, making these individuals eligible for farm program payments. The law modifies dairy programs, including renaming the Margin Protection Program as Dairy Margin Coverage (DMC) and revising it to expand the margin protection between milk prices and feed costs that milk producers may purchase, as well as lowering the cost of this coverage for the first 5 million pounds of milk produced. Loan rates under the sugar program are increased. The Supplemental Nutrition Assistance Program (SNAP), the largest domestic nutrition assistance program, is reauthorized through FY2023. The law amends SNAP in a number of ways, including making changes to policies intended to reduced errors and fraud in SNAP, limiting fees that electronic benefit transfer processors may charge, and requiring nationwide online acceptance of SNAP benefits. Not included in the enacted bill are provisions in the House-passed bill that would have expanded work requirements and SNAP employment and training programs. The enacted bill does make certain modifications to these elements of the program, such as expanding the employment and training activities that a state may provide. Beyond SNAP, the law amends programs that distribute U.S. Department of Agriculture foods to low-income households, and it increases funding for The Emergency Food Assistance Program (TEFAP). The enacted farm bill addresses agricultural conservation on several fronts. For one, it reauthorizes the two largest working lands programs—the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP)—while reducing the overall funding allocated for these two programs. It also reauthorizes the primary land retirement program, the Conservation Reserve Program (CRP), allowing it to expand from a maximum of 24 million acres in FY2019 to 27 million acres in FY2023 while offsetting the added cost of any enrollment increase through lower payments to participants. The law also expands grazing and commercial uses on CRP acres and provides options for new and limited resource producers for transitioning CRP land. The enacted 2018 farm bill addresses a range of issues of importance to rural America, including combatting substance abuse by prioritizing assistance under certain programs, by expanding broadband access and providing additional authorized appropriations to that end and by amending the definition of rural by excluding certain groups of individuals from population-based criteria. The credit title increases the maximum loan amount for guaranteed loans, and these amounts are adjusted for inflation thereafter. The ceiling for direct loans is also raised, among other changes. Among the broad and diverse array of other provisions in the law are provisions intended to facilitate the commercial cultivation, processing, and marketing of hemp. Among these, hemp with low levels of the psychoactive ingredient in marijuana is excluded from the statutory definition of marijuana. The law creates a new hemp program under USDA oversight and makes hemp an eligible crop under the federal crop insurance program. The enacted 2018 farm bill also strengthens the National Organic Program and increases funding for organic agricultural research. Within the Miscellaneous title, the livestock industry is the object of several initiatives to guard against disease outbreaks and strengthen the response to such events. These include the establishment of the National Animal Disease Preparedness Response Program and the National Animal Vaccine and Veterinary Countermeasures Bank. The law also addresses USDA organizational changes in recent years, requiring USDA to reestablish the position of Under Secretary for Rural Development and creating a Rural Health Liaison, among other changes. Among its provisions, the Forestry title addresses the accumulation of biomass in many forests and the consequent risk of wildfires by establishing, reauthorizing, and modifying various assistance programs to promote wood use and biomass removal. With these programs, policies, and initiatives codified into law, the job that remains is for USDA, other federal agencies, and entities designated by the enacted farm law to implement the will of Congress through regulatory actions and other administrative measures. As implementation of the farm law proceeds, Congress may find it prudent to monitor this process and to provide direction and feedback through the exercise of its oversight responsibilities.

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Introduction One of the most common methods for redistributing spending priorities in appropriations bills on the House floor is through offset amendments. House offset amendments generally change spending priorities in a pending appropriations measure by increasing spending for certain activities (or creating spending for new activities not previously included in the bill) and offsetting the increase(s) by decreasing or striking funding for other activities in the bill. For example, an amendment increasing funding for one agency funded in the bill by $3 million and decreasing funding for another agency by the same amount in the same bill would be an offset amendment. These amendments may transfer funds between two activities or among several activities. In addition, certain offset amendments may reduce funding with across-the-board spending reductions. Representatives use offset amendments for a variety of reasons, including to (1) ensure that proposals increasing funding for certain activities in any appropriations measure do not violate parliamentary rules enforcing certain spending ceilings; (2) comply with the prohibition against increasing total spending in a general appropriations bill; (3) garner support for efforts to reduce funding for certain activities by transferring those funds to popular programs; and (4) provide a focal point for discussion of a particular issue. This report is an introduction to selected House rules and practices governing the consideration of offset amendments to appropriations measures considered in the Committee of the Whole House on the State of the Union (or Committee of the Whole). It analyzes the parliamentary context providing the need for offset amendments; the two types of offset amendments, clause 2(f) and reachback (or fetchback) offset amendments, including procedural factors regarding each; and the mechanisms for waiving House rules. The report concludes with highlights on the procedural advantages of each offset amendment type. This report is not an official statement of House procedures. The House Parliamentarian advises the presiding officer on procedural issues regarding offset amendments and other matters. Although this report provides useful background information, it should not be considered a substitute for consultation with the Parliamentarian on specific procedural problems and opportunities. Parliamentary Context Offset amendments are needed to ensure amendments increasing funding for certain activities in a regular appropriations bill, supplemental appropriations bill, or continuing resolution do not also cause spending ceilings associated with the annual budget resolution to be exceeded. Additionally, a separate order of the House prohibits amendments increasing the total spending level in a general appropriations bill. Spending Ceilings and Offset Amendments Under the Congressional Budget Act of 1974, as amended, Congress typically considers an annual budget resolution each spring. These measures are under the jurisdiction of the House and Senate Budget Committees. Each budget resolution establishes, in part, total new budget authority and outlay ceilings for federal government activities for the upcoming fiscal year. Once these figures are finalized, under Section 302(a) of the Congressional Budget Act, the new budget authority and outlays are required to be allocated among the House committees with jurisdiction over spending, and each committee is given specific spending ceilings (referred to as the 302(a) allocations ). The House Appropriations Committee receives separate allocations for discretionary and direct spending and, in turn, is required under Section 302(b) to subdivide its 302(a) allocations among its 12 appropriations subcommittees, providing each subcommittee with its spending ceiling ( 302(b) subdivisions ). In the case of the Appropriations Committee, these allocations are only established for the upcoming fiscal year because appropriations measures are annual. Two Congressional Budget Act points of order, under Sections 302(f) and 311(a), enforce selected spending ceilings. The 302(f) point of order prohibits, in part, floor consideration of any committee-reported appropriations measure and related amendments providing new budget authority for the upcoming fiscal year that would cause the applicable 302(a) or 302(b) allocations of new budget authority for that fiscal year to be exceeded. In effect, the application of this point of order on appropriations legislation is generally limited to discretionary spending. If, for example, the 302(b) subdivision in new discretionary budget authority for a fiscal year is $24 billion and the reported bill would provide the same amount for the same fiscal year, any amendment proposing an increase in new discretionary budget authority for activities in the bill (or creating new discretionary budget authority) would cause the 302(b) limit for that bill to be exceeded, triggering the 302(f) point of order. An offset amendment, however, that also includes a commensurate decrease in new discretionary budget authority for activities in the bill would not prevent a violation of the rule. The second rule, the 311(a) point of order, prohibits, in part, floor consideration of any committee-reported appropriations measure and related amendments providing new budget authority for the upcoming fiscal year that would cause the applicable total budget authority and outlay ceilings in the budget resolution for that fiscal year to be exceeded. As the amounts of all the spending measures considered in the House accumulate, they could potentially reach or exceed these ceilings. This point of order would typically affect the last spending bills to be considered, such as supplemental appropriations measures or the last regular appropriations bills. If a Representative raises a point of order that an amendment violates either rule and the presiding officer sustains the point of order, the amendment falls. Appropriations measures considered on the House floor are typically at or just below the level of the subcommittee's 302(b) subdivision and, in some cases, the committee's 302(a) allocation and the total spending ceiling as well. Appropriations Measures: Selected Content The structure of appropriations measures has a direct impact on the form of offset amendments. Because regular appropriations bills and supplementals generally include several lump-sum and line-item appropriations, adding a new appropriation or increasing funding for an appropriation in the bill typically requires an offset. The procedural necessity of an offset for a funding set-aside within a lump-sum appropriation is dependent on the structure of the appropriation in the bill. Lump-Sum and Line-Item Appropriations Regular appropriations bills and supplemental appropriations measures generally contain numerous unnumbered paragraphs. Most paragraphs provide a lump-sum amount (usually an appropriation) for similar programs, projects, or activities. Such paragraphs are referred to as lump-sum appropriations . A few paragraphs may provide an appropriation for a single program or project, referred to as a line-item appropriation . Most appropriations paragraphs correspond to a unique budget account. The total net spending levels provided in an appropriations bill include all lump-sum and line-item appropriations, rescissions, and other provisions affecting spending. An amendment increasing a lump-sum or line-item appropriation as well as adding a new appropriation to a general appropriations bill would violate Section 3(d)(3) unless it was accompanied by a commensurate offset regardless of the level of spending in the measure. In addition, appropriations bills initially considered on the House floor are typically near or at the level of the subcommittee's 302(b) subdivision and, in some cases (particularly supplementals), the committee's 302(a) allocation and the total spending ceilings as well. An amendment increasing a lump-sum or line-item appropriation, therefore, could increase the amount of funding in the bill, causing it to exceed these ceilings. As a result, such an amendment typically requires an offset for it to be in order. Funding Set-Asides Within a lump-sum appropriation, separate amounts are sometimes included in the bill that set aside spending for specified programs, projects, or activities (for purposes of this report, they are referred to as funding set-asides ). An amendment proposing to increase (or create) a funding set-aside in a lump-sum appropriation that has been entirely set aside in the bill would procedurally require a commensurate offset. In the example below, the three set-asides total $200 million, which is the total lump-sum amount. An amendment proposing an increase in any of the three set-asides that does not include an offset in one of the other set-asides would require an increase of the lump-sum amount. For necessary expenses, including salaries and related expenses, of the Executive Office for YYY, to implement program activities, $200,000,000, of which $100,000,000 is for the yellow program, $50,000,000 for the green program, and $50,000,000 for the blue program. By contrast, certain set-aside amendments would not increase lump-sum amounts. If a bill contains a lump-sum amount with no set-asides, for example, an amendment designating part (or all) of the funds for a particular purpose would not increase spending. In cases in which the lump-sum appropriation includes a set-aside(s) that does not affect the entire amount, an amendment setting aside only the remaining funds or a portion of those funds would also not increase spending. If enacted, the effect of either case would be reductions in funding for activities that were not set aside to accommodate funding in the bill that was specified as set-asides. To avoid such reductions, amendments may include offsets from other appropriations in the bill. Types of Offset Amendments There are two types of offset amendments, clause 2(f) and reachback (or fetchback) amendments, available during consideration of regular and supplemental appropriations bills in the Committee of the Whole. Clause 2(f) refers to clause 2(f) of House Rule XXI, which establishes some of the parliamentary procedures governing the consideration of such amendments. Clause 2(f) Offset Amendments Clause 2(f) offset amendments consist of two or more amendments considered together (or en bloc) that would change amounts by directly adding text or changing text in the body of the bill. Reachback offset amendments , by contrast, are generally offered at the end of the bill, that change funding amounts by reference. The clause 2(f) offset amendment transfers appropriations among objects in the pending bill and, taken as a whole, does not cause the bill to exceed the total new budget authority or outlay levels already provided in the bill. An example of a clause 2(f) offset amendment follows. This amendment would have decreased the lump-sum appropriation for the Bureau of the Census, Periodic Censuses and Programs account by $10 million; increased the lump-sum appropriation for the Office of Justice Programs, State and Local Law Enforcement Assistance account by $10 million; and increased a set-aside within the latter appropriation for the Southwest Border Prosecutor Initiative by the same amount. Page 6, line 23, after t he dollar amount insert "(reduced by $10,000,000)." Page 42, line 8, after the dollar amount insert "(increased by $10,000,000)." Page 43, line 8, after the dollar amount insert "(increased by $10,000,000)." These offset amendments typically change a spending level by inserting after the amount a parenthetic increase or decrease (see example above). Under House rules, an amendment generally cannot amend previously amended text. Changing a monetary figure by a parenthetic increase or decrease placed after the amount text, rather than changing the amount in the text, however, is allowed. Under House rules, clause 2(f) offset amendments must be offered when the first portion of the bill to be amended is pending. In practice, however, they may be offered at other times if no Member objects. In the Committee of the Whole, appropriations bills are generally read for amendment sequentially by paragraph. After the reading clerk reads or designates a paragraph, the presiding officer entertains any points of order against that paragraph, and then Members may propose amendments to it. After the clerk has designated or begun reading the next paragraph, amendments to the former paragraph are not in order. Prior to consideration of a proposed clause 2(f) offset amendment, the presiding officer asks if any Member wants to raise a point of order against any provision the en bloc amendment would change. If a point of order against such a provision is sustained, the provision is stricken from the bill and is no longer amendable. Therefore, the offset amendment would fall as well, unless appropriately modified or amended by unanimous consent. There are four additional procedural implications regarding clause 2(f) offset amendments. These amendments (1) must offset any increase in both budget authority and outlays, (2) can only include language transferring appropriations, (3) may contain certain unauthorized appropriations, and (4) are exempt from a "demand for a division of the question." Must Offset Both Budget Authority and Outlays Under clause 2(f) of House Rule XXI, any spending increases in a clause 2(f) offset amendment must be offset by commensurate reductions in both new budget authority and outlays. The 302(f) point of order enforcing 302(a) and 302(b) allocations and Section 3(d)(3) only apply to budget authority. The spending increases and decreases contained in an offset amendment must be provided in the same fiscal year, the year of the pending appropriations bill. Offset amendments providing equal increases and decreases in new budget authority might not produce equal amounts of outlays in the same fiscal year. The amount of resulting outlays may vary among different accounts because the length of time needed to complete the activities funded may differ. It takes less time to purchase office supplies than to complete construction of an aircraft carrier. For example, in Table 1 , the distribution of outlays from $20 million in new budget authority varies between two accounts. Based on historical spending practices, the Congressional Budget Office (CBO) each year estimates the speed at which outlays from each appropriation will occur, referred to as the spendout rates (or outlay rates ). A spendout rate is the rate at which budget authority is expected to be spent (outlays) in a fiscal year. In the example in Table 1 , the FY2017 spending rate for the operating expenses account is 90%, whereas the rate for the construction account is 10%. The varying spendout rates of appropriations sometimes complicate efforts to increase budget authority. In the example in Table 2 , increasing FY2017 budget authority for an operating expenses account by $20 million produces $18 million in outlays. Decreasing a construction account by the same amount in budget authority, however, produces only $2 million in outlays. Under this scenario, reductions in three accounts produce the $18 million in outlays needed to fund the $20 million budget authority increase in operating expenses. By contrast, increasing the construction account by $20 million in budget authority would be easier because only $2 million in outlays would be required. Representatives (or their staff) routinely ask CBO to estimate the budgetary effects of their clause 2(f) offset amendments for informational purposes. If a point of order is raised under clause 2(f), the chair relies on determinations made by the House Appropriations Committee as to the budgetary effects of the amendment. Can Only Include Language Transferring Appropriations Clause 2(f) offset amendments are, in part, amendments "proposing only to transfer appropriations among objects in the bill" by directly changing dollar amounts. Provisions that would not be considered "transferring appropriations" include adding a new lump-sum appropriation or spending set-aside, changing the amount of a rescission, providing an across-the-board spending reduction, or reaching back to provisions in the bill the House has already considered. May Contain Certain Unauthorized Appropriations Clause 2(a) of House Rule XXI generally prohibits unauthorized appropriations in certain committee-reported appropriations bills and amendments to such bills. Certain amendments, such as clause 2(f) offset amendments, however, may increase the level of funding for certain unauthorized appropriations already in the bill. Under clause 2(a), appropriations must generally be for purposes authorized by prior enactment of legislation concerning a program (or an agency, account, project, or activity). An "[a]uthorization for a program may be derived from a specific law providing authority for that particular program or from a more general existing law—'organic law'—authorizing appropriations for such programs." Authorizations of subsequent appropriations may be permanent or they may be multi-year or annual, expiring at the end of a specific time period. The rule prohibits floor consideration of appropriations for a purpose or program whose authorization has expired or whose budget authority exceeds the ceiling authorized, if any. Appropriations violating these restrictions are unauthorized appropriations . Appropriations bills frequently include unauthorized appropriations. Such appropriations are allowed to remain in an appropriations bill when the House adopts a special rule waiving points of order against the appropriation or, less frequently, when no one raises a point of order against it. Under House precedents, a germane amendment that merely perfects an unauthorized appropriation permitted to remain in the bill is allowed. An example would be an amendment that would only increase the unauthorized amount and would do so by either amending the amount text or by inserting a parenthetical increase after the amount (such as an en bloc clause 2(f) offset amendment). One scenario for providing such funding would follow the following steps: 1. An authorization act provided an authorization of appropriations of $2 million for program yellow through FY2016; as of the close of FY2016, the entire amount of the authorization had expired. 2. Subsequently, an FY2017 regular appropriations bill provides an unauthorized appropriation of $2 million for program yellow. 3. The House adopts a special rule waiving clause 2(a) of House Rule XXI against all provisions in the bill, allowing the above appropriation to remain. 4. A clause 2(f) offset amendment parenthetically increasing the unauthorized appropriation by $1 million for program yellow is allowed. Although clause 2(f) offset amendments may increase an unauthorized appropriation, they remain subject to budget authority and the outlay offset requirements of clause 2(f) of House Rule XXI. A clause 2(f) amendment may not propose to increase an "authorized appropriation" in an appropriations bill beyond the authorized level. For example, if an authorization act included a $2 million authorization for FY2017 and the regular appropriations bill provided that amount, an offset amendment increasing the amount above that level would be prohibited. Exempt from a "Demand for a Division of the Question" Under clause 2(f) of House Rule XXI, these amendments are not subject to a "demand for a division of the question in the House or in the Committee of the Whole." That is, a Member cannot demand separate consideration of two or more provisions in such en bloc amendments. Instead. the House must consider the amendment as a whole. Reachback Offset Amendments Reachback (or fetchback ) offset amendments add a new section (or title), typically at the end of an appropriations measure, that reaches back to change amounts previously considered by reference. For example, the following amendment inserted a new section at the end of the committee-reported FY2008 Labor, Health and Human Services, and Education regular appropriations bill ( H.R. 3043 , 110 th Congress): Title VI—Additional General Provisions Sec. 601. The amounts otherwise provided by this Act are revised by reducing the amount made available for the "Department of Labor, Employment and Training Administration, Training and Employment Services", by increasing the amount made available for the "National Institutes of Health, National Cancer Institute", and by increasing the amount made available for the "National Institutes of Health, National Institute of Neurological Disorders and Stroke" by $49,000,000, $10,000,000, and $10,000,000, respectively. Prior to adoption of Section 3(d)(3) of H.Res. 5 (112 th Congress), reachback amendments to general appropriations bills could have been offered that increased spending provided in the bill as long as they did not violate the 302(f) and 311(a) points of order. Reachback amendments must offset budget authority, but not necessarily outlays; may add new lump-sum appropriations and set-asides, subject to certain restrictions; may not include unauthorized appropriations; must be drafted to avoid a demand for a division of the question; and may provide across-the-board spending reductions as offsets. Must Offset Budget Authority But Not Necessarily Outlays Under the 3(d)(3) and 302(f) points of order, only budget authority offsets are needed; but the 311(a) point of order applies to both new budget authority and outlays. Generally, the most restrictive points of order are those under 3(d)(3) and 302(f) enforcing the 302(b) subdivisions, which both enforce only budget authority. Furthermore, only the last spending measures considered for a fiscal year, such as supplementals or the last regular bills, are likely to breach the overall spending limit and violate the 311(a) point of order. For reachback amendments, budget authority offsets are generally the primary procedural concern. Opponents of a reachback amendment may, however, raise the lack of outlay offsets as a concern for policy reasons. They may also argue that the resulting outlay increases might present a procedural problem for the bill in the Senate or in conference. In the case of reachback amendments that also provide sufficient new budget authority reductions to offset any outlay increases, Representatives (or their staff) routinely ask CBO to estimate the outlay effect of their amendments. The spending increases and decreases contained in an offset amendment must be provided in the same fiscal year, the year of the pending appropriations bill. May Add New Appropriations (and Set-Asides) Reachback amendments may contain new appropriations and set-asides for certain activities not already included in the bill. Such new appropriations and set-asides must be germane to the bill. Under clause 7 of House Rule XVI, all amendments must be germane to the pending bill. That is, they may not add new subject matter to the bill. Reachback amendments offered at the end of the bill must be germane to the bill, and those offered at the end of a title must be germane to the title. Regular appropriations measures generally have broad subject matter, which may provide flexibility for reachback amendments. Set-asides may not, however, violate a House rule prohibiting legislation on a general appropriations bill (or legislation). Clause 2(b) of House Rule XXI prohibits legislation in committee-reported general appropriations bills, and clause 2(c) prohibits legislation in amendments to those measures. For purposes of this rule, legislation refers to any provision in a general appropriations bill or related amendment that changes existing law, such as proposals amending or repealing existing law or creating new law. The following are examples of legislative language: abolishing a department, agency, or program; providing, changing, limiting, or waiving an authorization; or proposing new rescissions in the appropriations bill. One of the guiding principles in interpreting this prohibition is that an amendment designating funds may not interfere with an executive branch official's statutory authority. For example, such amendments may not significantly alter the official's discretion. Language doing so changes existing law and is therefore prohibited. For example, if an authorization law provides an agency head with the authority to make decisions allocating funds within a particular lump-sum appropriation, an amendment proposing a new set-aside would alter the agency head's authority and would thus be out of order. In cases where a new set-aside would violate the rules, an amendment sponsor frequently does not include the set-aside in the amendment; instead, the sponsor merely discusses that set-aside in terms of intent and expectation during debate on the amendment. This approach is used to avoid the point of order against the amendment. The amendment's sponsor may also urge conferees to include the set-aside in any subsequent conference report. Recent House practice has also included amendments for which both the increase and the offset apply to the same provision in an appropriation bill. These amendments use the form of en bloc offset amendments in order to allow Members the opportunity to discuss a new set aside or other agency guidance without changing the overall level of funding provided in the bill. At the end of consideration, such amendments are withdrawn by unanimous consent. May Not Include Unauthorized Appropriations Under clause 2(a) of House Rule XXI, new appropriations and set-asides included in amendments must be proposed for authorized purposes. All new set-asides must also be proposed to authorized lump-sum appropriations. In contrast to clause 2(f) offset amendments, reachback amendments may not increase unauthorized appropriations permitted to remain in the bill because they do not change the text of the bill. The section added by a reachback amendment is considered adding a further unauthorized appropriation, as opposed to merely perfecting the text. Must Be Drafted to Avoid a "Demand for a Division of the Question" Under clause 5 of House Rule XVI, a Member may demand separate consideration of two or more individual portions of an amendment if each portion identified, when standing alone, is a separate, substantive proposition and is grammatically separate "so that if one proposition is rejected a separate proposition will logically remain." Because reachback amendments are potentially subject to a demand for a division of the question, if the presiding officer rules that an amendment is divisible, each divided portion of the amendment will be considered separately and subject to separate debate and amendment, as well as a separate vote. Members often demand a division of the question on an amendment to more easily defeat one or more of the portions of that amendment separately. For example, a majority of Members might be opposed to the portion of an offset amendment that decreases funds for a particular program. One of them might demand a division of the question that, if granted, would allow a separate vote on the funding decrease portion of the amendment. Even if the amendment as a whole was not subject to a point of order, once one portion is defeated the remainder may be subject to the Section 3(d)(3) or Congressional Budget Act points of order. May Provide Across-the-Board Spending Reductions as Offsets Reachback amendments may include as an offset across-the-board spending cuts. Clause 2(f) amendments may only directly change amounts in the bill. Procedural Considerations Parliamentary rules may be suspended or waived to consider offset amendments that violate these rules, typically by House adoption of a special rule. However, this approach has been used infrequently. There are certain procedural advantages of clause 2(f) amendments over reachback amendments and vice versa. Opportunities to Waive Parliamentary Rules There are generally three limited opportunities to suspend or waive the rules governing consideration of an offset amendment: (1) if no one raises a point of order; (2) if the House adopts a special rule explicitly waiving points of order against the amendment; or (3) if the House agrees by unanimous consent to waive the rules. Otherwise, if the presiding officer sustains a point of order against an amendment for violating the parliamentary rules previously discussed, the amendment falls. First, House rules are not generally self-enforcing. A Representative must raise a point of order that an amendment violates a specific rule. If no one opposes an amendment, a point of order does not have to be raised. Second, under current practice, the House Rules Committee usually reports a special rule setting additional procedural parameters for the consideration of appropriations measures. The House typically adopts the special rule and then considers the particular appropriations measure pursuant to it. If an offset amendment would violate one or more parliamentary rules, the sponsor may ask the Rules Committee to include a waiver protecting the amendment from the point(s) of order. Special rules generally do not provide special protection for offset amendments to appropriations bills. Third, a Member might ask to consider an amendment violating the rules by unanimous consent. A single Member, however, can prevent such consideration by simply objecting to the unanimous consent request. To attain their policy objectives, sponsors of offset amendments generally select either a clause 2(f) or reachback amendment and work within the rules governing their consideration. Selected Procedural Advantages of Clause 2(f) Amendments May Include Unauthorized Appropriations Appropriations bills typically include some unauthorized appropriations. Generally, the House Rules Committee reports a special rule adopted by the House, waiving the prohibition against unauthorized appropriations for most or all unauthorized appropriations in a reported bill. Clause 2(f) amendments can increase those unauthorized appropriations allowed to remain. Reachback amendments, however, can only increase authorized appropriations in the bill to their authorized level (if there is one). In some cases, entire bills or significant portions of bills have consisted of unauthorized appropriations. As a result, reachback amendments could not increase those amounts. For example, many of the lump-sum appropriations provided in the committee-reported regular defense appropriations bills have typically been unauthorized because of the timing of consideration of the annual defense authorization bill. The House has adopted special rules regarding each bill waiving the application of clause 2 of House Rule XXI. As a result, clause 2(f) amendments to those bills were in order, but reachback amendments were limited to the few, if any, authorized appropriations. Considered Earlier The timing of clause 2(f) amendments is sometimes an advantage over reachback amendments because clause 2(f) amendments are offered earlier in a bill's consideration. By the time reachback amendments are considered, there may be fewer politically appealing offset options available. Amendments, including clause 2(f) amendments, may have already been adopted that reduced the account a reachback amendment sponsor selected for offsets. The account might be reduced to a point where there is no support for further reductions. Selected Procedural Advantages of Reachback Amendments May Add New Lump-Sum Appropriations or Set-Asides Reachback amendments may add new lump-sum appropriations and set-asides within certain restrictions. Clause 2(f) amendments, by contrast, are limited to transferring appropriations among objects already in the bill. May Provide Across-the-Board Cuts in Spending Reachback amendments may include as an offset an across-the-board spending cut, but clause 2(f) amendments may only directly change amounts in the bill. May Not Necessarily Have to Offset Outlays Another limited advantage of reachback amendments is that for most appropriations bills, reachback amendments must offset only new budget authority. Clause 2(f) amendments must offset both new budget authority and outlays. In practice, however, this advantage of reachback amendments over clause 2(f) amendments is limited because sponsors sometimes provide offsets in both budget authority and outlays to garner political support for reachback amendments.

One of the most common methods for changing spending priorities in appropriations bills on the House floor is through offset amendments. House offset amendments may generally change spending priorities in a pending appropriations measure by increasing spending for certain activities (or creating spending for new activities not previously included in the bill) and offsetting the increase with funding decreases in other activities in the bill. Offset amendments are needed to avoid points of order under Sections 302(f) and 311(a) of the Congressional Budget Act, enforcing certain spending ceilings affecting regular appropriations bills, continuing resolutions (CRs), and supplemental appropriations measures (supplementals). In addition, amendments to general appropriations bills that would increase total spending provided in the bill must be entirely offset. Two types of House offset amendments are considered in the Committee of the Whole House on the State of the Union (Committee of the Whole): clause 2(f) and reachback (or fetchback) amendments. As provided under House Rule XXI, clause 2(f) offset amendments consist of two or more amendments considered together (or en bloc) that would change amounts by directly adding text or changing text in the body of the bill. Taken as a whole, the amendment does not increase the amount of funding in the pending bill. Such amendments (1) must provide offsets in both new budget authority and outlays, (2) can only include language transferring appropriations in the bill, and (3) may contain certain unauthorized appropriations. Reachback offset amendments are generally offered at the end of the bill and change funding amounts in the pending bill by reference. These amendments (1) must provide offsets in new budget authority, but not necessarily outlays; (2) may add new appropriations (and spending set-asides within certain restrictions); (3) cannot include unauthorized appropriations; and (4) may provide across-the-board spending reductions as offsets. Parliamentary rules governing consideration of offset amendments may be suspended or waived, typically by House adoption of a special rule but also by unanimous consent. The advantages of clause 2(f) amendments over reachback amendments are that clause 2(f) amendments may contain certain unauthorized appropriations and are typically considered before reachback amendments, sometimes limiting offset opportunities for reachback amendments. The main advantages of reachback amendments are that they may not have to offset outlays, may add new appropriations, and may include across-the-board spending reductions.

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Overview of the Federal Communications Commission The Federal Communications Commission (FCC) is an independent federal agency, with its five members appointed by the President, subject to confirmation by the Senate. It was established by the Communications Act of 1934 (1934 Act, or "Communications Act") and is charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. The mission of the FCC is to ensure that the American people have available, "without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nationwide, and worldwide wire and radio communication service with adequate facilities at reasonable charges." The 1934 Act is divided into titles and sections that describe various powers and concerns of the commission. Title I—FCC Administration and Powers. The 1934 Act originally called for a commission consisting of seven members, but that number was reduced to five in 1983. Commissioners are appointed by the President and approved by the Senate to serve five-year terms; the President designates one member to serve as chairman. Title II—Common carrier regulation, primarily telephone regulation, including circuit-switched telephone services offered by cable companies. Common carriers are communication companies that provide facilities for transmission but do not originate messages, such as telephone and microwave providers. The 1934 Act limits FCC regulation to interstate and international common carriers, although a joint federal-state board coordinates regulation between the FCC and state regulatory commissions. Title III—Broadcast station requirements. Much existing broadcast regulation was established prior to 1934 by the Federal Radio Commission, and most provisions of the Radio Act of 1927 were subsumed into Title III of the 1934 Act. Title IV—Procedural and administrative provisions, such as hearings, joint boards, judicial review of the FCC's orders, petitions, and inquiries. Title V—Penal provisions and forfeitures, such as violations of rules and regulations. Title VI—Cable communications, such as the use of cable channels and cable ownership restrictions, franchising, and video programming services provided by telephone companies. Title VII—Miscellaneous provisions and powers, such as war powers of the President, closed captioning of public service announcements, and telecommunications development fund. FCC Leadership The FCC is directed by five commissioners appointed by the President and confirmed by the Senate for five-year terms (except when filling an unexpired term). The President designates one of the commissioners to serve as chairperson. Three commissioners may be members of the same political party as the President and none can have a financial interest in any commission-related business. Ajit Pai, Chair (originally sworn in on May 14, 2012; designated chairman by President Trump in January 2017 and confirmed by the Senate for a second term on October 2, 2017); Michael O'Rielly (sworn in for a second term on January 29, 2015); Brendan Carr (sworn in on August 11, 2017); Jessica Rosenworcel (sworn in on August 11, 2017); and Geoffrey Starks (sworn in on January 30, 2019). FCC Structure The day-to-day functions of the FCC are carried out by 7 bureaus and 10 offices. The current basic structure of the FCC was established in 2002 as part of the agency's effort to better reflect the industries it regulates. The seventh bureau, the Public Safety and Homeland Security Bureau, was established in 2006, largely in response to Hurricane Katrina. The bureaus process applications for licenses and other filings, analyze complaints, conduct investigations, develop and implement regulatory programs, and participate in hearings, among other things. The offices provide support services. Bureaus and offices often collaborate when addressing FCC issues. The bureaus hold the following responsibilities: Consumer and Governmental Affairs Bureau—Develops and implements consumer policies, including disability access and policies affecting Tribal nations. The Bureau serves as the public face of the Commission through outreach and education, as well as responding to consumer inquiries and informal complaints. The Bureau also maintains collaborative partnerships with state, local, and tribal governments in such critical areas as emergency preparedness and implementation of new technologies. In addition, the Bureau's Disability Rights Office provides expert policy and compliance advice on accessibility with respect to various forms of communications for persons with disabilities. Enforcement Bureau—Enforces the Communications Act and the FCC's rules. It protects consumers, ensures efficient use of spectrum, furthers public safety, promotes competition, resolves intercarrier disputes, and protects the integrity of FCC programs and activities from fraud, waste, and abuse. International Bureau—Administers the FCC's international telecommunications and satellite programs and policies, including licensing and regulatory functions. The Bureau promotes pro-competitive policies abroad, coordinating the FCC's global spectrum activities and advocating U.S. interests in international communications and competition. The Bureau works to promote high-quality, reliable, interconnected, and interoperable communications infrastructure on a global scale. Media Bureau—Recommends, develops, and administers the policy and licensing programs relating to electronic media, including broadcast, cable, and satellite television in the United States and its territories. Public Safety and Homeland Security Bureau—Develops and implements policies and programs to strengthen public safety communications, homeland security, national security, emergency management and preparedness, disaster management, and network reliability. These efforts include rulemaking proceedings that promote more efficient use of public safety spectrum, improve public alerting mechanisms, enhance the nation's 911 emergency calling system, and establish frameworks for communications prioritization during crisis. The Bureau also maintains 24/7 operations capability and promotes Commission preparedness to assist the public, first responders, the communications industry, and all levels of government in responding to emergencies and major disasters where reliable public safety communications are essential. Wireless Telecommunications Bureau—Responsible for wireless telecommunications programs and policies in the United States and its territories, including licensing and regulatory functions. Wireless communications services include cellular, paging, personal communications, mobile broadband, and other radio services used by businesses and private citizens. Wireline Competition Bureau—Develops, recommends, and implements policies and programs for wireline telecommunications, including fixed (as opposed to mobile) broadband and telephone landlines, striving to promote the widespread development and availability of these services. The Bureau has primary responsibility for the Universal Service Fund which helps connect all Americans to communications networks. The offices hold the following responsibilities: Administrative Law Judges—Composed of one judge (and associated staff) who presides over hearings and issues decisions on matters referred by the FCC. Communications Business Opportunities—Promotes competition and innovation in the provision and ownership of telecommunications services by supporting opportunities for small businesses as well as women and minority-owned communications businesses. Economics and Analytics—Responsible for expanding and deepening the use of economic analysis into Commission policymaking, for enhancing the development and use of auctions, and for implementing consistent and effective agency-wide data practices and policies. The Office also manages the FCC's auctions in support of and in coordination with the FCC's Bureaus and Offices. In January 2019, the FCC voted along party lines to eliminate the Office of Strategic Planning and Policy Analysis and replace it with the Office of Economics and Analytics. Engineering and Technology—Advises the FCC on technical and engineering matters. This Office develops and administers FCC decisions regarding spectrum allocations and grants equipment authorizations and experimental licenses. General Counsel—Serves as the FCC's chief legal advisor and representative. Inspector General—Conducts and supervises audits and investigations relating to FCC programs and operations. Legislative Affairs—Serves as the liaison between the FCC and Congress, as well as other federal agencies. Managing Director—Administers and manages the FCC. Media Relations—Informs the media of FCC decisions and serves as the FCC's main point of contact with the media. Workplace Diversity—Ensures that FCC provides employment opportunities for all persons regardless of race, color, sex, national origin, religion, age, disability, or sexual orientation. Additionally, an FCC Secretary serves to preserve the integrity of the FCC's records, oversee the receipt and distribution of documents filed by the public through electronic and paper filing systems, and give effective legal notice of FCC decisions by publishing them in the Federal Register and the FCC Record . FCC Strategic Plan The current FCC Strategic Plan covers the five-year period FY2018-FY2022. The plan outlines four goals: Closing the Digital Divide—Broadband is acknowledged as being critical to economic opportunity, but broadband is unavailable or unaffordable in many parts of the country. The FCC is to seek to help close the digital divide, bring down the cost of broadband deployment, and create incentives for providers to connect consumers in hard-to-serve areas. Promoting Innovation—Fostering a competitive, dynamic, and innovative market for communications services is a key priority for the FCC. The FCC plans to promote entrepreneurship, expand economic opportunity, and remove barriers to entry and investment. Protecting Consumers and Public Safety—Serving the broader public interest is the FCC's core mission. The FCC plans to work to combat unwanted and unlawful robocalls, make communications accessible for people with disabilities, and protect public safety (e.g., ensuring delivery of 9-1-1 calls, restoring communications after disasters). Reforming the FCC's Processes—One of the chairman's top priorities has been to implement process reforms to make the work of the FCC more transparent, open, and accountable to the public. The FCC plans to modernize and streamline its operations and programs to improve decisionmaking, build consensus, and reduce regulatory burdens. The FCC has identified performance objectives associated with each strategic goal. Commission management annually develops targets and measures related to each performance goal to provide direction toward accomplishing those goals. Targets and measures are published in the FCC's Performance Plan, and submitted with the commission's annual budget request to Congress. Results of the commission's efforts to meet its goals, targets, and measures are found in the FCC's Annual Performance Report published each February. The FCC also issues a Summary of Performance and Financial Results every February, providing a concise, citizen-focused review of the agency's accomplishments. FCC Operations: Budget, Authorization, and Reporting to Congress Since the 110 th Congress, the FCC has been funded through the House and Senate Financial Services and General Government (FSGG) appropriations bill as a single line item. Previously, it was funded through what is now the Commerce, Justice, Science appropriations bill, also as a single line item. The FCC annually collects and retains regulatory fees to offset costs incurred by the agency and to carry out its functions. Since 2009 the FCC's budget has been 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). The regulatory fees do not apply to governmental entities, amateur radio operator licensees, nonprofit entities, and certain other non-commercial entities. The FCC is authorized to review the regulatory fees each year and adjust them to reflect changes in its appropriation from year to year. The Commission originally implemented the Regulatory Fee Collection Program by rulemaking on July 18, 1994. The most recent regulatory fee order was released by the Commission on August 29, 2018. The FCC's budgets from FY2010 to FY2020 are in Figure 1 . Availability of Regulatory Fees On March 23, 2018, the Repack Airwaves Yielding Better Access for Users of Modern Services Act of 2018 (the "RAY BAUM'S Act" or "2018 Act") became law as part of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). The 2018 Act requires the FCC to transfer all excess collections for FY2018 and prior years to the General Fund of the U.S. Treasury for the sole purpose of deficit reduction. The 2018 Act also requires the Commission to transfer any excess collections in FY2019 and in subsequent years to the General Fund of the U.S. Treasury for the sole purpose of deficit reduction. On October 1, 2018, the Commission transferred over $9 million in excess collections from FY2018 as well as approximately $112 million in excess collections from FY2017 and prior years to the General Fund of the U.S. Treasury. FCC FY2020 Budget For FY2020, the FCC has requested $335,660,000 in budget authority from regulatory fee offsetting collections. This is $3,950,000 less than the authorization level of $339,610,000 included in the 2018 FCC Reauthorization in the Consolidated Appropriations Act, 2018. The FY2020 FCC request also represents a decrease of $3,340,000, or about 1.0%, from the FY2019 appropriated level of $339,000,000. The FCC requested $132,538,680 in budget authority for the spectrum auctions program. For FY2019, Congress appropriated a cap of $130,284,000 for the spectrum auctions program, which included additional funds to implement the requirements of the 2018 Act that mandated significant additional work for the FCC related to the TV Broadcaster Relocation Fund. The Commission's FY2020 budget request of $132,538,680 for this program would be an increase of $2,254,680, or 1.7%, over the FY2019 appropriation. This level of funding is intended to enable the Commission to continue its efforts to: reimburse full power and Class A stations, multichannel video programming distributors, Low Power TV, TV translator, and FM stations for reasonable costs incurred as a result of the Commission's incentive auction; make more spectrum available for 5G; and educate consumers affected by the reorganization of broadcast television spectrum. To date, the Commission's spectrum auctions program has generated over $114.6 billion for government use; at the same time, the total cost of the auctions program has been less than $2.0 billion, or less than 1.7% of the total auctions' revenue. FCC Authorization Through the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), the FCC was reauthorized for the first time since 1990 (FCC Authorization Act of 1990, P.L. 101-396 ). FCC Reporting to Congress The FCC publishes four periodic reports for Congress. Strategic Plan. The Strategic Plan is the framework around which the FCC develops its yearly Performance Plan and Performance Budget. The FCC submitted its current four-year Strategic Plan for 2018-2022 in February 2018, in accordance with the Government Performance and Results Modernization Act of 2010, P.L. 111-352 . Performance Budget. The annual Performance Budget includes performance targets based on the FCC's strategic goals and objectives, and serves as the guide for implementing the Strategic Plan. The Performance Budget becomes part of the President's annual budget request. Agency Financial Report. The annual Agency Financial Report contains financial and other information, such as a financial discussion and analysis of the agency's status, financial statements, and audit reports. Annual Performance Report. At the end of the fiscal year, the FCC publishes an Annual Performance Report that compares the agency's actual performance with its targets. All of these reports are available on the FCC website, https://www.fcc.gov/about/strategic-plans-budget . Activity in the 116th Congress One FCC-related hearing has been held in the 116 th Congress. On April 3, 2019, the House Committee on Appropriations Subcommittee on Financial Services and General Government held a hearing on the FY2020 FCC budget. The hearing addressed issues including 5G deployment, federal preemption of state and local tower siting requirements, merger reviews, robocalls, and net neutrality. No bills that would affect the operation of the FCC have been introduced in the 116 th Congress. Trends in FCC Regulation: Defining the Public Interest The FCC operates under a public interest mandate first laid out in the 1927 Radio Act (P.L. 632, 69 th Congress), but how this mandate is applied depends on which of two regulatory philosophies is relied upon to interpret it. The first seeks to protect and benefit the public at large through regulation, while the second seeks to achieve the same goals through the promotion of market efficiency. Additionally, Congress granted the FCC wide latitude and flexibility to revise its interpretation of the public interest standard to reflect changing circumstances, and the agency has not defined it in more concrete terms. These circumstances, paired with changes in FCC leadership, have led to significant changes over time in how the FCC regulates the broadcast and telecommunications industries. This evolution can be illustrated in changes to the agency's strategic goals under former Chairman Tom Wheeler to current Chairman Ajit Pai, which, in turn, led to the repeal in 2017 of the FCC's 2015 net neutrality rules and to changes in the agency's structure in 2019. FCC Strategic Goals The FCC's strategic goals are set forth in its quadrennial Strategic Plan. How these goals change from one plan to the next can illustrate how the priorities of the commission change over time, especially when there is a change in the political majority of the commission and therefore, the political party of the chairman. Table 1 outlines the strategic goals of Chairman Wheeler in the FY2015-FY2018 Strategic Plan compared to those of Chairman Pai in the FY2018-FY2022 Strategic Plan. Chairman Wheeler was a proponent of protecting and benefitting the public through regulation. His support of this regulatory philosophy can be seen in the language used in the strategic goals, such as the "rights of users" and the "responsibilities of network providers." Another example can be seen in the following language: "The FCC has a responsibility to promote the expansion of these networks and to ensure they have the incentive and the ability to compete fairly with one another in providing broadband services." On the other hand, Chairman Pai speaks about protecting and benefitting the public through the promotion of market incentives and efficiency. His support of this regulatory philosophy can be seen in the language used in the strategic goals, such as "reducing regulatory burdens" and ensuring that "regulations reflect the realities of the current marketplace, promote entrepreneurship, expand economic opportunity, and remove barriers to entry and investment." The use of this particular language may seem somewhat vague, but within the context of the net neutrality debate, discussed below, and the replacement of the Office of Strategic Planning and Policy Analysis with the Office of Economics and Analytics, those words take on more specific meaning, each intending to support the policy agenda of the Chairman. Net Neutrality Net neutrality is arguably the highest profile issue illustrating the two regulatory philosophies described above. Chairman Pai had long maintained that the FCC under Chairman Wheeler had overstepped its bounds, expressing confidence that the 2015 Wheeler-era net neutrality rules would be undone, calling them "unnecessary regulations that hold back investment and innovation." Although the net neutrality debate originated in 2005, the 2015 Open Internet Order, implemented under the leadership of Chairman Wheeler, and the 2017 Order overturning those rules, promulgated under Chairman Pai, are the most recent. These two orders can be used to illustrate the contrast between the regulatory philosophies of the two chairmen: Some policymakers contend that more proscriptive regulations, such as those contained in the FCC's 2015 Open Internet Order (2015 Order), are necessary to protect the marketplace from potential abuses which could threaten the net neutrality concept. Others contend that existing laws and the current, less restrictive approach, contained in the FCC's 2017 Restoring Internet Freedom Order (2017 Order), provide a more suitable framework. Net neutrality continues to be a highly politicized issue, with most FCC action being approved along party lines. FCC Structure In January 2019, the FCC voted along party lines to eliminate the Office of Strategic Planning and Policy Analysis and replace it with a new Office of Economics and Analytics. The Office of Strategic Planning and Policy Analysis (OSP) was created in 2005, replacing the Office of Plans and Policy. OSP had been charged with "providing advice to the chairman, commissioners, bureaus, and offices; developing strategic plans; identifying the agency's policy objectives; and providing research, advice, and analysis of advanced, novel, and nontraditional communications issues." It had also been the home of the Chief Economist and Chief Technologist. The new Office of Economics and Analytics is "responsible for expanding and deepening the use of economic analysis into FCC policy making, for enhancing the development and use of auctions, and for implementing consistent and effective agency-wide data practices and policies." This new office reflects the goals in the current strategic plan: We will modernize and streamline the FCC's operations and programs to … reduce regulatory burdens…. A key priority [is to] … ensure that the FCC's actions and regulations reflect the realities of the current marketplace … and remove barriers to entry and investment. Concluding Observations As the FCC continues to conduct its business into the future, the changing regulatory philosophies of the FCC chairmen may continue to drive how the FCC defines its long-term, strategic goals. This, in turn, may affect how the agency structures (and restructures) itself and how it decides regulatory questions, including a continued review of net neutrality. Congress may determine that the public interest standard should remain more static, rather than fluctuating dramatically depending on the regulatory philosophy of the chairman. No legislation on this topic has been introduced in Congress, signaling to some observers that it intends to continue allowing the FCC to define it. Appendix. FCC-Related Congressional Activity—115th Congress Table A-1 . Senate and House hearings in the 115 th Congress regarding the operation of the FCC are detailed in Table A-2 and Table A-3 , respectively. Links to individual hearing pages are included in these tables.

The Federal Communications Commission (FCC) is an independent federal agency established by the Communications Act of 1934 (1934 Act, or "Communications Act"). The agency is charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. The mission of the FCC is to make available for all people of the United States, "without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nationwide, and worldwide wire and radio communication service with adequate facilities at reasonable charges." The FCC operates under a public interest mandate first laid out in the 1927 Radio Act (P.L. 632, 69th Congress), but how this mandate is applied depends on how "the public interest" is interpreted. Some regulators seek to protect and benefit the public at large through regulation, while others seek to achieve the same goals through the promotion of market efficiency. Additionally, Congress granted the FCC wide latitude and flexibility to revise its interpretation of the public interest standard to reflect changing circumstances and the agency has not defined it in more concrete terms. These circumstances, paired with changes in FCC leadership, have led to significant changes over time in how the FCC regulates the broadcast and telecommunications industries. The FCC is directed by five commissioners appointed by the President and confirmed by the Senate for five-year terms. The President designates one of the commissioners as chairperson. Three commissioners may be members of the same political party of the President and none can have a financial interest in any commission-related business. The current commissioners are Ajit Pai (Chair), Michael O'Rielly, Brendan Carr, Jessica Rosenworcel, and Geoffrey Starks. The day-to-day functions of the FCC are carried out by 7 bureaus and 10 offices. The current basic structure of the FCC was established in 2002 as part of the agency's effort to better reflect the industries it regulates. The seventh bureau, the Public Safety and Homeland Security Bureau, was established in 2006. The bureaus process applications for licenses and other filings, manage non-federal spectrum, analyze complaints, conduct investigations, develop and implement regulatory programs, and participate in hearings, among other things. The offices provide support services. Bureaus and offices often collaborate when addressing FCC issues. Beginning in the 110th Congress, the FCC has been funded through the House and Senate Financial Services and General Government (FSGG) appropriations bill as a single line item. Previously, it was funded through what is now the Commerce, Justice, Science appropriations bill, also as a single line item. Since 2009 the FCC's budget has been 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. The FCC is authorized to review the regulatory fees each year and adjust them to reflect changes in its appropriation from year to year. Most years, appropriations language prohibits the use by the commission of any excess collections received in the current fiscal year or any prior years. For FY2020, the FCC has requested $335,660,000 in budget authority from regulatory fee offsetting collections. The FCC also requested $132,538,680 in budget authority for the spectrum auctions program.

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Introduction Article II, Section 2, of the Constitution provides that the President shall appoint officers of the United States "by and with the Advice and Consent of the Senate." The method by which the Senate provides advice and consent on presidential nominations, referred to broadly as the confirmation process, serves several purposes. First, largely through committee investigations and hearings, the confirmation process allows the Senate to examine the qualifications of nominees and any potential conflicts of interest. Second, Senators can influence policy through the confirmation process, either by rejecting nominees or by extracting promises from nominees before granting consent. Also, the Senate sometimes has delayed the confirmation process in order to increase its influence with the executive branch on unrelated matters. Senate confirmation is required for several categories of government officials. Military appointments and promotions make up the majority of nominations, approximately 65,000 per two-year Congress, and most are confirmed routinely. Each Congress, the Senate also considers approximately 2,000 civilian nominations, and, again, many of them, such as appointments to or promotions in the Foreign Service, are routine. Civilian nominations considered by the Senate also include federal judges and specified officers in executive departments, independent agencies, and regulatory boards and commissions. Many presidential appointees are confirmed routinely by the Senate. With tens of thousands of nominations each Congress, the Senate cannot possibly consider them all in detail. A regularized process facilitates quick action on thousands of government positions. The Senate may approve en bloc hundreds of nominations at a time, especially military appointments and promotions. The process also allows for close scrutiny of candidates when necessary. Each year, a few hundred nominees to high-level positions are regularly subject to Senate investigations and public hearings. Most of these are routinely approved, while a small number of nominations are disputed and receive more attention from the media and Congress. Judicial nominations, particularly Supreme Court appointees, are generally subject to greater scrutiny than nominations to executive posts, partly because judges may serve for life. Among the executive branch positions, nominees for policymaking positions are more likely to be examined closely, and are slightly less likely to be confirmed, than nominees for non-policy positions. There are several reasons that the Senate confirms a high percentage of nominations. Most nominations and promotions are not to policymaking positions and are of less interest to the Senate. In addition, some sentiment exists in the Senate that the selection of persons to fill executive branch positions is largely a presidential prerogative. Historically, the President has been granted wide latitude in the selection of his Cabinet and other high-ranking executive branch officials. Another important reason for the high percentage of confirmations is that Senators are often involved in the nomination stage. The President would prefer a smooth and fast confirmation process, so he may decide to consult with Senators prior to choosing a nominee. Senators most likely to be consulted, typically by White House congressional relations staff, are Senators from a nominee's home state, leaders of the committee of jurisdiction, and leaders of the President's party in the Senate. Senators of the President's party are sometimes invited to express opinions or even propose candidates for federal appointments in their own states. There is a long-standing custom of "senatorial courtesy," whereby the Senate will sometimes decline to proceed on a nomination if a home-state Senator expresses opposition. Positions subject to senatorial courtesy include U.S. attorneys, U.S. marshals, and U.S. district judges. Over the past decade, Senators have expressed concerns over various aspects of the confirmation process, including the rate of confirmation for high-ranking executive branch positions and judgeships, as well as the speed of Senate action on routine nominations. When the Senate is controlled by the party of the President, this concern has often been raised as a complaint that minority party Senators are disputing a higher number of nominations, and have increasingly used their leverage under Senate proceedings to delay or even block their consideration. These concerns have led the Senate to make several changes to the confirmation process since 2011. The changes are taken into account in the following description of the process and are described in detail in other CRS Reports. Receipt and Referral and "Privileged Nominations" The President customarily sends nomination messages to the Senate in writing. Once received, nominations are numbered by the executive clerk and read on the floor. The clerk actually assigns numbers to the presidential messages, not to individual nominations, so a message listing several nominations would receive a single number. Except by unanimous consent, the Senate cannot vote on nominations the day they are received, and most are referred immediately to committees. Senate Rule XXXI provides that nominations shall be referred to appropriate committees "unless otherwise ordered." A standing order of the Senate provides that some nominations to specified positions will not be referred unless a Senator requests referral. Instead of being immediately referred, the nominations are instead listed in a special section of the Executive Calendar , a document distributed daily to congressional offices and available online. This section of the Calendar is titled "Privileged Nominations." After the chair of the committee with jurisdiction over a nomination has notified the executive clerk that biographical and financial information on the nominee has been received, this is indicated in the Calendar. After 10 days, the nomination is moved from the "Privileged Nominations" section of the Calendar and placed on the "Nominations" section with the same status as a nomination that had been reported by a committee. (See " Executive Calendar " below.) Importantly, at any time that the nomination is listed in the new section of the Executive Calendar , any Senator can request that a nomination be referred, and it is then sent to the appropriate committee of jurisdiction. Formally the presiding officer, but administratively the executive clerk's office, refers the nominations to committees according to the Senate's rules and precedents. The Senate rule concerning committee jurisdictions (Rule XXV) broadly defines issue areas for committees, and the same jurisdictional statements generally apply to nominations as well as legislation. An executive department nomination can be expected to be referred to the committee with jurisdiction over legislation concerning that department or to the committee that handled the legislation creating the position. Judicial branch nominations, including judges, U.S. attorneys, and U.S. marshals, are under the jurisdiction of the Judiciary Committee. In some instances, the committee of jurisdiction for a nomination has been set in statute. The number of nominations referred to various committees differs considerably. The Committee on Armed Services, which handles all military appointments and promotions, receives the most. The two other committees with major confirmation responsibilities are the Committee on the Judiciary, with its jurisdiction over nominations in the judicial branch, and the Committee on Foreign Relations, which considers ambassadorial and other diplomatic appointments. Occasionally, nominations are referred to more than one committee, either jointly or sequentially. A joint referral might occur when the jurisdictional claim of two committees is essentially equal. In such cases, both committees must report on the nomination before the whole Senate can act on it, unless the Senate discharges one or both committees. If two committees have unequal jurisdictional claims, then the nomination is more likely to be sequentially referred. In this case, the first committee must report the nomination before it is sequentially referred to the second committee. The second referral often is subject to a requirement that the committee report within a certain number of days. Typically, nominations are jointly or sequentially referred by unanimous consent. Sometimes the unanimous consent agreement applies to all future nominations to a position or category of positions. Committee Procedures Written Rules Most Senate committees that consider nominations have written rules concerning the process. Although committee rules vary, most contain standards concerning information to be gathered from a nominee. Many committees expect a biographical resumé and some kind of financial statement listing assets and liabilities. Some specify the terms under which financial statements will or will not be made public. Committee rules also frequently contain timetables outlining the minimum layover required between committee actions. A common timing provision is a requirement that nominations be held for one or two weeks before the committee proceeds to a hearing or a vote, permitting Senators time to review a nomination before committee consideration. Other committee rules specifically mandate a delay between steps of the process, such as the receipt of pre-hearing information and the date of the hearing, or the distribution of hearing transcripts and the committee vote on the nomination. Some of the written rules also contain provisions for the rules to be waived by majority vote, by unanimous consent, or by the chair and the ranking minority Member. Investigations Committees often gather and review information about a nominee either before or instead of a formal hearing. Because the executive branch acts first in selecting a nominee, congressional committees are sometimes able to rely partially on any field investigations and reports conducted by the Federal Bureau of Investigation (FBI). Records of FBI investigations are provided only to the White House, although a report or a summary of a report may be shared, with the President's authorization, with Senators on the relevant committee. The practices of the committees with regard to FBI materials vary. Some rarely if ever request them. On other committees, the chair and ranking Member review any FBI report or summary, but on some committees these materials are available to any Senator upon request. Committee staff usually do not review FBI materials. Almost all nominees are also asked by the Office of the Counsel to the President to complete an "Executive Personnel Financial Disclosure Report, SF-278," which is reviewed and certified by the relevant agency as well as the Director of the Office of Government Ethics. The documents are then forwarded to the relevant committee, along with opinion letters from ethics officers in the relevant agency and the director of the Office of Government Ethics. In contrast to FBI reports, financial disclosure forms are made public. All committees review financial disclosure reports and some make them available in committee offices to Members, staff, and the public. To varying degrees, committees also conduct their own information-gathering exercises. Some committees, after reviewing responses to their standard questionnaire, might ask a nominee to complete a second questionnaire. Committees frequently require that written responses to these questionnaires be submitted before a hearing is scheduled. The Committee on the Judiciary sends form letters, sometimes called "blue slips," to Senators from a nominee's home state to determine whether they support the nomination. The Committee on the Judiciary also has its own investigative staff. The Committee on Rules and Administration handles relatively few nominations and conducts its own investigations, sometimes with the assistance of the FBI or the Government Accountability Office (GAO). It is not unusual for nominees to meet with committee staff prior to a hearing. High-level nominees may meet privately with Senators. Generally speaking, these meetings, sometimes initiated by the nominee, serve basically to acquaint the nominee with the Members and committee staff, and vice versa. They occasionally address substantive matters as well. A nominee also might meet with the committee's chief counsel to discuss the financial disclosure report and any potential conflict-of-interest issues. Hearings Historically, approximately half of all civilian appointees were confirmed without a hearing. All committees that receive nominations do hold hearings on some nominations, and the likelihood of hearings varies with the importance of the position and the workload of the committee. The Committee on the Judiciary, for example, which receives a large number of nominations, does not usually hold hearings for U.S. attorneys, U.S. marshals, or members of part-time commissions. The Committee on Agriculture, Nutrition, and Forestry and the Committee on Energy and Natural Resources, on the other hand, typically hold hearings on most nominations that are referred to them. Committees often combine related nominations into a single hearing. The length and nature of hearings varies. One or both home-state Senators will often introduce a nominee at a hearing. The nominee typically testifies at the hearing, and occasionally the committee will invite other witnesses, including Members of the House of Representatives, to testify as well. Some hearings function as routine welcomes, while others are directed at influencing the policy program of an appointee. In addition to policy views, hearings might address the nominee's qualifications and potential conflicts of interest. Senators also might take the opportunity to ask questions of particular concern to them or their constituents. Committees sometimes send questions to nominees in advance of a hearing and ask for written responses. Nominees also might be asked to respond in writing to additional questions after a hearing. Especially for high-level positions, the nomination hearing may be only the first of many times an individual will be asked to testify before a committee. Therefore, the committee often gains a commitment from the nominee to be cooperative with future oversight activities of the committee. Hearings, under Senate Rule XXVI, are open to the public unless closed by majority vote for one of the reasons specified in the rule. Witness testimony is sometimes made available online through the website of the relevant committee and also through several commercial services, including Congressional Quarterly. Most committees print the hearings, although no rule requires it. The number of Senators necessary to constitute a quorum for the purpose of taking testimony varies from committee to committee, but it is usually smaller than a majority of the membership. Reporting A committee considering a nomination has four options. It may report the nomination to the Senate favorably, unfavorably, or without recommendation, or it may choose to take no action at all. It is more common for a committee to take no action on a nomination than to report unfavorably. Particularly for policymaking positions, committees sometimes report a nomination favorably, subject to the commitment of the nominee to testify before a Senate committee. Sometimes, committees choose to report a nomination without recommendation. Even if a majority of Senators on a committee do not agree that a nomination should be reported favorably, a majority might agree to report a nomination without a recommendation in order to permit a vote by the whole Senate. The timing of a vote to report a nomination varies in accordance with committee rules and practice. Most committees do not vote to report a nomination on the same day that they hold a hearing, but instead wait until the next meeting of the committee. Senate Rule XXVI, clause 7(a)(1) requires that a quorum for making a recommendation on a nomination consist of a majority of the membership of the committee. In most cases, the number of Senators necessary to constitute a quorum for making a recommendation on a nomination to the Senate is the same that the committee requires for reporting a measure. Every committee reports a majority of nominations favorably. Most of the time, committees do not formally present reports on nominations on the floor of the Senate. Instead, committee staff prepare the appropriate paperwork on behalf of the committee chair and file it with the clerk. The executive clerk then arranges for the nomination to be printed in the Congressional Record and placed on the Executive Calendar . If a report were presented on the floor, it would have to be done in executive session. Executive session and the Executive Calendar will be discussed in the next section. According to Senate Rule XXXI, the Senate cannot vote on a nomination the same day it is reported except by unanimous consent. Discharging a Committee from Consideration of a Nomination It is fairly common for the Senate to discharge a committee from consideration of an unreported nomination by unanimous consent. This removes the nomination from the committee in order to allow the full Senate to consider it. When the Senate discharges a committee by unanimous consent, it is doing so with the support of the committee for the purposes of simplifying the process. It is unusual for Senators to attempt to discharge a committee by motion or resolution, instead of by unanimous consent, and only a few attempts have ever been successful. Senate Rule XVII does permit any Senator to submit a motion or resolution that a committee be discharged from the consideration of a subject referred to it. The discharge process, however, does not allow a simple majority to quickly initiate consideration of a nomination still in committee. It requires several steps and, most notably, a motion or resolution to discharge is debatable. This means that a cloture process may be necessary to discharge a committee. Cloture on a discharge motion or resolution requires the support of three-fifths of the Senate, usually 60 Senators, and several days. Floor Procedures The Senate handles executive business, which includes both nominations and treaties, separately from its legislative business. All nominations reported from committee, regardless of whether they were reported favorably, unfavorably, or without recommendation, are listed on the Executive Calendar , a separate document from the Calendar of Business , which lists pending bills and resolutions. Usually, the majority leader schedules the consideration of nominations on the Calendar. Nominations are considered in executive session, a parliamentary form of the Senate in session that has its own journal and, to some extent, its own rules of procedure. Executive Calendar After a committee reports a nomination or is discharged from considering it, the nomination is assigned a number by the executive clerk and placed on the Executive Calendar . Under a standing order of the Senate, certain nominations might also be placed in this status on the Executive Calendar after certain informational and time requirements are met. The list of nominations in the Executive Calendar includes basic information such as the name and office of the nominee, the name of the previous holder of the office, and whether the committee reported the nomination favorably, unfavorably, or without recommendation. Long lists of routine nominations are printed in the Congressional Record and identified only by a short title in the Executive Calendar , such as "Foreign Service nominations (84) beginning John F. Aloia, and ending Paul G. Churchill." In addition to reported nominations and treaties, the Executive Calendar contains the text of any unanimous consent agreements concerning executive business. The Executive Calendar is distributed to Senate personal offices and committee offices when there is business on it. It is also available online by following the link to "Calendars and Schedules" on the Virtual Reference Desk under the Reference tab of the Senate website (www.Senate.gov) . Executive Session Business on the Executive Calendar , which consists of nominations and treaties, is considered in executive session. In contrast, all measures and matters associated with lawmaking are considered in legislative session. Until 1929 executive sessions were also closed to the public, but now they are open unless ordered otherwise by the Senate. The Senate usually begins the day in legislative session and enters executive session either by a non-debatable motion or, far more often, by unanimous consent. Only if the Senate adjourned or recessed while in executive session would the next meeting automatically open in executive session. The motion to go into executive session can be offered at any time, is not debatable, and cannot be laid upon the table. All business concerning nominations, including seemingly routine matters such as requests for joint referral or motions to print hearings, must be done in executive session. In practice, Senators often make such motions or unanimous consent requests "as if in executive session." These usually brief proceedings during a legislative session do not constitute an official executive session. In addition, at the start of each Congress, the Senate adopts a standing order, by unanimous consent, that allows the Senate to receive nominations from the President and for them to be referred to committees even on days when the Senate does not meet in executive session. Taking Up a Nomination The majority leader, by custom, makes most motions and requests that determine when or whether a nomination will be called up for consideration. For example, the majority leader may move or ask unanimous consent to "immediately proceed to executive session to consider the following nomination on the Executive Calendar.... " By precedent, the motion to go into executive session to take up a specified nomination is not debatable. The nomination itself, however, is debatable. It is not in order for a Senator to move to consider a nomination that is not on the Calendar, and, except by unanimous consent, a nomination on the Calendar cannot be taken up until it has been on the Calendar at least one day (Rule XXXI, clause 1). A day for this purpose is a calendar day. In other words, a nomination reported and placed on the Calendar on a Monday can be considered on Tuesday, even if it is the same legislative day. If the Senate simply resolved into executive session, the business immediately pending would be the first item on the Executive Calendar . A motion to proceed to another matter on the Calendar would be debatable and subject to a filibuster. For this reason, the Senate does not begin consideration of executive business this way. Instead, the motion made to call up a nomination is a motion to proceed to executive session to consider that specific nomination. If the Senate is already in executive session, and the Leader wishes to call up a nomination, the Leader will first move that the Senate enter legislative session and then that the Senate enter executive session to take up the nomination. Both motions (to enter legislative session and to enter executive session) are not subject to debate and are decided by a simple majority. Typically they are approved by voice vote. Consideration and Disposition The question before the Senate when a nomination is taken up is "will the Senate advise and consent to this nomination?" The Senate can approve or reject a nomination. A majority of Senators present and voting, a quorum being present, is required to approve a nomination. According to Senate Rule XXXI, any Senator who voted with the majority on the nomination has the option of moving to reconsider a vote on the day of the vote or the next two days the Senate meets in executive session. Only one motion to reconsider is in order on each nomination, and often the motion to reconsider is laid upon the table, by unanimous consent, shortly after the vote on the nomination. This action prevents any subsequent attempt to reconsider. After the Senate acts on a nomination, the Secretary of the Senate attests to a resolution of confirmation or disapproval and transmits it to the White House. Many nominations are brought up by unanimous consent and approved without objection; routine nominations often are grouped by unanimous consent in order to be brought up and approved together, or en bloc . A small proportion of nominations, generally to higher-level positions, may need more consideration. When there is debate on a nomination, the chair of the committee usually makes an opening speech. For positions within a state, Senators from the state may wish to speak on the nominee, particularly if they were involved in the selection process. Under Senate rules, there are no time limits on debate except when conducted under cloture or a unanimous consent agreement. Cloture Senate Rule XXII provides a means to bring debate on a nomination to a close, if necessary. Under the terms of Rule XXII, at least 16 Senators sign a cloture motion to end debate on a pending nomination. The motion proposed is "to bring to a close the debate upon [the pending nomination]." A Senator can interrupt a Senator who is speaking to present a cloture motion. Cloture may be moved only on a question that is pending before the Senate; therefore, absent unanimous consent, the Senate must be in executive session and considering the nomination when the motion is filed. After the clerk reads the motion, the Senate returns to the business it was considering before the presentation of the motion. Unless a unanimous consent agreement provides otherwise, the Senate does not vote on the cloture motion until the second day of session after the day it is presented; for example, if the motion was presented on a Monday, the Senate would act on it on Wednesday. One hour after the Senate has convened on the day the motion "ripened," the presiding officer can interrupt the proceedings during an executive session to present a cloture motion for a vote. If the Senate is in legislative session when the time arrives for voting on the cloture motion, it proceeds into executive session prior to taking action on the cloture petition. According to Rule XXII, the presiding officer first directs the clerk to call the roll to ascertain that a quorum is present, although this requirement is often waived by unanimous consent. Senators then vote either yea or nay on the question: "Is it the sense of the Senate that the debate shall be brought to a close?" In April 2017, the Senate reinterpreted Rule XXII in order to allow cloture to be invoked on all nominations by a majority of Senators voting (a quorum being present), including Supreme Court justice nominations. This expanded the results of similar actions taken by the Senate in November 2013, which changed the cloture vote requirement to a majority for nominations except to the Supreme Court. Once cloture is invoked, for most nominations there can be a maximum of two hours of post-cloture consideration. The two hour maximum includes debate as well as any actions taken while the nomination is formally pending, including quorum calls. If cloture is invoked on nominations to the highest ranking executive branch positions, or on nominations to the Supreme Court or the U.S. Circuit Court of Appeals, then the maximum time for consideration after cloture is invoked is 30 hours (see Table 1 ). Under the rule, the 2 or 30 hours is floor time spent considering the nomination in the Senate, not simply the passage of time. Thus, for time to count against the 2 or 30-hour maximum, the Senate must be in session and the question must be pending. Time spent in recess or adjournment does not count, and if the Senate were to take up other business by unanimous consent, the time spent on that other business also would not count against the post-cloture time. Holds A hold is a request by a Senator to his or her party leader to prevent or delay action on a nomination or a bill. Holds are not mentioned in the rules or precedents of the Senate, and they are enforced only through the agenda decisions of party leaders. A standing order of the Senate aims to ensure that any Senator who places a hold on any matter (including a nomination) make public his or her objection to the matter. Senators have placed holds on nominations for a number of reasons. One common purpose is to give a Senator more time to review a nomination or to consult with the nominee. Senators may also place holds because they disagree with the policy positions of the nominee. Senators have also admitted to using holds in order to gain concessions from the executive branch on matters not directly related to the nomination. The Senate precedents reducing the threshold necessary to invoke cloture on nominations, and the recent precedent reducing the time necessary for a cloture process, could affect the practice of holds. In some sense, holds are connected to the Senate traditions of mutual deference, since they may have originated as requests for more time to examine a pending nomination or bill. The effectiveness of a hold, however, ultimately has been grounded in the power of the Senator placing the hold to filibuster the nomination and the difficulty of invoking cloture to overcome a filibuster. Invoking cloture is now easier because the support of fewer Senators is necessary, and in most cases, the floor time required for a cloture process is less. The large number of nominations submitted by the President for Senate consideration, however, might still lead Senators to seek unanimous consent to quickly approve nominations. Reduced Post-Cloture Time on Nominations: Some Possible Implications On April 3, 2019, the Senate reinterpreted Senate Rule XXII to reduce, from 30 hours to 2 hours, the maximum time allowed for consideration of most nominations after cloture is invoked. The Senate took this step by reversing two rulings by the Presiding Officer. The first vote established that "postcloture time under rule XXII for all executive branch nominations other than a position at level 1 of the Executive Schedule under section 5312 of title 5 of the United States Code is 2 hours." On the second vote, the Senate established that "postcloture time under rule XXII for all judicial nominations, other than circuit courts or Supreme Court of the United States, is 2 hours" (see Table 1 ). It is uncommon for the Senate to reverse a decision by the Presiding Officer. Any Senator can attempt to reverse a ruling by making an appeal, and except in specific cases, appeals are decided by majority vote. In most circumstances, however, appeals are debatable, and therefore supermajority support (through a cloture process) is typically necessary to reach a vote to reverse a decision of the Presiding Officer. In the April 3 proceedings, however, the appeal was raised after cloture had been invoked. Senate Rule XXII states that after a successful cloture vote, "appeals from the decision of the Presiding Officer, shall be decided without debate." Therefore, when the Majority Leader appealed the rulings of the Presiding Officer, the questions on whether the ruling should stand as the judgment of the Senate received a vote without an opportunity for extended debate. The Senate voted that the ruling should not stand, and thereby upheld instead the position of the Majority Leader. The future impact of these decisions on the nominations process is difficult to assess. The immediate and obvious expected impact is that the time between a cloture vote and a confirmation vote will decrease. In recent years, a vote to confirm a nominee has typically occurred the day after cloture was invoked (or on the next day of Senate session). Usually, Senators did not spend all of the time between the votes debating the nomination. Instead, Senators typically debated the nomination for some time post-cloture, but also usually entered into unanimous consent agreements that affected when the vote would occur. For example, it became common in recent Congresses for the Senate to agree, by unanimous consent, to consider the time the Senate spent in adjournment or recesses (e.g., overnight) to count as post-cloture time. The cloture rule affected the time of the vote set by unanimous consent: the rule provided for up to 30 hours of consideration of the nomination, and the Senate would agree to vote on the nomination a day later—reflecting the approximate time that the Senate could have debated the nomination under the rule. Assuming the Senate continues to establish times for voting on nominations by unanimous consent, those negotiations will be affected by the reinterpretation of the rule. In the absence of a unanimous consent agreement, most nominations can now receive a vote two hours after a vote to invoke cloture. The two hours is not formally divided between the parties pursuant to the rule (or pursuant to the reinterpretation of the rule), but it might be divided, by unanimous consent, between the Majority and Minority Leader. Even without an explicit unanimous consent agreement, the Majority and Minority Leaders are recognized before any other Senators. In addition, a Senator can speak for a maximum of one hour post-cloture. As a result, the Majority Leader could claim the first hour, and the Minority Leader the second, or vice versa. (Of course, Senators could speak on a nomination at times other than after cloture has been invoked, even when the nomination is not formally pending before the Senate. ) It is also possible that the recent reinterpretation of the rule will affect how often the Senate relies on the cloture process to approve nominations. After the first reinterpretation of the cloture rule in 2013, the number of nominations subjected to cloture motions increased significantly in both of the Congresses when the Senate was controlled by the same party as the President (113 th (2013-2014) and 115 th (2017-2018) Congresses). Nominations Returned to the President Nominations that are not confirmed or rejected are returned to the President at the end of a session or when the Senate adjourns or recesses for more than 30 days (Senate Rule XXXI, paragraph 6). If the President still wants a nominee considered, he must submit a new nomination to the Senate. The Senate can, however, waive this rule by unanimous consent, and it often does to allow nominations to remain "in status quo" between the first and second sessions of a Congress or during a long recess. The majority leader or his designee also may exempt specific nominees by name from the unanimous consent agreement, allowing them to be returned during the recess or adjournment. Recess Appointments The Constitution, in Article II, Section 2, grants the President the authority to fill temporarily vacancies that "may happen during the Recess of the Senate." These appointments do not require the advice and consent of the Senate; the appointees temporarily fill the vacancies without Senate confirmation. In most cases, recess appointees have also been nominated to the positions to which they were appointed. Furthermore, when a recess appointment is made of an individual previously nominated to the position, the President usually submits a new nomination to the Senate in order to comply with a provision of law affecting the pay of recess appointees (5 U.S.C. 5503(a)). Recess appointments have sometimes been controversial and have occasionally led to inter-branch conflict.

Article II, Section 2, of the Constitution provides that the President shall appoint officers of the United States "by and with the Advice and Consent of the Senate." This report describes the process by which the Senate provides advice and consent on presidential nominations, including receipt and referral of nominations, committee practices, and floor procedure. Committees play the central role in the process through investigations and hearings. Senate Rule XXXI provides that nominations shall be referred to appropriate committees "unless otherwise ordered." Most nominations are referred, although a Senate standing order provides that some "privileged" nominations to specified positions will not be referred unless requested by a Senator. The Senate rule concerning committee jurisdictions (Rule XXV) broadly defines issue areas for committees, and the same jurisdictional statements generally apply to nominations as well as legislation. A committee often gathers information about a nominee either before or instead of a formal hearing. A committee considering a nomination has four options. It can report the nomination to the Senate favorably, unfavorably, or without recommendation, or it can choose to take no action. It is more common for a committee to take no action on a nomination than to reject a nominee outright. The Senate handles executive business, which includes both nominations and treaties, separately from its legislative business. All nominations reported from committee are listed on the Executive Calendar, a separate document from the Calendar of Business, which lists pending bills and resolutions. Generally speaking, the majority leader schedules floor consideration of nominations on the Calendar. Nominations are considered in "executive session," a parliamentary form of the Senate in session that has its own journal and, to some extent, its own rules of procedure. The Senate can call up a nomination expeditiously, because a motion to enter executive session to consider a specific nomination on the Calendar is not debatable. This motion requires a majority of Senators present and voting, a quorum being present, for approval. After a nomination has been called up, the question before the Senate is "will the Senate advise and consent to this nomination?" A majority of Senators voting is required to approve a nomination. However, Senate rules place no limit on how long a nomination may be debated, and ending consideration could require invoking cloture. On April 6, 2017, the Senate reinterpreted Rule XXII in order to allow cloture to be invoked on nominations to the Supreme Court by a majority of Senators voting. This expanded the results of similar actions taken by the Senate in November 2013, which changed the cloture vote requirement to a majority for nominations other than to the Supreme Court. After the 2013 decision, the number of nominations subjected to a cloture process increased. On April 3, 2019, the Senate reinterpreted Rule XXII again. The Senate reduced, from 30 hours to 2 hours, the maximum time nominations can be considered after cloture has been invoked. This change applied to all executive branch nominations except to high-level positions such as heads of departments, and it applied to all judicial nominations except to the Supreme Court and the U.S. Circuit Court of Appeals. The full impact of this change is difficult to assess at this time, but it is likely to shorten the time between a cloture vote and a vote on the nomination. If Senators respond as they did to the last reinterpretation of the cloture rule, it might also increase the number of nominations subjected to a cloture process. Nominations that are pending when the Senate adjourns sine die at the end of a session or recesses for more than 30 days are returned to the President unless the Senate, by unanimous consent, waives the rule requiring their return (Senate Rule XXXI, clause 6). If a nomination is returned, and the President still desires Senate consideration, he must submit a new nomination.

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Introduction Through its investigative powers, Congress gathers information it considers necessary to oversee the implementation of existing laws or to evaluate whether new laws are necessary. This "power of inquiry" is essential to the legislative function and derives directly, though implicitly, from the Constitution's vesting of legislative power in the Congress. The information that Congress seeks, whether to inform itself for lawmaking purposes or to conduct oversight, often lies in the executive branch's possession. And while executive branch officials comply with most congressional requests for information, "experience has taught that mere requests" can sometimes be "unavailing," and that "information which is volunteered is not always accurate or complete . . . ." The Supreme Court has therefore determined that "some means of compulsion [is] essential" for Congress "to obtain what is needed." When Congress finds an inquiry blocked by the withholding of information, or where the traditional process of negotiation and accommodation is considered inappropriate or unavailing, a subpoena—either for testimony or documents—may be used to compel compliance with congressional demands. An individual—whether a member of the public or an executive branch official—has a legal obligation to comply with a duly issued and valid congressional subpoena, unless a valid and overriding privilege or other legal justification permits non-compliance. The subpoena, however, is only as effective as the means by which it is potentially enforced. Without a process by which Congress can coerce compliance or deter non-compliance, the subpoena would be reduced to a formalized request rather than a constitutionally based demand for information. Congress currently employs an ad hoc combination of methods to combat non-compliance with subpoenas. The two predominant methods rely on the authority and participation of another branch of government. First, the criminal contempt statute permits a single house of Congress to certify a contempt citation to the executive branch for the criminal prosecution of an individual who has willfully refused to comply with a committee subpoena. Once the contempt citation is received, any later prosecution lies within the control of the executive branch. Second, Congress may try to enforce a subpoena by seeking a civil judgment declaring that the recipient is legally obligated to comply. This process of civil enforcement relies on the help of the courts to enforce congressional demands. Congress has only rarely resorted to either criminal contempt or civil enforcement to combat non-compliance with subpoenas. In most circumstances involving the executive branch, committees can obtain the information they seek through voluntary requests or after issuing (but not yet seeking enforcement of) a subpoena. Even where the executive branch is initially reluctant to provide information, Congress can use the application of various forms of legislative leverage, along with an informal political process of negotiation and accommodation, to obtain what it needs. Congress exercises substantial power over the executive branch by controlling agency authority, funding, and, in the case of the Senate, confirmation of executive officers. The use or threatened use of these powers in a way that would impose burdens on an agency can encourage compliance with subpoenas (or make it more likely that requested information will be provided without need to issue a subpoena) and solidify Congress's position when trying to negotiate a compromise during an investigative dispute with the executive branch. But legislative leverage and the subpoena enforcement mechanisms do not always ensure congressional access to requested information, particularly from the executive branch. Recent controversies could be interpreted to suggest that the existing mechanisms are at times inadequate—at least in the relatively rare instance that enforcement is necessary to respond to a current or former executive branch official who has refused to comply with a subpoena. Four times since 2008, the House of Representatives has held an executive branch official (or former official) in criminal contempt of Congress for denying a committee information subpoenaed during an ongoing investigation. In each instance the executive branch determined not to bring the matter before a grand jury. In three of the four instances, the House also looked to the federal courts for civil enforcement of the outstanding subpoena. The committees involved eventually obtained much of the information sought through those lawsuits, but only after prolonged litigation, and, in one of the cases, only after a judicial decision that could be viewed as potentially hindering Congress's access to executive branch information in the future. The House's decision to resort to criminal contempt of Congress and civil enforcement in these cases was not without controversy, as in each instance the executive official asserted that a constitutional privilege limited Congress's right to the information sought. This report will not address whether the officials in each case invoked a valid privilege or whether the privilege asserted was adequate to justify withholding information from Congress. Nor will this report address whether, under the circumstances, it was appropriate for Congress to exercise its contempt power. Rather, this report will examine the legal enforcement of congressional subpoenas in a contemporary and historical context and discuss legal issues associated with alternative subpoena-enforcement frameworks that Congress may consider to obtain information from the executive branch. The Current Process: Criminal Contempt and Civil Enforcement of Subpoenas Besides leveraging its general legislative powers, Congress currently relies on two formal legal mechanisms to enforce subpoenas: criminal contempt of Congress and civil enforcement of subpoenas in the federal courts. Criminal Contempt of Congress The criminal contempt of Congress statute, enacted in 1857 and only slightly modified since, makes the failure to comply with a duly issued congressional subpoena a criminal offense. The statute, now codified under 2 U.S.C. § 192, provides that any person who "willfully" fails to comply with a properly issued committee subpoena for testimony or documents is guilty of a misdemeanor, punishable by a substantial fine and imprisonment for up to one year. The criminal contempt statute outlines the process by which the House or Senate may refer the non-compliant witness to the Department of Justice (DOJ) for criminal prosecution. Under 2 U.S.C. § 194, once a committee reports the failure to comply with a subpoena to its parent body, the President of the Senate or the Speaker of the House is directed to "certify[] the statement of facts . . . to the appropriate United States attorney, whose duty it shall be to bring the matter before the grand jury for its action." The statute does not expressly require approval of the contempt citation by the committee's parent body, but both congressional practice and judicial decisions suggest that approval may be necessary. Although approval of a criminal contempt citation under § 194 appears to impose a mandatory duty on the U.S. Attorney to submit the violation to a grand jury, the executive branch has repeatedly asserted that it retains the discretion to determine whether to do so. A successful contempt prosecution may lead to criminal punishment of the witness in the form of incarceration, a fine, or both. Because the criminal contempt statute is punitive, its use is mainly as a deterrent. In other words, while the threat of criminal contempt can be used as leverage to encourage compliance with a specific request, a conviction does not necessarily lead to release of the information to Congress. Civil Enforcement of Subpoenas Congress may also choose to enforce a subpoena through a civil suit in the federal courts by a process known as civil enforcement. Under this process, either house of Congress may unilaterally authorize one of its committees or another legislative entity to file a suit in federal district court seeking a court order declaring that the subpoena recipient is legally required to comply with the demand for information. In the past, this authorization has been provided through a simple House or Senate resolution. Federal law provides the jurisdictional basis for the Senate's exercise of its civil enforcement power. Under 28 U.S.C. § 1365, the U.S. District Court for the District of Columbia (D.C. District Court) has jurisdiction "over any civil action brought by the Senate or committee or subcommittee of the Senate to enforce . . . any subpoena." The law, however, makes clear that the grant of jurisdiction "shall not apply" to an action to enforce a subpoena issued to an executive branch official acting in his or her official capacity who has asserted a "governmental privilege." Yet at least one district court has suggested that the limitation found within § 1365 does not necessarily bar the courts from exercising jurisdiction over Senate claims to enforce a subpoena against an executive official under other jurisdictional provisions. The House has no corresponding statutory framework for beginning a civil enforcement lawsuit, but still retains the authority to seek assistance from the courts. Recent practice, approved by the D.C. District Court, suggests that the House may authorize a committee or other entity to file a civil claim in federal court to enforce a subpoena on behalf of the body. This process has been used on various occasions to bring civil enforcement lawsuits against an executive branch official. As opposed to criminal contempt, a successful civil enforcement suit generally has the benefit of securing compliance with the congressional subpoena—meaning the committee may obtain the information it seeks. If the court orders compliance with the subpoena and disclosure of the information, generally after finding both that the subpoena is valid and that the individual has not invoked an adequate privilege justifying non-compliance, continued defiance may lead to contempt of court as opposed to contempt of Congress. The Current Process in Use Modern congressional disputes with the executive branch over access to information provide insight into the functioning of both the criminal contempt of Congress and civil enforcement processes. The Burford Contempt In 1982, a pair of House committees issued subpoenas to Environmental Protection Agency (EPA) Administrator Anne Burford for litigation documents relating to EPA's enforcement of the federal "Superfund" law. At the direction of President Ronald Reagan, Administrator Burford refused to disclose the files on the ground that they were protected by executive privilege. In response, the House approved a criminal contempt citation under 2 U.S.C. § 192 and § 194 for Burford's failure to comply with the committee subpoenas. Shortly after passage of the contempt resolution, and before the Speaker delivered the citation to the U.S. Attorney, the DOJ filed a lawsuit asking a federal court to declare that Administrator Burford had acted appropriately in withholding the litigation documents. The lawsuit was ultimately dismissed, with the court determining that judicial intervention in such executive-legislative disputes "should be delayed until all possibilities for settlement have been exhausted." That point, the court reasoned, would not occur until Administrator Burford was prosecuted for criminal contempt of Congress. The U.S. Attorney subsequently refused to present the criminal contempt to a grand jury, asserting that despite the apparently mandatory language of 2 U.S.C. § 194, the statute left him with discretion to withhold the citation. Two separate compromises were ultimately reached in which both congressional committees were provided access to the subpoenaed documents, at least partly in exchange for proposing a resolution effectively withdrawing the contempt citation. Shortly thereafter, the DOJ Office of Legal Counsel (OLC), which acts as a legal adviser to the President and the executive branch, released an opinion articulating the legal reasoning underlying the Administration's decision not to pursue a contempt prosecution against Administrator Burford. Based on both statutory interpretation and the constitutional separation of powers, the OLC concluded that (1) Congress "may not direct the Executive to prosecute a particular individual without leaving any discretion to the Executive to determine whether a violation of the law has occurred," and (2) "the contempt of Congress statute was not intended to apply and could not constitutionally be applied to an Executive Branch official who asserts the President's claim of executive privilege . . . ." Specifically, the opinion asserted that interpreting 2 U.S.C. § 194 as requiring the executive branch to bring a criminal contempt prosecution under these circumstances would "burden" and "nullif[y]" the President's exercise of executive privilege, and impermissibly interfere with the "prosecutorial discretion of the Executive by directing the executive branch to prosecute particular individuals." The Miers and Bolten Contempts In 2007, former White House Counsel Harriet Miers and White House Chief of Staff Joshua Bolten failed to comply with subpoenas issued by the House Judiciary Committee for testimony and documents relating to the dismissal of various United States Attorneys during the George W. Bush Administration. The President asserted executive privilege in each case, asserting that the subpoenaed testimony and documents involved protected White House communications. Both Miers and Bolten relied on the President's determination as justification for non-compliance with the committee subpoenas. After failed negotiations, the House held both individuals in criminal contempt of Congress and—presumably in response to the position taken by the DOJ in the Burford contempt—simultaneously approved a separate resolution authorizing the Judiciary Committee to initiate a civil lawsuit in federal court to enforce the subpoenas. After receiving the criminal contempt citation, the Attorney General informed the Speaker that the DOJ would exercise its discretion and not take any action to prosecute Mr. Bolten or Ms. Miers for criminal contempt of Congress. The DOJ's position, as in the Burford contempt, was that requiring such a prosecution would inhibit the President's ability to assert executive privilege and infringe on the DOJ's prosecutorial discretion. Shortly thereafter, the House Judiciary Committee filed suit, asking the federal court to direct compliance with the subpoenas. In Committee on the Judiciary v Miers , the D.C. District Court rejected the Administration's main argument that a senior presidential adviser asserting executive privilege at the direction of the President is immune from being compelled to testify before Congress. The court described the asserted immunity as "entirely unsupported by existing case law" and instead held that Ms. Miers had to appear, but was free to assert executive privilege "in response to any specific questions posed by the Committee. " Thus, Ms. Miers could still assert the protections of executive privilege during her testimony depending on the substance of any individual question asked by a Member of the Committee. As for Mr. Bolten, the court directed that the executive branch produce a "detailed list and description of the nature and scope of the documents it seeks to withhold on the basis of executive privilege" to allow the court to resolve those claims. The district court decision was appealed. Almost two years after the first subpoena was issued, with the appeal pending before the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit) and a newly elected Congress and President in office, the parties reached a settlement and the case was dismissed. Under that settlement, most of the requested documents were provided to the Committee and Ms. Miers would testify, under oath, in a closed but transcribed hearing. The Holder Contempt In 2012, Attorney General Eric Holder failed to comply with a House Oversight and Government Reform Committee subpoena seeking documents relating to misleading communications made by the DOJ in response to the committee's ongoing investigation into operation Fast and Furious—a Bureau of Alcohol, Tobacco, Firearms, and Explosives operation in which firearms were permitted to be "walked," or trafficked, to gunrunners and other criminals in Mexico. Like the previous controversies, the President asserted executive privilege over the pertinent documents and directed the Attorney General not to comply with the subpoena. Procedurally, the Holder controversy mirrored that of Miers and Bolten. The House held the Attorney General in criminal contempt of Congress and simultaneously passed a resolution authorizing the committee to enforce the subpoena in federal court. The DOJ shortly thereafter informed the Speaker that it would not take any action on the criminal contempt citation, again citing congressional encroachments on executive privilege and prosecutorial discretion. The committee responded by filing a lawsuit, authorized by House resolution, seeking judicial enforcement of the subpoena. The D.C. District Court held that it had jurisdiction to hear the dispute in 2013 and denied the committee's motion for summary judgment in 2014. But it was not until 2016—in a new Congress and after Attorney General Holder had left his position—that the D.C. District Court issued an opinion in Committee on Oversight and Government Reform v. Lynch instructing the new Attorney General to comply with the subpoena. The court rejected the DOJ's argument that the deliberative process privilege—a prong of executive privilege that protects pre-decisional and deliberative agency communications—justified withholding the subpoenaed documents in the case. In "balancing the competing interests" at stake, the court held that the asserted privilege must yield to Congress's "legitimate need" for the documents. Despite the committee's victory, two aspects of the court's reasoning may affect Congress's ability to obtain similar documents from the executive branch. First, in denying the committee's earlier motion for summary judgment, the court rejected the argument that the deliberative process privilege can never justify withholding documents in the face of a congressional subpoena. While a previous D.C. Circuit decision had suggested that the deliberative process privilege is a "common law" privilege, typically subject to override by legislative action, the district court determined that "there is an important constitutional dimension to the deliberative process aspect of the executive privilege." Although the scope of the deliberative process privilege remains unsettled, by explicitly concluding that it has some degree of constitutional foundation the court's decision might have strengthened the privilege in certain contexts, especially for its use in response to a congressional subpoena. Second, in ordering disclosure of the subpoenaed material, the court emphasized that the substance of the DOJ's internal deliberations had been publicly disclosed as part of a DOJ Inspector General investigation and report. Thus, in considering the DOJ's interests, the court noted that the agency would suffer only "incremental harm" from disclosing the documents to the committee. This suggests that in a scenario where deliberative process privilege documents have not been disclosed, a court may give more weight than the Lynch court to the agency's interest in protecting the confidentiality of its communications. Although the committee won the case, it still appealed the decision to the D.C. Circuit out of concern for the reasoning applied. As with Miers , the litigation has spanned different Congresses and different presidential Administrations. The case is being held in abeyance pending a potential settlement between the committee and the Trump Administration. Although the parties reportedly reached a negotiated settlement in March 2018, that settlement was contingent upon the vacation of two specific orders issued by the district court earlier in the case. In October 2018, the district court declined to vacate those decisions, leaving the fate of the negotiated settlement uncertain. The Lerner Contempt Finally, in 2013, former Internal Revenue Service (IRS) official Lois Lerner appeared before the House Oversight and Government Reform Committee for a hearing on allegations that the IRS had given increased scrutiny to conservative political groups applying for tax-exempt status. After Ms. Lerner provided an opening statement denying any wrongdoing, she invoked her Fifth Amendment privilege against self-incrimination, and refused to respond to questions from committee members. After further deliberation, the committee ruled that she had waived her Fifth Amendment privilege by making an opening statement proclaiming her innocence. About 10 months later, the committee recalled her to provide testimony and she again asserted her Fifth Amendment privilege. Ultimately, the House adopted a resolution citing Ms. Lerner for criminal contempt of Congress, but did not choose to approve a resolution authorizing the committee to pursue civil enforcement of the subpoena in federal court, as had been done in 2008 with Ms. Miers and 2012 with Attorney General Holder. The U.S. Attorney for the District of Columbia later informed the Speaker that Ms. Lerner's actions did not warrant a prosecution for criminal contempt, as he had determined that she had not waived her Fifth Amendment rights. This decision was notable in that unlike the Burford, Miers, Bolten, and Holder scenarios, Ms. Lerner was relying on a personal privilege rather than the President's assertion of executive privilege as justification for her non-compliance. Implications of Recent Practice A pair of observations may be gleaned from the above events. First, efforts to punish an executive branch official for non-compliance with a committee subpoena through the criminal contempt of Congress statute will likely prove unavailing in certain circumstances. For example, when the President directs or endorses the non-compliance of the official, such as when the official refuses to disclose information pursuant to the President's decision that the information is protected by executive privilege, past practice suggests that the DOJ is unlikely to pursue a prosecution for criminal contempt. As a result, it would appear arguable that there is not currently a credible threat of prosecution for violating 2 U.S.C. § 192 when an executive branch official refuses to comply with a congressional subpoena at the direction of the President. Even when the official is not acting at the clear direction of the President, as in the Lerner controversy, the executive branch has contended that it retains the authority to make an independent assessment of whether the official (or former official) has in fact violated the criminal contempt statute. If the executive branch determines either that the statute has not been violated or that a defense is available that would bar the prosecution, then it may—in an exercise of discretion—leave a congressional citation unenforced. The criminal contempt statute, therefore, may have limited utility as a deterrent to non-compliance with congressional subpoenas by executive branch officials faced with similar circumstances. Second, seeking enforcement of congressional subpoenas in the courts, even when successful, may lead to significant delays in Congress obtaining the sought-after information. This shortcoming was apparent in Miers and the Fast and Furious litigation. Miers , which never reached a decision on the merits by the D.C. Circuit, was dismissed at the request of the parties after about 19 months. Similarly, the Fast and Furious litigation, which remains pending on appeal before the D.C. Circuit, was filed more than six years ago. The passage of time, together with the intervening congressional and presidential elections in each case, could be said to have diminished both the value of the disclosure and the committee's ability to engage in effective, timely oversight. Relying on civil enforcement also involves the risk to Congress that the court will reach a decision that will make it harder for committees to obtain information in the future. For example, while the Miers decision rejected absolute immunity for senior presidential advisers and may have removed a barrier to Congress's access to such testimony in the future, the district court opinions in the Fast and Furious litigation may have more limiting effect on congressional efforts to access testimony by certain executive branch officials, because the court recognized that the deliberative process privilege has constitutional roots and must be balanced against Congress's need for the information. The Historical Process: Inherent Contempt Historically, the House and Senate relied on their own institutional power to not only enforce congressional subpoenas, but also to respond to other actions that either house viewed as obstructing their legislative processes or prerogatives. Indeed, the criminal contempt statute was not enacted until 1857, and the courts do not appear to have entertained a civil action to enforce a congressional subpoena against an executive official until the Watergate era. For much of American history the House and Senate instead used what is known as the inherent contempt power to enforce their investigative powers. The inherent contempt power is a constitutionally based authority given to each house to unilaterally arrest and detain an individual found to be "obstruct[ing] the performance of the duties of the legislature." The power is therefore broader in scope than the criminal contempt statute in that it may be used not only to combat subpoena non-compliance, but also in response to other actions that could be viewed as "obstructing" or threatening either house's exercise of its legislative powers. In practice, the inherent contempt power has been exercised using a multi-step process. Upon adopting a House or Senate resolution authorizing the execution of an arrest warrant by that chamber's Sergeant-at-Arms, the individual alleged to have engaged in contemptuous conduct is taken into custody and brought before the House or Senate. A hearing or "trial" follows in which allegations are heard and defenses raised. Although generally occurring before the full body, it would appear likely that the contempt hearing could also permissibly take place before a congressional committee who reports its findings to the whole House or Senate. If judged guilty, the House or Senate may then direct that the witness be detained or imprisoned until the obstruction to the exercise of legislative power is removed. Although the purpose of the detention may vary, for subpoena non-compliance the use of the power has generally not been punitive. Rather, the goal is to detain the witness until he or she discloses the information sought, but not beyond the end of the Congress. Despite its title, "inherent" contempt is more accurately characterized as an implied constitutional power. The Supreme Court has repeatedly held that although the contempt power is not specifically granted by the Constitution, it is still "an essential and appropriate auxiliary to the legislative function," and thus implied from the general vesting of legislative powers in Congress. The Court has viewed the power as one rooted in self-preservation, concluding that the "power to legislate" includes an "implied right of Congress to preserve itself" by dealing "with direct obstructions to its legislative duties" through contempt. The Court has also suggested that Congress may effectuate this implied power through the Necessary and Proper Clause, which authorizes Congress to "make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers . . . ." The 1857 criminal contempt provision, for example, has been viewed as "an act necessary and proper for carrying into execution the powers vested in . . . each House." To that end, it seems understood that the criminal contempt statute was intended to supplement each house's inherent contempt power, rather than to replace it. The Supreme Court has specifically articulated this view and, in fact, gone further to suggest that "Congress could not divest itself, or either of its Houses, of the essential and inherent power to punish for contempt." Historical practice also supports this conclusion, as Congress continued to use the inherent contempt power after enactment of the criminal contempt statute. As applied to subpoena enforcement, the Supreme Court has affirmed the existence of each house's constitutionally based authority to arrest and detain individuals for refusing to comply with congressional demands for information. The 1927 case of McGrain v. Daugherty may be viewed as the high-water mark of the judiciary's recognition of this power. McGrain arose from a Senate investigation into the alleged failure of the Attorney General to prosecute federal antitrust violations associated with the Teapot Dome Scandal. As part of that investigation, a subpoena was issued to Mallie Daugherty, the brother of the Attorney General and president of an Ohio bank, for relevant testimony. When Daugherty refused to comply, the Senate exercised its inherent contempt power and ordered its Sergeant-at-Arms to take Mr. Daugherty into custody. Once arrested, Daugherty filed a writ of habeas corpus with the local district court, which, upon review, held the House's action unlawful and directed that Daugherty be discharged from the Sergeant-at-Arm's custody. The Supreme Court reversed and upheld the House's authority to arrest and detain a witness in order to obtain information for legislative purposes—noting that "[t]he power of inquiry—with process to enforce it—is an essential and appropriate auxiliary to the legislative function." In an oft-quoted passage, the Court declared: 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; and where the legislative body does not itself possess the requisite information—which not infrequently is true—recourse must be had to others who do possess it. Experience has taught that mere requests for such information often are unavailing, and also that information which is volunteered is not always accurate or complete; so some means of compulsion are essential to obtain what is needed. Although broadly conceived, the Court has policed the outer confines of the inherent contempt power. In Jurney v MacCracken , the Court clarified that no act is punishable for contempt "unless it is of a nature to obstruct the performance of the duties of the legislature." The Court identified two scenarios to which the power to punish would not extend: (1) where Congress lacks a "legislative duty to be performed" or (2) where "the act complained of is deemed not to be of a character to obstruct the legislative process." The first scenario is reflected in Kilbourn v. Thompson, a case in which the Court held that no person may be made subject to the contempt power unless the subject matter of the investigation giving rise to the contempt was within the body's authority. In Kilbourn , the Court ordered the release of a witness held under the contempt power after determining that the House had exceeded its authority when it authorized an investigation into a bankrupt private real-estate pool, of which the United States was a creditor pursuing payment in the bankruptcy court. The Court viewed the investigation—and therefore the contempt—as exceeding the House's constitutional authority because Congress had "no general power of making inquiry into the private affairs of the citizen." Instead, the Court concluded that by interfering in an issue properly resolved in the bankruptcy courts, the House had "assumed power . . . [that was] in its nature clearly judicial." The second scenario set forth in MacCracken is reflected in Marshall v. Gordon . There it was held that a "manifestly ill-tempered" letter written to a committee chair was not related enough to obstructing the powers of the House to constitute a contempt. The Marshall opinion began by establishing that the exercise of the contempt power is appropriate only as "necessary to preserve and carry out the legislative authority given" to Congress. The power could, for example, be used to remedy physical obstruction of the legislative body in the discharge of its duties, or physical assault upon its members for action taken or words spoken in the body, or obstruction of its officers in the performance of their official duties, or the prevention of members from attending so that their duties might be performed, or finally with contumacy in refusing to obey orders to produce documents or give testimony which there was a right to compel. The Court concluded that because the Marshall contempt was approved in response to the writing of an "irritating" letter, and "not because of any obstruction to the performance of legislative duty," it was "not intrinsic to the right of the House to preserve the means of discharging its legislative duties" and thus invalid. Despite its potential reach, the inherent contempt power has been described by some observers as cumbersome, inefficient, and "unseemly." Presumably for these reasons, it does not appear that either house has exercised its inherent contempt power to enforce subpoenas or to remove any other obstruction to the exercise of the legislative power since the 1930s. Even so, the mere threat of arrest and detention by the Sergeant-at-Arms can be used to encourage compliance with congressional demands. For example, Senator Sam Ervin, when serving as chairman of the Senate Select Committee on Presidential Campaign Activities, invoked the inherent contempt power several times to encourage compliance with the committee's requests for information during its investigation of the Nixon Administration. Although the power has long lain dormant, it remains a tool that Congress may use to enforce subpoenas. Subpoena-Enforcement Frameworks and Their Attendant Constitutional Concerns Given the difficulties associated with Congress's current approach to subpoena enforcement, the House or Senate may find it desirable to consider potential alternative frameworks. Before turning to specific alternatives, it is necessary briefly to establish certain foundational separation-of-powers principles that are generally implicated in any discussion of Congress's authority to compel compliance with subpoenas issued to the executive branch. Potentially Applicable Separation-of-Powers Principles Although the text of the Constitution distributes the legislative, executive, and judicial powers among the three branches of government, the Supreme Court generally has not endorsed an absolute separation. The allocation of powers was never intended, in the words of Justice Oliver Wendell Holmes, to cause the branches to be "hermetically sealed," or divided into "fields of black and white." Instead, observed Justice Robert Jackson, the separation of powers "enjoins upon [the] branches separateness but interdependence, autonomy but reciprocity." It is a doctrine often characterized by ambiguity and overlap rather than bright-line rules. In the subpoena-enforcement context, potential separation-of-powers concerns may arise in three principle areas: congressional exercise of executive or judicial powers; congressional infringement upon executive privilege; and procedural compliance with the constitutional requirements of bicameralism and presentment. Congressional Exercise of Executive or Judicial Powers The separation of powers could be implicated either when Congress attempts to enforce a subpoena on its own; seeks to limit or control the executive's discretion in conducting that enforcement; or reserves for itself the ultimate right to adjudicate inter-branch disputes. These actions, at least on the surface, might implicate enforcement and adjudication powers generally granted to the executive and judicial branches, respectively. While the Constitution provides Congress with "[a]ll legislative Powers herein granted," it is the executive branch, and the President specifically, that is directed to "take Care that the Laws be faithfully executed." In enforcing these constitutionally articulated roles, the Court has carefully proscribed attempts by Congress to preserve for itself the authority to engage in executive functions, such as the execution or implementation of law. Congress, the Court has held, may neither execute the law itself, nor appoint or control those engaged in the execution. In Bowsher v. Synar , for example, the Court struck down a provision of law that had delegated executive power to the Comptroller General, a legislative branch officer. Under the law, the Comptroller General was to use his own "independent judgment" to identify spending reductions to be implemented by the President that were necessary to reduce the deficit to an established target. In rejecting this arrangement, the Court held that the functions delegated to the Comptroller General were executive in nature, as he was required to "exercise judgment concerning facts that affect the application" and "interpretation" of the law, and had "ultimate authority to determine the budget cuts to be made." Because "[t]he structure of the Constitution does not permit Congress to execute the laws," Congress could not constitutionally delegate that authority to a legislative officer under its control. The Court has also clearly stated that Congress is not "a law enforcement or trial agency." "Legislative power," the Court has established, "is the authority to make laws, but not to enforce them ." Thus, "in order to forestall the danger of encroachment 'beyond the legislative sphere,'" Congress may not "invest itself or its Members with . . . executive power." These general principles have specific application in the context of congressional investigations and contempt, in which the Court has held that "the power to investigate must not be confused with any of the powers of law enforcement; those powers are assigned under our Constitution to the Executive and the Judiciary." A corollary to the principle that the Constitution has assigned the law enforcement power principally to the executive branch is the notion that when engaging in that enforcement, the executive branch generally retains some degree of "prosecutorial discretion." This doctrine, which derives from a mixture of constitutional principles including the separation of powers, the Take Care Clause, and the duties of a prosecutor as an appointee of the President, forms the foundation of the Court's statement in United States v. Nixon that "the Executive Branch has exclusive authority and absolute discretion to decide whether to prosecute a case . . . ." As noted previously, the executive branch has relied partially on prosecutorial discretion in declining to pursue some violations of criminal contempt of Congress. The scope of this discretion is not well established, especially regarding the extent that Congress can require or curtail its exercise. In any event, any attempt by Congress to mandate that the executive branch initiate a specific prosecution, including a prosecution for criminal contempt of Congress, has been opposed by the executive branch and may raise constitutional questions. Just as Congress is not a law enforcer, it is similarly not a court, and may not bestow upon itself the judicial power. The Supreme Court has made clear that "no judicial power is vested in Congress" and has generally rebuked congressional attempts to "try" an individual for "any crime or wrongdoing." The Constitution does not authorize Congress to exercise even "commingled" legislative and judicial powers. In fact, the Court has declared that such an arrangement "would be absolutely destructive of the distinction between legislative, executive, and judicial authority which is interwoven in the very fabric of the Constitution." Relatedly, the Bill of Attainder Clause prohibits Congress from adjudicating specific legal disputes by taking action "that legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial." One might assert that these general prohibitions on Congress's exercise of executive or judicial powers would cast doubt upon Congress's historical exercise of its inherent contempt power. It could be argued that when exercising that power, Congress, both as an institution and through officials such as the Sergeant-at-Arms, is exercising executive and judicial power by acting as an arresting officer, prosecutor, and judge. But in affirming the constitutionality of the inherent contempt power, the Court has viewed the power (including the attendant arrest, hearing, and detention of the witness) as an exercise of implied legislative power and thus not in contravention of general separation-of-powers principles. Thus, in considering separation-of-powers questions that arise from the various methods by which Congress can enforce its subpoenas, it is essential to distinguish between Congress exercising its own legislative powers pursuant to the inherent contempt power, and Congress attempting to enforce and judge general statutory prohibitions such as statutory criminal contempt violations under 2 U.S.C. § 192. In short, the former is a permissible exercise of legislative power to remedy an offense against Congress, while the latter may be an impermissible exercise of executive and judicial power to remedy a criminal offense against the United States. Executive Privilege The use of some contempt procedures against an executive branch official invoking executive privilege at the direction of the President could be viewed as frustrating the President's ability to protect the confidentiality of his communications—a protection rooted in the separation of powers. In general, executive privilege is an implied legal doctrine that permits the executive branch to "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." Because past subpoena enforcement disputes between Congress and the executive branch have involved such assertions, it is necessary to outline briefly executive privilege's general contours. The Supreme Court has only rarely addressed executive privilege, but its most significant explanation of the doctrine came in the unanimous opinion of United States v. Nixon . Nixon involved the President's assertion of executive privilege in refusing to comply with a criminal trial subpoena—issued upon the request of a special prosecutor—for electronic recordings of conversations he had in the Oval Office with White House advisers. The Court's opinion recognized an implied constitutional privilege protecting presidential communications, holding that the "privilege of confidentiality of presidential communications" is "fundamental to the operation of Government and inextricably rooted in the separation of powers." The justification underlying the privilege related to the integrity of presidential decisionmaking, with the Court reasoning that the importance of protecting a President's communications with his advisers was "too plain to require further discussion," as "[h]uman experience teaches that those who expect public dissemination of their remarks may well temper candor with a concern for appearances and for their own interests to the detriment of the decisionmaking process." Even so, the Court determined that when the President asserts only a "generalized interest" in the confidentiality of his communications, that interest must be weighed against the need for disclosure in the given case. In conducting that balancing, the Court held that the President's "generalized" assertion of privilege "cannot prevail over the fundamental demands of due process of law in the fair administration of criminal justice," and therefore "must yield to the demonstrated, specific need for evidence in a pending criminal trial." The Nixon opinion established three key characteristics of executive privilege, at least as it relates to presidential communications. First, the Court expressly rejected the assertion that the privilege was absolute. Instead, the Court found the privilege to be qualified, requiring that it be assessed in a way that balances "competing interests" and "preserves the essential functions of each branch." Second, to protect the "public interest in candid, objective, and even blunt or harsh opinions in presidential decisionmaking," the Court viewed confidential presidential communications as "presumptively privileged." As a result, the Court appeared to suggest that some degree of deference is due to a President's initial determination that certain information is protected by the privilege. Moreover, the burden would appear to be on the party seeking the information to overcome that "presumption" through a strong showing of need for the information. Third, the Court viewed the privilege as limited to communications made "'in performance of [a President's] responsibilities,' 'of his office,' and made 'in the process of shaping policies and making decisions. . . .'" Thus, the privilege does not appear to apply to all presidential communications. Although presidential claims of a right to protect executive branch confidentiality interests have occurred with relative frequency, the Supreme Court has not addressed executive privilege in any substantial way since the Nixon era, and, in fact, has never addressed the application of executive privilege in the context of a congressional investigation. Indeed, in Nixon , the Court explicitly disclaimed any attempt to assess the application of executive privilege in a congressional investigation, noting that "we are not here concerned with the balance between the President's generalized interest in confidentiality . . . and congressional demands for information." The lower federal courts have generally sought to avoid adjudicating disputes between the executive and legislative branches over executive privilege, instead encouraging the branches to settle their differences through political resolution. Consistent with that approach, lower federal courts have suggested that judicial intervention in such disputes "should be delayed until all possibilities for settlement have been exhausted," and warned that the branches should not take an "adversarial" approach to executive privilege disagreements, but should instead "take cognizance of an implicit constitutional mandate to seek optimal accommodation through a realistic evaluation of the needs of the conflicting branches in the particular fact situation." The most significant judicial analysis of executive privilege in the context of a congressional investigation is the D.C. Circuit's decision in Senate Select Committee on Presidential Campaign Activities v. Nixon . Senate Select Committee involved an attempt by the Senate Select Committee on Presidential Campaign Activities to obtain the Nixon White House tapes and other materials as part of the committee's investigation into "illegal, improper, or unethical" actions during the 1972 presidential election. The D.C. Circuit decision was issued shortly before the Supreme Court decision in United States v . Nixon , and contemporaneously to an impeachment investigation conducted by the House Judiciary Committee. Although ultimately siding with the President, the D.C. Circuit's opinion affirmed the qualified nature of the privilege by making clear that a President's assertion of the privilege could be overcome by a "strong showing of need by another institution of government. . . ." The court elaborated that Congress, in the exercise of its investigative powers, may overcome the President's presumptive privilege when it can show that "the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's function." Notably, the court suggested that the "nature of the presidential conduct that the subpoenaed material might reveal," including President Nixon's alleged criminal misconduct, is not a significant factor in assessing whether the privilege is overcome. Instead, that analysis depends "solely" on the "nature and appropriateness" of the function the committee is carrying out. The D.C. Circuit in Senate Select Committee concluded that the Select Committee on Presidential Campaign Activities had failed to make the requisite showing of need. That determination, however, appears to have been based on a pair of unique facts: first, that copies of the tapes had been provided to the House Judiciary Committee under that committee's impeachment investigation; and second, that the President had publicly released partial transcripts of the tapes. Significantly, the Select Committee sought to make the required showing by arguing it had a "critical" need for the tapes to carry out two separate and distinct functions. First, pursuant to its oversight function , the committee argued that the tapes were 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 legislative 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' and 'could help engender the public support needed for basic reforms in our electoral system.'" As for the oversight function, the Court held that the Select Committee failed to show the requisite need—mainly because the House Judiciary Committee had already obtained the tapes. Any further investigative need by the Select Committee was therefore "merely cumulative," as the tapes were already in the possession of one committee of Congress. With regard to the Select Committee's legislative functions, the court 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 Select Committee, the court concluded, could "responsibly be made" based on the released transcripts. Given both Nixon and Senate Select Committee , it appears that executive privilege does not establish an absolute bar to Congress obtaining protected information, especially when the assertion of the privilege is based on a "generalized interest" in confidentiality rather than one connected to "military, diplomatic, or sensitive national security secrets." Instead, the appropriate inquiry appears to be fact-specific, focusing "solely" on whether the investigating committee can show that the information sought is "demonstrably critical" to a legitimate legislative function such as oversight or the consideration of legislation. Without more detailed judicial pronouncements the political branches have adopted somewhat divergent views on the scope of executive privilege. This interpretive divide has likely contributed to the frequency and intensity of inter-branch disputes over executive privilege. The executive branch has historically viewed the privilege broadly, providing protections to several different categories of documents and communications that relate to executive branch confidentiality interests. Under the executive branch's interpretation, the privilege covers, among other possible areas, presidential communications; deliberative communications within the executive branch; military, diplomatic, and national security information; and law enforcement files. Congress, however, has generally interpreted the privilege more narrowly, limiting its application to the types of core Article II duties and presidential communications referenced by the Supreme Court in Nixon , while also emphasizing that whatever the privilege's scope, it can be overcome by an adequate showing of need. It appears likely that the executive branch will continue to raise constitutional objections if Congress attempts to use the contempt power to either force the disclosure of information the President considers privileged or to punish an executive branch official for asserting executive privilege. Yet judicial decisions and historical practice have set few clear legal standards for application in such disputes—except to establish that neither side's power is absolute and that Congress and the President have an obligation to attempt to accommodate each other's needs. Thus, any conflict between the power of inquiry and executive privilege, either under the current system or as applied to the alternative approaches discussed in this report, would likely be governed not by bright-line rules, but by a balancing of the specific interests at play in the given dispute, and only after it had become apparent that the legislative and executive branches could not reach an acceptable settlement. How that balancing is implemented, and what legal standard is applied to evaluate an executive privilege claim made in response to a congressional subpoena, will likely depend on the type of information the privilege is asserted to protect. The courts appear to have adopted a hierarchical approach to various privileges within the executive privilege taxonomy. For example, the courts "have traditionally shown the utmost deference" to the executive's need to protect "military or diplomatic secrets." Courts have not "extended this high degree of deference to a President's generalized interest in confidentiality" of his communications. Other asserted aspects of executive privilege, for example the deliberative process privilege, have been given still less weight, and must be assessed differently in the face of an exercise of Congress's investigative powers. Ultimately, the framework through which Congress chooses to enforce a subpoena for information the President considers protected by executive privilege will impact the process by which executive branch assertions of the privilege are resolved. Under the criminal contempt framework, the Executive becomes the final arbiter of the appropriate scope of executive privilege by deciding whether to go forward with a criminal contempt prosecution of an official relying on the privilege. A decision not to move forward with a prosecution would generally not be subject to judicial review. Under the civil enforcement framework, the initial determination on the application of the privilege is made by the Executive, subject to judicial review if the House or Senate chooses to challenge that determination in federal court. Under inherent contempt, the initial determination on the application of the privilege is made by Congress, subject to review in the courts if the subject of the contempt proceeding challenges his detention. Bicameralism and Presentment Finally, because the power to seek enforcement of a congressional subpoena is independently vested in each house, rather than in Congress as a whole, constitutional questions may be raised over whether a single house, through approval of a contempt resolution, can trigger legal consequences or impose requirements upon the executive branch without compliance with bicameralism and presentment. The Supreme Court has made clear that Congress must exercise its legislative power in compliance with the "finely wrought and exhaustively considered[] procedure" set forth in Article I, Section 7 of the Constitution, which provides that "every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States." This provision establishes the bedrock constitutional principle that before legislation is given the force and effect of statutory law, it must first satisfy the requirements of bicameralism (approval by both houses of Congress) and presentment (submission to the President for his signature or veto). In the seminal case INS v. Chadha , the Court relied on the bicameralism and presentment requirements to invalidate provisions of the Immigration and Nationality Act that authorized either house of Congress, by a one-house resolution, to "veto" an exercise of statutory authority delegated to an executive branch officer. In invalidating this "legislative veto," the Court interpreted Article I, Section 7 of the Constitution as establishing that not only all bills, but all "legislative acts" are subject to the procedural requirements of bicameralism and presentment. 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." In other words, congressional actions that have the "force of law" generally must comply with the Constitution's "single, finely wrought" process—that of passage by both houses and presentment to the President. The Chadha opinion identified specific exceptions to the bicameralism and presentment requirements, noting that "[c]learly, when the [Constitution's] Draftsmen sought to confer special powers on one House, independent of the other House, or of the President, they did so in explicit, unambiguous terms." The Constitution's impeachment provisions and those relating to Senate advice and consent to treaty ratification and the appointment of judges, ambassadors, and public officials are examples of such provisions. The Court also noted that "[e]ach House has the power to act alone in determining specified internal matters." That authority, the Court added, "only empowers Congress to bind itself and is noteworthy only insofar as it further indicates the Framers' intent that Congress not act in any legally binding manner outside a closely circumscribed legislative arena, except in specific and enumerated instances." The contempt power does not fit neatly into the Chadha mold. Indeed, the Court may have neglected the inherent contempt power in articulating its list of exceptions to Chadha 's bicameralism and presentment requirements. Despite Chadha 's language, it does not appear that the Constitution always speaks "explicit[ly]" or "unambiguous[ly]" when conferring power to each house individually. There is no explicit constitutional language conferring the contempt power or the power of inquiry to each individual house. Rather, as discussed, these powers are implied as essential to the legislative power. Notably, no court has suggested that the exercise of the inherent contempt power by a single house of Congress, which could alter the legal rights or obligations of a detained witness, is inconsistent with the requirements of bicameralism or presentment. As for the criminal contempt statute, the DOJ has asserted that interpreting that statute to require that a contempt citation be brought before the grand jury would be inconsistent with Chadha by allowing one house to place a legal requirement on a U.S. Attorney. To date, no court has had opportunity to consider the validity of the DOJ's position. But it is possible that Chadha -like concerns could be raised by alterations to the contempt framework that would allow the approval of a contempt citation by a single house to create new legal rights or restrictions or otherwise alter the legal authority that may be exercised by executive branch officials. With these general separation-of-powers principles established as background, this report now considers possible subpoena-enforcement frameworks and the key legal issues they raise. Current Framework As noted previously, most congressional requests for information from the executive branch are complied with, and in those cases when there is a dispute, negotiations between the committee and the executive agency generally lead to a resolution acceptable to both parties. In the instances that Congress has resorted to its subpoena-enforcement mechanisms, the committee involved has generally been able to obtain eventually much of the information it sought. Thus, an argument can be made that the current system acts as an adequate and effective way to obtain information and deter non-compliance with congressional subpoenas in most cases. However, in the rare case that actual prosecution is necessary to compel an executive branch official to comply with a subpoena, criminal contempt (as described above) would not appear to be a wholly reliable means of enforcement. Congress would instead presumably be forced to rely on the traditional process of negotiation, accommodation, and compromise to encourage compliance, or wield its other constitutional powers, such as the power of the purse, the confirmation power, impeachment, and its general legislative control over agency authority to encourage compliance by executive branch officials. When necessary, each house retains the authority to utilize the courts for assistance in enforcing subpoenas. Civil enforcement in the courts, especially when an executive branch official is asserting executive privilege at the direction of the President, conforms to general pronouncements from both the judicial and executive branches. It accords with the judiciary's determination that its established authority to "say what the law is" includes the power to "construe and delineate" the scope of executive privilege and the executive branch's previous statements that civil enforcement is a permissible way to resolve the competing interests of Congress and the Executive in information access disputes. But reliance on civil enforcement may have certain drawbacks. As discussed above, judicial resolution of oversight disputes can be lengthy and possibly lead to opinions that weaken Congress's oversight authority. Moreover, although a series of district court opinions have recently held civil enforcement cases arising from oversight disputes between the legislative and executive branches to be justiciable, the last appellate opinion to reach the merits of such a dispute was Senate Select Committee v. Nixon in 1977. The executive branch continues to assert the position that inter-branch oversight disputes are non-justiciable. Although such arguments have been rejected by the D.C. District Court, if an appellate court were to adopt the executive's position, that decision could leave both the existing criminal and civil enforcement avenues with only limited effect for use against an executive branch official. Alternative Subpoenas Enforcement Frameworks There would appear to be several ways in which Congress could alter its approach to enforcing committee subpoenas issued to executive branch officials. But because of the separation-of-powers issues highlighted above, many of these options have potential legal concerns. The extensive ambiguity in this area results from a combination of a lack of applicable judicial precedent; the vast differences in how the executive and legislative branches interpret their own institutional powers; and the importance of practical implementation issues. Establish Expedited Civil Enforcement in the Courts Congress could try to expedite the civil enforcement process by either statutorily establishing timetables for review or urging speedy judicial consideration of civil subpoena-enforcement cases filed in the federal judiciary by the House or Senate. For example, H.R. 4010 , introduced in the 115th Congress, would have amended 28 U.S.C. § 1365a to provide that "it shall be the duty" of the federal courts to "advance on the docket and to expedite to the greatest possible extent the disposition" of any civil enforcement lawsuit. The bill would have also provided the House and Senate with the option of having the claim heard by a three-judge panel with a direct appeal to the Supreme Court. Such an approach would appear to be well within Congress's power. Congress has broad authority over the rules of procedure for federal courts, including setting general timetables for judicial consideration of "cases and controversies." Various examples of expedited judicial review procedures exist elsewhere in federal law. Some provisions combine expedited review with the ability to file the lawsuit directly with a federal appellate court rather than a federal district court. Federal law had provided for expedited judicial review of lawsuits filed by the Senate to enforce subpoenas. Under 28 U.S.C. § 1364(c), Senate subpoena-enforcement actions were to be set for hearing at the "earliest practicable date" and "in every way to be expedited." Those provisions were repealed in 1984. Establishing expedited judicial review of congressional subpoena-enforcement actions may mitigate some drawbacks of the current civil enforcement process. Yet even if expedited procedures lead to swifter judicial decisions, the risk remains to Congress that a reviewing court could issue a decision adverse to the legislative branch's investigative and oversight interests. Moreover, some commentators have suggested that any attempt to seek assistance from the courts to enforce Congress's own constitutional powers effectively weakens the legislative branch. Return to the Inherent Contempt Power The House or Senate may also seek to utilize the inherent contempt power to enforce compliance with congressional subpoenas issued to executive branch officials. As noted, the Supreme Court has confirmed the existence of each house's independent and unilateral authority to arrest and detain individuals in order to compel compliance with a subpoena. If either the House or Senate was to revive the inherent contempt power, the chamber may consider establishing specific procedures to be followed in its exercise. Such procedures could govern consideration of an inherent contempt resolution and actions of the Sergeant-at-Arms, as well as the process by which the House or Senate would conduct the "trial." These procedures could be established by a one-house resolution or—if both the House and Senate seek to use uniform procedures—by concurrent resolution or by statute. Although rare, the inherent contempt power has been used to detain executive branch officials, including for non-compliance with a congressional subpoena. During an 1879 investigation into allegations of maladministration by George F. Seward while a consul general in Shanghai, a House committee issued a subpoena to Seward for relevant documents and testimony. When Seward—then an ambassador to China—refused to comply, the House passed a resolution holding him in contempt and directing the Sergeant-at-Arms to take him into custody and bring him before the House. Seward was taken into custody and brought before the House, where he was ultimately released while the House considered impeachment articles. In another example which gave rise to Marshall v. Gordon , the House adopted a contempt resolution directing the Sergeant-at-Arms to arrest U.S. Attorney Snowden Marshall for an insulting letter sent to a committee chair. The arrest was then made and quickly challenged in federal court, where ultimately the Supreme Court ordered Marshall released. In doing so, the Court reaffirmed the contempt power generally, but concluded that in Marshall's case the contempt was invalid as "not intrinsic to the right of the House to preserve the means of discharging its legislative duties." Notably, the Court was silent on whether Marshall's status as an executive branch official had any impact on the House's exercise of the power. Given these examples, and the Supreme Court's general statements on the reach of the inherent contempt power, it would appear to be within Congress's power to use inherent contempt to compel executive branch compliance with congressional subpoenas, at least in certain circumstances. But neither the Seward nor Marshall example involved an assertion of executive privilege, meaning that the Court did not need to consider what, if any, constraints that privilege may impose upon Congress's exercise of its inherent contempt authority. Moreover, an attempt by Congress to arrest or detain an executive official may carry other risks. There would appear to be a possibility that, if the Sergeant-at-Arms attempted to arrest an executive official, a standoff might occur with executive branch law enforcement tasked with protecting that official. This concern is also applicable in the event that a judicial marshal enforces a judicial order of contempt against an executive official, and perhaps will always be "attendant in high-stakes separation-of-powers controversies." Inherent Contempt and Executive Privilege Although any subpoena-enforcement mechanism used to override the President's assertion of executive privilege may raise constitutional considerations, use of the inherent contempt power to detain an executive official to obtain documents or testimony the President has found to be privileged would likely raise unique concerns. As discussed, the 1984 OLC opinion issued in the wake of the Burford contempt concluded that the criminal contempt of Congress provision could not constitutionally be applied to an executive official asserting a President's claim of executive privilege. The alternative, the OLC argued, "would immeasurably burden the President's ability to assert the privilege and to carry out his constitutional functions" by requiring that subordinates risk a criminal trial and possible conviction to "vindicate" the privilege. In a footnote, the opinion extended that same conclusion to Congress's use of inherent contempt to "arrest" and "punish" an executive branch official invoking a President's claim of executive privilege. The OLC asserted that because the "reach" of the criminal contempt statute was "intended to be coextensive with Congress's inherent civil contempt powers," the "same reasoning that suggests that the criminal contempt statute could not constitutionally be applied against a Presidential assertion of privilege applies to Congress' inherent contempt powers as well." This argument has never been tested in court, but was alluded to in Miers . There, the district court stated that the executive branch position was not "dispositive" and that the court "need not decide the issue." Nevertheless, the court acknowledged that "there are strong reasons to doubt the viability of Congress's inherent contempt authority vis-a-vis senior executive officials." An argument can be made that the OLC position is based on a conception of inherent contempt not entirely consistent with the power's historical use. For example, the criminal contempt statute does not appear to have been intended to be "coextensive" with inherent contempt. While 2 U.S.C. § 192 and its predecessors apply only to non-compliance with congressional subpoenas, the inherent contempt power applies to a much wider range of actions that threaten Congress's ability to discharge the legislative function. The Supreme Court also appears to have viewed the two powers as distinct, noting that they are "separately exercised" and " diverso intuito ." As opposed to prosecution under the criminal contempt statute, inherent contempt is not necessarily imposed to "punish" the contemnor. In the context of subpoena enforcement, inherent contempt has in fact generally been remedial rather than punitive, in that any detention has generally been lifted once the subpoena is complied with. The Supreme Court, for example, noted in 1917 that it could not identify a "single instance where in the exertion of the power to compel testimony restraint was ever made to extend beyond the time when the witness should signify his willingness to testify . . . ." Even so, the Court also appears to have recognized that Congress retains the authority to use the inherent contempt power "solely" for purposes of punishment. Conflicts between the President's constitutionally implied privilege to protect confidential executive branch communications and Congress's constitutionally implied power to conduct investigative oversight prerogatives are not novel. Indeed, they have consistently arisen throughout American history, beginning as early as the first Congress when President Washington asserted that although the executive branch had a general obligation to comply with congressional requests for information, it still "ought to refuse those [papers], the disclosure of which would injure the public." A full analysis of this long-standing debate is beyond the scope of this report. It is enough to suggest that historical practice and the limited case law both suggest that neither the President's executive privilege nor Congress's inherent contempt power is absolute. In the case of a conflict, judicial decisions relating to both executive privilege and Congress's oversight and contempt powers would suggest that a resolution would most appropriately come through good-faith negotiations between the political branches in which each seeks to accommodate the needs of the other. If those negotiations fail, and Congress chooses to invoke the inherent contempt power against an executive branch official claiming executive privilege, a court would likely be called upon to resolve the dispute, presumably in the posture of a habeas proceeding or a civil suit for wrongful detention. Although the scope of this review is somewhat unclear, it would seem likely that a reviewing court would engage in a fact-based balancing of interests—weighing Congress's legislative or oversight need for the information against the Executive's need to maintain confidentiality in the specific instance. Inherent Contempt and the Power to Fine: An Alternative to Detention The use of the inherent contempt power to arrest and detain an executive branch official asserting executive privilege at the direction of the President would likely also raise practical concerns relating to historical comity between the branches. The district court in Miers articulated this view, warning that the use of the inherent contempt power to imprison current or even former executive branch officials would "exacerbate the acrimony between the two branches and would present a grave risk of precipitating a constitutional crisis." The court suggested that a "stand-off" between the Sergeant-at-Arms and an executive branch official would be an "unseemly" and "provocative clash" that should be avoided. If Congress agrees with the sentiments expressed in the Miers opinion about the "unseemly" nature of directing the Sergeant-at-Arms to arrest and detain an executive branch official, it may consider imposing less onerous penalties on an official deemed guilty of contempt through the inherent contempt process. For example, the imposition of a fine or other monetary penalty, rather than detention and imprisonment, could mitigate some concerns associated with a physical arrest. Neither the House nor the Senate has ever imposed a monetary penalty through the exercise of inherent contempt, yet there may be an argument supporting the existence of that power. Such an argument would likely rely both on dicta from the Supreme Court's opinion in Kilbourn v. Thomps on and an analogy to the judiciary's contempt power . In Kilbourn , the Court made a passing reference to fines during a discussion of the scope of the House's power to "punish." After establishing that the House clearly had authority to punish its own Members for "disorderly behavior," and perhaps the power to punish others as part of either an inquiry into a contested election or an impeachment investigation, the Court then noted that "[w]hether the power of punishment in either House by fine or imprisonment goes beyond this or not, we are sure that no person can be punished for contumacy as a witness before either House, unless his testimony is required in a matter into which that House has jurisdiction to inquire." This may be interpreted to suggest that so long as punishment is appropriate, the form of punishment that may be imposed could include a fine. In Anderson v. Dunn , the Court drew analogies between Congress's power and the judiciary's power to punish for contempt. The courts, the opinion noted, had been delegated authority by statute to punish contemptuous conduct with a fine, imprisonment, or both. The Court suggested, however, that the courts could have exercised the "power to fine and imprison for contempts . . . without the aid of the statute" pursuant to a constitutional contempt authority "incidental to a grant of judicial power." The purpose of the judicial contempt statute, the Court reasoned, was to make a "legislative declaration, that the power of punishing for contempt shall not extend beyond its known and acknowledged limits of fine and imprisonment." This statement could be read to suggest that the court viewed the imposition of a fine as a "known and acknowledged" form of punishment for inherent contempt, at least in the courts. If such a power inheres to the courts, it might also inhere to Congress as a coordinate branch of government. Yet additional language from Anderson suggests that the power to punish for inherent contempt in the congressional context may be limited to imprisonment. After discussing the judicial contempt power, the Anderson opinion appears to have directly considered the scope of Congress's authority, noting that the "extent of [Congress's] punishing power" is "the least possible power adequate to the end proposed;" which is the power of imprisonment. It may, at first view, and from the history of the practice of our legislative bodies, be thought to extend to other inflictions. But every other will be found to be mere commutation for confinement; since commitment alone is the alternative where the individual proves contumacious. Despite the Court's statement that "imprisonment" was the "least possible power adequate" to remedy contemptuous conduct, monetary penalties have generally been viewed as less severe than imprisonment. The Supreme Court, for example, has viewed the imposition of a fine as a "lesser punishment" than the "punishment of imprisonment." Still, the Court later reaffirmed the notion that imprisonment was the appropriate penalty for contempt in Marshall by stating that Anderson imposed two limitations on the contempt power: "the power . . . is limited to imprisonment and such imprisonment may not be extended beyond the session of the body in which the contempt occurred." It would appear, therefore, that whether Congress has the authority to impose a fine or other monetary penalty on a witness found to be in contempt by either house is an open question. However, in the case of a legal challenge to a fine, the lack of any precedent for such an assertion of power may inform a court's judgment on the appropriate reach of Congress's power. Moreover, even if Congress retains this authority, it is unclear how such a fine would be implemented and, in the case that the contemnor refuses to remit the sum, collected. Provide for the Appointment of an Independent Official to Enforce Violations of the Criminal Contempt of Congress Statute Another proposed alternative for subpoena enforcement has been to establish statutorily a procedure for the appointment of an independent official responsible for prosecuting criminal contempt of Congress citations against executive branch officials. Such a law would seek to create an independent prosecutor authorized to make litigation and enforcement decisions, including the decision to initiate and pursue a criminal contempt prosecution pursuant to 2 U.S.C. § 192 and § 194 under reduced influence from the President and the DOJ. The independent prosecutor would retain prosecutorial discretion in enforcement decisions, but would arguably not be subject to the same "subtle and direct" political pressure and controls that a traditional U.S. Attorney may face. This office would likely be loosely modeled on the expired Office of Independent Counsel (Independent Counsel) established in the Independent Counsel Act of 1978 (Independent Counsel Act or ICA) and upheld by the Supreme Court in Morrison v Olson . The ICA created a statutory framework by which an Independent Counsel could be appointed to investigate and prosecute high-ranking government officials for a variety of violations of federal law, including criminal contempt of Congress. The actual appointment took place under a three-step process. First, the law required that the Attorney General conduct a preliminary investigation upon receiving "information sufficient to constitute grounds to investigate whether" a covered federal criminal violation has occurred. Second, if the Attorney General determined that there were "reasonable grounds to believe that further investigation is warranted," the Attorney General had to "apply" to a three-judge panel of the D.C. Circuit for the appointment of an Independent Counsel. Third, upon receipt of an application from the Attorney General, the three-judge panel had to "appoint an appropriate independent counsel . . . ." Thus, although the actual appointment was made by the judiciary, the Attorney General's preliminary investigation determined whether the court's appointment authority was triggered. Under the law, Congress could request an appointment of an Independent Counsel, but it could not mandate that the Attorney General initiate the appointment process. Nor was a decision by the Attorney General not to seek appointment of an Independent Counsel subject to judicial review. Once appointed, the Independent Counsel had "full power and independent authority to exercise all investigative and prosecutorial functions and powers of the Department of Justice, the Attorney General, and any other officer or employee of the Department of Justice." Moreover, he would exercise those powers with a substantial degree of independence established through removal protections and other provisions ensuring the Independent Counsel's authority to make investigatory and prosecutorial decisions without direction from the Attorney General. With regard to removal, the law provided that the Independent Counsel "may be removed from office . . . only by the personal action of the Attorney General and only for good cause, physical or mental disability . . . or any other condition that substantially impairs the performance of such independent counsel's duties." The ICA was upheld against constitutional challenge in the 1988 case of Morrison v. Olson . In a 7-1 decision, the Court held that the law was consistent with both the Appointments Clause and the general separation of powers. With regard to the Appointments Clause, the Court determined that the Independent Counsel was an inferior officer, and was thus not required to be appointed by the President with the advice and consent of the Senate, but could permissibly be appointed by the "courts of law." As for the general separation of powers, the Court held that Congress could provide the Independent Counsel with substantial autonomy and protection from removal despite his law enforcement powers. The majority opinion reasoned that although the Independent Counsel was "to some degree 'independent' and free from executive supervision to a greater extent than other federal prosecutors," the ICA still provided the Attorney General with several adequate means of "supervising or controlling" the Independent Counsel's prosecutorial powers, preserving in the executive branch "sufficient control over the Independent counsel to ensure that the President is able to perform his constitutionally assigned duties." Although subject to some external criticism in the decades since its issuance, the Morrison opinion has neither been overturned nor even directly criticized by a majority opinion of the Supreme Court. That said, the composition of the Court has changed, and its more recent decisions have arguably been more protective of executive power, specifically with regard to the President's authority to supervise and control executive branch officials. In any event, if Congress were to seek to establish an independent office for the prosecution of criminal contempt of Congress, it would seem prudent to mirror the Independent Counsel framework approved in Morrison , subject to some potential adjustments. Perhaps the chief criticism of the independent counsel statute, and arguably the reason the statute was permitted to expire, was the breadth of the Independent Counsel's jurisdiction. The ICA authorized the appointment of an independent counsel to investigate and prosecute a wide array of crimes, while also providing the option for the expansion of an appointed counsel's initial jurisdiction with the approval of the three-judge panel. Strictly limiting a new Independent Counsel's jurisdiction to only the investigation and prosecution of the specific criminal contempt of Congress citation approved by either the House or the Senate, with no option for jurisdictional expansion, might sufficiently restrict the authority of the Independent Counsel to alleviate some of those concerns. Congress may also seek to alter the triggering mechanism for the appointment of an independent counsel, for example, by removing the requirement for a preliminary investigation and instead simply requiring appointment by the court upon the approval of a contempt citation by either house of Congress. This alteration would prevent the Attorney General from effectively blocking an appointment at that preliminary stage by concluding that the official's non-compliance with the subpoena had legal merit. It would appear, however, that such a change could raise additional constitutional concerns to an already debated framework. Providing the Attorney General with discretion in triggering the appointment was important to the Court's ultimate approval of independent counsel provisions in Morrison . The Court noted the Attorney General's control in both discussing whether the law authorized an unconstitutional "usurpation" of "executive functions" and whether the law otherwise undermines "the powers of the executive branch." Specifically, the Court noted that the special division could not appoint an independent counsel "sua sponte," and that because the Attorney General retained authority over the appointment, the law gave "the executive a degree of control over the power to initiate an investigation by the independent counsel." Given these statements, removal of the discretionary authority provided to the Attorney General in triggering the appointment would likely create additional avenues of legal challenge to the law. Contingent Contempt Legislation Congress might also seek to establish a contingent contempt framework in which either house's approval of a contempt citation against an executive branch official automatically results in some other consequence to either the individual official who is the subject of the contempt citation or the official's agency. Like the criminal contempt of Congress provisions, such a statute would arguably be enacted as "necessary and proper" to Congress's enforcement of its investigative subpoena power. Any number of consequences may be built into this type of contingent framework, but perhaps the most effective approach would be to utilize Congress's power of the purse to establish some form of conditional limitation or reduction on an agency's funding that is triggered by the approval of a contempt citation against the agency's official. For example, a law might seek to establish that the approval of a contempt resolution against an executive branch official would lead to the temporary withholding of a certain percentage of the official's agency's appropriated funds until the outstanding subpoena is complied with. A law could, for example, place an obligation on the Office of Management and Budget (OMB) to restrict the release of a percentage of the applicable agency's funds at the next quarterly apportionment. Such an arrangement would use Congress's control over agency funding to encourage and incentivize agency cooperation with committee subpoenas. Contingent (or conditional) legislation—typically defined as legislation in which a provision is triggered, activated, or given legal effect only upon the occurrence of some future event or decision—has generally been approved by the courts. That said, the triggering event built into previously approved contingent legislation has generally been an action, finding, or decision of an executive branch official. The Supreme Court has explained the purpose of this type of legislation, writing that due to the uncertainty of "future conditions," Congress "may feel itself unable conveniently to determine exactly when its exercise of the legislative power should become effective," and instead "may leave the determination of such time to the decision of an Executive." A statute that would instead effectively leave that determination to a single house of Congress—through the approval of a contempt resolution—would appear to be a unique and potentially problematic arrangement. Such a statutory arrangement could arguably be viewed as an impermissible exercise of either legislative or executive power by a single house of Congress. The argument that tying a reduction in agency funding to the approval of a contempt resolution may represent an invalid exercise of legislative power by a single house of Congress would be based on the principles of Chadha . As noted, Chadha limited Congress's authority to wield legislative power—which the Court defined as any action with "the purpose and effect" of "altering the legal rights" of those outside the legislative branch—without complying with the Constitution's "finely wrought" process of bicameralism and presentment. Once Congress makes a legislative choice it generally must abide by that choice until "legislatively altered or revoked." Thus, Congress cannot, even by statute, provide one house with the power to override or alter authority delegated to the executive branch. A contingent contempt framework that would allow one house effectively to amend an agency's legal authority to obligate funds by adopting a contempt resolution could be viewed as in tension with this principle. The executive branch, for example, has objected to legislative proposals that would create a "permanent [contempt] mechanism to be triggered by the vote of one house," at least when that mechanism would "impose. . . an affirmative legal duty" on the executive branch. Such an arrangement, the executive has argued, would be "contrary to the clear language and rationale of Chadha ." The limits that the Chadha decision imposes on contingent contempt legislation are difficult to assess. It is clear, for example, that in the typical legislative scenario a one-house resolution cannot constitutionally have the legal effect of altering statutorily authorized appropriations. If Congress wants to amend an appropriations provision, it generally must do so by enacting a new law. Even so, it would appear that an argument could be made that the restrictions of Chadha are either inapplicable or apply with less force in the investigative and oversight context, perhaps because it is an area in which the Constitution has implicitly authorized a single house to act with legal authority. There are a variety of existing investigative authorities that appear to allow a single house, or a single committee, to alter the legal rights and obligations of those outside the legislative branch. These include issuing a subpoena, which triggers a legal obligation to comply; the inherent contempt power, which allows one house to arrest and detain those outside the legislative branch; the criminal contempt statute, which by its terms and as interpreted by some courts appears to impose an obligation on the U.S. Attorney that flows from the approval of a contempt resolution; and the federal immunity statute, which allows a single committee or single house to obtain a court order granting a witness immunity and requiring their testimony following an assertion of the Fifth Amendment privilege against self-incrimination. Decisions of at least two federal appellate courts have explicitly recognized each house's authority to act unilaterally in the investigatory context, holding that "[t]here is no doubt that Congress constitutionally can act, without recourse to the full legislative procedure of bicameral passage and presentment, to investigate the conduct of executive officials and others outside the legislative branch." Because the "process to enforce" investigative demands has been viewed as part of the "power of inquiry," an argument could be made that laws incidental to enforcing congressional subpoenas (like contingent contempt legislation) should not be subject to bicameralism and presentment limitations. The argument that tying a reduction in agency funding to the approval of a contempt resolution may represent an impermissible exercise of executive power by a single house of Congress would likely be based on the principles of Bowsher v. Synar . As discussed, in Bowsher , the Court relied on the separation of powers to invalidate a federal law that had empowered the Comptroller General, a legislative branch officer, to identify and mandate executive branch spending reductions. The Court concluded that by vesting the "ultimate authority" to interpret and implement the law in one of its officers, Congress had in effect "retained control over the execution of the Act" and unconstitutionally "intruded into the executive function." Congress, the Court concluded, may "control the execution of its enactment only indirectly . . . by passing new legislation." As in Bowsher , it could be argued that the House and Senate would retain impermissible control over the execution of any law that ties budgetary reductions to the approval of a contempt resolution. Arguably, however, the Comptroller General's authority at issue in Bowsher could be distinguished from that exercised by the House or Senate in a contingent contempt framework. In determining that the Comptroller General was exercising executive authority, the Bowsher Court focused on the fact that the Comptroller General used his own "interpretation" and "judgment" to "determine precisely what budgetary calculations are required" and the "budget cuts to be made." Under a contingent contempt framework that established a set percentage funding reduction the House and Senate would exercise no such "interpretation" or "judgment" in determining the cuts to be made. To the contrary, a house would have discretion in determining whether an official was in contempt (a legislative act) but would exercise no discretion in the resulting execution or implementation (an executive act) of the budget restrictions, which would be implemented in an arguably ministerial manner by the executive branch. A contingent funding restriction in this context may also run into some of the same implementation obstacles as enforcement of subpoenas through criminal contempt of Congress, especially if executive privilege is being asserted. This is because the withholding of already appropriated funds would likely require the assistance of the executive branch—either through OMB withholding or through DOJ enforcement of a violation of the Anti-Deficiency Act. The executive branch has objected to congressional attempts to use the spending power to encourage compliance with investigative demands in a way that "infringe[s] on the President's constitutional authority." For example, in 1960 the Attorney General directed that appropriated funds "continue to be available" to the State Department despite the agency withholding information from Congress that triggered a conditional provision terminating certain funds if congressional requests for documents were not complied with. Thus, in a contempt dispute involving executive privilege, if the President views the contingent contempt funding restriction as a "burden" on his ability to assert executive privilege, he might direct the OMB not to withhold applicable funding. The uncertainty associated with tying automatic funding reduction to the approval of a contempt resolution in mind, Congress may consider creating a contingent contempt framework that uses the power of the purse to reward agencies for compliance with congressional subpoenas rather than to punish them. This approach may provide the executive branch with a clear budgetary incentive to disclose subpoenaed information to a committee. For example, future appropriations bills could contain provisions that would make additional funding available (at some later point in the fiscal year) to an agency that has not had an official held in contempt of Congress. This carrot, rather than stick, approach has been used to encourage agency compliance with congressional wishes. Even though arguments may still be put forward that this arrangement raises Chadha or Bowsher concerns by giving a single house control over an agency's funding level, it may not be in the Executive's interest to challenge such a provision given that invalidation of the provision would remove agency access to the increased funds. Rather than trying to establish an automatic alteration to agency funds, Congress could avoid any potential constitutional concerns by instead allowing for the introduction of a joint resolution that would provide for the withholding of the agency's funding upon the approval of a contempt citation by either house. That resolution could be given "fast track procedures" to encourage speedy consideration by both the House and Senate. Upon passage by the House and Senate, the joint resolution would be presented to the President. This arrangement would satisfy the requirements of bicameralism and presentment and entail no execution of the law by the legislative branch or its competent parts. The joint resolution would, however, be subject to presidential veto. In the alternative, the House or Senate may establish parliamentary procedural consequences that flow from the approval of a contempt citation under each body's constitutional authority to "determine the Rules of its Proceedings." For example, either the House or Senate could limit consideration of any legislative measure that would fully fund either the salary of the official held in contempt or the office in which the official works. Like other rules, such a provision would be enforceable by a point of order, and subject to waiver under the usual processes. Conclusion Congress's ability to issue and enforce its own subpoenas is essential to the legislative function and an "indispensable ingredient of lawmaking." That said, the prevailing enforcement mechanisms of criminal contempt of Congress and civil enforcement, both of which rely on the assistance and participation of the other branches of government, have certain drawbacks that arguably limit their effectiveness in ensuring timely compliance with congressional subpoenas by executive branch officials. As discussed, alternatives to the current framework are available, but both the constitutional separation of powers and the practical limitations arising from the political nature of congressional executive information access disputes would likely need to be considered in any potential effort at reform.

Congress gathers much of the information necessary to oversee the implementation of existing laws or to evaluate whether new laws are necessary from the executive branch. While executive branch officials comply with most congressional requests for information, there are times when the executive branch chooses to resist disclosure. When Congress finds an inquiry blocked by the withholding of information by the executive branch, or where the traditional process of negotiation and accommodation is inappropriate or unavailing, a subpoena—either for testimony or documents—may be used to compel compliance with congressional demands. The recipient of a duly issued and valid congressional subpoena has a legal obligation to comply, absent a valid and overriding privilege or other legal justification. But the subpoena is only as effective as the means by which it may be enforced. Without a process by which Congress can coerce compliance or deter non-compliance, the subpoena would be reduced to a formalized request rather than a constitutionally based demand for information. Congress currently employs an ad hoc combination of methods to combat non-compliance with subpoenas. The two predominant methods rely on the authority and participation of another branch of government. First, the criminal contempt statute permits a single house of Congress to certify a contempt citation to the executive branch for the criminal prosecution of an individual who has willfully refused to comply with a committee subpoena. Once the contempt citation is received, any prosecution lies within the control of the executive branch. Second, Congress may try to enforce a subpoena by seeking a civil judgment declaring that the recipient is legally obligated to comply. This process of civil enforcement relies on the help of the courts to enforce congressional demands. But these mechanisms do not always ensure congressional access to requested information. Recent controversies could be interpreted to suggest that the existing mechanisms are at times inadequate—particularly in the instance that enforcement is necessary to respond to a current or former executive branch official who has refused to comply with a subpoena. There would appear to be several ways in which Congress could alter its approach to enforcing committee subpoenas issued to executive branch officials. These alternatives include the enactment of laws that would expedite judicial consideration of subpoena-enforcement lawsuits filed by either house of Congress; the establishment of an independent office charged with enforcing the criminal contempt of Congress statute; or the creation of an automatic consequence, such as a withholding of appropriated funds, triggered by the approval of a contempt citation. In addition, either the House or Senate could consider acting on internal rules of procedure to revive the long-dormant inherent contempt power as a way to enforce subpoenas issued to executive branch officials. Yet, because of the institutional prerogatives that are often implicated in inter-branch oversight disputes, some of these proposals may raise constitutional concerns.

crs_98-35

crs_98-35_0

Introduction Social Security provides insured workers and their eligible family members with a measure of protection against the loss of income due to the worker's retirement, disability, or death. The amount of the monthly benefit payable to workers and their family members is based on the worker's career-average earnings from jobs covered by Social Security (i.e., jobs in which the worker's earnings were subject to the Social Security payroll tax). The Social Security benefit formula is weighted to replace a greater share of career-average earnings for low-paid workers than for high-paid workers. This means that low-paid workers receive relatively high benefits in relation to their payroll tax contributions, although the dollar amount of their benefits is lower than that provided to high-paid workers. The benefit formula, however, cannot distinguish between workers who have low career-average earnings because they worked for many years at low earnings in Social Security-covered employment and workers who appear to have low career-average earnings because they worked for many years in jobs not covered by Social Security. (Those years show up as zeros in their Social Security earnings records, which, when averaged, lower their career earnings from covered work.) Consequently, workers who split their careers between covered and noncovered employment—even highly paid ones—may also receive the advantage of the weighted formula. The windfall elimination provision (WEP) is a modified benefit formula designed to remove the unintended advantage, or "windfall," of the regular benefit formula for certain retired or disabled workers who spent less than full careers in covered employment and who are also entitled to pension benefits based on earnings from jobs not covered by Social Security. The reduction in initial benefits caused by the WEP is designed to place affected workers in approximately the same position they would have been in had all their earnings been covered by Social Security. Background on the Social Security Benefit Formula Workers qualify for Social Security benefits if they worked and paid Social Security payroll taxes for a sufficient amount of time in covered employment. Retired workers need at least 40 quarters of coverage (or about 10 years of covered work), whereas disabled workers generally need fewer quarters of coverage. Initial benefits are based on a worker's career-average earnings from jobs covered by Social Security. In computing the initial benefit amount, a worker's annual taxable earnings are indexed (i.e., adjusted) to average wage growth in the national economy. This is done to bring earlier years of earnings up to a comparable, current basis. Next, a summarized measure of a worker's career-average earnings is found by totaling the highest 35 years of covered earnings and then dividing by 35. After that, a monthly average, known as a v erage indexed monthly e arnings (AIME), is found by dividing the annual average by 12. Once the worker's AIME has been derived, it is then entered into the Social Security benefit formula to produce the worker's initial benefit amount. The benefit formula is progressive, replacing a greater share of career-average earnings for low-paid workers than for high-paid workers. The benefit formula applies three factors—90%, 32%, and 15%—to three different levels, or brackets , of AIME. The result is known as the primary insurance amount (PIA) and is rounded down to the nearest 10 cents. The PIA is the worker's basic benefit before any adjustments are applied. The benefit formula applicable to a given worker is based on the individual's earliest eligibility year (ELY), that is, the year in which the worker first attains age 62, becomes disabled, or dies. For workers whose ELY is 2019, the PIA is determined as follows in Table 1 . The averaging provision in the benefit formula tends to cause workers with short careers in Social Security-covered employment to have low AIMEs, even if they had high earnings in their noncovered career, similar to people who worked for low earnings in covered employment throughout their careers. This is because years of zero covered earnings are entered as zeros into the formula that averages the worker's earnings history over 35 years. For example, a person with 10 years in Social Security-covered employment would have an AIME that reflects 25 years of zero earnings, even if that person worked for 25 years in a high-paying, noncovered career. Consequently, for a worker whose AIME is low because his or her career was split between covered and noncovered employment, the benefit formula replaces more of covered earnings at the 90% rate than if the worker had spent a full 35-year career in covered employment at the same earnings level. The higher replacement rate for workers who have split their careers between Social Security-covered and noncovered jobs is sometimes referred to as a "windfall." How the Windfall Elimination Provision Works A different Social Security benefit formula, known informally as the windfall elimination provision , applies to certain workers who are entitled to Social Security benefits as well as to pension benefits from employment not covered by Social Security. Under the WEP, the 90% factor in the first bracket of the formula is reduced to as low as 40%. The effect is to lower the proportion of earnings in the first bracket that are converted to benefits. Table 2 illustrates how the regular benefit formula and the WEP work in 2019 for someone with a 40% factor. In this scenario, the monthly benefit is $463.00 lower under the WEP than under the regular benefit formula ($1,017.00 minus $554.00). Note that the WEP reduction is limited to the first bracket in the AIME formula (90% vs. 40%), while the 32% and 15% factors for the second and third brackets are unchanged. As a result, for AIME amounts that exceed the first formula threshold of $926, the WEP reduction remains a flat $463 per month. For example, if the worker had an AIME of $4,000 instead of $1,500, the WEP reduction would still be $463 per month. The WEP therefore causes a proportionally larger reduction in benefits for workers with lower AIMEs and monthly benefit amounts. A guarantee in the WEP ensures that the WEP reduction cannot exceed half of the noncovered pension based on the worker's noncovered work. This guarantee is designed to help protect workers with low pensions from noncovered work. The WEP does not apply to workers who have 30 or more years of substantial employment covered under Social Security, with an adjusted formula for workers with 21 to 29 years of substantial covered employment, as shown in Table 3 . The WEP applies to benefits payable to retired or disabled workers who meet the criteria above and to their eligible dependents; however, it does not apply to benefits payable to survivors of deceased insured workers. Groups of workers likely to be affected by the WEP include certain state and local government employees who are covered by alternative pension plans through their employers and most permanent civilian federal employees hired before January 1, 1984, who are covered by the Civil Service Retirement System (CSRS). The WEP does not apply to federal employees performing service on January 1, 1984, to which coverage was extended on that date by reason of the Social Security Amendments of 1983 ( P.L. 98-21 ); employees of a nonprofit organization who were exempt from Social Security coverage on December 31, 1983, and who became covered for the first time on January 1, 1984, under P.L. 98-21 ; workers who attained age 62, became disabled, or were first eligible for a pension from noncovered employment before 1986; workers who receive foreign pension payments after 1994 that are based on a totalization agreement with the United States; workers whose only noncovered pension is based on earnings from noncovered domestic or foreign employment before 1957; and railroad workers whose only noncovered pension is based on earnings from employment covered by the Railroad Retirement Act. The Number of People Affected by the WEP According to the Social Security Administration (SSA), as of December 2018, nearly 1.9 million Social Security beneficiaries were affected by the WEP ( Table 4 ). The overwhelming majority of those affected (about 94%) were retired workers. Approximately 3% of all Social Security beneficiaries (including disabled workers and dependent beneficiaries) and 4% of all retired-worker beneficiaries were affected by the WEP in December 2018. Of retired workers affected by the WEP, approximately 58% were men ( Table 5 ). For data on the number and share of Social Security beneficiaries affected by the WEP, by state, see Table A-1 and Table A-2 in the Appendix , respectively. Legislative History and Rationale The WEP was enacted in 1983 as part of major amendments ( P.L. 98-21 ) designed to shore up the financing of the Social Security program. The 40% WEP formula factor was the result of a compromise between a House bill that would have substituted a 61% factor for the regular 90% factor and a Senate proposal that would have substituted a 32% factor. The purpose of the 1983 provision was to remove an unintended advantage that the regular Social Security benefit formula provided to certain retired or disabled worker-beneficiaries who were also entitled to pension benefits based on earnings from jobs not subject to the Social Security payroll tax. The regular formula was intended to help workers who spent their lifetimes in low-paying jobs, by providing them with a benefit that replaces a higher proportion of their career-average earnings than the benefit provided to workers with high career-average earnings. However, the formula does not differentiate between those who worked in low-paid jobs throughout their careers and other workers who appear to have been low paid because they worked many years in jobs not covered by Social Security. Under the old law, workers who were employed for only a portion of their careers in jobs covered by Social Security—even highly paid ones—also received the advantage of the weighted formula, because their few years of covered earnings were averaged over their entire working career to determine the average covered earnings on which their Social Security benefits were based. The WEP is intended to place affected workers in approximately the same position they would have been in had all their earnings been covered by Social Security. Arguments for the WEP Proponents of the measure say that it is a reasonable means to prevent payment of overgenerous and unintended benefits to certain workers who otherwise would profit from happenstance (i.e., the mechanics of the Social Security benefit formula). Furthermore, they maintain that the provision rarely causes hardship because by and large the people affected are reasonably well off because by definition they also receive pensions from noncovered work. The guarantee provision ensures that the reduction in Social Security benefits cannot exceed half of the pension from noncovered work, which protects people with small pensions from noncovered work. In addition, the impact of the WEP is reduced for workers who spend 21 to 29 years in Social Security-covered work and is eliminated for people who spend 30 years or more in Social Security-covered work. Arguments Against the WEP Some opponents believe the provision is unfair because it substantially reduces a benefit that workers may have included in their retirement plans. Others criticize how the provision works. They say the arbitrary 40% factor in the windfall elimination formula is an imprecise way to determine the actual windfall when applied to individual cases. The WEP's Impact on Low-Income Workers The impact of the WEP on low-income workers has been the subject of debate. Jeffrey Brown and Scott Weisbenner (hereinafter "Brown and Weisbenner") point out two reasons why the WEP can be regressive. First, because the WEP adjustment is confined to the first bracket of the benefit formula ($926 in 2019), it causes a proportionally larger reduction in benefits for workers with lower AIMEs and benefit amounts. Second, a high earner is more likely than a low earner to cross the "substantial work" threshold for accumulating years of covered earnings (in 2019 this threshold is $24,675 in Social Security-covered earnings); therefore, high earners are more likely to benefit from the provision that phases out the WEP for people with between 21 and 29 years of covered employment. Brown and Weisbenner found that the WEP does reduce benefits disproportionately for lower-earning households. For some high-income households, applying the WEP to covered earnings even provides a higher replacement rate than if the WEP were applied proportionately to all earnings, covered and noncovered. Brown and Weisbenner found that the WEP can also lead to large changes in Social Security replacement rates based on small changes in covered earnings, particularly when a small increase in covered earnings carries a person over the threshold for an additional year of substantial covered earnings, leading to an adjustment in the WEP formula applied to the AIME. Legislative Activity on the WEP in the 116th Congress H.R. 141 (Social Security Fairness Act of 2019) and S. 521 were introduced by Representative Rodney Davis on January 3, 2019, and Senator Sherrod Brown on February 14, 2019, respectively. The legislation would repeal the WEP and the government pension offset (GPO), which reduces the Social Security benefits paid to spouses and widow(er)s of insured workers if the spouse or widow(er) also receives a pension based on government employment not covered by Social Security. The elimination of the WEP and GPO would apply to benefits payable for months after December 2019. In 2016, SSA's Office of the Chief Actuary (OCACT) projected that repealing both the WEP and the GPO would reduce the long-range actuarial balance (i.e., increase the net long-term cost) of the combined Social Security trust funds by 0.13% of taxable payroll. The OCACT estimated that repealing only the WEP would reduce the long-range actuarial balance of the combined trust funds by 0.08% of taxable payroll. S. 710 (Social Security Fairness for Firefighters and Police Officers Act) was introduced by Senator Pat Toomey on March 7, 2019. The bill would exempt certain firefighters and police officers with five years of qualified service from the WEP and the GPO. Legislative Activity on the WEP in the 115th Congress H.R. 1205 and S. 915 , identical bills both titled the Social Security Fairness Act of 2017, would have repealed the WEP as well as the GPO. The elimination of the WEP and GPO would have applied to benefits payable for months after December 2017. H.R. 6933 and S. 3526 , identical bills both titled the Equal Treatment of Public Servants Act of 2018, proposed to replace the WEP with a new proportional formula for individuals who would become eligible for OASDI benefits in 2025 or later. The proposal would have also provided for a rebate payment starting in 2020 for individuals affected by the current WEP. In October 2018, the OCACT projected that the enactment of this legislation would increase (improve) the long-range actuarial balance of the combined trust funds by 0.04% of taxable payroll. Other bills in the 115 th Congress related to the WEP included H.R. 6962 , the Social Security Equity Act of 2018, and S. 3433 , the Social Security Fairness for Firefighters and Police Officers Act. H.R. 6962 would have reduced the WEP benefit reduction relative to current law, and S. 3433 would have exempted certain firefighters and police officers with five years of qualified service from the WEP and the GPO. Appendix. WEP Affected Beneficiaries, by State

The windfall elimination provision (WEP) is a modified benefit formula that reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security and thus not subject to the Social Security payroll tax. Its purpose is to remove an unintended advantage or "windfall" that these workers would otherwise receive as a result of the interaction between the regular Social Security benefit formula and the workers' relatively short careers in Social Security-covered employment. In December 2018, nearly 1.9 million people (or about 3% of all Social Security beneficiaries) were affected by the WEP.

crs_R45296

crs_R45296_0

Introduction A variety of issues related to housing were active during the 115 th Congress, including issues related to housing finance, housing-related tax provisions, housing assistance and grant programs (including in response to presidentially declared major disasters), and actions undertaken by the Department of Housing and Urban Development (HUD) as part of its efforts to review existing department regulations. This report provides a high-level overview of the most prominent housing-related issues during the Congress, including brief background on each and discussion of legislative or other relevant activity. This report is meant to provide a broad overview of major issues and is not intended to provide detailed information or analysis. However, it includes references to more in-depth CRS reports on the issues where possible. Housing and Mortgage Market Conditions This section provides background on housing and mortgage market conditions to provide context for the housing policy issues discussed later in the report. This discussion of market conditions is at the national level; however, it is important to be aware that local housing market conditions can vary dramatically, and national housing market trends may not reflect the conditions in a specific area. Nevertheless, national housing market indicators can provide an overall sense of general trends in housing. For several years since the housing and financial market turmoil of the late 2000s, housing markets have been recovering from house price declines, high rates of mortgage foreclosures, and other symptoms of the housing crisis. While some areas of the country have not fully recovered, most housing market indicators have rebounded. For example, house prices have been increasing for several years, and in many areas have passed their pre-crisis peaks in nominal terms; foreclosure rates have generally declined to levels similar to the years preceding the housing market turmoil; and housing market activity in general is increasing. As many communities have recovered, other housing market conditions have received increased attention. Some of the most prominent considerations that are often discussed in relation to current housing markets include the following: Affordability of Both Owner-Occupied and Rental Housing: In many areas of the country, housing affordability has been an ongoing issue for both homebuyers and renters. House prices and rental costs have increased in recent years and have generally increased faster than incomes. Despite concerns about the affordability of owner-occupied housing, many metrics suggest that homeownership is currently relatively affordable by historical standards; however, such measures generally focus on the ability of households to afford monthly mortgage payments and do not consider other costs of purchasing a home, such as saving for a down payment. Housing Inventory: The available housing inventory is one factor that affects housing affordability, as too few homes available for sale or rent can increase home prices or rents. Limited inventory, particularly of modestly priced housing, appears to be impacting affordability and home sales in many housing markets. Relatively low levels of new home construction is one of the factors contributing to lower levels of housing inventory. Mortgage Access: The availability of mortgage credit tightened in the aftermath of the housing crisis, for a variety of reasons. While credit is not currently as tight as it was at the peak, some argue that it is still too difficult for some creditworthy households to obtain affordable mortgages. Others, however, argue that mortgage standards are loosening too much for certain types of mortgages. The following subsections provide an overview of selected indicators reflecting conditions in owner-occupied housing markets and the mortgage market, and rental markets, respectively, during the 115 th Congress. Some of the included graphics show housing market indicators over time; these graphics highlight the time period of the 115 th Congress to allow readers easily to see the levels and trends in these indicators during the Congress. In some cases, these graphics include data for the entire 115 th Congress (2017-2018), while in other cases data covering the full time period of the 115 th Congress were not available as of the date of the final update of this report. Owner-Occupied Housing Markets and the Mortgage Market Over the past few years, on a national level, markets for owner-occupied housing have generally been characterized by rising home prices, low inventory levels, housing starts that are increasing but remain relatively low by historical standards, and home buying activity that is beginning to return to pre-crisis levels. Housing starts remain below the levels seen in the mid-1990s and early 2000s. For the most part, mortgage foreclosures and negative equity, which characterized the housing and economic turmoil that began around 2007, have eased. However, national statistics can mask the experience of local housing markets, and not all communities have recovered equally from the effects of the housing crisis. Most homebuyers take out a mortgage to purchase a home. Therefore, owner-occupied housing markets are closely linked to the mortgage market, although they are not the same. The ability of prospective homebuyers to obtain mortgages and the costs of those mortgages impact housing demand and affordability. House Prices As shown in Figure 1 , on a national basis, nominal house prices have been increasing on a year-over-year basis in each quarter since the beginning of 2012. Year-over-year house price changes have been above 5% in each quarter since the second quarter of 2015 and over 6% since mid-2017. These increases follow almost five years of house price declines in the years during and surrounding the economic recession of 2007-2009 and associated housing market turmoil. House prices vary greatly across local housing markets. In some areas of the country, prices have fully regained or even exceeded their pre-recession levels in nominal terms, while in other areas prices remain below those levels. Furthermore, house price increases affect participants in the housing market differently. Rising prices reduce affordability for prospective homebuyers, but they are generally beneficial for current homeowners, who benefit from the increased home equity that accompanies them (although rising house prices also have the potential to negatively impact affordability for current homeowners through increased property taxes). Mortgage Interest Rates For several years, mortgage interest rates have been low by historical standards. As shown in Figure 2 , average mortgage interest rates have been consistently below 5% since May 2010 and have been below 4% for several stretches during that time. Lower interest rates increase mortgage affordability and make it easier for some households to purchase homes or refinance their existing mortgages. Mortgage interest rates have generally increased since the start of 2018, though they decreased somewhat in December 2018, ending the year at 4.64%. Rising interest rates may make mortgages less affordable for some households, contributing to homeownership affordability pressures. Owner-Occupied Housing Affordability As house prices have been rising for several years on a national basis, and as mortgage interest rates have also begun to rise, concerns about the affordability of owner-occupied housing have increased. Incomes have also been rising in recent years, helping to mitigate some affordability pressures, but in general incomes have not been rising as quickly as house prices. Despite rising house prices, many metrics of housing affordability suggest that owner-occupied housing is currently relatively affordable. These metrics generally measure the share of income that a median-income family would need to qualify for a mortgage to purchase a median-priced home, subject to certain assumptions. Therefore, rising incomes and, especially, interest rates that are still low by historical standards contribute to homes, and borrowers' monthly mortgage payments in particular, being considered affordable despite recent house price increases. Some factors that affect housing affordability may not be captured by these metrics, however. For example, many of the metrics are based on certain assumptions (such as a borrower making a 20% down payment) that may not apply to many households. Furthermore, since they typically measure the affordability of monthly mortgage payments, they often do not take into account other affordability challenges that homebuyers may face, such as affording a down payment and other upfront costs of purchasing a home (costs that generally increase as home prices rise). Other factors—such as the ability to qualify for a mortgage, the availability of homes on the market, and regional differences in house prices and income—may also make homeownership less attainable for some households. Finally, some of these factors may have a bigger impact on affordability for certain specific demographic groups, as income trends and housing preferences are not uniform across all segments of the population. To the extent that house prices and interest rates continue to increase, housing affordability could become more of an issue going forward. Inventory and Housing Starts Many market observers have pointed to low levels of housing inventory as being a key contributor to rising house prices. One measure of the housing inventory is the months' supply of new and existing homes for sale—that is, how many months it would take for all of the homes that are currently on the market to sell based on the current pace of home sales, assuming no additional homes were placed on the market. According to HUD, using data from the National Association of Realtors and the U.S. Census Bureau, the months' supply of homes for sale has generally been below the historical average of six months of late, and the inventory of homes for sale has been low for several years. One factor that affects housing inventory is the decision of existing homeowners to put their homes on the market. A number of considerations may be impacting owners' decisions about whether to sell their homes, including concerns about being able to find a suitable new home to purchase. Another factor that affects the housing inventory is the amount of new construction. In recent years, levels of new construction have been relatively low by historical standards, reflecting a variety of considerations including labor shortages and the cost of building. One measure of the amount of new construction is housing starts. Housing starts are the number of new housing units on which construction is started in a given period and are typically reported monthly as a "seasonally adjusted annual rate." This means that the number of housing starts reported for a given month (1) has been adjusted to account for seasonal factors and (2) has been multiplied by 12 to reflect what the total number of housing starts would be if the current month's pace continued for an entire year. That is, the number reported for a given month is the annual number of housing starts that would result if the number of starts per month continued at the current month's rate for 12 months. Figure 3 shows the seasonally adjusted annual rate of starts on one-unit homes for each month from January 1995 through November 2018. Housing starts for single-family homes fell during the housing market turmoil, reflecting decreased home purchase demand. In recent years, as demand has increased, housing starts have been mostly increasing as well, though they remain below the levels seen in the late 1990s and early 2000s. From 2000 through 2007, the seasonally adjusted annual rate of housing starts in one-unit residential buildings was generally between 1.2 million and 1.8 million each month, before falling to a rate of between 400,000 and 600,000 for each month until about 2013. More recently, housing starts have been trending upward, and the seasonally adjusted annual rate averaged about 850,000 during 2017. In November 2018, the seasonally adjusted annual rate of housing starts was 824,000. Home Sales Despite limited inventory and rising home prices, home sales have been increasing in recent years. Home sales include sales of both existing and newly built homes. Existing home sales generally number in the millions each year, while new home sales are usually in the hundreds of thousands.  Figure 4 shows the annual number of existing and new home sales for each year from 1995 through 2017. Existing home sales numbered about 5.5 million in 2017, representing the third straight year of increases and the highest level since 2006. New home sales numbered about 614,000 in 2017. This was the highest level since 2007, but the number of new home sales remains appreciably lower than in the late 1990s and early 2000s, when they tended to be between 800,000 and 1 million per year. Mortgage Credit Access Some prospective homebuyers may find themselves unable to obtain mortgages due to their credit histories, other financial characteristics, the cost of obtaining a mortgage (such as down payments and closing costs), or other factors. In general, it is beneficial to the housing market when creditworthy homebuyers are able to obtain mortgages to purchase homes. However, access to mortgages must be balanced against the risk of offering them to people who will not be willing or able to repay the money they borrowed. Striking the right balance of credit access and risk management and the question of who is considered to be "creditworthy" are subjects of ongoing debate. A variety of organizations attempt to measure the availability of mortgage credit. While their methods vary, many experts agree that access to mortgage credit is tighter than it was in the early 2000s, prior to the housing bubble that preceded the housing market turmoil later in the decade, although it has eased somewhat of late. Despite this easing, some have argued that access to mortgage credit is still too tight, and that the mortgage market is taking on less default risk than it did in the years prior to the loosening of credit standards during the housing bubble. Others have argued that mortgage credit standards are easing too much, focusing on the fact that credit standards for certain types of mortgages, such as those insured by the Federal Housing Administration (FHA), have appeared to loosen somewhat in recent years compared to the immediate aftermath of the housing market turmoil when standards tightened across the board. They argue that easing credit standards unsustainably increases the risk of certain types of mortgages and contributes to higher house prices by allowing households to leverage higher amounts of mortgage debt. FHA itself has noted that it is monitoring certain trends, such as a larger share of new FHA-insured mortgages with higher debt-to-income ratios and the performance of loans with certain types of down payment assistance, that have the potential to increase risk to FHA. Mortgage Market Composition When a lender originates a mortgage, it can choose to hold that mortgage in its own portfolio, sell it to a private company, or sell it to Fannie Mae or Freddie Mac, two congressionally chartered government-sponsored enterprises (GSEs). Fannie Mae and Freddie Mac bundle mortgages into securities and guarantee investors payments on those securities. Furthermore, a mortgage might be insured by a federal government agency, such as the FHA or the Department of Veterans Affairs (VA). Most FHA-insured or VA-guaranteed mortgages are included in mortgage-backed securities that are guaranteed by Ginnie Mae, another government agency. In the years after the housing bubble burst, there was an increase in the share of mortgages that either had mortgage insurance from a government agency or were guaranteed by Fannie Mae or Freddie Mac, leading some to express concern about increased government exposure to risk and a lack of private capital in the mortgage market. As shown in Figure 5 , about two-thirds of the total dollar volume of mortgages originated during the first three-quarters of 2018 were either guaranteed by a federal agency such as FHA or VA (22%) or backed by Fannie Mae or Freddie Mac (45%). Close to one-third of the dollar volume of mortgages originated was held in bank portfolios (31%), while about 2% was securitized in the private market. The share of new mortgage originations, by dollar volume, insured by a federal agency or guaranteed by Fannie Mae or Freddie Mac has fallen from a high of nearly 90% in 2009, during the housing market turmoil. Nevertheless, the share of mortgage originations with federal mortgage insurance or a Fannie Mae or Freddie Mac guarantee remains elevated compared to the 2002-2007 period, when FHA and VA mortgages constituted a small share of the mortgage market and the GSE share ranged from about 30% to 50%. The FHA and VA share of mortgages during the 2002-2007 period was low by historical standards, however, as many households opted for other types of mortgages, including subprime mortgages, during that time. Rental Housing Markets In the years since the housing market turmoil began, the homeownership rate has decreased while the percentage of renter households has correspondingly increased. Although new rental housing units have also been created, both through new construction and as some formerly owner-occupied homes are converted to rentals, in many markets the rise in the number of renters increased competition for rental housing, leading to lower rental vacancy rates and higher rents in recent years. This, in turn, has resulted in more renter households being considered cost-burdened, commonly defined as paying more than 30% of income toward housing costs. Share of Renters As shown in Figure 6 , the share of renters has generally been increasing for the last decade, reaching close to 37% of all occupied housing units in 2016. This was the highest share of renters since the early 1990s. The homeownership rate has correspondingly decreased, falling from a high of 69% in 2004 to just over 63% in 2016. Most recently, in 2017, the share of renters decreased slightly, to about 36%, and the homeownership rate increased slightly, to nearly 64%. In addition to an increase in the share of households who rent, the overall number of renter households has been increasing as well. In 2016, there were nearly 43.3 million occupied rental housing units, compared to 40 million in 2013 and 35.9 million in 2008. The number of renter households decreased in 2017, to 43.1 million. (In comparison, the number of housing units occupied by an owner decreased somewhat after 2008 before beginning to rise again in recent years. The number of housing units occupied by owners was 76.6 million in 2017, compared to about 75.7 million in 2008. ) Vacancy Rates In general, the increase in renters has led to a decrease in rental vacancy rates in many, though not all, areas of the country. This has been the case in many areas despite the creation of new rental units through both new construction and the conversion of some previously owner-occupied single-family units to rental housing. In many cases, the increase in the rental housing supply has not kept up with the increase in rental housing demand. As shown in Figure 7 , on a national basis the rental vacancy rate was over 10% in most quarters from 2008 through 2010. Since then, the rate has mostly declined, reaching about 8% at the end of 2013 and 7% at the end of each year from 2014 through 2017. The rental vacancy rate did increase somewhat throughout much of 2017, reaching 7.5% in the third quarter, before decreasing back to about 7% for most of 2018. Furthermore, the market for affordable rental units has been particularly tight, as many of the rental units that have been constructed in recent years have been at the higher end of the market. Rental Housing Affordability Rental housing affordability is impacted by a variety of factors, including the supply of rental housing units available, the characteristics of those units (e.g., age and amenities), and the demand for available units. As noted previously, new housing units have been added to the rental stock in recent years through both construction of new rental units and conversions of existing owner-occupied units to rental housing. At the same time, however, the demand for rental housing has increased as more households have become renters. Furthermore, much of the new rental housing construction in recent years has been higher-end construction rather than lower-cost units. The increased demand for rental housing, as well as the concentration of new rental construction in higher-cost units, has led to increases in rents in recent years. Median renter incomes have also been increasing for the last several years, at times outpacing increases in rents. However, over the longer term, median rents have increased faster than renter incomes. For example, between 2001 and 2017, in real terms the median rent (less utilities) for recent movers has risen over 25% while the median renter income has increased about 6%, reducing rental affordability over that time period. Rising rental costs and renter incomes that are not keeping up with rent increases over the long term can contribute to housing affordability problems, particularly for households with lower incomes. Under one common definition, housing is considered to be affordable if a household is paying no more than 30% of its income in housing costs. Under this definition, households that pay more than 30% are considered to be cost-burdened, and those that pay more than 50% are considered to be severely cost-burdened. The overall number of cost-burdened renter households has generally increased in recent years, from 15.7 million in 2003 to 20.8 million in 2016, although the number of cost-burdened renter households in 2016 represented a decrease from over 21 million in both 2014 and 2015. (Over this time period, the overall number of renter households has increased as well.) As shown in Figure 8 , cost burdens are most prevalent among lower-income renter households. Among renter households with incomes below $30,000, 80% are cost-burdened, with over half experiencing severe cost burdens. However, cost burdens affect households of all incomes: half of renter households with incomes of at least $30,000 but less than $45,000, and over 20% of renter households with incomes of at least $45,000 but less than $75,000, were cost burdened in 2016. Moderate-income renter households have experienced some of the greatest increases in cost burdens since the early 2000s. Furthermore, according to HUD, 8.3 million renter households were considered to have "worst-case housing needs" in 2015 (the most recent data available). Households with worst-case housing needs are defined as renter households with incomes at or below 50% of area median income who do not receive federal housing assistance and who pay more than half of their incomes for rent, live in severely inadequate conditions, or both. The 8.3 million renter households with worst-case housing needs in 2015 represented an increase from 7.7 million in 2013 and was similar to 2011 (8.5 million households). In comparison, the number of renter households with worst-case housing needs in 2005 and 2007 was about 6 million. Housing Finance Issues in the 115th Congress Several of the issues that were of interest during the 115 th Congress are related to the financing of housing. In some cases, these issues can impact the financing of both owner-occupied housing and rental housing, though in other cases they are primarily relevant to one or the other. Financial "Regulatory Relief" Legislation and Housing Background The financial crisis of 2007-2009 led to a variety of legislative and regulatory responses intended to address its perceived causes. These responses included new requirements on financial institutions, some of which were related to mortgages. Many of these requirements were enacted in the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 ) in 2010. In the years since, there has been ongoing debate about the extent to which the new requirements achieve the right balance of protecting consumers and the financial system from potentially risky mortgage features without unduly restricting access to credit for creditworthy households. Recent Developments During the 115 th Congress, a variety of bills were considered to amend certain financial regulatory requirements, including requirements related to mortgages. Most notable among these for housing was the Economic Growth, Regulatory Relief, and Consumer Protection Act ( P.L. 115-174 ), which became law in May 2018. The act includes a variety of provisions related to financial regulatory requirements, including some mortgage-related requirements. In general, it modifies these mortgage-related requirements rather than eliminating them entirely. The act also includes some additional provisions related to housing. Provisions of the act that modify mortgage-related requirements that were put in place after the housing market turmoil include the following: allowing certain mortgages originated and held in portfolio by small depository institutions to be considered "qualified mortgages" for the purposes of complying with the ability-to-repay rule; making changes to requirements related to certain property appraisals; exempting some banks and credit unions that make fewer than a particular number of mortgage loans from specified new reporting requirements under the Home Mortgage Disclosure Act (HMDA); providing grace periods for individuals working as mortgage originators to obtain the proper licensing to originate mortgages in their new positions when they move from banks to nonbanks or across state lines; expanding the circumstances under which manufactured home retailers and their employees can be excluded from the definition of mortgage originators, and therefore exempt from certain requirements that apply to mortgage originators, subject to specified conditions; and waiving the waiting period between receipt of particular mortgage-related disclosures and the mortgage closing when a borrower is offered a lower interest rate after initial receipt of the disclosures. While supporters of the act argued that these are targeted changes that will help to ease unnecessarily burdensome regulations and increase the availability of mortgage credit, opponents argued that they weaken or eliminate certain protections that were put in place in response to practices that harmed consumers and ultimately the broader mortgage market. The act also includes several other mortgage- or housing-related provisions. These include the following: requirements intended to address concerns about certain refinancing practices related to some mortgages guaranteed by the Department of Veterans Affairs; making permanent specified protections for renters in foreclosed properties that had been put in place by the Protecting Tenants at Foreclosure Act (Title VII of the Helping Families Save Their Homes Act, P.L. 111-22 ) in 2009 but had since expired; making permanent a one-year protection against foreclosure for active duty servicemembers under particular circumstances; requiring Fannie Mae and Freddie Mac to consider alternative credit scoring models for mortgages purchased by those institutions; making Property Assessed Clean Energy (PACE) loans, which allow some homeowners to finance specified energy improvements through property tax assessments, subject to the ability-to-repay requirements that apply to most mortgages; certain changes related to small public housing agencies; changes to HUD's Family Self-Sufficiency program, an asset-building program for residents of public and assisted housing; and requiring certain reports, including a report by HUD on lead paint hazards and abatement and a Government Accountability Office (GAO) report on foreclosures in Puerto Rico in the aftermath of Hurricane Maria. A dditional information: For an expanded discussion of the provisions of P.L. 115-174 , see CRS Report R45073, Economic Growth, Regulatory Relief, and Consumer Protection Act (P.L. 115-174) and Selected Policy Issues . Housing Finance Reform Background The U.S. housing finance system supports about $10 trillion in outstanding single-family residential mortgage debt and over $1 trillion in multifamily residential mortgage debt. Two major players in the housing finance system are Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) that were created by Congress to provide liquidity to the mortgage market. By law, Fannie Mae and Freddie Mac cannot make mortgages; rather, they are restricted to purchasing mortgages that meet certain requirements from lenders. Once the GSEs purchase a mortgage, they either package it with others into a mortgage-backed security (MBS), which they guarantee and sell to institutional investors, or retain it as a portfolio investment. Fannie Mae and Freddie Mac are involved in both single-family and multifamily housing, though their single-family businesses are much larger. In 2008, during the housing and mortgage market turmoil, Fannie Mae and Freddie Mac entered voluntary conservatorship overseen by their regulator, the Federal Housing Finance Agency (FHFA). As part of the legal arrangements of this conservatorship, the Department of the Treasury contracted to purchase over $200 billion of new senior preferred stock from each of the GSEs; in return for this support, Fannie Mae and Freddie Mac pay dividends on this stock to Treasury. To date, Treasury has purchased a total of over $191 billion of senior preferred stock from the two GSEs and has received a total of nearly $280 billion in dividends. These funds become general revenues. Since the first quarter of 2012, the only time Fannie Mae and Freddie Mac have drawn on their lines of credit with Treasury was in the fourth quarter of 2017; this draw was attributed to changes in the value of deferred tax assets as a result of the tax revision law that was enacted in late 2017 ( P.L. 115-97 ). Recent Developments Since Fannie Mae and Freddie Mac were placed in conservatorship in 2008, policymakers have largely agreed on the need for comprehensive housing finance reform legislation that would transform or eliminate the GSEs' role in the housing finance system. While there is broad agreement on certain principles of housing finance reform—such as increasing the private sector's role in the mortgage market and maintaining access to affordable mortgages for creditworthy households—there is disagreement over how best to achieve these objectives and over the technical details of how a restructured housing finance system should operate. The 113 th Congress considered, but did not enact, housing finance reform legislation. The 114 th Congress considered a number of more-targeted reforms to Fannie Mae and Freddie Mac, but did not actively consider comprehensive housing finance reform legislation. During the 115 th Congress, Members on the House and Senate committees of jurisdiction and Administration officials indicated that housing finance reform would be a priority. However, little formal legislative action on the issue took place, and in July 2018, Treasury Secretary Steven Mnuchin suggested at a House Financial Services Committee hearing that housing finance reform would be a focus in the 116 th Congress. In September 2018, House Financial Services Committee Chairman Jeb Hensarling released a discussion draft of a comprehensive housing finance reform bill with some bipartisan support. Chairman Hensarling also indicated plans to reintroduce the Protecting American Taxpayers and Homeowners Act (PATH Act) from the 113 th Congress, which takes a different approach to housing finance reform. However, noting that the reintroduced PATH Act ( H.R. 6746 ) was considered unlikely to pass, he said that he would pursue the discussion draft bill as an alternative. The Financial Services Committee held a hearing on the discussion draft bill in December 2018. In addition to considering the role of the GSEs in the housing finance system, any future housing finance reform legislation could also consider changes to the Federal Housing Administration (FHA). FHA is a part of the Department of Housing and Urban Development (HUD) and insures certain mortgages made by private lenders against the possibility of borrower default. By insuring these mortgages, FHA helps to make affordable mortgages more available to borrowers who might otherwise not be well-served by the private mortgage market, such as borrowers with low down payments. Apart from comprehensive reform of the housing finance system, several additional issues related to Fannie Mae and Freddie Mac received attention during the 115 th Congress. These included (1) an FHFA decision to allow Fannie Mae and Freddie Mac to each retain $3 billion in capital (under the terms of the Treasury support agreements, the amount of capital they are allowed to retain was scheduled to fall to zero at the beginning of 2018), (2) the need for both Fannie Mae and Freddie Mac to draw on their lines of credit with Treasury in the fourth quarter of 2017 due to a reduction in the value of deferred tax assets as a result of the tax revision law passed in late 2017, and (3) FHFA directing Fannie Mae and Freddie Mac to continue to make required contributions to certain affordable housing funds despite the draw from Treasury. For more information on these issues in particular, see CRS In Focus IF10851, Housing Finance: Recent Policy Developments . A dditional information: For background on the housing finance system in general, see CRS Report R42995, An Overview of the Housing Finance System in the United States . For information on Fannie Mae and Freddie Mac and their conservatorship, see CRS Report R44525, Fannie Mae and Freddie Mac in Conservatorship: Frequently Asked Questions . For background on FHA, see CRS Report RS20530, FHA-Insured Home Loans: An Overview . Federal Housing Administration Mortgage Insurance Premiums Background The Federal Housing Administration (FHA), part of HUD, insures certain mortgages made by private lenders against the possibility of the borrower defaulting. FHA insurance protects the lender in the event of borrower default, which is intended to increase the availability of affordable mortgage credit to households who might otherwise be underserved by the private mortgage market. FHA charges borrowers both upfront and annual fees, referred to as mortgage insurance premiums, in exchange for this insurance. These fees are supposed to cover the costs of paying a claim to a lender if an FHA-insured mortgage defaults and goes to foreclosure. By law, the HUD Secretary has a responsibility to ensure that the FHA single-family mortgage insurance fund remains financially sound and that the fund is in compliance with a requirement that it maintain a capital ratio of at least 2%. FHA raised the premiums it charges several times in the years during and following the housing market turmoil in response to concerns about rising mortgage delinquency rates and FHA's ability to maintain compliance with the capital ratio requirement. It then lowered the annual premiums in 2015 as mortgage delinquency rates began to decrease and its financial position stabilized. The level of the premiums charged by FHA is often a topic of interest. The premiums have implications for the affordability and availability of FHA-insured mortgages for certain homebuyers, on the one hand, and for the financial health of the FHA insurance fund, on the other; setting the appropriate premium level involves balancing these considerations. Recent Developments Early in January 2017, HUD announced that it planned to decrease the annual mortgage insurance premium it charged for new mortgages that closed on or after January 27, 2017. However, on January 20, 2017, the first day of the Trump Administration, HUD suspended the planned decrease before it went into effect, citing a need to further analyze the potential impact that a mortgage insurance premium decrease could have on the FHA insurance fund. In its Annual Report to Congress on the Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund) in November 2017, FHA stated that had the planned premium decrease gone into effect, the estimated capital ratio for the MMI Fund would have fallen below the statutorily mandated capital ratio requirement of 2% for FY2017. (The actual estimated capital ratio for FY2017 was lower than FY2016, but remained above 2%.) The estimated lower capital ratio would have been due to a combination of (1) less premium revenue coming into the fund as a result of the lower premiums and (2) an increase in the total dollar amount of mortgages that would have been insured as a result of more borrowers obtaining FHA-insured mortgages due to the lower premiums. The report also suggests, however, that reverse mortgages insured by FHA are having a disproportionately negative impact on the insurance fund, raising questions about the extent to which the performance of the reverse mortgage portfolio may, or should, impact decisions about the premiums charged to forward-mortgage borrowers. A dditional information: For more information on FHA-insured mortgages in general, including the current premium levels, see CRS Report RS20530, FHA-Insured Home Loans: An Overview . For more information on the financial status of FHA's single-family mortgage insurance fund, see CRS Report R42875, FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund) . FHA Requirements for Insuring Mortgages on Condominium Units Background FHA-insured mortgages can be used to purchase condominium units as well as other types of single-family homes. However, HUD places specific requirements on FHA-insured mortgages for condominiums that may affect the eligibility of a condominium mortgage for the insurance. In order for FHA to insure a mortgage on a condominium unit, HUD requires that the entire condominium project where the unit is located have FHA approval. In order for the condominium project to be approved, it must meet a variety of requirements. These include, among others, a minimum percentage of units that must be owner-occupied, and limits on the amount of nonresidential space and the percentage of units that are behind on their association dues. Condominium buildings seeking FHA approval must go through a certification process and a periodic recertification process to maintain FHA approval. In 2009, HUD made a number of changes related to condominium mortgage insurance. In addition to tightening several requirements, it ended a practice known as "spot approval," in which a mortgage on a condominium located in a project that did not have FHA approval could qualify for FHA insurance on a case-by-case basis. Requirements placed on condominium projects seeking FHA approval are intended to ensure that the buildings themselves are well-managed and financially stable, which in turn is thought to make mortgages on individual units in the building less risky. However, some industry groups and others have argued that many of the changes that FHA made are too strict and unnecessarily reduce access to FHA-insured mortgages for prospective condominium buyers and for condominium owners who seek FHA-insured reverse mortgages. While the specifics of debates around individual requirements related to FHA approval of condominium buildings may vary, in general the debate around these requirements is usually framed as a question of how to balance access to FHA-insured mortgages with making sure that insured mortgages do not pose an undue risk to the financial health of the FHA insurance fund. Recent Developments In July 2016, towards the end of the 114 th Congress, the Housing Opportunity Through Modernization Act (HOTMA, P.L. 114-201 ) was enacted. While most of the provisions of HOTMA affected HUD rental assistance programs, there were four provisions related to FHA's requirements for insuring mortgages on condominium units. These provisions directed the HUD Secretary to (1) streamline the recertification process for FHA approval of condominium buildings to make it less burdensome, (2) make changes to the process for granting exceptions for exceeding FHA's limits on commercial space, (3) adopt Federal Housing Finance Agency (FHFA) regulations related to transfer fees and condominiums, and (4) issue new guidance, and a justification, addressing the required percentage of owner-occupied units in the building. In September 2016, during the 114 th Congress, HUD issued a comprehensive proposed rule related to approval of condominium projects. While this rulemaking takes the HOTMA provisions into account, it is broader than just the areas addressed by HOTMA and had been in the development stages prior to the passage of the act. Among other things, it proposed a single-unit approval process, similar to the previous spot approval process, to provide a way for FHA-insured mortgages to be approved for condominiums in buildings that are not FHA-approved, subject to certain conditions. In June 2018, over a hundred Members of Congress signed a letter to HUD urging it to finalize the rule. As of the end of the 115 th Congress, HUD had not yet issued a final rule. A dditional information: For more information on the condominium-related provisions included in HOTMA, see CRS Report R44358, Housing Opportunity Through Modernization Act (H.R. 3700) . Housing-Related Tax Issues in the 115th Congress During the 115 th Congress, a number of housing-related tax provisions were modified or extended through different pieces of enacted legislation: a broad tax revision law that included changes to housing-related tax provisions, tax extenders legislation that extended temporary tax provisions related to housing, and an appropriations law that included changes to the low-income housing tax credit. Housing Provisions in the Tax Revision Law Background Two of the largest and most well-known tax incentives available to homeowners are the mortgage interest deduction and the deduction for property taxes. Homeowners are allowed to deduct interest paid on a mortgage that finances the acquisition of a primary or secondary residence as long as the homeowner itemizes their tax deductions. Historically, the amount of interest that was allowed to be deducted was limited to the interest incurred on the first $1 million of combined mortgage debt and the first $100,000 of home equity debt ($1.1 million total). If a taxpayer's mortgage debt exceeded $1 million, they were still allowed to claim a deduction for a percentage of interest paid. Homeowners also benefit from the ability to deduct state and local property taxes. Historically, homeowners were allowed to claim an itemized deduction equal to the full amount of state and local property taxes paid. Not all homeowners claim these deductions. Some have no mortgage, and hence no interest to deduct. Others may be toward the end of their mortgage repayment period, and thus paying relatively little interest, so the deduction for interest is not worth much. Some homeowners live in states with low state and local taxes, and may find the standard deduction to be more valuable. Some may also live in low-cost areas and therefore have a relatively small mortgage and property taxes. There may also be interactions with other drivers of itemization. For example, itemization rates tend to be lower in states with an income tax, which can also lead to fewer homeowners claiming the deductions for mortgage interest and property taxes. Among households that do claim the deductions, the majority of their advantages tend to benefit those with higher income. This is in part because these households are more likely to have a financial incentive to itemize their taxes and claim the deductions. It is also because higher-income households are more likely to have more expensive homes with larger mortgages, and therefore more likely to have higher property taxes and larger amounts of mortgage interest to deduct, and because the tax benefits increase with higher marginal tax rates in higher income brackets. Some have argued that the ability to deduct mortgage interest and property taxes incentivize homeownership and have pointed to several perceived benefits of homeownership as a rationale for these tax benefits. However, some researchers have suggested that these deductions have little effect on the homeownership rate, in part because they do not reduce the upfront cost of buying a home, which is one of the biggest barriers to homeownership for many households. This research suggests that the tax benefits may incentivize homebuyers to purchase larger homes than they otherwise would, however, because they increase households' purchasing power and the benefit of the deductions increases with more expensive homes and larger mortgages. The above discussion draws from CRS Report R41596, The Mortgage Interest and Property Tax Deductions: Analysis and Options . Readers can refer to that report for a fuller exploration of these tax benefits, including the rationales put forward for them, an economic analysis of their effects, and a discussion of research related to their impact. Recent Developments In late 2017, a broad tax revision law ( P.L. 115-97 ) that substantively changed the federal tax system was signed into law by President Trump. The legislation temporarily reduced the maximum amount of mortgage debt for which interest can be deducted to $750,000 ($375,000 for married filing separately) for debt incurred after December 15, 2017. For mortgage debt incurred on or before December 15, 2017, the combined mortgage limit remains $1 million ($500,000 for married filing separately). Refinanced mortgage debt will be treated as having been incurred on the date of the original mortgage for purposes of determining which mortgage limit applies ($750,000 or $1 million). The interest on a home equity loan that is secured by a principal or second residence and is used to buy, build, or substantially improve a taxpayer's home is still deductible, but the home equity loan amount counts towards the maximum eligible mortgage amount ($750,000 or $1 million). After 2025, the mortgage limit for all new and existing qualifying mortgage interest will revert to $1 million, plus $100,000 in home equity indebtedness (regardless of its use). The 2017 tax revision also limits the deduction for state and local property and income taxes to $10,000 until the end of 2025. Additionally, P.L. 115-97 increased the standard deduction to $12,000 (single) or $24,000 (married), which is expected to further reduce the number of taxpayers who itemize deductions generally. The increase in the standard deduction will mitigate the impact of the changes to the mortgage interest and property tax deductions for many households, though some will pay more in taxes as a result of these changes. The limit to the deduction for property taxes could have implications for some states and localities with high property taxes, and to the extent that the value of the mortgage interest deduction has been capitalized into home prices, the lower limits on the amount of mortgage interest that can be deducted could exert downward pressure on home prices in some areas. However, at this point the size and scope of any effects these changes may have is unclear. A dditional information: For more on how the tax revision law affected the mortgage interest deduction, see CRS Insight IN10845, P.L. 115-97: The Mortgage Interest Deduction . Housing Provisions in Tax Extenders Legislation Background In the past, Congress has regularly extended a number of temporary tax provisions that address a variety of policy issues, including housing. This set of temporary provisions is commonly referred to as "tax extenders." Two housing-related provisions that have been included in tax extenders packages in the recent past are the exclusion for canceled mortgage debt, and the deduction for mortgage insurance premiums. Exclusion for Canceled Mortgage Debt Historically, when all or part of a taxpayer's mortgage debt has been forgiven, the forgiven amount has been included in the taxpayer's gross income for tax purposes. This income is typically referred to as canceled mortgage debt income. During the housing market turmoil of the late 2000s, some efforts to help troubled borrowers avoid foreclosure resulted in canceled mortgage debt. The Mortgage Forgiveness Debt Relief Act of 2007 ( P.L. 110-142 ), signed into law in December 2007, temporarily excluded qualified canceled mortgage debt income that is associated with a primary residence from taxation. The provision was originally effective for debt discharged before January 1, 2010, and was subsequently extended several times. Rationales put forward for extending the exclusion have included minimizing hardship for distressed households, lessening the risk that nontax homeownership retention efforts will be thwarted by tax policy, and assisting in the recoveries of the housing market and overall economy. Arguments against the exclusion have included concerns that it makes debt forgiveness more attractive for homeowners, which could encourage homeowners to be less responsible about fulfilling debt obligations, and concerns about fairness as the ability to realize the benefits depends on a variety of factors. Furthermore, to the extent that housing markets and the economy have improved in recent years, and foreclosure rates have returned to more typical levels, some may argue that the exclusion is less necessary now than it may have been during the height of the housing and mortgage market turmoil. Deductibility of Mortgage Insurance Premiums As described earlier, homeowners traditionally have been able to deduct the interest paid on their mortgage, as well as property taxes they pay, as long as they itemize their tax deductions. Beginning in 2007, homeowners could also deduct qualifying mortgage insurance premiums as a result of the Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ). Specifically, homeowners could effectively treat qualifying mortgage insurance premiums as mortgage interest, thus making the premiums deductible if homeowners itemized and their adjusted gross incomes were below a specified threshold ($55,000 for single, $110,000 for married filing jointly). Originally, the deduction was to be available only for 2007, but it was subsequently extended several times. Two rationales that have been put forward for allowing the deduction of mortgage insurance premiums are the promotion of homeownership and the recovery of the housing market. However, it is not clear that the deduction has an effect on the homeownership rate, nor is it clear that the deduction is still needed to assist in the recovery of the housing market, given that housing market indicators suggest that it is stronger as a whole than when the provision was originally enacted (although some areas have not fully recovered from the housing market turmoil). Furthermore, to the degree that owner-occupied housing is over subsidized, extending the deduction could lead to a greater misallocation of resources that are directed toward the housing industry. Extending the deduction, however, may assist some households who are in financial distress because of burdensome housing payments. Recent Developments Congress most recently enacted tax extenders legislation in the Bipartisan Budget Act of 2018 ( P.L. 115-123 ). The legislation extended the exclusion for canceled mortgage debt and the ability to deduct mortgage insurance premiums, each of which had previously expired at the end of 2016, through the end of 2017. No additional tax extenders legislation was enacted during the 115 th Congress. A dditional information: For more on the tax extenders in the Bipartisan Budget Act, see CRS Report R44925, Recently Expired Individual Tax Provisions ("Tax Extenders"): In Brief . For background on the tax exclusion for canceled mortgage debt, see CRS Report RL34212, Analysis of the Tax Exclusion for Canceled Mortgage Debt Income . Changes to the Low-Income Housing Tax Credit Background The low-income housing tax credit (LIHTC) is one of the primary sources of federal funding that is used for affordable rental housing development, which it incentivizes with federal tax credits administered through the Internal Revenue Service. The tax credits are provided to states based on population, and states award the credits to housing developers that agree to build or rehabilitate housing where a certain percentage of units will be affordable to low-income households. Housing developers then sell the credits to investors and use the proceeds to help finance the housing developments. Historically, LIHTC-assisted developments have had to meet one of two income tests: either a "20-50" test or a "40-60" test. Under the former, at least 20% of units have to be occupied by households with incomes at or below 50% of the area's median gross income (area median income, or AMI), adjusted for family size. Under the latter, at least 40% of the units have to be occupied by individuals with incomes at or below 60% of the area's median gross income, adjusted for family size. Recent Developments The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) made two changes to the LIHTC program. The first change added a third option for complying with the income test for LIHTC developments in addition to the 20-50 or 40-60 tests. This option allows for income averaging, and the income test is satisfied if at least 40% of the units are occupied by tenants with an average income of no greater than 60% of AMI, and no individual tenant has an income exceeding 80% of AMI. Thus, for example, renting to someone with an income equal to 80% of AMI would also require renting to someone with an income no greater than 40% of AMI, so the tenants would have an average income equal to 60% of AMI. Proponents of income averaging have argued that it will have a variety of benefits, including potentially making it easier for LIHTC developments to include more deeply income-targeted units for households with the lowest incomes, increasing the number of households that are eligible to live in LIHTC properties, and making it easier to use LIHTC for mixed-income housing. The second change made by P.L. 115-141 increased the amount of LIHTC credits available to states by 12.5% per year for each of FY2018-FY2021. The broader tax revision law ( P.L. 115-97 ) did not make any changes directly to the LIHTC program. However, certain changes that were included in the law—such as reductions in corporate tax rates—could affect the demand for LIHTCs and the price that investors are willing to pay for them. If investors pay less for tax credits, then the credits would generate less money for affordable housing development, all else equal. The increase in tax credits included in P.L. 115-141 may help to alleviate concerns about the potential impact of the tax revision law on the price for LIHTCs. A dditional information: For more information on the low-income housing tax credit in general, and these recent changes to the program, see CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit . Housing Assistance Issues in the 115th Congress Some of the housing-related issues that were active in the 115 th Congress have to do with federal programs or activities that provide housing assistance to low-income households or other households with particular housing needs. HUD Appropriations Background For several years, concern in Congress about federal budget deficits has led to increased interest in reducing the amount of discretionary funding provided each year through the annual appropriations process. This interest was most manifest by the enactment of the Budget Control Act of 2011 ( P.L. 112-25 ), which set enforceable limits for both mandatory and discretionary spending. The limits on discretionary spending, which have been amended and adjusted since they were first enacted, have implications for HUD's budget, the largest source of funding for direct housing assistance, because it is made up almost entirely of discretionary appropriations. More than three-quarters of HUD's appropriations are devoted to three rental assistance programs serving more than 4 million families: the Section 8 Housing Choice Voucher (HCV) program, Section 8 project-based rental assistance, and the public housing program. Funding for the HCV program and project-based rental assistance has been increasing in recent years, largely because of the increased costs of maintaining assistance for households that are currently served by the programs. Public housing has, arguably, been underfunded (based on studies undertaken by HUD of what it should cost to operate and maintain it) for many years. Despite the large share of total HUD funding these rental assistance programs command, their combined funding levels only permit them to serve an estimated one in four eligible families, which creates long waiting lists for assistance in most communities. In a budget environment featuring limits on discretionary spending, the pressure to provide increased funding to maintain current services for HUD's largest programs must be balanced against the pressure from states, localities, and advocates to maintain or increase funding for other HUD programs, such as the Community Development Block Grant (CDBG) program, grants for homelessness assistance, and funding for Native American housing. Recent Developments The Trump Administration's budget requests for FY2018 and FY2019 each proposed decreases in funding for HUD as compared to the prior year. Both budget requests proposed to eliminate funding for several programs, including multiple HUD block grants (CDBG, the HOME Investment Partnerships Program, and the Self-Help and Assisted Homeownership Opportunity Program (SHOP)), and to decrease funding for most other HUD programs. In proposing to eliminate the block grant programs, the Administration cited budget constraints and proposed that state and local governments should take on more of a role in the housing and community development activities funded by these programs. In February 2018, Congress enacted the Bipartisan Budget Act of FY2018 (BBA;  P.L. 115-123 ), which, among other things, increased the statutory limits on discretionary spending for FY2018 and FY2019. Following passage of the BBA, the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) was enacted in March 2018, providing final FY2018 appropriations for HUD. The enacted legislation increased overall funding for HUD by nearly 10% compared to FY2017 and did not adopt the program eliminations proposed in the President's budget request. Most HUD funding accounts saw increases in FY2018 compared to FY2017. As of the end of the 115 th Congress, final FY2019 appropriations for HUD had not yet been enacted. HUD programs and activities were funded under continuing resolutions through December 21, 2018, at which point funding lapsed. This funding lapse was still underway when the 115 th Congress ended. A dditional information: For more on HUD appropriations trends in general, see CRS Report R42542, Department of Housing and Urban Development (HUD): Funding Trends Since FY2002 . For more on FY2018 HUD appropriations, see CRS Report R44931, HUD FY2018 Appropriations: In Brief . For more on the FY2019 HUD budget request, see CRS Report R45166, Department of Housing and Urban Development (HUD): FY2019 Budget Request Fact Sheet . HUD Rental Assistance Programs Background As noted, HUD administers three primary direct rental assistance programs: the Housing Choice Voucher program, the public housing program, and project-based rental assistance (including project-based Section 8). Combined, these programs serve more than 4 million families at a cost of nearly $40 billion per year, accounting for the vast majority of HUD's total budget. While the three programs provide different forms of assistance—rental vouchers, publicly owned subsidized apartments, and privately owned subsidized apartments—they all allow low-income individuals and families to pay rent considered affordable (generally 30% of adjusted family income). About half of the families served by the combined programs are headed by persons who are elderly or have disabilities and the other half are primarily other families with children. Although these are the largest federal housing assistance programs for low-income families, they are estimated to serve only approximately one in four eligible families due to funding limitations, and most communities have long waiting lists for assistance. Recent Developments The size and scope of HUD's rental assistance programs mean they are often of interest to policymakers. Specifically in the 115 th Congress, cost considerations, interest in broader welfare reform ideas such as work requirements, and concerns about administrative efficiencies led to various policy proposals and debates. Administration Rent Reform and Work Requirement Proposal In April 2018, HUD Secretary Carson announced the Administration's Making Affordable Housing Work Act of 2018 (MAHWA) legislative proposal. If enacted, the proposal would have made a number of changes to the way tenant rents are calculated in HUD rental assistance programs. These changes would have resulted in rent increases for assisted housing recipients, and corresponding decreases in the cost of federal subsidies. Specifically, MAHWA proposed to eliminate the current income deductions used when calculating tenant rent and establish two rent structures: one for elderly and disabled households, based on 30% of gross income; and one for other families, based on 35% of gross income, with a mandatory minimum rent based on part-time work at the minimum wage. While these changes would have resulted in rent increases for tenants, the language would have allowed the Secretary to phase in the increases. Additionally, the proposal would have authorized the Secretary to establish other rent structures, and would have authorized local program administrators to establish still other rent structures, with the Secretary's authorization. Further, the proposal would have permitted local program administrators or property owners to institute work requirements for recipients. Given the variation that would have resulted from these last two elements permitting local discretion, it is difficult to estimate what the consequences of the changes would have been for any given family. In announcing the proposal, HUD described it as setting the programs on "a more fiscally sustainable path," creating administrative efficiency, and promoting self-sufficiency. Low-income housing advocates have been critical of the proposal, particularly the effect increased rent payments may have on families. Legislation to implement the Administration's proposal was not introduced in the 115 th Congress. Rental Assistance Demonstration The Rental Assistance Demonstration (RAD) was an Obama Administration initiative initially designed to test the feasibility of addressing the estimated $25.6 billion backlog in unmet capital needs in the public housing program by allowing local public housing authorities (PHAs) to convert their public housing properties to either Section 8 Housing Choice Vouchers or Section 8 project-based rental assistance. PHAs are limited in their ability to mortgage, and thus raise private capital for, their public housing properties because of a federal deed restriction placed on the properties as a condition of federal assistance. When public housing properties are converted under RAD, that deed restriction is removed. As currently authorized, RAD conversions must be cost-neutral, meaning that the Section 8 rents the converted properties may receive must not result in higher subsidies than would have been received under the public housing program. Given this restriction, and without additional subsidy, not all public housing properties can use a conversion to raise private capital, potentially limiting the usefulness of a conversion for some properties. RAD was first authorized by Congress in the FY2012 HUD appropriations law and was originally limited to 60,000 units of public housing (out of roughly 1 million units). However, Congress has since expanded the demonstration. Most recently, in FY2018, Congress raised the cap so that up to 455,000 units of public housing will be permitted to convert to Section 8 under RAD. Given the most recent expansion, nearly half of all public housing units could ultimately convert. While RAD conversions have been popular with PHAs, and HUD's initial evaluations of the program have been favorable, a recent GAO study has raised questions about HUD's oversight of it, as well as how much private funding is actually being raised for public housing through the conversions. Moving to Work Expansion In the FY2016 HUD appropriations law, Congress mandated that HUD expand the Moving to Work (MTW) demonstration by 100 PHAs. MTW is a waiver program that allows a limited number of participating PHAs to get exceptions from HUD for most of the rules and regulations governing the public housing and voucher programs. MTW has been controversial for many years, with PHAs supporting the flexibility the demonstration provides (e.g., allowing PHAs to move funding between programs), and low-income housing advocates criticizing some of the policies being adopted by PHAs (e.g., work requirements and time limits). Most recently, GAO issued a report raising concerns about HUD's oversight of MTW, including the lack of monitoring of the effects of policy changes under MTW on tenants. The FY2016 expansion required that HUD phase in the expansion and that it evaluate any new policies adopted by participating PHAs. Following a series of listening sessions, and at the very end of the Obama Administration, HUD published a notice in the Federal Register in January 2017 soliciting comments on the expansion process for MTW. In May 2017, HUD issued several revisions and reopened the comment period for that notice. In October 2018, HUD published a notice to select the first expansion cohort and a final expansion operations notice for comment, reflecting the comments it had received on the earlier versions. Thus, while actions were taken to expand MTW, no additional agencies were selected for participation in the demonstration before the end of the 115 th Congress. Other Assisted Housing Legislation A number of more narrowly targeted housing assistance bills were approved by committee, considered on the floor, or enacted into law during the 115 th Congress. These include the following: P.L. 115-174 , the Economic Growth, Regulatory Relief, and Consumer Protection Act, signed into law in May 2018, contained two assisted housing provisions: one making changes to the Family Self Sufficiency program that largely mirrors H.R. 4258 , the Family Self Sufficiency Act, which was reported by the House Financial Services Committee in December 2017 and approved by the House in January 2018; and one offering various regulatory streamlining provisions for small PHAs. H.R. 5793 , the Housing Choice Voucher Mobility Demonstration Act of 2018, ordered reported by the House Financial Services Committee in May 2018 and passed by the House in July 2018 (on a vote of 412-5, Roll no. 22) , would have authorize d HUD to conduct a mobility demonstration to test regional administrati on of the Housing Choice Voucher program and its effects on encouraging and supporting moves by voucher hold ers to lower-poverty and higher- opportunity areas. The text of H.R. 5793 was also incorporated as Section 238 of the House Appropriations Committee- reported FY2019 HUD ap propriations bill ( H.R. 6072 ). Neither form of this legislation was enacted before the end of the 115th Congress.H.R. 5735 , the THRIVE Act, ordered reported by the House Financial Services Committee in May 2018 and passed by the House in June 2018 (on a vote of 230-173, Roll no. 266), would have required HUD to undertake a demonstration program, setting aside up to 10,000 existing Housing Choice Vouchers, to test temporary supportive housing approaches for individuals recovering from opioid and other substance use disorders. This legislation was not enacted before the end of the 115 th Congress.H.R. 2069 , the Fostering Stable Housing Opportunities Act of 2017, ordered to be reported by the House Financial Services Committee in July 2018 (on a vote of 34-23), would have created a new federal preference for youth aging out of foster care and at risk of homelessness across most federal housing assistance programs and required that youth accessing assistance via the preference be subject to education, training, or work requirements as set by local program administrators. This legislation was not enacted before the end of the 115 th Congress.H.R. 1511 , the Homeless Children and Youth Act of 2017, ordered to be reported by the House Financial Services Committee in July 2018 (on a vote of 39-18), would have expanded the definition of homelessness governing the HUD homeless programs, while maintaining existing resources for the programs, to include homeless families with children and youth certified as homeless under other federal programs that have less-restrictive definitions. This legislation was not enacted before the end of the 115 th Congress. Native American Housing Programs Background Native Americans living in tribal areas experience a variety of housing challenges. Housing conditions in tribal areas are generally worse than those for the United States as a whole, and factors such as the legal status of trust lands present additional complications. The main federal program that provides housing assistance to Native American tribes and Alaska Native villages is the Native American Housing Block Grant (NAHBG), which was authorized by the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA, P.L. 104-330 ). NAHASDA reorganized the federal system of housing assistance for tribes while recognizing the rights of tribal self-governance and self-determination. The NAHBG provides formula funding to tribes for a range of affordable housing activities that benefit primarily low-income Native Americans or Alaska Natives living in tribal areas. A separate block grant program authorized by NAHASDA, the Native Hawaiian Housing Block Grant (NHHBG), provides funding for affordable housing activities that benefit Native Hawaiians eligible to reside on the Hawaiian Home Lands. Although the NAHBG is the largest source of federal housing assistance to tribes, other federal housing programs also provide tribal housing assistance. One of these is the Tribal HUD-Veterans Affairs Supportive Housing (Tribal HUD-VASH) program, which provides rental assistance and supportive services to Native American veterans who are homeless or at risk of homelessness. Tribal HUD-VASH was initially created and funded through the FY2015 HUD appropriations act ( P.L. 113-235 ), and funds to renew rental assistance were provided in FY2017 and FY2018. No separate authorizing legislation for the program currently exists. Recent Developments The most recent authorization for most NAHASDA programs expired at the end of FY2013, although these programs have generally continued to be funded in annual appropriations laws. (The NHHBG has not been reauthorized since its original authorization expired in FY2005, though it has continued to receive funding in most years. ) Both the 113 th and 114 th Congresses considered NAHASDA reauthorization legislation, though none was enacted. In the 115 th Congress, NAHASDA reauthorization bills were again introduced in both the House and the Senate; these bills were similar, but not identical, to one another. In the House, H.R. 3864 was reported by the Financial Services Committee in March 2018, while in the Senate S. 1895 was referred to the Committee on Indian Affairs. NAHASDA reauthorization legislation was not enacted by the end of the 115 th Congress. As introduced, both the House and the Senate bills would have reauthorized the NAHBG and the NHHBG as well as two home loan guarantee programs that benefit Native Americans and Native Hawaiians, respectively. However, as reported by the House Financial Services Committee, H.R. 3864 did not include reauthorization of the Native Hawaiian programs. Both bills would have also made certain changes to NAHBG program requirements, authorized a demonstration program intended to allow participating tribes to use their NAHBG funds in specified ways to support more private financing for housing activities in tribal areas, and required the HUD Secretary to set aside at least 5% of HUD-VASH funding for the Tribal HUD-VASH program. In response to concerns about certain tribes not spending their NAHBG funds in a timely fashion, both bills also included a provision to reduce funding to tribes with annual allocations of $5 million or more who have large balances of unexpended NAHBG funds. (The vast majority of tribes receive annual allocations below $5 million.) While tribes and Congress are generally supportive of NAHASDA, there has been some disagreement in Congress over specific provisions or policy proposals that have been included in reauthorization bills, such as a provision that would allow tribes to set maximum rents for NAHASDA-assisted housing units that exceed 30% of tenant incomes. There has also been disagreement over the Native Hawaiian housing programs for many years. This disagreement reflects a broader debate about the appropriate relationship of the federal government to Native Hawaiians and whether programs that solely benefit Native Hawaiians could be construed to provide benefits based on race. Supporters of the Native Hawaiian housing programs argue that the funding is necessary due to housing conditions on the Hawaiian Home Lands and the history of the federal government's involvement with Native Hawaiians. Separately from NAHASDA, a stand-alone Senate bill ( S. 1333 ) would have codified the Tribal HUD-VASH program. The Senate passed S. 1333 in May 2018, but the House did not consider the bill. A dditional information: For more on NAHASDA and the NAHBG, see CRS Report R43307, The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA): Background and Funding . Housing and Disaster Response Background During the 115 th Congress, several major disasters struck the United States (including Hurricanes Harvey, Irma, and Maria and significant wildfires in California) that resulted in presidential disaster declarations. These declarations trigger aid that protects property, public health, and safety, primarily provided through the Federal Emergency Management Agency (FEMA). FEMA's housing-related assistance may include, depending on the needs created by the specific disaster, emergency shelter, temporary housing assistance, and assistance with long-term housing recovery. In many cases, Congress will also provide supplemental funding, often through HUD's Community Development Block Grant-Disaster Recovery (CDBG-DR) grant program, to further support long-term recovery efforts following major disasters. Recent Developments CDBG-DR The 115 th Congress provided substantial supplemental appropriations, including $37 billion in total supplemental CDBG-DR funding in FY2017, FY2018, and FY2019 combined, to aid disaster-affected communities with long-term recovery, including the restoration of housing, infrastructure, and economic activity. While CDBG-DR has had a significant role in funding recovery efforts from past disasters, and is slated to play a major role in the recovery from the 2017 hurricanes, the program is not formally authorized, meaning the rules that govern the funding use and oversight vary with HUD guidance accompanying each allocation. Some Members of the 115 th Congress expressed interest in formally authorizing the CDBG-DR program, in part in response to concerns about HUD's oversight of CDBG-DR funding. The House Financial Services Committee's Subcommittee on Oversight and Investigations held a hearing on CDBG-DR oversight and potential for future reforms, including authorization of the program. The House Financial Services Committee later ordered to be reported H.R. 4557 , the Reforming Disaster Recovery Act of 2017. The bill would have authorized the CDBG-DR program and included a number of provisions to codify financial controls over program funds. Disaster Housing Assistance Program Advocates for low-income housing and some Members of Congress have been critical of FEMA's housing response to the 2017 hurricanes, and they have called for HUD to play a larger role, particularly for residents of Puerto Rico displaced as a result of Hurricane Maria. Specifically, they have called for FEMA to enter into an interagency agreement with HUD to provide longer-term temporary rental assistance. This was done after Hurricanes Katrina and Ike in 2005 and 2008, and to a more limited extent after Hurricane Sandy in 2012. The program of assistance to residents resulting from those interagency agreements was referred to as the Disaster Housing Assistance Program (DHAP). DHAP was structured somewhat differently after each of those past disasters (in terms of who was eligible, how long they received rental assistance, how they were transitioned off of assistance, etc.), but it generally featured FEMA-funded rental assistance administered by local PHAs and modeled after Section 8 Housing Choice Vouchers. The structure of a future DHAP would depend on what was negotiated between FEMA and HUD, unless otherwise specified by Congress. Although the governor of Puerto Rico explicitly requested in December 2017 that FEMA initiate a DHAP in response to Hurricane Maria, FEMA denied that request in May of 2018, arguing DHAP was neither necessary nor cost effective. Instead, FEMA has made various forms of temporary housing assistance available for Puerto Ricans displaced to the mainland United States, primarily funding extended hotel and motel stays through the Transitional Sheltering Assistance (TSA) program, which was repeatedly extended, including by court order, but expired in September, 2018. A dditional information: For more information on 2017 disaster supplemental funding, see CRS Report R45084, 2017 Disaster Supplemental Appropriations: Overview . Other Affordable Housing Proposals Background As noted earlier in this report, housing affordability challenges have been increasing, particularly for lower-income families. The share of families with significant cost burdens has been growing and a number of research and media reports have highlighted growing concerns about housing costs outpacing income growth. Recent Developments In response to concerns about housing affordability, several bills were introduced in the 115 th Congress that focused on addressing the issue of housing affordability broadly, but through different approaches. Some proposals were focused on demand-side solutions, in the form of new or increased subsidies for certain renters or homeowners meant to make it easier for those households to afford housing. For example, several bills— S. 3250 / H.R. 6671 , S. 3342 , H.R. 4074 , and H.R. 3670 —would have created a renter credit through changes to the tax code. (Some of these bills included other housing-related provisions as well.) Other proposals were focused on supply-side solutions, such as in the form of additional resources for existing affordable housing programs that focus on the production or preservation of affordable housing units. For example, Representative Waters introduced H.R. 3160 and H.R. 2076 , which would have authorized significant increases in resources for the public housing program and homeless assistance programs, respectively. Another bill, S. 3231 , took a different approach by proposing to authorize a task force to study the effect of a shortage of affordable housing on life outcomes as well as the impact such a shortage has on other federal, state, and local programs, and make recommendations to Congress. The most sweeping affordable housing proposal in the 115 th Congress, and arguably in the last several Congresses, was S. 3503 , the American Housing and Economic Mobility Act of 2018, introduced by Senator Warren. It would have authorized new funding for affordable housing programs and activities at a level greater than HUD's entire budget, with both supply-side and demand-side investments, among other changes. Specifically, the bill included the following: authorizations of $44.5 billion per year for 10 years for affordable housing development through HUD's Housing Trust Fund, $2.5 billion per year for 10 years for Treasury's Capital Magnet Fund, and $2.5 billion for FY2019 for HUD's Native American Housing Block Grant, as well as additional funding for certain USDA rural housing programs; creation of a new $4 billion middle class housing emergency fund; a new authorization of $2 billion per year for five years for local governments that agree to reform local land use polices in support of affordable housing development; the creation of a new down payment assistance grant program for first-time homebuyers in low-income communities that were affected by historical redlining practices; an authorization of $2 billion for new one-time grants for states to assist homeowners with negative equity; modifications and expansions to the Community Reinvestment Act; amendments to the Fair Housing Act to add sexual orientation, gender identity, marital status, and source of income to the categories protected from discrimination, among other changes; and modifications to the Housing Choice Voucher program to promote regional mobility. These changes were to be paid for, at least in part, by changes to the estate tax designed to increase revenue. While none of these bills was the subject of legislative action during the 115 th Congress, they received attention among industry and advocacy groups and the media as part of a larger conversation about how to address housing affordability. HUD Regulatory Reviews During the 115th Congress The Trump Administration took office in January 2017, at the beginning of the 115 th Congress. In February 2017, President Trump issued Executive Order 13777 directing agencies to establish a Regulatory Reform Task Force to evaluate existing agency regulations and identify regulations that should potentially be modified or repealed. In accordance with the order, in May 2017 HUD issued a Federal Register notice requesting public comments "to assist in identifying existing regulations that may be outdated, ineffective, or excessively burdensome." HUD has since suspended, withdrawn, or considered modifying a variety of regulations and policy decisions. Not all of these actions have been directly related to the regulatory review required by Executive Order 13777, though HUD has often described its actions as consistent with that review or noted public comments received as part of that review in explaining its decisions. The regulations and policy decisions that have been withdrawn or suspended or that are under review impact a range of HUD programs and policies. Some of the more high-profile actions that HUD has taken are discussed in the following sections. Small Area Fair Market Rents Background Fair Market Rents (FMRs) are estimated annually by HUD for use in various HUD programs, including for setting subsidy levels in the Section 8 Housing Choice Voucher (HCV) program. FMRs are set at the 40 th percentile gross rent of standard-quality housing in a community. HUD uses Census data and inflation estimates to establish FMRs for the geographies of metropolitan areas and nonmetropolitan counties. It has long been understood that housing markets are often more localized than metropolitan areas or counties, but given data limitations these were the smallest geographies for which HUD would produce regular estimates. With the introduction of the American Community Survey to replace the decennial Census long form, more-frequently updated data became available at smaller geographies. Thus, HUD is now able to calculate FMRs for smaller geographic areas. HUD released its first hypothetical Small Area FMRs (SAFMRs), with FMRs at the zip code level, in FY2011 and has published them annually since. With the release of the SAFMRs, HUD also announced a demonstration to test the use of SAFMRs on the HCV program in selected communities. Recent Developments In June 2016, during the 114 th Congress, HUD published a notice in the Federal Register proposing to require certain PHAs to use SAFMRs in the administration of their HCV programs if they had high levels of vouchers concentrated in high-poverty areas. Some commenters expressed support, citing the opportunity SAFMRs present to promote mobility and accuracy in subsidy determination, among other reasons; other commenters opposed the change, expressing concern about the potential for cost increases in the program resulting in fewer families being served, among other reasons. The rule was finalized in November 2016, at the end of the Obama Administration. Under the final rule, 24 communities would be mandated to use SAFMRs for their HCV programs and any other PHA could choose to use them, beginning on October 1, 2017. Following the transition to the Trump Administration, HUD Secretary Carson announced in the summer of 2017 that he was suspending the mandatory use of SAFMRs for two fiscal years, citing interim findings from the SAFMR demonstration that raised concerns about the availability of units for voucher holders, negative public comments during the rulemaking process, and the need for more guidance and technical assistance for PHAs. In response to the suspension, fair housing advocates sued HUD, and in December 2017 the U.S. District Court for the District of Columbia entered a preliminary injunction voiding the suspension, thus putting the mandatory use of SAFMRs into effect. In light of the injunction, HUD issued a notice for the 24 mandatory communities to begin using SAFMRs "as expeditiously as possible and no later than April 1, 2018." Other PHAs may also voluntarily begin using SAFMRs to administer their HCV programs. Manufactured Housing Background Manufactured housing—housing that is assembled in a factory setting and transported to a home site on a permanent chassis—is required to be built in accordance with HUD's Manufactured Housing Construction and Safety Standards. HUD issues regulations governing the standards, with the input of the Manufactured Housing Consensus Committee. HUD also develops model manufactured home installation standards; states that implement their own manufactured home installation programs must have standards that at least meet the HUD model standards. Recent Developments In January 2018, HUD issued a Federal Register notice stating that, consistent with Executive Order 13777 and the Regulatory Reform Task Force, it was undertaking a broad review of HUD's regulations related to manufactured housing and inviting public comment on regulations that may warrant review. While HUD rules are generally intended to ensure that manufactured housing is high quality and safe, some have argued that certain HUD rules are unnecessary or too inflexible and that they therefore drive up the cost of manufactured housing and reduce access to it as an affordable housing option. Rules or guidance that have attracted particular attention in recent years include a final rule related to on-site completions of manufactured homes, a memorandum related to the construction of certain add-on features (such as attached garages) at the home site and the applicability of HUD alternative construction procedures in those circumstances, and an interpretative bulletin related to foundation requirements in areas subject to ground freezing. HUD specifically requested comments on these and other selected topics, in addition to requesting comments generally on any of its manufactured housing regulations. The House-passed FY2018 consolidated appropriations bill that included HUD appropriations would have prohibited funds provided in that bill from being used for the three HUD directives mentioned above. While that provision was not included in the enacted FY2018 appropriations law, the explanatory statement directed HUD to review those specific directives, develop a solution that balances consumer safety with costs and burdens placed on both manufacturers and consumers, and report on whether state and local agencies should have jurisdiction over on-site completion of manufactured homes. Affirmatively Furthering Fair Housing Background The Fair Housing Act requires HUD to administer its programs in a way that affirmatively furthers fair housing, and statutes or regulations governing specific HUD programs also require that funding recipients affirmatively further fair housing (AFFH). For many years, public housing authorities and state and local governments that receive HUD block grant funds satisfied their obligation to affirmatively further fair housing by certifying to HUD that they conducted an Analysis of Impediments (AI) to fair housing and were taking appropriate actions to overcome impediments. However, both HUD and GAO had identified certain weaknesses in the AI process. In July 2015, during the 114 th Congress, HUD published a final rule (AFFH rule) that more specifically defines what it means to affirmatively further fair housing and requires that program participants submit a new Assessment of Fair Housing (AFH) to HUD rather than an AI. The rule also provides that HUD will supply data for program participants to use in preparing their AFHs and will publish tools that help them through the process. Recent Developments On January 5, 2018, HUD issued a notice stating that it would extend the deadline for local governments receiving more than $500,000 in CDBG funding to submit their AFHs until after October 31, 2020.  Under the AFFH rule, these local governments had begun submitting AFHs starting in 2016. In extending the deadline, HUD stated that, based on reviews of AFHs that had been submitted so far, it believed that program participants needed more time and technical assistance to produce acceptable AFHs. On May 23, 2018, HUD issued three more notices that effectively suspend indefinitely the implementation of the AFFH rule and return to the previous AI process. The three notices (1) withdrew the January 2018 notice that delayed implementation of the AFFH rule for local governments, (2) withdrew the final assessment tool that had been released to assist local governments in preparing their AFHs, and (3) directed program participants that have not already submitted an AFH under the AFFH rule to comply with the previous AI requirements. Withdrawing the local government assessment tool delays the AFH submission dates for local governments because the AFFH rule provides for at least nine months between publication of the final assessment tool and the AFH due date. HUD states that it withdrew the assessment tool because it had identified "significant deficiencies" that made the tool "unduly burdensome" for program participants to use, and that it does not have the personnel to provide technical assistance that the jurisdictions would need. The notice provides that HUD will produce a "more effective and less burdensome" tool in the future and that it will accept public input on improving the tool. In the 115 th Congress, the Restoring Fair Housing Protections Eliminated by HUD Act of 2018 ( H.R. 6220 ) would have required HUD to reinstate the assessment tool for local governments and require them to submit AFHs. The bill was referred to committee but no further action was taken during the 115 th Congress. Most recently, on August 13, 2018, HUD announced an Advance Notice of Proposed Rulemaking (ANPR) stating that it "has determined that a new approach towards AFFH is required" and requesting public comments on potential changes to the AFFH regulations. The ANPR states that "HUD is committed to its mission of achieving fair housing opportunity for all," but that it believes that the current rule "is not fulfilling its purpose to be an efficient means for guiding meaningful action by program participants." A dditional information: For more on HUD and fair housing, including HUD's obligation to affirmatively further fair housing, see CRS Report R44557, The Fair Housing Act: HUD Oversight, Programs, and Activities . Disparate Impact Standard under the Fair Housing Act Background137 The Fair Housing Act (FHA) was enacted "to provide, within constitutional limitations, for fair housing throughout the United States." It prohibits discrimination on the basis of race, color, religion, national origin, sex, physical and mental handicap, and familial status. Subject to certain exemptions, the FHA applies to all sorts of private and public housing, including single family homes, apartments, condominiums, and manufactured homes. It also applies to "residential real estate-related transactions," which include both the "making [and] purchasing of loans … secured by residential real estate [and] the selling, brokering, or appraising of residential real property." In June 2015, the Supreme Court, in Texas Department of Housing Community Affairs v. Inclusive Communities Project , confirmed the long-held interpretation that, in addition to outlawing intentional discrimination, the FHA prohibits certain housing-related decisions that have a disparate impact on a protected class. Historically, courts have generally recognized two types of disparate impacts resulting from "facially neutral decision[s]" that can result in liability under the FHA. First, courts have recognized disparate impact when a "decision has a greater adverse impact on one [protected] group than on another." Second, courts consider the "effect which the decision has on the community involved; if it perpetuates segregation and thereby prevents interracial association it will be considered invidious under the Fair Housing Act independently of the extent to which it produces a disparate effect on different racial groups." The Supreme Court's holding in Inclusive Communities that "disparate-impact claims are cognizable under the [FHA]" mirrors previous interpretations of HUD and all 11 federal courts of appeals that had ruled on the issue as of June 2015. However, HUD and these courts had not all applied the same criteria for determining when a neutral policy that causes a disparate impact violates the FHA. In a stated attempt to harmonize disparate impact analysis across the country, HUD finalized regulations in 2013 that established uniform standards for determining when such practices violate the act. The Inclusive Communities Court did not expressly adopt the standards established in HUD's disparate impact regulations, but instead embraced a similar, but not identical, three-step burden-shifting test for assessing disparate impact liability under the FHA. At step one, the plaintiff has the burden of establishing evidence that a housing decision or policy caused a disparate impact on a protected class. At step two, defendants can counter the plaintiff's prima facie showing by establishing that the challenged policy or decision is "necessary to achieve a valid interest." The defendant will not be liable for the disparate impact resulting from a "valid interest" unless, at step three, the plaintiff proves "that there is an available alternative … practice that has less disparate impact and serves the entity's legitimate needs." In addition, the Supreme Court outlined a number of limiting factors that lower courts and HUD should apply when assessing disparate impact claims. The Court stressed that lower courts and HUD should rigorously evaluate plaintiffs' claims to ensure that evidence has been provided to support not only a statistical disparity, but also causality. Additionally, the Court emphasized that claims should be disposed of swiftly in the preliminary stages of litigation if plaintiffs have failed to establish a prima facie case of disparate impact. Recent Developments On June 20, 2018, HUD published an Advance Notice of Proposed Rulemaking in the Federal Register seeking public comment on whether the 2013 disparate impact regulations should be amended in light of the Inclusive Communities decision. The Advance Notice of Proposed Rulemaking noted that the request for comments was "consistent with HUD's efforts to carry out the Administration's regulatory reform efforts" and that HUD had received "numerous" comments related to this rule in response to its May 2017 Federal Register notice seeking comment on its regulatory reform agenda. With the June 2018 Advance Notice of Proposed Rulemaking, HUD specifically sought public feedback on, among other issues, whether the regulations "strike the proper balance in encouraging legal action for legitimate disparate impact cases while avoiding unmeritorious claims"; sufficiently detail the causality requirements for establishing a prima facie disparate impact case; should establish safe harbors from or defenses to disparate impact claims; and could be amended to "add [] clarity, reduce uncertainty, decrease regulatory burden, or otherwise assist the regulated entities and other members of the public in determining what is lawful." The public comment period closed on August 20, 2018.

A variety of housing-related issues were active during the 115th Congress. These issues included topics related to housing finance, tax provisions related to housing, housing assistance and grant programs administered by the Department of Housing and Urban Development (HUD), and regulatory review efforts underway at HUD. In some cases, the 115th Congress considered or passed legislation related to certain housing issues, such as mortgage-related provisions enacted as part of broader financial "regulatory relief" legislation and particular housing-related tax provisions. In other cases, Congress conducted oversight or otherwise expressed interest in actions taken by HUD or other entities involved in housing, such as Fannie Mae and Freddie Mac. Many of the housing-related topics that were of interest during the 115th Congress are ongoing issues, though some involved particular actions that took place during the 115th Congress. Issues of interest during the Congress included the following: Housing finance issues included changes to certain mortgage-related requirements and other housing provisions included in broader financial legislation that became law in May 2018. Congress also expressed ongoing interest in certain issues related to the Federal Housing Administration (FHA): (1) a forthcoming final rule on FHA's requirements for insuring mortgages on condominiums and (2) the level of the mortgage insurance premiums charged by FHA. Comprehensive housing finance reform that would address the status of Fannie Mae and Freddie Mac is also an ongoing topic of interest, although the 115th Congress did not actively consider comprehensive housing finance reform legislation. Tax issues included changes to housing-related tax provisions in the tax revision law enacted at the end of 2017 (P.L. 115-97); extensions of other, temporary housing-related tax provisions through 2017 by the Bipartisan Budget Act of 2018 (P.L. 115-123); and changes to the low-income housing tax credit in the Consolidated Appropriations Act, 2018 (P.L. 115-141). Housing assistance issues included considerations related to HUD appropriations, ongoing initiatives or proposed changes to HUD rental assistance programs, committee consideration of legislation to reauthorize the Native American Housing Assistance and Self-Determination Act (NAHASDA), issues related to the housing response to presidentially declared major disasters, and a variety of introduced bills that were meant to address housing affordability issues in various ways. HUD began a variety of regulatory review efforts in keeping with Executive Order 13777, which directed federal agencies to evaluate existing regulations and identify opportunities for reform. Specific HUD actions included suspending a rule related to small-area fair market rents (the suspension has since been voided by a preliminary court injunction); initiating a broad review of manufactured housing regulations; suspending certain regulations governing how HUD funding recipients must comply with the requirement to affirmatively further fair housing; and publishing an Advanced Notice of Proposed Rulemaking seeking public comment on whether its regulations related to disparate impact and the Fair Housing Act should be amended. Housing and mortgage market conditions provide important context for these issues, although housing markets are generally local in nature and national housing market indicators do not necessarily accurately reflect conditions in specific communities. Generally speaking, owner-occupied housing markets in recent years have been characterized by rising house prices, relatively low levels of housing starts and housing inventory, and relatively strong home sales. Rising house prices combined with rising mortgage interest rates have raised concerns about the affordability of buying a home, although interest rates remain low by historical standards. Rental housing markets have also raised affordability concerns. Nearly 21 million renter households are considered to be cost burdened, meaning they spend more than 30% of their incomes on rent. The share of households who rent, rather than own, their homes has increased in the years since the housing market turmoil that began around 2007, contributing to lower rental vacancy rates and increasing rents. Increases in household income in recent years have generally not kept pace with increases in house prices or rents, contributing to affordability concerns.

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Introduction Banks play a central role in the financial system by connecting borrowers to savers and allocating available funds across the economy. As a result, banking is vital to the U.S. economy's health and growth. Nevertheless, banking is an inherently risky activity involving extending credit and undertaking liabilities. Therefore, banking can generate tremendous societal and economic benefits, but banking panics and failures can create devastating losses. Over time, a regulatory system designed to foster the benefits of banking while limiting risks has developed, and both banks and regulatio n have coevolved as market conditions have changed and different risks have emerged. For these reasons, Congress often considers policies related to the banking industry. The last decade has been a transformative period for banking. The 2007-2009 financial crisis threatened the total collapse of the financial system and the real economy. Many assert only huge and unprecedented government interventions staved off this collapse. Others argue that government interventions were unnecessary or potentially exacerbated the crisis. In addition, many argue the crisis revealed that the financial system was excessively risky and the regulatory regime governing the financial system had serious weaknesses. Policymakers responded to the perceived weaknesses in the pre-crisis financial regulatory regime by implementing numerous changes to financial regulation, including to bank regulation. Most notably, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203 ) in 2010 with the intention of strengthening regulation and addressing risks. In addition, U.S. bank regulators have implemented changes under their existing authorities, many of which generally adhere to the Basel III Accords—an international framework for bank regulation agreed to by U.S. and international bank regulators—that called for making certain bank regulations more stringent. In the ensuing years, some observers raised concerns that the potential benefits of those regulatory changes (e.g., better-managed risks, increased consumer protection, greater systemic stability, potentially higher economic growth over the long term) were outweighed by the potential costs (e.g., compliance costs incurred by banks, reduced credit availability for consumers and businesses, potentially slower economic growth). In response to these concerns, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCP Act; P.L. 115-174 ). Among other things, the law modified certain (1) regulations facing small banks; (2) regulations facing banks large enough to be subjected to Dodd-Frank enhanced regulation but still below the size thresholds exceeded by the very largest banks; and (3) mortgage regulations facing lenders including banks. In addition, federal banking regulatory agencies—the Federal Reserve (the Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC)—have proposed further changes in regulation. Implementing the regulatory changes prescribed in the aftermath of the crisis and made pursuant to the Dodd-Frank Act occurred over the course of years. In recent years—a period in which the leadership of the regulators has transferred from Obama Administration to Trump Administration appointees—the banking regulators have expressed the belief that, after having viewed the effects of the regulations, they now have the necessary information to determine which regulations may be ineffective or inefficient as currently implemented. Recently, these regulators have made of number of proposals with the aim of reducing regulatory burden. A key issue surrounding regulatory relief made pursuant to the EGRRCP Act and regulator-initiated changes is whether regulatory burden can be reduced without undermining the goals and effectiveness of the regulations. Meanwhile, market trends and economic conditions continue to affect the banking industry coincident with the implementation of new regulation. Some of the more notable conditions include the development of new technologies used in financial services (known as "fintech") and a rising interest rate environment following an extraordinarily long period of very low rates. This report provides a broad overview of selected banking-related issues, including issues related to "safety and soundness" regulation, consumer protection, community banks, large banks, what type of companies should be able to establish banks, and recent market and economic trends. This report is not an exhaustive look at all bank policy issues, nor is it a detailed examination of any one issue. Rather, it provides concise background and analyses of certain prominent issues that have been the subject of recent discussion and debate. In addition, this report provides a list of Congressional Research Service reports that examine specific issues. "Safety and Soundness" Banks face a number of regulations intended to increase the likelihood that banks are profitable without being excessively risky and prone to failures; decrease the likelihood that bank services are used to conceal the proceeds of criminal activities; and to protect banks and their customers' data from cyberattacks. This section provides background on these "safety and soundness" regulations and analyzes selected issues related to them, including prudential regulation related to capital requirements and the Volcker Rule (which restricts proprietary trading); requirements facing banks related to anti-money laundering laws, such as the Bank Secrecy Act (P.L. 91-508); and challenges related to cybersecurity. Background Bank failures can inflict large losses on stakeholders, including taxpayers via government "safety nets" such as deposit insurance and Federal Reserve lending facilities. Failures can cause systemic stress and sharp contraction in economic activity if they are large or widespread. To make such failures less likely—and to reduce losses when they do occur—regulators use prudential regulation designed to ensure banks are safely profitable and to reduce the likelihood of bank failure. In addition, banks are subject to regulations intended to reduce the prevalence of crime. Some of those are anti-money laundering measures aimed at stopping criminals from using the banking system to conduct or hide illegal operations. Others are cybersecurity regulations aimed at protecting banks and their customers from becoming victims of cybercrime, such as denial-of-service attacks or data theft. Prudential Regulation9 Banks profit in part because their assets are generally riskier, longer term, and more illiquid than their liabilities, which allows the banks to earn more interest on their assets than they pay on their liabilities. The practice is usually profitable, but does expose banks to risks that can potentially lead to failure. Failures can be reduced if (1) banks are better able to absorb losses or (2) they are less likely to experience unsustainably large losses. One tool regulators use to increase a bank's ability to absorb losses is to require banks to hold a minimum level of capital. Another tool regulators use to reduce the likelihood and size of potential losses is to prohibit banks from engaging in activities that could create excessive risks. For example, the Volcker Rule prohibits banks from engaging in proprietary trading —the buying and selling of securities that the bank itself owns with the aim of profiting from price changes. The EGRRCP Act mandated certain changes to these prudential regulations, and regulators have proposed changes under existing authorities. Regulators are to promulgate these changes through the rulemaking process in the coming months and years. In addition, whether policymakers have calibrated these regulations such that their benefits and costs are appropriately balanced is likely to be an area of ongoing debate. For these reasons, prudential regulation issues will likely continue to draw congressional attention. Capital Requirements A bank's balance sheet is composed of assets, liabilities, and capital. Assets are largely the value of loans owed to the bank and securities owned by the bank. To make loans and buy securities, a bank secures funding by either issuing liabilities or raising capital. A bank's liabilities are largely the value of deposits and borrowings the bank owes savers and creditors. Capital is raised through various methods, including issuing equity to shareholders or special types of bonds that can be converted into equity. Banking is an inherently risky activity, because banks may suffer losses on assets but face rigid obligations on the liabilities owed to depositors and creditors. In contrast to liabilities, capital generally does not obligate the bank to repay or distribute a specified amount of money at a specified time. This characteristic means that, in the event a bank suffers losses, capital gives the bank the ability to absorb some amount of losses while meeting its obligations. Thus, banks can avoid failures if they hold sufficient capital. Banks are required to satisfy several requirements to ensure they hold enough capital. In the United States, these requirements are generally aligned with the Basel III standards developed as part of a nonbinding agreement between international bank regulators. In general, these are expressed as minimum ratios between certain balance sheet items that banks must maintain. A detailed examination of how these ratios are calculated and what levels must be met is beyond the scope of this report. This examination of policy issues only requires noting that capital ratios fall into one of two main types—a leverage ratio or a risk-weighted ratio. A leverage ratio treats all assets the same, requiring banks to hold the same amount of capital against assets regardless of how risky each asset is. A risk-weighted ratio assigns a risk weight—a percentage based on the riskiness of the asset that the asset value is multiplied by—to account for the fact that some assets are more likely to lose value than others. Riskier assets receive a higher risk weight, which requires banks to hold more capital to meet the ratio requirement. Whether the benefits of capital requirements (e.g., increased bank and financial system stability) are generally outweighed by the potential costs (e.g., reduced credit availability) is an issue subject to debate. Capital is typically a more expensive source of funding for banks than liabilities. Thus, requiring banks to hold higher levels of capital may make funding more expensive, and so banks may choose to reduce the amount of credit available. Some studies indicate this could slow economic growth. However, no economic consensus exists on this issue, because a more stable banking system with fewer crises and failures may lead to higher long-run economic growth. In addition, estimating the value of regulatory costs and benefits is subject to considerable uncertainty, due to difficulties and assumptions involved in complex economic modeling and estimation. Lack of consensus also surrounds questions over whether or under what circumstances risk-weighted ratios are necessary, effective, and efficient. Proponents of risk-based measures assert that it is important to use both risk-weighted and leverage ratios because each addresses weaknesses of the other. For example, riskier assets generally offer a greater rate of return to compensate the investor for bearing more risk. Without risk weighting, banks would have an incentive to hold riskier assets because the same amount of capital must be held against risky and safe assets. However, the use of risk-weighted ratios could be problematic for a number of reasons. Risk weights assigned to particular classes of assets could potentially be an inaccurate estimation of some assets' true risk, which could incent banks to misallocate available resources across asset classes. For example, banks held a high level of seemingly low-risk, mortgage-backed securities (MBSs) before the crisis, in part because those assets offered a higher rate of return than other assets with the same risk weight. MBSs then suffered unexpectedly large losses during the crisis. Another criticism is that the risk-weighted requirements involve "needless complexity" and their use is an example of regulatory micromanagement. The complexity could benefit the largest banks that have the resources to absorb the added regulatory cost compared with small banks that could find compliance costs more burdensome. (Small or "community" bank compliance issues will be covered in more detail in the " Regulatory Burden on Community Banks " section later in the report.) Section 201 of the EGRRCP Act is aimed at addressing concerns over the complexity of risk-weighted ratios and the costs they impose on community banks. This provision created an option for banks with less than $10 billion in assets to meet a higher leverage ratio—the Community Bank Leverage Ratio (CBLR)—in order to be exempt from having to meet the risk-based ratios described above. Bank regulators have issued a proposal to implement this provision wherein banks (1) below the threshold that (2) meet at least a 9% leverage ratio measure of equity and certain retained earnings to assets and (3) had limited off-balance sheet exposures and limited securities trading activity (among other requirements) would qualify for the exemption. The FDIC estimates that more than 80% of community banks will be eligible for the CBLR. However, this new optional exemption does not entirely settle the issue. One bank industry group has argued that 9% is set higher than is necessary, excluding deserving banks from the exemption. In addition, bills in the 115 th Congress, notably H.R. 10 , proposed a high-leverage-ratio option be available to banks regardless of size that would exempt qualifying banks from a wider range of prudential regulations. There are also specific policy issues relating to capital requirements for large banks, which are discussed in the " Regulator Proposals Related to Large Bank Capital Requirements " section below. Volcker Rule Section 619 of Dodd-Frank—often referred to as the Volcker Rule—generally prohibits depository banks from engaging in proprietary trading or sponsoring a hedge fund or private equity fund. Proprietary trading refers to owning and trading securities for a bank's own portfolio with the aim of profiting from price changes. Put simply, if a bank is engaged in proprietary trading, it is itself an investor in stocks, bonds, and derivatives, which is commonly characterized as "playing the market" or "speculating." The rule includes exceptions for when bank trading is deemed appropriate—such as (1) when a bank is hedging against risks the bank has assumed as a part of its traditional business and (2) market-making (i.e., buying available securities with the intention of quickly selling them to meet market demand). Proprietary trading is an inherently risky activity, and banks have faced varying degrees of restrictions over engaging in this activity for a number of decades. Sections 16, 20, 21, and 32 of the Banking Act of 1933 (P.L. 73-66)—commonly referred to as the Glass-Steagall Act—generally prohibited certain deposit-taking banks from engaging in certain securities markets activities. Over time, regulator interpretation of Glass-Steagall and legislative changes expanded permissible activities for certain banks, allowing them to make certain securities investments and authorizing bank-holding companies to own depositories and securities firms within the same organization. The financial crisis increased debate over whether banks were engaging in unnecessarily risky activities. Ultimately, certain provisions in Dodd-Frank placed restrictions on permissible activities to reduce banks' riskiness, and the Volcker Rule was designed to prohibit proprietary trading by depository banking organizations. One of the Volcker Rule's proponents' main rationales for the separation of deposit-taking and certain securities investments is that when banks analyze and assume risks, they may be subject to moral hazard —the willingness to take on excessive risk due to some outside protection from losses. Deposits are an important source of bank funding and insured (up to a limit on each account) by the government. This arguably reduces depositors' incentive to monitor their banks' riskiness. Thus, a bank could potentially take on excessive risk without concern about losing this funding because, in the event of large losses that lead to failure, at least part of the losses will be borne by the FDIC's Deposit Insurance Fund (which is backed by the full faith and credit of the U.S. government and so ultimately the taxpayer). Thus, supporters of the Volcker Rule have characterized it as preventing banks from "gambling" in securities markets with taxpayer-backed deposits. However, critics of the Volcker Rule doubt its necessity and efficiency. In regard to necessity, they assert that proprietary trading at commercial banks did not play a substantive role in the financial crisis. They note the rule would not have prevented a number of the major events that played a direct role in the crisis—including failures or bailouts of large investment banks and insurers and losses on loans held by commercial banks. On this point, they also argue that proprietary trading risks are no greater than those posed by "traditional" banking activities, such as mortgage lending, and allowing banks to take on risks in different markets might diversify their risk profiles, making them less likely to fail. Debates relating to the efficiency of the Volcker Rule involve its complexity, compliance burden, and potential to lead banks to reduce their engagement in beneficial market activities. Recall that the Volcker Rule is not a ban on all trading, as banks are still allowed to trade to hedge risks or make markets. This poses practical supervisory problems. For example, how can regulators determine whether a broker-dealer is holding a security for market-making, as a hedge against another risk, or as a speculative investment? Differentiating among these motives creates the aforementioned complexity and compliance costs that could affect banks' trading behavior, and so could reduce financial market efficiency. Another criticism of the Volcker Rule in its original form was that it unnecessarily subjected all banks to the rule and their associated compliance costs. Critics of this aspect asserted that the vast majority of community banks are not involved in complex trading activity, but nevertheless must incur costs in evaluating the rule to ensure they are in compliance. Both Congress and regulators have recently taken actions in response to concerns over the complexity of the Volcker Rule and its compliance burden for small banks. Section 203 of the EGRRCP Act exempted banks with less than $10 billion in assets that fell below certain trading activity limits from the rule. Independent of that mandate, the agencies that implemented and enforced the Volcker Rule released and called for public comment on a proposal to simplify the rule in May 2018. Under the proposal, the agencies would clarify certain of the rule's definitions and criteria in an effort to reduce or eliminate uncertainties related to how certain trading activity can qualify for exemption. The proposal would also further tailor the compliance requirements facing banks based on the size of an institution's trading activity. Proponents of the Volcker Rule are generally wary of size-based exemptions. They contend that community banks typically do not face compliance obligations under the rule and do not face an excessive burden by being subject to it. They argue that community banks that are subject to compliance requirements can comply by having clear policies and procedures in place for review during the normal examination process. In addition, Volcker Rule supporters are generally critical of the regulators' proposal, asserting that the changes would undermine "the effective supervision and enforcement" of the rule. Anti-Money Laundering Regulation40 Anti-money laundering (AML) regulation refers to efforts to prevent criminal exploitation of financial systems to conceal the location, ownership, source, nature, or control of illicit proceeds. The U.S. Department of the Treasury estimates domestic financial crime, excluding tax evasion, generates $300 billion in illicit proceeds that might involve money laundering. Despite robust AML efforts in the United States, the ability to counter money laundering effectively remains challenged by factors including (1) the diversity of illicit methods to move and store ill-gotten proceeds through the international financial system; (2) the introduction of new and emerging threats such as cyber-related financial crimes; (3) gaps in legal, regulatory, and enforcement regimes; and (4) the costs associated with financial institution compliance with global AML guidance and national laws. In the United States, the statutory foundation for domestic AML originated in 1970 with the Bank Secrecy Act (BSA; P.L. 91-508) and its major component, the Currency and Foreign Transaction Reporting Act. Amendments to the BSA and related provisions in the 1980s and 1990s expanded AML policy tools available to combat crime, particularly drug trafficking, and prevent criminals from laundering their illicitly derived profits. Key elements to the BSA/AML legal framework include requirements for customer identification, recordkeeping, reporting, and compliance programs intended to identify and prevent money laundering abuses. In general, banking regulators examine institutions for compliance with BSA/AML. When a regulator finds BSA violations or deficiencies in AML compliance programs, it may take informal or formal enforcement action, including possible civil fines. The BSA/AML policy framework is premised on banks and other covered financial entities filing a range of reports with the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), when their clients either engage in suspicious financial transactions, large cash transactions, or certain other transactions. For example, a bank generally must file a Suspicious Activity Report (SAR) if, among other reasons, it conducts a transaction of $5,000 or more that the bank suspects involves money laundering or other criminal activity. A bank must file a Currency Transaction Report (CTR) if it conducts a currency (i.e., cash) transaction of $10,000 or more as to which it has the same suspicions. The accurate, timely, and complete reporting of such activity to FinCEN flags situations that may warrant further investigation for law enforcement. Whether this regulatory framework adequately hinders criminals from using the banking system to launder their criminal proceeds and whether it does so efficiently without unduly burdening banks are debated issues. One aspect of this debate is whether current reporting requirements are inefficient and overly costly to the banking industry. Some industry observers—including officials from the OCC—have indicated that they believe certain areas of the current framework could be reformed in a way that reduces compliance costs without unduly weakening the ability to prevent money laundering. In contrast, officials from other agencies involved in AML and law enforcement—including FinCEN and the FBI—have stressed the importance of the information gathered under the current reporting requirements in combating money laundering. Another area of concern involves beneficial owners —that is, the natural person(s) who own or control a legal entity, such as a corporation or limited liability company. When such entities are set up without physical operations or assets, they are often referred to as shell companies . Shell companies can be used to conceal beneficial ownership and facilitate anonymous financial transactions. In recent years, policymakers have become increasingly concerned regarding potential risks posed by shell companies whose beneficial ownership is not transparent. This is due in part to a series of leaks to the media regarding the use of shell companies to facilitate criminal activity (such as "the Panama Papers") and sustained multilateral criticism of current U.S. practices by the Financial Action Task Force, an international standard-setting body. In May 2018, a new FinCEN regulation came into effect that increased the requirements for banks to conduct customer due diligence (CDD) and ascertain the identity of beneficial owners in certain cases. Central to the CDD rule is a requirement for financial institutions to establish and maintain procedures to identify and verify beneficial owners of a legal entity opening a new account. If Congress decides that reporting requirements facing banks are not appropriately calibrated, it could pass legislation amending those requirements. For example, Congress could change the CTR or SAR reporting threshold or index the threshold levels to inflation. Certain bills introduced in the 115 th Congress would have increased financial transparency and reporting requirements for beneficial owners in other nonbank fields, such as real estate, but could potentially indirectly impact the banking industry as well. Cybersecurity50 Cybersecurity is a major concern of banks, other financial services providers, and federal regulators. In many ways, it is an important extension of physical security. For example, banks are concerned about both physical and electronic theft of money and other assets, and they do not want their businesses shut down by weather events or electronic denial-of-service attacks. Maintaining the confidentiality, security, and integrity of physical records and electronic data held by banks is critical to sustaining the level of trust that allows businesses and consumers to rely on the banking industry to supply services on which they depend. The federal government has increasingly recognized the importance of cybersecurity in the financial services industry, as evidenced by the inclusion of financial services in the government's list of critical infrastructure sectors. The basic authority that federal regulators use to establish cybersecurity standards emanates from the organic legislation that established the agencies and delineated the scope of their authority and functions. As previously discussed, federal banking regulators are required to promulgate safety and soundness standards for all federally insured depository institutions to protect the stability of the nation's banking system. Some of these standards pertain to cybersecurity issues, including information security, data breaches, and destruction or theft of business records. In addition, certain laws (at both the state and federal levels) have provisions related to cybersecurity of financial services that are often performed by banks, including the Dodd-Frank Act, the Gramm-Leach-Bliley Act of 1999 (GLBA; P.L. 106-102 ), and the Sarbanes-Oxley Act of 2002 ( P.L. 107-204 ). For example, Section 501 of GLBA imposes obligations on financial institutions to "respect the privacy of ... [their] customers and to protect the security and confidentiality of those customers' nonpublic personal information." Federal banking regulators require the entities that they regulate to protect customer privacy of physical and electronic records as mandated by the privacy title of GLBA. Federal bank regulators also issue guidance in a variety of forms designed to help banks evaluate their risks and comply with cybersecurity regulations. Regulators bring adjudicatory enforcement actions on a case-by-case basis related to banks' violations of cybersecurity protocols. Banks often view these actions as signaling how an agency interprets aspects of its regulatory authority. For example, a number of recent consent orders issued by the FDIC have directed banks to perform assessments or audits of information technology programs and management to identify risks and ensure compliance with cybersecurity requirements. Thus, oversight of financial services and bank cybersecurity reflects a complex and sometimes overlapping array of state and federal laws, regulators, regulations, and guidance. However, whether this framework is effective and efficient, resulting in adequate protection against cyberattacks without imposing undue cost burdens on banks, is an open question. The occurrence of successful hacks of banks and other financial institutions, wherein huge amounts of individuals' personal information are stolen or compromised, highlights the importance of ensuring bank cybersecurity. For example, in 2014, JPMorgan Chase, the largest U.S. bank, experienced a data breach that exposed financial records of 76 million households. However, no consensus exists on how best to reduce the occurrence of such incidents. Consumer Protection, Fair Lending, and Banking Access Financial products can be complex and potentially difficult for consumers to fully understand. Consumers seeking loans or financial services could be vulnerable to deceptive or unfair practices. To reduce the occurrence of bad outcomes, laws and regulations have been put in place to protect consumers. This section provides background on consumer financial protection and the Bureau of Consumer Financial Protection's (CFPB) authority. The section also analyzes related issues, including whether the CFPB has used its authorities and regulations of banking institutions appropriately; concerns relating to the lack of consumer access to banking services; and whether the Community Reinvestment Act as currently implemented is effectively and efficiently meeting its goal of ensuring banks provide credit to the areas in which they operate. Background Banks are subject to consumer compliance regulation, intended to ensure that banks are in compliance with relevant consumer-protection and fair-lending laws. Federal laws and regulations in this area take a variety of approaches and address different areas of concern. Certain laws provide disclosure requirements intended to ensure consumers adequately understand the costs and other features and terms of financial products. Other laws prohibit unfair, deceptive, or abusive acts and practices. Fair lending laws prohibit discrimination in credit transactions based upon certain borrower characteristics, including sex, race, religion, or age, among others. The financial crisis raised concerns among policymakers that regulators' mandates lacked sufficient focus on consumer protection. In response, the Dodd-Frank Act established the CFPB with the single mandate to implement and enforce federal consumer financial law, while ensuring consumers can access financial products and services. The CFPB also seeks to ensure the markets for consumer financial services and products are fair, transparent, and competitive. For banks with more than $10 billion in assets, the CFPB is the primary regulator for consumer compliance, whereas safety and soundness regulation continues to be performed by the prudential regulator. As a regulator of larger banks, the CFPB has rulemaking, supervisory, and enforcement authorities. A large bank, therefore, has different regulators for consumer protection and safety and soundness. For banks with $10 billion or less in assets, the rulemaking, supervisory, and enforcement authorities for consumer protection are divided between the CFPB and a prudential regulator. The CFPB may issue rules that apply to smaller banks, but the prudential regulators maintain primary supervisory and enforcement authority for consumer protection. The CFPB has limited supervisory and enforcement powers over small banks. Consumer Protection, Fair Lending, and CFPB Regulation64 Consumer protection and fair lending compliance continue to be important issues for banks for numerous reasons. Noncompliance can result in regulators taking enforcement actions that may involve substantial penalties. In addition, even in the absence of enforcement actions, an institution faces reputational risks if it comes to be perceived as dealing badly with customers. For example, the CFPB maintains a consumer complaints database that makes public consumer complaints against individual companies readily available, potentially affecting prospective customers' decisions on which companies to use for financial services. The recent public reaction to and enforcement actions pertaining to Wells Fargo's unauthorized opening of customer accounts show the importance of strong consumer protection compliance. Recently, banks and other nonbank financial institutions that provide financial products to consumers (e.g., mortgages, credit cards, and deposit accounts) have been affected by the implementation of new CFPB regulations. For example, banks and other lenders have begun to comply with major new mortgage rules such as the Ability-to-Repay and Qualified Mortgage Standards Rule (ATR/QM) and Truth in Lending Act/Real Estate Settlement Act Integrated Disclosure Rule (TRID). The ATR/QM encourages lenders to gather more information on prospective borrowers than they otherwise might have in order to reduce the likelihood that a borrower would receive an inappropriate loan. TRID requires lenders to provide borrowers with certain information about the mortgages for which they are applying. In addition to these and other new regulations, the CFPB also provides information on its supervisory activities related to banks, such as instances where its examiners found that certain financial institutions misrepresented service fees associated with deposit and checking accounts. Compliance with these new rules has increased banks' operational costs, which some argue potentially leads to higher costs for consumers in certain markets or a reduction in the availability of credit. Others stress that CFPB's regulatory, supervisory, and enforcement efforts reduce the likelihood of consumer harm in financial markets. Debates about how best to achieve the appropriate balance between consumer protection, credit access, and industry costs are unlikely to be resolved easily, and thus may continue to be an area of congressional interest. Access to Banking71 The banking sector provides valuable financial services for households that allow them to save, make payments, and access credit. Safe and affordable financial services allow households to avoid financial hardship, build assets, and achieve financial security. 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. According to the FDIC's National Survey of Unbanked and Underbanked Households, in 2017, 6.5% of households in the United States were unbanked (i.e., did not have an account at an insured institution) and 18.7% of households were underbanked (i.e., obtained financial products and services outside of the banking system in the past year). Lack of bank access leads some households to rely on alternative financial service providers and consumer credit products outside of the formal banking sector, such as payday or auto title loans. According to an FDIC estimate, 12.9% of households had unmet demand for mainstream small-dollar credit. Certain observers believe that financial outcomes for the unbanked and underbanked would be improved if banks—which may be more likely to be a stable source of relatively inexpensive financial services relative to certain alternatives—were more active in meeting this demand. For this reason, prudential regulators, like the OCC and the FDIC, are currently exploring ways to encourage banks to offer small-dollar credit products to consumers, and other policymakers and observers will likely continue to explore ways to make banking more accessible to a greater portion of the population. Community Reinvestment Act75 The Community Reinvestment Act of 1977 (CRA; P.L. 95-128 ) addresses how banking institutions meet the credit needs of the areas they serve, notably in low- and moderate-income (LMI) neighborhoods. The federal prudential banking regulators (the Fed, the OCC, and the FDIC) conduct examinations to evaluate how banks are fulfilling the objectives of the CRA. The regulators issue CRA credits, or points, where banks engage in qualifying activities—such as mortgage, consumer, and business lending; community investments; and low-cost services that would benefit LMI areas and entities—that occur within an assigned assessment area . These credits are then used to issue each bank a performance rating, from Outstanding to Substantial Noncompliance. The CRA requires regulators to take these ratings into account when banks request to merge with other banking institutions or otherwise expand their operations into new areas. Whether regulations as currently implemented are effectively and efficiently meeting the CRA's goals has been the subject of debate. The banking industry and other observers assert that CRA regulations can be altered in a way that would reduce regulatory burden while still meeting the law's goals. Recently, the OCC and Treasury have made proposals to address those concerns. However, consumer and community advocates argue that efforts to provide relief to banks may potentially be at the expense of communities that the CRA is intended to help. Treasury made a number of recommendations to the bank regulators for changes to CRA regulations in a memorandum it sent to those agencies in April 2018. Regarding the need for modernization, the memorandum recommends revisiting the approach for determining banks' assessment areas, given that geographically defined areas arguably may not fully reflect the community served by a bank because of technology developments. Treasury also recommends establishing clearer standards for CRA-eligible activities that provide flexibility and expand the types of loans, investments, and services that are eligible for CRA credit. Regarding aspects of CRA compliance that may be unnecessarily burdensome, Treasury recommends increasing the timeliness of the CRA performance examination process. Regarding improving the outcomes that the CRA was intended to encourage, such as increasing the availability of credit to LMI neighborhoods, Treasury recommendations include incorporating performance incentives that might result in more efficient lending activities. In September 2018, the OCC published an advance notice of proposed rulemaking (ANPR) seeking public comment on 31 questions pertaining to issues to consider and possible changes to CRA regulation. The OCC's ANPR does not propose specific changes, but its content and the questions posed suggest that the OCC is exploring the possibility of adopting a quantitative metric-based approach to CRA performance evaluation, changing how assessment areas are defined, expanding CRA-qualifying activities, and reducing the complexity, ambiguity, and burden of the regulations on the bank industry. The OCC received more than 1,300 comment letters in response to the ANPR that were alternatively supportive or critical of the various possible alterations to CRA regulation. Community Banks83 Although some banks hold a very large amount of assets, are complex, and operate on a national or international scale, the vast majority of U.S. banks are relatively small, have simple business models, and operate within a local area. This section provides background on these simpler banks—often called community bank s —and analyzes issues related to them, including regulatory relief for community banks and the long-term decline in the number of community banks. Background Although there is no official definition of a community bank, policymakers and the public generally recognize that the vast majority of U.S. banks differ substantially from a relatively small number of very large and complex banking organizations in a number of ways. Community banks tend to hold a relatively small amount of assets (although asset size alone need not be a determining factor); be more concentrated in core bank businesses of making loans and taking deposits and less involved in other, more complex activities; and operate within a smaller geographic area, making them generally more likely to practice relationship lending wherein loan officers and other bank employees have a longer standing and perhaps more personal relationship with borrowers. Therefore, community banks may serve as particularly important credit sources for local communities and underserved groups of which large banks may have little familiarity. In addition, relative to large banks, community banks generally have fewer employees, less resources to dedicate to regulatory compliance, and individually pose less of a systemic risk to the broader financial system. Congress often faces policy issue questions related to community banks. Community bank advocates often assert the tailoring of regulations currently in place does not adequately balance the benefits and costs of the regulations when applied to community banks. Concerns have also been raised about the three-decade decline in the number and market presence of these institutions, and the predominant cause of that decline is a matter of debate. Reduction in Community Banks In recent decades, community banks, under almost any common definition, have seen their numbers decline and their collective share of banking industry assets fall in the United States. Overall, the number of FDIC-insured institutions fell from a peak of 18,083 in 1986 to 5,477 in 2018. The number of institutions with less than $1 billion in assets fell from 17,514 to 4,704 during that time period, and the share of industry assets held by those banks fell from 37% to 7%. Meanwhile, the number of banks with more than $10 billion in assets rose from 38 to 138, and the share of total banking industry assets held by those banks increased from 28% to 84%. The decrease in the number of community banks occurred mainly through three methods: mergers, failures, and lack of new banks. Most of the decline in the number of institutions in the past 30 years was due to mergers, which averaged more than 400 a year from 1990 to 2016. Failures were minimal from 1999 to 2007, but played a larger role in the decline during the late 1980s and following the 2007-2009 financial crisis and subsequent recession. As economic conditions have improved, failures have declined, but the number of n ew r eporters —new chartered institutions providing information to the FDIC for the first time—has been extraordinarily small in recent years. For example, in the 1990s, an average of 130 new banks reported data to the FDIC per year. Through September 30, five new banks reported data to the FDIC in 2018. Observers have cited several possible causes for this industry consolidation. Some observers argue the decline indicates that the regulatory burden on community banks is too onerous, driving smaller banks to merge to create or join larger institutions, an argument covered in more detail in the following section, " Regulatory Burden on Community Banks ." However, mergers—the largest factor in consolidation—could occur for a variety of reasons. For example, a bank that is struggling financially may look to merge with a stronger bank to stay in business. Alternatively, a community bank that has been outperforming its peers may be bought by a larger bank that wants to benefit from its success. In addition, other fundamental changes besides regulatory burden in the banking system could be driving consolidation, making it difficult to isolate the effects of regulation. Through much of the 20 th century, federal and state laws restricted banks' ability to open new branches and banking across state lines was restricted. Thus, many more banks were needed to serve every community. Branching and banking across state lines was not substantially deregulated at the federal level until 1997 through the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ( P.L. 103-328 ). When these restrictions were relaxed, it became easier for community banks to consolidate or for mid-size and large banks to spread operations to other markets. In addition, there may be economies of scale, not only in compliance, but in the business of banking in general. Furthermore, the economies of scale may be growing over time, which would also drive industry consolidation. For example, information technology has become more important in banking (e.g., cybersecurity and mobile banking), and certain information technology systems may be subject to economies of scale. Finally, the slow growth coming out of the most recent recession, and macroeconomic conditions more generally (such as low interest rates), may make it less appealing for new firms to enter the banking market. Regulatory Burden on Community Banks Community banks receive special regulatory consideration to minimize their regulatory burden. For example, many regulations—including a number of regulations implemented pursuant to the Dodd-Frank Act—include exemptions for community banks or are otherwise tailored to reduce compliance costs for community banks. Title I and Title II of the EGRRCP Act contained numerous provisions that provided new exemptions to community banks or raised the thresholds for existing exemptions, such as the Community Bank Leverage Ratio and Volcker Rule exemptions discussed above in the " Prudential Regulation " section. In addition, bank regulators are required to consider the effect of rules on community banks during the rulemaking process pursuant to provisions in the Regulatory Flexibility Act ( P.L. 96-354 ) and the Riegle Community Development and Regulatory Improvement Act ( P.L. 103-325 ). Supervision is also structured to pose less of a burden on small banks than larger banks, such as by requiring less-frequent bank examinations for certain small banks and less intensive reporting requirements. However, Congress often faces questions related to whether tailoring in general or tailoring provided in specific regulations is sufficient to ensure that an appropriate trade-off has been struck between the benefits and costs of regulations facing community banks. Advocates for further regulatory relief argue that certain realized benefits are likely to be relatively small, whereas certain realized costs are likely to be relatively large. One area where the benefits of regulation may be relatively small for community banks relative to large banks is regulations aimed at improving systemic stability, because community banks individually pose less of a risk to the financial system as a whole than a large, complex, interconnected bank. Many recent banking regulations were implemented at least in part in response to the systemic nature of the 2007-2009 crisis. Some community bank proponents argue that because small banks did not cause the crisis and pose less systemic risk, they need not be subject to new regulations made in response to the crisis. Opponents of these arguments note that systemic risk is only one of the goals of regulation, along with prudential regulation and consumer protection, and that community banks are exempted from many of the regulations aimed at systemic risk. They note that hundreds of small banks failed during and after the crisis, suggesting the prudential regulation in place prior to the crisis was not stringent enough. Another potential rationale for easing regulations on community banks would be if there are economies of scale to regulatory compliance costs, meaning that regulatory compliance costs may increase as bank size does but decrease as a percentage of overall costs or revenues. Put another way, as regulatory complexity increases, compliance may become relatively more costly for small institutions. Empirical evidence on whether compliance costs are subject to economies of scale is mixed, thus consider this illustrative example to show the logic behind the argument. Imagine a bank with $100 million in assets and 25 employees and a bank with $10 billion in assets and 1,250 employees each determine they must hire an extra employee to ensure compliance with new regulations. The relative burden is larger on the small institution that expands its workforce by 4% than on the large bank that expands by less than 0.1%. From a cost-benefit perspective, if regulatory compliance costs are subject to economies of scale, then the balance of costs and benefits of a particular regulation will differ depending on the size of the bank. For the same regulatory proposal, economies of scale could potentially result in costs outweighing benefits for smaller banks. Due to a lack of empirical evidence of the exact benefits and costs of each individual regulation at each individual bank (and even lack of consensus over which banks should qualify as community banks), debates over the appropriate level of tailoring of regulations is a debate over calibration involving qualitative assessments. Where should the lines be drawn? Should exemption thresholds be set high so that regulations apply only to the very largest, most complex banks? Should thresholds be set relatively low, so that only very small banks are exempt? At what point does a bank cease to have the characteristics associated with community banks? Often at issue in this debate are the so-called regional banks —banks that are larger and operate across a greater geographic market than the community banks but are also smaller and less complex than the largest, most complex organizations with hundreds of billions or trillions of dollars in assets. Should regulators provide regional banks the same exemptions as those provided to community banks? Policymakers, in the 116 th Congress, continue to face these and other questions concerning community banks. Large Banks and "Too Big to Fail"106 Along with the thousands of relatively small banks operating in the United States, there are a handful of banks with hundreds of billions of dollars of assets. The 2007-2009 financial crisis highlighted the problem of "too big to fail" (TBTF) financial institutions—the concept that the failure of a large financial firm could trigger financial instability, which in several cases prompted extraordinary federal assistance to prevent the failure of certain of these institutions. In response to the crisis, policymakers took a number of steps through the Dodd-Frank Act and the Basel III Accords to eliminate the TBTF problem, including subjecting the largest banks to enhanced prudential regulations, a new resolution regime to unwind these banks in the event of failure, and higher capital requirements. This section provides background on these large banks and examines issues related to them, including reductions in the application of enhanced prudential regulations facing certain large banks made pursuant to P.L. 115-174 and changes to capital requirements proposed by regulators that would reduce the amount of capital certain large banks would have to hold. As regulators implement these statutory changes and their proposed rules move forward, Congress faces questions about whether relaxing these regulations appropriately eases overly stringent requirements or unnecessarily increases the likelihood that large banks take on excessive risks. Background Some bank holding companies (BHCs) have hundreds of billions or trillions of dollars in assets and are deeply interconnected with other financial institutions. A bank may be so large that its leadership and market participants may believe that the government would save it if it became distressed. This belief could arise from the determination that the institution is so important to the country's financial system—and that its failure would be so costly to the economy and society—that the government would feel compelled to avoid that outcome. An institution of this size and complexity is said to be TBTF. In addition to fairness issues, economic theory suggests that expectations that a firm will not be allowed to fail creates moral hazard —if the creditors and counterparties of a TBTF firm believe that the government will protect them from losses, they have less incentive to monitor the firm's riskiness because they are shielded from the negative consequences of those risks. As a result, TBTF institutions may have incentives to be excessively risky, gain unfair advantages in the market for funding, and expose taxpayers to losses. Several market forces likely drive banks and other financial institutions to grow in size and complexity, thereby potentially increasing efficiency and improving financial and economic outcomes. For example, marginal costs can be reduced through economies of scale; risk can be diversified by spreading exposures over multiple business lines and geographic markets; and a greater array of financial products could be offered to customers allowing a bank to potentially attract new customers or strengthen relationships with existing ones. These market forces and the relaxation of certain interstate banking and branching regulations described in the " Reduction in Community Banks " section may have driven some banks to become very large and complex in the years preceding the crisis. At the end of 1997, two insured depository institutions held more than $250 billion in assets, and together accounted for about 9.3% of total industry assets. By the end of 2007, six banks held more than $250 billion in assets, accounting for 40.9% of industry assets. The trend has generally continued, and as of the third quarter of 2018, nine banks held more than $250 billion in assets, accounting for 49.5% of industry assets. Many assert that the worsening of the financial crisis in fall 2008 was a demonstration of TBTF-related problems. Large institutions had taken on risks that resulted in large losses, causing the institutions to come under threat of failure. In some cases, the U.S. government took actions to stabilize the financial system and individual institutions. Wachovia and Washington Mutual were large institutions that were acquired by other institutions to avoid their failure during the crisis. Bank of America and Citigroup received extraordinary assistance through the Troubled Asset Relief Program (TARP) to address financial difficulties. Other large (and small) banks participated in emergency government programs offered by the Treasury (TARP), the Federal Reserve, and the FDIC. In response, the Dodd-Frank Act attempted to end TBTF through (1) a new regulatory regime to reduce the likelihood that large banks would fail; (2) a new resolution regime to make it easier to safely wind down large bank holding companies that are at risk of failing; and (3) new restrictions on regulators' use of emergency authority to prevent "bail outs" of failing large banks. In addition, the Federal Reserve imposed additional capital requirements on the largest banks that largely aligned with proposed standards set out by the Basel III Accords, with some exceptions. To make it less likely that large banks would fail, certain large banks are now subject to an enhanced prudential regulatory regime administered by the Federal Reserve. Under this regime, large banks are subject to more stringent safety and soundness standards than other banks. They must comply with higher capital and liquidity requirements, undergo stress tests, produce living wills and capital plans, and comply with counterparty limits and risk management requirements. To make it easier to wind down complex BHCs with nonbank subsidiaries, the Dodd-Frank Act created the Orderly Liquidation Authority (OLA), a resolution regime administered by the FDIC that is similar to how the FDIC resolves bank subsidiaries. This replaced the bankruptcy process, focused on the rights of creditors, with an administrative process, focused on financial stability, for winding down such firms. To date, OLA has never been used. Implementing Statutory Changes The Dodd-Frank Act initially applied enhanced prudential regulation requirements to all BHCs with more than $50 billion in assets, although more stringent standards were limited to banks with more than $250 billion in assets or $10 billion in foreign exposure, and the most stringent standards were limited to U.S. globally systemically important banks (G-SIBs), the eight most complex U.S. banks. Subsequent to the enactment of Dodd-Frank, critics of the $50 billion asset threshold argued that many banks above that size are not systemically important and that Congress should raise the threshold. In particular, critics distinguished between regional banks (which tend to be at the lower end of the asset range and, some claim, have a traditional banking business model comparable to community banks) and Wall Street banks ( a term applied to the largest, most complex organizations that tend to have significant nonbank financial activities). Opponents of raising the threshold disputed this characterization, arguing that some regional banks are involved in sophisticated activities, such as being swap dealers, and have large off-balance-sheet exposures. In response to concerns that the enhanced prudential regulation threshold was set too low, P.L. 115-174 exempted banks with between $50 billion and $100 billion in assets from enhanced prudential regulation, leaving them to be regulated in general like any other bank. Under the proposed rule implementing the P.L. 115-174 changes, the Fed has increased the tiering of enhanced regulation for banks with more than $100 billion in assets. The proposed rule would create four categories of banks based on size and complexity, and impose increasingly stringent requirements on each category. From most to least stringent, Category I would currently include the eight G-SIBs, Category II would include one bank, Category III would include four banks, and Category IV would include 11 banks. Compared with current policy, banks in all categories would face reduced regulatory requirements under this rule, other proposed rules, and forthcoming rules required by Section 402 of P.L. 115-174 , if finalized. In addition, P.L. 115-174 created new size-based exemptions from various regulations, increasing the tendency to subject larger banks to more stringent requirements than smaller banks. These changes include exemptions from the Volcker Rule and risk-weighted capital requirements for banks with less than $10 billion in assets (meeting certain criteria). Proponents of the changes assert they provide necessary and targeted regulatory relief. Opponents argue they needlessly pare back important Dodd-Frank protections to the benefit of large and profitable banks. Regulator Proposals Related to Large Bank Capital Requirements As discussed in the " Capital Requirements " section, all banks must hold enough capital to meet certain capital ratio requirements. Broadly, those requirements take two forms—risk-weighted requirements and unweighted leverage requirements. In addition, a small subset of very large and very complex banks also face additional capital ratio requirements implemented by the U.S. federal bank regulators. The Federal Reserve has made two proposals to simplify and relax certain aspects of these additional requirements, and these proposals are subject to debate. All banks must hold additional high-quality capital on top of the minimum required levels—called the capital conservation buffer (CCB)—to avoid limitations on their capital distributions, such as dividend payments. In addition, certain large banks are subject to the Federal Reserve's stress tests, the results of which can lead to restrictions on the bank's capital distributions. Stress tests are intended to ensure that banks hold enough capital to withstand a hypothetical market stress scenario, but arguably have the effect of acting as additional capital requirements with which banks must comply. Advanced approaches banks must maintain a fixed minimum supplementary leverage ratio (SLR), an unweighted capital requirement that is more stringent than the leverage ratio facing smaller banks because it incorporates off-balance sheet exposures. A Congressional Research Service (CRS) analysis of large holding companies' regulatory filings indicates that, currently, 19 large and complex U.S. bank or thrift holding companies are classified as advanced approaches banks. G-SIBs must meet fixed enhanced SLR (eSLR) requirements, which sets the SLR higher for these banks. In addition, the G-SIBs are subject to an additional risk-weighted capital surcharge (on top of other risk-weighted capital requirements that all banks must meet) of between 1% and 4.5% based on the systemic importance of the institution. Whether these requirements are appropriately calibrated is a debated issue. Proponents of recalibrating some of these capital requirements argue that those requirements set at a fixed number—including the CCB and eSLR—are inefficient, because they do not reflect varying levels of risk posed by individual banks. Recalibration proponents also argue that compiling with these requirements in addition to stress test requirements is unnecessarily burdensome for banks. Opponents of proposals to relax current capital requirements facing large and profitable banks assert that doing so needlessly pares back important safeguards against bank failures and systemic instability. In response to concerns that fixed requirements do not adequately account for risk differences between institutions, the Fed has issued two proposals for public comment that would link individual large banks' requirements with other risk measures. One proposal would make bank CCB requirements a function of their stress tests results, and the other proposal would link large banks' eSLR requirements with individual G-SIB systemic importance scores. The Fed estimates that the new CCB requirement would generally reduce the amount of capital large banks would have to hold, but that some G-SIBs would see their required capital levels increase. The Fed estimates that the new eSLR requirement would generally reduce the amount of capital held by G-SIB parent companies by $400 million and the amount held by insured depository subsidiaries by $121 billion. What Companies Should Be Eligible For Charters131 To legally operate as a bank and perform the relevant activities, an institution generally must have a charter granted by either the OCC at the federal level or a state-level authority. In addition, to engage in certain activities, the institution must have federal deposit insurance granted by the FDIC. Currently, these requirements raise a number of policy questions, including whether companies established primarily as financial technology companies should be able to receive a national bank charter, as has been offered by the OCC; and whether the application process and determinations made by the FDIC as they relate to institutions seeking a specific type of state charter, called an industrial loan company (ILC) charter, is overly restrictive. Background An institution that makes loans and takes deposits—the core activities of traditional commercial banking—must have a government issued charter. Numerous types of charters exist, including national bank charters; state bank charters; federal savings association charters, and state savings association charters (saving associations are also referred to as thrifts ). Each charter type determines what activities are permissible for the institution, what activities are restricted, and which agency will be the institution's primary federal regulator (see Table 1 ). One of the main rationales for this system is that it gives institutions with different business models and ownership arrangements the ability to choose a regulatory regime appropriately suited to the institution's business needs and risks. The differences between institution business models and the attendant regulations are numerous, varied, and beyond the scope of this report. The issues examined in this section arise from each charter's granting an institution the right to engage in certain banking related activities, and thus generating the potential benefits and risks of those activities. Broadly, these issues relate to questions over whether companies that differ from traditional banks should be allowed to engage in traditional banking activities given the types and magnitudes of benefits and risks the companies might present. OCC "Fintech" Charter Recent advances in technology, including the proliferation of available data and internet access, have altered the way financial activities are performed in many ways. These innovations in financial technology, or fintech, have created the opportunity for certain activities that have traditionally been the business of banks to instead be performed by technology-focused, nonbank companies. Lending and payment processing are prominent examples. This development has raised questions over how these fintech companies should be regulated, and the appropriate federal and state roles in that regulation. One possible, though contested, proposal for addressing a number of these questions would be to make an OCC national bank charter available to certain fintech companies. Many nonbank fintech companies performing bank-like activities are regulated largely at the state level. They may have to obtain lending licenses or register as money transmitters in every state they operate and may be subject to the consumer protection laws of that state, such as interest rate limits. Proponents of fintech companies argue that subjecting certain technology companies to 50 different state level regulatory regimes is unnecessarily burdensome and hinders companies that hope to achieve nationwide operations quickly using the internet. In addition, a degree of uncertainty surrounding the applicability of certain laws and regulations to certain fintech firms and activities has arisen. For example, whether federal preemption of state interest rate limits apply to loans made through a marketplace lender —that is, online-only lenders that exclusively use automated, algorithmic underwriting—but originated by a bank faces legal uncertainty due to certain court decisions, including Madden v Midlands . One possible avenue to ease the state-by-state regulatory burdens and resolve the uncertainties facing some fintech firms would be to allow those firms that perform bank-like activities to apply for and (provided they meet necessary requirements) to grant them national bank charters. First proposed in 2016 by then-Comptroller of the Currency Thomas Curry, and following subsequent examination of the issue and review of public comments, the OCC announced in July 2018 that it would consider "applications for special purpose bank charters from financial technology (fintech) companies that are engaged in the business of banking but do not take deposits." OCC argues that companies with such a charter would be explicitly subject to all laws and regulations (including those that preempt state law, a contentious issue addressed below) applicable to national banks. The OCC stated that fintech firms granted the charter "will be subject to the same high standards of safety and soundness and fairness that all federally chartered banks must meet," and also that the OCC "may need to account for differences in business models and activities, risks, and the inapplicability of certain laws resulting from the uninsured status of the bank." Thus, the argument goes, establishing a fintech charter would mean a new set of innovative companies would no longer face regulatory uncertainty and could safely and efficiently provide beneficial financial services, perhaps to populations and market-niches that banks with traditional cost structures do not find cost-effective to serve. Until the OCC actually grants such charters and fintech firms operate under the national bank regime for some amount of time, how well this policy fosters potential innovations and benefits while guarding against risks is the subject of debate. Proponents of the idea generally view the charter as a mechanism for freeing companies from what they assert is the unnecessarily onerous regulatory burden of being subject to numerous state regulatory regimes. They further argue that this would be achieved without overly relaxing regulations, as the companies would become subject to the OCC's national bank regulatory regime and its rulemaking, supervisory, and enforcement authorities. Opponents generally assert both that the OCC does not have the authority to charter these types of companies, as discussed below, and that doing so would inappropriately allow marketplace lenders to circumvent important state-level consumer protections. The OCC's assertion that it has the authority to grant such charters has been challenged. Shortly after the initial 2016 announcements that the OCC was examining the possibility of granting the charters, the Conference of State Bank Supervisors and the New York State Department of Financial Services sued the OCC to prevent it from issuing the charters on the grounds that it lacked the authority to do so. A federal district court dismissed the case after concluding that because the OCC had not yet issued charters to nonbanks, the plaintiffs (1) lacked standing to challenge the OCC's purported decision to move forward with chartering nonbanks, and (2) had alleged claims that were not ripe for adjudication. Subsequent to the OCC's July 2018 announcement, state regulators have again filed lawsuits. Industrial Loan Company Charters Industrial loan companies (ILCs) hold a particular type of charter offered by some states that generally allows ILCs to engage in certain banking activities. Depending on the state, those activities can include deposit-taking, but only if they are granted deposit insurance by the FDIC. Thus, ILCs that take deposits are state regulated with the FDIC acting as the primary federal regulator. Importantly, a parent company that owns an ILC that meets certain criteria is not necessarily considered a BHC for legal and regulatory purposes. This means ILC charters create an avenue for commercial firms (i.e., companies not primarily focused on the financial industry, such as manufacturers, retailers, or possibly technology companies) to own a bank. Nonfinancial parent companies of ILCs generally are not subject to Fed supervision and other regulations pursuant to the Bank Holding Company Act of 1956 (P.L. 84-511). A commercial firm may want to own a bank for a number of economic reasons. For example, an ILC can provide financing to the parent company's customers and clients and thus increase sales for the parent. In recent decades, household-name manufacturers have owned ILCs, including but not limited to General Motors, Toyota, Harley Davidson, and General Electric. However, while they can generate profits and potentially increase credit availability, ILCs pose a number of potential risks. The United States has historically adopted policies to generally separate commerce and banking, because allowing a single company to be involved in both activities could potentially result in a number of bad outcomes. A mixed organization's banking subsidiary could make decisions based on the interests of the larger organization, such as making overly risky loans to customers of a commerce subsidiary or providing funding to save a failing commerce subsidiary. Such conflicts of interest could threaten the safety and soundness of the bank. Relatedly, some have argued that having a federally insured bank within a commercial organization is an inappropriate expansion of federal banking safety nets (such as deposit insurance). Certain observers, including community banks, have concerns over whether purely commercial or purely banking organizations would be able to compete with combined organizations that could potentially use economies of scale and funding advantages to exercise market power. These arguments played a prominent role in the public debate that was sparked when Walmart and Home Depot made unsuccessful efforts to secure an ILC charter between 2005 and 2008. Amid this debate, the FDIC imposed a moratorium in 2006 on the acceptance, approval, or denial of ILC applications for deposit insurance while the agency reexamined its policies related to these companies. That moratorium ended in January 2008. Subsequently, concerns over ILCs led Congress to mandate another moratorium (this one lasting three years, ending in July 2013) on granting new ILCs deposit insurance in the Dodd-Frank Act. No consensus has been reached on the magnitude of these risks and validity of the concerns surrounding deposit-taking ILCs. Recently, two financial technology companies, Square and SoFi, have applied for ILC charters and renewed debates over ILCs. Even though the moratoriums on granting ILCs deposit insurance have expired, the FDIC has not approved any new ILC applications since the 2013 expiration. However, since becoming FDIC chairman in June 2018, Jelena McWilliams has made statements indicating that under her leadership the FDIC will again consider ILC applications. Given the interest in and debate surrounding this charter type, policymakers will likely examine questions over the extent to which ILCs create innovative sources of credit and financial services subject to appropriate safeguards or inadvisably allow commercial organizations to act as banks with federal safety nets while exempting them from certain bank regulation and supervision. Market and Economic Trends160 In addition to regulation issues, market and economic conditions and trends continually affect the banking industry. This section analyzes such trends that may affect banks, including migration of financial activity from banks into nonbanks or the "shadow banking" system; increasing capabilities and market presence of financial technology or fintech; and a higher interest rate environment following a long period of extraordinarily low rates. Nonbank Credit Intermediation or "Shadow Banking" Credit intermediation is a core banking activity and involves transforming short-term, liquid, safe liabilities into relatively long-term, illiquid, higher-risk assets. In the context of traditional banking, credit intermediation is performed by taking deposits from savers and using them to fund loans to borrowers. Nonbank institutions can also perform similar credit intermediation to banks—sometimes called shadow banking —using certain instruments such as money market mutual funds, short-term debt instruments, and securitized pools of loans. When illiquid assets are funded by liquid liabilities, an otherwise-solvent bank or nonbank might experience difficulty meeting short-term obligations without having to sell assets, possibly at "fire sale" prices. If depositors or other funding providers feel their money is not safe with an institution, many of them may withdraw their funds at the same time. Such a "run" could cause an institution to fail. Long-established government programs mitigate liquidity- and run-risk in the banking industry. The Federal Reserve is authorized to act as a "lender of last resort" for a bank experiencing liquidity problems, and the FDIC insures depositors against losses. Banks are also subject to prudential regulation—as discussed in the " Prudential Regulation " section. However, nonbank intermediation is performed without the government safety nets available to banks or the prudential regulation required of them. The lack of an explicit government safety net in shadow banking means that taxpayers are less explicitly or directly exposed to risk, but it also means that shadow banking may be more vulnerable to a panic that could trigger a financial crisis. Some argue that the increased regulatory burden placed on banks in response to the financial crisis—such as the changes in bank regulation mandated by Dodd-Frank or agreed to in Basel III—could result in a decreased role for banks in credit intermediation and an increased role for relatively lightly regulated nonbanks. Many contend the financial crisis demonstrated how risks to deposit-like financial instruments in the shadow banking sector—such as money market mutual funds and repurchase agreements—can create or exacerbate systemic distress. Money market mutual funds are deposit-like instruments that are managed with the goal of never losing principal and that investors can convert to cash on demand. Institutions can also access deposit-like funding by borrowing through short-term funding markets—such as by issuing commercial paper and entering repurchase agreements. These instruments can be continually rolled over as long as funding providers have confidence in the borrowers' solvency. During the crisis, all these instruments—which investors had previously viewed as safe and unlikely to suffer losses—experienced run-like events as funding providers withdrew from markets. Moreover, nonbanks can take on exposure to long-term loans through investing in mortgage-backed securities (MBS) or other asset-backed securities (ABS). During the crisis, as firms faced liquidity problems, the value of these assets decreased quickly, possibly in part as a result of fire sales. Since the crisis, many regulatory changes have been made related to certain money market, commercial paper, and repurchase agreement markets and practices. For example, in the United States, certain money market mutual funds now must have a floating net asset value . Among other benefits, this may signal to fund investors that a loss of principal is possible and thus reduce the likelihood that investors would "run" at the first sign of possible small losses. However, some observers are still concerned that shadow banking poses risks, because the funding of relatively long-term assets with relatively short-term liabilities will inherently introduce run-risk absent certain safeguards. Financial Technology, or "Fintech" As discussed above, f intech usually refers to technologies with the potential to alter the way certain financial services are performed. Banks are affected by technological developments in two ways: (1) they face choices over how much to invest in emerging technologies and to what extent they want to alter their business models in adopting technologies, and (2) they potentially face new competition from new technology-focused companies. Such technologies include online marketplace lending, crowdfunding, blockchain and distributed ledgers, and robo-advising, among many others. Certain financial innovations may create opportunities to improve social and economic outcomes, but there is also potential to create risks or unexpected financial losses. Potential benefits from fintech are greater efficiency in financial markets that creates lower prices and increased customer and small business access to financial services. These can be achieved if innovative technology replaces traditional processes that are outdated or inefficient. For example, automation may be able to replace employees, and digital technology can replace physical systems and infrastructure. Cost savings from removing inefficiencies may lead to reduced prices, making certain services affordable to new customers. Some customers who previously did not have access to services—due to such things as the lack of information about creditworthiness or geographic remoteness—could also potentially gain access. Increased accessibility may be especially beneficial to traditionally underserved groups, such as low-income, minority, and rural populations. Fintech could also create or increase risks. Many fintech products have only a brief history of operation, so it can be difficult to predict outcomes and assess risk. It is possible certain technologies may not in the end function as efficiently and accurately as intended. Also, the stated aim of a new technology is often to bring a product directly to consumers and eliminate a "middle-man." However, that middle-man could be an experienced financial institution or professional that can advise consumers on financial products and their risks. In these ways, fintech could increase the likelihood that consumers engage in a financial activity and take on risks that they do not fully understand. Policymakers debate whether (and which) innovations can be integrated into the financial system without additional regulatory or policy action. Technology in finance largely involves reducing the costs or time involved in providing existing products and services, and the existing regulatory structure was developed to address risks from these financial products and activities. Existing regulation may be able to accommodate new technologies while adequately protecting against risks. However, there are two other possibilities. One is that some regulations may be stifling beneficial innovation. Another is that existing regulation does not adequately address risks created by new technologies. Some observers argue that regulation could potentially impede the development and introduction of beneficial innovation. For example, companies incur costs to comply with regulations. In addition, companies are sometimes unsure how regulators will treat the innovation once it is brought to market. A potential solution being used in other countries is to establish a regulatory "sandbox" or "greenhouse" wherein companies that meet certain requirements work with regulators as products are brought to market under a less onerous regulatory framework. In the United States, the CFPB has recently introduced a sandbox wherein companies can experiment with disclosure forms. Some are concerned that existing regulations may not adequately address certain risks posed by new technologies. Regulatory arbitrage—conducting business in a way that circumvents unfavorable regulations—may be a concern in this area. Fintech potentially could provide an opportunity for companies to claim they are not subject to certain regulations because of a superficial difference between how they operate compared with traditional banks. Another group of issues posed by fintech relates to cybersecurity (for general issues related to cybersecurity, see the " Cybersecurity " section above). As financial activity increasingly uses digital technology, sensitive data are generated. Data can be used to accurately assess risks and ensure customers receive the best products and services. However, data can be stolen and used inappropriately, and there are concerns over privacy issues. This raises questions over ownership and control of the data—including the rights of consumers and the responsibilities of companies in accessing and using data—and whether companies that use and collect data face appropriate cybersecurity requirements. Higher Interest Rate Environment The Federal Reserve's monetary policy response to the financial crisis, the ensuing recession, and subsequent slow economic growth was to keep interest rates unusually low for an extraordinarily long time. It accomplished this in part using unprecedented monetary policy tools such as quantitative easing —large-scale asset purchases that significantly increased the size of the Federal Reserve's balance sheet. Recently, as economic conditions improved, the Federal Reserve took steps to normalize monetary policy such as raising its target interest rate and reducing the size of its balance sheet. A rising interest rate environment—especially following an extended period of unusually low rates achieved with unprecedented monetary policy tools—is an issue for banks because they are exposed to interest rate risk . A portion of bank assets have fixed interest rates with long terms until maturity, such as mortgages, and the rates of return on these assets do not increase as current market rates do. However, many bank liabilities are short term, such as deposits, and can be repriced quickly. So although certain interest revenue being collected by banks is slow to rise, the interest costs paid out by banks can rise quickly. In addition to putting stress on net income, rising interest rates can cause the market value of fixed-rate assets to fall. Finally, banks incur an opportunity cost when resources are tied up in long-term assets with low interest rates rather than being used to make new loans at higher interest rates. The magnitude of interest rate risks should not be overstated, as rising rates can potentially increase bank profitability if they result in a greater difference between long-term rates banks receive and short-term rates they pay—referred to as net interest margin . However, thus far into the Federal Reserve interest rate normalization process, this has not materialized. During 2018, the difference between long-term rates and short-term rates has generally decreased (known as a flattening of the yield curve ). Whatever changes may occur to various interest rates in the coming months and years, banks and regulators typically recognize the importance of managing interest rate risk, carefully examine the composition of bank balance sheets, and plan for different interest rate change scenarios. While banks are well-practiced at interest rate risk management through normal economic and monetary policy cycles, managing bank risk through a period of interest rate growth could be more challenging because rates have been so low for so long and achieved through unprecedented monetary policy tools. Because rates have been low for so long, many loans made in different interest rate environments that preceded the crisis have matured. Meanwhile, all new loans made in the past 10 years were made in a low interest rate environment. This presents challenges to banks seeking to hold a mix of loans with different rates. In addition, because the Federal Reserve has used new monetary policy tools and grown its balance sheet to unprecedented levels, accurately controlling the pace of interest rate growth may be challenging. CRS Resources

Regulation of the banking industry has undergone substantial changes over the past decade. In response to the 2007-2009 financial crisis, many new bank regulations were implemented pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203) or under the existing authorities of bank regulators to address apparent weaknesses in the regulatory regime. While some observers view those changes as necessary and effective, others argued that certain regulations were unjustifiably burdensome. To address those concerns, the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (P.L. 115-174) relaxed certain regulations. Opponents of that legislation argue it unnecessarily pared back important safeguards, but proponents of deregulation argue additional pare backs are needed. Meanwhile, a variety of economic and technological trends continue to affect banks. As a result, the 116th Congress faces many issues related to banking, including the following: Safety and Soundness. Banks are subject to regulations designed to reduce the likelihood of bank failures. Examples include requirements to hold a certain amount of capital (which enables a bank to absorb losses without failing) and the so-called Volcker Rule (a ban on banks' proprietary trading). In addition, anti-money laundering requirements aim to reduce the likelihood banks will execute transactions involving criminal proceeds. Banks are also required to take steps to avoid becoming victims of cyberattacks. The extent to which these regulations (i) are effective, and (ii) appropriately balance benefits and costs is a matter of debate. Consumer Protection, Fair Lending, and Access to Banking. Certain laws are designed to protect consumers and ensure that lenders use fair lending practices. The Consumer Financial Protection Bureau has authorities to regulate for consumer protection. No consensus exists on whether current regulations strike an appropriate balance between protecting consumers while ensuring access to credit and justifiable compliance costs. In addition, whether Community Reinvestment Act regulations as currently implemented effectively and efficiently encourage banks to provide services in their areas of operation is an open question. Large Banks and "Too Big To Fail." Regulators also regulate for systemic risks, such as those associated with very large and complex financial institutions that may contribute to systemic instability. Dodd-Frank Act provisions include enhanced prudential regulation for certain large banks and changes to resolution processes in the event one fails. In addition, bank regulators imposed additional capital requirements on certain large, complex banks. Subsequently, some argued that certain of these additional regulations were too broadly applied and overly stringent. In response, Congress reduced the applicability of the Dodd-Frank measures and regulators have proposed changes to the capital rules. Whether relaxing these rules will provide needed relief to these banks or unnecessarily pare back important safeguards is a debated issue. Community Banks. The number of small or "community" banks has declined substantially in recent decades. No consensus exists on the degree to which regulatory burden, market forces, and the removal of regulatory barriers to interstate branching and banking are causing the decline. What Companies Should Be Eligible for Bank Charters. To operate legally as a bank, an institution must hold a charter granted by a state or federal government. Traditionally, these are held by companies generally focused on and led by people with experience in finance. However, recently companies with a focus on technology are interested in having legal status as a bank, either through a charter from the Office of the Comptroller of the Currency or a state-level industrial loan company charter. Policymakers disagree over whether allowing these companies to operate as banks would create appropriately regulated providers of financial services or inappropriately extend government-backed bank safety nets and disadvantage existing banks. Recent Market and Economic Trends. Changing economic forces also pose issues for the banking industry. Some observers argue that increases in regulation could drive certain financial activities into a relatively lightly regulated "shadow banking" sector. Innovative financial technology may alter the way certain financial services are delivered. If interest rates rise, it could create opportunities and risks. Such trends could have implications for how the financial system performs and influence debates over appropriate banking regulations.

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Introduction Persistent annual budget deficits and a large and increasing federal debt have generated discussions over the long-term sustainability of current budget projections. Federal budget deficits declined from 9.8% of gross domestic product (GDP) in FY2009 to 3.8% of GDP in FY2018. However, recent estimates forecast that the government will run deficits (i.e., federal expenditures will exceed revenues) in every year through FY2029. Federal debt totaled $21.516 trillion at the end of FY2018, and as a percentage of GDP (106.0%) was at its highest value since FY1947; $15.761 trillion of that debt (or 77.8% of GDP) was held by the public. This report explores distinctions in the concept and composition of deficits and debt and explains how they interact with economic conditions and other aspects of fiscal policy. Background What Is a Deficit? A deficit describes one of the three possible outcomes for the federal budget. The federal government incurs a deficit (also known as a net deficit) when its total outgoing payments (outlays) exceed the total money it collects (revenues). If instead federal revenues are greater than outlays, then the federal government generates a surplus. A balanced budget describes the case where federal receipts equal federal expenditures. The size of a deficit or surplus is equal to the difference between the levels of spending and receipts. Deficits are measured over the course of a defined period of time—in the case of the federal government, a fiscal year. Federal budget outcomes incorporate both "on-budget" activities, which represent the majority of federal taxes and spending, and "off-budget" government activities, which include revenues and outlays from Social Security trust funds and the Postal Service. For federal credit programs, the subsidy cost of government activities is included in deficit and surplus calculations. The federal budget is constructed in a manner that provides for lower net deficits in more robust economic conditions, attributable to higher revenues (from taxes on increased output) and, to a smaller degree, lower spending levels (from reduced demand for programs like unemployment insurance). The federal government incurred a deficit of $779 billion in FY2018, equivalent to 3.8% of GDP. From FY1969 to FY2018, the average net deficit equaled 2.9% of annual GDP ($587 billion in 2018 dollars). Over the FY1969-FY2018 period, the government generated a surplus on five occasions: in FY1969 and in each year from FY1998 through FY2001. In all other years, the federal government incurred a net deficit. What Is the Debt? The federal debt is the money that the government owes to its creditors, which include private citizens, institutions, foreign governments, and other parts of the federal government. Debt measurements may be taken at any time and represent the accumulation of all previous government borrowing activity. Federal debt increases when there are net budget deficits, outflows made for federal credit programs (net of the subsidy costs already included in deficit calculations), and increases in intragovernmental borrowing. Federal credit programs include loans issued for college tuition payments, small business programs, and other activities the government may seek to support. In those cases, debt levels increase as additional loans are granted and decrease as money for such programs is repaid. Intragovernmental debt is generated when trust funds, revolving funds, and special funds receive money from tax payments, fees, or other revenue sources that is not immediately needed to make payments. In those cases the surpluses are used to finance other government activities, and Government Account Series (GAS) securities are issued to the trust fund. GAS securities may then be redeemed when trust fund expenditures exceed revenue levels. Intragovernmental debt may be thought of as money that one part of the government owes another part. The Department of the Treasury is responsible for managing federal debt. The primary objective of Treasury's debt management strategy is to fulfill the government's borrowing needs at the lowest cost over time. Treasury finances federal borrowing activities by issuing government-backed securities that generate interest payments for their owners. Treasury securities are typically sold to the public through an auction process, and have maturity periods (the length of time that they are held before repayment) of anywhere from several weeks to 30 years. Comparing Debt Held by the Public and Intragovernmental Debt Federal debt may be divided into two major categories: (1) debt held by the public, which is the sum of accrued net deficits and outstanding money from federal credit programs; and (2) intragovernmental debt. As of February 28, 2019, the amount of federal debt outstanding was $22.087 trillion, with 73.6% of that debt held by the public and 26.4% held as intragovernmental debt. Table 1 summarizes the composition of debt held by the public and intragovernmental debt. Individuals, firms, the Federal Reserve, state and local governments, and foreign governments are all eligible to purchase publicly held debt. Debt may be acquired directly through the auction process, from which most publicly held debt is initially sold, or on the secondary market if the debt is deemed "marketable" or eligible for resale. The total amount of publicly held debt outstanding was $16.251 trillion as of February 28, 2019. The majority of publicly held debt is marketable, and includes all Treasury Notes, Bonds, Bills, Treasury Inflation Protected Securities (TIPS), and Floating Rate Notes (FRNs) issued by Treasury. Nonmarketable debt held by the public is composed of U.S. Savings Bonds, State and Local Government Securities (SLGS), and other, smaller issues. As of February 28, 2019, 96.8% of publicly held issues, or $15.741 trillion, was marketable. Intragovernmental debt is debt where the federal government is both the creditor and the borrower. Intragovernmental debt issuances are almost exclusively nonmarketable, as marketable debt comprised only $0.029 trillion (0.5%) of the $5.836 trillion in total intragovernmental debt on February 28, 2019. The majority of nonmarketable intragovernmental debt was held by trust funds devoted to Social Security and military and federal worker retirement. Marketable intragovernmental debt is composed primarily of debt held by the Federal Financing Bank, which is a government corporation created to reduce the cost of federal borrowing. Since intragovernmental debt is held only in government accounts, such debt cannot be accessed by institutions outside the federal government. Conversely, the bonds that finance publicly held debt activity may compete for assets in private and financial markets. Public debt issues may be a particularly attractive collateral option on the secondary market if the federal government is perceived as a safe credit risk. Deficit and Debt Interaction Federal deficit and debt outcomes are interdependent; budget deficits increase federal debt levels, which in turn increase future net deficits because of the need to service higher interest payments on the nation's debt. The nature of the relationship between deficits and debt varies depending on the type of debt considered. This section describes the relationship between federal deficits and debt. How Deficits Contribute to Debt Budget deficits are the principal contributor to debt held by the public. To finance budget deficits, Treasury sells debt instruments. The value of those debt holdings (which include interest payments) represents the vast majority of publicly held debt. From FY1969 to FY2018, annual nominal budget deficits and surpluses of the federal government summed to $13.745 trillion; over the same period, total debt held by the public increased by $15.473 trillion. Publicly held debt has been the biggest determinant of historical changes in the total stock of federal debt. Figure 1 shows changes in federal debt levels from FY1969 through FY2018. Though there has been a gradual increase in intragovernmental debt in recent decades, the decline in real debt following World War II and subsequent increase in debt levels beginning in the late 1970s were each caused primarily by similar changes in the stock of publicly held debt over those time periods. How Debt Contributes to Deficits Present borrowing outcomes affect future budgeting outcomes. Publicly held debt contributes directly to federal deficits through interest payments on debt issuances. Interest payments are made to both debt held by the public and intragovernmental debt. As the government serves as buyer and seller of intragovernmental debt, interest payments on those holdings do not affect the federal budget deficit. However, interest payments made on publicly held debt represent new federal spending, and are recorded in the budget as outlays when payments are made. The government incurs interest costs when it opts to finance spending through borrowing rather than through increased revenues. Net interest payments represent the amount paid from the government to debt holders in a given time period , less interest payments received for federal loan programs . For investors, purchasing a debt issuance represents both a loss of liquidity relative to currency holdings (money paid for the debt holding can be used immediately, while the debt issuance may only be resold on the secondary market or held until the date of maturity) and an opportunity cost (the money used for the purchase could have been spent on other items, invested elsewhere, or saved). Debt holders are compensated for those costs by receiving interest payments from Treasury on their issuances. From FY1969 to FY2018 net interest payments averaged 2.0% of annual GDP, equivalent to about $407 billion annually in 2018 dollars. High interest rates and increasing debt levels caused the net interest burden to peak in the 1980s and 1990s. Recent net interest payments have been lower than their long-term averages; in FY2018, net interest payments were $325 billion, or 1.6% of GDP. FY2018 payments were the product of real low interest rates and relatively high levels of real debt. Unless the federal debt is reduced, net interest payments will likely increase if interest rates shift toward their long-term averages. In its most recent forecast, the Congressional Budget Office (CBO) projects that real net interest payments will increase to 3.0% of GDP by FY2029. One way to measure the effect of debt on future deficits is to examine the relationship between total federal deficits and the primary deficit , which measures the balance of revenues and expenditures with net interest payments excluded. Figure 2 shows total and primary budget outcomes from FY1969 through FY2018. The gap between the total and primary outcomes in a given year is explained by net interest payments. The primary deficit averaged 0.9% of GDP from FY1969 to FY2018, as compared to the average total budget deficit of 2.9% of GDP recorded over the same time period. While the federal government recorded a budget surplus five times from FY1969 to FY2018, in nine other years it registered a primary surplus, most recently in 2007. Economic Theory, Deficits, and Debt: In Brief This section provides a primer of how government deficits and debt are integrated into the larger economy in both the short and long run, and provides some ways to measure such interactions. The nature of interaction between fiscal outcomes and economic performance may have ramifications for how Congr ess wishes to distribute its activity both within a recession or expansion and for what fiscal targets it wishes to set in the long run. How Deficits and Debt Contribute to the Economy: Short-Run Effects In the short run, when economic output is assumed to be fixed, output is a function of both private and public activity. Equation (1), also known as the national accounting identity , shows the different choices that can be made with all economic output in a given time period. It states that output ( Y ) in a given economy is equal to the sum of private consumption ( C ), private investment ( I ), net government investment ( G ), and net exports ( X ). Put another way, equation (1) asserts that output is the sum of private consumption, private saving, and net government activity. The net government deficit, or G , is shown in equation (2) as spending ( S ) less revenues ( R ). Absent a monetary policy intervention by the Federal Reserve (which makes monetary decisions independently), G must be obtained through government borrowing, or debt. (1) Y = C + I + G + X (2) G = S - R Since the levels of output ( Y ) and consumption ( C ) in a given time period are fixed, increases in government investment ( G ) will reduce private investment ( I ), net exports ( X ), or some combination thereof. Government borrowing increases that reduce private investment are commonly categorized as "crowding out," and represent a shift from private investment to public investment. Increased government borrowing that reduces net exports (generated by borrowing from foreign sources) represents an expansion of the short-term money supply, as money is being brought into the economy now at the expense of the future stock of money (as foreign borrowing is repaid). Such a fiscal expansion increases the quantity of money demanded, which drives up interest rates (or cost of borrowing). The federal government may choose to generate short-run budget deficits for a few reasons. Deficit financing, or payment for federal government activity at least partly through debt increases, increases the total level of spending in the economy. Most economists believe that the implementation of deficit financing can be used to generate a short-term stimulus effect, either for a particular industry or for the entire economy. In this view, increases in expenditures and tax reductions can be used to generate employment opportunities and consumer spending and reduce the intensity of stagnant economic periods. Deficit financing is a less effective countercyclical strategy when it leads to "crowding out," or when government financing merely replaces private-sector funding instead of inducing new economic activity, and is more likely to occur in periods of robust economic growth. Deficit reduction when the economy is operating near or at full potential can help prevent the economy from overheating and avoid "crowding out" of private investment, which could have positive implications for intergenerational equity and long-term growth. Deficit financing may also be used as part of a structurally balanced budget strategy, which alters government tax and spending levels to smooth the effect of business cycles. Smoothing budgetary changes may reduce the economic shocks deficits induce among businesses and households. Governments may also use federal deficits or surpluses to spread the payment burden of long-term projects across generations. This sort of intergenerational redistribution is one justification for the creation of long-run trust funds, such as those devoted to Social Security. How Deficits and Debt Contribute to the Economy: Long-Run Effects In the long run, when economic output is affected by supply-side choices, the effect of government borrowing on economic growth depends on how amounts borrowed are used relative to what would have otherwise been done with those savings (i.e., an increase in private investment or net exports) if such borrowing had not taken place. As shown in equation (3), economic growth, or the change ( Δ ) in output ( Y ), is a function ( f ) of the stock of labor ( L , or the number of people working and hours that they work), the stock of capital ( K , which includes equipment, machines, and all other nonlabor factors), and the knowledge and technological capability (A) that determines the productivity of labor and capital. (3) ΔY= f(ΔL, ΔK, ΔA) Assuming that the stock of labor is insensitive to fiscal policy choices, the effect of federal debt on economic growth depends on how the additional government activity affects the capital stock and productivity of labor and capital relative to what would have happened had amounts borrowed been invested privately or increased net exports. If that government activity (debt-financed spending) contributes to those factors more than the economic activity it replaced, than that debt financing will have had a positive effect on future economic growth (or potential). Alternatively, if such activity contributes less to those factors than the replaced private investment and net exports, it will reduce long-term economic potential. Changes in federal debt levels shift economic resources across time periods, a process sometimes described as an intertemporal transfer . Federal debt issuances represent an increase in the current level of federal resources and a decrease in future federal resources. Net interest payments, or the total interest payments made by the federal government (to creditors) on borrowed money less interest payments received (from individuals and institutions borrowing from the federal government or debtors), may be thought of as the total expense associated with past federal borrowing. Those resources cannot be allocated to other government services. Total borrowing is constrained by the money available for investment (savings in dollars) at a given point in time. This limit means that the amount of federal debt relative to output cannot increase indefinitely. The trajectory of federal debt is therefore thought to be unsustainable if debt taken as a share of output (measured in this report with gross domestic product, or GDP) rises continuously in long-term projections. This happens when growth in the stock of debt outpaces total economic growth, which can cause a variety of adverse outcomes, including reduced output, increased unemployment, higher inflation, higher private interest rates, and currency devaluation. Recent international experiences speak to the complexity of borrowing capacity. Both Greece and Japan experienced rapid growth in government debt in the past decade. Organization for Economic Co-operation and Development (OECD) data on general government debt (including municipal government debt) indicate that Greek debt rose from 115% of GDP in 2006 to 189% of GDP in 2017, while Japanese debt rose from 180% of GDP to 234% of GDP over the same time period. A loss in market confidence in Greek debt led to a severe recession, with GDP contracting by 9 percentage points in 2011 and long-term interest rates reaching 22% in 2012. Japanese borrowing was viewed to be more sustainable despite being higher, with relatively flat GDP levels and long-term interest rates close to zero in recent years. Among 31 OECD countries, the United States had the fifth-largest level of general government debt (136% of GDP, including debt from state and local governments) in 2017, the most recent year for which full data are available. How the Economy Contributes to Deficits The deficit's cyclical pattern can be attributed in part to "automatic stabilizers," or spending programs and tax provisions that cause the budget deficit to move in tandem with the business cycle without any change in law. More robust economic periods generally produce lower net deficits (or higher net surpluses), due to increases in receipts (from greater tax revenues) and reduced expenditures (from decreased demand for public assistance). The opposite effect occurs during recessions: as incomes and employment fall, the existing structure of the federal tax system automatically collects less revenue, and spending on mandatory income security programs, such as unemployment insurance, automatically rises. CBO estimates that the share of the deficit attributable to automatic stabilizers fell from 1.9% of GDP in FY2010 to 0.0% of GDP in FY2018. In other words, the budget deficit recorded in FY2018 (3.8% of GDP) is nearly identical to the "structural deficit" that economists would expect with automatic stabilizer effects removed from the budget. Figure 3 shows the real economic growth (as a percentage on the horizontal axis) and the federal budget outcome (as a percentage of GDP, on the vertical axis) in each fiscal year from FY1969 through FY2018. The positive correlation between economic outcomes and budget outcomes is picked up by the general direction of the trend line from the lower left part of the graph to the upper right area. How the Economy Contributes to Debt All else equal, higher levels of nominal GDP make a given amount of debt easier to repay by eroding its real value. For example, the highest measurement of debt since 1940 occurred in 1946, when the federal debt level was 118.9% of GDP, or $271 billion in (nominal) FY1946 dollars. In contrast, $271 billion was equivalent to only 1.3% of GDP in FY2018. Increases in nominal GDP may be caused by productivity increases, economic inflation—which measures the purchasing power of currency—or a combination of each factor. Though changes in economic growth rates typically have a relatively small effect on real debt levels in the short run, long-run changes in economic productivity can have a significant effect on the trajectory and sustainability of the debt burden. For instance, from FY2009 through FY2018, federal deficits averaged 5.3% of GDP, and real economic growth averaged 1.76% per year over the same period; those factors combined to increase federal publicly held debt from 39% of GDP at the beginning of FY2008 to 78% of GDP at the end of FY2018. Though real deficits were actually larger from FY1943 to FY1952 (averaging 7.3% of GDP), robust real economic growth over that period (3.6% per year) meant that the change in publicly held debt in that decade was smaller (45% of GDP to 60% to GDP) than in the FY2009-FY2018 period. Deficit and Debt Outlook The FY2018 real deficit equaled 3.8% of GDP, which was higher than the average federal deficit from FY1969 to FY2018 (2.9% of GDP). Both real deficits and real debt are projected to increase over the course of the 10-year budget window, which runs through FY2029. In its latest economic forecast, the CBO projected that the total burden of U.S. debt held by the public would steadily increase over the course of the budget window, from 77.8% of GDP in FY2018 to 92.7% of GDP in FY2029. Table 2 provides the most recent forecasts for publicly held debt issued by the CBO. Each forecast projects an increase in publicly held debt over the next 5, 10, and 25 fiscal years. The CBO baseline assumes that current law continues as scheduled. Specifically, the CBO baseline assumes that discretionary budget authority from FY2020 through FY2021 will be restricted by the caps created by the Budget Control Act (BCA; P.L. 112-25 ), as amended, and that certain tax policy changes enacted in the 2017 tax revision ( P.L. 115-97 ) and in other laws will expire as scheduled under current law. CBO also provides alternative projections where such assumptions are revised. If discretionary spending increases with inflation after FY2019, instead of proceeding in accordance with the limits instituted by the BCA, and if tax reductions in the 2017 tax revision are extended, CBO projects that federal debt held by the public would increase to 97% of GDP by FY2029. CBO also produces a long-term baseline that uses a number of additional assumptions to extend its standard baseline an additional 20 years (thus the 2018 long-term baseline runs through FY2049). The current long-term forecast projects that publicly held federal debt will equal 147% of GDP in FY2049, which would exceed the highest stock of federal debt experienced in the FY1940-FY2018 period (106% of GDP in FY1946). CBO projects increases in both interest rates and publicly held federal debt over the next 10 years, leading to a significant rise in U.S. net interest payments. As noted above, CBO projects that publicly held federal debt will rise from 77.8% of GDP in FY2018 to 92.7% of GDP in FY2029, and projects that the average interest rate on three-month Treasury bills will rise from 1.66% in FY2017 to 2.81% in FY2029. Those factors combine to generate federal net interest payments of 3.0% of GDP in FY2029 under the CBO projections, which would be just under the highest amount paid from FY1940 through FY2017 (3.2% of GDP in FY1991). International Context It may be useful to compare the recent U.S. federal borrowing trajectory with the practices of international governments, because future interest rate and fiscal space considerations will both be affected by the behavior of other major actors. Table 3 includes the general government debt history and projections for G-7 countries and the European Area from FY2000 to FY2023. The worldwide impact of the Great Recession led to increased general gross debt levels for all G-7 countries in 2013 relative to their 2000-2009 average. As shown in Table 3 , U.S. debt levels rose by 40% of GDP over that time period, which was larger than increases in Canada and the European Area but smaller than rises in the United Kingdom and Japan. General debt levels largely stabilized from 2013 to 2018, with decreases in Germany and the European Area and small increases in other countries. Future projections of debt included in Table 3 are characterized by a divergence between U.S. general gross debt levels and those in other G-7 countries. The IMF forecast projects that U.S. general gross debt will rise from 106% to 117% from 2018 to 2023, while those same projections forecast a decrease in debt owed by all other G-7 governments and in the European Area. Addressing the potential consequences of those projections will likely involve policy adjustments that reduce future budget deficits, either through tax increases, reductions in spending, or a combination of the two. Under CBO's extended baseline, maintaining the debt-to-GDP ratio at today's level (78%) in FY2048 would require an immediate and permanent cut in noninterest spending, increase in revenues, or some combination of the two in the amount of 1.9% of GDP (or about $400 billion in FY2018 alone) in each year. Maintaining this debt-to-GDP ratio beyond FY2047 would require additional deficit reduction. If policymakers wanted to lower future debt levels relative to today, the annual spending reductions or revenue increases would have to be larger. For example, in order to bring debt as a percentage of GDP in FY2048 down to its historical average over the past 50 years (40% of GDP), spending reductions or revenue increases or some combination of the two would need to generate net savings of roughly 3.0% of GDP (or $630 billion in FY2018 alone) in each year.

The federal government incurs a budget deficit when its total outgoing payments (outlays) exceed the total money it collects (revenues). If instead federal revenues are greater than outlays, then the federal government generates a surplus. Deficits are measured over the course of a defined period of time—in the case of the federal government, a fiscal year. Debt measurements may be taken at any point in time, and represent the accumulation of all previous government borrowing activity from private citizens, institutions, foreign governments, and other parts of the federal government. Federal debt increases when there are net budget deficits and outflows made for federal credit programs, which combine to represent debt held by the public. Federal debt also rises through increases in intragovernmental debt, which is generated by trust fund surpluses that are used to finance other government activity. Federal debt declines when there are budget surpluses, a reduction in the federal credit portfolio, or decreases in intragovernmental borrowing. Federal deficit and debt outcomes are interdependent: budget deficits increase federal debt levels, which in turn increase future net deficits. The nature of the relationship between deficits and debt varies depending on the type of debt considered. Budget deficits are the principal contributor to debt held by the public. The effect of deficits on intragovernmental debt is less certain than their contribution to debt held by the public. All else equal, increases in net trust fund deficits will lead to increases in total budget deficits but decreases in intragovernmental debt. Interest payments made on publicly held debt instruments contribute directly to federal deficits. Holders of federal debt are compensated by receiving interest payments from Treasury. Intragovernmental debt does not contribute to future deficits. Persistent budget deficits and a large and increasing federal debt have generated discussions over the long-term sustainability of current budget projections. Federal budget deficits declined from 9.8% of gross domestic product (GDP) in FY2009 to 2.4% of GDP in FY2015, and subsequently increased to 3.8% of GDP in FY2018. Recent estimates forecast that the government will run deficits in every year through FY2029. Federal debt totaled $21.516 trillion at the end of FY2018, which as a percentage of GDP (106.0%) was its highest value since FY1947; of that debt, $15.761 trillion (or 77.8% of GDP) was held by the public. Over time, persistent budget deficits can hamper economic growth. Deficits represent an intertemporal transfer from later generations to the current one, as money borrowed now will eventually require repayment with interest. The effect of deficit financing on economic output depends on the nature of the government activity being financed and the private activity that would have otherwise taken place. Federal debt is constrained by the willingness of investors to finance borrowing. While the amount of federal borrowing investors will finance may be affected by economic growth and other factors, real federal debt cannot increase indefinitely. There are no signs that federal borrowing capacity will be exhausted in the short term. However, the consequences of exhausted fiscal space may be worth considering when examining the medium- and long-term trajectory of the federal budget.

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Introduction The program activities of most federal agencies are generally funded on an annual basis through the enactment of 12 regular appropriations acts . When those annual appropriations acts are not enacted by the beginning of the fiscal year (i.e., by October 1), one or more continuing appropriations acts may be enacted to provide temporary funding to continue certain programs and activities until action on regular appropriations acts is completed. Such funding is provided for a specified period of time, which may be extended through the enactment of subsequent CRs. A continuing appropriations act is commonly referred to as a continuing resolution or CR because it has typically been in the form of a joint resolution rather than a bill. But there is no procedural requirement as to its form. Continuing appropriations are also occasionally provided through a bill. If appropriations are not enacted for a fiscal year through a regular appropriations act or a CR, a "funding gap" occurs until such appropriations are provided. When a funding gap occurs, federal agencies may be directed to begin a "shutdown" of the affected programs and activities. Agencies are generally prohibited from obligating or expending federal funds in the absence of appropriations. Congress has enacted one or more CRs in all but three of the 43 fiscal years since FY1977. Further information is available in Table 2 of this report. In total, 186 CRs were enacted into law during the period covering FY1977-FY2019, ranging from zero to 21 in any single fiscal year. On average, about four CRs were enacted each fiscal year during this interval. Table 3 and Figure 1 of this report provide more information on this aspect of CRs. This report provides an overview of the components of CRs and information about congressional practices related to their use. The first section of this report explains six of the typical main components of CRs: coverage, duration, funding rate, restrictions on new activities, anomalies, and legislative provisions. The second section discusses the enactment of regular appropriations acts prior to the start of the fiscal year and the number of CRs enacted, beginning with FY1977, which was the first fiscal year that began on October 1. The third section provides information on the variation in the number and duration of CRs enacted each fiscal year after FY1997—the most recent fiscal year in which all regular appropriations were enacted before the start of the new fiscal year. Finally, the fourth section of this report discusses the features of the 15 "full-year CRs" that provided funding through the remainder of the fiscal year. For further information, see Table 4 in this report. A list of all CRs enacted between FY1977 and FY2019 is provided at the end of this report in Table 5 . This report has been updated from the previous January 2016 version to include information on FY2017, FY2018, and FY2019. Main Components of Continuing Resolutions Congress has included six main components in CRs. First, CRs provide funding for certain activities ( coverage ), which are typically specified with reference to the prior or current fiscal year's appropriations acts. Second, CRs provide budget authority for a specified duration of time. This duration may be as short as a single day or as long as the remainder of the fiscal year. Third, CRs typically provide funds based on an overall funding rate . Fourth, the use of budget authority provided in the CR is typically prohibited for new activities not funded in the previous fiscal year. Fifth, the duration and amount of funds in the CR, and purposes for which they may be used for specified activities, may be adjusted through anomalies . Sixth, legislative provisions —which create, amend, or extend other laws—have been included in some instances. Although this section discusses the above components as they have been enacted in CRs under recent practice, it does not discuss their potential effects on budget execution or agency operations. For analysis of these issues, see CRS Report RL34700, Interim Continuing Resolutions (CRs): Potential Impacts on Agency Operations . Coverage A CR provides funds for certain activities, which are typically specified with reference to other pieces of appropriations legislation or the appropriations acts for a previous fiscal year. Most often, the coverage of a CR is defined with reference to the activities funded in prior fiscal years' appropriations acts for which the current fiscal year's regular appropriations have yet to be enacted. For example, in Section 101 of P.L. 111-68 (the first CR for FY2010), the coverage included activities funded in selected regular and supplemental appropriations acts for FY2008 and FY2009: Sec. 101. Such amounts as may be necessary… under the authority and conditions provided in such Acts, for continuing projects or activities (including the costs of direct loans and loan guarantees) that are not otherwise specifically provided for in this joint resolution, that were conducted in fiscal year 2009, and for which appropriations, funds, or other authority were made available in the following appropriations Acts: (1) Chapter 2 of title IX of the Supplemental Appropriations Act, 2008 ( P.L. 110-252 ). (2) Section 155 of division A of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 ( P.L. 110-329 ), except that subsections (c), (d), and (e) of such section shall not apply to funds made available under this joint resolution. (3) Divisions C through E of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 ( P.L. 110-329 ). (4) Divisions A through I of the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ), as amended by section 2 of P.L. 111-46 . (5) Titles III and VI (under the heading `Coast Guard ' ) of the Supplemental Appropriations Act, 2009 ( P.L. 111-32 ). [emphasis added] Less frequently, CRs specify coverage with reference to regular appropriations bills for the current fiscal year that have yet to be enacted. In these instances, it is possible that an activity covered in the corresponding previous fiscal year's appropriations bill might not be covered in the CR. Alternatively, a CR might stipulate that activities funded in the previous fiscal year are covered only if they are included in a regular appropriations bill for the current fiscal year. For example, Section 101 of P.L. 105-240 , the first CR for FY1999, provided that funding would continue only under such circumstances. SEC. 101. (a) Such amounts as may be necessary under the authority and conditions provided in the applicable appropriations Act for the fiscal year 1998 for continuing projects or activities including the costs of direct loans and loan guarantees (not otherwise specifically provided for in this joint resolution) which were conducted in the fiscal year 1998 and for which appropriations, funds, or other authority would be available in the following appropriations Acts : (1) the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999…. (8) the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 1999, the House and Senate reported versions of which shall be deemed to have passed the House and Senate respectively as of October 1, 1998, for the purposes of this joint resolution, unless a reported version is passed as of October 1, 1998, in which case the passed version shall be used in place of the reported version for purposes of this joint resolution; (9) the Legislative Branch Appropriations Act, 1999…. [emphasis added] CRs may be enacted as stand-alone legislative vehicles or as provisions attached to a regular appropriations bill or an omnibus bill. In instances in which one or more regular appropriations bills are near completion, Congress may find it expeditious to include a CR in that same legislative vehicle to cover activities in the remaining regular bills that are not yet enacted. In such instances, some activities may be covered by reference while funding for others is provided through the text of the measure. For example, Division C of P.L. 115-245 —the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019, and Continuing Appropriations Act, 2019—provided continuing appropriations through December 7, 2018, by referencing the FY2018 regular appropriations acts, while the other divisions of P.L. 115-245 provided full-year regular appropriations for the FY2019 Defense and Labor-HHS-ED bills. Duration The duration of a CR refers to the period for which budget authority is provided for covered activities. The period ends either upon the enactment of the applicable regular appropriations act or on an expiration date specified in the CR, whichever occurs first. When a CR expires prior to the completion of all regular appropriations bills for a fiscal year, one or more additional CRs may be enacted to prevent funding gaps and secure additional increments of time to complete the remaining regular appropriations bills. The duration of any further CRs may be brief, sometimes a single day, to encourage the process to conclude swiftly, or it may be for weeks or months to accommodate further negotiations or congressional recesses. In some cases, CRs have carried over into the next session of Congress. In most of the fiscal years in which CRs have been used, a series of two or more have been enacted into law. Such CRs may be designated by their order (e.g., "first" CR, "second" CR) or, after the initial CR has been enacted, designated as a "further" CR. When action on the regular appropriations bills is not complete by the time when the first CR expires, subsequent CRs will often simply replace the expiration date in the preceding CR with a new expiration date. For example, Section 1 of the third CR for FY2016, P.L. 114-100 , stated that "Public Law 114-53 is amended by striking the date specified in Section 106(3) and inserting 'December 22, 2015.'" This action extended the duration of the preceding CR by six days. Funds provided by a CR will not necessarily be used by all covered activities through the date the CR expires. In practice, the budget authority provided by a CR may be superseded by the enactment of subsequent appropriations measures or the occurrence of other specified conditions. In an instance in which a regular appropriations bill was enacted prior to the expiration of a CR, the budget authority provided by the regular bill for covered activities would replace the funding provided by the CR. All other activities in the CR, however, would continue to be funded by the CR unless they were likewise superseded or the CR expired. The duration of funds for certain activities could also be shortened if other conditions that are specified in the CR occur. For example, Section 107 of P.L. 108-84 , the first CR for FY2004, provided funds for 31 days or fewer: Sec. 107. Unless otherwise provided for in this joint resolution or in the applicable appropriations Act, appropriations and funds made available and authority granted pursuant to this joint resolution shall be available until (a) enactment into law of an appropriation for any project or activity provided for in this joint resolution, or (b) the enactment into law of the applicable appropriations Act by both Houses without any provision for such project or activity, or (c) October 31, 2003, whichever first occurs . [emphasis added] In this instance, funding for all other activities not subject to these conditions would continue under the CR until it expired or was otherwise superseded. When a CR is attached to a regular appropriations bill, the activities covered by regular appropriations are funded through the remainder of the fiscal year, whereas the activities covered by the CR are funded through a specified date. Congress may also single out specific activities in a CR to receive funding for a specified duration that differs from the vast majority of other accounts and activities. This type of variation in duration is discussed in the " Exceptions to Duration, Amount, and Purposes: Anomalies " section. As an alternative to the separate enactment of one or more of the regular appropriations bills for a fiscal year, a CR may provide funds for the activities covered in such bills through the remainder of the fiscal year. This type of CR is referred to as a full-year CR. Full-year CRs may provide funding for all bills that have yet to be enacted or include the full text of one or more regular appropriations bills. For example, Division A of P.L. 112-10 contained the text of the FY2011 Defense Appropriations Act, whereas the programs and activities covered by the 11 remaining regular appropriations bills were funded by the full-year CR in Division B. Funding Rate CRs often fund activities under a formula-type approach that provides budget authority at a restricted level but not a specified amount. This method of providing budget authority is commonly referred to as the "funding rate." Under a funding rate, the amount of budget authority for an account is calculated as the total amount of budget authority annually available based on a reference level (usually a dollar amount or calculation), multiplied by the fraction of the fiscal year for which the funds are made available in the CR. This is in contrast to regular and supplemental appropriations acts, which generally provide specific amounts for each account. In previous years, many CRs have provided funding across accounts by reference to the amount of budget authority available in specified appropriations acts from the previous fiscal year. For example, Section 101 of P.L. 110-329 , the first CR for FY2010, provided the following funding rate: Such amounts as may be necessary, at a rate for operations as provided in the applicable appropriations Acts for fiscal year 2008 and under the authority and conditions provided in such Acts, for continuing projects or activities (including the costs of direct loans and loan guarantees) that are not otherwise specifically provided for in this joint resolution, that were conducted in fiscal year 2008, and for which appropriations, funds, or other authority were made available in the following appropriations Acts: divisions A, B, C, D, F, G, H, J, and K of the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ) . [emphasis added] Other CRs have provided funding by reference to the levels available in the previous fiscal year, with either an increase or decrease from the previous fiscal year's level. For example, Section 101(a) and (b) of P.L. 112-33 , the first CR for FY2012, provided the following funding rate: (a) Such amounts as may be necessary, at a rate for operations as provided in the applicable appropriations Acts for fiscal year 2011 and under the authority and conditions provided in such Acts, for continuing projects or activities (including the costs of direct loans and loan guarantees) that are not otherwise specifically provided for in this Act, that were conducted in fiscal year 2011, and for which appropriations, funds, or other authority were made available in the following appropriations Acts…. (b) The rate for operations provided by subsection (a) is hereby reduced by 1.503 percent . [emphasis added] Although these examples illustrate the most typical types of funding rates, other types of funding rates have sometimes been used when providing continuing appropriations. For example, P.L. 105-240 , the first CR for FY1999, provided a variable funding rate for covered activities. Specifically, the CR provided funds derived from three possible reference sources: the House- and Senate-passed FY1999 regular appropriations bills, the amount of the President's budget request, or "current operations" (the total amount of budget authority available for obligation for an activity during the previous fiscal year), whichever was lower. In instances where no funding was provided under the House-and Senate-passed FY1999 appropriations bills, the funding rate would be based on the lower of the President's budget request or current operations. In addition, while the first CR for a fiscal year may provide a certain funding rate, subsequent CRs sometimes may provide a different rate. CRs have sometimes provided budget authority for some or all covered activities by incorporating the actual text of one or more regular appropriations bills for that fiscal year rather than providing funding according to the rate formula. For example, P.L. 112-10 provided funding for the Department of Defense through the incorporation of a regular appropriations bill in Division A, whereas Division B provided formulaic funding for all other activities for the remainder of the fiscal year. In this type of instance, the formula in the CR applies only to activities not covered in the text of the incorporated regular appropriations bill or bills. Purpose for Funds and Restrictions on New Activities CRs that provide a funding rate for activities often stipulate that funds may be used for the purposes and in the manner provided in specified appropriations acts for the previous fiscal year. CRs may also provide that the funds provided may be used only for activities funded in the previous fiscal year. In practice, this is often characterized as a prohibition on "new starts." In addition, conditions and limitations on program activity from the previous year's appropriations acts may be retained by language contained within the resolution's text. An example of such language, from P.L. 112-33 , is below: Sec. 103. Appropriations made by section 101 shall be available to the extent and in the manner that would be provided by the pertinent appropriations Act. [emphasis added] Sec. 104. Except as otherwise provided in section 102, no appropriation or funds made available or authority granted pursuant to section 101 shall be used to initiate or resume any project or activity for which appropriations, funds, or other authority were not available during fiscal year 2011. [emphasis added] This language prevents the initiation of new activities with the funds provided in the CR. Agencies may use appropriated funds from prior fiscal years that remain available, however, to initiate new activities in some circumstances. Exceptions to Duration, Amount, and Purposes: Anomalies Even though CRs typically provide funds at a rate, they may also include provisions that enumerate exceptions to the duration , amount , or purposes for which those funds may be used for certain appropriations accounts or activities. Such provisions are commonly referred to as "anomalies." The purpose of anomalies is to preserve Congress's constitutional prerogative to provide appropriations in the manner it sees fit, even in instances when only short-term funding is provided. Duration A CR may contain anomalies that designate a duration of funding for certain activities that is different from the overall duration provided. For example, Section 112 of P.L. 108-84 provided an exception to the expiration date of October 31, 2003, specified in Section 107(c) of the CR: For entitlements and other mandatory payments whose budget authority was provided in appropriations Acts for fiscal year 2003, and for activities under the Food Stamp Act of 1977, activities shall be continued at the rate to maintain program levels under current law, under the authority and conditions provided in the applicable appropriations Act for fiscal year 2003, to be continued through the date specified in section 107(c): Provided , That notwithstanding section 107, funds shall be available and obligations for mandatory payments due on or about November 1 and December 1, 2003, may continue to be made . [emphasis added] Amount Anomalies may also designate a specific amount or rate of budget authority for certain accounts or activities that is different than the funding rate provided for the remainder of activities in the CR. Typically, such funding is specified as an annualized rate based upon a lump sum. For example, Section 120 of P.L. 112-33 provided the following anomaly for a specific account, which was an exception to the generally applicable rate in Section 101: Notwithstanding section 101, amounts are provided for "Defense Nuclear Facilities Safety Board—Salaries and Expenses" at a rate for operations of $29,130,000. [emphasis added] Funding adjustments can also be provided in anomalies for groups of accounts in the bill. For example, Section 121 of P.L. 112-33 provided a different rate for certain funds in a group of accounts: Notwithstanding any other provision of this Act, except section 106, the District of Columbia may expend local funds under the heading "District of Columbia Funds" for such programs and activities under title IV of H.R. 2434 (112 th Congress), as reported by the Committee on Appropriations of the House of Representatives, at the rate set forth under ''District of Columbia Funds—Summary of Expenses'' as included in the Fiscal Year 2012 Budget Request Act of 2011 (D.C. Act 19–92), as modified as of the date of the enactment of this Act. [emphasis added] Further, anomalies may provide exceptions to amounts specified in other laws. For example, Section 121 of P.L. 110-329 provided that funds may be expended in excess of statutory limits up to an alternative rate. Notwithstanding the limitations on administrative expenses in subsections (c)(2) and (c)(3)(A) of section 3005 of the Digital Television Transition and Public Safety Act of 2005 ( P.L. 109-171 ; 120 Stat. 21), the Assistant Secretary (as such term is defined in section 3001(b) of such Act) may expend funds made available under sections 3006, 3008, and 3009 of such Act for additional administrative expenses of the digital-to-analog converter box program established by such section 3005 at a rate not to exceed $180,000,000 through the date specified in section 106(3) of this joint resolution. [emphasis added] Purpose CRs may also use anomalies to alter the purposes for which the funds may be expended. Such anomalies may allow funds to be spent for activities that would otherwise be prohibited or prohibit funds for activities that might otherwise be allowed. For example, Section 114 of P.L. 108-309 , the first CR for FY2005, prohibited funds from being available to a particular department for a certain activity: Notwithstanding any other provision of this joint resolution, except sections 107 and 108, amounts are made available for the Strategic National Stockpile ("SNS") at a rate for operations not exceeding the lower of the amount which would be made available under H.R. 5006, as passed by the House of Representatives on September 9, 2004, or S. 2810, as reported by the Committee on Appropriations of the Senate on September 15, 2004: Provided, That no funds shall be made available for the SNS to the Department of Homeland Security under this joint resolution …. [emphasis added] Legislative Provisions Substantive legislative provisions, which have the effect of creating new law or changing existing law, have also been included in some CRs. One reason why CRs have been attractive vehicles for such provisions is that they are often widely considered to be must-pass measures to prevent funding gaps. Legislative provisions previously included in CRs have varied considerably in length, from a short paragraph to more than 200 pages. House and Senate rules restrict the inclusion of legislative provisions in appropriations bills, but such restrictions are applicable in different contexts. Although House rules prohibit legislative provisions from being included in general appropriations measures (including amendments or any conference report to such measures), these restrictions do not apply to CRs. Senate rules prohibit non-germane amendments that include legislative provisions either on the Senate floor or as an amendment between the houses. While these Senate restrictions do apply in the case of CRs, there is considerable leeway on when such provisions may be included, such as when the Senate amends a legislative provision included by the House. The rules of the House and Senate are not self-enforcing. A point of order must be raised and sustained to prevent any legislative language from being considered and enacted. Substantive provisions in CRs have included language that established major new policies, such as an FY1985 CR, which contained the Comprehensive Crime Control Act of 1984. More frequently, CRs have been used to amend or renew provisions of law. For example, Section 140 of P.L. 112-33 retroactively renewed import restrictions under the Burmese Freedom and Democracy Act of 2003 ( P.L. 108-61 ): (a) Renewal of Import Restrictions Under Burmese Freedom and Democracy Act of 2003.— (1) In general.—Congress approves the renewal of the import restrictions contained in section 3(a)(1) and section 3A (b)(1) and (c)(1) of the Burmese Freedom and Democracy Act of 2003. (2) Rule of construction.—This section shall be deemed to be a "renewal resolution" for purposes of section 9 of the Burmese Freedom and Democracy Act of 2003. (b) Effective Date.—This section shall take effect on July 26, 2011. CRs have also contained legislative provisions that temporarily extended expiring laws. For example, Section 136 of P.L. 115-298 extended the National Flood Insurance Program: Sec. 136. Sections 1309(a) and 1319 of the National Flood Insurance Act of 1968 ( 42 U.S.C. 4016(a) and 4026) shall be applied by substituting the date specified in section 105(3) of this Act for 'December 7, 2018.' Legislative provisions that temporarily extend expiring laws are effective through the date the CR expires, unless otherwise specified. The Enactment of Regular Appropriations Bills and Use of CRs, FY1977-FY2019 As mentioned previously, regular appropriations were enacted after October 1 in all but four fiscal years between FY1977 and FY2019. Consequently, CRs have been needed in almost all of these years to prevent one or more funding gaps from occurring. Table 2 provides an overview of the enactment of regular appropriations bills and the use of CRs between FY1977 and FY2019. All appropriations were enacted before the start of the new fiscal year four times during this period: FY1977, FY1989, FY1995, and FY1997. Over half of the regular appropriations bills for a fiscal year were enacted before the start of the new fiscal year in only one instance (FY1978). In all other fiscal years, fewer than six regular appropriations acts were enacted on or before October 1. In addition, in 15 out of the 43 years during this period, no regular appropriations bills were enacted prior to the start of the fiscal year. Ten of these fiscal years have occurred in the interval since FY2001. CRs were enacted in all but three of these fiscal years (FY1989, FY1995, and FY1997). In FY1977, although all 13 regular appropriations bills became law on or before the start of the fiscal year, two CRs were enacted to provide funding for certain activities that had not been included in the regular appropriations acts. Duration and Frequency of Continuing Resolutions, FY1998-FY2019 CRs have been a significant element of the recent annual appropriations process. As shown in Table 3 , a total of 117 CRs were enacted into law from FY1998 to FY2019. While the average number of such measures enacted per year was about five, the number enacted ranged from two measures (for FY2009, FY2010, and FY2013) to 21 (for FY2001). During the past 22 fiscal years, Congress provided funding by means of a CR for an average of almost five months (143 days) each fiscal year. Taking into account the total duration of all CRs for each fiscal year, the period for which continuing appropriations were provided ranged from 21 days to 365 days. On average, each of the 117 CRs lasted for about 39 days; 53 of these were for seven days or fewer. Three full-year CRs were used during this period, for FY2007, FY2011, and FY2013. In the first four instances (FY1998-FY2001), the expiration date of the final CR was set in the first quarter of the fiscal year on a date occurring between October 21 and December 21. The expiration date in the final CR for the next three fiscal years (FY2002-FY2004) and FY2019, however, was set in the following session of Congress on a date occurring between January 10 and February 20. In six of the next 12 fiscal years (FY2005, FY2006, FY2008, FY2010, FY2012, and FY2016), the expiration dates were in the first quarter of the fiscal year on a date occurring between December 8 and December 31. For the remaining fiscal years, the final CRs were enacted during the next session of Congress. In one instance, the final CR for the fiscal year expired during the month of January (FY2014). In three instances, the final CR expired in March (FY2009, FY2015, and FY2018). Three other final CRs—for FY2007, FY2011, and FY2013—provided funding through the end of the fiscal year. Figure 1 presents a representation of the duration of CRs for FY1998-FY2019. As the figure shows, there is no significant correlation between these two variables. For example, six CRs were enacted for both FY1998 and FY1999, but the same number of measures lasted for a period of 57 days for FY1998 and only 21 days for FY1999. The largest number of CRs enacted for a single fiscal year during this period—21 for FY2001—covered a period lasting 82 days at an average duration of about four days per act. The smallest number enacted—two each for FY2009, FY2010, and FY2013—covered 162 days, 79 days, and 365 days, respectively. Figure 1 also shows considerable mix in the use of shorter-term and longer-term CRs for a single fiscal year. For example, for FY2001, 21 CRs covered the first 82 days of the fiscal year. The first 25 days were covered by a series of four CRs lasting between five and eight days each. The next 10 days, a period of intense legislative negotiations leading up to the national elections on November 7, 2000, were covered by a series of 10 one-day CRs. The next 31 days were covered by two CRs, the first lasting 10 days and the second lasting 21 days. The first of these two CRs was enacted into law on November 4, the Saturday before the election, and extended through November 14, the second day of a lame-duck session. The second CR was enacted into law on November 15 and expired on December 5, which was 10 days before the lame-duck session ended. The remaining five CRs, which ranged in duration from one to six days, covered the remainder of the lame-duck session and several days beyond (as the final appropriations measures passed by Congress were being processed for the President's approval). Table 5 provides more detailed information on the number, length, and duration of CRs enacted for FY1977-FY2019. As indicated previously, this represents the period after the start of the federal fiscal year was moved from July 1 to October 1 by the Congressional Budget Act. Features of Full-Year CRs After FY1977 Full-year CRs have been used to provide annual discretionary spending on a number of occasions. Prior to the full implementation of the Congressional Budget Act in FY1977, full-year CRs were used occasionally, particularly in the 1970s. Full-year CRs were enacted into law for four of the six preceding fiscal years (FY1971, FY1973, FY1975, and FY1976). Following the successful completion of all 13 regular appropriations acts prior to the start of FY1977, full-year CRs were used in each of the 11 succeeding fiscal years (FY1978-FY1988) to cover at least one regular appropriations act. Three years later, another full-year CR was enacted for FY1992. Most recently, full-year CRs were enacted for FY2007, FY2011, and FY2013. Table 4 identifies the 15 full-year CRs enacted for the period since FY1977. Nine of the 15 full-year CRs during this period were enacted in the first quarter of the fiscal year—three in October, two in November, and four in December. The six remaining measures, however, were enacted during the following session between February 15 and June 5. The full-year CRs enacted during this period also varied in terms of length and the form of funding provided. Full-year CRs prior to FY1983 were relatively short measures, ranging in length from one to four pages in the Statutes-at-Large . Beginning with FY1983 and extending through FY1988, however, the measures became much lengthier, ranging from 19 to 451 pages. The greater page length of full-year CRs enacted for the period covering FY1983-FY1988 may be explained by two factors. First, full-year CRs enacted prior to FY1983 generally established funding levels by formulaic reference. Beginning with FY1983, however, Congress began to incorporate the full text of some or all of the covered regular appropriations acts, thereby increasing its length considerably. None of the full-year CRs enacted between 1985 and 1988 used formulaic funding provisions. Secondly, the number of regular appropriations acts covered by full-year CRs increased significantly during the FY1983-FY1988 period. For the period covering FY1978-FY1982, the number of regular appropriations acts covered by CRs for the full fiscal year ranged from one to six (averaging about three). Beginning with FY1983 and extending through FY1988, the number of covered acts ranged from five to 13, averaging about 10. The next two full-year CRs, for FY1992 and FY2007, returned to the earlier practice of using formulaic references and anomalies to establish funding levels. Both CRs provided funding only through this means. As a consequence, the length of these measures was considerably shorter than the FY1983 through FY1988 full-year CRs. The two most recent full-year CRs, for FY2011 and FY2013, in some respects were a hybrid of the earlier and recent approaches. The FY2011 full-year CR provided funding for 11 bills through formulaic provisions and anomalies. It also carried the full text of one regular appropriations bill in a separate division of the act (the FY2011 Department of Defense Appropriations Act). Similarly, the FY2013 CR contained the texts of five regular appropriations bills in Divisions A through E of the act—the FY2013 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act; the Commerce, Justice, Science, and Related Agencies Appropriations Act; the Department of Defense Appropriations Act; the Department of Homeland Security Appropriations Act; and the Military Construction and Veterans Affairs and Related Agencies Appropriations Act. In addition, Division F was characterized as providing continuing appropriations for the remaining seven regular appropriations bills through formulaic provisions and anomalies. Unlike previous years, the formula for providing continuing appropriations was based on the amount provided in FY2012 rather than a rate.

The program activities of most federal agencies are generally funded on an annual basis through the enactment of regular appropriations acts. When those annual appropriations acts are not enacted by the beginning of the fiscal year (i.e., by October 1), one or more continuing appropriations acts (commonly known as continuing resolutions or CRs) may be enacted to provide temporary funding to continue certain programs and activities until action on the regular appropriations acts is completed. Congress has included six main components in CRs. First, CRs have provided funding for certain activities (coverage), which are typically specified with reference to the prior fiscal year's appropriations acts. Second, CRs have provided budget authority for a specified duration of time. This duration may be as short as a single day or as long as the remainder of the fiscal year. Third, CRs have provided funds based on an overall funding rate. Fourth, the use of budget authority provided in the CR has been prohibited for new activities not funded in the previous fiscal year. Fifth, the duration and amount of funds in the CR, and purposes for which they may be used for specified activities, may be adjusted through anomalies. Sixth, legislative provisions—which create, amend, or extend other laws—have been included in some instances. This report provides detailed information on CRs beginning with FY1977, which was the first fiscal year that began on October 1. Congress has enacted one or more CRs in all but three of the last 43 fiscal years (FY1977-FY2019). In addition, in 10 of the last 18 fiscal years, the initial CR—and in some years subsequent CRs—provided continuing appropriations for all the regular appropriations acts. After FY1997—the most recent fiscal year that all regular appropriations bills were enacted before the start of the new fiscal year—an average of at least five CRs were signed into law for each fiscal year before the appropriations process was completed for that year. During this period, CRs provided funding for an average of almost five months each fiscal year. For some fiscal years, a CR has provided continuing appropriations (i.e., at a rate of operations) through the end of that year (often referred to as a full-year CR). Most recently, a full-year CR was enacted for most of the regular appropriations acts for FY2007, FY2011, and FY2013. In the 1980s, in contrast, some "full-year CRs" actually included the full text of certain regular appropriations acts (i.e., in the form of an omnibus appropriations act rather than a typical CR).

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CRA Background and Objectives Congress passed the Community Reinvestment Act of 1977 (CRA; P.L. 95-128 , 12 U.S.C. §§2901-2908) in response to concerns that federally insured banking institutions were not making sufficient credit available in the local areas in which they were chartered and acquiring deposits. According to some in Con gress, the granting of a public bank charter should translate into a continuing obligation for that bank to serve the credit needs of the public where it was chartered. Consequently, the CRA was enacted to "re-affirm the obligation of federally chartered or insured financial institutions to serve the convenience and needs of their service areas" and "to help meet the credit needs of the localities in which they are chartered, consistent with the prudent operation of the institution." The CRA requires federal banking regulators to conduct examinations to assess whether a bank is meeting local credit needs. The regulators issue CRA credits, or points, where banks engage in qualifying activities—such as mortgage, consumer, and business lending; community investments; and low-cost services that would benefit low- and moderate-income (LMI) areas and entities—that occur within assessment areas (where institutions have local deposit-taking operations). These credits are then used to issue each bank a performance rating from a four-tiered system of descriptive performance levels (Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance). The CRA requires federal banking regulators to take those ratings into account when institutions apply for charters, branches, mergers, and acquisitions, or seek to take other actions that require regulatory approval. Congress became concerned with the geographical mismatch of deposit-taking and lending activities for a variety of reasons. Deposits serve as a primary source of borrowed funds that banks may use to facilitate their lending. Hence, there was concern that banks were using deposits collected from local neighborhoods to fund out-of-state as well as various international lending activities at the expense of addressing the local area's housing, agricultural, and small business credit needs. Another motivation for congressional action was to discourage redlining practices. One type of redlining can be defined as the refusal of a bank to make credit available to all of the neighborhoods in its immediate locality, including LMI neighborhoods where the bank may have collected deposits. A second type of redlining is the practice of denying a creditworthy applicant a loan for housing located in a certain neighborhood even though the applicant may qualify for a similar loan in another neighborhood. This type of redlining pertains to circumstances in which a bank refuses to serve all of the residents in an area, perhaps due to discrimination. The CRA applies to banking institutions with deposits insured by the Federal Deposit Insurance Corporation (FDIC), such as national banks, savings associations, and state-chartered commercial and savings banks. The CRA does not apply to credit unions, insurance companies, securities companies, and other nonbank institutions because of the differences in their financial business models. The Office of the Comptroller of the Currency (OCC), the Federal Reserve System, and the FDIC administer the CRA, which is implemented via Regulation BB. The CRA requires federal banking regulatory agencies to evaluate the extent to which regulated institutions are effectively meeting the credit needs within their designated assessment areas, including LMI neighborhoods, in a manner consistent with the federal prudential regulations for safety and soundness . The CRA's impact on lending activity has been publicly debated. Some observers are concerned that the CRA may induce banks to forgo more profitable lending opportunities in nontargeted neighborhoods by encouraging a disproportionate amount of lending in LMI communities. Furthermore, some argue that the CRA compels banks to make loans to higher-risk borrowers that are more likely to have repayment problems, which may subsequently compromise the financial stability of the banking system. For example, some researchers have attributed the increase in risky lending prior to the 2007-2009 recession to banks attempting to comply with CRA objectives. Others are concerned that enforcement of CRA objectives has not been stringent enough to compel banks to increase financial services in LMI areas. Almost all banks receive Satisfactory or better performance ratings (discussed in more detail below) on their CRA examinations, which some may consider indicative of weak enforcement. This report informs the congressional debate concerning the CRA's effectiveness in incentivizing bank lending and investment activity to LMI customers. It begins with a description of bank CRA examinations, including how a bank delineates its assessment area; the activities that may qualify for points under the three tests (i.e., lending, investment, and service) that collectively make up the CRA examination; and how the composite CRA rating is calculated. Next, the report analyzes the difficulty in attributing bank lending decisions to CRA incentives. For example, the CRA does not specify the quality and quantity of CRA-qualifying activities, meaning that CRA compliance does not require adherence to lending quotas or benchmarks. Without explicit benchmarks, linking the composition of banks' loan portfolios to either too strong or too weak CRA enforcement is difficult. Banks are also unlikely to get CRA credit for all of the loans they make to LMI customers. Specifically, higher-risk loans that banking regulators explicitly discourage are unlikely to be eligible for CRA consideration. Furthermore, greater mobility of lending and deposit-taking activity across regional boundaries due to various financial market innovations has complicated the ability to geographically link various financial activities. Hence, many banks' financial activities occurring in a designated assessment area that are eligible for CRA consideration may simply be profitable, meaning they may have occurred without the CRA incentive. Finally, this report summarizes recent policy discussions regarding modernization of the CRA. CRA Examinations As noted above, the federal banking regulators conduct regular examinations of banks to assess whether they meet local credit needs in designated assessment areas. The regulators issue CRA credits, or points, when banks engage in qualifying activities—such as mortgage, consumer, and business lending; community investments; and low-cost services that would benefit LMI areas and entities—that occur within assessment areas. Defining the CRA Assessment Areas Regulation BB provides the criteria that a bank's board of directors must use to determine the assessment area(s) in which its primary regulator will conduct its CRA examination. The assessment area typically has a geographical definition—the location of a bank's main office, branches, and deposit-taking automatic teller machines, as well as surrounding areas where the bank originates and purchases a substantial portion of loans. Assessment areas must generally include at least one metropolitan statistical area (MSA) or at least one contiguous political subdivision, such as a county, city, or town. Regulation BB also requires that assessment areas may not reflect illegal discrimination, arbitrarily exclude LMI geographies, and extend substantially beyond an MSA boundary or a state boundary (unless the assessment area is located in a multistate MSA). Banking regulators regularly review a bank's assessment area delineations for compliance with Regulation BB requirements as part of the CRA examination. Instead of a more conventionally delineated assessment area, certain banking firms may obtain permission to devise a strategic plan for compliance with Regulation BB requirements. For example, wholesale and limited purpose banks are specialized banks with nontraditional business models. Wholesale banks provide services to larger clients, such as large corporations and other financial institutions; they generally do not provide financial services to retail clients, such as individuals and small businesses. Limited purpose banks offer a narrow product line (e.g., concentration in credit card lending) rather than provide a wider range of financial products and services. These banking firms typically apply to their primary regulators to request designation as a wholesale or limited purpose bank and, for CRA examination purposes, are evaluated under strategic plan options that have been tailored for their distinctive capacities, business strategies, and expertise. The option to develop a strategic plan of pre-defined CRA performance goals is available to any bank subject to the CRA. The public is allowed time (e.g., 30 days) to provide input on the draft of a bank's strategic plan, after which the bank submits the plan to its primary regulator for approval (within 60 days after the application is received). Qualifying Activities Regulation BB does not impose lending quotas or benchmarks. Instead, Regulation BB provides banks with a wide variety of options to serve the needs of their assessment areas. Qualifying CRA activities include mortgage, consumer, and business lending; community investments; and low-cost services that would benefit LMI areas and entities. For example, banks may receive CRA credits for such activities as investing in special purpose community development entities (CDEs), which facilitate capital investments in LMI communities (discussed below); providing support (e.g., consulting, detailing an employee, processing transactions for free or at a discounted rate, and providing office facilities) to minority- and women-owned financial institutions and low-income credit unions (MWLIs), thereby enhancing their ability to serve LMI customers; serving as a joint lender for a loan originated by MWLIs; facilitating financial literacy education to LMI communities, including any support of efforts of MWLIs and CDEs to provide financial literacy education; opening or maintaining bank branches and other transactions facilities in LMI communities and designated disaster areas; providing low-cost education loans to low-income borrowers; and offering international remittance services in LMI communities. The examples listed above are not comprehensive, but they illustrate several activities banks may engage in to obtain consideration for CRA credits. The banking regulators will consider awarding CRA credits or points to a bank if its qualifying activities occur within an assigned assessment area. The points are then used to compute a bank's overall composite CRA rating. The CRA Examination Tests Regulators apply up to three tests, which are known as the lending , investment , and service tests, respectively, to determine whether a bank is meeting local credit need in designated assessment areas. The lending test evaluates the number, amount, and distribution across income and geographic classifications of a bank's mortgage, small business, small farm, and consumer loans. The investment test grades a bank's community development investments in the assessment area. The service test examines a bank's retail service delivery, such as the availability of branches and low-cost checking in the assessment area. The point system for bank performance under the lending, investment, and service tests is illustrated in Table 1 . The lending test is generally regarded as the most important of the three tests, awarding banks the most points (CRA credits) in all rating categories. As shown in Table 1 , banks receive fewer credits for making CRA-qualified investments than for providing direct loans to individuals under the lending test. In some instances, an activity may qualify for more than one of the performance tests. Federal banking regulators evaluate financial institutions based upon their capacity, constraints, and business strategies; demographic and economic data; lending, investment, and service opportunities; and benchmark against competitors and peers. Because these factors vary across banks, the CRA examination was customized in 1995 to account for differences in bank sizes and business models. In 2005, the bank size definitions were revised to include small , intermediate small , and large banks. The bank regulators also indexed the asset size thresholds—which are adjusted annually—to inflation using the Consumer Price Index. As of January 1, 2019, a small bank is defined as having less than $1.284 billion in assets as of December 31 of either of the prior two calendar years; an intermediate small bank has at least $321 million as of December 31 of both of the prior two calendar years but less than $1.284 billion as of December 31 of either of the prior two calendar years; and a large bank has $1.284 billion or more in assets. Small banks are typically evaluated under the lending test. Regulators review (1) loan-to-deposit ratios; (2) percentage of loans in an assessment area; (3) lending to borrowers of different incomes and in different amounts; (4) geographical distribution of loans; and (5) actions on complaints about performance. Intermediate small banks are subject to both the lending and investment tests. Large banks are subject to all three tests. Community Investments Qualifying for CRA Consideration As mentioned previously, direct lending to borrowers, taking place in what is referred to as primary lending markets , qualify for CRA credit under the lending test. Investments taking place in secondary lending markets , in which investors purchase loans that have already been originated (such that little or no direct interaction occurs between investors and borrowers), qualify for CRA credit under the investment test. Secondary market investors may assume the default risk associated with a loan if the entire loan is purchased. Alternatively, if a set of loans are pooled together, then numerous secondary investors may purchase financial securities in which the returns are generated by the principal and interest repayments from the underlying loan pool, thereby sharing the lending risk. Direct ownership of loans or purchases of smaller portions (debt securities) of a pool of loans, therefore, are simply alternative methods to facilitate lending. As shown in Table 1 above, a bank may receive CRA consideration under the lending test for making a loan to LMI individuals that is guaranteed by a federal agency, such as the Federal Home Administration (FHA). If, however, a bank purchases securities backed by pools of FHA-guaranteed mortgage originations, this activity receives credit under the investment test. Thus, the bank receives less CRA credit when the financial risk is shared with other lenders than it would for making a direct loan (and holding all of the lending risk) even though it would still facilitate lending to LMI borrowers. In 2005, the activities that qualify for CRA credit were expanded to encourage banks to make public welfare investments. More specifically, qualifying activities include a public welfare investment (PWI) that promotes the public welfare by providing housing, services, or jobs that primarily benefit LMI individuals; and a community development investment (CDI), economic development investment , or project that meets the PWI requirements. Examples of CDI activities include promoting affordable housing, financing small businesses and farms, and conducting activities that revitalize LMI areas. Banks may engage in certain activities that typically would not be permitted under other banking laws as long as these activities promote the public welfare and do not expose institutions to unlimited liability. For example, banks generally are not allowed to make direct purchases of the preferred or common equity shares of other banking firms; however, banks may purchase equity shares of institutions with a primary mission of community development (discussed in more detail in the Appendix ) up to an allowable CDI limit. The Financial Services Regulatory Relief Act of 2006 ( P.L. 109-351 ) increased the amount that national banking associations and state banks (that are members of the Federal Reserve System) may invest in a single institution from 10% to 15% of a bank's unimpaired capital and unimpaired surplus. CDIs that benefit a bank's designated assessment area may qualify for CRA credit. For CRA purposes, the definition of a CDI was expanded in 2005 to include "underserved and distressed" rural areas and "designated disaster areas" to aid the regional rebuilding from severe hurricanes, flooding, earthquakes, tornados, and other disasters. The disaster area provision allows banks anywhere in America to receive consideration for CRA credit if they facilitate making credit available to a distressed location or geographic area outside of their own assessment areas. Thus, the 2005 revisions to the PWI and CDI definitions made more banking activities eligible for CRA credits. The banking regulators would consider awarding full CRA credits under the lending test to banks that make CDI loans directly in their assessment areas. Under the investment test, however, the banking regulators may choose to prorate the credits awarded to indirect investments. The Appendix provides examples of CDI activities that would qualify for CRA consideration under the investment test. Any awarded CRA credits could be prorated given that investing banks typically would have less control over when and where the funds are loaned. Results of the CRA Examination The CRA was revised in 1989 to require descriptive CRA composite performance ratings that must be disclosed to the public. The composite ratings illustrated in Table 2 are tabulated using the points assigned from the individual tests (shown in Table 1 above). Grades of Outstanding and Satisfactory are acceptable; Satisfactory ratings in both community development and retail lending are necessary for a composite Satisfactory . Large banks must receive a sufficient amount of points from the investment and service tests to receive a composite Outstanding rating. Regulators include CRA ratings as a factor when lenders request permission to engage in certain activities, such as moving offices or buying another institution. Denying requests, particularly applications for mergers and acquisitions, is a mechanism that may be applied against banking organizations with ratings below Satisfactory . In 2005, the banking regulators also ruled that any evidence of discrimination or credit practices that violate an applicable law, rule, or regulation by any affiliate would adversely affect an agency's evaluation of a bank's CRA performance. Applicants with poor ratings may resubmit their applications after making the necessary improvements. Covered institutions must post a CRA notice in their main offices and make publicly available a record of their composite CRA performance. Difficulties Determining CRA Effectiveness Given that the CRA is not a federal assistance program and that several regulators implement it separately, no single federal agency is responsible for evaluating its overall effectiveness. In 2000, Congress directed the Federal Reserve to study the CRA's effectiveness. The Federal Reserve's study reported that lending to LMI families had increased since the CRA's enactment but found it was not possible to directly attribute all of that increase to the CRA. For example, advancements in underwriting over the past several decades have enabled lenders to better predict and price borrower default risk, thus making credit available to borrowers that might have been rejected prior to such technological advances. This section examines the difficulty linking bank lending outcomes directly to the CRA, considering questions raised about the subjectivity of the CRA examination itself, whether prudential regulators use CRA to encourage banks to engage in high-risk lending, and whether the increased lending to LMI borrowers since CRA's enactment can be attributed to other profit-incentives that exist apart from the CRA. Is the CRA Examination Subjective? Questions have been raised as to whether the CRA examination itself is effective at measuring a bank's ability to meet local credit needs. For example, the CRA examinations have an element of subjectivity in terms of measuring both the quality and quantity of CRA compliance. In terms of quality, regulators determine the "innovativeness or flexibility" of qualified loan products; the "innovativeness or complexity" of qualified investments; or the "innovativeness" of ways banks service groups of customers previously not served. The number of points some CRA-qualifying investments receive relative to others is up to the regulator's judgment given that no formal definition of innovativeness has been established (although regulators provide a variety of examples as guidelines for banks to follow). In terms of quantity, there is no official quota indicating when banks have done enough CRA-qualified activities to receive a particular rating. Without specific definitions of the criteria or quotas, the CRA examination may be considered subjective. Almost all banks pass their CRA examinations. Figure 1 shows the average annual composite scores of banks that received CRA examinations as well as the annual number of bank examinations by size. In general, most banks receive a composite Satisfactory or better rating regardless of the number of banks examined in a year. For all years, approximately 97% or more of banks examined received ratings of Satisfactory or Outstanding . Whether the consistently high ratings reflect the CRA's influence on bank behavior or whether the CRA examination procedures need improvement is difficult to discern. Do Higher-Risk Loans Receive CRA Consideration? Another issue raised is whether the CRA has resulted in banks making more high-risk loans given that it encourages banks to lend to LMI individuals (perhaps under the presumption that LMI individuals are less creditworthy relative to higher-income individuals). Since passage of the CRA, however, innovations have allowed lenders to better evaluate the creditworthiness of borrowers (e.g., credit scoring, the adoption of automated underwriting), thus enhancing credit availability to both high credit quality and credit-impaired individuals. Credit-impaired borrowers can be charged higher interest rates and fees than those with better credit histories to compensate lenders for taking on greater amounts of credit or default risk. Nontraditional loan products (e.g., interest-only, initially low interest rate) allow borrowers to obtain lower regular payments during the early stages of the loan, perhaps under the expectation that their financial circumstances may improve in the later stages as the loan payments adjust to reflect the true costs. The ability to charge higher prices or offer such nontraditional loan products may result in greater higher-risk lending. Because these technological developments in the financial industry occurred after enactment of the CRA, banks' willingness to enter into higher-risk lending markets arguably cannot be attributed solely to the CRA. Regulators arguably are more reluctant to award banks CRA credit for originating higher-risk loans given the scrutiny necessary to determine whether higher loan prices reflect elevated default risk levels or discriminatory or predatory lending practices. Primary bank regulators are concerned with both prudential regulation and consumer protection. It is difficult for regulators to monitor how well borrowers understood the disclosures regarding loan costs and features, or whether any discriminatory or predatory behavior occurred at the time of loan origination. Regulators use fair lending examinations to determine whether loan pricing practices have been applied fairly and consistently across applicants or if some steering to higher-priced loan products occurred. Nevertheless, although it is not impossible for banks to receive CRA credits for making some higher-priced loans, regulators are mindful of practices such as improper consumer disclosure, steering, or discrimination that inflate loan prices. Prudential regulators are also unlikely to encourage lending practices that might result in large concentrations of high-risk loans on bank balance sheets. Hence, certain lending activities—subprime mortgages and payday lending—have been explicitly discouraged by bank regulators, as discussed in more detail below. Subprime Mortgages and the Qualified Mortgage Rule Although no consensus definition has emerged for subprime lending, this practice may generally be described as lending to borrowers with weak credit at higher costs relative to borrowers of higher credit quality. In September 2006, the banking regulatory agencies issued guidance on subprime lending that was restrictive in tone. The guidance warned banks of the risk posed by nontraditional mortgage loans, including interest-only and payment-option adjustable-rate mortgages. The agencies expressed concern about these loans because of the lack of principal amortization and the potential for negative amortization. Consequently, a study of 2006 Home Mortgage Disclosure Act data reported that banks subject to the CRA and their affiliates originated or purchased only 6% of the reported high-cost loans made to lower-income borrowers within their CRA assessment areas. Banks, therefore, received little or no CRA credit for subprime mortgage lending. Instead, federal regulators offered CRA consideration to banks that helped mitigate the effects of distressed subprime mortgages. On April 17, 2007, federal regulators provided examples of various arrangements that financial firms could provide to LMI borrowers to help them transition into affordable mortgages and avoid foreclosure. The various workout arrangements were eligible for favorable CRA consideration. Banks are unlikely to receive CRA consideration for originating subprime mortgages going forward. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203 ) requires lenders to consider consumers' ability to repay before extending them mortgage credit, and one way for lenders to comply is to originate qualified mortgages (QMs) that satisfy various underwriting and product-feature requirements. For example, QMs may not have any negative amortization features, interest-only payments, or points and fees that exceed specified caps of the total loan amount; in most cases, borrowers' debt-to-income ratios shall not exceed 43%. QM originations will give lenders legal protections if the required income verification and other proper underwriting procedures were followed. Given the legal protections afforded to QMs, some banks might show greater reluctance toward making non-QM loans. With this in mind, the federal banking regulators announced that banks choosing to make only or predominately QM loans should not expect to see an adverse effect on their CRA evaluations; however, the regulators did not indicate that CRA consideration would be given for non-QMs. Arguably, the federal banking regulators appear less inclined to use the CRA to encourage lending that could be subject to greater legal risks. Small-Dollar (Payday) Lending Banks have demonstrated interest in providing financial services such as small dollar cash advances, which are similar to payday loans, in the form of subprime credit cards, overdraft protection services, and direct deposit advances. However, banks are discouraged from engaging in payday and similar forms of lending. Legislation, such as the Credit Card Accountability Responsibility and Disclosure Act of 2009 ( P.L. 111-24 ), placed restrictions on subprime credit card lending. In addition, federal banking regulators expressed concern when banks began offering deposit advance products due to the similarities to payday loans. Specifically, on April 25, 2013, the OCC, FDIC, and Federal Reserve expressed concerns that the high costs and repeated extensions of credit could add to borrower default risks and issued final supervisory guidance regarding the delivery of these products. Many banks subsequently discontinued offering deposit advances. In general, these legislative and regulatory efforts explicitly discourage banks from offering high-cost consumer financial products and thus such products are unlikely to receive CRA consideration. When various financial products are deemed unsound by bank regulators and not offered by banks, a possible consequence may be that some customers migrate to nonbank institutions willing to provide these higher-cost products. Accordingly, the effectiveness of the CRA diminishes if more individuals choose to seek financial products from nonbank institutions. Do Profit and CRA Incentives Exist Simultaneously? In general, it can be difficult to determine the extent to which banks' financial decisions are motivated by CRA incentives, profit incentives, or both. Compliance with CRA does not require banks to make unprofitable, high-risk loans that would threaten the financial health of the bank. Instead, CRA loans have profit potential; and bank regulators require all loans, including CRA loans, to be prudently underwritten. As evidenced below, it may be difficult to determine whether banks have made particular financial decisions in response to profit or CRA incentives in cases where those incentives exist simultaneously. For example, banks increased their holdings of municipal bonds in 2009. Although banks may receive CRA consideration under the investment test for purchasing state and local municipal bonds that fund public and community development projects in their designated assessment areas, banks may choose this investment for reasons unrelated to CRA. During recessions, for example, banks may reduce direct (or primary market) lending activities and increase their holdings of securities in the wake of declining demand for and supply of direct loan originations that occur during economic slowdowns and early recovery periods. In addition, a provision of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) provided banks with a favorable tax incentive to invest in municipal bonds in the wake of the 2007-2009 recession. Hence, determining whether banks increased their municipal holdings because of a turn to securities markets for higher yields following a recession, a favorable tax incentive, or the CRA incentive is challenging. Similarly, banks increased their investments in Small Business Investment Corporations (SBICs, defined in the Appendix ) in 2010. Investments in SBICs allow banks to provide subordinate financing (rather than senior debt) to businesses. Senior lenders have first claims to the business's assets in case of failure; however, subordinate financiers provide funds in the form of mezzanine capital or equity, requiring a higher return because they are repaid after senior lenders. Banks generally are not allowed to act as subordinate financiers because they are not allowed to acquire ownership interests in private equity funds, unless such investments promote public welfare. Hence, attributing community development financing activities, such as SBIC investments, to CRA incentives may arguably be easier (relative to other financing activities) because the ability to engage in subordinate financing activities typically represents a CRA exemption from ordinary permissible banking activities. Following the 2007-2009 recession, however, U.S. interest rates dropped to historically low levels for an abnormally long period of time. Because low-yielding interest rate environments squeeze profits, banks were likely to search for higher-yielding and larger-sized lending opportunities, such as investments in SBICs. Hence, it remains difficult to determine whether a particular bank's decision to increase SBIC financing activities was driven by normal profit or CRA-related incentives. Between June 2016 and June 2017, more than 1700 U.S. bank branches were closed. Many branch closings occurred primarily in rural and low-income tract areas, raising concerns that banks would be able to circumvent their CRA obligation to lend and be evaluated in these areas. A traditional bank business model, however, relies primarily on having access to core deposits , a stable source of funds used to subsequently originate loans. Banks value geographic locations with greater potential to attract high core deposit volumes, which is also consistent with the CRA's requirement that assessment areas include at least one MSA or contiguous political subdivision (as previously discussed). Furthermore, using FDIC and U.S. Census Bureau data, the Federal Reserve noted that the number of branches per capita in 2017 was higher than two decades ago. Hence, determining whether branch closures reflect a bank's intentions to circumvent CRA compliance or to facilitate its ability to attract core deposits is challenging. Recent Developments On April 3, 2018, the U.S. Department of Treasury (Treasury) released recommendations to modernize CRA in a memorandum to the federal banking regulators (OCC, FCIC, and the Fed). Treasury highlighted four of its recommendations, summarized below. When the CRA was enacted in 1977, banks received deposits and made loans primarily through geographical branches. Assessment areas defined geographically arguably may not fully reflect the community served by a bank because of technology developments, such as the internet and mobile phone banking, prompting Treasury to call for revisiting the approach for determining banks' assessment areas. In 2016, the banking regulators issued Interagency Questions and Answers (Q&As) to provide banks guidance pertaining to CRA-eligible activities; however, Treasury noted that each regulator provides its examiners with additional guidance. Also, the Interagency Q&As illustrate past CRA-qualifying activities, but Treasury noted that no formal process currently exists to help determine whether potential (complex, innovative, or innovative) activities would qualify for CRA credit. Treasury recommends establishing clearer standards for CRA-qualifying activities and flexibility (expanding the types of loans, investments, and services that qualify for CRA credit), which may encourage banks to venture beyond activities that typically receive CRA credit. Treasury reports that each bank regulator follows a different examination schedule; the examinations are lengthy; and delays associated with the release of performance evaluations may limit the time banks can react to recommendations before their next CRA examination. Treasury recommends increasing the timeliness of the CRA examination process. Treasury recommends incorporating performance incentives that might result in more efficient lending activities. For example, CRA-qualifying loans may receive credit in the year of origination, but equity investments may receive credit each year that the investment is held. Treasury recommends consistent treatment of loans and investments, which may encourage banks to make more long-term loans (rather than sequences of short-term loans for the sake of being awarded CRA credits at each CRA examination). On August, 28, 2018, the OCC released an Advance Notice of Proposed Rulemaking (ANPR) to seek comments on ways to modernize the CRA framework. The ANPR solicited comments on the issues raised by Treasury among other things. The OCC's ANPR does not propose specific changes, but its content and the questions posed suggest that the OCC is exploring the possibility of adopting a quantitative metric-based approach to CRA performance evaluation, changing how assessment areas are defined, expanding CRA-qualifying activities, and reducing the complexity, ambiguity, and burden of the regulations on the bank industry. When the comment period closed on November 19, 2018, the OCC had received 1584 comments. The Federal Reserve and the FDIC did not join the OCC in releasing the ANPR. The Federal Reserve System, however, did host research symposiums around the country to gather comments pertaining to CRA reform. As reported by the Federal Reserve, some banking industry comments suggested, among other things, the need for consistency of the CRA examinations to facilitate CRA compliance. Yet some tailoring may still be necessary with respect to determining assessment areas that better reflect each bank's business models, particularly for models that use technology to deliver products and services. The regulators also heard from community and consumer groups. While expressing the need to retain focus on the historical context of the CRA, these groups highlighted the need to address issues pertaining to banking deserts in underserved communities. Appendix. CRA Investment Options Community development investments (CDIs) that meet public welfare investment (PWI) requirements are those that promote the public welfare, primarily resulting in economic benefits for low- and moderate-income (LMI) individuals. This appendix provides examples of CDI activities that would qualify for consideration under the CRA investment test. In many cases, covered banks are more likely to take advantage of these optional vehicles to obtain CRA credits if they perceive the underlying investment opportunities to have profit potential. Loan Participations Banks and credit unions often use participation (syndicated) loans to jointly provide credit. When a financial firm (e.g., bank, credit union) originates a loan for a customer, it may decide to structure loan participation arrangements with other institutions. The loan originator often retains a larger portion of the loan and sells smaller portions to other financial institutions willing to participate. Suppose a financial firm originates a business or mortgage loan in a LMI neighborhood. A bank may receive CRA investment credit consideration by purchasing a participation, thus becoming a joint lender to the LMI borrower. An advantage of loan participations is that the default risk is divided and shared among the participating banks (as opposed to one financial firm retaining all of the risk). CRA consideration is possible if the activity occurs within the designated assessment area. For all participating banks to receive credit, some overlap in their designated assessment areas must exist. An exception is made for participations made to benefit designated disaster areas, in which all participating banks would receive CRA consideration regardless of location. State and Local Government Bonds State and local governments issue municipal bonds, and the proceeds are used to fund public projects, community development activities, and other qualifying activities. The interest that nonbank municipal bondholders receive is exempt from federal income taxes to encourage investment in hospitals, schools, infrastructure, and community development projects that require state and local funding. Legislative actions during the 1980s eliminated the tax-exempt status of interest earned from holdings of municipal bonds for banks. Although banks no longer have a tax incentive to purchase municipal bonds, they still consider the profitability of holding these loans, as they do with all lending opportunities. Furthermore, banks receive CRA investment consideration when purchasing state and local municipal bonds that fund public and community development projects in their designated assessment areas. CRA-Targeted Secondary Market Instruments Secondary market financial products have been developed to facilitate the ability of banks to participate in lending activities eligible for CRA consideration, such as purchasing mortgage-backed securities (MBSs) or shares of real estate investment trusts (REITs). A MBS is a pool of mortgage loans secured by residential properties; a multifamily MBS is a pool of mortgage loans secured by multifamily properties, consisting of structures designed for five or more residential units, such as apartment buildings, hospitals, nursing homes, and manufactured homes. CRA-MBSs are MBSs consisting of loans that originated in specific geographic assessment areas, thereby allowing bank purchases into these pools to be eligible for CRA consideration under the investment test. Similarly, REITs may also pool mortgages, mortgage MBSs, and real estate investments (e.g., real property, apartments, office buildings, shopping malls, hotels). Investors purchase shares in REIT pools and defer the taxes. Banks may only invest in mortgage REITs and MBS REITs. Similar to the CRA-MBSs, the REITs must consist of mortgages and MBSs that would be eligible for CRA consideration. The Community Development Trust REIT is an example of a REIT that serves as a CRA-qualified investment for banks. Community Development Financial Institutions and Equity Equivalent Investments The Community Development Financial Institutions (CDFI) Fund was created by the Riegle Community Development Regulatory Improvement Act of 1994 (the Riegle Act; P.L. 103-325 ). The CDFI Fund was established to promote economic development for distressed urban and rural communities. The CDFI Fund, currently located within the U.S. Department of the Treasury, is authorized to certify banks, credit unions, nonprofit loan funds, and (for-profit and nonprofit) venture capital funds as designated CDFIs. In other words, a bank may satisfy the requirements to become a CDFI, but not all CDFIs are banks. The primary focus of institutions with CDFI certification is to serve the financial needs of economically distressed people and places. The designation also makes these institutions eligible to receive financial awards and other assistance from the CDFI Fund. In contrast to non-CDFI banks, some CDFI banks have greater difficulty borrowing funds and then transforming them into loans for riskier, economically distressed consumers. The lack of loan level data for most CDFI banks causes creditors to hesitate in making low-cost, short-term loans to these institutions. Specifically, the lack of information on loan defaults and prepayment rates on CDFI banking assets is likely to result in limited ability to sell these loan originations to secondary loan markets. Consequently, the retention of higher-risk loans, combined with limited access to low-cost, short-term funding, makes CDFI banks more vulnerable to liquidity shortages. Hence, CDFIs rely primarily on funding their loans (assets) with net assets , which are proceeds analogous to the equity of a traditional bank or net worth of a credit union. CDFI net assets are often acquired in the form of awards or grants from the CDFI Fund or for-profit banks. Funding assets with net assets is less expensive for CDFIs than funding with longer-term borrowings. Banks may obtain CRA investment credit consideration by making investments to CDFIs, which provides CDFIs with net assets (equity). Under PWI authority, banks are allowed to make equity investments in specialized financial institutions, such as CDFIs, as long as they are considered by their safety and soundness regulator to be at least adequately capitalized . Furthermore, the final Basel III notification of proposed regulation (NPR) allows for preferential capital treatment for equity investments made under PWI authority, meaning equity investments to designated CDFIs may receive more favorable capital treatment. Consequently, banks often provide funds to CDFIs through equity equivalent investments (EQ2s), which are debt instruments issued by CDFIs with a continuous rolling (indeterminate) maturity. EQ2s, from a bank's perspective, are analogous to holding convertible preferred stock with a regularly scheduled repayment. Hence, banks may view EQ2s as a potentially profitable opportunity to invest in other specialized financial institutions and receive CRA consideration, particularly when the funds are subsequently used by CDFIs to originate loans in the banks' assessment areas. Small Business Investment Companies The Small Business Administration (SBA) was established in 1953 by the Small Business Act of 1953 (P.L. 83-163) to support small businesses' access to capital in a variety of ways. Although issuing loan guarantees for small businesses is a significant component of its operations, the SBA also has the authority to facilitate the equity financing of small business ventures through its Small Business Investment Company (SBIC) program, which was established by the Small Business Investment Act of 1958 (P.L. 85-699). SBICs that are licensed and regulated by the SBA may provide debt and equity financing and, although not a program requirement, educational (management consulting) resources for businesses that meet certain SBA size requirements. Banks may act as limited partners if they choose to provide funds to SBICs, which act as general partners. Banks may establish their own SBICs, jointly establish SBICs (with other banks), or provide funds to existing SBICs. SBICs subsequently use bank funding to invest in the long-term debt and equity securities of small, independent (SBA-eligible) businesses, and banks may receive CRA investment consideration if the activities benefit their assessment areas. Community banks invest in SBICs because of the profit potential as well as the opportunity to establish long-term relationships with business clients during their infancy stages. Banks that are considered by their regulators to be adequately capitalized are allowed to invest in these specialized financial institutions under PWI authority, but the investments still receive risk-based capital treatment. SBIC assets, similar to CDFIs, are illiquid given the difficulty to obtain credit ratings for SBIC investments; thus, they cannot be sold in secondary markets. Because banks risk losing the principal of their equity investments, they are required to perform the proper due diligence associated with prudent underwriting. Tax Credits The low-income housing tax credit (LIHTC) program was created by the Tax Reform Act of 1986 ( P.L. 99-514 ) to encourage the development and rehabilitation of affordable rental housing. Generally speaking, government (federal or state) issued tax credits may be bought and, in many cases, sold like any other financial asset (e.g., stocks and bonds). Owners of tax credits may reduce their tax liabilities either by the amount of the credits or by using the formulas specified on those credits, assuming the owners have participated in the specified activities that the government wants to encourage. For LIHTCs, banks may use a formula to reduce their federal tax liabilities when they provide either credit or equity contributions (grants) for the construction and rehabilitation of affordable housing. If a bank also owns a LIHTC, then a percentage of the equity grant may be tax deductible if the CDFI uses the funds from the grant to finance affordable rental housing. Furthermore, banks may receive consideration for CRA-qualified investment credits. After a domestic corporation or partnership receives designation as a Community Development Entity (CDE) from the CFDI Fund, it may apply for New Markets Tax Credits (NMTCs). Encouraging capital investments in LMI communities is the primary mission of CDEs, and CDFIs and SBICs automatically qualify as CDEs. Only CDEs are eligible to compete for NMTCs, which are allocated by the CDFI Fund via a competitive process. Once awarded an allocation of NMTCs, the CDE must obtain equity investments in exchange for the credits. Then, the equity proceeds raised must either be used to provide loans or technical assistance or deployed in eligible community investment activities. Only for-profit CDEs, however, may provide NMTCs to their investors in exchange for equity investments. Investors making for-profit CDE equity investments can use the NMTCs to reduce their tax liabilities by a certain amount over a period of years. As previously discussed, a bank may receive CRA credit for making equity investments in nonprofit CDEs and for-profit subsidiaries, particularly if the investment occurs within the bank's assessment area. Furthermore, banks may be able to reduce their tax liabilities if they can obtain NMTCs from the CDEs in which their investments were made.

The Community Reinvestment Act (CRA; P.L. 95-128, 12 U.S.C. §§2901-2908) addresses how banking institutions meet the credit needs of the areas they serve, particularly in low- and moderate-income (LMI) neighborhoods. The federal banking regulatory agencies—the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC)—currently implement the CRA. The regulators issue CRA credits, or points, where banks engage in qualifying activities—such as mortgage, consumer, and business lending; community investments; and low-cost services that would benefit LMI areas and entities—that occur with a designated assessment area. These credits are then used to issue each bank a performance rating. The CRA requires these ratings be taken into account when banks apply for charters, branches, mergers, and acquisitions among other things. The CRA, which was enacted in 1977, was subsequently revised in 1989 to require public disclosure of bank CRA ratings to establish a four-tiered system of descriptive performance levels (i.e., Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance). In 1995, the CRA examination was customized to account for differences in bank sizes and business models. In 2005, the bank size definitions were revised and indexed to the Consumer Price Index. The 2005 amendments also expanded opportunities for banks to earn CRA credit for public welfare investments (such as providing housing, services, or jobs that primarily benefit LMI individuals). Qualifying activities under the CRA have evolved to include consumer and business lending, community investments, and low-cost services that would benefit LMI areas and entities. Congressional interest in the CRA stems from various perceptions of its effectiveness. Some have argued that, by encouraging lending in LMI neighborhoods, the CRA may also encourage the issuance of higher-risk loans to borrowers likely to have repayment problems (under the presumption that low-income is correlated with lower creditworthiness), which can translate into losses for lenders. Others are concerned that the CRA is not generating sufficient incentives to increase credit availability to qualified LMI borrowers, which may impede economic recovery for some, particularly following the 2007-2009 recession. This report informs the congressional debate concerning the CRA's effectiveness in incentivizing bank lending and investment activity to LMI borrowers. After a discussion of the CRA's origins, it presents the CRA's examination process and bank activities that are eligible for consideration of CRA credits. Next, it discusses the difficulty of determining the CRA's influence on bank behavior. For example, the CRA does not specify the quality and quantity of CRA-qualifying activities, meaning that compliance with the CRA does not require adherence to lending quotas or benchmarks. In the absence of benchmarks, determining the extent to which CRA incentives have influenced LMI credit availability relative to other factors is not straightforward. Banks also face a variety of financial incentives—for example, capital requirements, the prevailing interest rate environment, changes in tax laws, and technological innovations—that influence how much (or how little) they lend to LMI borrowers. Because multiple financial profit incentives and CRA incentives tend to exist simultaneously, it is difficult to determine the extent to which CRA incentives have influenced LMI credit availability relative to other factors.

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Introduction With its adoption as part of the Civil Rights Act of 1964, Title VI invested the federal government with a uniquely powerful role in addressing race and national origin discrimination. Like other statutory provisions in the Civil Rights Act, Title VI seeks to end race discrimination among institutions and programs whose doors were otherwise open to the public—especially public schools. But unlike the Civil Rights Act's better known and more heavily litigated provisions, Title VI is concerned specifically with the use of "public funds," designed to ensure that federal dollars not be "spent in any fashion which encourages, entrenches, subsidizes, or results in racial discrimination." And to fulfill that broad mandate, Title VI takes a distinctive approach to policing discrimination by making the promise of nondiscrimination a condition of the federal government's financial support. Title VI consequently prohibits all federally funded programs, activities, and institutions from discriminating based on race, color, or national origin. Although that prohibition accompanies nearly all grants and contracts awarded by the federal government, much of Title VI's doctrine has been shaped by its use in the public schools. That doctrinal story has accordingly centered on one agency in particular: the Office for Civil Rights (OCR) in the U.S. Department of Education (ED). As this report explains, Title VI continues to play a central part in OCR's mission of protecting civil rights on campuses at all educational levels, and in institutions both public and private. This report begins by briefly tracing Title VI to its historical and conceptual roots in the federal spending power, and explains how the early understanding of that power shaped the various legislative proposals that ultimately became Title VI. The report then examines the central doctrinal question behind the statute: what exactly Title VI outlawed by prohibiting "discrimination" among federally funded programs, and what agencies are therefore allowed to do in order to enforce that prohibition. The report then turns to ED's OCR, briefly reviewing how that agency goes about the day-to-day work of enforcing Title VI in schools, and concludes by surveying two recent developments related to Title VI, along with some considerations should Congress wish to revisit this landmark civil rights law. Because this report focuses specifically on how OCR has come to understand and enforce Title VI, it does not directly discuss litigation under the statute, whether filed by a private party or by the U.S. Department of Justice following a referral from OCR, though many of the substantive legal standards overlap. Title VI of the 1964 Civil Rights Act: Origins and Overview Leveraging the Spending Power: The Origins of Title VI By the time Title VI was being seriously debated in 1964, its basic premise—that federal dollars should not go to support programs or institutions that discriminate based on race—was already familiar. In 1947, nearly a decade before the Supreme Court declared an end to the de jure segregation of the public schools in Brown v. Board of Education , President Truman's Committee on Civil Rights had already sketched out the basic pattern for Title VI, calling for "establishment by act of Congress or executive order" of a federal office to review "the expenditures of all government funds," so that none would go to subsidize discrimination based on race, color, creed, or national origin. Several years later, in 1953, President Eisenhower was also expressing dismay at the "discrimination in expenditure of [federal] funds as among our citizens." And Brown , decided the next year, put even more pressure on the federal government to begin leveraging its funds to combat discrimination —first in the public schools, but possibly also on a wider scale. The early years of the Kennedy Administration saw some of the first steps in that direction. Early on in his tenure, for example, Abraham Ribicoff, then the Secretary of Health, Education, and Welfare (HEW), refused to locate the department's summer teacher-training institutes at "any college or university that declined to operate such institutes without discrimination." In a related decision, HEW later moved to withdraw support from segregated schooling on military bases as well. Those steps led others in the Administration, like then-Attorney General Robert Kennedy, to publicly suggest that the federal funds might be used on a wider scale, "to persuade southern states to alter their racial practices" more generally. These early uses of the federal spending power to redress race discrimination had their limits, however. After leaving HEW for the U.S. Senate, Ribicoff explained during the floor debate over Title VI that, while at HEW, he had frequently "found [his] authority to act was questionable, and in some instances ... limited by the explicit wording of congressional enactments." A number of Kennedy Administration officials evidently shared that view, with some publicly questioning whether the executive branch had authority to withhold money appropriated by Congress or condition disbursement on terms not found in underlying funding authorities. This view "did not go unchallenged," as civil rights leaders made clear during the House hearings on the bill; nor has it received a definitive judicial ruling since. But with the risk of a bruising, possibly fatal, legal challenge looming over unilateral executive action, it "became clear" to Administration officials "that administrative action alone could not solve the entire problem." Congressional action, by contrast, seemed to face far fewer legal constraints. In several earlier decisions the Supreme Court had established that Congress unambiguously had the right under the Spending Clause to condition the receipt of appropriated funds on the terms of its choosing, even in areas traditionally left to the regulation of the states. Congress was therefore free to do by legislation what the executive branch could only questionably have done on its own: make nondiscrimination a condition for receiving federal financial support. Title VI: An Overview The final legislative resolution, reached after a period of protracted debate, was Title VI. The legislation went through a number of significant alterations from the measure originally proposed by the Kennedy Administration, many of which sought to address fears of potential administrative abuse by layering agencies' enforcement power with procedural protections for funding recipients. But the basic pattern suggested by the Committee on Civil Rights some 20 years earlier—making nondiscrimination a condition for federal financial support—remained the same. In its final form, largely unchanged since its adoption, Title VI incorporates five basic features relevant to this report: 1. Nondiscrimination Mandate . Title VI bars any federally funded "program or activity" from discriminating against a "person in the United States" based on his or her "race, color, or national origin." 2. Imp lementing Rules , Regulations , and Orders . All federal funding agencies are "authorized and directed" to promulgate rules, regulations, or orders of general applicability "effectuat[ing]" that nondiscrimination mandate. 3. Approval of Implementing Rules, Regulations, and Orders . Any rule, regulation, or order issued under Title VI was made subject to presidential approval, an authority since delegated to the Attorney General by executive order. 4. Agency Enforcement . To enforce Title VI an agency could resort to either of two measures: (1) the termination or refusal to provide federal financial assistance to an institution or program seeking it; or (2) "any other means authorized by law," now understood to be a lawsuit brought by the Attorney General seeking a recipient's compliance with Title VI. 5. Procedural Requirements Related to Agency Enforcement . Though an agency's withdrawal of federal funds was envisioned as the primary mechanism for enforcing Title VI, that authority was hedged with a range of procedural requirements designed to spur agencies into seeking consensual resolutions with recipients. Each of these statutory features is explained below, including how they have come to be understood since Title VI's passage and the role they play in addressing racial discrimination at school. Defining "Discrimination" Under Title VI Title VI revolves around a single sentence-long prohibition, found in Section 601 of the law, providing that "[n]o person in the United States" may be "subjected to discrimination" by a "program or activity" that receives federal financial assistance based on his or her "race, color, or national origin." Plainly that prohibition outlaws racial "discrimination" in all federally funded programs. It does not define, however, the sorts of practices Title VI thereby excludes. And with the legislative history on this point inconclusive at best , the task of providing a workable definition has been left to the agencies charged with enforcing Title VI and, ultimately, to the courts. As explained below, however, with its 2001 decision in Alexander v. Sandoval , the Supreme Court appears to have put the basic interpretive question to rest: Section 601 directly prohibits only intentional discrimination . Banning Intentional Discrimination (Disparate Treatment) Despite Title VI's basic ambiguity, the courts have long agreed that, at a minimum, Section 601 bars federally funded programs from intentionally singling out individuals for adverse treatment because of their race. This sort of intentional discrimination is commonly known as disparate or different treatment . And it can be proved in either of two ways: (1) directly, by pointing to a policy or decision that expressly singles out individuals by race, or (2) indirectly, by providing circumstantial evidence that a discriminatory motive was likelier than not responsible for the alleged mistreatment. Disparate Treatment: Direct Evidence Perhaps the clearest way a program may discriminate along racial lines is by expressly singling out individuals by race for adverse treatment. Thus, for example, a school that explicitly excludes students from an assembly by race will clearly have discriminated in this intentional sense. And because the "discrimination" involved appears on the face of the policy or decision itself, proving a violation of Title VI becomes that much more straightforward: to prevail, the aggrieved party generally need only establish that the discriminatory policy existed and was used against him. Disparate Treatment: Circumstantial Evidence Although still litigated, over the years such facially discriminatory policies and decisions have grown less common—a shift widely attributed to laws like the 1964 Civil Rights Act. As a result, the more usual case today instead involves allegations of racially motivated mistreatment under a policy or decision that, at least on its face, is race-neutral. Thus, for example, an African American student might still plausibly allege that a school official discriminated against him based on his race by disciplining him more severely than his white classmates for substantially the same misconduct, even though neither the discipline policy nor the disciplining official made any mention of his race. In such cases, the " form of the governmental action"—the literal wording of the policy used or the decisionmaker's explanation—is not at issue. What matters is why the individuals alleging mistreatment received the treatment they did; whether, that is, a discriminatory intent shaped the allegedly discriminatory decision. Where the surrounding circumstances suggest that some such racial animus was likelier than not what motivated the adverse treatment, that treatment will amount to intentional discrimination, presumptively violating Title VI. Banning Discriminatory Effects (Disparate Impact) Title VI has long been understood to bar federally funded programs from intentionally discriminating based on race. At least for the first few decades following its adoption, however, there was considerably more debate about whether Section 601 might also forbid policies that, while not purposefully discriminatory, nonetheless had a disparate effect on persons of different races. And in its first case involving Title VI— Lau v. Nichols —the Supreme Court seemed to say exactly that. In its most recent encounter with disparate impact under Title VI, however, in Alexander v Sandoval , the Court squarely rejected Lau 's ruling on that point. Today, as a result, the only discrimination Title VI directly prohibits is intentional . The Origin of Disparate Impact Under Title VI: Lau v. Nichols Lau was the Court's first encounter with Title VI, and it set the stage for much of the uncertainty about the statute that has followed. In Lau, non-English-speaking Chinese students had sued San Francisco's school system alleging that its policy of refusing bilingual or remedial English instruction effectively denied them the educational opportunities provided non-Chinese students, in violation of Title VI as well as the Equal Protection Clause of the Fourteenth Amendment. And in an unexpectedly unanimous ruling, the Court agreed—albeit along two different lines of reasoning. Relying "solely" on Section 601, five of the Justices, led by Justice Douglas, concluded that Section 601 barred discrimination "which has [a discriminatory] effect even though no purposeful design is present." In that case the effect was clear: "the Chinese-speaking minority receive[d] fewer benefits than the English-speaking majority" from the city's schools. As recipients of federal educational dollars subject to Title VI, the school system had "contractually" obligated itself to reform its instructional policies to ensure the Chinese-speaking minority the same educational benefits as the English-speaking majority. Lau therefore seemed to imply that Section 601 directly outlawed policies with discriminatory effects , irrespective of their motivating intent—a form of discrimination now commonly known as disparate impact . But the Court also mixed some uncertainty into that message. Immediately after saying that they were "rely[ing] solely on [Section] 601" in siding with the student plaintiffs, the majority in Lau turned to recite a regulation issued by HEW, specifically addressing what recipient school districts had to do under Title VI to ensure students with "linguistic deficiencies" had the same "opportunity to obtain the education generally obtained by other students in the system." That discussion drew a contrasting concurrence from three other Justices, all of whom agreed that the student should prevail under a disparate impact theory, but believed that the proper basis for that theory—and the result in favor of the students—was HEW's regulation implementing Title VI, not Section 601 itself. In all, though, eight Justices in Lau put down a marker in favor of disparate impact under Title VI, five seemingly under Section 601. And so, whatever the vagaries in its rationale, Lau 's basic message seemed clear: Title VI barred not just intentional discrimination, but policies with a disparate impact as well. Limiting Lau Only a few years after handing down Lau , in its landmark ruling in Regents of the University of California v. Bakke , the Court appeared to reverse course. Bakke involved a white applicant's challenge to the affirmative action admissions policy then in use at the University of California at Davis's medical school. And like the Chinese students in Lau , Bakke objected to that policy on both constitutional and statutory grounds. To dispose of his challenge the Justices therefore had to confront the question they effectively avoided in Lau : how does Section 601's nondiscrimination mandate relate to the Fourteenth Amendment's Equal Protection Clause? None of the opinions in Bakke commanded a clear majority, but in separate opinions, five of the Justices, separately sifting through the legislative record, arrived at the same answer: Title VI's drafters intended Section 601 to "enact[] constitutional principles," and nothing more. Title VI, in their view, therefore "proscribe[d] only those racial classifications that would violate the Equal Protection Clause" —policies that the Court had already said must involve more than just a racially disparate impact, but a provable discriminatory intent as well. In the decades since Bakke , the Court continued to divide over the basic ambiguity in Title VI—over exactly what sort of "discrimination" Section 601 outlawed. By the time Title VI returned to the Court in 2001, however, with Alexander v. Sandoval , a unified five-Justice majority appeared to settle on a more definite view. As Justice Scalia explained for the Sandoval majority, despite the lingering "uncertainty regarding [Title VI's] commands," it seemed "beyond dispute" at that point that a policy with only a disparate impact did not violate Section 601. Tallying the votes in Bakke seemed to make that clear enough: on that statutory point, five Justices in Bakke explicitly agreed that Title VI should be read coextensively with the Equal Protection Clause. And as claims under that constitutional provision had already been limited to cases of provable discriminatory intent, the Sandoval majority thought it stood to reason that claims under Title VI had to be so limited as well. The difficulty, however, was Lau . There, after all, the Court seemed to say that Section 601 did prohibit policies with a racially disparate impact, irrespective of whether those effects were intentional. But as the Sandoval majority saw it, Bakke had effectively resolved that difficulty as well: to the extent Lau rested on Section 601 directly—rather than HEW's regulations —the majority in Lau had simply misread Title VI. The only discrimination Title VI directly outlawed, according to the votes in Bakke , was intentional. As far as the Sandoval Court was concerned, to the extent Lau disagreed with Bakke , Lau had already been "rejected." Regulating "Discrimination" Under Title VI In Sandoval the Court appeared to resolve the basic ambiguity in Title VI: the statute's central nondiscrimination mandate—Section 601—outlaws only intentional discrimination. But saying that much, the Sandoval majority also acknowledged, did not speak to whether policies with a disparate impact might still be barred by regulations issued under the rulemaking grant found in Section 602 of Title VI . Section 602, as noted, directs agencies to promulgate regulations "to effectuate" the antidiscrimination prohibition of Section 601 "consistent with achievement of the objectives of the statute." And pursuant to that directive, all Cabinet-level federal funding agencies, along with many smaller agencies, have since issued rules and guidance under Title VI outlawing disparate impact discrimination. As this section explains, however, Sandoval seems to have placed narrower limits on what funding agencies may redress through regulations under Section 602, arguably constraining them to redress in their rulemakings the same forms of intentional discrimination outlawed by Section 601. Rulemaking Under Title VI: Section 602 In the courts, and especially the Supreme Court, much of the fight over Title VI has focused on definitions—what in general terms will count as unlawful "discrimination" under Section 601. But for the agencies charged with actually enforcing that mandate the primary concerns have tended to be more operational and programmatic: how to go about the business of reviewing and assessing particular practices under Title VI. To address those concerns, funding agencies have therefore had to look beyond the bare substantive standard in Section 601 to their rulemaking authority under Section 602. Section 602 is at once a source of authority and a command, "authoriz[ing] and direct[ing]" every federal funding agency to "effectuate" Section 601's nondiscrimination mandate "by issuing rules, regulations, or orders of general applicability consistent with" the "objectives" of its underlying funding authority. Every Cabinet-level department, among many other smaller agencies, has since done so. And given DOJ's unique coordinating authority over Title VI, those funding agencies have generally followed the rules DOJ developed for HEW in 1964, including its regulation outlawing disparate impact discrimination . Like the nondiscrimination provision in Section 601, the rulemaking authority provided by Section 602 was made deliberately broad. That breadth has produced a further point of uncertainty about the statute: what limits are there to agencies' rulemaking authority under Section 602? The Supreme Court, for its part, has never squarely addressed that question, nor the validity of the disparate-impact regulations in particular. And as explained below, the resulting ambiguity has yielded two contrasting views of what Section 602 will allow an agency to outlaw as unlawful "discrimination" under Title VI: (1) a largely deferential view that would give agencies broad leeway to issue "broad prophylactic rules" reaching conduct beyond intentional discrimination; and (2) a more exacting view under which agencies would be limited to redressing provable cases of intentional discrimination. The Limits to Section 602: Two Views 1. The Reasonable-Relation View The earliest view of Title VI's rulemaking authority was also the most expansive. In his concurring opinion in Lau , Justice Stewart set out the basic theory: because Section 602 allows agencies to promulgate rules "effectuat[ing]" Section 601, HEW had the authority to enact any rule that broadly furthered the purpose of deterring "discrimination" in federally funded programs. All the courts would require, as a formal matter, is that any rules issued under Section 602 be "reasonably related" to the antidiscriminatory ambitions of the statute. Only two other Justices signed on to Justice Stewart's view in Lau , and it has never been adopted by a majority of the Court. But it also has never been squarely rejected by the Court either. This more expansive view of Section 602 appears nevertheless to rest on two arguable bases. The first comes down to basic principles of administrative law. As Justice Stewart noted in Lau , the Court has generally accorded considerable latitude to agencies authoring rules pursuant to generic rulemaking provisions, on the assumption that Congress intended to defer more particular legislative decisions to their expert judgment. And thus, when presented with such broad delegations—permitting an agency, for example, to make "such rules and regulations as may be necessary to carry out" another statutory mandate —the courts have traditionally been inclined to defer "to the informed experience and judgment of the agency to whom Congress delegated appropriate authority." Given its similarly expansive wording, Section 602 could be seen to embody much the same sort of broad rulemaking authority. In such cases, as Justice Stewart argued, and as some Justices later agreed, the test should be correspondingly lenient, asking only whether the agency's rule bears some reasonable relationship "to the purposes of the enabling legislation." That leniency would arguably authorize an agency to issue "broad prophylactic rules" so long as they "realiz[e] the vision laid out in" Section 601—as arguably would a rule outlawing policies with racially disparate impacts. Apart from principles of administrative law, this more expansive view of Section 602 might also find support in a constitutional analogy, based on two of the Reconstruction Amendments. As Justice Stevens pointed out in his dissent in Guardians Association v. Civil Service Commission , the Court had at one time indicated—in a decision dating to "the dawn of [the last] century"—that "an administrative regulation's conformity to statutory authority was to be measured by the same standard as a statute's conformity to constitutional authority." And as it happened, only a few years before Guardians , the Court had read the Fifteenth Amendment, despite "only prohibit[ing] purposeful racial discrimination in voting," to allow "Congress [to] implement that prohibition by banning voting practices that are discriminatory in effect." Congress could do that, according to Justice Stevens, because the Fifteenth Amendment—much like Title VI—supplements its prohibition against racially discriminatory voting policies with a provision empowering Congress "to enforce" that prohibition "by appropriate legislation." Given the structural similarity between the amendment and Title VI, Justice Stevens saw no reason why Section 602 should give federal agencies any less authority than the Fifteenth Amendment offers Congress—including authority to outlaw policies with discriminatory effects. Justice Steven's view in Guardians , like Justice Stewart's in Lau , has never commanded a majority from the Court. That analogy may also have lost some force more recently, following the Court's arguably more restrictive decisions under the Fifteenth Amendment. But the Court has also never expressly ruled out the analogy, and it appears to be at least consistent with the way the federal courts have read another of the Reconstruction Amendments—the Thirteenth, outlawing slavery and involuntary servitude. Whether that analogy would find favor among the Justices today seems at best uncertain, however, partly for the reasons discussed below. 2. The View from Sandoval In opposition to the early expansive reading of Section 602, a number of other Justices—and arguably a majority in Sandoval —have suggested that regulations under Section 602 must instead fit more closely with the particular purpose of Section 601: ridding federally funded programs of intentional discrimination. Sandoval , given its posture, did not squarely address disparate impact rules under Title VI; that case concerned the right of private parties to sue under a Title VI disparate impact regulation, not the validity of the underlying regulation itself. But in a suggestive footnote in his opinion for the majority, Justice Scalia expressed some doubt that those regulations could be squared with the majority's view that Section 601 bars only intentional discrimination. The majority's concern fastened less on the breadth of Section 602 than on the narrowness of Section 601. It seemed "strange," Justice Scalia explained, that a rule prohibiting disparate impact could "effectuate" the purpose of Section 601 when that provision "permits the very behavior that the regulations forbid." Or as Justice O'Connor had put the same point in her concurrence in Guardians , also involving a disparate impact claim under Title VI, it was "difficult to fathom how the Court could uphold" regulations outlawing discriminatory effects when, to do so, they would have to "go well beyond " Title VI's purpose of proscribing intentional discrimination. The majority in Sandoval , like Justice O'Connor in Guardians , seemed to signal their dissatisfaction with the "reasonably related" test endorsed by Justice Stewart's concurrence in Lau . Neither, however, proposed a test to replace it. To do so, however, they may well have turned to a constitutional analogy of their own —based not on the Fifteenth Amendment but the Fourteenth. Under the Fourteenth Amendment, the Court has held that Congress may legislatively enforce that amendment's guarantees of equal protection and due process of law but in doing so may not redefine what would count as violating either . By that analogy, an agency could then clearly seek to enforce Section 601's bar against intentional discrimination by enacting prophylactic regulation "congruent and proportional" to redressing instances of different treatment . But the agency could not substantively amplify that prohibition by adding to the types of discrimination outlawed by Section 601—as a disparate impact rule arguably would, given the Court's view in Sandoval that Section 601 does not bar a policy simply for having discriminatory effects. Unresolved Questions About Disparate Impact Under Section 602 The Court has yet to squarely resolve which of these views of agencies' rulemaking authority under Section 602 is the right one. Regardless of which they choose, however, an agency arguably may still be able to defend its Title VI disparate impact regulations, depending on how it styles its enforcement under that regulation. Even if Section 602 is construed narrowly to permit only regulations that address intentional discrimination, it might still be argued that Title VI allows agencies to promulgate regulations addressing disparate impact in at least some circumstances. As Justice Stevens pointed out dissenting in Sandoval , one way of looking at Title VI's disparate impact regulations is as an indirect rule against intentional discrimination—only intentional discrimination in a "more subtle form[]," masked by an "ostensibly race-neutral" policy but with "the predictable and perhaps intended consequence of materially benefitting some races at the expense of others." Styled that way, an agency might be able to defend its disparate impact rules as a means of "counteract[ing] unconscious prejudices and disguised animus that escape easy classification as disparate treatment." In that sense, those rules would still be directed at "uncovering discriminatory intent," even if only in subtler forms, such as "covert and illicit stereotyping." And, for that reason, those rules would arguably also comply with Sandoval 's more exacting standard for Section 602 regulations, despite their formal focus on racial disparities. Even if styled in this way, however, a disparate impact rule under Title VI would likely face further constraints. As the Court recently explained in the context of the Fair Housing Act, an agency relying on a disparate impact theory will still need to "point to a defendant's policy or policies causing" the "statistical disparity" at issue—that the policy actually had racially discriminatory effects . And to make that showing, the agency may also need to satisfy a "robust causality requirement," to "ensure[] that [r]acial imbalance [] does not, without more, establish a prima facie case of disparate impact," protecting "defendants from being held liable for racial disparities they did not create." What such a causality requirement might entail as a practical matter seems unclear at this point. Nevertheless, recasting the argument over Section 602 in these terms might help sharpen some of the debate around Title VI, by redirecting the discussion away from the abstract concerns about rulemaking authority to the more basic and concrete issue of what disparate impact liability may—or may not—involve. Enforcing Title VI at School: The U.S. Department of Education's Office for Civil Rights Although Title VI applies to funds distributed by every federal agency, much of the doctrine under the statute has been shaped by its use in the public schools. That doctrinal story has accordingly centered on one agency in particular: the Office for Civil Rights (OCR), originally housed in HEW but today located in the U.S. Department of Education (ED). As the agency primarily responsible for enforcing Title VI in the public schools, as well as nearly all colleges and universities, OCR handles every year a large volume and variety of claims alleging race and national origin discrimination. Some of the most common types of those claims are discussed below, beginning first with a brief overview of how ED, as a matter of policy, processes the complaints it receives under Title VI. OCR's Enforcement of Title VI OCR primarily enforces Title VI through its investigation and resolution of complaints. To guide its review of those complaints, OCR has published a detailed manual of procedures—known as the Case Processing Manual (CPM)—by which it receives, analyzes, and disposes of allegations under Title VI, among other statutes within its jurisdiction. That guidance document, described below, divides OCR's enforcement into five distinct phases: Jurisdictional Evaluation. At the first phase of its review, OCR evaluates an allegation for its basic sufficiency—conducting an essentially jurisdictional analysis. As a part of that evaluation, OCR first examines whether an allegation has enough information in it, of the right kind. If so, OCR has to establish jurisdiction over both the subject matter of the complaint as well as the entity complained of. Thus, the allegation must state enough facts from which to infer race or national origin discrimination (subject matter jurisdiction), and the complainant must allege discrimination by a program or activity that receives ED's financial assistance (personal jurisdiction). And the allegation must also be timely: a complaint under Title VI generally must be filed with OCR within 180 calendar days of the date when the discrimination allegedly occurred. Insufficiency on any of these points may result in an allegation's dismissal without OCR's further investigation or review. After determining that it has jurisdiction over an allegation and finds it otherwise suitable for review, OCR will formally open its investigation, beginning with the issuance of informational letters to both the complainant and recipient. Those letters primarily serve to notify the parties of the allegations OCR intends to investigate and the basis for its jurisdiction, including appropriate statutory and regulatory authority. The letters also apprise the parties of OCR's role in the investigation—as a "neutral fact-finder"—as well as the complainant's right to bring suit in federal court regardless of how OCR administratively resolves the complaint. Facilitated Resolution. As a part of its opening letter, OCR will also inform the parties of its voluntary resolution process, called a "Facilitated Resolution Between the Parties." Under that process, OCR may offer to serve as "an impartial, confidential facilitator between the parties," to assist them in informally resolving the allegations before OCR formally makes any findings of its own. During those discussions OCR may accordingly suspend its investigation for up to 30 calendar days to allow negotiations to proceed in good faith; it will reinstate its investigation, however, should the parties fail to reach an agreement within that time. In no case, though, will OCR approve or otherwise endorse an agreement reached under this process, nor monitor a recipient's compliance with it. Investigation. If the parties cannot voluntarily resolve the complaint through facilitated negotiation, OCR will proceed to investigate. At any time during that investigation—which may involve OCR's review of school data, interviews with students and staff, or other measures—the recipient may still choose to negotiate a voluntary resolution with OCR, and recent resolutions suggest that this is relatively common. In such cases, OCR will issue a resolution letter memorializing the allegations and its investigation, along with the agreement resolving them. In these cases, however, OCR will generally not make any findings on the underlying allegations. In the event the recipient declines to negotiate a voluntary resolution, at the completion of its investigation OCR will issue findings on each allegation, resolving them by a preponderance of the evidence. In each case OCR will therefore explain why the evidence likelier than not supports the finding of a violation ("non-compliance determination") or else explain why it does not ("insufficient evidence"). In cases of non-compliance OCR will also propose a resolution agreement, outlining the steps for the recipient to take to resolve the allegations in question and ensure its future compliance with Title VI. A recipient generally has 90 days in which to consider and negotiate the terms of a final agreement with OCR. If the recipient and OCR fail to reach an agreement within that period, OCR will advise the recipient, by "Letter of Impending Enforcement Action," that it intends to proceed to enforcement should the parties fail to reach an agreement in short order. Monitoring. Once the sides have reached an acceptable resolution agreement, OCR will monitor, on an ongoing basis, the recipient's compliance with its terms. To do so, recipients generally must agree to certain reporting requirements, ensuring OCR access to "data and other information in a timely manner" by which it can assure the recipient's compliance. OCR also reserves the right to "visit the recipient, interview staff and students, and request such additional reports or data as are necessary for OCR to determine whether the recipient has fulfilled the terms and obligations of the resolution agreement." In some instances OCR may also choose to amend or altogether end a resolution agreement "when it learns that circumstances have arisen that substantially change, fully resolve, or render moot, some or all of the compliance concerns that were addressed by the resolution agreement." Enforcement Action. Where OCR cannot negotiate or secure compliance with an acceptable resolution agreement, it may resort to either of the two enforcement mechanisms allowed by Title VI: (1) an administrative proceeding resulting in the termination or refusal of federal funds; or (2) the referral of a complaint to DOJ for litigation. Fund termination, as noted, was envisioned as the primary mechanism for enforcing Title VI, and was once aggressively used by OCR to enforce the desegregation of southern schools. Over the past several Administrations its use appears to have waned significantly, perhaps owing to an increased reliance on resolution agreements, voluntary or otherwise, to achieve compliance. Major Areas of Administrative Enforcement OCR's administrative docket for Title VI is considerable, covering a wide variety of allegations involving race and national origin discrimination. Among the issues raised in those complaints, three appear especially common: different treatment, retaliation, and racial harassment. In 2016, for instance, OCR reported receiving some 2,400 total complaints raising issues under 17 general categories of Title VI violations. Of those, 976 alleged some form of different treatment, while another 569 complaints alleged race-based retaliation and a further 548 made claims of racial harassment. In 2015, OCR reported largely similar figures as well. The next section examines two recent examples of how OCR reviews complaints under Title VI, one involving a more typical allegation of indirect "disparate treatment," and another posing a less typical allegation of direct discrimination. Different Treatment: Two Illustrations The single largest category of complaints OCR receives involves allegations of "disparate treatment." That category covers a wide variety of conduct, covering any complaint that a recipient has singled out an individual or individuals by race for adverse treatment. Of those complaints two types are especially common: "intentionally disciplining students differently based on race" or else excluding them in some way. As noted, OCR will seek to confirm those allegations in either of two ways: either directly, by looking to evidence of overt discriminatory intent, or else indirectly, by establishing that any "apparent differences in the treatment of similarly-situated students of different races" have no legitimate, nondiscriminatory basis. And because Title VI has been read to overlap with the Equal Protection Clause, even where OCR believes a recipient has treated individuals differently by race, it still has to assess whether that treatment was a "narrowly tailored" means of "meet[ing] a compelling governmental interest." Disparate Treatment: Circumstantial Evidence In one recent example, OCR received a complaint from an African American student, identified only as "Student A," alleging that he had been disciplined more severely than his white classmates, in violation of Title VI. As in many disciplinary cases, the student did not produce direct evidence of discrimination. And so OCR instead looked to whether there were any "apparent differences" in the way the school treated Student A from the way it handled "similarly-situated students of different races," and if so, whether those differences had a legitimate, nondiscriminatory basis. In the course of its investigation, OCR uncovered what it believed were four apparent differences in the way the school treated Student A. First, the school had repeatedly recorded disciplinary warnings it gave Student A, but "did not consistently record warnings given to similarly situated white students." Second, even though "the Principal employed an informal progressive discipline policy" that was applied to Student A, "increasing the severity of the disciplinary consequence after each incident," a "similarly situated white student who had a more extensive disciplinary history, did not face increasingly severe disciplinary consequences." Third, the evidence suggested that the school's principal "responded more favorably" to allegations made by a white student's mother than Student A's mother "that other students were teasing him to entice him to engage in misconduct." And, finally, Student A had pointed to a specific case where a white male student had been treated more leniently for assaulting another student. The school, for its part, sought to defend some of those decisions by pointing to differences in the students' misconduct. OCR, however, disagreed: according to its investigators, the students' files bore out no meaningful differences besides the students' race. Nor did OCR accept the school's admission that in the other cases it had simply made a mistake: the quantity, frequency, and variety of those mistakes, OCR found, "established a pattern of unjustified, discriminatory treatment on the basis of race in the discipline administered to Student A." That was enough, OCR concluded, to violate Title VI and its implementing regulations. Disparate Treatment: Direct Evidence Another recent case, also involving an allegation of disparate treatment, illustrates how OCR reads Title VI against the backdrop of the Equal Protection Clause. That case arose in the wake of events in Ferguson, MO, in 2014, following the fatal police shooting of an 18-year-old African American that provoked widespread protests in Ferguson and elsewhere. In response to the events there, an Illinois public school had decided to convene a special "Black Lives Matter" assembly, so that "black students [could] express their frustrations" in "a comfortable forum." To do that, however, the school chose to "limit the assembly to participation by students who self-identified as black." That decision, as the school district later admitted, clearly amounted to different treatment—excluding some students while admitting others solely based on whether they identified as African American. That finding alone, though, did not decide the school's liability under Title VI. Instead, OCR had to go on to examine whether the school's decision would satisfy constitutional requirements—whether the school had an "interest in holding a racially exclusive assembly [that] was compelling and that the means [it] used [would] survive strict scrutiny." Looking to relevant constitutional precedent, OCR ultimately sided with the complainant: even though the school did have a compelling interest in holding a racially exclusive assembly, it had nevertheless failed "to assess fully whether there were workable race-neutral alternatives" or to "conduct a flexible and individualized review of potential participants." The school had therefore violated Title VI, according to OCR. And to resume compliance, the school district agreed not to allow similarly exclusive assemblies again. Considerations for Congress Title VI has gone largely unchanged in the 50 years since it became law. As this report has explained, the debates over the statute have therefore centered on how the courts have read its two central provisions—Sections 601 and 602—and how federal agencies have gone about enforcing them. But Congress has the ultimate say over how Title VI works—rooted not only in its legislative power but in its authority to oversee the statute's use by federal agencies. As this section explains, recently two issues over the statute have drawn particular congressional interest: the viability of disparate impact regulations under Section 602, and the inclusion of new protected classes in Section 601. As explained earlier, with its 2001 decision in Alexander v. Sandoval , the Court seemed to cast doubt on the future of all disparate impact liability under Title VI as currently written, even when liability was premised on regulations issued under Section 602. In the last several months, following the release of a widely remarked report on school safety, the Trump Administration signaled that it may be rethinking altogether Title VI regulations that reach beyond intentional discrimination to address policies with a racially disparate impact. Given the continuing debate about the relation of Title VI's central provisions, Congress could opt to put down its own marker, by definitively clarifying Title VI's scope in either of two ways. On the one hand, Congress could make clear that Section 601 indeed prohibits only intentional discrimination, and that any rules under Section 602 may not find a recipient liable for discrimination absent proof of discriminatory intent. Congress, on the other hand, could expressly endorse disparate impact under Title VI by, for example, grafting that standard onto Section 601, as it has done in Title VII of the 1964 Civil Rights Act. That addition would unambiguously allow funding agencies to investigate policies and practices under Title VI based on their discriminatory effects, regardless of the underlying intent. In addition to clarifying the types of discrimination Title VI outlaws, Congress could also choose to revise the classes of individuals who come within its protection. One recent proposal, for example, would amend Section 601 to include "sex (including sexual orientation and gender identity)" along with race, color, and national origin among its protected classes. Although that or a similar amendment would clearly expand Title VI's coverage, its effects will likely hinge on how the courts choose to interpret Section 601 in light of such additions. Though a complete analysis lies beyond the scope of this report, at least two readings seem arguable. On the one hand, the courts could continue to read Section 601 to "enact[] constitutional principles," in which case they would presumably review claims based on sex discrimination under a heightened standard of review, while in the case of gender identity, possibly only for basic rationality. On the other hand, to the extent that an amendment introduces a statutory protection for a class of individuals not currently recognized by the Court as a constitutionally "suspect classification," that addition, especially if buttressed by supporting legislative history, could suggest that Congress had decided to amend the reach of Title VI altogether, to "independently proscribe conduct that the Constitution does not." Conclusion In the 50 years since becoming law Title VI has played a central role in addressing racial discrimination in the nation's schools. Title VI provides that protection in a unique way: by making the promise of nondiscrimination a condition for any program or institution that receives federal financial support. For much of its history, the debates over Title VI have fastened on two basic ambiguities in the statute: the kind of "discrimination" Title VI was meant to outlaw and the types of rules a funding agency could issue to effectuate that prohibition. The Supreme Court appears to have definitively resolved the first of those ambiguities: because Title VI simply "enacts constitutional principles," as currently written, it prohibits only intentional discrimination. And on that basis the Court has suggested, but not definitively ruled on, how it might resolve the second ambiguity as well: to effectuate Title VI's purpose, an agency may outlaw only policies resulting from a provable discriminatory intent, not simply having a racially discriminatory effect. Whether the Court will turn that suggestion into a holding remains to be seen. Until then, however, federal agencies like OCR will likely continue to enforce Title VI consistent with constitutional standards that the Court has since read into the statute. In OCR's case, that enforcement work is already considerable, involving thousands of complaints every year culminating in significant resolutions across a wide range of schools and institutions of higher education. And in the background remains ED's ultimate authority under Title VI—to withdraw its financial support from any program or institution that refuses to comply with the statute's command that all individuals be treated equally, regardless of their race.

Title VI of the Civil Rights Act of 1964 prohibits federally funded programs, activities, and institutions from discriminating based on race, color, or national origin. In its current form, largely unchanged since its adoption, Title VI incorporates a number of unique features. Besides barring federally funded programs from discriminating based on race, Title VI also authorizes and directs all federal funding agencies to promulgate rules effectuating that nondiscrimination mandate. Those rules were also made subject to presidential approval, an authority since delegated to the Attorney General by executive order. To enforce Title VI, agencies also have at their disposal a uniquely powerful tool: the termination or refusal to provide federal financial support to an institution or program seeking it. Although this power to withdraw federal funds was envisioned as the primary mechanism for enforcing Title VI, that authority was also hedged with a range of procedural requirements designed to spur agencies to resolve complaints against recipients through voluntary agreements. In the 50 years since Title VI became law much of the debate over the statute has centered on how the courts have read its two central provisions—Sections 601 and 602—and how federal agencies have gone about enforcing them. In the courts those debates have especially focused on what counts as unlawful "discrimination" under Section 601. The courts have long agreed that Title VI bars federally funded programs from intentionally singling out individuals by race for adverse treatment. In its first case involving Title VI the Supreme Court suggested that Section 601 might also reach beyond intentional discrimination to bar the use of policies with a disparate impact—policies that, irrespective of the intent, impose a discriminatory effect on different racial groups. With its 2001 ruling in Alexander v Sandoval, the Court appeared to put that interpretive question to rest: Title VI directly prohibits only intentional discrimination. For the agencies charged with enforcing Title VI, the primary concerns have tended to be more operational and programmatic—how to go about the business of reviewing and assessing particular practices under Section 602 of the statute. Section 602 authorizes and directs agencies to issue regulations "effectuat[ing]" Section 601. The breadth of that authority has produced a further point of uncertainty about the statute: what limits are there to funding agencies' rulemaking authority under Title VI? So far, two divergent views have emerged from the Court's decisions: (1) a largely deferential view that would give agencies leeway to issue prophylactic rules reaching conduct beyond intentional discrimination, and (2) a more exacting view under which agencies may redress only provable cases of intentional discrimination. Although Title VI's nondiscrimination prohibition accompanies nearly all awards of federal financial support, much of the statute's doctrine has been shaped by its use in the public schools. That doctrinal history has centered on one agency in particular: the Office for Civil Rights (OCR) in the U.S. Department of Education (ED). Title VI continues to play a central part in OCR's mission of protecting civil rights on campuses at all educational levels, and in institutions both public and private. OCR handles a large volume and variety of claims alleging race and national origin discrimination, which it administratively resolves through a series of investigative procedures laid out in its Case Processing Manual. Although the types of allegations OCR investigates vary, three major categories of complaint occupy much of its docket: disparate treatment, retaliation, and racial harassment. Congress has the ultimate say over how Title VI works—rooted not only in its legislative power but in its authority to oversee the statute's enforcement. In recent years two questions surrounding Title VI have drawn particular congressional interest: the viability of disparate impact regulations under Section 602 and the possible inclusion of new protected classes in Section 601. No matter how Congress may choose to address those subjects, however, they are likely only to raise further questions about the future of this landmark civil rights law.

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Introduction The federal government subsidizes a wide range of activities through the tax code. The majority of available tax incentives are claimed directly by the party engaged in the activity targeted by the subsidy. There are several tax credits, however, that often require or encourage the intended beneficiary of the subsidy to partner with a third party to use the tax incentive. This may happen because the tax credits are nonrefundable and the intended beneficiary of the tax credit has little or no tax liability (e.g., a nonprofit), or because the credits are delivered over multiple years whereas upfront funding is needed to break g round. This situation often results in a tax equity transaction—the intended beneficiary of the tax credit agrees to transfer the rights to claim the credits to a third party in exchange for an equity financing contribution. One estimate placed the size of the tax equity market in 2017 at $20 billion. This report provides an introduction to the general tax equity financing mechanism. To facilitate the presentation of the tax equity approach to subsidization, three categories of tax credits that either currently use or have recently used this mechanism are examined: the low-income housing tax credit (LIHTC); the new markets tax credit (NMTC); and two energy-related tax credits—the renewable electricity production tax credit (PTC) and energy investment tax credit (ITC). This report does not evaluate the economic rationale for subsidizing the activities targeted by these tax credits, and does not analyze whether these subsidies increase net investment in these activities. Instead, this report focuses on explaining the structure and functioning of tax equity arrangements. Tax Equity Investments T ax equity investment is not a statutorily defined term, but rather identifies transactions that pair the tax credits or other tax benefits generated by a qualifying physical investment with the capital financing associated with that investment. These transactions involve one party agreeing to assign the rights to claim the tax credits to another party in exchange for an equity investment (i.e., cash financing). The exchange is sometimes referred to as "monetizing," "selling," or "trading" the tax credits. Importantly, however, the "sale" of federal tax credits occurs within a partnership or contractual agreement that legally binds the two parties to satisfy federal tax requirements that the tax credit claimant have an ownership interest in the underlying physical investment. This makes the trading of tax credits different than the trading of corporate stock, which occurs between two unrelated parties on an exchange. The partnership form also allows for income (or losses), deductions, and other tax items to be allocated directly to the individual partners. In some cases, nonprofit entities can form a partnership with taxable investors and benefit from tax credits through this relationship. Overview of Structure and Mechanics While the specifics of a tax equity arrangement vary depending on the project and tax credit program involved, these deals often share some general common structural features. Figure 1 provides a graphical summary of the structure and mechanics of one kind of project that relies on tax equity investment. The process begins with a developer, also sometimes referred to as a "sponsor," identifying a potential project eligible for federal tax credits. For projects where an application is required, the developer will apply to the entity in charge of awarding the credits. At the same time, the developer will seek out potential investors willing to contribute equity capital in exchange for the tax credits expected to be awarded. A developer can partner directly with an investor, or, as is also common, partner with a tax credit "syndicator" that manages a tax credit fund for multiple investors that may not have the expertise to partner directly with a developer, or that may want to diversify their tax equity investment portfolio. The syndicator will earn a syndication fee for identifying, evaluating, and managing tax equity investments for the fund. Regardless of whether the partnership with investors is direct or via a syndicator, the tax equity investors are typically large corporations with predictable tax liabilities. The developer and investors will negotiate how much equity capital will be contributed in exchange for the right to claim the tax credits and other tax benefits. As previously mentioned, this is commonly referred to as the "selling," "trading," or "monetizing" of tax credits. The tax equity investors will serve as the "limited" partners in the partnership, meaning they generally have a passive role and do not participate in management decisions. The developer will serve as the "general" partner overseeing day-to-day operations in exchange for a fee and possibly any cash distributions the project may generate. The developer may also contribute their own capital to or arrange or coordinate other sources of capital for the project, depending on the particular tax credit program being used. While tax equity investors are not generally required to have an active management role, they have an incentive to monitor the project to ensure it complies with the program's rules, since compliance violations can result in forfeiture of tax credits. The Tax Equity Investor's Return A tax equity investor's return depends on the price paid per credit and associated benefits the investor secures in exchange. In the simplest case, the only benefit the investor receives from the credits is the ability to reduce their tax liability. For example, consider a project that will cost $1.5 million to complete and that will generate $1 million in federal tax credits that its owner is seeking to sell to finance the upfront cost of the project. An outside investor has agreed to contribute 90 cents in equity financing in exchange for each $1.00 of tax credit. Thus, the investor pays (contributes in capital) $900,000 in exchange for $1 million in tax credits. The net return to the investor is $100,000 (in reduced taxes), or 11.1% ($100,000 divided by $900,000). The project developer will need to make up the difference between the project's cost ($1.5 million) and tax equity investor's capital contribution ($900,000). This difference is often referred to as the "equity gap." Possible options for filling the equity gap include traditional loans or equity financing from other sources. The gap could also be filled with additional federal, state, or local subsidies. These might be grants, below-market-rate loans, or other tax incentives. Depending on the structure of the arrangement, the tax equity investor may also secure other benefits, such as additional state and federal tax incentives, a claim to operating income and losses, a share of any capital gains when the underlying investment is sold, or goodwill with the community or regulators. With regard to regulatory-driven motives, investments in LIHTC and NMTC projects, for example, can assist financial institutions in satisfying requirements under the Community Reinvestment Act (CRA; P.L. 95-128 ), which is intended to encourage banks to make credit more readily available in low- and moderate-income communities. Tax equity investors in renewable energy projects generally have returns that consist of both tax attributes and operating cash flow to conform to guidance provided by the Internal Revenue Service (IRS). The price investors are willing to pay for tax credits not only depends on the benefits attached to the credits, but on factors associated with the underlying project. These factors can include the risk associated with the project, how it is financed, and the time period over which benefits accrue. Due to the complexity of tax equity transactions and the size of investors' tax liabilities they desire to offset, the current federal tax equity mechanism may not, in some cases, be well suited for assisting small individual projects. When possible, tax equity investors typically seek large projects expected to generate a fairly significant amount of credits. Since tax equity investors require a financial return in exchange for providing financial capital, a portion of the subsidy is diverted away from the targeted activity. Returning to the previous example, if a tax equity investor agrees to contribute 90 cents in equity financing per $1.00 of federal tax credit, it means that for every $1.00 in government subsidy (i.e., tax credit), 10 cents is diverted away from subsidizing the underlying activity and to the investor and middlemen. Put differently, every 90 cents in federal subsidy that reaches the targeted industry actually costs the government $1.00 in lost tax revenue. This aspect of the tax equity mechanism is discussed in more detail in the " Policy Options and Considerations " section. Subsidy Fluctuations The use of the tax equity mechanism can create fluctuations in the amount of subsidy qualified activities receive. The subsidy flowing into a project depends on the price tax equity investors receive in exchange for their financing contributions. All else equal, higher tax credit prices imply more federal subsidization of the targeted activity per dollar loss of federal tax revenue. Therefore, factors that cause variability in tax credit prices also cause variability in the subsidization rate. This can lead to fluctuation in the subsidy delivered via the tax equity mechanism, even though there has been no direct policy change regarding the tax credit program itself. For example, during the Great Recession, falling corporate tax liabilities reduced investor demand for credits, leading to depressed credit prices. In turn, qualified investments had difficulty raising enough equity to finance projects. To bypass the tax equity mechanism, some credits were temporarily converted into direct grants. Policies enacted by Congress, but not directly related to the underlying tax credit program itself, can also lead to subsidy fluctuations. This occurred most recently with the 2017 tax revision ( P.L. 115-97 ). Although some direct changes were made to several incentives that use the tax equity mechanism, there have also been concerns that the reduction in corporate tax rates and overall corporate tax liabilities could curb investor appetite for credits, and reduce the amount of tax equity investment being offered in the market. With less tax equity being supplied in the market, tax equity investors might demand higher rates of return, which could increase the cost of financing from the perspective of investors in targeted activities. Additionally, the subsidies delivered by LIHTC and NMTC can also vary geographically due to the CRA. Policies can also affect the demand for tax equity. For example, with renewable energy tax incentives phasing down, renewable energy investors may have fewer tax credits they are seeking to monetize. Less demand for tax equity could tend to reduce tax equity financing costs from the perspective of investors in targeted activities, reducing the overall rate of return for tax equity investors. Select Case Studies While several current federal tax credits use the tax equity financing mechanism, no two credits do so in the same manner. For example, affordable housing developers are awarded LIHTCs by officials in each state who review applications, decisions regarding NMTC applications are made by federal officials, and renewable energy tax credits have no similar application and review process. The rate of subsidization and time frame over which the various tax credits may be claimed are also different, as are many of the intricacies of the rules and requirements of each. This section reviews three large tax credits that employ the tax equity financing mechanism to illustrate the various ways the approach is used in practice. Low-Income Housing Tax Credit The LIHTC program was created by the Tax Reform Act of 1986 ( P.L. 99-514 ) to replace various affordable housing tax incentives that were viewed as inefficient and uncoordinated at the time. The tax credits are given to developers over a 10-year period in exchange for constructing affordable rental housing. Originally scheduled to expire in 1989, the program was extended several times before being made permanent in the Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ). According to the Joint Committee on Taxation's (JCT's) most recent tax expenditure estimates, the LIHTC is estimated to cost the government an average of approximately $9.9 billion annually in reduced federal tax revenues. The mechanics of the program are complex. The process begins at the federal level, with each state receiving an annual LIHTC allocation based on population. In 2019, states received an LIHTC allocation of $2.75625 per person, with a minimum small-population state allocation of $3,166,875. These amounts reflect a temporary increase in the amount of credits each state received as a result of the 2018 Consolidated Appropriations Act ( P.L. 115-141 ). The increase is equal to 12.5% above what states would have received absent P.L. 115-141 , and is in effect through 2021. State or local housing finance agencies (HFAs) then award credits to developers using a competitive application process to determine which developers receive a credit award. HFAs review developer applications to ensure that proposed projects satisfy certain federally required criteria, as well as criteria established by each state. For example, some states may choose to give priority to buildings that offer specific amenities such as computer centers or that are located close to public transportation, while others may give priority to projects serving a particular demographic, such as the elderly. Delegating authority to HFAs to award credits gives each state the flexibility to address its individual housing needs, which is important given the local nature of housing markets. Upon receipt of an LIHTC award, developers typically "sell" the tax credits to investors in exchange for an equity investment. This transaction occurs within a partnership structure and in a manner similar to the generalized example discussed in the previous section. While LIHTC prices fluctuate over time and geographic regions, they typically range from the mid-$0.80s to mid-$0.90s per $1.00 of tax credit. In addition to the tax credits, the equity investor may also receive tax benefits related to any tax losses and other deductions, as well as residual cash flow. New Markets Tax Credit The NMTC program was created by the Community Renewal Tax Relief Act of 2000 ( P.L. 106-554 ) to provide an incentive to stimulate investment in low-income communities (LICs). The original allocation authority eligible for the NMTC program was $15 billion from 2001 to 2007. Congress subsequently increased the total allocation authority to $61 billion and extended the program through 2019. The tax credits are awarded to community development entities (CDEs) to make eligible low-income community investments. According to JCT's most recent tax expenditure estimates, the NMTC is estimated to cost the government an average of approximately $1.2 billion annually in reduced federal tax revenues. The process by which the NMTC affects eligible low-income communities involves multiple agents and steps. The multiple steps and agents are designed to ensure that the tax credit achieves its primary goal: encouraging investment in low-income communities. For example, the Department of the Treasury's Community Development Financial Institutions Fund (CDFI) reviews NMTC applicants submitted by CDEs, issues tax credit authority to those CDEs deemed most qualified, and plays a significant role in program compliance. To receive an allocation, a CDE must submit an application to the CDFI, which asks a series of standardized questions about the CDE's track record, the amount of NMTC allocation authority being requested, and the CDE's plans for any allocation authority granted. The application is reviewed and scored to identify those applicants most likely to have the greatest community development impact and ranked in descending order of aggregate score. Tax credit allocations are then awarded based upon the aggregate ranking until all of the allocation authority is exhausted. Upon receipt of an NMTC award, developers often "sell" the tax credits to investors in exchange for an equity investment. This transaction typically occurs through a limited liability corporation obtaining a loan from a bank and combining the loan proceeds with the tax credit proceeds to invest in the low-income community. While NMTC prices fluctuate over time, geographic regions, and the business cycle, they typically range from the mid-$0.70s to mid-$0.80s per $1.00 of tax credit. Unlike the LIHTC investor, the NMTC equity investor does not generally receive tax benefits related to any tax losses and other deductions. Energy Tax Credits Investment tax credits for renewable energy date back to the late 1970s. The production tax credit (PTC) for renewable energy was enacted in the Energy Policy Act of 1992 ( P.L. 102-486 ). In recent years, the cost of both of these incentives has increased, as investment in renewable energy technologies has accelerated. For FY2018, the JCT estimates tax expenditures for the renewable energy investment tax credit (ITC) will be $2.8 billion. Tax expenditures estimates for the PTC are $5.1 billion for FY2018. Most of the forgone revenue associated with the ITC is attributable to solar ($2.5 billion of the $2.8 billion for all eligible technologies). In the case of the PTC, most of the forgone revenue is associated with tax credits claimed for using wind to produce electricity ($4.7 billion of the $5.1 billion for all eligible technologies). The energy credit for solar is 30% of the amount invested in solar projects that start construction before the end of calendar year 2019. In 2020, the credit rate is reduced to 26% for property beginning construction in 2020, before being reduced again to 22% in 2021. For property that begins construction after 2021, the credit is 10%. As an investment credit, the ITC is generally claimed in the year the property is placed in service. The energy credit may be recaptured, meaning a taxpayer must add all or part of the tax credit to their tax liability, if a taxpayer disposes of the energy property or ceases to use the property for the purpose for which a tax credit was claimed. The recapture period is five years. The PTC is a per-kilowatt-hour (kWh) tax credit that can be claimed for the first 10 years of qualified renewable energy production. In 2018, the tax credit for wind was 2.4 cents per kWh. The amount of the credit is adjusted annually for inflation. Since 2009, taxpayers have had the option of electing to receive an ITC in lieu of the PTC. Wind or solar projects that began construction in 2009, 2010, or 2011 had an option to elect to receive a one-time grant in lieu of tax credits. Using tax equity financing arrangements has allowed developers to monetize the tax benefits, essentially trading future tax benefits for upfront capital. The ITC and PTC were not designed as tax equity incentives. Rather, they were intended to subsidize investment in and production of renewable energy. Unlike the LIHTC and the NMTC, the energy tax credits were not intended to rely on taxpayer investors to deliver the subsidy. In the case of the PTC, when enacted, it was anticipated that tax credits would be claimed for electricity produced at facilities owned by the taxpayer and later sold by the taxpayer. Over time, however, partnerships began to form to efficiently use tax benefits. Recognizing that tax equity transactions were being undertaken with respect to wind development, in 2007 the IRS released Revenue Procedure 2007-65, which established a safe harbor under which the allocation of tax credits in a tax equity partnership structure would not be challenged as long as certain ownership requirements were met. While separate guidance has not been issued for solar projects claiming the ITC, industry practice has generally been to follow the safe harbor guidance provided to wind projects claiming the PTC. Partnership flips are a common tax equity financing structure in renewable energy markets. Under a partnership flip structure, a renewable energy developer partners with a third-party tax equity investor. The tax equity investor has (or expects to have) sufficient tax liability to use the tax credits associated with the renewable energy investment or production. The tax equity investor and renewable energy developer establish a partnership, which is the project company. The tax equity investor may provide upfront cash to the project company, in exchange for production or investment tax credits, depreciation, interest deductions, and operating income. During the initial phase of the project, the tax equity investor will receive most of the tax benefits, as well as the income or loss (often the share is 99%). The developer retains a small allocation of tax benefits and income (profit or loss). Once the tax equity investor has achieved a targeted internal rate of return (IRR), the partners' interests in the project company will flip, with the developer now receiving most of the tax benefits and income (profit or loss) associated with the project (typically 95%, leaving the tax equity investor with 5%). The developer may also buy out the tax equity investor, such that the tax equity investor no longer owns any part of the project. Tax equity generally provides a portion of a project's capital needs—somewhere from 30% to 60%, depending on the specifics of the project. For renewable energy projects, tax equity is generally more expensive than other sources of debt financing. For example, tax equity investors require rates of return that are 7% to 10% higher than the return on a comparable debt product. Tax equity yields (or the after-tax return required by tax equity investors) can vary widely across energy projects, but often fall in the 6% to 8% range, depending on the technology and specifics of the project. Policy Options and Considerations There are a range of policy options to consider when it comes to using tax equity markets to monetize tax benefits. For existing programs and new tax policies that could involve tax equity transactions, consideration of various options might ask whether the use of tax equity markets is an efficient and effective means of delivering federal financial support. At first glance, it may appear that the government would get more "bang for its buck" by structuring the subsidy delivery mechanism to eliminate investors. However, such a conclusion overlooks one role that tax equity investors often play in addition to providing financing: tax equity investors evaluate the quality of projects before investing, as well as provide continuing oversight and compliance monitoring. Effectively, the tax equity mechanism outsources a portion of the oversight and compliance monitoring to the investors in exchange for a financial return. There may be value to the federal government in being able to rely on outside investors to provide oversight and monitoring. It could be argued, though, that for some tax equity programs that have a government entity overseeing participant compliance, the monitor role of investors is redundant. This section presents several policy options frequently discussed in debates regarding tax equity. The options are with respect to the general tax equity approach. Due to important differences in the underlying structure of various current or future credits, some options may be better suited for particular credits than others. Careful consideration on a case-by-case basis is part of evaluating the appropriateness of each option. The list of options presented here is by no means exhaustive. Make the Credits Refundable Making the tax credits refundable could, in some cases, reduce or eliminate the need for tax equity. In other cases, making the tax credits refundable could reduce the cost of such financing for those who still need to access tax equity markets. All the tax credits currently using the tax equity approach are nonrefundable. Nonrefundable credits have value only to the extent that there is a tax liability to offset. In contrast, refundable credits have value regardless of tax liability. For example, if a developer has $1,000 in refundable tax credits and no tax liability, they may claim the credits and receive a tax refund of $1,000. Thus, fully refundable credits are similar to direct grants administered through the tax system. Even if the relevant tax credits were made refundable, there could still be a role for tax equity investment. Current tax credits relying on tax equity are delivered over multiple years or when the investment in qualifying property is complete and tax returns are filed. Project developers, however, typically need upfront capital to make their investments. Thus, developers (for-profit and nonprofit) may still choose to rely on tax equity markets to monetize tax credits even if they were refundable. Alternatively, allowing tax credits to be refundable could make it easier for projects to rely on debt financing. Lenders may be more willing to lend on favorable terms to a project that expects a refundable tax benefit in the future. Moving to refundable credits could potentially increase the amount of subsidy per dollar of federal revenue loss. That is, it could increase the efficiency of the subsidy delivery mechanism and result in more of the targeted activity taking place. As discussed previously, all else equal, higher tax credit prices imply there is more federal subsidization per dollar loss of federal tax revenue. With refundable tax credits, current tax equity investors would be expected to pay more for each tax credit because the risk of not having sufficient tax liability to use the credits would be removed. Additionally, potential investors who are currently not purchasing tax credits because of uncertainty over their ability to use nonrefundable tax credits may enter the market now that the uncertainty is gone. This would add to the competition among investors and would likely put upward pressure on tax credit prices, further enhancing the subsidy mechanism. Transitioning to refundable business tax credits raises two potential concerns. The first is the federal cost. Refundable tax credits typically result in a large revenue loss because they may be fully utilized regardless of tax liability, whereas nonrefundable credits may be claimed only to the extent there is a tax liability, which can result in a portion of nonrefundable credits ultimately going unused. This concern is likely less of an issue with LIHTC and NMTC, since few of these tax credits currently go unclaimed. This implies that converting these to refundable credits would likely not result in a significant increase in federal revenue loss. Making the energy credits (PTC and ITC) refundable could result in considerable federal revenue loss. ITCs and PTCs that are currently carried forward and ultimately go unused under current law could instead be claimed immediately by taxpayers. For energy tax credits, many are claimed without the involvement of tax equity investors. Tax equity investors typically require projects to be of a certain size (i.e., generate a certain amount of tax benefits) to invest. As a result, there are many PTC- and ITC-eligible projects that are not able to monetize tax benefits using tax equity investors. Making energy tax credits refundable could (1) make the tax credits more attractive to developers that are not currently participating in tax equity markets; and (2) reduce the cost of tax equity for developers that are participating. Without a cap on the amount of ITCs or PTCs that can be claimed, if policy changes were made that increased demand for credits, the cost associated with delivering those credits would increase. One option to address concerns about the potential cost associated with an unlimited tax credit would be to limit the amount of tax credits that could be claimed. There is some experience with refundable energy tax credits. The energy tax credits enacted for wind and solar in the late 1970s were refundable, although legislation was enacted to make the credits nonrefundable in 1980. Also, several states offer tax credits designed to promote renewable energy that are refundable. The second concern is allowing businesses to claim a refundable tax credit generally. Refundable tax credits are a useful tool for providing income support via the tax code. For this reason, refundable tax credits have generally been reserved for households, and mostly for lower-income households. Some may take issue with allowing businesses to access an income-support tax incentive. Others assert that allowing the credits to be refundable would likely result in each dollar of federal tax revenue loss yielding more subsidy flowing into the intended activity. Convert to Grants The tax credits could be replaced with grants. A concern with the current tax equity mechanism is the amount of subsidy that is diverted away from the underlying activity and toward third-party investors and middlemen. Even if the tax credits were fully refundable, as discussed above, tax equity might still be used to monetize tax credits to get upfront financing. Nonprofit entities that do not file federal income tax returns would also not generally benefit directly from an incentive delivered through the tax code. Another concern with the current tax equity structure that has already been mentioned is that it can potentially create a bias toward larger-scale projects because of tax credit investors' appetite for credits combined with the cost savings from evaluating and monitoring fewer projects. One way to potentially overcome or mitigate these concerns would be to provide lump-sum grants. The effective subsidy would correspond to the federal revenue loss, and there would no longer be a bias toward larger projects resulting from the way the subsidy was delivered. The tradeoff, however, is that there would be no outside investors scrutinizing the long-term feasibility of potential projects or monitoring compliance after construction—though a mechanism such as that used to award NMTCs may help address this concern. Thus, there could be an increase in project failure and noncompliance, without the federal government (and in some cases, state governments) filling the role of tax credit investors. Carefully designed recapture provisions would also be needed in the case of project failure. In the end, replacing tax credits with grants would likely increase government administrative costs that could offset the increased subsidy flowing to the projects from the removal of tax credit investors. An option for maintaining the role of investors would be to deliver a portion of the tax credits as upfront grants, and deliver the remaining tax credits over time. To maintain a feasible tax credit market and investor participation, the proportion of grant funding would have to be such that enough developers sold their remaining tax credits. It is not clear exactly what proportion would achieve the appropriate balance, although there are several options. The federal government could statutorily determine a particular split, such as 50% grants and 50% tax credits. For programs primarily administered by states, such as the LIHTC, the decision could be left to the states. Alternatively, developers could request that a specific amount of their funding be in the form of grants up to a certain percentage. In any case, if enough developers chose not to sell their credits, then the tax credit market would not function well, and project feasibility assessment and compliance monitoring responsibilities would fall on the government. There is recent precedent for allowing grants in lieu of tax credits. During the Great Recession, falling corporate tax liabilities reduced investor demand for credits, leading to depressed credit prices. In response to the general macroeconomic conditions at the time, Congress passed the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ) in early 2009. The act allowed a portion of LIHTCs to be converted into grants. Renewable energy tax credits also had the option of receiving a grant in exchange for forgoing future tax benefits. In the case of the LIHTC, the grants were awarded via the competitive process used for awarding the credits. The need to intervene in tax credit markets highlights that the tax equity mechanism can create fluctuations in the subsidy qualified activities receive, as was discussed in the " Subsidy Fluctuations " section. In addition, ARRA allowed taxpayers who otherwise would have been eligible for the PTC or ITC to elect to receive a one-time grant from the Treasury in lieu of these tax benefits. Initially, the grant option was to be available for 2009 and 2010, although the policy was later extended such that projects that began construction before the end of 2011 could qualify. Since the grant was designed to be in lieu of existing tax benefits, tax benefits that could be claimed only by tax-paying entities, tax-exempt entities were not eligible. Allow the Direct Transfer of Credits The tax code could be modified to allow the direct transfer of tax credits without having to form a legal partnership. Currently, federal tax law requires tax equity investors to have an ownership interest in the underlying business venture in order to claim the associated tax credits. To meet this requirement, monetization of federal tax credits typically takes place within a partnership structure that legally binds the project's sponsor and investors for a period of time. In contrast, certain states permit state tax credits to be sold directly to investors without the need to establish a legal relationship. Removing the need to form a partnership to invest in tax equity projects could broaden the pool of potential investors. In turn, this could enhance competition for tax credits, resulting in more equity finance being raised per dollar of forgone federal tax revenue. It is unclear, however, what impact the direct transfer of credits would have on deals involving other tax benefits that are often bundled with the tax credits. For example, the section titled " The Tax Equity Investor's Return " notes that investors may also secure a claim to other state and federal tax incentives, operating income and losses, capital gains when the underlying investment is sold, or goodwill with the community or regulators. A number of issues would need to be addressed before allowing tax credits to be directly transferred. For example, allowing credits to be sold to anonymous investors with no formal ties to the underlying project potentially removes the tax equity investors' oversight incentives, which are a crucial feature of the current approach. Additionally, procedures would need to be implemented to track who has the right to claim the credits and prevent credits from being claimed (or from being recaptured) in instances of noncompliance or project failure. A decision would also need to be made about whether credits could be transferred only once, or if purchasers could resell credits. This would determine the resources needed to accurately track eligible credit claimants. Policymakers would also face the issue of who could participate in this market. Unsophisticated investors may not fully understand the risks or how to properly scrutinize these investments. Some of these issues may be resolved by the market itself if direct transfers were permitted. For example, at the state level, tax credit brokers have emerged to facilitate the exchange of transferable credits. There are also a number of online tax credit exchanges where state tax credits are traded. Brokers or exchanges can provide some level of expertise and guidance on the risks of these transactions. Their services also come at a cost that reduces the subsidy directed to the targeted activity. Imposing reporting requirements on brokers or exchanges may help with the administration of a direct transfer regime. Another option would be to allow more flexibility in transferring tax credits among various project participants. For example, tax-exempt entities engaged in a subsidized activity could be allowed to transfer their tax credit to someone else involved in the project (a designer or builder, or the provider of financing, for example) without entering into a formal partnership. As was the case with general transferability of credits, even allowing more restricted transfer of credits could impose additional administrative and oversight burdens on both taxpayers and the government. Accelerate the Credits Accelerating the credits could potentially reduce the cost of tax equity. This option, however, would not eliminate the need to rely on tax equity markets altogether. Further, this option is most directly applicable to tax credits or other tax benefits that accrue and reduce tax liability over a multiyear period, as opposed to the current tax year. A straightforward way to accelerate the credits would be to shorten the time period over which they are claimed. Alternatively, acceleration could also be achieved by leaving the claim periods unaltered, and frontloading the credits so that a greater proportion could be claimed in the earlier years. Either of these changes would likely increase the amount of equity a developer could raise from a given tax credit award because tax equity investors would be willing to pay a higher price per dollar of tax credit. This, in turn, would result in more subsidy flowing into the targeted investment, and allow for more projects to be undertaken for the same federal revenue loss. Tax equity investors would be willing to pay more if credits were accelerated for two reasons. First, a shorter claim period means that investors would reduce the discount applied to the total stream of tax credits, since they could offset tax liabilities sooner. Second, longer claim periods result in more uncertainty (risk) over whether an investor will have sufficient tax liability to use purchased credits. Accelerating the tax credit reduces that risk, and less risk would lead to current investors being willing to pay higher prices for tax credits. Less risk could also bring new tax equity investors into the market, which would also tend to increase tax credit prices. A concern with accelerating the tax credits is the potential for participants to lose focus on the investment after they have claimed all the credits. This concern could be addressed with a compliance period that is longer than the claim period and with credit recapture. For example, currently LIHTC is claimed over a 10-year period, but investors and developers are subject to a 15-year compliance period. Should the project fall out of compliance with the LIHTC rules in the last five years, the investors are subject to recapture of previously claimed tax credits. For purposes of this example, the claim period could be shortened to five years while leaving the 15-year compliance period in place.

This report provides an introduction to the general tax equity financing mechanism. The term tax equity investment describes transactions that pair the tax credits or other tax benefits generated by a qualifying physical investment with the capital financing associated with that investment. These transactions involve one party agreeing to assign the rights to claim the tax credits to another party in exchange for an equity investment (i.e., cash financing). The exchange is sometimes referred to as "monetizing," "selling," or "trading" the tax credits. Importantly, however, the "sale" of federal tax credits usually occurs within a partnership or contractual agreement that legally binds the two parties. Three categories of tax credits that either currently use or have recently used this mechanism are presented in this report to help explain the structure and function of tax equity arrangements. These include the low-income housing tax credit (LIHTC); the new markets tax credit (NMTC); and two energy-related tax credits—the renewable electricity production tax credit (PTC) and energy investment tax credit (ITC). While these credits all use the tax equity financing mechanism, no two credits do so in the same manner. The economic rationale for subsidizing the activities targeted by these tax credits is not evaluated. Instead, this report focuses on explaining the structure and functioning of tax equity arrangements, analyzing the delivery of federal financial support using this mechanism, and discussing various policy options related to tax credits that rely on tax equity. Four policy options are presented to help Congress should it consider modifications to an existing tax equity program, or create a new one. The options are with respect to the general tax equity approach and include making the credits refundable, converting the credits to grants, allowing for the direct transfer of credits, and accelerating the credit claim periods. This list of options is not exhaustive. Due to important differences in the underlying structure of various current or future credits, some options may be better suited for particular credits than others. Careful consideration on a case-by-case basis is part of evaluating the appropriateness of each option. Consideration of various options might ask whether the use of tax equity markets is an efficient and effective means of delivering federal financial support. At first glance, it may appear that the government would get more "bang for its buck" by delivering subsidies more directly, without a role for tax equity markets. However, such a conclusion overlooks one role that tax equity investors play in some industries in addition to providing financing: they evaluate the quality of projects before investing, as well as provide continuing oversight and compliance monitoring. Effectively, the tax equity mechanism outsources a portion of the oversight and compliance monitoring to investors in exchange for a financial return. On the one hand, there may be value to the federal government in being able to rely on outside investors to provide oversight and monitoring. On the other hand, for some tax equity programs that have a government entity overseeing participant compliance, the monitor role of investors may be redundant. There also may be ways to improve the current delivery approach.

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Introduction Antipoverty interventions that provide resources to local communities, based on the characteristics of those communities, have been of interest to Congress. One such policy, dubbed the "10-20-30 provision," was implemented in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). Title I, Section 105 of ARRA required the Secretary of Agriculture to allocate at least 10% of funds provided in that act from three rural development program accounts to persistent poverty counties; that is, to counties that have had poverty rates of 20% or more for the past 30 years, as measured by the 1980, 1990, and 2000 decennial censuses. One notable characteristic of this provision is that it did not increase spending for the rural development programs addressed in ARRA, but rather targeted existing funds differently. Given Congress's interest both in addressing poverty and being mindful about levels of federal spending, the past four Congresses included 10-20-30 language in multiple appropriations bills, some of which were enacted into law. However, the original language used in ARRA could not be used verbatim, because the data source used by ARRA to define persistent poverty—the decennial census—stopped collecting income information. As a consequence, the appropriations bills varied slightly in their definitions of "persistent poverty counties" as it was applied to various programs and departments, sometimes even within different sections of the same bill, if the bill included language on different programs. In turn, because the definitions of "persistent poverty" differed, so did the lists of counties identified as persistently poor and subject to the 10-20-30 provision. The bills included legislation for rural development, public works and economic development, technological innovation, and brownfields site assessment and remediation. Most recently, in the 116 th Congress, much of the language used in these previous bills was included in P.L. 116-6 (Consolidated Appropriations Act, 2019). This report discusses how data source selection, and the rounding of poverty estimates, can affect the list of counties identified as persistently poor. After briefly explaining why targeting funds to persistent poverty counties might be of interest, this report explores how "persistent poverty" is defined and measured, and how different interpretations of the definition and different data source selections could yield different lists of counties identified as persistently poor. This report does not compare the 10-20-30 provision's advantages and disadvantages against other policy options, nor does it examine the range of programs or policy goals for which the 10-20-30 provision might be an appropriate policy tool. Motivation for Targeting Funds to Persistent Poverty Counties Research has suggested that areas for which the poverty rate (the percentage of the population that is below poverty) reaches 20% experience systemic problems that are more acute than in lower-poverty areas. The poverty rate of 20% as a critical point has been discussed in academic literature as relevant for examining social characteristics of high-poverty versus low-poverty areas. For instance, property values in high-poverty areas do not yield as high a return on investment as in low-poverty areas, and that low return provides a financial disincentive for property owners to spend money on maintaining and improving property. The ill effects of high poverty rates have been documented both for urban and rural areas. Therefore, policy interventions at the community level, and not only at the individual or family level, have been and may continue to be of interest to Congress. Defining "Persistent Poverty" Counties Persistent poverty counties are counties that have had poverty rates of 20% or greater for at least 30 years. The county poverty rates for 1999 and previous years are measured using decennial census data, and for more recent years, either the Small Area Income and Poverty Estimates (SAIPE) or the American Community Survey (ACS). The data sources used, and the level of precision of rounding for the poverty rate, affects the list of counties identified as persistent poverty counties, as will be described below. Computing the Poverty Rate for an Area Poverty rates are computed by the Census Bureau for the nation, states, and smaller geographic areas such as counties. The official definition of poverty in the United States is based on the money income of families and unrelated individuals. Income from each family member (if family members are present) is added together and compared against a dollar amount called a poverty threshold, which represents a level of economic hardship and varies according to the size and characteristics of the family (ranging from one person to nine persons or more). Families (or unrelated individuals) whose income is less than their respective poverty threshold are considered to be in poverty. Every person in a family has the same poverty status. Thus, it is possible to compute a poverty rate based on counts of persons (dividing the number of persons below poverty within a county by the county's total population, and multiplying by 100 to express as a percentage). Data Sources Used in Identifying Persistent Poverty Counties Poverty rates are computed using data from household surveys. Currently, the only data sources that provide poverty estimates for all U.S. counties are the American Community Survey (ACS) and the Small Area Income and Poverty Estimates program (SAIPE). Before the mid-1990s, the only poverty data available at the county level came from the Decennial Census of Population and Housing, which was only collected once every 10 years, and used to be the only source of estimates that could determine whether a county had persistently high poverty rates (ARRA referred explicitly to decennial census poverty estimates for that purpose). However, after Census 2000, the decennial census no longer collects income information, and as a result cannot be used to compute poverty estimates. Therefore, to determine whether an area is persistently poor in a time span that ends after 2000, it must first be decided whether ACS or SAIPE poverty estimates will be used for the later part of that time span. The ACS and the SAIPE program serve different purposes. The ACS was developed to provide continuous measurement of a wide range of topics similar to that formerly provided by the decennial census long form, available down to the local community level. ACS data for all counties are available annually, but are based on responses over the previous five-year time span (e.g., 2013-2017). The SAIPE program was developed specifically for estimating poverty at the county level for school-age children and for the overall population, for use in funding allocations for the Improving America's Schools Act of 1994 ( P.L. 103-382 ). SAIPE data are also available annually, and reflect one calendar year, not five. However, unlike the ACS, SAIPE does not provide estimates for a wide array of topics. For further details about the data sources for county poverty estimates, see the Appendix . Considerations When Identifying and Targeting Persistent Poverty Counties Selecting the Data Source: Strengths and Limitations of ACS and SAIPE Poverty Data Because poverty estimates can be obtained from multiple data sources, the Census Bureau has provided guidance on the most suitable data source to use for various purposes. Characteristics of Interest: SAIPE for Poverty Alone; ACS for Other Topics in Addition to Poverty The Census Bureau recommends using SAIPE poverty estimates when estimates are needed at the county level, especially for counties with small populations, and when additional demographic and economic detail is not needed at that level. When additional detail is required, such as for county-level poverty estimates by race and Hispanic origin, detailed age groups (aside from the elementary and secondary school-age population), housing characteristics, or education level, the ACS is the data source recommended by the Census Bureau. Geographic Area of Interest: SAIPE for Counties and School Districts Only; ACS for Other Small Areas For counties (and school districts) of small population size, SAIPE data have an advantage over ACS data in that the SAIPE model uses administrative data to help reduce the uncertainty of the estimates. However, ACS estimates are available for a wider array of geographic levels, such as ZIP code tabulation areas, census tracts (subcounty areas of roughly 1,200 to 8,000 people), cities and towns, and greater metropolitan areas. Reference Period of Estimate: SAIPE for One Year, ACS for a Five-Year Span While the ACS has greater flexibility in the topics measured and the geographic areas provided, it can only provide estimates in five-year ranges for the smallest geographic areas. Five years of survey responses are needed to obtain a sample large enough to produce meaningful estimates for populations below 65,000 persons. In this sense the SAIPE data, because they are based on a single year, are more current than the data of the ACS. The distinction has to do with the reference period of the data—both data sources release data on an annual basis; the ACS estimates for small areas are based on the prior five years, not the prior year alone. Other Considerations Treatment of Special Populations in the Official Poverty Definition Poverty status is not defined for persons in institutions, such as nursing homes or prisons, nor for persons residing in military barracks. These populations are excluded from totals when computing poverty statistics. Furthermore, the homeless population is not counted explicitly in poverty statistics. The ACS is a household survey, thus homeless individuals who are not in shelters are not counted. SAIPE estimates are partially based on Supplemental Nutrition Assistance Program (SNAP) administrative data and tax data, so the part of the homeless population that either filed tax returns or received SNAP benefits might be reflected in the estimates, but only implicitly. In the decennial census, ACS, and SAIPE estimates, poverty status also is not defined for persons living in college dormitories. However, students who live in off-campus housing are included. Because college students tend to have lower money income (which does not include school loans) than average, counties that have large populations of students living off-campus may exhibit higher poverty rates than one might expect given other economic measures for the area, such as the unemployment rate. Given the ways that the special populations above either are or are not reflected in poverty statistics, it may be worthwhile to consider whether counties that have large numbers of people in those populations would receive an equitable allocation of funds. Other economic measures may be of use, depending on the type of program for which funds are being targeted. "Persistence" Versus Flexibility to Recent Situations The 10-20-30 provision was developed to identify counties with persistently high poverty rates. Therefore, using that funding approach by itself would not allow flexibility to target counties that have recently experienced economic hardship, such as counties that had a large manufacturing plant close within the past three years. Other interventions besides the 10-20-30 provision may be more appropriate for counties that have had a recent spike in the poverty rate. Effects of Rounding and Data Source Selection on Lists of Counties In ARRA, persistent poverty counties were defined as "any county that has had 20 percent or more of its population living in poverty over the past 30 years, as measured by the 1980, 1990, and 2000 decennial censuses." Poverty rates published by the Census Bureau are typically reported to one decimal place. The numeral used in the ARRA language was the whole number 20. Thus, for any collection of poverty data, there are two reasonable approaches to compiling a list of persistent poverty counties: using poverty rates of at least 20.0% in all three years, or using poverty rates that round up to the whole number 20% or greater in all three years (i.e., poverty rates of 19.5% or more in all three years). The former approach is more restrictive and results in a shorter list of counties; the latter approach is more inclusive. Table 1 illustrates the number of counties identified as persistent poverty counties using the 1990 and 2000 decennial censuses, and various ACS and SAIPE datasets for the last data point, under both rounding schemes. The rounding method and data source selection can each have large impacts on the number of counties listed. Approximately 30 more counties appear in SAIPE-based lists compared to ACS-based lists using the same rounding method. Compared to using 20.0% as the cutoff (rounded to one decimal place), rounding up to 20% from 19.5% adds approximately 50 to 60 counties to the list. Taking both the data source and the rounding method together, the list of persistent poverty counties could vary by roughly 70 to 100 counties in a given year depending on the method used. Example List of Persistent Poverty Counties The list of persistent poverty counties below ( Table 2 ) is based on data from the 1990 Census, Census 2000, and the 2017 SAIPE estimates, and included counties with poverty rates of 19.5% or greater (that is, counties with poverty rates that were at least 20% with rounding applied to the whole number). These same counties are mapped in Figure 1 . Appendix. Details on the Data Sources Decennial Census of Population and Housing, "Long Form" Poverty estimates are computed using data from household surveys, which are based on a sample of households. In order to obtain meaningful estimates for any geographic area, the sample has to include enough responses from that area so that selecting a different sample of households from that area would not likely result in a dramatically different estimate. If estimates for smaller geographic areas are desired, a larger sample size is needed. A national-level survey, for instance, could produce reliable estimates for the United States without obtaining any responses from many counties, particularly counties with small populations. In order to produce estimates for all 3,143 county areas in the nation, however, not only are responses needed from every county, but those responses have to be plentiful enough from each county so that the estimates are meaningful (i.e., their margins of error are not unhelpfully wide). Before the mid-1990s, the only data source with a sample size large enough to provide meaningful estimates at the county level (and for other small geographic areas) was the decennial census. The other household surveys available prior to that time did not have a sample size large enough to produce meaningful estimates for small areas such as counties. Income questions were asked on the census long form, which was sent to one-sixth of all U.S. households; the rest received the census short form, which did not ask about income. While technically still a sample, one-sixth of all households was a large enough sample to provide poverty estimates for every county in the nation, and even for smaller areas such as small towns. The long form was discontinued after Census 2000, and therefore poverty data are no longer available from the decennial census. Beginning in the mid-1990s, however, two additional data sources were developed to ensure that poverty estimates for small areas such as counties would still be available: the American Community Survey (ACS), and the Small Area Income and Poverty Estimates program (SAIPE). American Community Survey (ACS) The ACS replaced the decennial census long form. It was developed to accommodate the needs of local government officials and other stakeholders who needed detailed information on small communities on a more frequent basis than once every 10 years. To that end, the ACS questionnaire was designed to reflect the same topics asked in the census long form. In order to produce meaningful estimates for small communities, however, the ACS needs to collect a number of responses comparable to what was collected in the decennial census. In order to collect that many responses while providing information more currently than once every 10 years, the ACS collects information from respondents continuously, in every month, as opposed to at one time of the year, and responses over time are pooled to provide estimates at varying geographic levels. To obtain estimates for geographic areas of 65,000 or more persons, one year's worth of responses are pooled—these are the ACS one-year estimates. For the smallest geographic levels, which include the complete set of U.S. counties, five years of monthly responses are needed: these are the ACS five-year estimates. Even though data collection is ongoing, the publication of the data takes place only once every year, both for the one-year estimates and the estimates that represent the previous five-year span. Small Area Income and Poverty Estimates (SAIPE) The SAIPE program was developed in the 1990s in order to provide state and local government officials with poverty estimates for local areas in between the decennial census years. In the Improving America's Schools Act of 1994 (IASA, P.L. 103-382 ), which amended the Elementary and Secondary Education Act of 1965 (ESEA), Congress recognized that providing funding for children in disadvantaged communities created a need for poverty data for those communities that were more current than the once-a-decade census. In the IASA, Congress provided for the development and evaluation of the SAIPE program for its use in Title I-A funding allocations. SAIPE estimates are model-based, meaning they use a mathematical procedure to compute estimates using both survey data (ACS one-year data) and administrative data (from tax returns and numbers of participants in the Supplemental Nutrition Assistance Program, or SNAP). The modeling procedure produces estimates with less variability than estimates computed from survey data alone, especially for counties with small populations. Guidance from the U.S. Census Bureau, "Which Data Source to Use" The CPS ASEC provides the most timely and accurate national data on income and is the source of official national poverty estimates, hence it is the preferred source for national analysis. Because of its large sample size, the ACS is preferred for subnational data on income and poverty by detailed demographic characteristics. The Census Bureau recommends using the ACS for 1-year estimates of income and poverty at the state level. Users looking for consistent, state-level trends before 2006 should use CPS ASEC 2-year averages. For substate areas, like counties, users should consider their specific needs when picking the appropriate data source. The SAIPE program produces overall poverty and household income 1-year estimates with standard errors usually smaller than direct survey estimates. Users looking to compare estimates of the number and percentage of people in poverty for counties or school districts or the median household income for counties should use SAIPE, especially if the population is less than 65,000. Users who need other characteristics such as poverty among Hispanics or median earnings, should use the ACS, where and when available. The SIPP is the only Census Bureau source of longitudinal poverty data. It provides national estimates and since the 2004 Panel, provides reliable state-level estimates for select states. As SIPP collects monthly income over 3 or 4 year panels, it is also a source of poverty estimates for time periods more or less than one year, including monthly poverty rates. Table A-1 below reproduces the Census Bureau's recommendations, summarized for various geographic levels:

Antipoverty interventions that provide resources to local communities, based on the characteristics of those communities, have been of interest to Congress. One such policy, dubbed the "10-20-30 provision," was implemented in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). Title I, Section 105 of ARRA required the Secretary of Agriculture to allocate at least 10% of funds from three rural development program accounts to persistent poverty counties; that is, to counties that have had poverty rates of 20% or more for the past 30 years, as measured by the 1980, 1990, and 2000 decennial censuses. One notable characteristic of this provision is that it did not increase spending for the rural development programs addressed in ARRA, but rather targeted existing funds differently. Research has suggested that areas for which the poverty rate (the percentage of the population that is below poverty) reaches 20% experience systemic problems that are more acute than in lower-poverty areas. Therefore, policy interventions at the community level (such as applying the 10-20-30 provision to other programs besides those cited in ARRA), and not only at the individual or family level, could continue to be of interest to Congress. Poverty rates are computed using data from household surveys. The list of counties identified to be persistently poor may differ by roughly 70 to 100 counties in a particular year, depending on the surveys selected to compile the list and the rounding method used for the poverty rate estimates. Before the mid-1990s, the decennial census was the only source of county poverty estimates. However, currently, the only data sources that provide poverty estimates for all U.S. counties are the American Community Survey (ACS) and the Small Area Income and Poverty Estimates program (SAIPE). Therefore, to determine whether an area is "persistently" poor in a time span that ends after the year 2000, it must first be decided whether ACS or SAIPE poverty estimates will be used for the later part of that time span. When determining the rounding method and data source to be used to compile a list of persistent poverty counties, the following may be relevant to consider: Characteristics of interest: SAIPE is suited for poverty or median income alone; ACS for other topics in addition to poverty and income. Geographic areas of interest: SAIPE is recommended for counties and school districts only; ACS produces estimates for other small geographic areas as well. Reference period of estimate: SAIPE for one year; ACS for a five-year span. Rounding method for poverty rates: rounding to 20.0% (one decimal place) yields a shorter list than rounding to 20% (whole number). Poverty status is not defined for all persons: foster children (unrelated individuals under age 15), institutionalized persons, and residents of college dormitories are excluded; the homeless are not targeted by household surveys; and areas with large numbers of students living off-campus may have high poverty rates.

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Introduction This report provides background information and issues for Congress on the Aegis ballistic missile defense (BMD) program, which is carried out by the Missile Defense Agency (MDA) and the Navy, and gives Navy Aegis cruisers and destroyers a capability for conducting BMD operations. The issue for Congress is whether to approve, reject, or modify Department of Defense (DOD) acquisition strategies and proposed funding levels for the Aegis BMD program. Congress's decisions on the Aegis BMD program could significantly affect U.S. BMD capabilities and funding requirements, and the BMD-related industrial base. For an overview of the strategic and budgetary context in which the Aegis BMD program may be considered, see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke. Background Aegis Ships Most of the Navy's cruisers and destroyers are called Aegis ships because they are equipped with the Aegis ship combat system—an integrated collection of sensors, computers, software, displays, weapon launchers, and weapons named for the mythological shield that defended Zeus. The Aegis system was originally developed in the 1970s for defending ships against aircraft, anti-ship cruise missiles (ASCMs), surface threats, and subsurface threats. The system was first deployed by the Navy in 1983, and it has been updated many times since. The Navy's Aegis ships include Ticonderoga (CG-47) class cruisers and Arleigh Burke (DDG-51) class destroyers. Ticonderoga (CG-47) Class Aegis Cruisers A total of 27 CG-47s (CGs 47 through 73) were procured for the Navy between FY1978 and FY1988; the ships entered service between 1983 and 1994. The first five ships in the class (CGs 47 through 51), which were built to an earlier technical standard in certain respects, were judged by the Navy to be too expensive to modernize and were removed from service in 2004-2005, leaving 22 ships in operation (CGs 52 through 73). Arleigh Burke (DDG-51) Class Aegis Destroyers1 A total of 62 DDG-51s were procured for the Navy between FY1985 and FY2005; the first entered service in 1991 and the 62 nd entered service in FY2012. The first 28 ships are known as Flight I/II DDG-51s. The next 34 ships, known as Flight IIA DDG-51s, incorporate some design changes, including the addition of a helicopter hangar. No DDG-51s were procured in FY2006-FY2009. The Navy during this period instead procured three Zumwalt (DDG-1000) class destroyers. The DDG-1000 design does not use the Aegis system and does not include a capability for conducting BMD operations. Navy plans do not call for modifying the three DDG-1000s to make them BMD-capable. Procurement of DDG-51s resumed in FY2010, following procurement of the three DDG-1000s. A total of 20 DDG-51s were procured in FY2010-FY2019. DDG-51s procured in FY2017 and subsequent years are being built to a new version of the DDG-51 design called the Flight III version. The Flight III version is to be equipped with a new radar, called the Air and Missile Defense Radar (AMDR) or the SPY-6 radar, that is more capable than the SPY-1 radar installed on all previous Aegis cruisers and destroyers. Aegis Ships in Allied Navies Sales of the Aegis system to allied countries began in the late 1980s. Allied countries that now operate, are building, or are planning to build Aegis-equipped ships include Japan, South Korea, Australia, Spain, and Norway. Most of Japan's Aegis-equipped ships are currently BMD-capable, and Japan plans to make all of them BMD-capable in coming years. The Aegis-equipped ships operated by South Korea, Australia, Spain, and Norway are not BMD-capable. Aegis BMD System5 Aegis ships are given a capability for conducting BMD operations by incorporating changes to the Aegis system's computers and software, and by arming the ships with BMD interceptor missiles. In-service Aegis ships can be modified to become BMD-capable ships, and DDG-51s procured in FY2010 and subsequent years are being built from the start with a BMD capability. Versions and Capabilities of Aegis BMD System The Aegis BMD system exists in several variants. Listed in order of increasing capability, these include (but are not necessarily limited to) 3.6.X variant, the 4.0.3 variant, the 4.1 variant (also known as the Aegis Baseline [BL] 5.4 variant), the 5.0 CU (Capability Upgrade) variant (also known as the BL 9.1 variant), the 5.1 variant (also known as the BL 9.2 variant), and the 6.X variant (also known as the BL 10 variant). Figure 1 summarizes the capabilities of some of these variants (using their designations as of 2016) and correlates them with the phases of the European Phased Adaptive Approach (or EPAA; see discussion below) for European BMD operations. As shown in Figure 1 , the Aegis BMD system was originally designed primarily to intercept theater-range ballistic missiles, meaning short-, medium-, and intermediate-range ballistic missiles (SRBMs, MRBMs, and IRBMs, respectively). In addition to its capability for intercepting theater-range ballistic missiles, detection and tracking data collected by the Aegis BMD system's radar might be passed to other U.S. BMD systems that are designed to intercept intercontinental ballistic missiles (ICBMs), which might support intercepts of ICBMs that are conducted by those other U.S. BMD systems. With the advent of the Aegis BMD system's new SM-3 Block IIA interceptor (which is discussed further in the next section), DOD is now evaluating the potential for the Aegis BMD system to intercept certain ICBMs. Section 1680 of the FY2018 National Defense Authorization Act ( H.R. 2810 / P.L. 115-91 of December 12, 2017) directed DOD to "conduct a test to evaluate and demonstrate, if technologically feasible, the capability to defeat a simple intercontinental ballistic missile threat using the standard missile 3 block IIA missile interceptor." DOD's January 2019 missile defense review report states the following: The SM-3 Blk IIA interceptor is intended as part of the regional missile defense architecture, but also has the potential to provide an important "underlay" to existing GBIs [ground-based interceptors] for added protection against ICBM threats to the homeland. This interceptor has the potential to offer an additional defensive capability to ease the burden on the GBI system and provide continuing protection for the U.S. homeland against evolving rogue states' long-range missile capabilities. Congress has directed DoD to examine the feasibility of the SM-3 Blk IIA against an ICBM-class target. MDA will test this SM-3 Blk IIA capability in 2020. Due to the mobility of sea-based assets, this new underlay capability will be surged in a crisis or conflict to further thicken defensive capabilities for the U.S. homeland. Land-based sites in the United States with this SM-3 Blk IIA missile could also be pursued. A March 18, 2019, press report states: The Pentagon plans a "first-of-its-kind" test of an unprecedented weapons capability to intercept and destroy an enemy Intercontinental Ballistic Missile "ICBM" -- from a Navy ship at sea using a Standard Missile-3 Block IIA. The concept, as articulated by Pentagon officials and cited briefly in this years' DoD "Missile Defense Review," would be to use an advanced SM-3 IIA to "underlay" and assist existing Ground-Based Interceptors (GBI), adding new dimensions to the current US missile defense posture.… The testing, Pentagon officials tell Warrior, is slated for as soon as next year. The effectiveness and promise of the Raytheon-built SM-3 IIA shown in recent testing have inspired Pentagon weapons developers to envision an even broader role for the weapon. The missile is now "proven out," US weapons developers say…. "The SM-3 IIA was not designed to take out ICBMs, but is showing great promise. This would be in the upper range of its capability -- so we are going to try," the Pentagon official told Warrior…. The SM-3 IIA's size, range, speed and sensor technology, the thinking suggests, will enable it to collide with and destroy enemy ICBMs toward the beginning or end of their flight through space, where they are closer to the boundary of the earth's atmosphere. "The SM-3 IIA would not be able to hit an ICBM at a high altitude, but it can go outside the earth's atmosphere," the Pentagon official said. "You want to hit it as far away as possible because a nuke could go off." A March 26, 2018, press report states the following: [MDA] Director Lt. Gen. Sam Greaves said MDA "is evaluating the technical feasibility of the capability of the SM-3 Block IIA missile, currently under development, against an ICBM-class target." "If proven to be effective against an ICBM, this missile could add a layer of protection, augmenting the currently deployed GMD [ground-based missile defense] system," Greaves said in written testimony submitted March 22 to the Senate Armed Services strategic forces subcommittee. [Greaves] said MDA will conduct a demonstration of the SM-3 Block IIA against an ICBM-like target by the end of 2020." Aegis BMD Interceptor Missiles The BMD interceptor missiles used by Aegis ships are the Standard Missile-3 (SM-3), the SM-2 Block IV, and the SM-6. SM-3 Midcourse Interceptor The SM-3 is designed to intercept ballistic missiles above the atmosphere (i.e., exo-atmospheric intercept), in the midcourse phase of an enemy ballistic missile's flight. It is equipped with a "hit-to-kill" warhead, called a kinetic vehicle, that is designed to destroy a ballistic missile's warhead by colliding with it. MDA and Navy plans call for fielding increasingly capable versions of the SM-3 in coming years. The current versions, called the SM-3 Block IA and SM-3 Block IB, are to be supplemented in coming years by SM-3 Block IIA. Compared to the Block IA version, the Block IB version has an improved (two-color) target seeker, an advanced signal processor, and an improved divert/attitude control system for adjusting its course. Compared to the Block IA and 1B versions, which have a 21-inch-diameter booster stage at the bottom but are 13.5 inches in diameter along the remainder of their lengths, the Block IIA version has a 21-inch diameter along its entire length. The increase in diameter to a uniform 21 inches provides more room for rocket fuel, permitting the Block IIA version to have a burnout velocity (a maximum velocity, reached at the time the propulsion stack burns out) that is greater than that of the Block IA and IB versions, as well as a larger-diameter kinetic warhead. The United States and Japan have cooperated in developing certain technologies for the Block IIA version, with Japan funding a significant share of the effort. SM-2 and SM-6 Terminal Interceptors The SM-2 Block IV is designed to intercept ballistic missiles inside the atmosphere (i.e., endo-atmospheric intercept), during the terminal phase of an enemy ballistic missile's flight. It is equipped with a blast fragmentation warhead. The existing inventory of SM-2 Block IVs—72 as of February 2012—was created by modifying SM-2s that were originally built to intercept aircraft and ASCMs. A total of 75 SM-2 Block IVs were modified, and at least 3 were used in BMD flight tests. MDA and the Navy are now procuring a more capable terminal-phase (endo-atmospheric intercept) BMD interceptor based on the SM-6 air defense missile (the successor to the SM-2 air defense missile). The SM-6 is a dual-capability missile that can be used for either air defense (i.e., countering aircraft and anti-ship cruise missiles) or ballistic missile defense. A July 23, 2018, press report states the following: The Defense Department has launched a prototype project that aims to dramatically increase the speed and range of the Navy's Standard Missile-6 by adding a larger rocket motor to the ship-launched weapon, a move that aims to improve both the offensive and defensive reach of the Raytheon-built system. On Jan. 17, the Navy approved plans to develop a Dual Thrust Rocket Motor with a 21-inch diameter for the SM-6, which is currently fielded with a 13.5-inch propulsion package. The new rocket motor would sit atop the current 21-inch booster, producing a new variant of the missile: the SM-6 Block IB. European Phased Adaptive Approach (EPAA) for European BMD On September 17, 2009, the Obama Administration announced a new approach for regional BMD operations called the Phased Adaptive Approach (PAA). The first application of the approach is in Europe, and is called the European Phased Adaptive Approach (EPAA). EPAA calls for using BMD-capable Aegis ships, a land-based radar in Europe, and two Aegis Ashore sites in Romania and Poland to defend Europe against ballistic missile threats from countries such as Iran. Phase I of EPAA involved deploying Aegis BMD ships and a land-based radar in Europe by the end of 2011. Phase II involved establishing the Aegis Ashore site in Romania with SM-3 IB interceptors in 2016. Phase 3 involves establishing the Aegis Ashore site in Poland with SM-3 IIA interceptors by perhaps FY2020. The completion of construction of the Poland site has been delayed by at least a year, MDA says, due to contractor performance issues. Each Aegis Ashore site in the EPAA is to include a structure housing an Aegis system similar to the deckhouse on an Aegis ship and 24 SM-3 missiles launched from a relocatable Vertical Launch System (VLS) based on the VLS that is installed in Navy Aegis ships. Although BMD-capable Aegis ships were deployed to European waters before 2011, the first BMD-capable Aegis ship officially deployed to European waters as part of the EPAA departed its home port of Norfolk, VA, on March 7, 2011, for a deployment to the Mediterranean that lasted several months. Numbers of BMD-Capable Aegis Ships Under the FY2020 budget submission, the number of BMD-capable Navy Aegis ships is projected to increase from 38 at the end of FY2018 to 59 at the end of FY2024. During the period FY2018-FY2024, the portion of the force equipped with earlier Aegis variants is to decrease, and the number equipped with later variants is to increase. Forward Homeporting of BMD-Capable DDG-51s in Spain On October 5, 2011, the United States, Spain, and NATO jointly announced that, as part of the EPAA, four BMD-capable Aegis ships were to be forward-homeported (i.e., based) at the naval base at Rota, Spain. The four ships were transferred to Rota in FY2014 and FY2015. Navy officials have said that the four Rota-based ships can provide a level of level of presence in the Mediterranean for performing BMD patrols and other missions equivalent to what could be provided by about 10 BMD-capable Aegis ships that are homeported on the U.S. east coast. The Rota homeporting arrangement thus effectively releases about six U.S. Navy BMD-capable Aegis ships for performing BMD patrols or other missions elsewhere. Aegis BMD Flight Tests The Aegis BMD development effort, including Aegis BMD flight tests, has been described as following a development philosophy long held within the Aegis program office of "build a little, test a little, learn a lot," meaning that development is done in manageable steps, then tested and validated before moving on to the next step. For a summary of Aegis BMD flight tests since 2002, see Appendix A . Allied Participation and Interest in Aegis BMD Program Japan19 Japan is modifying all six of its Aegis destroyers to include the Aegis BMD capability. As of August 2017, four of the six ships reportedly had been modified, and Japan planned to modify a fifth by March 2018, or perhaps sooner than that. In November 2013, Japan announced plans to procure two additional Aegis destroyers and equip them as well with the Aegis BMD capability, which will produce an eventual Japanese force of eight BMD-capable Aegis destroyers. The two additional ships are expected to enter service in 2020 and 2021. Japanese BMD-capable Aegis ships have participated in some of the flight tests of the Aegis BMD system using the SM-3 interceptor (see Table A-1 in Appendix A ). Japan cooperated with the United States on development the SM-3 Block IIA missile. Japan developed certain technologies for the missile, and paid for the development of those technologies, reducing the missile's development costs for the United States. Japan plans to procure and operate two Aegis Ashore systems that reportedly are to be located at Ground Self-Defense Force (GSDF) facilities in Akita Prefecture in eastern Japan and Yamaguchi Prefecture in western Japan, and would be operated mainly by the GSDF (i.e., Japan's army). The two systems reportedly will be equipped with a new Lockheed-made radar called the Long Range Discrimination Radar (LRDR) rather than the Raytheon-made SPY-6 AMDR that is being installed on U.S. Navy Flight III DDG-51s, and reportedly will go into operation by 2023. A July 6, 2018, press report states that "The U.S. and Japan are looking to jointly develop next-generation radar technology that would use Japanese semiconductors to more than double the detection range of the Aegis missile defense system." South Korea An October 12, 2018, press report states that "the South Korean military has decided to buy ship-based SM-3 interceptors to thwart potential ballistic missile attacks from North Korea, a top commander of the Joint Chiefs of Staff revealed Oct. 12. Other Countries Other countries that MDA views as potential naval BMD operators (using either the Aegis BMD system or some other system of their own design) include the United Kingdom, the Netherlands, Spain, Germany, Denmark, and Australia. Spain, South Korea, and Australia either operate, are building, or are planning to build Aegis ships. The other countries operate destroyers and frigates with different combat systems that may have potential for contributing to BMD operations. FY2020 MDA Funding Request The Aegis BMD program is funded mostly through MDA's budget. The Navy's budget provides additional funding for BMD-related efforts. Table 1 shows MDA procurement and research and development funding for the Aegis BMD program. Research and development funding for the land-based SM-3 is funding for Aegis Ashore sites. MDA's budget also includes additional funding not shown in the table for operations and maintenance (O&M) and military construction (MilCon) for the Aegis BMD program. Issues for Congress FY2020 Funding Request One issue for Congress is whether to approve, reject, or modify MDA's FY2019 procurement and research and development funding requests for the program. In considering this issue, Congress may consider various factors, including whether the work that MDA is proposing to fund for FY2019 is properly scheduled for FY2019, and whether this work is accurately priced. Required vs. Available Numbers of BMD-Capable Aegis Ships Another potential issue for Congress concerns required numbers of BMD-capable Aegis ships versus available numbers of BMD-capable Aegis ships. Some observers are concerned about the potential operational implications of a shortfall in the available number of BMD-capable relative to the required number. Regarding the required number of BMD-capable Aegis ships, an August 15, 2018, Navy information paper states the following: The [Navy's] 2016 Force Structure Assessment [FSA] sets the requirement [for BMD-capable ships] at 54 BMD-capable ships, as part of the 104 large surface combatant requirement, to meet Navy unique requirements to support defense of the sea base and limited expeditionary land base sites…. The minimum requirement for 54 BMD ships is based on the Navy unique requirement as follows. It accepts risk in the sourcing of combatant commander (CCDR) requests for defense of land. - 30 to meet CVN escort demand for rotational deployment of the carrier strike groups - 11 INCONUS for independent BMD deployment demand - 9 in forward deployed naval forces (FDNF) Japan to meet operational timelines in USINDOPACOM - 4 in FDNF Europe for rotational deployment in EUCOM. Burden of BMD Mission on U.S. Navy Aegis Ships A related potential issue for Congress is the burden that BMD operations may be placing on the Navy's fleet of Aegis ships, particularly since performing BMD patrols requires those ships to operate in geographic locations that may be unsuitable for performing other U.S. Navy missions, and whether there are alternative ways to perform BMD missions now performed by U.S. Navy Aegis ships, such as establishing more Aegis Ashore sites. A June 16, 2018, press report states the following: The U.S. Navy's top officer wants to end standing ballistic missile defense patrols and transfer the mission to shore-based assets. Chief of Naval Operations Adm. John Richardson said in no uncertain terms on June 12 that he wants the Navy off the tether of ballistic missile defense patrols, a mission that has put a growing strain on the Navy's hard-worn surface combatants, and the duty shifted towards more shore-based infrastructure. "Right now, as we speak, I have six multi-mission, very sophisticated, dynamic cruisers and destroyers―six of them are on ballistic missile defense duty at sea," Richardson said during his address at the U.S. Naval War College's Current Strategy Forum. "And if you know a little bit about this business you know that geometry is a tyrant. "You have to be in a tiny little box to have a chance at intercepting that incoming missile. So, we have six ships that could go anywhere in the world, at flank speed, in a tiny little box, defending land." Richardson continued, saying the Navy could be used in emergencies but that in the long term the problem demands a different solution. "It's a pretty good capability and if there is an emergent need to provide ballistic missile defense, we're there," he said. "But 10 years down the road, it's time to build something on land to defend the land. Whether that's AEGIS ashore or whatever, I want to get out of the long-term missile defense business and move to dynamic missile defense." The unusually direct comments from the CNO come amid growing frustration among the surface warfare community that the mission, which requires ships to stay in a steaming box doing figure-eights for weeks on end, is eating up assets and operational availability that could be better used confronting growing high-end threats from China and Russia. The BMD mission was also a factor in degraded readiness in the surface fleet. Amid the nuclear threat from North Korea, the BMD mission began eating more and more of the readiness generated in the Japan-based U.S. 7th Fleet, which created a pressurized situation that caused leaders in the Pacific to cut corners and sacrifice training time for their crews, an environment described in the Navy's comprehensive review into the two collisions that claimed the lives of 17 sailors in the disastrous summer of 2017. Richardson said that as potential enemies double down on anti-access technologies designed to keep the U.S. Navy at bay, the Navy needed to focus on missile defense for its own assets. "We're going to need missile defense at sea as we kind of fight our way now into the battle spaces we need to get into," he said. "And so restoring dynamic maneuver has something to do with missile defense. A June 23, 2018, press report states the following: The threats from a resurgent Russia and rising China―which is cranking out ships like it's preparing for war―have put enormous pressure on the now-aging [U.S. Navy Aegis destroyer] fleet. Standing requirements for BMD patrols have put increasing strain on the U.S. Navy's surface ships. The Navy now stands at a crossroads. BMD, while a burden, has also been a cash cow that has pushed the capabilities of the fleet exponentially forward over the past decade. The game-changing SPY-6 air and missile defense radar destined for DDG Flight III, for example, is a direct response to the need for more advanced BMD shooters. But a smaller fleet, needed for everything from anti-submarine patrols to freedom-of-navigation missions in the South China Sea, routinely has a large chunk tethered to BMD missions. "Right now, as we speak, I have six multimission, very sophisticated, dynamic cruisers and destroyers―six of them are on ballistic missile defense duty at sea," Chief of Naval Operations Adm. John Richardson said during an address at the recent U.S. Naval War College's Current Strategy Forum. "You have to be in a tiny little box to have a chance at intercepting that incoming missile. So we have six ships that could go anywhere in the world, at flank speed, in a tiny little box, defending land." And for every six ships the Navy has deployed in a standing mission, it means 18 ships are in various stages of the deployment cycle preparing to relieve them. The Pentagon, led by Defense Secretary Jim Mattis, wants the Navy to be more flexible and less predictable―"dynamic" is the buzzword of moment in Navy circles. What Richardson is proposing is moving standing requirements for BMD patrols away from ships underway and all the associated costs that incurs, and toward fixed, shore-based sites, and also surging the Navy's at-sea BMD capabilities when there is an active threat.... In a follow-up response to questions posed on the CNO's comments, Navy spokesman Cmdr. William Speaks said the Navy's position is that BMD is an integral part of the service's mission, but where long-term threats exist, the Navy should "consider a more persistent, land-based solution as an option." "This idea is not about the nation's or the Navy's commitment to BMD for the U.S. and our allies and partners―the Navy's commitment to ballistic missile defense is rock-solid," Speaks said. "In fact, the Navy will grow the number of BMD-capable ships from 38 to 60 by 2023, in response to the growing demand for this capability. "The idea is about how to best meet that commitment. In alignment with our national strategic documents, we have shifted our focus in an era of great power competition―this calls us to think innovatively about how best to meet the demands of this mission and optimize the power of the joint force."... While the idea of saving money by having fixed BMD sites and freeing up multimission ships is sensible, it may have unintended consequences, said Bryan McGrath, a retired destroyer skipper and owner of the defense consultancy The FerryBridge Group. "The BMD mission is part of what creates the force structure requirement for large surface combatants," McGrath said on Twitter after Defense News reported the CNO's comments. "Absent it, the number of CG's and DDG's would necessarily decline. This may in fact be desirable, depending on the emerging fleet architecture and the roles and missions debate underway. Perhaps we need more smaller, multi-mission ships than larger, more expensive ones. "But it cannot be forgotten that while the mission is somewhat wasteful of a capable, multi-mission ship, the fact that we have built the ships that (among other things) do this mission is an incredibly good thing. If there is a penalty to be paid in peacetime sub-optimization in order to have wartime capacity--should this not be considered a positive thing?" McGrath went on to say that the suite of combat systems that have been built into Aegis have been in response to the BMD threat. And indeed, the crown jewels of the surface fleet―Aegis Baseline 9 software, which allows a ship to do both air defense and BMD simultaneously; the Aegis common-source library; the forthcoming SPY-6; cooperative engagement―have come about either in part or entirely driven by the BMD mission.... A Navy official who spoke on condition of anonymity, to discuss the Navy's shifting language on BMD, acknowledged the tone had shifted since the 2000s when the Navy latched onto the mission. But the official added that the situation more than a decade later has dramatically shifted. "The strategic environment has changed significantly since the early 2000s―particularly in the western Pacific. We have never before faced multiple peer rivals in a world as interconnected and interdependent as we do today," the official said. "Nor have we ever seen technologies that could alter the character of war as dramatically as those we see emerging around us. China and Russia have observed our way of war and are on the move to reshape the environment to their favor." In response to the threat and Defense Secretary Jim Mattis' desire to use the force more dynamically, the Navy is looking at its options, the official said. "This includes taking a look at how we employ BMD ships through the lens of great power competition to compete, deter and win against those who threaten us." A January 29, 2019, press report states the following: The Navy is looking to get out of the missile defense business, the service's top admiral said today, and the Pentagon's new missile defense review might give the service the off-ramp it has been looking for to stop sailing in circles waiting for ground-based missile launches. This wasn't the first time Adm. John Richardson bristled in public over his ships sailing in "small boxes" at sea tasked with protecting land, when they could be out performing other missions challenging Chinese and Russian adventurism in the South China Sea and the North Atlantic…. "We've got exquisite capability, but we've had ships protecting some pretty static assets on land for a decade," Richardson said at the Brookings Institute. "If that [stationary] asset is going to be a long-term protected asset, then let's build something on land and protect that and liberate these ships from this mission." Japan is already moving down the path of building up a more robust ground-based sensor and shooter layer, while also getting its own ships out to sea armed with the Aegis radar and missile defense system, both of which would free up American hulls from what Richardson on Monday called "the small [geographic] boxes where they have to stay for ballistic missile defense." Burden Sharing: U.S. vs. Allied Contributions to Regional BMD Capabilities Another related potential issue for Congress concerns burden sharing—how allied contributions to regional BMD capabilities and operations compare to U.S. naval contributions to overseas regional BMD capabilities and operations, particularly in light of constraints on U.S. defense spending, worldwide operational demands for U.S. Navy Aegis ships, and calls by some U.S. observers for increased allied defense efforts. The issue can arise in connection with both U.S. allies in Europe and U.S. allies in Asia. Regarding U.S. allies in Asia, a December 12, 2018, press report states the following: In June, US Navy Chief of Naval Operations (CNO) Admiral John Richardson said during a speech at the US Naval War College that the US Navy should terminate its current practice of dedicating several US Navy warships solely for Ballistic Missile Defense (BMD). Richardson wanted US warships to halt BMD patrols off Japan and Europe as they are limiting, restrictive missions that could be better accomplished by existing land-based BMD systems such as Patriot anti-missile batteries, the US Terminal High Altitude Area Defense (THAAD) anti-missile system and the Aegis Ashore anti-missile system. In the months since dropping his bombshell, Richardson—and much of the debate—has gone quiet. "My guess is the CNO got snapped back by the Pentagon for exceeding where the debate actually stood," one expert on US naval affairs told Asia Times. But others agree with him. Air Force Lt Gen Samuel A Greaves, the director of the US Missile Defense Agency (MDA), acknowledges Richardson's attempts to highlight how these BMD patrols were placing unwelcome "strain on the (US Navy's) crews and equipment." But there are complications. While it may free US Navy warships for sea-control, rather than land defense, there is a concern that next- generation hypersonic cruise missiles could defeat land-based BMD systems, such as Aegis Ashore, while the US Navy's Aegis-equipped warships offer the advantages of high-speed mobility and stealth, resulting in greater survivability overall. As Japan prepares to acquire its first Aegis Ashore BMD system – and perhaps other systems such as the THAAD system which has been deployed previously in Romania and South Korea – the possibility that the US Navy will end its important BMD role represents abrupt change…. Japan's decision to deploy Aegis Ashore can fill in any gap created by a possible US Navy cessation of BMD patrols. "The land-based option is more reliable, less logistically draining, and despite being horrendously expensive, could be effective in the sense that it provides a degree of reassurance to the Japanese people and US government, and introduces an element of doubt of missile efficacy into [North Korean] calculations," said [Garren Mulloy, Associate Professor of International Relations at Daito Bunka University in Saitama, Japan], adding, however, that these systems could not cover Okinawa. "Fixed sites in Japan could be vulnerable, and the Aegis vessels provide a flexible forward-defense, before anything enters Japanese airspace, but with obviously limited reactions times," Mulloy said. "Aegis Ashore gives more reaction time – but over Japanese airspace."… The silence about this sudden possible shift in the US defense posture in the western Pacific is understandable: it is a sensitive topic in Washington and Tokyo. However, the Trump administration has urged its allies to pay more for their own defense needs and to support US troops deployed overseas. Meanwhile, Tokyo needs to proceed cautiously given the likelihood that neighbors might view a move on BMD as evidence that Tokyo is adopting an increasingly aggressive defense posture in the region. But for them, it is a no-win situation. If the US does ditch the BMD patrol mission, China and North Korea might view the shift as equally menacing given that it greatly enhances the US Navy's maritime warfare capabilities. Conversion of Hawaii Aegis Test Site Another potential issue for Congress is whether to convert the Aegis test facility in Hawaii into an operational land-based Aegis BMD site. DOD's January 2019 missile defense review report states, in a section on improving or adapting existing BMD systems, that Another repurposing option is to operationalize, either temporarily or permanently, the Aegis Ashore Missile Defense Test Center in Kauai, Hawaii, to strengthen the defense of Hawaii against North Korean missile capabilities. DoD will study this possibility to further evaluate it as a viable near-term option to enhance the defense of Hawaii. The United States will augment the defense of Hawaii in order to stay ahead of any possible North Korean missile threat. MDA and the Navy will evaluate the viability of this option and develop an Emergency Activation Plan that would enable the Secretary of Defense to operationalize the Aegis Ashore test site in Kauai within 30 days of the Secretary's decision to do so, the steps that would need to be taken, associated costs, and personnel requirements. This plan will be delivered to USDA&S, USDR&E, and USDP within six months of the release of the MDR. A January 25, 2019, press report states the following: The Defense Department will examine the funding breakdown between the Navy and the Missile Defense Agency should the government make Hawaii's Aegis Ashore Missile Defense Test Center into an operational resource, according to the agency's director. "Today, it involves both Navy resources for the operational crews -- that man that site -- as well as funds that come to MDA for research, development and test production and sustainment," Lt. Gen. Sam Greaves said of the test center when asked how the funding would shake out between the Navy and MDA should the Pentagon move forward with the recommendation. Potential Contribution from Lasers, Railguns, and Guided Projectiles Another potential issue for Congress concerns the potential for ship-based lasers, electromagnetic railguns (EMRGs), and gun-launched guided projectiles (GLGPs, previously known as hypervelocity projectiles [HVPs]) to contribute in coming years to Navy terminal-phase BMD operations and the impact this might eventually have on required numbers of ship-based BMD interceptor missiles. Another CRS report discusses the potential value of ship-based lasers, EMRGs, and GLGPs for performing various missions, including, potentially, terminal-phase BMD operations. Technical Risk and Test and Evaluation Issues Another potential oversight issue for Congress is technical risk and test and evaluation issues in the Aegis BMD program. Regarding this issue, a December 2018 report from DOD's Director, Operational Test and Evaluation (DOT&E)—DOT&E's annual report for FY2018—stated the following in its section on the Aegis BMD program: Assessment • Results from flight testing, high-fidelity M&S, HWIL, and distributed ground testing demonstrate that Aegis BMD can intercept non-separating, simple-separating, and complex-separating ballistic missiles in the midcourse phase. However, flight testing and M&S did not address all expected threat types, ground ranges, and raid sizes. • FTM-45 successfully and fully demonstrated the Aegis BL 9.2 organic engagement capability and corrective action for the previous FTM-29 missile failure. FTM-29 was only partially able to demonstrate EOR capability given the in-flight missile failure. In FTM-29, the Aegis Weapon System supported the SM-3 Block IIA missile and demonstrated bi-directional communication between the SM-3 Block IIA guidance section and the KW until loss of signal at horizon. However, the weapon system did not exercise all aspects of communication after KW eject. DOT&E considers the FTM-29 failure to be an example of a shortfall in conducting ground testing in an operationally representative way, and an example of a deficiency found in OT that DT should have discovered. • The MDA implemented process improvements to better identify, report, and fi x common failures and anomalies identified during SM-3 ground testing prior to flight testing. • SM CTV-03 demonstrated the capability of the Aegis BMD 4.1 upgrade to fi re an SM-6 Dual I missile. The BMD 4.1 build incorporates BL 9.C1 capabilities into the BMD 4.0 baseline. • FS-17 demonstrated the Aegis BMD 4.0.3 capability to interoperate with NATO partners over operational communication architectures during cruise missile and ballistic missile engagements, and to use remote data provided by NATO partners to prosecute remote engagements. JFTM-05 Event 2 demonstrated inter-ship communication between U.S. and Japanese destroyers using a realistic communications architecture while prosecuting ballistic missile engagements. Pacific Dragon demonstrated interoperability between U.S. Aegis BMD assets, Japanese destroyers, and Republic of Korea naval assets. • Aegis BMD has exercised rudimentary engagement coordination with Terminal High-Altitude Area Defense firing units, but not with Patriot. The MDA plans to include Patriot in FTO-03. MDA ground tests have routinely demonstrated that inter-element coordination and interoperability need improvement to increase situational awareness and improve engagement efficiency. • The MDA has been collaborating with DOT&E and the Under Secretary of Defense (Research and Engineering) to establish an affordable ground testing approach to support assessments of reliability. DOT&E cannot assess SM-3 missile reliability with confidence until the MDA is able to provide additional ground test data that simulates the in-flight environment. DOT&E is working with the MDA to determine if existing ground test venues are able to provide the needed missile reliability data. Recommendations The MDA should: 1. Ensure that ground tests of all SM-3 missile components, sections, and all-up rounds use the same configuration as will be flown in flight tests (i.e., "test as you fly"). 2. Determine how to properly score acceptance ground test data for production missiles to enable their use in estimating SM-3 reliability. 3. Fund and execute high-fidelity M&S RFRs for Aegis BL 9.2 SM-3 Block IIA and SM-6 Dual II scenarios that span the engagement battlespace. Regarding the SM-6 missile, the January 2018 DOT&E report also stated the following: Assessment • As reported in the DOT&E FY18 SM-6 BLK I FOT&E Report, the SM-6 remains effective and suitable with the exception of the classified deficiency identified in the FY13 IOT&E Report. The SM-6 Block 1 satisfactorily demonstrated compatibility with Aegis Weapon System Baseline 9 Integrated Fire Control capability. • In FY17-18, the Navy developed and tested specific software improvements to SM-6 BLK I to mitigate the classified performance problems discovered during IOT&E. As previously reported, testing conducted by the Navy demonstrated the software improvements perform as intended, but did not eliminate them. Recommendation 1. The Navy should continue to improve software based on IOT&E results and verify corrective actions with flight tests. Legislative Activity for FY2020 Summary of Action on FY2020 MDA Funding Request Table 2 summarizes congressional action on the FY2020 request for MDA procurement and research and development funding for the Aegis BMD program. Appendix A. Aegis BMD Flight Tests Table A-1 presents a summary of Aegis BMD flight tests since January 2002. As shown in the table, since January 2002, the Aegis BMD system has achieved 33 successful exo-atmospheric intercepts in 42 attempts using the SM-3 missile (including 4 successful intercepts in 5 attempts by Japanese Aegis ships, and 2 successful intercepts in 3 attempts attempt using the Aegis Ashore system), and 7 successful endo-atmospheric intercepts in 7 attempts using the SM-2 Block IV and SM-6 missiles, making for a combined total of 40 successful intercepts in 49 attempts. In addition, on February 20, 2008, a BMD-capable Aegis cruiser operating northwest of Hawaii used a modified version of the Aegis BMD system with the SM-3 missile to shoot down an inoperable U.S. surveillance satellite that was in a deteriorating orbit. Including this intercept in the count increases the totals to 34 successful exo-atmospheric intercepts in 43 attempts using the SM-3 missile, and 41 successful exo- and endo-atmospheric intercepts in 50 attempts using SM-3, SM-2 Block IV, and SM-6 missiles.

The Aegis ballistic missile defense (BMD) program, which is carried out by the Missile Defense Agency (MDA) and the Navy, gives Navy Aegis cruisers and destroyers a capability for conducting BMD operations. Under the FY2020 budget submission, the number of BMD-capable Navy Aegis ships is projected to increase from 38 at the end of FY2018 to 59 at the end of FY2024. BMD-capable Aegis ships operate in European waters to defend Europe from potential ballistic missile attacks from countries such as Iran, and in in the Western Pacific and the Persian Gulf to provide regional defense against potential ballistic missile attacks from countries such as North Korea and Iran. The Aegis BMD program is funded mostly through MDA's budget. The Navy's budget provides additional funding for BMD-related efforts. MDA's proposed FY2020 budget requests a total of $1,784.2 million (i.e., about $1.8 billion) in procurement and research and development funding for Aegis BMD efforts, including funding for two Aegis Ashore sites in Poland and Romania. MDA's budget also includes operations and maintenance (O&M) and military construction (MilCon) funding for the Aegis BMD program. Issues for Congress regarding the Aegis BMD program include the following: whether to approve, reject, or modify MDA's FY2020 funding procurement and research and development funding requests for the program; required numbers of BMD-capable Aegis ships versus available numbers of BMD-capable Aegis ships; the burden that BMD operations may be placing on the Navy's fleet of Aegis ships, and whether there are alternative ways to perform BMD missions now performed by U.S. Navy Aegis ships, such as establishing more Aegis Ashore sites; burden sharing—how allied contributions to regional BMD capabilities and operations compare to U.S. naval contributions to overseas regional BMD capabilities and operations; whether to convert the Aegis test facility in Hawaii into an operational land-based Aegis BMD site; the potential for ship-based lasers, electromagnetic railguns (EMRGs), and hypervelocity projectiles (HVPs) to contribute in coming years to Navy terminal-phase BMD operations and the impact this might eventually have on required numbers of ship-based BMD interceptor missiles; and technical risk and test and evaluation issues in the Aegis BMD program.

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Introduction Issue for Congress This report provides background information and issues for Congress on three new ship-based weapons being developed by the Navy—solid state lasers (SSLs), the electromagnetic railgun (EMRG), and the gun-launched guided projectile (GLGP), also known as the hypervelocity projectile (HVP)—that could substantially improve the ability of Navy surface ships to defend themselves against surface craft, unmanned aerial vehicles (UAVs), and eventually anti-ship cruise missiles (ASCMs). Any one of these three new weapons, if successfully developed and deployed, might be regarded as a "game changer" for defending Navy surface ships against enemy missiles and UAVs. If two or three of them are successfully developed and deployed, the result might be considered not just a game changer, but a revolution. Rarely has the Navy had so many potential new types of surface-ship air-defense weapons simultaneously available for development and potential deployment. The issue for Congress is whether to approve, reject, or modify the Navy's acquisition strategies and funding requests for these three potential new weapons. Congress's decisions on this issue could affect future Navy capabilities and funding requirements and the defense industrial base. This report supersedes an earlier CRS report that provided an introduction to potential Navy shipboard lasers. Another CRS report provides an overview of the strategic and budgetary context in which the programs covered in this report, and other Navy programs, may be considered. Scope of Report High-energy lasers (HELs) and railguns are being developed by multiple parts of the Department of Defense (DOD), not just the Navy. HELs, railguns, and GLGP have potential application to military aircraft and ground forces equipment, not just surface ships. And SSLs, EMRG, and GLGP could be used for performing missions other than defense against missiles, UAVs, and surface craft. In particular for the Navy and Marine Corps, EMRG could provide the Navy with a new naval surface fire support (NSFS) weapon for attacking land targets in support of Marines or other friendly ground forces ashore. This report focuses on Navy efforts to develop SSLs, EMRG, and GLGP for potential use in defending Navy surface ships against missiles and UAVs. Background Strategic and Budgetary Context Concern About Survivability of Navy Surface Ships Although Navy surface ships have a number of means for defending themselves against missiles and UAVs, some observers are concerned about the survivability of Navy surface ships in potential combat situations against adversaries, such as China, that are armed with large numbers of missiles, including advanced models, and large numbers of UAVs. Concern about this issue has led some observers to conclude that the Navy's surface fleet in coming years might need to avoid operating in waters that are within range of these weapons, or that the Navy might need to move toward a different and more distributed fleet architecture that relies less on larger surface ships and more on smaller surface ships, unmanned vehicles, and submarines. Perspectives on whether it would be cost effective to spend money on the procurement and operation of larger surface ships might be influenced by views on whether such ships can adequately defend themselves against enemy missiles and UAVs. Depth of Magazine and Cost Exchange Ratio Two key limitations that Navy surface ships currently have in defending themselves against missiles and UAVs are limited depth of magazine and unfavorable cost exchange ratios. Limited depth of magazine refers to the fact that Navy surface ships can use surface-to-air missiles (SAMs) and their Close-in Weapon System (CIWS) Gatling guns to shoot down only a certain number of enemy missiles and UAVs before running out of SAMs and CIWS ammunition —a situation (sometimes called "going Winchester") that can require a ship to withdraw from battle, spend time travelling to a safe reloading location (which can be hundreds of miles away), and then spend more time traveling back to the battle area. Unfavorable cost exchange ratios refer to the fact that a SAM used to shoot down a missile or UAV can cost the Navy more (perhaps much more) to procure than it cost the adversary to build or acquire the missile or UAV. Procurement costs for Navy air-defense missiles range from several hundred thousand dollars per mission to a few million dollars per missile, depending on the type. In combat scenarios against an adversary with a limited number of missiles or UAVs, an unfavorable cost exchange ratio can be acceptable because it saves the lives of Navy sailors and prevents very expensive damage to Navy ships. But in combat scenarios (or an ongoing military capabilities competition) against a country such as China that has many missiles and UAVs and a capacity for building or acquiring many more, an unfavorable cost exchange ratio can become a very expensive—and potentially unaffordable—approach to defending Navy surface ships against missiles and UAVs, particularly in a context of constraints on U.S. defense spending and competing demands for finite U.S. defense funds. SSLs, EMRG, and GLGP offer a potential for dramatically improving depth of magazine and the cost exchange ratio: D epth of magazine . SSLs are electrically powered, drawing their power from the ship's overall electrical supply, and can be fired over and over, indefinitely, as long as the laser continues to work and the ship has fuel to generate electricity. EMRG projectiles and GLGPs can be stored by the hundreds in a Navy surface ship's weapon magazine. C ost exchange ratio . An SSL can be fired for a marginal cost of less than one dollar per shot (which is the cost of the fuel needed to generate the electricity used in the shot), while GLGP reportedly had an estimated unit procurement cost in 2018 of about $85,000. High-energy SSLs that have enough beam power to counter small boats and UAVs, but not enough to counter missiles, could nevertheless indirectly improve a ship's ability to counter missiles by permitting the ship to use fewer of its SAMs for countering UAVs, and more of them for countering missiles. Similarly, even though GLGPs fired from 5-inch powder guns might not be able to counter anti-ship ballistic missiles (ASBMs), they could indirectly improve a ship's ability to counter ASBMs by permitting the ship to use fewer of its SAMs for countering ASCMs and more of its SAMs for countering ASBMs. Navy Shipboard Lasers in Brief SSLs in General The Navy in recent years has leveraged both significant advancements in industrial SSLs and decades of research and development work on military lasers done by other parts of DOD to make substantial progress toward deploying high-energy SSLs on Navy surface ships. Navy surface ships would use high-energy SSLs initially for jamming or confusing (i.e., "dazzling") intelligence, surveillance, and reconnaissance (ISR) sensors, for countering small boats and UAVs, and potentially in the future for countering enemy missiles as well. High-energy SSLs on Navy ships would generally be short-range defensive weapons—they would generally counter targets at ranges of about one mile to perhaps eventually a few miles. In addition to a low marginal cost per shot and deep magazine, potential advantages of shipboard lasers include fast engagement times, an ability to counter radically maneuvering missiles, an ability to conduct precision engagements, and an ability to use lasers for graduated responses ranging from detecting and monitoring targets to causing disabling damage. Potential limitations of shipboard lasers relate to line of sight; atmospheric absorption, scattering, and turbulence (which prevent shipboard lasers from being all-weather weapons); an effect known as thermal blooming that can reduce laser effectiveness; countering saturation attacks; possible adversary use of hardened targets and countermeasures; and risk of collateral damage, including damage to aircraft and satellites and permanent damage to human eyesight, including blinding. These potential advantages and limitations are discussed in greater detail in the Appendix . Earlier Developments Regarding Navy SSLs Earlier developments in the Navy's efforts to develop high-energy SSLs include the following: Between 2009 and 2012, the Navy successfully tested a prototype SSL called the Laser Weapon System (LaWS) against UAVs in a series of engagements that took place initially on land and subsequently on a Navy ship at sea. LaWS had a reported beam power of 30 kilowatts (kW). Between 2010 and 2011, the Navy tested another prototype SSL called the Maritime Laser Demonstration (MLD) in a series of tests that culminated with an MLD installed on a Navy ship successfully engaging a small boat. In August 2014, the Navy installed LaWS on the USS Ponce (pronounced pon-SAY)—a converted amphibious ship that operated in the Persian Gulf as an interim Afloat Forward Staging Base (AFSB[I]) —to conduct evaluation of shipboard lasers in an operational setting against swarming boats and swarming UAVs ( Figure 1 and Figure 2 ). In December 2014, the Navy declared LaWS on the Ponce to be an "operational" system . Ponce remained in the Persian Gulf until it was relieved in September 2017 by its replacement, the new-construction Expeditionary Sea Base ship Lewis B. Puller (ESB-3). Ponce returned to the United States and was decommissioned in October 2017, at which point LaWS was removed from Ponce. LaWS is to be refurbished to serve as a land-based test asset for the HELIOS effort discussed below. Current Navy SSL Development Efforts The Navy is now developing SSLs with improved capability for countering surface craft and UAVs, and eventually a capability for countering ASCMs. Navy efforts to develop these more capable lasers include the Solid State Laser Technology Maturation (SSL-TM) effort; the Ruggedized High Energy Laser (RHEL); the Optical Dazzling Interdictor, Navy (ODIN); the Surface Navy Laser Weapon System (SNLWS) Increment 1, also known as the high-energy laser with integrated optical dazzler and surveillance (HELIOS); and the High Energy Laser Counter-ASCM Program (HELCAP). As shown in Figure 3 , the Navy refers to the first four efforts above collectively as the Navy Laser Family of Systems (NFLoS). As also shown in Figure 3 , under the Navy's laser development approach, NFLOS and HELCAP, along with technologies developed by other parts of DOD, are to support the development of future, more capable lasers referred to as SNLWS Increment 2 and SNLWS Increment 3. The Navy's FY2020 budget submission states that "HELCAP will leverage the knowledge gained in the Navy Laser Family of Systems (NLFoS) efforts…. This leveraged knowledge and new HELCAP technical solutions to the C-ASCM problem will enable a fully informed decision to rapidly field an integrated, fleet ready, HEL Weapon." SSL-TM As a follow-on effort to LaWS and MLD, the Navy initiated the SSL Technology Maturation (SSL-TM) program, in which industry teams led by BAE Systems, Northrop Grumman, and Raytheon, among others, competed to develop a shipboard laser with a beam power of up to 150 kW, which would provide increased effectiveness against small boats and UAVs. Technology developed in the SSL-TM effort will support development of the SNLWS Increment 2 system. On October 22, 2015, DOD announced that it had selected Northrop Grumman as the winner of the SSL-TM competition. Figure 4 is an Office of Naval Research (ONR) graphic illustration of the SSL-TM system and its components as installed on the Navy's Self Defense Test Ship (the ex-USS Paul F. Foster [DD-964], an old Spruance [DD-963] class destroyer). In January 2018, the Navy announced that it intended to install the SSL-TM laser on the newly built amphibious ship USS Portland (LPD-27). Sea testing of SSL-TM on the Portland is scheduled for the fourth quarter of FY2019. RHEL RHEL reportedly is "a 150-kilowatt laser that will apparently employ 'different laser architectures' that will handle more powerful laser beams eventually." The Navy's FY2020 budget submission states that Budget Activity 3 development (i.e., advanced technology development) associated with RHEL was completed in FY2019; that HELCAP, discussed below, was previously known as RHEL Phase II; and that HELCAP will leverage, among other things, "Alternative Laser Sources for higher powers, also known as the Ruggedized High Energy Laser (RHEL) activities." Congress added about $11.6 million in development funding for RHEL in FY2018; the funding was used for "long lead procurement for the beam director required to support integrated laser weapons system testing, mission analysis, lethality and defeat of anti-ship cruise missile threats." SNLWS Increment 1 (HELIOS) SNLWS Increment 1 is called HELIOS, an acronym meaning high energy laser with integrated optical dazzler and surveillance. The HELIOS effort is focused on rapid development and rapid fielding of a 60 kW-class high-energy laser (with growth potential to 150 kW) and dazzler in an integrated weapon system, for use in countering UAVs, small boats, and ISR sensors, and for combat identification and battle damage assessment. Following a full and open competition based on a request for proposals (RFP) released on June 18, 2017, the Navy on January 26, 2018, awarded Lockheed Martin a $150 million contract for the development, manufacture, and delivery of two HELIOS systems—one for installation on a Navy Arleigh Burke (DDG-51) class Aegis destroyer, the other for land-based testing—by FY2020. The contract includes options for up to 14 additional HELIOS systems that if exercised could increase the total value of the contract to $942.8 million. Figure 5 and Figure 6 show an artist's renderings of HELIOS installed on a DDG-51. A March 21, 2019, press report states: The Navy is planning to install the High Energy Laser and Integrated Optical-dazzler with Surveillance (HELIOS) directed energy (DE) system on a DDG-51 Flight IIA destroyer by FY 2021 as it learns how to integrate laser weapons on its ships, a top official said Wednesday [March 20]. Rear Adm. Ron Boxall, director of Navy Surface Warfare, called characterized the Navy's plans to integrate directed energy weapons as "yes we are going to burn the boats if you will, and move forward with this technology." Boxall said the Navy plans to install a HELIOS system on a West Coast DDG-51 in 2021. "It's already POM'ed in there to do that, hopefully a West Coast destroyer in '21, onboard. We'll be testing it and then putting it aboard the ship." The Lockheed Martin [LMT] HELIOS will consist of a 60-150 kW single laser beam that can target unmanned aircraft systems (UAS) and small boats. The HELIOS is expected to be integrated on to a destroyer for its lifetime. The weapon will also feed intelligence, surveillance and reconnaissance (ISR) data into the ship's combat system and provide a counter-UAS (C-UAS) ISR dazzler capability. The dazzler uses a lower power setting to confuse or reduce ISR capabilities of a hostile UAS. Boxall said he is confident increased DE power outputs will come, but he is not yet confident in integrating them into existing combat systems. "Because if I'm going to burn the boats, I'm going to replace something that I have on ships today doing that mission with these weapons. And if I do that, I've got to be confident that it's going to work and it's going to cover those missions." He added that if a ship has a new DE laser weapon that will both sense and kill targets, "then I have to make sure it integrates with the other things that I have on my ship that can sense and kill—namely the Aegis weapon system. And so to me the most important aspect of the integrated laser is its integration into my existing combat system, period." While Boxall is confident the Navy can continue to increase laser weapon power on ship, one major limiting factor is power margin. The first HELIOS going on a destroyer will go on a Flight IIA ship, but the Flight III as a downside that it uses almost the same hull but focuses more power generation on the new AN/SPY-6 Air and Missile Defense Radar (AMDR). The AMDR will better detect air and missile threats, but "we are out of schlitz with regard to power. We used a lot of power for that and we don't have as much" extra for additional functions. Boxall said to get a HELIOS on a DDG-51 Flight III, the Navy will have to either remove something or look at "very aggressive power management." This is part of the calculus in the successor to the DDG-51, the Large Surface Combatant (LSC)…. Last year, the Navy awarded Lockheed Martin a $150 million contract to develop two HELIOS systems in early 2018, with one to integrate on a DDG-51 and one for land-based testing…. However, the FY '19 defense authorization bill restricted the Navy to only one HELIOS per fiscal year without first receiving a detailed contracting and acquisition strategy report. The HELIOS will not merely be bolted on the ship, but integrated into its Aegis combat system to direct the DE weapon…. More recently, in January Lockheed Martin officials said they plan to put HELIOS through a production design review in 2019…. Summary of FY2020 Activities for SSL-TM, RHEL, and HELCAP Figure 7 shows a summary of the Navy's proposed FY2020 activities for SSL-TM, RHEL, and HELCAP. Electromagnetic Railgun (EMRG) The Navy since 2005 has been developing EMRG, a cannon that uses electricity rather than chemical propellants (i.e., gunpowder charges) to fire a projectile. In EMRG, "magnetic fields created by high electrical currents accelerate a sliding metal conductor, or armature, between two rails to launch projectiles at [speeds of] 4,500 mph to 5,600 mph," or roughly Mach 5.9 to Mach 7.4 at sea level. Like SSLs, EMRG draws its power from the ship's overall electrical supply. The Navy originally began developing EMRG as a naval surface fire support (NSFS) weapon for supporting U.S. Marines operating ashore, but subsequently determined that the weapon also has potential for defending against missiles. Following tests with early Navy-built EMRG prototypes, the Navy funded the development of two industry-built EMRG prototype demonstrators, one by BAE Systems and the other by General Atomics (see Figure 8 and Figure 9 ). The two industry-built prototypes are designed to fire projectiles at energy levels of 20 to 32 megajoules, which is enough to propel a projectile 50 to 100 nautical miles. (Such ranges might refer to using the EMRG for NSFS missions. Intercepts of missiles and UAVs might take place at much shorter ranges.) The Navy began evaluating the two industry-built prototypes in 2012. A February 27, 2017, press report stated that a new full and open competition is in the works for the railgun. While the Office of Naval Research and several companies will continue their development of the railgun and projectile, [Naval Sea Systems Command spokeswoman Christianne] Witten said the program office is planning to hold a new competition for the technologies prior to them entering the engineering and manufacturing development phase of the acquisition process, known as "milestone B." "The railgun acquisition program will avoid being 'locked in' to proprietary solutions for key system components," Witten wrote. "It is the Navy's objective to leverage the industry competition that ONR initially held for the subsystems of pulse power, barrel technology maturation and projectiles. Another round of system full and open competition is planned at milestone B." A July 21, 2017, press report stated the following: The U.S. Office of Naval Research (ONR) is proceeding in its electromagnetic railgun research and expects to reach a capacity of 10 rounds per minute with a 32 Mega-Joule muzzle launch for each round, officials said Thursday [July 20]. Dr. Thomas Beutner, department head of Code 35 in ONR's Naval Air Warfare and Weapons Department, told reporters that the railgun research is going well and has made several scientific advances.... Tom Boucher, program officer at Code 35 said the ONR S&T program calls for a maturation of achieving 10 rounds per minute at 32 megajoules by fiscal year 2019. To reach that goal, ONR is building a series of barrels and incorporating lessons learned. They will achieve the full rep-rate and muzzle energy in 2018 and in 2019 demonstrate the longest life of a barrel at that muzzle energy. After reaching these goals the S&T portion of the program should be complete. Separately the Navy's Program Executive Office Integrated Warfare Systems (PEO IWS) will look at shipboard integration if the Navy decides to do that and that office will make any follow-on acquisition decisions, Boucher said.... ONR's rep-rate composite launcher, which can repeat launches quicker than other test devices, will be able to achieve the 10 round-per-minute rate the program seeks by later this summer. ONR plans to gradually ramp up this launcher to higher rep-rate and energy levels through the end of the year, Beutner said. He also talked about how ONR has demonstrated the ability to use pulse power, having fired 5,000 pulse shots. For the rep-rate firing, ONR has to use a larger energy farm or capacitor base resulting in pulse power using over one megajoule per cubic meter energy density. "That's an important scientific advance in terms of energy density in those capacitors, but even more important that's a size factor that will fit into the ships. Both crewed combatants and future combatants," Beutner said. A March 9, 2018, press report states the following: Following a flurry of reports in December predicting the Navy's $500 million electromagnetic railgun experiment was dead on arrival, the chief of Naval Operations told lawmakers this week that the death of the program was greatly exaggerated. "[We are] fully invested in railgun; we continue to test it," Adm. John Richardson told the House Appropriations subcommittee on defense during a Wednesday hearing on Navy and Marine Corps budget issues. "We've demonstrated it at lower firing rates and ... shorter ranges. Now we have to do the engineering to, sort of, crank it up and get it at the designated firing rates, at the 80- to 100-mile range."... Business Insider reported in December that the Pentagon's Strategic Capabilities office was shifting research efforts from the railgun, which uses electromagnetic energy to shoot large projectiles at speeds of up to 4,500 miles per hour, to broader high-velocity projectile study. The Navy has never acknowledged a loss of interest in railgun technology, however. Last July, officials with the Office of Naval Research told reporters that the power behind the gun would be increased to 32 megajoules over the summer, giving the weapon a range of 110 miles.... While Richardson acknowledged the challenges and said Navy brass were "very conscious" of reported Chinese achievements in railgun technology, he maintained the service was still invested in the program. Gun-Launched Guided Projectile (GLGP) As the Navy was developing EMRG, it realized that the guided projectile being developed for EMRG, which weighs about 23 pounds, could also be fired from 5-inch and 155mm powder guns. When fired from EMRG, the projectile reaches hypervelocity (i.e., Mach 5+) speeds, and thus came to be known as the hypervelocity projectile (HVP). When fired from a power gun, the projectile flies quickly, but not as quickly as it does when fired from EMRG. In addition, whereas the Navy's original concept was to use the EMRG projectile for both EMRG and powder guns—and might still decide to do that—the Navy now states that the high-speed projectile fired from powder guns might instead be a different projectile. For both of these reasons, the high-speed projectile for powder guns, which was originally called HVP, is now referred to by the Navy as the gun-launched guided projectile (GLGP). The Navy states that The terms HVP and GLGP are both still used. Hyper Velocity Projectile (HVP) is the term used in the current development programs that [DOD's] SCO [Strategic Capabilities Office] and [Office of naval Research] ONR have ongoing with BAE Systems. Gun Launch Guided Projectile (GLGP) is the term that describes the future acquisition program and the associated performance specification that industry will compete for. GLGP is the RDT&E [research, development, test, and evaluation] budget program element [i.e., line item] covering all guided projectile development effort including HVP. As noted earlier, GLGP had an estimated unit procurement cost in 2018 of about $85,000. Figure 10 and Figure 11 show the then-named HVP. One advantage of GLGP is that the 5-inch and 155mm guns from which it would be fired are already installed on Navy cruisers and destroyers, creating a potential for rapidly proliferating GLGP through the cruiser-destroyer force, once development of GLGP is complete and the weapon has been integrated into cruiser and destroyer combat systems. Navy cruisers each have two 5-inch guns, Navy Arleigh Burke (DDG-51) class destroyers each have one 5-inch gun, and the Navy's three new Zumwalt class (DDG-1000) destroyers each have two 155mm guns. Figure 12 shows launch packages for the then-named HVP configured for 5-inch guns, 155mm guns, and EMRG. In September 2012, when the concept was to use the then-named HVP as a common projectile for both EMRG and powder guns (which might still happen), the Navy described the projectile as a next generation, common, low drag, guided projectile capable of completing multiple missions for gun systems such as the Navy 5-Inch, 155-mm, and future railguns. Types of missions performed will depend on gun system and platform. The program goal is to address mission requirements in the areas of Naval Surface Fire Support, Cruise Missile Defense, Anti-Surface Warfare, and other future Naval mission areas. Mission performance will vary from gun system, launcher, or ship. HVP's low drag aerodynamic design enables high velocity, maneuverability, and decreased time-to-target. These attributes coupled with accurate guidance electronics provide low cost mission effectiveness against current threats and the ability to adapt to air and surface threats of the future. The high velocity compact design relieves the need for a rocket motor to extend gun range. Firing smaller more accurate rounds improves danger close/collateral damage requirements and provides potential for deeper magazines and improved shipboard safety. Responsive wide area coverage can be achieved using HVP from conventional gun systems and future railgun systems. The modular design will allow HVP to be configured for multiple gun systems and to address different missions. The hypervelocity projectile is being designed to provide lethality and performance enhancements to current and future gun systems. A hypervelocity projectile for multiple systems will allow for future technology growth while reducing development, production, and total ownership costs. Research Challenges & Opportunities [include]: -- High acceleration tolerant electronic components -- Lightweight, high strength structural composites -- Miniature, high density electronic components -- Safe high energy propellants compatible with shipboard operations -- Aerothermal protection systems for flight vehicles When fired from 5-inch powder guns, GLGP reportedly achieves a speed of roughly Mach 3, which is roughly half the speed it achieves when fired from EMRG, but more than twice the speed of a conventional 5-inch shell fired from a 5-inch gun. This is apparently fast enough for countering at least some ASCMs. The Navy states that "The HVP—combined with the MK 45 [5-inch gun] —will support various mission areas including naval surface fire support, and has the capacity to expand to a variety of anti-air threats, [and] anti-surface [missions], and could expand the Navy's engagement options against current and emerging threats." A December 21, 2016, opinion column states the following: Now the Navy is acquiring rail guns that use such energy to fire 15- to 25-pound, 18-inch projectiles at 5,000 miles per hour. They hit with the impact of a train slamming into a wall at 100 miles per hour. The high-speed, hence high-energy projectiles, which cost just $25,000, can radically improve fleet-protection capabilities: A barrage of them could counter an enemy's more expensive anti-ship missiles. The daunting challenge posed by defense against the proliferating threat of ballistic missiles is that it is prohibitively expensive to be prepared to intercept a swarm of incoming missiles. New technologies, however, can revolutionize defense against ballistic missiles because small, smart projectiles can be inexpensive. It takes 300 seconds to pick up such a launched missile's signature, the missile must be tracked and a vector calculated for defensive projectiles. A single 25-pound projectile can dispense more than 500 three-gram tungsten impactors and be fired at hypervelocity by electromagnetic energy. Their impact force—their mass times the square of their velocity—can destroy expensive missiles and multiple warheads. Figure 13 is a slide showing the potential application of the then-named HVP to 5-inch power guns, 155mm powder guns, and EMRG. The first line of the slide in Figure 13 , for example, discusses then-named HVP's use with 5-inch powder guns, stating that it uses a high-explosive (HE) warhead for the NSFS mission; that a total of 113 5-inch gun barrels are available in the fleet (which could be a reference to 22 cruisers with two guns each, and 69 destroyers with one gun each); and that as a game-changing capability, it is guided and can be used at ranges of up to 26 nautical miles to 41 nautical miles for NSFS operations, for countering ASCMs, and for anti-surface warfare (ASuW) operations (i.e., attacking surface ships and craft). Figure 14 is a not-to-scale illustration of how then-named HVPs fired from EMRGs and 5-inch guns could be used to counter various targets, including ASCMs and ASBMs. DOD Interest in GLGP GLGP emerged as a program of particular interest to DOD, which has exploring the potential for using the weapon across multiple U.S. military services. An April 11, 2016, press report states the following: The Pentagon wants to take a weapon originally designed for offense, flip its punch for defense and demonstrate by 2018 the potential for the Army and Navy to conduct missile defense of bases, ports and ships using traditional field guns to fire a new hypervelocity round guided by a mobile, ground variant of an Air Force fighter aircraft radar. The Strategic Capabilities Office [SCO] is working with the Army, Navy and Air Force to craft a Hypervelocity Gun Weapon System that aims, in part, to provide China and Russia an example of a secret collection of new U.S. military capabilities the Defense Department is bringing online in an effort to strengthen conventional deterrence. "It is a fantastic program," Will Roper, [then-]Strategic Capabilities Office director, said in a March 28 interview with reporters, who said the project aims "to completely lower the cost of doing missile defense" by defeating missile raids at a lower cost per round and, as a consequence, imposing higher costs on attackers. A May 2, 2016, press report states the following: "We thought rail guns were something we were really going to go after, but it turns out that powder guns firing the same hypervelocity projectiles gets you almost as much as you would get out of the electromagnetic rail gun, but it's something we can do much faster," [then-Deputy Secretary of Defense Robert] Work said. "We are going to say [to the next administration] 'Look, we believe this is the place where you want to put your money, but we're going to have enough money in there for both the electromagnetic rail gun and the powder gun.' So if the new administration says 'No really the electromagnetic rail gun is the way I want to go,' knock yourself out, we've set you up for success." A May 5, 2016, press report similarly states the following: Come January [2017], the Pentagon will almost assuredly have new leadership, complete with a new vision for how the Department of Defense should operate, organize and plan for the future. It's a reality facing down [then-]Defense Secretary Ash Carter and [then-]Deputy Secretary Bob Work as they try to complete a transformation at the Pentagon, one which both men have said is vital to making sure the US is able to maintain its technological edge against great powers like Russia and China in the future.... "One of the things we have done in our program is build in a lot of different options that they [i.e., officials in the next administration] can pull levers on," Work explained. As an example, he pointed to the idea of an electromagnetic railgun. Initially, Work and his team thought that was an area that would be a major focus of development, but as they experimented they realized that a powder gun with a hypervelocity round could have almost the same impact—but at a fraction of the cost, because it did not require the development, testing and adaptation of a new gun. "We're going to say 'look, this is the place where [we think] you want to put your money,' but we're going to have enough money in both the electromagnetic railgun and the powder gun that if the new administration says 'I really want the electromagnetic railgun, this is the way I want to go,' knock yourself out," Work said. "We've set you up for success." A May 9, 2016, press report states the following: [Then-]Deputy Defense Secretary Bob Work said last week that current Pentagon leaders have made investments intended to position the next presidential administration to offset expected Russian and Chinese technological advancements, specifically highlighting lessons learned about a new hypervelocity gun. Work... said one of the key findings to emerge from the effort was the Hypervelocity Gun Weapon System, which he said could be poised to displace much of what the Defense Department had planned to invest in the Navy's electromagnetic rail gun. "We thought rail guns were going to be something we were really going to go after," he said, adding that "it turns out that powder guns" are capable of firing the same projectiles, at the same velocity, for far less cost. A July 18, 2016, press report states the following: The Pentagon's office tasked with tweaking existing and developing military technology for new uses is pushing development of ammo meant for the electromagnetic railgun for use in existing naval guns and artillery pieces.... About year and a half ago, researchers at the Pentagon's Strategic Capabilities Office and inside the service realized that there was more short-term promise for not only the Navy but the Army to use the Hyper Velocity Projectiles (HVP) rounds overseen by the Office of Naval Research (ONR) in both services existing powder guns, said [then-]SCO [Strategic Capabilities Office] head William Roper said last week. "To me they were just interesting test articles a few years ago, but thanks to that service input and us funding some high-risk demonstration we now think that we can do pretty revolutionary things with existing powder guns—think howitzers, Paladins, the Navy's five-inch guns. We've shifted emphasis to that," Roper said during a Wednesday talk at the Center for Strategic and International Studies (CSIS). "Not that we're not interested in railgun—we are—but if you look at the delta between fielding in quantity—we have [more than] a 1,000 powder guns, we have very few railguns."... The SCO-led research effort will work to create HVP sensor and a fire control regime that will find its way eventually to the railgun project, Roper said. "So when the railgun is ready to field it will be able to just be dropped in place as a better launcher as opposed to being a great technology that we have to build a new architecture for," he said. "We're going to take the bet and let's see if we can field this and let's completely flip the paradigm of missile defense." A September 19, 2016, press report states the following: After much deliberation, both public and private, the Pentagon, which has shifted emphasis away from the electromagnetic rail gun as a next-generation missile defense platform, sees a new hypervelocity powder gun technology as the key to demonstrating to potential adversaries like China and Russia that U.S. military units on land and sea can neutralize large missile salvos in future conflicts.... "If you do that, you change every 155 [mm] howitzer in the U.S. Army in every NATO country into a cruise missile and tactical ballistic missile defender and, oh by the way, you extend their offensive range," [then-Deputy Secretary of Defense Robert] Work said. The article states that Work "is pushing hard to lay the groundwork for the next presidential administration to conduct a military exercise called 'Raid Breaker' that would demonstrate the capabilities of the Hypervelocity Gun Weapon System program." It quotes him as stating that if DOD conducted such an exercise against 100 cruise missiles and ballistic missiles, "and were able to convince [potential adversaries] that we're able to knock down 95 to 98 of them, then that would have an enormous impact on the competition in the Pacific, on the competition in Europe and would [clearly] improve conventional deterrence." It further quotes him as stating that DOD's modeling shows that "if we can close the fire support with a controlled solution," the weapon would be able to shoot down most of a 100-missile raid. A May 19, 2017, press report states the following: An Army Howitzer is now firing a super high-speed, high-tech, electromagnetic Hyper Velocity Projectile, initially developed as a Navy weapon, an effort to fast-track increasing lethal and effective weapons to warzones and key strategic locations, Pentagon officials said. Overall, the Pentagon is accelerating developmental testing of its high-tech, long-range Electro-Magnetic Rail Gun by expanding the platforms from which it might fire and potentially postponing an upcoming at-sea demonstration of the weapon, Pentagon and Navy officials told Scout Warrior. While initially conceived of and developed for the Navy's emerging Rail Gun Weapon, the Pentagon and Army are now firing the Hyper Velocity Projectile from an Army Howitzer in order to potential harness near-term weapons ability, increase the scope, lethality and range ability to accelerate combat deployment of the lethal, high-speed round. A January 26, 2018, press report states the following: The Pentagon's Strategic Capabilities Office will test-fire a radical new missile defense system in less than a year.... "That projectile is being designed to engage multiple threats," [Vincent Sabio, the HVP program manager at the Pentagon's Strategic Capabilities Office] said of the HVP. "There may be different modes that it operates in (in terms of) how does it maneuver, how does it close on the threat, and whether it engages a (explosive) warhead or whether it goes into a hit-to-hill mode. Those will all be based on the threat, and we can tell it as it's en route to the threat, 'here's what you're going after, this is the mode you're going to engage in.'"... So when will the Army and Navy actually get Hyper Velocity Projectiles? Both services are already working with SCO to plan a handover of the program, Sabio said. His role is just to prove the key technology works: specifically, to demonstrate that an HVP can maneuver close enough to "an inbound, maneuvering threat" that it could have destroyed it if fitted with the proper warhead. Sabio's not developing that warhead. "We are building out the full fire control loop including the sensors, the coms links, the projectile, the launchers (i.e.) the guns," he said. "The command and control…. I leave that to my independent transition partners, Navy and Army." And by when will the demonstration happen? "Well," said Sabio, "my program ends less than a year from now." A January 8, 2019, press report states: Last summer USS Dewey (DDG-105) fired 20 hyper velocity projectiles (HVP) from a standard Mk 45 5-inch deck gun in a quiet experiment that's set to add new utility to the weapon found on almost every U.S. warship, officials familiar with the test have told USNI News. The test, conducted by the Navy and the Pentagon's Strategic Capabilities Office as part of the Rim of the Pacific (RIMPAC) 2018 international exercise, was part of a series of studies to prove the Navy could turn the more than 40-year-old deck gun design into an effective and low-cost weapon against cruise missiles and larger unmanned aerial vehicles…. While officials confirmed to USNI News that the RIMPAC test was unclassified, both the Office of the Secretary of Defense and the Office of Naval Research would not acknowledge the test when asked by USNI News. Remaining Development Challenges Although the Navy in recent years has made considerable progress in developing SSLs, EMRG, and GLGP, a number of significant development challenges remain. Overcoming these challenges will likely require years of additional development work, and ultimate success in overcoming them is not guaranteed. Solid-State Lasers (SSLs) Remaining development challenges for high-energy SSLs include, among other things, making the system rugged enough for extended shipboard use, making the beam director (the telescope-like part of the laser that sends the beam toward the target) suitable for use in a marine environment (where moisture and salt in the air can be harsh on equipment), and integrating the system into the ship's electrical power system and combat system. A January 23, 2015, blog post co-authored by the Office of Naval Research's program officer for the Navy's SSL program states the following: In the near term, many challenges remain to develop and operate high-energy laser systems in the maritime environment that are unique to the Navy and Marine Corps. Among these challenges is dealing with the heat generated as power levels increase. A second issue is packing sufficient power on the platform, which will require advanced battery, generator, power conditioning, and hybrid energy technologies. Current laser technologies are approximately 30 percent electrically efficient. Corrosion and contamination of optical windows by shipboard salt spray, dirt, and grime also are technical challenges. In addition, atmospheric turbulence resulting from shifting weather conditions, moisture, and dust is problematic. Turbulence can cause the air over long distances to act like a lens, resulting in the laser beam's diffusing and distorting, which degrades its performance. Much progress has been made in demonstrating high-energy laser weapon systems in the maritime environment, but there is still much to be done. Additional advances will be required to scale power levels to the hundreds of kilowatts that will make high[-]energy lasers systems robust, reliable, and affordable. Higher power levels are important for the ability to engage more challenging threats and improve the rate and range at which targets can be engaged. The programs managed by ONR are addressing these remaining issues while positioning this important warfighting capability toward an acquisition program and eventual deployment with the fleet and force. Skeptics sometimes note that proponents of high-energy military lasers over the years have made numerous predictions about when lasers might enter service with DOD, and that these predictions repeatedly have not come to pass. Viewing this record of unfulfilled predictions, skeptics have sometimes stated, half-jokingly, that "lasers are X years in the future—and always will be." Laser proponents acknowledge the record of past unfulfilled predictions, but argue that the situation has now changed because of rapid advancements in SSL technology and a shift from earlier ambitious goals (such as developing megawatt-power lasers for countering targets at tens or hundreds of miles) to more realistic goals (such as developing kilowatt-power lasers for countering targets at no more than a few miles). Laser proponents might argue that laser skeptics are vulnerable to what might be called cold plate syndrome (i.e., a cat that sits on a hot plate will not sit on a hot plate again—but it will not sit on a cold plate, either). EMRG and GLGP Remaining development challenges for EMRG involve items relating to the gun itself (including increasing barrel life to desired levels), the projectile, the weapon's electrical power system, and the weapon's integration with the ship. Fielding GLGP on cruisers and destroyers equipped with 5-inch and 155mm powder guns would additionally require GLGP to be integrated with the combat systems of those ships. The Navy stated the following in 2017: The Railgun INP is in the second phase of a two-phase development effort. INP Phase I (FY 2005-2011) successfully advanced foundational enabling technologies and explored, through analysis and war gaming, the railgun's multi-mission utility. Launcher energy was increased by a factor of five to the system objective muzzle energy of 32 mega joules (110 nautical miles range) and barrel life was increased from tens of shots to hundreds of shots. Two contractors delivered tactical-style advanced containment launchers proving the feasibility of composite wound launchers. Pulsed power size was cut in half while thermal management for firing rate (rep-rate) was added to the design. INP Phase II focuses on increasing rep-rate capability. Rep-rate adds new levels of complexity to all of the railgun sub-systems, including thermal management, autoloader, and energy storage. A new test facility capable of supporting rep-rate testing at full energy level is coming on line at the Terminal Range at the Naval Surface Warfare Center, Dahlgren, Virginia. A new demonstration launcher (DL1) has been delivered and installed at the Terminal Range to commission the new facility. Additional rep-rate composite launchers (RCLs) capable of rep-rate are in various stages of design and fabrication. The Office of Naval Research will develop a tactical prototype railgun launcher and pulsed-power architecture suitable for advanced testing both afloat and ashore. A May 19, 2017, press report states the following: Consider 35 pounds of metal moving at Mach 5.8. Ten shots per minute. 1,000 shots before the barrel wears out under the enormous pressures. That's the devastating firepower the Navy railgun program aims to deliver in the next two years, and they're well on their way. "We continue to make great technical progress," said Office of Naval Research program manager Tom Boucher. Boucher and an aide briefed me in the blazing hot courtyard of the Pentagon, which was hosting the annual DoD Lab Day — a kind of military-grade science fair. Three years ago, then-Chief of Naval Operations Jonathan Greenert declared that railguns — which fire projectiles with electromagnetic pulses rather than gunpowder — had come so close to battle-ready that he wanted to test-fire one at sea. Since then the Navy has changed course, deciding that permanent land-based test sites would provide more and better data for fewer dollars than an ad hoc installation aboard a repurposed fast transport (variously known as JHSV or EFP). So on November 17, along the Potomac River at the Naval Surface Warfare Center in Dahlgren, Va., a new 32-megajoule railgun built by BAE Systems opened fire for the first time.... A second railgun is being set up at the Army's White Sands Missile Range in the New Mexico desert, where there's enough wide-open space to fire the weapon at its maximum range of more than a hundred nautical miles. While White Sands tests the long-range performance of the projectile, Dahlgren will work on the weapon itself. Previous test weapons were like medieval bombards, firing just a few times per day. The Dahlgren team is now making multiple shots per hour as they work out the bugs, and by the end of the year they expect to reach the goal of 10 shots per minute. Once they've reached the 10-round a minute rate, Dahlgren will switch focus to barrel life. A decade ago, experimental railguns often wore out their barrel with a single shot. With new materials better able to endure the intense stresses, the barrels on the current test weapons can last for hundreds of shots before requiring replacement — roughly how long a battleship's 16″ barrels lasted back in World War II. The goal is a barrel that lasts 1,000 rounds. Transitioning from Development to Procurement Transitioning military technology efforts from the research and development phase to the procurement phase can sometimes be a challenge. Some military technology efforts fail to make the transition, falling into what observers sometimes refer to as the "valley of death" metaphorically located between the research and development phase and the procurement phase. A February 27, 2017, press report states that The Navy has established programs for high-energy lasers and the electromagnetic railgun at Naval Sea Systems Command acquisition directorates, paving the way for technologies that have long been stuck in research and development to potentially be installed on the service's ships one day. The program executive office for integrated warfare systems (PEO IWS) is developing acquisition plans for lasers and the electromagnetic railgun, as well as the railgun's associated weapon, the hypervelocity projectile, according to NAVSEA spokeswoman Christianne Witten. Last August, a "Directed Energy Program Office" was set up at the above-water sensors directorate within PEO IWS, Witten wrote in a Feb. 22 email. The new office was established to "accelerate the fielding of High Energy Laser (HEL) weapon systems to the fleet," according to the spokeswoman. Additionally, last June, the Navy's acquisition executive charged the surface-ship weapons program office at PEO IWS with developing an acquisition and fielding plan for the railgun and the hypervelocity projectile, Witten said. Issues for Congress Potential Oversight Questions Potential oversight questions for Congress regarding Navy programs for SNLWS, EMRG, and GLP include the following: Using currently available air-defense weapons, how well could Navy surface ships defend themselves in a combat scenario against an adversary such as China that has or could have large numbers of missiles and UAVs? How would this situation change if Navy surface ships in coming years were equipped with SNLWS, EMRG, GLGP, or some combination of these systems? How significant are the remaining development challenges for SNLWS, EMRG, and GLGP? Are current schedules for developing SNLWS, EMRG, and GLGP appropriate in relation to remaining development challenges and projected improvements in enemy missiles? When does the Navy anticipate issuing roadmaps detailing its plans for procuring and installing production versions of SNLWS, EMRG, and GLGP on specific Navy ships by specific dates? Will the kinds of surface ships that the Navy plans to procure in coming years have sufficient space, weight, electrical power, and cooling capability to take full advantage of SNLWS and EMRG? What changes, if any, would need to be made in Navy plans for procuring large surface combatants (i.e., destroyers and cruisers) or other Navy ships to take full advantage of SNLWS and EMRGs? Given the Navy's interest in HPV, how committed is the Navy to completing the development of EMRG and eventually deploying EMRGs on Navy ships? Are the funding line items for SNLWS, EMRG, and GLDP sufficiently visible for supporting congressional oversight sufficiently visible for supporting congressional oversight? Legislative Activity for FY2020 Summary of Congressional Action on FY2020 Funding Table 1 summarizes congressional action on selected Navy FY2020 research and development account line items (known as program elements, or PEs) that related to shipboard lasers, EMRG, and GLGP. These PEs do not necessarily capture all Navy research and development work related to these efforts—additional funding for these efforts may occur in other PEs that do not explicitly indicate that they include funding for these efforts. Appendix. Potential Advantages and Limitations of Shipboard Lasers This appendix presents additional information on potential advantages and limitations of shipboard lasers. Potential Advantages In addition to a low marginal cost per shot and deep magazine, potential advantages of shipboard lasers include the following: F ast engagement times . Light from a laser beam can reach a target almost instantly (eliminating the need to calculate an intercept course, as there is with interceptor missiles) and, by remaining focused on a particular spot on the target, cause disabling damage to the target within seconds. After disabling one target, a laser can be redirected in several seconds to another target. A bility to counter radically maneuvering missiles . Lasers can follow and maintain their beam on radically maneuvering missiles that might stress the maneuvering capabilities of Navy SAMs. P recision engagements . Lasers are precision-engagement weapons—the light spot from a laser, which might be several inches in diameter, affects what it hits, while generally not affecting (at least not directly) separate nearby objects. G raduated responses. Lasers can perform functions other than destroying targets, including detecting and monitoring targets and producing nonlethal effects, including reversible jamming of electro-optic (EO) sensors. Lasers offer the potential for graduated responses that range from warning targets to reversibly jamming their systems, to causing limited but not disabling damage (as a further warning), and then finally causing disabling damage. Potential Limitations Potential limitations of shipboard lasers include the following: L ine of sight . Since laser light tends to fly through the atmosphere on an essentially straight path, shipboard lasers would be limited to line-of-sight engagements, and consequently could not counter over-the-horizon targets or targets that are obscured by intervening objects. This limits in particular potential engagement ranges against small boats, which can be obscured by higher waves, or low-flying targets. Even so, lasers can rapidly reacquire boats obscured by periodic swells. A tmospheric absorption, scattering, and turbulence . Substances in the atmosphere—particularly water vapor, but also things such as sand, dust, salt particles, smoke, and other air pollution—absorb and scatter light from a shipboard laser, and atmospheric turbulence can defocus a laser beam. These effects can reduce the effective range of a laser. Absorption by water vapor is a particular consideration for shipboard lasers because marine environments feature substantial amounts of water vapor in the air. There are certain wavelengths of light (i.e., "sweet spots" in the electromagnetic spectrum) where atmospheric absorption by water vapor is markedly reduced. Lasers can be designed to emit light at or near those sweet spots, so as to maximize their potential effectiveness. Absorption generally grows with distance to target, making it in general less of a potential problem for short-range operations than for longer-range operations. Adaptive optics, which make rapid, fine adjustments to a laser beam on a continuous basis in response to observed turbulence, can counteract the effects of atmospheric turbulence. Even so, lasers might not work well, or at all, in rain or fog, preventing lasers from being an all-weather solution. T hermal blooming . A laser that continues firing in the same exact direction for a certain amount of time can heat up the air it is passing through, which in turn can defocus the laser beam, reducing its ability to disable the intended target. This effect, called thermal blooming, can make lasers less effective for countering targets that are coming straight at the ship, on a constant bearing (i.e., "down-the-throat" shots). Other ship self-defense systems, such as interceptor missiles or a CIWS, might be more suitable for countering such targets. Most tests of laser systems have been against crossing targets rather than "down-the-throat" shots. In general, thermal blooming becomes more of a concern as the power of the laser beam increases. S aturation attacks . Since a laser can attack only one target at a time, requires several seconds to disable it, and several more seconds to be redirected to the next target, a laser can disable only so many targets within a given period of time. This places an upper limit on the ability of an individual laser to deal with saturation attacks—attacks by multiple weapons that approach the ship simultaneously or within a few seconds of one another. This limitation can be mitigated by installing more than one laser on the ship, similar to how the Navy installs multiple CIWS systems on certain ships. H ardened targets and countermeasures . Less-powerful lasers—that is, lasers with beam powers measured in kilowatts (kW) rather than megawatts (MW)—can have less effectiveness against targets that incorporate shielding, ablative material, or highly reflective surfaces, or that rotate rapidly (so that the laser spot does not remain continuously on a single location on the target's surface) or tumble. Small boats (or other units) could employ smoke or other obscurants to reduce their susceptibility to laser attack. Measures such as these, however, can increase the cost and/or weight of a weapon, and obscurants could make it more difficult for small boat operators to see what is around them, reducing their ability to use their boats effectively. R isk of collateral damage to aircraft , satellites , and human eyesight . Since light from an upward-pointing laser that does not hit the target would continue flying upward in a straight line, it could pose a risk of causing unwanted collateral damage to aircraft and satellites. The light emitted by SSLs being developed by the Navy is of a frequency that can cause permanent damage to human eyesight, including blinding. Blinding can occur at ranges much greater than ranges for damaging targeted objects. Scattering of laser light off the target or off fog or particulates in the air can pose a risk to exposed eyes. For additional background information on potential Navy shipboard SSLs, see CRS Report R41526, Navy Shipboard Lasers for Surface, Air, and Missile Defense: Background and Issues for Congress , by Ronald O'Rourke.

Three new ship-based weapons being developed by the Navy—solid state lasers (SSLs), the electromagnetic railgun (EMRG), and the gun-launched guided projectile (GLGP), also known as the hypervelocity projectile (HVP)—could substantially improve the ability of Navy surface ships to defend themselves against surface craft, unmanned aerial vehicles (UAVs), and eventually anti-ship cruise missiles (ASCMs). The Navy has been developing SSLs for several years, and in 2014 installed on a Navy ship a prototype SSL called the Laser Weapon System (LaWS) that was capable of countering surface craft and UAVs. The Navy is now developing SSLs with improved capability for countering surface craft and UAVs, and eventually a capability for countering ASCMs. Navy efforts to develop these more capable lasers include the Solid State Laser Technology Maturation (SSL-TM) effort; the Ruggedized High Energy Laser (RHEL); the Optical Dazzling Interdictor, Navy (ODIN); the Surface Navy Laser Weapon System (SNLWS) Increment 1, also known as the high-energy laser with integrated optical dazzler and surveillance (HELIOS); and the High Energy Laser Counter-ASCM Program (HELCAP). The Navy refers to the first four efforts above collectively as the Navy Laser Family of Systems (NFLoS). Under the Navy's laser development approach, NFLOS and HELCAP, along with technologies developed by other parts of DOD, are to support the development of future, more capable shipboard lasers. The Navy has been developing EMRG for several years. It was originally conceived as a naval surface fire support (NSFS) weapon for supporting Marines and other friendly forces ashore. Subsequently, it was determined that ERGM could also be used for air and missile defense, which strengthened interest in ERGM development. More recently, it was determined that the projectile to be fired by ERGM could also be fired by existing powder-propellant guns, including 5-inch and 155 mm guns on Navy cruisers and destroyers, and 155 mm artillery guns operated by the Army and Marine Corps. When fired from power guns, the projectile does not fly as quickly as it does when fired from an ERGM, but it still flies quickly enough to be of use as an air-defense weapon. The concept of firing the projectile from powder guns is referred to as GLGP and HVP. One potential advantage of HVP/GLGP is that, once developed, it can be rapidly deployed on Navy cruisers and destroyers and in Army and Marine Corps artillery units, because the powder guns in question already exist. In addition to the question of whether to approve, reject, or modify the Navy's FY2020 funding requests for SSLs, ERGM, and HVP/GLGP, issues for Congress include the following: whether the Navy is moving too quickly, too slowly, or at about the right speed in its efforts to develop these weapons; the Navy's plans for transitioning these weapons from development to procurement and fielding aboard Navy ships; and whether Navy the Navy's shipbuilding plans include ships with appropriate amounts of space, weight, electrical power, and cooling capacity to accommodate these weapons.

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F or more than forty-five years, all three branches of government have struggled with how to interpret the meaning of "waters of the United States" in the Clean Water Act. In 1972, Congress eliminated the requirement that waters must be navigable in the traditional sense —meaning they are capable of being used by vessels in interstate commerce—in order to be subject to federal water pollution regulation. Rather than use traditional tests of navigability, the 1972 amendments to the Federal Water Pollution Control Act, which came to be known as the Clean Water Act, redefined "navigable waters" to include "the waters of the United States, including the territorial seas." Disputes over the meaning of that phrase have been ongoing ever since the change. Some courts and commentators disagree on how the scope of federal jurisdictional waters changed over time as a result of interpretative approaches taken by the agencies responsible for administering the Clean Water Act—the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps). This debate resurfaced during the Obama Administration when the Corps and EPA issued a rule, known as the Clean Water Rule, which substantially redefined "waters of the United States" in the agencies' regulations for the first time in more than two decades. While some argued that the Clean Water Rule constituted a major expansion of federal jurisdiction, others asserted that the agencies construed the term in a narrower fashion than in prior regulations. A vocal critic of the Clean Water Rule, President Trump shifted the executive branch's policy toward the meaning of "waters of the United States." In February 2017, President Trump issued an executive order directing EPA and the Corps to review and revise or rescind the Clean Water Rule. The agencies currently are in the process of carrying out the executive order, and they unveiled proposed regulations redefining "waters of the United States" in December 2018. As in nearly all prior attempts to define this phrase, however, observers disagree on whether the latest proposed definition correctly calibrates the scope of federal water pollution regulation. This report provides context for this debate by examining the history of major changes to the meaning of "waters of the United States" as expressed in federal regulations, legislation, agency guidance, and case law. Background The Clean Water Act is the principal law governing pollution of the nation's surface waters. Among other requirements, the act prohibits the unauthorized discharge of pollutants into "navigable waters," and requires persons wishing to discharge dredged or fill material into "navigable waters" to obtain a permit from the Corps. In its definition section, the act defines the term "navigable waters" to mean "waters of the United States, including its territorial seas." This single, jurisdiction-defining phrase applies to the entire law, including the national pollutant discharge elimination system (NPDES) permit program; permit requirements for disposal of dredged or fill material, known as the Section 404 program; water quality standards and measures to attain them; oil spill liability and prevention; and enforcement. The Clean Water Act itself does not expand further on the meaning of "waters of the United States." Instead, the Corps and EPA have expounded on this phrase through agency guidance and regulations, which federal courts have struck down on various occasions as failing to satisfy statutory or constitutional requirements. Federal authority to regulate waters within the United States primarily derives from the Commerce Clause, which gives Congress the power to "regulate commerce with foreign nations, and among the several states . . . ." Accordingly, federal laws and regulations regulating waters of the United States cannot cover matters that exceed that constitutional source of authority. Legal challenges to the Corps' and EPA's interpretation of "waters of the United States"—particularly those which were successful—often followed broader trends in interpreting the Commerce Clause. For a period after its enactment in 1972, courts generally interpreted the Clean Water Act as having a wide jurisdictional reach, but, in recent decades, the Supreme Court has emphasized that "the grant of authority to Congress under the Commerce Clause, though broad, is not unlimited." A time line of events in the evolution of the definition of "waters of the United States" is provided in the Appendix , and major events are shown in Figure 1 . Early History of Jurisdictional Waters Historically, federal laws regulating waterways, such as the Rivers and Harbors Appropriations Act of 1899 (Rivers and Harbors Act), exercised jurisdiction over "navigable water[s] of the United States[.]" The Supreme Court interpreted this phrase to govern only waters that were "navigable-in-fact"—meaning that they were "used, or are susceptible of being used, . . . as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water." Beginning with the Federal Water Pollution Control Act of 1948, Congress began to use a different jurisdiction-defining phrase to regulate pollution of "interstate waters," which it defined as "all rivers, lakes, and other waters that flow across, or form a part of, a State's boundaries." Congress amended that legislation in 1961 to expand federal jurisdiction from "interstate waters" to "interstate or navigable waters[.]" The Federal Water Pollution Control Act Amendments of 1972, which came to be known as the Clean Water Act, again amended the jurisdictional reach of federal water pollution legislation. There, Congress exercised jurisdiction over "navigable waters," but provided a new definition of that phrase, stating: "The term 'navigable waters' means the waters of the United States, including the territorial seas." This subtle definitional change proved to have tremendous consequences for the jurisdictional scope of the Clean Water Act. In debating the 1972 amendments that created the Clean Water Act, some Members of Congress explained that they intended the revised definition to expand the law's jurisdiction beyond traditionally navigable or interstate waters. The conference report states that the "conferees fully intend that the term 'navigable waters' be given the broadest possible constitutional interpretation unencumbered by agency determinations which have been made or may be made for administrative purposes." And during debate in the House on approving the conference report, one Representative explained that the definition "clearly encompasses all water bodies, including streams and their tributaries, for water quality purposes." Courts have frequently referred to the act's legislative history when interpreting its jurisdictional reach, but they have not always agreed on the import of this history. Differing Agency Definitions Following the Clean Water Act The Corps and EPA share responsibility for administering the Clean Water Act. Both agencies have administrative responsibilities under Section 404 of the act, and EPA administers most other Clean Water Act-related programs in partnership with U.S. states. Because of this shared jurisdiction, both agencies create regulations defining the waters subject to their regulatory jurisdiction. In the initial years following the enactment of the Clean Water Act, their respective definitions differed significantly. EPA's Initial Definitions In May 1973, EPA issued its first set of regulations implementing the Clean Water Act's NPDES permit program. There, EPA defined the term "navigable waters" to include six categories of waterbodies. Three months prior to issuing these regulations, EPA's general counsel had provided an opinion on the meaning of "navigable waters" in the Clean Water Act. The general counsel's recommended definition largely mirrored EPA's 1973 regulatory definition, but with one critical difference: categories four through six of the general counsel's recommendation would have included interstate lakes, rivers, and streams that are utilized for interstate activities rather than intrastate waters used for such activities. EPA's definition of "navigable waters" in its non-NPDES water pollution regulations at the time also differed in certain ways from its May 1973 definition. The Corps' Initial Definition The Corps' early implementation of the Clean Water Act differed considerably from EPA's regulations. After initially proposing regulations that simply repeated the statutory definition of "navigable waters," the Corps issued final regulations in April 1974 implementing Section 404 of the Clean Water Act. There, the Corps acknowledged the language from the conference report for the Clean Water Act as calling for the "broadest possible constitutional interpretation" of navigable waters, but concluded that the Constitution limited its jurisdiction to the same waters that it regulated under preexisting laws, such as the Rivers and Harbors Act. Based on this reasoning, the Corps defined "navigable waters" using language that generally limited its jurisdiction to waters that were navigable-in-fact. Callaway and its Aftermath Less than one year after the Corps published its first regulations defining jurisdictional waters, the United States District Court for the District of Columbia struck them down as too narrow and inconsistent with the Clean Water Act. In Natural Resources Defense Council v. Callaway , the court held that because "Congress . . . asserted federal jurisdiction over the nation's waters to the maximum extent permissible under the Commerce Clause of the Constitution[,]" the definition could not be limited to "traditional tests of navigability[.]" The court ordered the Corps to produce new regulations that acknowledged "the full regulatory mandate" of the Clean Water Act. The Corps' Expansion of Jurisdictional Waters Following Callaway The Corps responded to Callaway on May 6, 1975, by publishing proposed regulations that offered four alternative methods of redefining the Corps' jurisdiction under the 1972 amendments. At the same time that it proposed these alternatives, the Corps published a press release stating that the holding of Callaway may require "the rancher who wants to enlarge his stock pond, or the farmer who wants to deepen an irrigation ditch or plow a field, or the mountaineer who wants to protect his land against stream erosion" to obtain federal permits. These events brought public and media attention to the breadth of jurisdiction under the Clean Water Act. They also created a disagreement between the Corps and EPA, and led to a series of subcommittee hearings in the House and Senate. In the aftermath of this public and congressional scrutiny, the Corps issued interim final regulations in 1975 in which it revised the definition of "navigable waters" for purposes of the Clean Water Act's Section 404 program by adopting much of the structure used in EPA's 1973 regulations. The Corps' definition also added "wetlands, mudflats, swamps, marshes, and shallows" that are "contiguous or adjacent to other navigable waters" and "artificially created channels and canals used for recreational or other navigational purposes that are connected to other navigable waters" to the definition of "waters of the United States." Finally, the Corps' 1975 interim regulations permitted federal regulation over all other waters that a Corps' district engineer "determines necessitate regulation for the protection of water quality" based on the Corps' technical standards and evaluation criteria. The Corps' 1977 Regulations In 1977, the Corps issued final regulations reorganizing the definition of "waters of the United States" into five categories. The final category of the 1977 definition contained the Corps' most expansive definition of jurisdictional waters as of that time. A footnote to the Corps' regulations explained that the Category Five waters incorporate "all other waters of the United States that could be regulated under the federal government's Constitutional powers to regulate and protect interstate commerce." The Corps would continue to use this Commerce Clause-focused provision (with revisions) until the Clean Water Rule was published in 2015, and EPA would later adopt it in its regulations. The Clean Water Act of 1977 After the Corps' 1975 and 1977 regulations, some Members of Congress introduced bills that sought to limit the Clean Water Act's jurisdiction to traditional, navigable-in-fact waters, but the proposed limiting legislation never became law. Instead, Congress amended the Federal Water Pollution Control Act through the Clean Water Act of 1977, which did not alter the jurisdictional phrase "waters of the United States." The original version of the Clean Water Act of 1977 introduced in the House would have limited the Corps' jurisdiction, and an amendment proposed in the Senate sought similar limitations. But the original Senate version, which generally retained the existing definition of "navigable waters," was adopted in conference and passed into law. The Clean Water Act of 1977, as enacted, contained certain exemptions from Section 404 permitting for "normal farming, silviculture, . . . ranching[,]" and other activities. Synthesizing Definitions Following the Clean Water Act of 1977 While the 1977 legislation appeared to resolve temporarily some congressional dispute over the reach of the Clean Water Act, disagreement arose between the Corps and EPA over which agency had final authority to determine which waters were subject to Section 404 permit requirements. EPA independently defined the jurisdictional reach of the Clean Water Act as it related to programs like NPDES and oil pollution prevention, but it incorporated the Corps' definition into its regulations related to Section 404 permits. At the same time, however, EPA separately expanded on that definition in an appendix to its Section 404 regulations. The U.S. Attorney General ultimately intervened in 1979 and provided a legal opinion that EPA has final administrative authority to determine the reach of the term "navigable waters" for purposes of Section 404. The Corps and EPA eventually executed a Memorandum of Agreement in 1989 resolving that EPA would act as the lead agency responsible for developing programmatic guidance and interpretation of the scope of jurisdictional waters, and the Corps would be responsible for most case-specific determinations on whether certain property was subject to Section 404. Although it took the agencies 10 years after the Attorney General's opinion to agree formally on a division of responsibilities, the Corps and EPA streamlined and harmonized the regulatory definition of "waters of the United States" well before that. In May 1980, EPA issued regulations redefining the term among its consolidated permit requirements, and the Corps adopted EPA's definition in interim regulations two years later . The Corps issued final regulations in 1986 that did not change the regulatory definition, and the two agencies continued to use this core definition (with modifications) until they published the Clean Water Rule in 2015 . Changes in "Waters of the United States" in the 1980s Riverside Bayview Homes The Supreme Court reviewed a legal challenge to the Corps' application of "waters of the United States" for the first time in 1985 in United States v. Riverside Bayview Homes, Inc . There, the Corps sought to enjoin a property owner from discharging fill material on his wetlands located one mile from the shore of Lake St. Clair in Michigan, a 468-square-mile, navigable-in-fact lake that forms part of the boundary between Michigan and Ontario, Canada. The Corps argued that, by defining "waters of the United States" to include wetlands that are "adjacent to" other jurisdictional waters, including navigable-in-fact waters like Lake St. Clair, its regulations required the landowner to obtain a Section 404 permit before discharging fill material. Before the case reached the Supreme Court, the Sixth Circuit concluded that it must construe the Corps' regulatory definition narrowly in order to avoid a potential violation of the Fifth Amendment prohibition on the taking of private property for public use without just compensation. Applying this method of interpretation, the Sixth Circuit construed the Corps' regulations so as not to include the wetlands at issue, and it avoided reaching a decision on whether the Corps' regulations were constitutional. The Supreme Court reversed. Although it acknowledged that on a "purely linguistic level" it may seem unreasonable to classify lands , wet or otherwise, as waters , the Supreme Court called such a plain language approach "simplistic." Further, it rejected the lower courts' concerns over the constitutionality of the Corps' regulations as "spurious." Instead of applying a narrow approach to avoid constitutional implications, the Court gave deference to the Corps' position, and concluded that because "[w]ater moves in hydrological cycles" rather than along "artificial lines," it was reasonable for the Corps to conclude that "adjacent wetlands are inseparably bound up with the 'waters' of the United States . . . ." The Court also cited legislative history from the passage of the Clean Water Act and the amendments in 1977—in which the term "adjacent wetlands" was added to the statute —as support for its conclusion that Congress intended for the Clean Water Act to have a broad jurisdictional reach which included the adjacent wetlands at issue. In concluding that adjacent wetlands could reasonably be covered, however, the Court also emphasized that it did not express any opinion on the Corps' authority to regulate discharges of fill material into wetlands that are not adjacent to bodies of open water. The Migratory Bird Rule and Other Adjustments to "Waters of the United States" Following Riverside Bayview Homes , the Corps and EPA engaged in rulemaking in which they interpreted the Clean Water Act to govern all waters which were used or may have been used by migratory birds crossing state lines. The agencies did not redefine "waters of the United States" through this interpretation, which came to be known as the Migratory Bird Rule, but instead stated that the Migratory Bird Rule was a "clarification" of the existing regulatory definition. The agencies also continued to adjust their interpretation of the definition of "waters of the United States" in the late 1980s by, among other things, excluding nontidal drainage and irrigation ditches, artificial lakes or ponds used for irrigation and stock watering, reflecting pools, and swimming pools. In 1993, the agencies jointly revised their regulations to exclude "prior converted cropland"—areas that were previously drained and converted to agricultural use—from jurisdictional waters. Competing Wetland Manuals and Congressional Intervention Through Appropriations In addition to disputes over the textual definition of "waters of the United States," disagreement surrounding the technical standards used to delineate the physical boundaries of jurisdictional waters, particularly wetlands , arose in the late 1980s. The Corps issued the first wetlands delineation manual in 1987 (1987 Manual), but EPA published its own manual the following year which used an alternative technical analysis. Differences among these and other wetlands manuals led to the preparation of an interagency Federal Manual for Identifying and Delineating Jurisdictional Wetlands in January 1989 (Federal Manual). Some observers criticized aspects of the Federal Manual, including the methodology it employed for identifying and delineating jurisdictional waters. Some also argued that the Federal Manual improperly expanded the scope of federal regulations of wetlands. Disagreements ultimately led to congressional action in 1991 in the form of appropriations legislation that prohibited the Corps from using funds to identify jurisdictional waters using the Federal Manual. The following year, Congress mandated that the Corps use the 1987 Manual until a new manual was published after public notice and comment. The interagency group proposed revisions to the Federal Manual, which received over 100,000 comments, but that proposal was never finalized, and no interagency wetlands manual was created. Judicially Imposed Limitations Beginning in the Late 1990s In contrast to the agencies' attempt to align jurisdictional waters with what they interpreted to be the outer reaches of the Commerce Clause in the 1980s, a series of court cases beginning in the late 1990s caused the Corps and EPA to modify their interpretation of "waters of the United States." For much of the 20th century, the Supreme Court broadly construed the Commerce Clause to give Congress discretion to regulate activities which "affect" interstate commerce, so long as its legislation was reasonably related to achieving its goals of regulating interstate commerce. In the 1995 case of United States v. Lopez , however, the Supreme Court struck down a federal statute for the first time in more than 50 years based purely on a finding that Congress exceeded its powers under the Commerce Clause. In Lopez , the Court held the Commerce Clause did not provide a constitutional basis for federal legislation criminalizing possession of a firearm in a school zone because the law neither regulated a commercial activity nor contained a requirement that the firearm possession be connected to interstate commerce. The Court revisited its prior Commerce Clause cases and sorted Congress's commerce power into three categories: (1) regulation of channels of commerce, (2) regulation of instrumentalities of commerce, and (3) regulation of economic activities which not only affect but "substantially affect" interstate commerce. Lopez set the backdrop for a series of major opinions limiting federal jurisdiction under the Clean Water Act. United States v. Wilson The United States Court of Appeals for the Fourth Circuit issued the first in the series of decisions limiting the jurisdictional reach of the Clean Water Act in 1997. Following a seven-week trial in United States v. Wilson , a jury convicted three defendants of violating Section 404 for knowingly discharging fill material into wetland property located approximately 10 miles from the Chesapeake Bay and 6 miles from the Potomac River in Maryland. On appeal to the Fourth Circuit, the defendants challenged their conviction on the grounds that the portion of the Corps' regulatory definition of "waters of the United States"—which included all waters "the use, degradation or destruction of which could affect interstate or foreign commerce"—exceeded the Corps' statutory authority in the Clea n Water Act and Congress's constitutional authority in the Commerce Clause. Relying in part on the holding in Lopez , the Fourth Circuit agreed with a portion of the defendants' arguments and ordered a new trial. The court reasoned that, under Lopez , the regulated conduct must "substantially affect" interstate commerce in order to invoke the Commerce Clause power. Because the Corps purported to regulate waters that "could affect" interstate commerce—without regard to whether there was any actual effect, substantial or otherwise—the Fourth Circuit concluded that the Corps exceeded its authority. Although the Fourth Circuit strongly suggested that the Corps' assertion of jurisdiction exceeded the constitutional grant of authority under the Commerce Clause, it ultimately invalidated the challenged portion of the regulations solely on the ground that it exceeded the congressional authorization under the Clean Water Act. As Wilson never reached the Supreme Court, it was only binding precedent in the Fourth Circuit, and the stricken language remained in the regulations of the Corps and EPA until the release of the 2015 Clean Water Rule. The Corps' 2000 Guidance in Response to Wilson Although the Corps did not modify its regulatory definition of "waters of the United States" in response to Wilson , it did publish guidance in March 2000 on the effect of the decision on its Section 404 jurisdiction. The Corps explained that, within the Fourth Circuit only , "isolated waters" must be shown to have an actual connection to interstate or foreign commerce. "Isolated waters," in Clean Water Act parlance, are waters that are not navigable-in-fact, not interstate, not tributaries of the foregoing, and not hydrologically connected to such waters—but whose use, degradation, or destruction could affect interstate commerce. The 2000 guidance also provided clarification on certain nontraditional waters that the Corps considered part of the "waters of the United States." Jurisdictional waters, the Corps explained, included both intermittent streams , which have flowing water supplied by groundwater during certain times of the year, and ephemeral streams , which have flowing water only during and for a short period after precipitation events. The Corps also deemed drainage ditches constructed in jurisdictional waters to be subject to the Clean Water Act except when the drainage was so complete that it converted the entire area to dry land. SWANCC In 2001, the Supreme Court took up another challenge to the jurisdictional reach of the Clean Water Act in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers ( SWANCC ), revisiting the issue for the first time since its 1995 decision in Riverside Bayview Homes . In SWANCC , the Court evaluated whether Clean Water Act jurisdiction extended to an abandoned sand and gravel pit which contained water that had become a habitat for migratory birds. Citing the legislative history of the 1972 amendments and the Clean Water Act of 1977, the Corps had argued that the Clean Water Act can extend to such isolated waters under the Migratory Bird Rule. In a 5-4 ruling, the Court rejected the Corps' position, and held that the Corps' assertion of jurisdiction over isolated waters based purely on their use by migratory birds exceeded its statutory authority. The SWANCC Court's conclusion was informed, in part, by Lopez and another landmark Commerce Clause decision issued five years later, United States v. Morrison , in which the Court held that Congress lacked constitutional authority under the Commerce Clause to enact portions of the Violence Against Women Act. In light of this jurisprudence, the SWANCC Court concluded that allowing the Corps to assert jurisdiction under the Migratory Bird Rule raised "serious constitutional questions" about the limits of Congress's authority and "would result in significant impingement of States' traditional and primary power of land and water use." Rather than interpret the Clean Water Act in a way that would implicate these "significant constitutional and federalism questions[,]" the Court concluded that Congress's use of the phrase "navigable waters" in the Clean Water Act "has at least the import of showing us what Congress had in mind for enacting the [act]: its traditional jurisdiction over waters that were or had been navigable in fact or which could reasonably be made so." Based on this reading, the Court concluded that Congress did not intend to invoke the outer limits of the Commerce Clause in the Clean Water Act, and the Corps could not rely on the Migratory Bird Rule as a basis for jurisdiction. In contrast to Riverside Bayview Homes , the SWANCC Court focused less on the legislative history of the Clean Water Act, and instead emphasized the Corps' original interpretation of the 1972 amendments in which it limited its jurisdiction to navigable-in-fact waters. Although the Riverside Bayview Homes Court found that classical "navigability" was of "limited import" in determining Clean Water Act jurisdiction, the SWANCC Court distinguished that case as focused on "wetlands adjacent to navigable waters." The ponds which formed in the abandoned gravel pits in SWANCC were " not adjacent to open water[,]" and therefore lacked the requisite "significant nexus" to traditionally navigable waters necessary for jurisdiction under the Clean Water Act, the Court concluded. SWANCC did not go as far as the Fourth Circuit, however, in striking down an entire subsection of the definition of "waters of the United States." It limited its holding to the Migratory Bird Rule, which the Corps described as an effort to "clarify" its regulatory definition. But while its direct holding was arguably narrow, SWANCC 's rationale was much broader and called into question whether the Corps and EPA could assert jurisdiction under the Clean Water Act over many wholly intrastate isolated waters. The relationship between SWANCC 's limited holding and the Court's broader rationale generated considerable litigation over the scope of the Clean Water Act. Agency Guidance in Response to SWANCC The general counsels for the Corps and EPA added their voices to the post- SWANCC debate in a joint memorandum issued on the last full day of the Clinton Administration, January 19, 2001. Combining the "significant nexus" language from SWANCC with the existing regulatory definition of "waters of the United States," the agencies concluded that they could continue to exercise jurisdiction over isolated waters so long as the use, degradation, or destruction of those waters could affect other "waters of the United States." The potential effect on or degradation on existing jurisdictional waters, the agencies reasoned, established the "significant nexus" mentioned in SWANCC . In January 2003, the Corps and EPA issued a notice of proposed rulemaking regarding how field staff should address jurisdictional issues in the Clean Water Act and which contained a revised joint memorandum on the effect of SWANCC . The agencies later abandoned that proposed rulemaking effort, leaving unanswered questions over federal jurisdiction over isolated waters after SWANCC . These uncertainties caused the Corps and EPA to shift their attention to alternative bases for jurisdiction in defining "waters of the United States"—such as "adjacent wetlands"—and set the stage for the Supreme Court's next encounter with a Clean Water Act jurisdictional dispute in Rapanos v. United States . Rapanos Rapanos involved a consolidation of two cases on appeal from the Sixth Circuit— Rapanos and Carabell —both of which concerned the breadth of the Clean Water Act's jurisdiction over "adjacent" wetlands. In Carabell , landowners challenged whether Section 404 jurisdiction extends to "wetlands that are hydrologically isolated from any of the 'waters of the United States[,]'" and Rapanos presented the similar question of whether this jurisdiction includes nonnavigable wetlands "that do not even abut a navigable water." In both cases, collectively referred to as Rapanos , the Sixth Circuit upheld the Corps' assertion of jurisdiction over the wetland property in question. Many anticipated that Rapanos would provide clarity on the disputes following SWANCC . And although a majority of five Justices agreed that the Sixth Circuit decision was flawed, they were not able to agree on a single, underlying standard which would govern future jurisdictional disputes. Instead, a four-Justice plurality opinion, authored by Justice Scalia, and an opinion by Justice Kennedy, writing only for himself, proposed two alternative tests for evaluating jurisdictional waters. Lower Courts' Response to Rapanos With no controlling rationale from the majority, lower courts interpreting Rapanos struggled with the question of what analysis to apply in Clean Water Act jurisdictional disputes. When a majority of the Supreme Court agrees only on the outcome of a case and not on the ground for that outcome, the holding of the Court which lower courts must follow "may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds." While this rule may appear straightforward, it is not always self-evident how courts should identify which Justice's opinion rests on the "narrowest grounds." Some courts have held that Justice Kennedy's "significant nexus" test is the narrowest ruling to be derived from Rapanos . Others concluded that waterbodies that satisfy either the plurality test or the "significant nexus" test satisfy Rapanos and may be deemed jurisdictional. Of the nine circuits that have addressed the issue, all have applied Justice Kennedy's significant nexus test either alone or in combination with the plurality's test, and none have applied the plurality approach alone. Still, some courts and observers have criticized the significant nexus test as vague and difficult to implement. Agency Guidance in Response to Rapanos The Corps and EPA offered their own interpretation of Rapanos through guidance to field officers in 2007, which the agencies revised and replaced after public comment in 2008. The 2008 guidance adopted the view taken by some lower courts that jurisdiction exists over any waterbody that satisfies either the plurality approach or the significant nexus test. The agencies further deconstructed the jurisdictional analysis into three categories: (1) waters that are categorically jurisdictional; (2) waters that may be deemed jurisdictional on a case-by-case basis; and (3) waters that are excluded from jurisdiction under the Clean Water Act. In 2011, the Corps and EPA sought comments on proposed changes to the 2008 guidance, which the agencies acknowledged would increase the number of waters regulated under the Clean Water Act in comparison to its earlier post- Rapanos guidance. The potential enlargement of jurisdiction spawned congressional attention, including a letter signed by 41 Senators requesting that the agencies abandon the effort. Some Members of Congress introduced prohibitions on funding related to the draft guidance in several appropriations bills, but those provisions were never enacted. Instead, the agencies abandoned pursuit of the 2011 draft guidance in favor of their 2015 effort at defining the scope of "waters of the United States," the Clean Water Rule. The Clean Water Rule The Corps and EPA issued the Clean Water Rule in May 2015 in an effort to clarify the bounds of jurisdictional waters in the wake of SWANCC and Rapanos . The agencies relied on a synthesis of more than 1,200 published and peer-reviewed scientific reports and over 1 million comments on the proposed version of the rule. The Clean Water Rule contains the same three-tier structure from the agencies' 2008 joint guidance, identifying waters that (1) are categorically jurisdictional, (2) may be deemed jurisdictional on a case-by-case basis if they have a significant nexus with other jurisdictional waters, and (3) are categorically excluded from the Clean Water Act's jurisdiction. In an effort to reduce uncertainty about the scope of federal jurisdiction, the agencies sought to increase categorical jurisdictional determinations and reduce the number of waterbodies subject to the case-specific significant nexus test. Response to the Clean Water Rule During the 114th Congress The Clean Water Rule was the subject of significant debate among observers, stakeholders, and Members of Congress, and a 2015 Government Accountability Office (GAO) report found that EPA violated publicity or propaganda and antilobbying provisions in prior appropriations acts through its promotion of the Clean Water Rule on social media. The 114th Congress also took steps to block its implementation. In January 2016, the Senate and House passed a resolution of disapproval seeking to nullify the Clean Water Rule under the Congressional Review Act. However, President Obama vetoed that resolution, and a procedural vote in the Senate to override the veto failed. National Association of Manufacturers v. Department of Defense: Jurisdiction over Challenges to the Clean Water Rule The Obama Administration intended the Clean Water Rule to take effect on August 28, 2015, but 31 states and 53 non-state plaintiffs, including industry associations, environmental groups, and others, filed suit challenging its legality. The plaintiffs argued, among other things, that the rule exceeded the agencies' statutory and constitutional authority and did not comply with the rulemaking requirements in the Administrative Procedure Act (APA). Environmental groups, seven states, and the District of Columbia intervened in defense of the rule. Before any court could address the merits of the claims, however, an impasse arose over what court was the proper forum for the litigation. Whereas some plaintiffs filed suit in federal district courts, others argued that a judicial-review provision in Section 509 of the Clean Water Act gave the U.S. circuit courts of appeals direct appellate-level review over challenges to the Clean Water Rule. At the district court level, some courts dismissed their suits, concluding that the courts of appeals had exclusive jurisdiction. But one district court—the District Court for the District of North Dakota (District of North Dakota)—ruled that it had jurisdiction to review the Clean Water Rule. In August 2015, the District of North Dakota concluded that the rule was likely to be struck down on the merits, and it granted a motion for preliminary injunction, temporarily barring the Clean Water Rule's implementation in 13 western states. (The court later added another state, Iowa, to the scope of injunction.) In the parallel litigation at the appellate level, a Judicial Panel on Multidistrict Litigation consolidated and transferred all circuit court cases to the United States Court of Appeals for the Sixth Circuit (Sixth Circuit). In the consolidated, appellate-level litigation, the Sixth Circuit concluded that the agencies should not apply the Clean Water Rule during the pendency of the legal challenges, and it issued a nationwide stay of the rule. The Sixth Circuit also concluded that it—and not the district courts—had exclusive jurisdiction over the challenges to the Clean Water Rule, setting the stage for the Supreme Court to address the threshold question of which court or courts possess jurisdiction to hear the Clean Water Rule cases. In National Association of Manufacturers (NAM) v. Department of Defense , the Supreme Court disagreed with the Sixth Circuit and concluded that the Clean Water Act did not provide direct appellate-level jurisdiction over the pending cases. Section 509 of the Clean Water Act lists seven categories of agency actions subject to direct appellate review, Justice Sotomayor explained in an opinion for the unanimous Court, but a legal challenge to a rule defining "waters of the United States" does not fall within those categories. "Congress has made clear that rules like the [Clean Water] Rule must be reviewed first in federal district court[,]" the Court concluded. While NAM resolved the threshold question of which courts can hear challenges to the Clean Water Rule, it did not address the merits of the challenges themselves. Merits challenges soon resumed at the district court level after the 2018 NAM decision. In the interim, while the jurisdictional issue was being litigated, the legal landscape had changed as a result of the Trump Administration's shift in United States' policy toward the jurisdictional reach of the Clean Water Act. The Trump Administration and "Waters of the United States" The Trump Administration opposes the Clean Water Rule, and it is in the process of attempting to rescind the rule and replace it with new regulations elaborating on the meaning of "waters of the United States." The Two-Step Rescind and Revise Process Less than two months after taking office, President Trump issued Executive Order 13778 directing EPA and the Corps to revise or rescind the Clean Water Rule. The executive order instructs the agencies to review the Clean Water Rule for consistency with the Administration's policy to "ensure that the Nation's navigable waters should be kept free from pollution, while at the same time promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the role of the Congress and the States under the Constitution." The executive order also provides that EPA and the Corps "shall consider" interpreting the jurisdictional reach of the Clean Water Act in a manner consistent with Justice Scalia's plurality opinion in Rapanos . EPA and the Corps intend to carry out Executive Order 13778 through a two-step process. First, they proposed to issue regulations that rescind the Clean Water Rule and recodify the definition of "waters of the United States" that was in place before the agencies issued that rule in 2015. Second, they proposed to engage in a separate rulemaking process to develop new regulations that will define the jurisdictional reach of the Clean Water Act. Step One Status: Repealing the Clean Water Rule In July 2017, EPA and the Corps provided notice and sought comment on a proposed rule (Step One Proposal) rescinding the Clean Water Rule and replacing it with the same text that existed before the Clean Water Rule was promulgated. In 2018, the agencies issued a supplemental notice expanding on their legal rationale for repealing the Clean Water Rule and clarifying that the Step One Proposal is intended to rescind permanently the Clean Water Rule in its entirety. According to the supplemental notice, a full repeal is necessary because the Clean Water Rule exceeded the agencies' statutory authority by adopting an interpretation of Justice Kennedy's Rapanos opinion that was inconsistent with the Clean Water Act and the opinion itself. The agencies also argued that the complex legal landscape created by litigation surrounding the Clean Water Rule has undermined the Clean Water Rule's goal of providing greater clarity regarding the scope of "waters of the United States." The public comment period for the proposed repeal closed on August 13, 2018. Step Two Status: Drafting a New Definition of "Waters of the United States" In December 2018, EPA and the Corps unveiled a second proposed rule (Step Two Proposal) that would complete the second step of the repeal and revise process by creating new regulations that substantively redefine "waters of the United States." According to EPA and the Corps, the Step Two Proposal is intended to provide "predictability and consistency by increasing clarity as to the scope of 'waters of the United States' federally regulated" under the Clean Water Act. The agencies also intend the Step Two Proposal to "clearly implement" the Clean Water of Act's objectives of restoring and maintaining the quality of the nation's waters while respecting state and tribal authority over land and resources. The Step Two Proposal would define "waters of the United States" to include six categories of waterbodies. The Step Two Proposal would mark a significant change from post- Rapanos interpretations of "waters of the United States" because it would eliminate the case-by-case "significant nexus" evaluation that has been part of EPA and the Corps' guidance and regulations since 2007. According to the agencies, improvements to the definitions of "adjacent wetland" and "tributary" in the Step Two Proposal would eliminate the need for case-specific significant nexus tests. Under the Clean Water Rule, a wetland is adjacent to jurisdictional waters (and therefore subject to Clean Water Act regulation itself) if, among other potential criteria, it meets certain distance requirements from the ordinary high water mark of other jurisdictional waters. The Step Two Proposal would largely eliminate the distance evaluation and define "adjacent wetlands" as those wetlands that "abut" ( i.e. , touch) or have a "direct hydrological surface connection with" other jurisdictional waters. Tributaries under the Step Two Proposal must contribute flow to traditionally navigable waters through other jurisdictional waters or non-jurisdictional waters that convey downstream perennial or intermittent flows. Under the Clean Water Rule, by contrast, a tributary is any water that contributes flow to jurisdictional waters that have a bed, bank, and ordinary high water mark. The Applicability Date Rule: Suspending the Clean Water Rule During the Two-Step Process In addition to the two-step repeal and replace plan, the Trump Administration has engaged in a third rulemaking process designed to suspend the Clean Water Rule until February 2020. While the Clean Water Rule states that it is effective as of August 28, 2015, EPA and the Corps published a separate final rule (Applicability Date Rule), which adds a new "applicability date" of February 6, 2020, to the Clean Water Rule. The Trump Administration's impetus for the Applicability Date Rule is derived, in part, from the Supreme Court's NAM v. Department of Defense decision. Prior to NAM , the Sixth Circuit's nationwide stay of the Clean Water Rule prevented EPA and the Corps from applying the Clean Water Rule anywhere in the United States. But after NAM concluded that challenges to the rule must begin in federal district courts, the Sixth Circuit dismissed the consolidated appellate-level challenges and vacated its stay. With no nationwide stay in place and with the step-one repeal rule still in proposed form, the Clean Water Rule could have reverted into effect in states that were not subject to a district court injunction. Seeking to prevent reactivation of the Clean Water Rule in some parts of the country, EPA and the Corps promulgated the Applicability Date Rule in an effort to suspend the Clean Water Rule while the agencies undertake the two-step repeal and revise process. Like many prior rules related to the definition of "waters of the United States," litigants challenged the Applicability Date Rule in federal courts. In late 2018, two federal district courts determined that EPA and the Corps did not comply with administrative rulemaking requirements in promulgating the Applicability Date Rule. By declining to consider comments on the substantive merits of the pre-Clean Water Rule regulations, the agencies deprived the public of a "meaningful opportunity" to comment on the Applicability Date Rule in violation of the Administrative Procedure Act, the courts held. Both courts issued orders vacating the Applicability Date Rule nationwide. As a consequence, there currently is no instrument (either a final rule or court order) that bars application of the Clean Water Rule on a nationwide basis. The Legal Landscape for the 116th Congress The multitude of legal challenges related to "waters of the United States" has created a complex legal landscape for the 116th Congress. Because both rules in the Trump Administration's rescind-and-replace process are still in proposed form, the Obama Administration's Clean Water Rule remains the current regulation defining waters of the United States. However, post- NAM challenges to the Clean Water Rule have proceeded at the U.S. district court level, and three federal district courts have entered preliminary injunctions barring application of the Clean Water Rule during the pendency of the suits. At the same time, these district courts have limited the scope of their injunction to the specific states that brought legal challenges to the Clean Water Rule. The ultimate result is that the Clean Water Rule currently is enjoined in 28 states, but it is the current enforceable regulation in 22 states, the District of Columbia, and U.S. territories. While finalization of the Trump Administration's Step One and Step Two Proposals could bring greater uniformity to this fragmented legal landscape, those rules are also likely to engender new litigation. The focus of future lawsuits, if filed, is likely to depend on the rulemaking process and content of the final rules. But observers expect critics to challenge whether EPA and the Corps considered sufficient scientific data and provided an adequate rationale to depart from prior agency guidance and regulations that utilized Justice Kennedy's "significant nexus" test. While critics of that test argue that it is too unpredictable for the average landowner to determine whether a waterbody is part of the "waters of the United States," opponents of the Trump Administration's policy contend that the Step Two Proposal would also introduce new technical definitions that ordinary landowners would not be able to implement without hiring a specialist. Proposed Legislation Because the "waters of the United States" debate hinges on the meaning of a statutory term, Congress could enact legislation that seeks to define the jurisdictional reach of the Clean Water Act more clearly. Some Members of the 115th Congress introduced legislation that would have amended the Clean Water Act by providing a narrower definition of "waters of the United States." Other legislation introduced in the 115th Congress would have repealed the Clean Water Rule or allowed EPA and the Corps to repeal the Clean Water Rule without regard to the requirements of the Administrative Procedure Act. While none of the proposed legislation in the 115th Congress was enacted, at least one bill introduced in the 116th Congress proposes to repeal the Clean Water Rule and narrow the Clean Water Act's definition of jurisdictional waters. Conclusion The debate over the jurisdictional reach of the Clean Water Act implicates complex and overlapping concerns of environmental protection, statutory interpretation, federalism, and constitutional law. While judicial interpretations of "waters of the United States" generally have followed broader trends in understanding of the scope of the Commerce Clause, the Supreme Court's inability to identify a unified rationale in Rapanos has caused significant confusion and debate over the outer reaches of the Clean Water Act in the following years. Both the Obama Administration (in the Clean Water Rule) and the Trump Administration (in its rescind and revise process) have sought to provide clarity by promulgating new definitions of "waters of the United States" in EPA and the Corps' regulations. But both Administrations' efforts have faced criticism and legal challenges from certain stakeholders, creating a fragmented legal landscape for the 116th Congress in which "waters of the United States" means different things in different parts of the nation. Because the "waters of the United States" debate hinges on the meaning of a statutory term, Congress could provide greater clarity and uniformity by amending the Clean Water Act to define its jurisdictional scope more clearly, but legislative proposals thus far have not been enacted. Appendix. Table Concerning Major Federal Actions Related to "Waters of the United States" in the Clean Water Act

For more than forty-five years, all three branches of government have struggled with how to interpret the meaning of "waters of the United States" in the Clean Water Act. In a shift from early water pollution legislation, the 1972 amendments to the Federal Water Pollution Control Act, which came to be known as the Clean Water Act, eliminated the requirement that federally regulated waters must be capable of being used by vessels in interstate commerce. Rather than use traditional navigability tests, the 1972 amendments redefined "navigable waters" for purposes of the Clean Water Act's jurisdiction to include "the waters of the United States, including the territorial seas." Disputes over the proper meaning of that phrase have been ongoing since that change. Federal authority to regulate waters within the United States primarily derives from the Commerce Clause, and accordingly, federal laws and regulations concerning waters of the United States cannot cover matters which exceed that constitutional source of authority. During the first two decades after the passage of the Clean Water Act, courts generally interpreted the act as having a wide jurisdictional reach. In recent decades, however, the Supreme Court has emphasized that "the grant of authority to Congress under the Commerce Clause, though broad, is not unlimited." This modern Commerce Clause jurisprudence has informed federal courts' approach to interpreting which "waters" are subject to the Clean Water Act. At the same time, the Supreme Court has not always provided clear rules for determining whether a particular waterbody is a water of the United States. In its most recent case on the issue, Rapanos v. United States, the High Court issued a fractured 4-1-4 decision with no majority opinion providing a rationale for how to evaluate jurisdictional disputes. Some courts and commentators disagree on how the scope of federal jurisdictional waters changed over time as a result of interpretative approaches taken by the agencies responsible for administering the Clean Water Act—the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps). This debate resurfaced during the Obama Administration when the Corps and EPA issued a rule, known as the Clean Water Rule, which substantially redefined "waters of the United States" in the agencies' regulations for the first time in more than two decades. While some argued that the Clean Water Rule constituted a large-scale expansion of federal jurisdiction, others asserted that the agencies construed the term in a narrower fashion than in prior regulations. A vocal critic of the Clean Water Rule, President Trump shifted the executive branch's policy toward the meaning of "waters of the United States." In February 2017, President Trump issued an executive order directing EPA and the Corps to review and revise or rescind the Clean Water Rule. The agencies currently are in the process of carrying out the executive order, and they unveiled proposed regulations redefining "waters of the United States" in December 2018. As in nearly all prior attempts to define this phrase, observers disagree on whether the latest proposed definition correctly calibrates the scope of federal jurisdiction to regulate water pollution.

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Introduction Successive Administrations have identified Iran as a key national security challenge. The Trump Administration encapsulated its assessment of the threat posed by Iran in a late September 2018 State Department report entitled "Outlaw Regime: A Chronicle of Iran's Destructive Activities." It outlines Iran's malign activities as well as a litany of other activities the Administration terms "the Iranian regime's destructive behavior at home and abroad." The U.S. intelligence community testified in January 2019 that "Iran's regional ambitions and improved military capabilities almost certainly will threaten U.S. interests in the coming year, driven by Tehran's perception of increasing U.S., Saudi, and Israeli hostility, as well as continuing border insecurity, and the influence of hardliners." An annual Defense Department report on Iran's military power required by successive National Defense Authorization Acts (NDAAs), generally contain assessments similar to those presented publicly by the intelligence community. Iran's Policy Motivators Iran's foreign and defense policies are products of overlapping, and sometimes contradictory, motivations. One expert asserts that Iran has not decided whether it is a "nation, or a cause." Threat Perception Iran's leaders are apparently motivated, at least to some extent, by the perception of threats to their regime and their national interests posed by the United States and its allies. Supreme Leader Grand Ayatollah Ali Khamene'i, Iran's paramount decisionmaker since 1989, has repeatedly stated that the United States seeks to overturn Iran's regime through support for anti-regime activists, economic sanctions, and alliances with Iran's regional adversaries. Iran's leaders assert that the U.S. military presence in and around the Persian Gulf region reflects intent to intimidate Iran or attack it if Iran pursues policies the United States finds inimical. Iran's leaders assert that the United States' support for Sunni Arab regimes that oppose Iran has led to the empowerment of radical Sunni Islamist groups and spawned Sunni-dominated terrorist groups such as the Islamic State. Ideology The ideology of Iran's 1979 Islamic revolution infuses Iran's foreign policy. The revolution overthrew a secular, authoritarian leader, the Shah, who the leaders of the revolution asserted had suppressed Islam and its clergy. A clerical regime was established in which ultimate power is invested in a "Supreme Leader" who melds political and religious authority. In the early years after the revolution, Iran attempted to "export" its revolution to nearby Muslim states. In the late 1990s, Iran appeared to abandon that goal because its promotion produced resistance to Iran in the region. However, the various conflicts in the region that arose from the 2011 "Arab Spring" uprisings have appeared to give Iran opportunities to revive that goal to some extent. Iran's leaders assert that the political and economic structures of the Middle East are heavily weighted in favor of the United States and its regional allies and against who Iranian leaders describe as "oppressed peoples": the Palestinians, who do not have an independent state, and Shia Muslims, who are politically underrepresented and economically disadvantaged minorities in many countries of the region. Iran claims that the region's politics and economics have been distorted by Western intervention and economic domination. Iranian leaders also assert that the creation of Israel is a manifestation of Western intervention that deprived the Palestinians of legitimate rights. Iranian leaders frequently assert that the Islamic revolution made Iran independent of U.S. influence and that the country's foreign policy is intended, at least in part, to ensure that the United States cannot interfere in Iran's domestic affairs. They cite as evidence of past U.S. interference the 1953 U.S.-backed overthrow of elected Prime Minister Mohammad Mossadeq and U.S. backing for Saddam Hussein's regime in the 1980-1988 Iran-Iraq war. Iran claims its ideology is pan-Islamic and nonsectarian. It cites its support for Sunni groups such as Hamas and for secular Palestinian groups as evidence that it works with non-Islamist and non-Shia groups to promote Palestinian rights. National Interests Iran's national interests usually dovetail with, but sometimes conflict with, Iran's ideology. Iran's leaders, stressing Iran's well-developed civilization and historic independence, claim a right to be recognized as a major power in the region. They contrast Iran's history with that of the six Persian Gulf monarchy states (Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Bahrain, and Oman of the Gulf Cooperation Council, GCC), most of which gained independence only in the 1960s and 1970s. To this extent, many of Iran's foreign policy actions are similar to those undertaken by the Shah of Iran and prior Iranian dynasties. Iran has generally refrained from backing Islamist movements in the Central Asian countries, which are mainly Sunni inhabited and whose Islamist movements are largely hostile toward Iran. Iran has sometimes tempered its commitment to aid other Shias to promote its geopolitical interests. For example, it has supported mostly Christian-inhabited Armenia, rather than Shia-inhabited Azerbaijan, in part to thwart cross-border Azeri nationalism among Iran's large Azeri minority. Even though Iranian leaders accuse U.S. allies of contributing to U.S. efforts to structure the Middle East to its advantage, Iranian officials have sought to engage with historic U.S. allies, such as Turkey, to try to thwart international sanctions and consolidate Iran's position in Syria. Factional Interests, Competition, and Public Opinion Iran's foreign policy often appears to reflect differing approaches and outlooks among key players and interest groups. Supreme Leader Khamene'i sits as the apex of Iran's hardline leaders and factions. His consistent refrain, and the title of his book widely available in Iran, is "I am a revolutionary, not a diplomat." He and leaders of Iran's Islamic Revolutionary Guard Corps (IRGC), the military and internal security force created after the Islamic revolution, consistently support regional interventions, even when doing so earns international criticism. More moderate Iranian leaders, including President Hassan Rouhani and Foreign Minister Mohammad Javad Zarif, argue that Iran should not have any "permanent enemies." They maintain that a pragmatic foreign policy has resulted in easing of international sanctions under the JCPOA, increased worldwide attention to Iran's views, and the positioning of Iran as a trade and transportation hub. They argue for continuing to adhere to the JCPOA as a means of dividing the United States from Europe and other U.S. partners—virtually all of which opposed the U.S. withdrawal from the JCPOA. Criticism from hardliners contributed to Zarif's resignation in February 2019, but Rouhani did not accept the resignation and Zarif remains in position. The moderate factions draw support from Iran's youth and intellectuals who want integration with the West. The degree to which public opinion shapes Iranian foreign policy decisions is not clear. During protests in Iran in December 2017-January 2018, some protesters expressed opposition to the use of Iran's financial resources for regional interventions rather than to improve the living standards of the population. And, the 2011-2016 period of comprehensive international sanctions weakened Iran's economy and living standards to the point where the government accepted a compromise to limit its nuclear program. Yet, the regime has not at any time shifted its regional policies in response to domestic public opinion. Instruments of Iran's National Security Strategy Iran employs a number of different methods and mechanisms to implement its foreign policy. Support to Allied Regimes and Groups and Use of Terrorism Iran uses support for terrorist groups and armed factions as an instrument of policy. In some cases, such as Lebanese Hezbollah and some Iraqi Shia factions, Iran has established Shia militia groups as armed factions and, through funding and advice, has helped build them into political movements that acquire political legitimacy and seats in national parliaments and cabinets. The State Department report on international terrorism for 2017 stated that Iran remained the foremost state sponsor of terrorism in 2017, and continued to provide arms, training, and military advisers in support of allied governments and movements, such as the regime of President Bashar Al Asad of Syria, Lebanese Hezbollah, Hamas and other Palestinian militant groups, Houthi rebels in Yemen, Shia militias in Iraq, and underground violent groups in Bahrain. Other Administration reports, testimony, and statements, including DNI worldwide threat assessment testimony in recent years, make similar assertions. Many of the groups Iran supports are named as Foreign Terrorist Organizations (FTOs) by the United States, and because of that support, Iran was placed on the U.S. list of state sponsors of terrorism ("terrorism list") in January 1984. Some armed factions that Iran supports have not been named as FTOs. Such groups include the Houthi ("Ansar Allah") movement in Yemen (composed of Zaidi Shia Muslims), the Taliban, and underground Shia opposition factions in Bahrain. Iran generally opposes Sunni terrorist groups that work against Iran's core interests, such as Al Qaeda and the Islamic State. Iran actively combatted the Islamic State in Syria and Iraq. Iran has expelled some Al Qaeda activists who it allowed to take refuge there after the September 11, 2001, attacks, but some reportedly remain, perhaps in an effort by Iran to exert leverage against the United States or Saudi Arabia. Iran's operations in support of its allies are carried out by the Qods (Jerusalem) Force of the IRGC (IRGC-QF). That force, estimated to have about 20,000 personnel, is headed by IRGC Major General Qasem Soleimani, who is said to report directly to Khamene'i. IRGC and IRGC-QF leaders generally publicly acknowledge operations in support of regional allies, although often characterizing Iran's support as humanitarian aid or protection for Shia religious shrines or sites. Much of the weaponry Iran supplies to its allies includes specialized anti-tank systems ("explosively forced projectiles" EFPs), artillery rockets, mortars, short-range ballistic missiles, and cruise missiles. The table below lists major terrorist attacks sponsored by Iran and/or Hezbollah, and does not include plots that were foiled. In recent months, authorities in Europe have arrested Iranian diplomats and operatives, including IRGC-QF agents, suspected of organizing terrorist plots against Iranian dissidents and other targets. In January 2018, Germany arrested 10 IRGC-QF operatives. In March 2018, Albania arrested two Iranian operatives for terrorist plotting. In mid-2018, authorities in Germany, Belgium, and France arrested Iranian operatives, including one based at Iran's embassy in Austria, for a suspected plot to bomb a rally by Iranian dissidents in Paris. In October 2018, an Iranian operative was arrested for planning assassinations in Denmark. Direct Military Action Iran seemingly prefers indirect action through proxies and armed factions it supports, but does sometimes undertake direct military action. Iran conducts, although less frequently in 2017-2018, "high speed intercepts" of U.S. ships in the Persian Gulf as an apparent show of strength. Iran has, on some occasions, diverted or detained international shipping transiting the Gulf. In 2018, Iran has conducted missile strikes on regional opponents. In September, Iran fired missiles at a Kurdish opposition group based in northern Iraq. In early October, Iran fired, from Iranian territory, missiles at Islamic State positions in Syria. Other Political Action/Cyberattacks Iran's national security is not limited to militarily supporting allies and armed factions. A wide range of observers report that Iran has provided funding to political candidates in neighboring Iraq and Afghanistan to cultivate allies there. Iran has provided direct payments to leaders of neighboring states to gain and maintain their support. In 2010, then-President of Afghanistan Hamid Karzai publicly acknowledged that his office had received cash payments from Iran. Iran has established some training and education programs that bring young Muslims to study in Iran. One such program runs in Latin America, despite the small percentage of Muslims there. Since 2012, Iran has dedicated significant resources toward cyberespionage and has conducted cyberattacks against the United States and U.S. allies in the Persian Gulf. Government-supported Iranian hackers have conducted a series of cyberattacks against oil and gas companies in the Persian Gulf. Diplomacy Iran also uses traditional diplomatic tools. Iran has an active Foreign Ministry and maintains embassies or representation in all countries with which it has diplomatic relations. Khamene'i has rarely traveled outside Iran as Supreme Leader—and not at all in recent years—but Iranian presidents travel outside Iran regularly, including to Europe and U.N. meetings in New York. Khamene'i frequently hosts foreign leaders in Tehran. From August 2012 until August 2015, Iran held the presidency of the Non-Aligned Movement (NAM), which has about 120 member states and 17 observer countries and generally shares Iran's criticisms of big power influence over global affairs. In August 2012, Iran hosted the NAM annual summit. Iran is a party to all major nonproliferation conventions, including the Nuclear Non-Proliferation Treaty (NPT) and the Chemical Weapons Convention (CWC). Iran insists that it has adhered to all its commitments under these conventions, but the international community asserted that it did not meet all its obligations under these pacts. Nuclear negotiations between Iran and international powers began in 2003 and culminated with the July 2015 JCPOA. Iran is actively seeking to expand its participation in multilateral organizations. It has sought to join the World Trade Organization (WTO) since the mid-1990s. Iran also seeks full membership in regional organizations including the South Asian Association of Regional Cooperation (SAARC) and the Shanghai Cooperation Organization (SCO). Officials from some SCO countries have said that the JCPOA removed obstacles to Iran's obtaining full membership, but opposition from some members has blocked Iran's accession to date. Iran has participated in multilateral negotiations to try to resolve the civil conflict in Syria, even though Iran's main goal is to ensure Asad's continuation in power. Iran's Nuclear and Defense Programs Iran has pursued a wide range of defense programs, as well as a nuclear program that the international community perceived could be intended to eventually produce a nuclear weapon. These programs are discussed in the following sections. Nuclear Program22 Iran's nuclear program has been a paramount U.S. concern, in part because Iran's acquisition of an operational nuclear weapon could cause Iran to perceive that it is immune from military pressure and produce a regional nuclear arms race. Israeli leaders have characterized an Iranian nuclear weapon as a threat to Israel's existence. Some Iranian leaders argue that a nuclear weapon could end Iran's historic vulnerability to great power invasion, domination, or regime change attempts. Iran's nuclear program became a major issue in 2002, when U.S. officials confirmed that Iran was building a uranium enrichment facility at Natanz and a heavy water production plant at Arak. The threat escalated in 2010, when Iran began enriching uranium to 20% purity, which requires most of the effort needed to produce weapons-grade uranium (90%+ purity). A nuclear weapon also requires a detonation mechanism. The International Atomic Energy Agency (IAEA) concluded that Iran researched such a mechanism until 2009. The United States insists that Iran must not possess a nuclear-capable missile. Iran's Nuclear Intentions and Activities The U.S. intelligence community has stated in recent years that it "does not know whether Iran will eventually decide to build nuclear weapons." Iranian leaders cite Supreme Leader Khamene'i's 2003 proclamation ( fatwa ) that nuclear weapons are un-Islamic as evidence that a nuclear weapon is inconsistent with Iran's ideology. Iranian leaders assert that Iran's nuclear program was always intended for civilian uses, including medicine and electricity generation. Iran argued that uranium enrichment is its "right" as a party to the 1968 Nuclear Non-Proliferation Treaty and that it wants to make its own nuclear fuel to avoid potential supply disruptions. U.S. officials have said that Iran's use of nuclear energy is acceptable. IAEA findings that Iran researched a nuclear explosive device—detailed in a December 2, 2015, International Atomic Energy Agency (IAEA) report—cast doubt on Iran's assertions of purely peaceful intent. There were no assertions that Iran, at any time, diverted nuclear material for a weapons program. Nuclear Weapons Time Frame Estimates In April 2015, then-Vice President Biden stated that Iran could likely have enough fissile material for a nuclear weapon within two to three months of a decision to manufacture that material. U.S. officials said that the JCPOA increased the "breakout time"—an all-out effort by Iran to develop a nuclear weapon using declared facilities or undeclared covert facilities—to at least 12 months. When the JCPOA was agreed, Iran had about 19,000 total installed centrifuges to enrich uranium, of which about 10,000 were operating. Prior to the interim nuclear agreement (Joint Plan of Action, JPA), Iran had a stockpile of 400 pounds of 20% enriched uranium (short of the 550 pounds that would be needed to produce one nuclear weapon). Weapons grade uranium is uranium that is enriched to 90%. Under the JCPOA, Iran is allowed to operate only about 5,000 centrifuges and was required to reduce its stockpile of 3.67% enriched uranium to 300 kilograms (660 pounds). These restrictions start to expire in October 2025—10 years from Adoption Day (October 2015). Another means of acquiring fissile material for a nuclear weapon is to reprocess plutonium, a material that could be produced by Iran's heavy water plant at Arak. In accordance with the JCPOA, Iran rendered inactive the core of the reactor and it has limited its stockpile of heavy water. The JCPOA does not prohibit civilian nuclear plants such as the one Russia built at Bushehr. Under a 1995 bilateral agreement, Russia supplies nuclear fuel for that plant and takes back the spent nuclear material for reprocessing. It became operational in 2012. Diplomatic History of Addressing Iran's Nuclear Program The JCPOA was the product of a long international effort to persuade Iran to negotiate limits on its nuclear program. In 2003, France, Britain, and Germany (the "EU-3") opened a diplomatic track to negotiate curbs on Iran's program, and in October 2003 they obtained an Iranian pledge, in return for receiving peaceful nuclear technology, to suspend uranium enrichment activities and sign and ratify the "Additional Protocol" to the NPT (allowing for enhanced inspections). Iran signed the Additional Protocol on December 18, 2003, although the Majles did not ratify it. Iran ended the suspension after several months, but the EU-3 and Iran subsequently reached a November 14, 2004, "Paris Agreement," under which Iran suspended uranium enrichment in exchange for trade talks and other non-U.S. aid. The Bush Administration supported the agreement with a March 11, 2005, announcement by dropping the U.S. objection to Iran's applying to join the World Trade Organization (WTO). That agreement broke down in 2005 when Iran rejected an EU-3 proposal for a permanent nuclear accord as offering insufficient benefits. In August 2005, Iran began uranium "conversion" (one step before enrichment) at its Esfahan facility and, on February 4, 2006, the IAEA board voted 27-3 to refer the case to the Security Council. The Council set an April 29, 2006, deadline to cease enrichment. "P5+1" Formed . In May 2006, the Bush Administration join the talks, triggering an expanded negotiating group called the "Permanent Five Plus 1" (P5+1: United States, Russia, China, France, Britain, and Germany). A month after it formed, the P5+1 offered Iran guaranteed Iran nuclear fuel for its civilian reactor (Annex I to Resolution 1747) and threatened sanctions if Iran did not agree (sanctions were imposed in subsequent years). U.N. Security Council Resolutions Adopted The U.N. Security Council subsequently imposed sanctions on Iran in an effort to shift Iran's calculations toward compromise, as outlined in the text box below. The Obama Administration and the JCPOA The P5+1 met in February 2009 to incorporate the Obama Administration's stated commitment to direct U.S. engagement with Iran and, in April 2009, U.S. officials announced that a U.S. diplomat would attend P5+1 meetings with Iran. In July 2009, the United States and its allies demanded that Iran offer constructive proposals by late September 2009 or face "crippling sanctions." A September 9, 2009, Iranian proposal led to an October 1, 2009, P5+1-Iran meeting in Geneva that produced a tentative agreement for Iran to allow Russia and France to reprocess 75% of Iran's low-enriched uranium stockpile for medical use. A draft agreement was approved by the P5+1 countries following technical talks in Vienna on October 19-21, 2009, but the Supreme Leader decided that Iran's concessions were excessive and no accord was finalized. In April 2010, Brazil and Turkey negotiated with Iran to revive the October arrangement. On May 17, 2010, the three countries signed a "Tehran Declaration" for Iran to send 2,600 pounds of low enriched uranium to Turkey in exchange for medically useful uranium. Iran submitted to the IAEA an acceptance letter, but the Administration rejected the plan for failing to address enrichment to the 20% level. U.N. Security Council Resolution 1929 Immediately after the Brazil-Turkey mediation failed, then-Secretary of State Clinton announced that the P5+1 had reached agreement on a new U.N. Security Council Resolution that would give U.S. allies authority to take substantial new economic measures against Iran. Adopted on June 9, 2010, Resolution 1929 was pivotal by linking Iran's economy to its nuclear capabilities and thereby authorizing U.N. member states to sanction key Iranian economic sectors. An annex to the Resolution presented a modified offer of incentives to Iran. Negotiations subsequent to the adoption of Resolution 1929—in December 2010, in Geneva and January 2011, in Istanbul—floundered over Iran's demand for immediate lifting of international sanctions. Additional rounds of P5+1-Iran talks in 2012 and 2013 (2012: April in Istanbul; May in Baghdad; and June in Moscow; 2013: Almaty, Kazakhstan, in February and in April) did not reach agreement on a P5+1 proposals that Iran halt enrichment to the 20% level; close the Fordow facility; and remove its stockpile of 20% enriched uranium. Joint Plan of Action (JPA) The June 2013 election of Rouhani as Iran's president improved the prospects for a nuclear settlement and, in advance of his visit to the U.N. General Assembly in New York during September 23-27, 2013, Rouhani stated that the Supreme Leader had given him authority to negotiate a nuclear deal. The Supreme Leader affirmed that authority in a speech on September 17, 2013, stating that he believes in the concept of "heroic flexibility"—adopting "proper and logical diplomatic moves...." An interim nuclear agreement, the Joint Plan of Action (JPA), was announced on November 24, 2013, providing modest sanctions relief in exchange for Iran (1) eliminating its stockpile of 20% enriched uranium, (2) ceasing to enrich to that level, and (3) not increasing its stockpile of 3.5% enriched uranium. The Joint Comprehensive Plan of Action (JCPOA)33 P5+1-Iran negotiations on a comprehensive settlement began in February 2014 but missed several self-imposed deadlines. On April 2, 2015, the parties reached a framework for a JCPOA, and the JCPOA was finalized on July 14, 2015. U.N. Security Council Resolution 2231 of July 20, 2015, endorsed the JCPOA and contains restrictions (less stringent than in Resolution 1929) on Iran's importation or exportation of conventional arms (for up to five years), and on development and testing of ballistic missiles capable of delivering a nuclear weapon (for up to eight years). On January 16, 2016, the IAEA certified that Iran completed the work required for sanctions relief and "Implementation Day" was declared. The Trump Administration and the Deterioration of the JCPOA The Trump Administration criticized the JCPOA for not addressing key U.S. concerns about Iran's continuing "malign activities" in the region or its ballistic missile program, and the expiration of key nuclear restrictions. In October 2017, the Administration withheld certification of Iranian compliance under the Iran Nuclear Agreement Review Act (INARA, P.L. 114-17 ) on the grounds that sanctions relief was not proportional to the limitations on Iran's nuclear program. The noncertification enabled Congress to use expedited rules to reimpose U.S. sanctions, but Congress did not take any action. On October 13, 2017, and January 12, 2018, the President threatened to withdraw the United States from the JCPOA unless Congress and the European countries acted to (1) extend the JCPOA's nuclear restrictions beyond current deadlines to ensure that Iran never comes close to developing a nuclear weapon; (2) impose strict sanctions on Iran's development of ballistic missiles; and (3) ensure that Iran allows "immediate" access to any site that the IAEA wants to visit. The Administration insisted that U.S. allies address Iran's "malign activities" in the region. The European countries negotiated with the United States but ultimately did not meet all of his stipulated conditions. On May 8, 2018, President Trump withdrew the United States from the JCPOA and announced that all U.S. sanctions would be reimposed by November 4, 2018. On August 29, 2018, the Administration provided Congress with a report mandated by the Countering America's Adversaries through Sanctions Act ( P.L. 115-44 ) on its strategy to counter "Iran's conventional and asymmetric threats." The elements of the strategy are discussed throughout this report. In May 2019, the Trump Administration revoked some of the waivers under U.S. law that enable European and other countries to provide technical assistance to Iran's JCPOA-permitted nuclear sites. On May 8, 2019, after that announcement as well as a series of U.S. sanctions announcements against Iran, President Rouhani announced that Iran would begin exceeding some of the allowed limits to Iran's program – particularly the amount of low-enriched uranium and heavy water that Iran could stockpile. He announced that Iran would take further nuclear steps in violation of the JCPOA if its demands for the economic benefits of the JCPOA were not met within 60 days. Missile Programs and Chemical and Biological Weapons Capability Iran has an active missile development program, as well as other WMD programs at varying stages of activity and capability, as discussed further below. Chemical and Biological Weapons36 Iran signed the Chemical Weapons Convention (CWC) on January 13, 1993, and ratified it on June 8, 1997. The U.S. statement to the November 22, 2018, CWC review conference said that "the United States has had longstanding concerns that Iran maintains a chemical weapons program that it failed to declare to the OPCW (Organization for the Prohibition of Chemical Weapons)." The statement specified that Iran failed to submit a complete chemical weapons production facility declaration; that Iran did not declare all of its riot control agents; and that Iran failed to declare its transfer of chemical weapons to Libya in the 1980s. The statement added that the United States could not certify that Iran does not maintain an undeclared CW stockpile. Iran also has ratified the Biological and Toxin Weapons Convention (BTWC), but it engages in dual-use activities with possible biological weapons applications that could potentially be inconsistent with the convention. Iran is widely believed to be unlikely to use chemical or biological weapons or to transfer them to its regional proxies or allies because of the potential for international powers to discover their origin and retaliate against Iran for any use. Missiles37 According to the September 2018 Administration report "Outlaw Regime: A Chronicle of Iran's Destructive Activities," Iran has "the largest ballistic missile force in the Middle East, with more than ten ballistic missile systems either in its inventory or in development, and a stockpile of hundreds of missiles that threaten its neighbors in the region." The intelligence community has said publicly that Iran "can strike targets up to 2,000 kilometers from Iran's borders." Iran is not known to possess an intercontinental ballistic missile (ICBM) capability (missiles of ranges over 2,900 miles), but the DNI threat assessment testimony of February 13, 2018, stated that "Iran's work on a space launch vehicle (SLV)—including on its Simorgh—shortens the timeline to an ICBM because SLVs and ICBMs use similar technologies." However, then-IRGC Commander-in-Chief Ali Jafari said in October 2017 that the existing ranges of Iran's missiles are "sufficient for now," suggesting that Iran has no plans to develop an ICBM. If there is a decision to do so, progress on Iran's space program could shorten the pathway to an ICBM because space launch vehicles use similar technology. Iran's missile programs are run by the IRGC Aerospace Force, particularly the Al Ghadir Missile Command—an entity sanctioned under Executive Order 13382. There are persistent reports that Iran-North Korea missile cooperation is extensive, but it is not known whether North Korea and Iran have recently exchanged missile hardware. At the more tactical level, Iran is acquiring, developing, and exporting short-range ballistic and cruise missiles that Iran's forces can use and/or transfer to regional allies and proxies to protect them and to enhance Iran's ability to project power. The U.S. intelligence community has said in recent years that Iran "continues to develop and improve a range of new military capabilities to target U.S. and allied military assets in the region, including armed UAVs, ballistic missiles, advanced naval mines, unmanned explosive boats, submarines and advanced torpedoes, and anti-ship and land-attack cruise missiles." Resolution 2231 (the operative Security Council resolution on Iran) "calls on" Iran not to develop or test ballistic missiles "designed to be capable of" delivering a nuclear weapon, for up to eight years from Adoption Day of the JCPOA (October 18, 2015). The wording is far less restrictive than that of Resolution 1929, which clearly prohibited Iran's development of ballistic missiles. The JCPOA itself does not specifically contain ballistic missile restraints. Iran has continued developing and testing missiles, despite Resolution 2231, which took effect on January 16, 2016, "Implementation Day." On October 11, 2015, and reportedly again on November 21, 2015, Iran tested a 1,200-mile-range ballistic missile, which U.S. intelligence officials called "more accurate" than previous Iranian missiles of similar range. Iran conducted ballistic missile tests on March 8-9, 2016—the first such tests after Implementation Day. Iran reportedly conducted a missile test in May 2016, although Iranian media had varying accounts of the range of the missile tested. A July 11-21, 2016, test of a missile of a range of 2,500 miles, akin to North Korea's Musudan missile, reportedly failed. It is not clear whether North Korea provided any technology or had any involvement in the test. On January 29, 2017, Iran tested what Trump Administration officials called a version of the Shahab missile and what outside experts called a Khorramshahr missile (see Table 2 ). Press reports say the test failed when the missile exploded after traveling about 600 miles. On July 27, 2017, Iran's Simorgh rocket launched a satellite into space. On January 15, 2019, a Simorgh vehicle failed to put a communications satellite into orbit. On December 1, 2018, Secretary of State Pompeo stated that Iran had test fired a medium-range ballistic missile "capable of carrying multiple warheads." Iran continues to periodically test short-range ballistic missiles. U.S. and U.N. Responses to Iran's Missile Tests The Obama Administration termed Iran's post-Implementation Day ballistic missile tests as "provocative and destabilizing" and "inconsistent with" Resolution 2231. The Trump Administration termed Iran's July 27, 2017, space launch and its December 1, 2018, missile launch "violations" of the Resolution because of the inherent capability of the vehicle and the missile to carry a nuclear warhead. The U.N. Security Council has not imposed any additional sanctions on Iran for these tests to date. Several successive Administrations have designated Iranian missile-related entities for sanctions under Executive Order 13382 and the Iran, North Korea, and Syria Nonproliferation Act. The Trump Administration has demanded, as a condition of any revised JCPOA, a binding ban on Iran's development of nuclear-capable ballistic missiles. Section 1226 of the FY2017 National Defense Authorization Act ( S. 2943 , P.L. 114-328 ) requires the DNI, as well as the Secretary of State and the Secretary of the Treasury, to submit quarterly reports to Congress on Iranian missile launches in the preceding year, and on efforts to impose sanctions on entities assisting those launches. The provision sunsets on December 31, 2019. Iran asserts that conventionally armed missiles are an integral part of its defense strategy and they will not accept any new curbs on Iran's missile program. Iran argues that it is not developing a nuclear weapon and therefore is not designing its missile to carry a nuclear weapon. U.S. and Other Missile Defenses Successive U.S. Administrations have sought to build up regional missile defense systems. The United States and Israel have a broad program of cooperation on missile defense as well as on defenses against shorter-range rockets and missiles such as those Iran supplies to Lebanese Hezbollah. Through sales of the Patriot system (PAC-3) and more advanced "THAAD" (Theater High Altitude Area Defense) to the Gulf states, the United States has sought to construct a coordinated GCC missile defense system. The United States has sought a defense against an eventual long-range Iranian missile system by emplacing missile defense systems in various Eastern European countries and on ship-based systems. The United States has helped Israel develop the Arrow missile defense system that is intended to intercept Iranian (or other) ballistic missiles launched at Israel. Other Israeli systems developed with U.S. help, including Iron Dome and David's Sling, are intended to intercept rockets launched by Iranian allies Hezbollah and Hamas. The FY2013 national defense authorization act ( P.L. 112-239 ) contained provisions urging the Administration to undertake more extensive efforts, in cooperation with U.S. partners and others, to defend against the missile programs of Iran (and North Korea). Conventional and "Asymmetric Warfare" Capability44 Iran appears to be able to defend against any conceivable aggression from Iran's neighbors, while lacking the ability to project conventional military power outside the region or across waterways. Iran's forces are widely assessed as incapable of defeating the United States in a classic military confrontation, but they could potentially inflict significant damage or casualties on the U.S. military. Then-CENTCOM Commander General Joseph Votel testified on February 27, 2018, that Iran's ground forces are "improving their ability to quickly mobilize and deploy in response to internal and external threats." Organizationally, Iran's armed forces are divided to perform functions appropriate to their roles. The Islamic Revolutionary Guard Corps (IRGC, known in Persian as the Sepah-e-Pasdaran Enghelab Islami ) controls the Basij (Mobilization of the Oppressed) volunteer militia that has been the main instrument to repress domestic dissent. The IRGC also has a national defense role. The IRGC and the regular military ( Artesh )—the national army that existed under the former Shah—report to a joint headquarters. In June 2016, Supreme Leader Khamene'i replaced the longtime Chief of Staff (head) of the Joint Headquarters with IRGC Major General Mohammad Hossein Bagheri, an early IRGC recruit who fought against Kurdish insurgents and in the Iran-Iraq War. The appointment of an IRGC officer to head the joint headquarters again demonstrates the IRGC's dominance within Iran's military and security structure. In April 2019, Khamene'i appointed a new IRGC Commander-in-Chief, IRGC Maj. Gen. Hossein Salami, to replace IRGC Maj. Gen. Mohammad Ali Jafari. Both are hardliners and IRGC operations and its political orientation are not expected to change. The IRGC Navy (IRGCN) and regular Navy (Islamic Republic of Iran Navy, IRIN) are distinct forces. As of 2007, the IRIN has responsibility for the Gulf of Oman, whereas the IRGC Navy has responsibility for the closer-in Persian Gulf and Strait of Hormuz more well-suited to its generally smaller ships. The IRGC Navy operates Iran's large inventory of small boats, including China-supplied patrol boats. In August 2018, the hardline IRGC General Alireza Tangsiri was appointed commander of the IRGC Navy. Rouhani's August 2017 appointment of a senior Artesh figure, Brigadier General Amir Hatami, as Defense Minister suggests that the Artesh remains an integral part of the defense establishment. The Artesh is deployed mainly at bases outside cities and has no internal security role. The regular air force (Islamic Republic of Iran Air Force, IRIAF) operates most of Iran's traditional combat aircraft, whereas the IRGC Aerospace Force operates Iran's missile force and does not generally operate combat aircraft. The IRIN controls Iran's larger ships as well as its three Kilo-class submarines bought from Russia and the 14 North Korea-designed "Yona" (Ghadir, Iranian variant) midget subs, according to DOD reports. Iran is also developing increasingly lethal systems such as more advanced naval mines. Iran has a small number of warships on its Caspian Sea coast and, since 2014, Iran has periodically sent warships into the Atlantic Ocean to demonstrate growing naval capability. Asymmetric Warfare Capacity Iran compensates for its conventional military deficiencies by focusing on "asymmetric warfare." As an example, the IRGC Navy has developed forces and tactics to control the approaches to Iran, including the Strait of Hormuz, centering on an ability to "swarm" U.S. naval assets with its fleet of small boats and to launch large numbers of anti-ship cruise missiles and coastal defense cruise missiles. Iran has added naval bases along its coast in recent years, enhancing its ability to threaten shipping in the strait. As discussed further later in this report, IRGC Navy vessels sometimes conduct "high-speed intercepts"—close-approaches of U.S. naval vessels in the Gulf. Iran's arming of regional allies and proxies represents another aspect of Iran's development of asymmetric warfare capabilities. Iran's allies and proxies control territory within which Iran can emplace missiles, rockets, and factories to build military equipment. These allies help Iran expand its influence and project power with little direct risk, giving Tehran a measure of deniability. For example, Iran's provision of anti-ship missiles to the Houthi rebels in Yemen could represent an effort by Tehran to project military power into the key Bab el-Mandeb Strait chokepoint. Iran could also try to retaliate through terrorist attacks inside the United States or against U.S. embassies and facilities in Europe or the Persian Gulf. Iran could also try to direct Iran-supported forces in Afghanistan or Iraq to attack U.S. personnel in those countries. Iran's support for regional terrorist groups was a justification for Iran's addition to the U.S. list of state sponsors of terrorism ("terrorism list") in January 1984. Military-to-Military Relationships Iran's armed forces have few formal relationships with foreign militaries outside the region. Iran's most significant military-to-military relationships have focused on Iranian arms purchases or upgrades. According to the August 2018 report to Congress mandated by the Countering America's Adversaries through Sanctions Act, Iran has bought weaponry from Russia, China, North Korea, Belarus, and Ukraine, and "has obtained missile and aircraft technology from foreign suppliers, including China and North Korea." Iran and Russia have cooperated closely to assist the Asad regime in Syria. In August 2016, Iran allowed Russia's bomber aircraft, for a brief time, to use Iran's western airbase at Hamadan to launch strikes in Syria—the first time the Islamic Republic gave a foreign military use of Iran's military facilities. Iran and India have a "strategic dialogue" and some Iranian naval officers reportedly underwent some training in India in the 1990s – a timeframe during which Iran's military also conducted joint exercises with the Pakistani armed forces. Iran has signed at least basic—and in some cases more extensive—military cooperation agreements with Syria, Afghanistan, Sudan, Oman, Venezuela, Belarus, Russia, China, and South Africa. The IRIN (regular navy) appears to be trying to expand Iran's relationships through naval port visits, including to China in 2013 and South Africa in 2016. The IRIN has also, in recent years, made port visits to Sri Lanka, Tanzania, Azerbaijan, Indonesia, and South Africa, and held joint naval exercises with Oman, Bangladesh, India, Pakistan, Kazakhstan, Russia, China, Djibouti, and Italy. In September 2014, two Chinese warships docked at Iran's port of Bandar Abbas, for the first time in history, to conduct four days of naval exercises, and in October 2015, the leader of Iran's regular (not IRGC) Navy made the first visit ever to China by an Iranian Navy commander. In August 2017, the chief of Iran's joint military headquarters made the first top-level military visit to Turkey since Iran's 1979 revolution. Iranian Arms Transfers and U.N. Restrictions Sales to Iran of most conventional arms (arms on a U.N. Register of Conventional Arms) were banned by U.N. Resolution 1929. Resolution 2231, which supersedes Resolution 1929, requires Security Council approval for any transfer of weapons or military technology, or related training or financial assistance, to Iran. The requirement extends for a maximum of five years from Adoption Day (until October 17, 2020). The Resolution named the systems subject to restriction: Battle tanks; armored combat vehicles; large caliber artillery systems; combat aircraft; attack helicopters; warships; missiles or missile systems, as defined by the U.N. Register of Conventional Arms, or related material, including spare parts ... and the provision to Iran ... of technical training, financial resources or services, advice, other services or assistance related to the supply, sale, transfer, manufacture, maintenance, or use of arms and related materiel.... Defense Minister Hossein Dehgan visited Moscow in February 2016, reportedly to discuss possible purchases of $8 billion worth of new conventional arms, including T-90 tanks, Su-30 aircraft, attack helicopters, anti-ship missiles, frigates, and submarines. Such purchases would require Security Council approval under Resolution 2231, and U.S. officials have said the United States would use its veto power to deny approval for the sale. Resolution 2231 also requires Security Council approval for Iranian transfers of any weaponry outside Iran until October 17, 2020. Separate U.N. Security Council resolutions ban arms shipments to such conflict areas as Yemen (Resolution 2216) and Lebanon (Resolution 1701). Iran appears to have violated this restriction on numerous occasions, but the U.N. Security Council has not, to date, agreed on any punishments for these apparent violations. Defense Budget Iran's defense budget generally runs about 4% of GDP, but was higher (6%) in 2018. Iran's national budget is about $300 billion and, in dollar terms, Iran's 2018-2019 defense budget was about $25 billion, up from about $23 billion in 2017. These observations appear to support President Trump's statement in his May 8, 2018, announcement of the U.S. withdrawal from the JCPOA that Iran's defense budget had increased 40% since the JCPOA has been implemented. Of the defense budget, about two-thirds funds the IRGC and its subordinate units, and about one-third funds the regular military ( Artesh ) and its units. By contrast, GCC combined defense spending is expected by defense industry experts to reach $100 billion in 2019. Countering Iran's Malign Activities The Trump Administration has articulated a multilayered strategy to try to counter Iran's malign activities and "roll back" Iranian influence in the region. The centerpiece of the strategy is to utilize economic sanctions to change Iran's behavior and deny Iran the resources it needs to continue its regional operations. The State Department's 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." The Administration has also articulated 12 specific demands for Iran to change its behavior in exchange for a new JCPOA and normalized relations with the United States and the international community. The demands pertaining to Iran's regional activities, as stipulated in the May 21, 2018, speech by Secretary of State Pompeo at the Heritage Foundation are that Iran: End support to Middle East terrorist groups, including Lebanese Hizballah, Hamas, and the Palestinian Islamic Jihad. Respect the sovereignty of the Iraqi government and permit the disarming, demobilization, and reintegration of Shia militias. End military support to the Houthi militia and work toward a peaceful political settlement in Yemen. Withdraw all forces under Iranian command throughout the entirety of Syria. End support for the Taliban and other terrorists in Afghanistan and the region, and cease harboring senior al-Qaeda leaders. End the IRGC-QF's support for terrorists and militant partners around the world. End its threatening behavior against its neighbors, including threats to destroy Israel, firing of missiles into Saudi Arabia and the UAE, threats to international shipping, and destructive cyberattacks. Coalition Building. Moreover, the Administration has sought to build alliances to counter Iran strategically. Some initiatives, such as the formation of a "Middle East Strategic Alliance," are discussed below. Building a coalition to counter Iran was a key component of Secretary of State Pompeo's trip to the GCC states, Iraq, Jordan, and Egypt in January 2019, as well as a ministerial meeting in Poland during February 13-14, 2019. Threatening Military Action. The Administration also has threatened military retaliation for Iranian direct action. On September 21, 2018, Secretary of State Pompeo threatened action against Iran also for activities undertaken by Iran's proxies. According to the Secretary, "We have told the Islamic Republic of Iran that using a proxy force to attack an American interest will not prevent us from responding against the prime actor." In early May 2019, the United States sent accelerated the deployment of an aircraft carrier group and sent a bomber group to the Persian Gulf region in response to what the Administration said were "troubling; and escalatory indications and warnings" related to Iran. The United States also works with local leaders and factions that seek to counter Iranian influence. The applications of Administration strategy are discussed in the sections below. Near East Region The focus of Iranian security policy is the Near East, where Iran employs all instruments of its national power. Successive Administrations have described many of Iran's regional operations as "malign activities." Director of National Intelligence Dan Coats, in the February 13, 2018, delivery of the annual worldwide threat assessment testimony before Congress, assessed that "Iran will seek to expand its influence in Iraq, Syria, and Yemen, where it sees conflicts generally trending in Tehran's favor." Secretary of State Pompeo described a litany of Iranian malign activities in his speech to the Heritage Foundation on May 21, 2018, referenced above. A question that often proves difficult is that of the dollar value of material support that the IRGC-QF provides to Iran's allies and proxies. Published estimates 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. The Persian Gulf Iran has a 1,100-mile coastline on the Persian Gulf and Gulf of Oman, and exerting dominance of the Gulf has always been a key focus of Iran's foreign policy—even during the reign of the Shah of Iran. In 1981, perceiving a threat from revolutionary Iran and spillover from the Iran-Iraq War that began in September 1980, the six Gulf states formed the Gulf Cooperation Council alliance (GCC: Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, and the United Arab Emirates). U.S.-GCC security cooperation expanded during the 1980-1988 Iran-Iraq War and became more institutionalized after the 1990 Iraqi invasion of Kuwait. Prior to 2003, the extensive U.S. presence in the Gulf was in large part to contain Saddam Hussein's Iraq but, with Iraq militarily weak since Saddam's ouster, the U.S. military presence in the Gulf focuses primarily on containing Iran and conducting operations against regional terrorist groups. Several of the GCC leaders have accused Iran of fomenting unrest among Shia communities in the GCC states. Yet, the GCC states maintain relatively normal trading relations with Iran. In 2017, Iran sought to ease tensions with the GCC countries in an exchange of letters and a February 2017 visit by President Hassan Rouhani to Kuwait and Oman, but the long-standing issues that divide Iran and the GCC countries thwarted the initiative. The willingness of Qatar, Kuwait, and Oman to engage Iran contributed to a rift within the GCC in which Saudi Arabia, UAE, and Bahrain—joined by a few other Muslim countries—announced on June 5, 2017, an air, land, and sea boycott of Qatar. The rift has given Iran an opportunity to accomplish a long-standing goal of weakening the GCC alliance. The GCC rift came two weeks after President Donald Trump visited Saudi Arabia and expressed strong support for its policies. Saudi Arabia54 Iranian and Saudi leaders accuse each other of seeking regional hegemony and the two countries consistently have sought to weaken each other, including by supporting each other's oppositionists. The mutual animosity has aggravated regional sectarian tensions and caused escalations of the region's various conflicts. In 2015, Saudi Arabia led a coalition that intervened in Yemen's internal conflict in an effort to roll back Iranian influence by reducing the territory under the control of Houthi rebels there. Saudi Arabia, with corroboration from U.S. officials and a U.N. "panel of experts" on the Yemen conflict, has blamed Iran directly for supplying the Houthis with ballistic missiles that have been fired on the Kingdom. In 2017, Saudi leaders unsuccessfully sought to undermine Lebanese Hezbollah by pressuring Saudi ally and Lebanon Prime Minister Sa'd Hariri to expose Hezbollah's political influence in Lebanon. Saudi leaders have sought since 2017 to more extensively engage Iraqi leaders to draw the country closer to the Arab world and away from Iran. Iran blamed Saudi Arabia and the Islamic State organization, for the September 22, 2018, attack on a military parade in Ahwaz, in mostly Arab southwestern Iran, which killed 25 persons. Iran did not retaliate against Saudi Arabia, instead launching missiles against Islamic State positions in Syria on October 1, 2018. In January 2016, Saudi Arabia severed diplomatic relations with Iran in the wake of violent attacks and vandalism against its embassy in Tehran and consulate in Mashhad, Iran. The attacks were a reaction to Saudi Arabia's January 2, 2016, execution of an outspoken Shia cleric, Nimr Baqr al Nimr, alongside dozens of Al Qaeda members; all had been convicted of treason and/or terrorism charges. Subsequently, Saudi Arabia and Bahrain broke diplomatic relations with Iran, and Qatar, Kuwait, and UAE recalled their ambassadors from Iran. In December 2016, Saudi Arabia executed 15 Saudi Shias sentenced to death for "spying" for Iran. Strong backers of a hard line U.S. policy toward Iran, Saudi leaders publicly applauded the Trump Administration's May 2018 exit from the JCPOA. Saudi Crown Prince Mohammad bin Salman Al Saudi, on the eve of a March 20, 2018, meeting with President Trump, stated that Saudi Arabia would acquire a nuclear weapon if Iran does. Saudi officials repeatedly cite past Iran-inspired actions as a reason for distrusting Iran. These actions include Iran's encouragement of violent demonstrations at some Hajj pilgrimages in Mecca in the 1980s and 1990s, which caused a break in relations from 1987 to 1991. The two countries increased mutual criticism of each other's actions in the context of the 2016 Hajj. Saudi Arabia asserts that Iran instigated the June 1996 Khobar Towers bombing and accused it of sheltering the alleged mastermind of the bombing, Ahmad Mughassil. United Arab Emirates (UAE)56 The UAE is aligned with Saudi Arabia on the Iran issues. It likewise applauded the U.S. pullout from the JCPOA and has been, aside from Saudi Arabia, the lead force combatting the Houthis in Yemen. UAE leaders blamed Iran for arming the Houthis with anti-ship missiles that damaged a UAE naval vessel in the Bab el-Mandeb Strait in late 2016. Despite their political and territorial differences, the UAE and Iran maintain extensive trade and commercial ties. Iranian-origin residents of Dubai emirate number about 300,000, and many Iranian-owned businesses are located there, including branch offices of large trading companies based in Iran. The UAE is alone in the GCC in having a long-standing territorial dispute with Iran, concerning the Persian Gulf islands of Abu Musa and the Greater and Lesser Tunb islands. The Tunbs were seized by the Shah of Iran in 1971, and the Islamic Republic took full control of Abu Musa in 1992, violating a 1971 agreement to share control of that island. The UAE has sought to refer the dispute to the International Court of Justice (ICJ), but Iran insists on resolving the issue bilaterally. (ICJ referral requires concurrence from both parties to a dispute.) In 2013-2014, the two countries held direct apparently productive discussions on the issue and Iran reportedly removed some military equipment from the islands. However, no resolution has been announced. The GCC has consistently backed the UAE position. Qatar58 Since 1995, Qatar has occupied a "middle ground" between anti-Iran animosity and sustained engagement with Iran. The speaker of Iran's Majles (parliament) visited Qatar in March 2015 and the Qatari government allowed him to meet with Hamas leaders in exile there. Qatar also pursues policies that are opposed to Iran's interests, for example by providing arms and funds to factions in Syria opposed to Syrian President Bashar Al Asad and—until the 2017 rift with Saudi Arabia and the UAE—by joining Saudi-led military intervention in Yemen. Qatar has sometimes used its engagement with Iran to obtain the release of prisoners held by Iran or its allies, and strongly refutes Saudi-led assertions that it is aligned with or politically close to Iran. Qatar withdrew its Ambassador from Iran in connection with the Nimr execution discussed above, but restored relations in August 2017 to reciprocate Iran's support for Qatar in the intra-GCC rift. Iran has increased its food exports to Qatar as an alternative to supplies from Saudi Arabia. Qatar does not have territorial disputes with Iran, but Qatari officials reportedly remain wary that Iran could try to encroach on the large natural gas field Qatar shares with Iran (called North Field by Qatar and South Pars by Iran). In April 2004, the Iran's then-deputy oil minister said that Qatar is probably producing more gas than "her right share" from the field. Bahrain59 Bahrain, ruled by the Sunni Al Khalifa family and still unsettled by 2011 unrest among its majority Shia population, consistently alleges that Iran is agitating Bahrain's Shia community, some of which is of Persian origin, to try to overturn Bahrain's power structure. Bahrain has consistently accused Iran of supporting violent Shia factions that reportedly operate separately from an opposition dominated by peaceful political societies. On several occasions, Bahrain has withdrawn its Ambassador from Iran following Iranian criticism of Bahrain's treatment of its Shia population or alleged Iranian antigovernment plots. Bahrain broke ties with Iran in concert with Saudi Arabia in January 2016. In 1981 and again in 1996, Bahrain publicly claimed to have thwarted Iran-backed efforts by Bahraini Shia dissidents to violently overthrow the ruling family. As did Saudi Arabia and the UAE, Bahrain supported the Trump Administration's withdrawal from JCPOA. Bahraini and U.S. officials assert that Iran provides weapons, explosives, and weapons-making equipment efforts to violent underground factions in Bahrain. In 2016, Bahraini authorities uncovered a large warehouse containing equipment, apparently supplied by Iran that is tailored for constructing "explosively forced projectiles" (EFPs) such as those Iran-backed Shia militias used against U.S. armor in Iraq during 2004-2011. No EFPs have actually been used in Bahrain, to date. On January 1, 2017, 10 detainees who had been convicted of militant activities such as those discussed above broke out of Bahrain's Jaw prison with the help of attackers outside the jail. In March 2017, security forces arrested a group of persons that authorities claimed were plotting to assassinate senior government officials, asserting that the cell received military training by IRGC-QF. Six Bahraini Shias were sentenced to death for this alleged plot on December 25, 2017. In October 2017, 29 Bahrainis were convicted for having links to Iran and conducting espionage in Bahrain. On March 17, 2017, the State Department named two members of a Bahrain militant group, the Al Ashtar Brigades, as Specially Designated Global Terrorists (SDGTs), asserting the group is funded and supported by Iran. In July 2018, the State Department named the Al Ashtar Brigades as a Foreign Terrorist Organization (FTO), based on State Department assertions that Iran has provided weapons, funding, and training to Bahraini militant Shia groups that have conducted attacks on the Bahraini security forces. On January 6, 2016, Bahraini security officials dismantled a terrorist cell, linked to IRGC-QF, planning to carry out a series of bombings throughout the country. Tensions also have flared occasionally over Iranian attempts to question the legitimacy of a 1970 U.N.-run referendum in which Bahrainis chose independence rather than affiliation with Iran. In March 2016, a former IRGC senior commander and adviser to Supreme Leader Khamene'i reignited the issue by saying that Bahrain is an Iranian province and should be annexed. Kuwait64 Kuwait is differentiated from some of the other GCC states by its integration of Shias into the political process and the economy. About 25% of Kuwaitis are Shia Muslims, but Shias have not been restive there and Iran was not able to mobilize Kuwaiti Shias to end Kuwait's support for the Iraqi war effort in the Iran-Iraq War (1980-1988). Kuwait cooperates with U.S.-led efforts to contain Iranian power and is participating in Saudi-led military action against Iran-backed Houthi rebels in Yemen. However, it also has tried to mediate a settlement of the Yemen conflict and broker GCC-Iran rapprochement, and Kuwait's government did not fund or arm any Syrian opposition groups. Kuwait exchanges leadership-level visits with Iran; Kuwait's Amir Sabah al-Ahmad Al Sabah visited Iran in June 2014, Kuwait's Foreign Minister visited Iran in late January 2017 to advance Iran-GCC reconciliation, and Rouhani visited Kuwait (and Oman) in February 2017 as part of that abortive effort. However, on numerous occasions, Kuwaiti courts have convicted Kuwaitis with spying for the IRGC-QF or Iranian intelligence. Kuwait recalled its Ambassador from Iran in connection with the Saudi-Iran dispute over the execution of Al Nimr. Oman65 Omani officials assert that engagement with Iran is a more effective means to moderate Iran's foreign policy than to threaten or pressure it, and Oman's leadership has the most consistent engagement with Iran's leadership of any of the Gulf states. Omani leaders express gratitude for the Shah's sending of troops to help the Sultan suppress rebellion in the Dhofar region in the 1970s, even though Iran's regime changed since then. President Rouhani visited Oman in 2014 and in 2017. Sultan Qaboos visited Iran in August 2013, reportedly to explore with the newly elected Rouhani U.S.-Iran nuclear negotiations that ultimately led to the JCPOA. After the JCPOA was finalized, Iran and Oman accelerated their joint development of the Omani port of Al Duqm, which is emerging as a significant trading and transportation outlet. Since late 2016, Oman also has been a repository of Iranian heavy water to help Iran comply with the JCPOA, but the May 2, 2019 U.S. ending of waivers for storing Iranian heavy water could curtail Oman's future storage of that Iranian product. Oman was the only GCC country to not downgrade its relations with Iran in connection with the January 2016 Nimr dispute. And, Oman drew closer to Iran in 2017 because of Iran's support for Qatar in the intra-GCC rift, which Omani leaders assert was the result of misguided action by Saudi Arabia and the UAE. Oman has not supported any factions fighting the Asad regime in Syria and has not joined the Saudi-led Arab intervention in Yemen, enabling Oman to undertake the role of mediator in both of those conflicts. Omani officials say that, in the past two years, they have succeeded in blocking Iran from smuggling weaponry to the Houthis via Oman. U.S.-GCC Cooperation against Iranian Threats to Gulf Security Successive U.S. Administrations have considered the Gulf countries as lynchpins in U.S. strategy to contain Iranian power, and to preserve the free flow of oil and freedom of navigation in the Persian Gulf, which is only about 20 miles wide at its narrowest point. Each day, about 17 million barrels of oil flow through the Strait, which is 35% of all seaborne traded oil and 20% of all worldwide traded oil. U.S. and GCC officials view Iran as posing a possible threat to the Strait and the Gulf, potentially using the naval, missile, mine, and other assets and tactics discussed above. In mid-2015, Iran stopped several commercial ships transiting the strait as part of an effort to resolve commercial disputes with the shipping companies involved. In July 2018, Iran's President Rouhani indirectly threatened the free flow of oil in the Gulf should the Trump Administration succeed in compelling Iran's oil customers to cease buying Iranian oil entirely. In late August 2018 and again in late April 2019, after the United States ended sanctions exceptions for the purchase of Iranian oil, IRGC Navy commander Alireza Tangsiri reiterated those threats. Iran has sometimes challenged U.S. forces in the Gulf, perhaps in part to demonstrate that it is not intimidated by U.S. power. During 2016-2017, according to DNI Coats, about 10% of U.S. Navy interactions with the IRGC-Navy were "unsafe, abnormal, or unprofessional." IRGC-Navy elements conducted numerous "high speed intercepts" of U.S. naval vessels in the Gulf and, in some cases, fired rockets near U.S. warships. During some of these incidents, U.S. vessels have fired warning shots at approaching Iranian naval craft. U.S. Navy and other military commanders say that, since August 2017, Iran has largely, although not completely, ceased the naval challenges. The shift in Iranian behavior might have been prompted by concerns that that the Trump Administration might respond militarily. President Trump has stated an intent to counter Iranian actions in the Gulf or more broadly, including potentially with military action. On July 22, 2018, President Trump issued the tweet below: To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS! As noted, in early May 2019, the United States accelerated a carrier deployment to the Gulf and sent additional bombers in response to reported Iranian planning for attacks on U.S. forces in and around the Gulf and possible further afield in the region. Some reports indicated that the U.S. deployments were triggered primarily by observed Iranian shipments of short-range ballistic missiles in regional waterways, presumably bound for the Houthis. In a statement, National Security Adviser John Bolton warned that the deployment was intended to send a "clear and unmistakable message that any attack on U.S. interests or those of our allies" would be met with "unrelenting force." U.S.-GCC Cooperation Structures The Obama Administration sought to add structure to the U.S.-GCC strategic partnership by instituting a "U.S.-GCC Strategic Dialogue" in March 2012. Earlier, in February 2010, then-Secretary Clinton also raised the issue of a possible U.S. extension of a "security umbrella" or guarantee to regional states against Iran. However, no such formal U.S. security pledge was issued. The JCPOA prompted GCC concerns that the United States might reduce its commitment to Gulf security and President Obama and the GCC leaders held two summit meetings—in May 2015 and April 2016—to reassure the GCC of U.S. support against Iran. The summit meetings produced announcements of a U.S.-GCC strategic partnership and specific commitments to (1) facilitate U.S. arms transfers to the GCC states; (2) increase U.S.-GCC cooperation on maritime security, cybersecurity, and counterterrorism; (3) organize additional large-scale joint military exercises and U.S. training; and (4) implement a Gulf-wide coordinated ballistic missile defense capability, which the United States has sought to promote in recent years. Perhaps indicating reassurance, the GCC states expressed support for the JCPOA. Despite that public support, the GCC states have strongly backed the Trump Administration's characterization of Iran as a major regional threat, and the related relaxation of restrictions on arms sales to the GCC states and downplaying of concerns about GCC human rights practices. Saudi Arabia, the UAE, and Bahrain all publicly supported the Trump Administration exit from the JCPOA, whereas—reflecting divisions within the GCC—Qatar, Kuwait, and Oman expressed "understanding" for the exit. U.S. officials have stated that the intra-GCC rift centered on Qatar is harming the U.S.-led effort to forge a united strategy against Iran, and, since April 2018, President Trump reportedly has been insisting that Gulf leaders resolve the rift, although without evident success to date. Middle East Strategic Alliance (MESA). The Trump Administration reportedly is attempting to build a new coalition to counter Iran, composed of the GCC states plus Egypt, Jordan, and possibly also Morocco. The Administration reportedly sought to unveil this "Middle East Strategic Alliance" (MESA) in advance of a planned U.S.-GCC summit but, because of the ongoing intra-GCC dispute and other factors, the meeting has been repeatedly postponed and no date has been announced. The Saudi killing of U.S.-based Saudi journalist Jamal Kashoggi, which has brought widespread international and congressional criticism of the Kingdom and Crown Prince Mohammad bin Salman Al Saud, further clouds prospects for another U.S.-GCC summit. The establishment of a MESA was a significant element of Secretary of State Pompeo's trip to the GCC states in January 2019, but the concept suffered a setback in April 2019 when Egypt announced it would not participate in the MESA grouping. U.S. Forces in the Gulf and Defense Agreements. The GCC states are pivotal to U.S. efforts to counter Iran militarily. There are about 35,000 U.S. forces stationed at GCC military facilities, in accordance with formal defense cooperation agreements (DCAs) with Kuwait, Bahrain, Qatar, and the UAE; a facilities access agreement with Oman; and memoranda of understanding with Saudi Arabia. The DCAs and other defense agreements reportedly provide for the United States to pre-position substantial military equipment, to train the GCC countries' forces; to sell arms to those states; and, in some cases, for consultations in the event of a major threat to the state in question. Some U.S. forces in the Gulf are aboard a U.S. aircraft carrier task force that is in the Gulf region nearly constantly, although a U.S. carrier was absent from the Gulf for much of 2018 before returning there in December 2018. The Defense Department also uses authority in Section 2282 of U.S.C. Title 10 to program Counterterrorism Partnerships Funds (CTPF) for U.S. special operations forces training to enhance GCC counterterrorism capabilities, including to prevent infiltration by the IRGC-QF. Arms Sales . U.S. arms sales to the GCC countries have improved GCC air and naval capabilities and their interoperability with U.S. forces. In past years, the United States has tended to approve virtually all arms purchase requests by the GCC states, including such equipment as combat aircraft, precision-guided munitions, combat ships, radar systems, and communications gear. However, the Bahrain government crackdown on the 2011 uprising there, the intra-GCC rift, and the Saudi/UAE-led war in Yemen have slowed or halted some U.S. arms sales to the GCC states. The following sections discuss specific U.S.-Gulf defense relationships. Saudi Arabia . The United States and Saudi Arabia have signed successive memoranda of understanding (MoUs) under which a few hundred U.S. military personnel to train the military, National Guard (SANG), and Ministry of Interior forces in Saudi Arabia. The Saudi force has about 225,000 active duty personnel, with about 600 tanks, of which 200 are U.S.-made M1A2 "Abrams" tanks. The Saudi Air Force flies the F-15. In late 2018, Saudi Arabia announced it would buy the sophisticated missile defense system Theater High Altitude Air Defense system (THAAD) at an estimated cost of about $14 billion. The sale was approved by the State Department in October 2017. Kuwait . The United States has had a DCA with Kuwait since 1991, and over 13,000 mostly U.S. Army personnel are stationed there, including ground combat troops. Kuwait has hosted the U.S.-led headquarters for Operation Inherent Resolve (OIR), the military component of the campaign against the Islamic State. U.S. forces operate from such facilities as Camp Arifjan, south of Kuwait City, where the United States pre-positions ground armor including Mine Resistant Ambush Protected (MRAP) vehicles, as well as from several Kuwaiti air bases. U.S. forces train at Camp Buehring, about 50 miles west of the capital. Kuwait has a small force (about 15,000 active military personnel) that relies on U.S. arms, including Abrams tanks and F/A-18 combat aircraft. The Trump Administration stated during the September 2017 visit to Washington, DC, of Kuwait's Amir that it would proceed with selling Kuwait 32 additional F/A-18s. Qatar . The United States has had a DCA with Qatar since 1992, which was revised in December 2013. Over 11,000 U.S. military personnel, mostly Air Force, are in Qatar, stationed at the forward headquarters of U.S. Central Command (CENTCOM), which has responsibility for the Middle East and Central Asia; a Combined Air Operations Center (CAOC) that oversees U.S. combat aircraft missions in the region; the large Al Udeid Air Base; and the As Saliyah army pre-positioning site where U.S. armor is pre-positioned. Qatar's armed force is small with about 12,000 active military personnel. Qatar has historically relied on French military equipment, including Mirage combat aircraft, but in late 2016, the Obama Administration approved selling up to 72 F-15s to Qatar. The F-15 deal, with an estimated value of $21 billion, was formally signed between Qatar and the Trump Administration on June 14, 2017. Qatar and the United States signed an agreement in early 2019 under which Qatar commits to expand Al Udeid air base and build fixed housing and other facilities there to be able to accommodate up to 13,000 U.S. personnel. UAE. The United States has had a DCA with UAE nearly continuously since 1994. About 5,000 U.S. forces, mostly Air Force and Navy, are stationed in UAE, operating surveillance and refueling aircraft from Al Dhafra Air Base, and servicing U.S. Navy and contract ships at the large commercial port of Jebel Ali. The UAE armed forces include about 63,000 active duty personnel, using primarily French-made tanks purchased in the 1990s. Its air force is equipped with U.S.-made F-16s the country has bought in recent years. The UAE has stated that it wants to buy the F-35 Joint Strike Fighter, but U.S. officials have indicated that the potential sale would be evaluated in accordance with U.S. policy to maintain Israel's Qualitative Military Edge (QME). The Trump Administration has reportedly agreed to brief the UAE on the aircraft—possibly signaling a willingness to sell it to the UAE at some point. The UAE has taken delivery of the THAAD anti-missile system. Bahrain . The United States has had a DCA with Bahrain since 1991. Over 6,000 U.S. personnel, mostly Navy, operate out of the large Naval Support Activity facility that houses the U.S. command structure for U.S. naval operations in the Gulf. U.S. Air Force personnel also access Shaykh Isa Air Base. Bahrain has only about 6,000 active military personnel, and another 11,000 internal security forces under the Ministry of Interior. The United States has given Bahrain older model U.S. M60A3 tanks and a frigate ship as grant "excess defense articles," and the country has bought U.S.-made F-16s with national funds and U.S. Foreign Military Financing (FMF) credit. The Obama Administration told Congress in 2016 that it would not finalize a sale of additional F-16s unless the government demonstrates progress on human rights issues, but in March 2017, the Trump Administration dropped that condition. The Trump Administration has maintained a general ban on arms sales to Bahrain's internal security forces. Oman . The United States has had a "facilities access agreement" with Oman since April 1980, under which a few hundred U.S. forces (mostly Air Force) are deployed at and have access to Omani air bases such as those at Seeb, Masirah Island, Thumrait, and Musnanah. Oman has a 25,000-person force that has historically relied on British-made military equipment. The United States has provided some M60A3 tanks as excess defense articles, and Oman has bought F-16s using national funds, partly offset by U.S. FMF. Assistance Issues . The GCC states are considered wealthy states and most receive little or virtually no U.S. assistance. The more wealthy GCC states (Saudi Arabia, Kuwait, Qatar, and UAE) sometimes receive nominal amounts of U.S. funding for the purpose or enabling them to obtain discounted prices to enroll personnel in military education courses in the United States. Bahrain and Oman receive a few million dollars per year in Foreign Military Financing (FMF) and International Military Education and Training Funds (IMET). Small amounts of State Department funds are provided to all the Gulf states for counterterrorism/border security programs (nonproliferation, antiterrorism, de-mining and related, NADR, funds) Iranian Policy on Iraq, Syria, and the Islamic State82 Iran's policy has been to support the Shia-led governments in Iraq and Syria against armed insurgencies or other domestic strife that might threaten those governments. That policy faced a significant challenge and uprising in Syria that began in 2011 and the Islamic State organization's capture of significant territory in Iraq in 2014. These challenges have been beaten back substantially not only by Iranian intervention but also by U.S. intervention in Iraq and Russian intervention in Syria, and Iran is perceived to be strongly positioned in both Syria and Iraq. Iraq The U.S. military ousting of Saddam Hussein in 2003 removed Iran's main regional adversary and produced governments led by Shia Islamists with long-standing ties to Iran. Iran is able to wield substantial influence on Iraq not only through these relationships but because the IRGC-QF arms, trains, and advises several Shia militias. Some of them were formed during Saddam Hussein's rule and others formed to fight U.S. forces in Iraq during 2003-2011. The June 2014 offensive led by the Islamic State organization at one point brought Islamic State forces to within 50 miles of the Iranian border, triggering Iran to supply the Baghdad government as well as the peshmerga forces of the autonomous Kurdistan Regional Government (KRG) with IRGC-QF advisers, intelligence drone surveillance, weapons shipments, and other direct military assistance. In part to counter the Islamic State challenge, Iranian leaders acquiesced to U.S. insistence that Iran's longtime ally, Prime Minister Nuri al-Maliki be replaced by a different Shia Islamist, Haider al-Abadi, who pledged to be more inclusive of Sunni leaders. Iran supplies Shia militias in Iraq with rocket-propelled munitions, such as Improvised Rocket Assisted Munitions (IRAMs), contributed to the deaths of about 500 U.S. military personnel during those years. Iran has typically appointed members of or associates of the IRGC-QF as its Ambassador to Iraq. Current estimates of the total Shia militiamen in Iraq number about 110,000-120,000, of which about two-thirds are members of Iran-backed militias. Collectively, all of the Shia militias are known as Popular Mobilization Forces or Units (PMFs or PMUs). Iran also exercises a degree of soft power in Iraq. It is the main supplier of natural gas that Iraq needs to operate its electricity plants. Then-Secretary of Defense Mattis warned in early 2018 that Iran was funding some Iraqi candidates as part of an effort to increase its influence over the Iraqi government elected in the May 2018 vote. In October 2018, coalition negotiations named relatively pro-American figures as president and prime minister, but Iran is said to be pushing for the appointment of a pro-Iranian figure to be interior minister, a post crucial to Iran's ability to continue to work with its proxies inside Iraq. To demonstrate Iran's interest in the Iraq relationship, President Rouhani conducted an official visit to Iraq in March 2019, during which agreements were signed for a new rail link and other new economic linkages. Rouhani was received in Najaf by the revered Iraqi Shia leader Ayatollah Ali al-Sistani—the only Iranian president the reclusive figure has received. Sistani reportedly urged Iran to respect Iraq's sovereignty—a veiled criticism of the IRGC-QF's emphasis on supporting Iraqi militias. At the same time, Iran reportedly has been seeking to increase its sway over the Shia religious leadership in Iraq. The commanders of the most powerful Iran-backed militias, including Asa'ib Ahl Al Haq (AAH) leader Qais Khazali, the Badr Organization's Hadi al-Amiri (see above), and Kata'ib Hezbollah's Abu Mahdi al-Muhandis, have come to wield significant political influence. They have close ties to Iran dating from their underground struggle against Saddam Hussein in the 1980s and 1990s, and the commanders have publicly pressured the government to reduce reliance on the United States and ally more closely with Iran. Some of these commanders advocate a U.S. withdrawal from Iraq now that the Islamic State has been mostly defeated in Iraq. These figures have largely resisted incorporating their forces into the formal security structure. In late August 2018, there were unconfirmed reports that Iran had transferred short-range ballistic missiles to some of its Shia militia allies in Iraq, possibly for the purpose or projecting force further into the region. Secretary of State Michael Pompeo reacted to the reports by stating in a tweet that he is Deeply concerned about reports of #Iran transferring ballistic missiles into Iraq. If true, this would be a gross violation of Iraqi sovereignty and of UNSCR 2231. Baghdad should determine what happens in Iraq, not Tehran. Despite good relations with the Iraqi Kurdish political leadership, Iran, as does the United States, supports the territorial integrity of Iraq and opposed the September 25, 2017, KRG referendum on independence. At the same time, Iran is wary of the ability of some anti-Iran government Kurdish movements to operate in northern Iraq. In September 2018, Iran fired seven Fateh-110 short-range ballistic missiles at a base in northern Iraq operated by the Kurdistan Democratic Party of Iran—an Iranian Kurdish opposition group. The KDP-I's Secretary General and other figures of the group were reportedly among those wounded. However, Iran's influence in Iraq was cast into some doubt with the strong May 12, 2018, election showing of Iraqi nationalist Moqtada al-Sadr's faction. Iranian Advice and Funding to Iraqi Militias The number of IRGC-QF personnel in Iraq advising Iran-backed militias or the Iraqi government is not known from published sources. It is likely that there are far fewer such Iranian personnel in Iraq than there were at the height of the Islamic State challenge to Iraq in 2014. In 2014, a senior Iranian cleric estimated the dollar value of Iran's assistance to Iraq at about $1 billion—a large increase over an estimated baseline level of about $150 million per year. Iran-Backed Militias and Their Offshoots Some Iran-backed militias are offshoots of the "Mahdi Army" militia that Shia cleric Moqtada Al Sadr formed in 2004 to combat the U.S. military presence in Iraq. As the U.S. intervention in Iraq ended in 2011, the Mahdi Army evolved into a social services network but, in response to the Islamic State offensive in 2014, it reorganized as the "Salaam (Peace) Brigade," with about 15,000 fighters. Kata'ib Hezbollah . One Mahdi Army offshoot, Kata'ib Hezbollah (KAH), was designated by the State Department as a Foreign Terrorist Organization (FTO) in June 2009. KAH has an estimated 20,000 fighters. In July 2009, the Department of the Treasury designated it and its commander, Abu Mahdi al-Muhandis, as threats to Iraqi stability under Executive Order 13438. Muhandis was a Da'wa party operative during Saddam's rule, and was convicted in absentia by Kuwaiti courts for the Da'wa assassination attempt on the ruler of Kuwait in May 1985 and the 1983 Da'wa bombings of the U.S. and French embassies there. After these attacks, he served as leader of the Badr Corps of the IRGC-backed Supreme Council for the Islamic Revolution in Iraq (SCIRI), but he broke with the group in 2003 because of its support for the U.S. invasion of Iraq. He joined the Mahdi Army during 2003-2006 but then broke to form KAH. Asa'ib Ahl Al Haq . Asa'ib Ahl Al Haq (AAH) leader Qais al-Khazali headed the Mahdi Army "Special Groups" breakaway faction during 2006-2007, until his capture and incarceration by U.S. forces for his alleged role in a 2005 raid that killed five American soldiers. During his imprisonment, his followers formed AAH. After his release in 2010, Khazali took refuge in Iran, returning in 2011 to take resume command of AAH while also converting it into a political movement. AAH resumed military activities after the 2014 Islamic State offensive, and has about 15,000 fighters. Khazali is now an elected member of Iraq's national assembly. Badr Organization . The Badr Organization, the armed wing of the Islamic Supreme Council of Iraq (ISCI, formerly SCIRI), the mainstream Shia party headed now by Ammar al-Hakim. Did not oppose the 2003-2011 U.S. intervention in Iraq. The Badr forces (then known as the Badr Brigades or Badr Corps) received training and support from the IRGC-QF in its failed efforts to overthrow Saddam during the 1980s and 1990s. The Badr Organization largely disarmed after Saddam's fall, integrated into the political process, and supported the United States as a facilitator of Iraq's transition to Shia rule. Its leader is Hadi al-Amiri, an elected member of the National Assembly who advocates for government reliance on the Shia militias. Amiri's faction, called "Conquest," won the second-highest number of seats in the May 12, 2018, Iraqi election, positioning Amiri to wield significant influence. Badr has an estimated 20,000 militia fighters. Harakat Hezbollah al-Nujaba. Some Iran-backed Shia militias formed after the U.S. withdrawal. Harakat Hezbollah al-Nujaba or "Nujaba Movement," led by Shaykh Akram al-Ka'bi, formed in 2013 to assist the Asad regime in Syria. The group increased its presence on the Aleppo front in 2016 to help the Asad regime recapture the whole city. Ka'bi was designated as a threat to Iraq's stability under E.O. 13438 in 2008, when he was then a leader of a Mahdi Army offshoot termed the "Special Groups." In March 2019, the Trump Administration designated the Nujaba militia as a terrorist entity under E.O. 13224. Another Shia militia, the Mukhtar Army, claimed responsibility for a late October 2015 attack on Iranian dissidents inhabiting the "Camp Liberty" facility, discussed below. These militias might total 10,000 personnel. U.S. Policy to Curb Iranian Influence in Iraq U.S. policy to limit Iranian influence in Iraq has focused on engaging with Iraqi leaders who are well-disposed to the United States and relatively nonsectarian. The United States supported Abadi's reelection bid in Iraq as contributing to efforts to counter Iran's influence there, and the current president and prime minister, Barham Salih and Adel Abdul Mahdi, respectively, are well known to U.S. officials and favor continued U.S. involvement in Iraq. In 2014, U.S. officials initially refused to support Iraqi Shia militias in the anti-Islamic State effort, but U.S. policy after 2015 supported those PMFs identified by U.S. officials as not backed by Iran. October 2017, then-Secretary of State Rex Tillerson called on Iran-backed militias to disarm and for their Iranian advisors to "go home." The Trump Administration reportedly has worked with the Iraqi government, with mixed success to date, to integrate the militias into the official security forces or demobilize and merge into the political process. Even though the approximately 5,000 U.S. forces in Iraq have directed their operations against Islamic State remnants and on improving the capabilities of Iraqi forces, and have not conducted any combat against IRGC-QF personnel or Iran-backed militias in Iraq, Iran-backed Shia militias pose a potential threat to U.S. personnel in Iraq. On September 11, 2018, following rocket attacks near U.S. diplomatic facilities in Iraq, the Administration blamed Iran for not "act[ing] to stop these attacks," and threatened potential U.S. military action against Iran if Iran-backed militias in Iraq attacked U.S. interests. Some reports indicate that the additional U.S. force deployments to the Persian Gulf were prompted in part by U.S. indications of Iranian planning for its allies in Iraq to attack U.S. forces. The potential for such Iranian attacks was assessed by experts as increasing following the April 15, 2019 U.S. designation of the IRGC as an FTO. U.S. indications of possible attacks on U.S. forces prompted Secretary of State Pompeo to suddenly rearrange his travel in Europe to make an unscheduled visit to Iraq on May 7, 2019 to "assure [Iraq's leaders] that we stood ready to continue to ensure that Iraq was a sovereign, independent nation, and that the United States would continue to help build out partners in the region." With respect to sanctions, the United States has pressed Iraq to comply with reimposed U.S. sanctions on Iran by ceasing oil swaps with Iran and ceasing dollar transactions with Iran's Central Bank. The United States has provided successive 90-day waivers of the Iran Freedom and Counterproliferation Act ( P.L. 112-239 ) to permit Iraq to continue buying Iranian natural gas that feeds its power plants until it can line up alternative gas sources. Executive Order 12438 blocks property and prevents U.S. visas for persons determined to threaten stabilization efforts in Iraq. The FY2019 National Defense Authorization Act (NDAA, P.L. 115-232 ), bans any U.S. assistance from being used to assist any group affiliated with the IRGC-QF. In the 116 th Congress, legislation such as H.R. 361 and H.R. 571 requires sanctions on Iran-backed militias or other entities determined to be destabilizing Iraq. On the other hand, these organizations are believed to have virtually no U.S.-based assets or financial interests that would be susceptible to U.S. sanctions. Syria100 Iranian leaders characterize Syrian President Bashar al Asad as a key ally, despite Asad's secular ideology, and Iran has undertaken major efforts to keep him in power. The reasons for Iran's consistent and extensive support for Asad include the following: (1) Syria's cooperation is key to Iran's arming and protection of Hezbollah; (2) the Asad regime has been Iran's closest Arab ally in a region where most governments oppose Iran; (3) a Sunni opposition government hostile to Iran might come to power if Asad fell; and (4) the Asad regime can help block Sunni extremist groups from attacking Hezbollah in Lebanon from across the Syria border. Most observers conclude that Iran's strategic interest in the Asad regime's survival is sufficiently compelling that Iran will resist withdrawing Iranian forces from Syria as long as any threat to Asad's grip on power persists. In 2018, Iran and Syria signed updated military cooperation agreements, perhaps suggesting Iranian intent to remain militarily in Syria indefinitely. On the Syria battlefield, Iran-backed militias advanced east to the point where they can potentially help Iran form a secure supply corridor from Iran to Lebanon. On several occasions, Iran-backed forces approached U.S. training locations for Syrian forces in southeast Syria combatting the Islamic State and were subjected to U.S.-led fire to halt their advances. On October 1, 2018, Iran fired six ballistic missiles from western Iran on suspected Islamic State positions near Hanjin, Syria. Iran claimed the strikes were retaliation for the September 2018 attack on Iran's military parade in Ahwaz (see above), but the strikes, which were near areas in which U.S. and U.S.-backed forces in Syria operate, could be interpreted as signaling Iran's ability to project power in Syria from Iran's homeland itself. Iran-backed forces are likely to play a role in any Syrian government offensive to recapture Idlib province, the last major bastion of opposition forces. Iran's extensive involvement in Syria has alarmed Israeli leaders who now apparently perceive Iran as using Syrian territory to exert greater leverage against Israel—adding to the threat posed by Hezbollah on Israel's northern border. Israel accuses Iran of constructing bases in Syria, including rocket and missile factories that can safely supply Hezbollah. For additional information on the threat to Israel posed by Iran's presence in Syria, see: CRS In Focus IF10858, Iran and Israel: Tension Over Syria , by Carla E. Humud, Kenneth Katzman, and Jim Zanotti Iran has not hidden its involvement or its losses in Syria. Deaths of high-ranking IRGC commanders in battles in Syria have been widely publicized in state-run media. Their deaths have been portrayed by the regime as heroic sacrifices on behalf of the Iranian revolution and Iran's national interests. At least 700 Iranian military personnel have died in Syria, including several high-level IRGC-QF commanders. Prior to the Russian intervention, Iran participated in multilateral diplomacy on a political solution in Syria and put forward proposals for a peaceful transition in Syria. In 2015, Iran attended meetings of and did not publicly dissent from joint statements issued by an international contact group on Syria, which included the United States. Iran was invited to participate in this "Vienna process" after the United States dropped its objections on the grounds that, in the wake of the July 2015 Iran nuclear agreement, Iran could potentially contribute to a Syria solution. However, Russia's intervention in Syria created the potential for Iran to achieve its maximum goals in Syria, and in 2016-2018, Iran has apparently continued to pursue those goals in negotiations brokered by Russia and Turkey ("Astana Process"). However, an August 2018 Administration report on Iran mandated by the Countering America's Adversaries through Sanctions Act said that Iran "is not playing a constructive role in Syria ... despite Iran's status as a 'guarantor' of the Astana ceasefire zones ostensibly in place." Iranian Military and Financial Support to Asad Iranian support to Asad against the rebellion is extensive, including the provision of substantial funds, weapons, and IRGC-QF advisors to the Syrian regime. However, exact numbers of Iranian and Iran-backed forces are available in ranges, because of the wide disparity in open reporting: Iranian Military Personnel. After 2012, Iran expanded its intervention to the point where regional security sources estimated that, by late 2015, it was deploying nearly 2,000 military personnel in Syria, including IRGC-QF, IRGC ground force, and even some regular army special forces personnel. The deployment of Iranian regular army forces in Syria was significant because Iran's regular military has historically not deployed beyond Iran's borders since the 1980-1988 Iran-Iraq War. Hezbollah Fighters . Sources tend to center on a figure of about 7,000 Lebanese Hezbollah fighters deployed to Syria to assist Syrian government forces. Militia Recruits . The IRGC-QF recruited a reported 24,000-80,000 Shia fighters to operating under Iranian command in Syria at the height of the conflict during 2013-2017. These include not only Lebanese Hezbollah fighters but also Iraqi militias such as Harakat Hezbollah al-Nujaba, and brigades composed of Afghan and Pakistani Shias. These numbers might have declined somewhat as the Syrian government regained much of its territory; on November 29, 2018, the State Department's policy official on Iran, Brian Hook, stated that Iran "manages as many as 10,000 Shia fighters in Syria, some of whom are children as young as 12 years old." Financial Support. Estimates of Iran's spending to support Asad's effort against the rebellion vary widely. In June 2015, the office of the U.N. Special Envoy to Syria Staffan de Mistura estimated Iran's aid to Syria, including military and economic aid, to total about $6 billion per year. Iranian aid to Syria is difficult to gauge with precision, in part because it includes a combination of economic aid (for which some figures, such as lines of credit, are publicly available in official statements), subsidized oil and commodity transfers, and military aid (for which numbers are difficult to obtain). The State Department's "Outlaw Regime" report (graphic, page 11), referenced above, indicates that Iran has extended "at least $4.6 billion in credit to the Assad regime" since 2012. U.S. Policy to Limit Iranian Influence in Syria U.S. officials have stated that reducing Iran's presence in Syria is critical to protecting Israel and to the larger U.S. strategy of rolling back Iran's regional influence. Then-Secretary of State Rex Tillerson devoted much of a January 17, 2018, speech on U.S. policy toward Syria to explaining that the 2,000 U.S. troops in Syria were there in part to diminish Iranian influence in Syria and denying Iran's "dreams of a northern arch" (from Iran to the Mediterranean). He explained that a U.S.-Russia de-escalation agreement for southwest Syria "addresses Israel's security by requiring Iranian-backed militias, most notably Hezbollah, to move away from Israel's border." National Security Adviser John Bolton reiterated that position in a speech on September 10, 2018. Secretary of State Pompeo said in his May 21, 2018, speech at the Heritage Foundation, that "Iran must withdraw all forces under Iranian command throughout the entirety of Syria." In December 2018, President Trump announced that U.S. forces would withdraw, leading some experts to assert that the United States would lose at least some of its leverage against Iran in Syria. Others argued that the U.S. forces that are in Syria do not pressure Iran much because the U.S. forces have not been ordered to preemptively attack Iranian or pro-Iranian forces in Syria and the U.S. force is not large enough to influence political outcomes in Syria. The Administration has supported Israeli strikes on Iranian positions in Syria that are part of Israel's effort to deny Iran the opportunity to conduct an extensive military infrastructure there. Still, at least in part due to these arguments and others, President Trump ultimately decided to leave at least 400 U.S. forces in Syria indefinitely. Executive Order 13572 blocks U.S.-based property and prevents U.S. visas for persons determined to be responsible for human rights abuses and repression of the Syrian people. Several IRGC-QF commanders have been designated for sanctions under the order. In the 115 th Congress, H.R. 4012 would direct the Director of National Intelligence to produce a National Intelligence Estimate on Iranian support to proxy forces in Syria (and Lebanon). Hamas, Hezbollah, and other Anti-Israel Groups109 A significant component of Iran's policy is to use its allies to pressure Israel strategically. Israel Iran's leaders assert that Israel is an illegitimate creation of the West and an oppressor of the Palestinians—a position that differs from that of the Shah of Iran, whose government maintained relatively normal relations with Israel. Supreme Leader Khamene'i has repeatedly described Israel as a "cancerous tumor" that should be removed from the region. In a September 2015 speech, Khamene'i stated that Israel will likely not exist in 25 years—the time frame for the last of the JCPOA nuclear restriction to expire. These statements underpin Israeli assertions that a nuclear-armed Iran would be an "existential threat" to Israel. Iran's leaders routinely state that Israel presents a strategic threat to Iran. They add that the international community applies a "double standard" to Iran in that Israel has faced no sanctions even though it is the only Middle Eastern country to possess nuclear weapons and not to become a party to the Nuclear Non-Proliferation Treaty (NPT). Iran's leaders assert that Israel's purported nuclear arsenal is a main obstacle to establishing a weapons-of-mass-destruction (WMD) free zone in the Middle East. Iran materially supports nonstate actors such as Hamas and Hezbollah that have undertaken armed action against Israel, possibly as an attempt to apply pressure to Israel to compel it to make concessions. Alternately, Iran might be attempting to disrupt prosperity, morale, and perceptions of security among Israel's population. For more than two decades, the annual State Department report on international terrorism has asserted that Iran provides funding, weapons (including advanced rockets), and training to a variety of U.S.-designated FTOs, including Hezbollah, Hamas, Palestinian Islamic Jihad—Shiqaqi Faction (PIJ), the Al Aqsa Martyrs Brigades (a militant offshoot of the dominant Palestinian faction Fatah), and the Popular Front for the Liberation of Palestine-General Command (PFLP-GC). Israel and the Obama Administration disagreed over the JCPOA—Prime Minister Benjamin Netanyahu called it a "historic mistake," and, in September 2017 and in March 2018, he reportedly urged President Trump to seek to renegotiate it or to terminate U.S. participation in it. Netanyahu's policy preference was adopted when the Trump Administration exited the JCPOA on May 8, 2018. Israel retains the option of a military strike on Iran's nuclear facilities should Iran responds to the U.S. exit by resuming the nuclear activities prohibited or limited by the JCPOA. Hamas111 U.S. officials assert that Iran gives Hamas funds, weapons, and training. Hamas seized control of the Gaza Strip in 2007 and has since administered that territory, but it ceded formal authority over Gaza in June 2014 to a consensus Palestinian Authority (PA) government and turned over further authority to the PA as part of an October 2017 reconciliation agreement. Hamas terrorist attacks within Israel have decreased since 2005, but Hamas has used Iran-supplied rockets and other weaponry during three conflicts with Israel since 2008, the latest of which was in 2014. Smaller scale trading of rocket attacks and air strikes have taken place in the summer of 2018. The Iran-Hamas relationship was forged in the 1990s as part of an apparent attempt to disrupt the Israeli-Palestinian peace process through Hamas attacks on buses, restaurants, and other civilian targets inside Israel. However, in 2012, their differing positions on the ongoing Syria conflict caused a rift. Largely out of sectarian sympathy with Sunni rebels in Syria, Hamas opposed the efforts by Asad to defeat the rebellion militarily. Iran reduced its support to Hamas in its brief 2014 conflict with Israel as compared to previous Hamas-Israel conflicts in which Iran backed Hamas extensively. Since then, Iran has apparently sought to rebuild the relationship by providing missile technology that Hamas used to construct its own rockets and by helping it rebuild tunnels destroyed in the conflict with Israel. Hamas and Iran restored their relations in October 2017. Iranian Financial Support to Hamas Iran's support to Hamas has been estimated to be as high as $300 million per year (funds and in-kind support, including weapons) during periods of substantial Iran-Hamas collaboration, but is widely assessed at a baseline amount in the tens of millions per year. The State Department's September 2018 "Outlaw Regime" report states that Iran "provides up to $100 million annually in combined support to Palestinian terrorist groups," including Hamas, PIJ, and the PFLP-GC. Hezbollah Lebanese Hezbollah, which Iranian leaders portray as successful "exportation" of Iran's Islamic revolution, is Iran's most significant nonstate ally. Hezbollah's actions to support its own as well as Iranian interests take many forms, including acts of terrorism and training and combat in countries in the region. Recent State Department reports on international terrorism state that "the group generally follows the religious guidance of the Iranian Supreme Leader, which [is] [Grand Ayatollah] Ali Khamenei." Iran's close relationship to the group began when Lebanese Shia clerics of the pro-Iranian Lebanese Da'wa (Islamic Call) Party—many of whom had studied under the leader of Iran's revolution, Grand Ayatollah Ruhollah Khomeini—began to organize in 1982 into what later was unveiled in 1985 as Hezbollah. IRGC forces were sent to Lebanon to help develop a military wing, and these IRGC forces subsequently evolved into the IRGC-QF. Iranian leaders have long worked with Hezbollah as an instrument to pressure Israel. Hezbollah's attacks on Israeli forces in Israel's self-declared "security zone" in southern Lebanon contributed to an Israeli withdrawal from that territory in May 2000. Hezbollah fired Iranian-supplied rockets on Israel's northern towns and cities during the July-August 2006 war with Israel, and in July 2006 Hezbollah damaged an Israeli warship with a C-802 anti-ship missile of the type that Iran reportedly bought in significant quantity from China in the 1990s. Hezbollah's leadership asserted that it was victorious in that war for holding out against Israel. Illustrating the degree to which Iranian assistance has helped Hezbollah become a potential global terrorism threat, the State Department Coordinator for Counterterrorism said on November 13, 2018, that "Hezbollah's ambitions and global reach rival those of Al Qaeda and ISIS." Iran has assisted Hezbollah in several of the terrorist attacks that are depicted in the table above. Hezbollah has become a major force in Lebanon's politics, in part due to the arms and funding it gets from Iran. Hezbollah now plays a major role in decisionmaking and leadership selections in Lebanon. Hezbollah's militia rivals the Lebanese Armed Forces (LAF). However, there has been vocal criticism of Hezbollah in and outside Lebanon for its support for Asad, which has diluted Hezbollah's image as a steadfast opponent of Israel and has embroiled it in war against other Muslims. In November 2017, the resignation of Prime Minister Sa'd Hariri appeared intended to expose and undermine Hezbollah's influence in Lebanon—a move he undertook immediately after close consultations with Riyadh. The resignation was rescinded by popular pressure in Lebanon and did not diminish Hezbollah's position. Hezbollah's allies increased their number of seats as a result of April 2018 parliamentary elections in Lebanon, although the number of seats held by Hezbollah itself stayed at the 13 it held previously. Iranian Financial and Military Support Iranian support for Hezbollah fluctuates according to the scope and intensity of their joint activity. Iran provided high levels of aid to the group in the course of its combat intervention in Syria and after the 2006 Hezbollah war with Israel. Among specific assistance: Training . The State Department report for 2016 asserted that Iran "has trained thousands of [Hezbollah] fighters at camps in Iran." In the early 1980s, Iran was widely reported to have a few thousand IRGC personnel helping to establish what became Hezbollah. More recently, Hezbollah has become more self-sufficient and able to assist IRGC-QF operations elsewhere, such as in Syria, Iraq, and Yemen. In Syria, the IRGC-QF has facilitated Hezbollah's extensive involvement on behalf of the Asad regime, whose continuation in power is in the interests of both Iran and Hezbollah. Syria is the key conduit through which the IRGC-QF has historically armed and assisted Hezbollah. Financial Support . The State Department report for 2015 contained a specific figure, stating that Iran has provided Hezbollah with "hundreds of millions of dollars." However, on June 5, 2018, Under Secretary of the Treasury for Terrorism and Financial Intelligence Sigal Mandelker cited a figure of $700 million in Iranian support to Hezbollah per year —far higher than specific figures previously cited in any U.S. official reports. The higher figure could represent a U.S. reassessment of its previous estimates, or perhaps reflect a large increase due to Hezbollah's extensive combat on various battlefronts in Syria. The State Department's September 2018 "Outlaw Regime" report repeats the $700 million figure. Weapons Transfers . State Department reports and officials say that, according to the Israeli government, since that conflict, Hezbollah has stockpiled more than 130,000 rockets and missiles, presumably supplied mostly by Iran. Some are said to be capable of reaching Tel Aviv and other population centers in central Israel from south Lebanon. The State Department report adds that Israeli experts assert that Iran also has transferred to Hezbollah anti-ship and anti-aircraft capabilities. These specific rockets and missiles are discussed in the table above. Iran has historically transferred weaponry to Hezbollah via Syria, offloading the material at Damascus airport and then trucking it over the border. However, possibly due to expanded Israeli strike operations against Iran in Syria, some reports indicate that in 2018 Iran has also sought to transfer weaponry directly to Hezbollah via Beirut. U.S. Policy to Reduce Iran's Support for Hezbollah The Trump Administration has followed its predecessors in trying to disrupt the Iran-Hezbollah relationship, although without appreciably more success than its predecessors had. The United States has not acted against Hezbollah militarily, but it has supported Israeli air strikes in Syria that are intended, at least in part, to disrupt Iranian weapons supplies to Hezbollah. Successive Administrations have also sought to provide U.S. military gear and other assistance to the Lebanese army, to build it up as a counterweight to Hezbollah. It is not clear that such efforts have accomplished the stated objectives, however. The United States has imposed sanctions on Iranian entities involved in supplying Hezbollah as well as on Hezbollah and its related entities, although without apparent effect in light of the fact that such entities do not generally operate in the international financial or commercial system. The 115 th Congress enacted legislation ( P.L. 115-272 ) that expanded the authority to sanction foreign banks that transaction business with Hezbollah, its affiliates, and partners. Sanctions on Hezbollah and on Iran might have contributed to the early 2019 call by Hezbollah's Secretary General Hassan Nasrallah for additional donations, but there has been no evident change in Hezbollah's operational behavior in 2019. Yemen125 Iranian leaders have not historically identified Yemen as a core Iranian security interest, but they seized on 2014 territorial gains by Zaidi Shia Houthi rebels there as an opportunity to acquire significant leverage against Saudi Arabia. A 2011 "Arab Spring"-related uprising in Yemen forced longtime President Ali Abdullah Saleh to resign in January 2012. In March 2015, Saudi Arabia assembled an Arab coalition that, with logistical help from U.S. forces, has helped the ousted government recapture some territory but has caused drastic humanitarian consequences without yet compelling the Houthis to accept a political solution. 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. Iranian weapons shipments to the Houthis are banned by Resolution 2231 on Iran and also by Resolution 2216 on Yemen, discussed above. A July 2016 report on Iran by the U.N. Secretary-General reiterated the assertion made previously by U.N. experts, that Iran has shipped arms to the Houthis. Among the systems Iran is providing are anti-ship cruise missiles that are of increasing concern to U.S. commanders. The Houthis fired anti-ship missiles at UAE and U.S. ships in the Red Sea in October 2016, which prompted U.S. strikes on Houthi-controlled radar installations. Iran subsequently deployed several warships to the Yemen seacoast as an apparent sign of support for the Houthis. In January 2017, the Houthis damaged a Saudi ship in the Red Sea—an action that contributed to the February 1, 2017, Trump Administration statement putting Iran "on notice" for its regional malign activities. The degree of U.S. concern about Iran's supplies of missiles to the Houthis was reflected in then-CENTCOM commander General Joseph Votel's March 29, 2017, testimony before the House Armed Services Committee, referring to the Bab el-Mandeb Strait: It is a choke point, it is a major transit area for commerce, not only ours but for international ships. About 60 to 70 ships go through there a day. What we have seen, I believe, that the—with the support of Iran, we have seen the migration of capabilities that we previously observed in the Straits of Hormuz, a layered defense, consists of coastal defense missiles and radar systems, mines, explosive boats that have been migrated from the Straits of Hormuz to this particular area right here, threatening commerce and ships and our security operations in that particular area. Saudi Arabia, with U.S. and some U.N. backing, accuses Iran of providing the ballistic missiles that the Houthis have fired on Riyadh on several occasions. A December 8, 2017, report by the U.N. Secretary-General on implementation of Resolution 2231 generally supports those allegations as well as allegations that Iran had shipped other weapons to the Houthis. U.S. Ambassador to the U.N. Nikki Haley cited that report in a December 14, 2017, presentation to the Security Council that asserted definitively that Iran had given the Houthis the missiles fired on Riyadh. A report by a U.N. panel of experts in January 2018 reportedly found that two missiles fired on Saudi Arabia by the Houthis, on July 22 and November 4, 2017, were consistent with the design of Iranian missiles, but the panel did not state definitively who supplied the missiles or how they were transported to Yemen. On November 29, 2018, the head of the State Department's "Iran Action Group," Brian Hook, displayed missiles, rockets, and other equipment that he asserted were supplied by Iran to the Houthis and captured by Saud-led coalition forces. Some of these systems are discussed in the "Iran missile arsenal" table above. In late February 2018, Russia blocked a U.N. Security Council resolution from identifying Iran directly as a violator of the U.N. ban on weapons shipments to Yemen (Resolution 2216). Iran has denied providing the Houthis with missiles and assert that they are from a government arsenal assembled before the 2011 civil strife. Financial and Advisory Support Many observers assess that Iran's support for the Houthis has been modest. The State Department's "Outlaw Regime" report states that since 2012, Iran "has spent hundreds of millions of dollars" aiding the Houthis. Secretary Pompeo mentioned the same figure in the transcript of his briefing for Senators on November 28, 2018. In that same transcript, Secretary Pompeo stated that a 20-person IRGC-QF unit called "Unit 190" is responsible for funneling Iranian weaponry to the Houthis. Pompeo added that the head of the unit also arranges for the travel of IRGC-QF and Hezbollah advisers to go to Yemen to advise the Houthis. The State Department's "Outlaw Regime" report cites press reports that Iran might have sent some militia forces from Syria to fight alongside the Houthis in Yemen. U.S. Policy to Counter Iranian Influence in Yemen U.S. officials have cited Iran's support for the Houthis to argue for the main policy line of effort, which is providing logistical support to the Saudi-led Arab coalition battling the Houthis in Yemen. In his May 21, 2018, speech, Secretary Pompeo stipulated as one U.S. demand on Iran that the country "must also end its military support for the Houthi militia and work towards a peaceful political settlement in Yemen." In the transcript of his remarks to Senators on November 28, 2018, Pompeo stated that "Iran wants to establish a version of Lebanese Hezbollah on the Arabian Peninsula so the mullahs in Tehran can control seaborne trade through strategic waterways like the Bab el-Mandeb Strait.... we must also prevent Iran from entrenching itself in Yemen." However, even though many Members of Congress express concerns with Iran's backing for the Houthis, several bills have passed the House and the Senate requiring a decrease, or even an end, to the U.S. support for the Arab coalition fighting in Yemen. These votes have been widely viewed as opposition to the civilian casualties caused by the Saudi-led effort as well as sentiment against Saudi Crown Prince Mohammad bin Salman over the October 2018 Kashoggi killing. The United States has also sought to prevent Iran from delivering weapons to the Houthis by conducting joint naval patrols with members of the Saudi-led coalition. Some weapons shipments have been intercepted. Some reports indicate that, to evade the naval scrutiny, Iran has been transferring its weapons deliveries to a variety of small boats in the northern Persian Gulf, from where they sail to Yemen. The United States also has increased its assistance to Oman to train its personnel to prevent smuggling through its territory, presumably including the smuggling of Iranian weaponry to the Houthis. U.S. forces have not engaged in any bombing of the Houthis or Iranian advisers in Yemen, although U.S. forces continue to operate on the ground in Yemen against the Al Qaeda in the Arabian Peninsula (AQAP) terrorist group that operates in southeastern Yemen. Turkey134 Iran and Turkey, which share a short border, have extensive economic relations but sometimes tense political relations. Turkey is a member of NATO, and Iran has sought to limit Turkey's cooperation with any NATO plan to emplace military technology near Iran's borders. Iran and Turkey's disputes on some regional issues might be caused, at least in part, by the sectarian differences between Sunni-inhabited Turkey and Shia Iran. Turkey has advocated Asad's ouster as part of a solution for conflict-torn Syria whereas Iran is a key supporter of Asad. However, following a failed Turkish military coup in July 2016, and mutual concerns over the empowerment of Syrian Kurdish forces, Turkey-Iran differences narrowed. Turkey's President Recep Tayip Erdogan has come to publicly accept that Asad might remain in power in Syria and both countries are integral part of Russia-led talks on an overall political solution for Syria. Iran and Turkey cooperate to try to halt cross border attacks by Kurdish groups that oppose the governments of Turkey (Kurdistan Workers' Party, PKK) and of Iran (Free Life Party, PJAK), and which enjoy safe have in northern Iraq. In August 2017, the first high-level Iranian military visit to Turkey since the Iranian revolution took place when the chief of staff of Iran's joint military headquarters, Hamid Baqeri, who rose through IRGC ranks, visited Ankara. Turkey supported the JCPOA, and sanctions relief on Iran has enabled Iran-Turkey trade to expand. Iran supplies as much as 50% of Turkey's oil and over 5% of its natural gas, the latter flowing through a joint pipeline that began operations in the late 1990s and has since been supplemented by an additional line. President Erdogan has indicated that Turkey will not cooperate with the reimposition of sanctions on Iran related to the U.S. exit from the JCPOA. In the 1990s and early 2000s, Iran and Turkey were at odds over the strategic engagement of Turkey's then leaders with Israel. The Iran-Turkey dissonance on the issue faded after Erdogan's Islamist-rooted Justice and Development Party (AKP) came to power in Turkey. Turkey has since been a significant supporter of Hamas and other Islamist movements. North Africa Two countries in North Africa, Egypt and Morocco, have been mentioned as potential members of the planned "Middle East Strategic Alliance" (MESA) to counter Iran Egypt135 Iran's relations with Egypt have been strained for decades, spanning various Egyptian regimes. Egypt is a Sunni-dominated state that is aligned politically and strategically with other Sunni governments that are critical of Iran. Iran broke relations with Egypt shortly after the 1979 peace treaty Egypt signed with Israel. The two countries reportedly have been close to reestablishing full relations numerous times, including after the election of a Muslim Brotherhood leader, Mohammad Morsi, as Egypt's president. Morsi visited Iran in August 2012. However, relations worsened again after the military's overthrow of the Morsi government. Egypt, particularly under the government of President Abd al Fattah Sisi, views Hamas as an Islamist threat and has sought to choke off Iranian and other weapons supplies to that movement. On the other hand, Egypt and Iran have found some common ground on Syria insofar as Sisi has not sought Asad's ouster. Egypt said in April 2019 that it would not join the U.S.-backed MESA alliance. Morocco136 In May 2018, Morocco announced t hat it would sever diplomatic ties with Iran because of alleged Iranian support (via its ally Lebanese Hezbollah) for the Polisario Front, which seeks independence for the Western Sahara. Morocc o's foreign minister claimed that Hezbollah had provided surface-to-air missiles to the Polisario; that evidence was reportedly presented to Iran but has not been made public. No other publicly available evidence appears to support of those specific allegations, and both Iran and Hezbollah denied the accusations. Morocco previously cut ties with Iran in March 2009 due to alleged Iranian efforts to spread Shiism in largely Sunni Morocco; diplomatic relations were reestablished in January 2017. Morocco has close relations with Saudi Arabia, which supported Morocco's severing ties with Iran. An intent to be part of the MESA coalition could give Morocco incentive to be as hardline on Iran as possible, and potential to accuse Iran of activities for which there might not be a lot of independently corroborated evidence. There has been little, if any, evidence that influencing politics or political outcomes in Morocco has been a significant feature of Iran's regional policies or its intent. Iranian leaders rarely, if ever, mention Morocco when they outline Iranian policy in the Middle East region. There are few easily identifiable factions in Morocco that are pro-Iranian or with which the IRGC-QF can work. South and Central Asia Iran's relations with countries in the Caucasus, Central Asia, and South Asia vary significantly, but most countries in these regions conduct relatively normal trade and diplomacy with Iran. Some of them face significant domestic threats from radical Sunni Islamist extremist movements similar to those that Iran characterizes as a threat. Most of the Central Asia states that were part of the Soviet Union are governed by authoritarian leaders. Afghanistan remains politically weak, and Iran is able to exert influence there. Some countries in the region, particularly India, seek greater integration with the United States and other world powers and tend to downplay cooperation with Iran. The following sections address countries that have significant economic and political relationships with Iran. The South Caucasus: Azerbaijan and Armenia Azerbaijan is, like Iran, mostly Shia Muslim-inhabited. However, Azerbaijan is ethnically Turkic and its leadership is secular. Iran and Azerbaijan also have territorial differences over boundaries in the Caspian Sea. Iran asserts that Azeri nationalism might stoke separatism among Iran's large Azeri Turkic population, which has sometimes been restive. Iran has generally tilted toward Armenia, which is Christian, in Armenia's conflict with Azerbaijan over the Nagorno-Karabakh enclave. The relationship is expanding among Iran, Armenia, and Georgia now that Iran is not under international economic sanctions. On December 21, 2016, President Rouhani visited Armenia to discuss a Persian Gulf-Black Sea transit and transport corridor. For more than two decades, Azerbaijan has engaged in strategic cooperation with the United States against Iran (and Russia), including Azerbaijan's deployments of troops to and facilitation of supply routes to Afghanistan, and counterterrorism cooperation. In the 1990s, the United States successfully backed construction of the Baku-Tblisi-Ceyhan oil pipeline, intended in part to provide non-Iranian and non-Russian export routes. On the other hand, the United States has accepted Azerbaijan's need to deal with Iran on some major regional energy projects. Several U.S. sanctions laws exempted from sanctions long-standing joint natural gas projects that involve some Iranian firms—particularly the Shah Deniz natural gas field and pipeline in the Caspian Sea. The project is run by a consortium in which Iran's Naftiran Intertrade Company (NICO) holds a passive 10% share. (Other major partners are BP, Azerbaijan's national energy firm SOCAR, and Russia's Lukoil.) The lifting of sanctions on Iran has caused Azerbaijan to alter its policy toward Iran somewhat. In August 2016, Azerbaijan's President Ilham Aliyev hosted Rouhani and Russia's President Vladimir Putin to a "Baku Summit," in which a major topic was a long-discussed "North-South Transport Corridor" involving rail, road, and shipping infrastructure from Russia to Iran, through Azerbaijan. The project is estimated to cost $400 million. And, some press reports indicate that Iranian investors previously or still linked to Iranian governing institutions have engaged in real estate and other projects in Azerbaijan. Central Asia Iran has generally sought positive relations with the leaderships of the Central Asian states, even though most of these leaderships are secular and all of the Central Asian states are mostly Sunni inhabited. Almost all of the Central Asian states share a common language and culture with Turkey; Tajikistan is alone among them in sharing a language with Iran. Several have active Sunni Islamist opposition movements, such as the Islamic Movement of Uzbekistan (IMU), giving the Central Asian countries common cause with Iran to prevent Sunni jihadist terrorist actions. The IMU, which is active in Afghanistan, in mid-2015, declared its loyalty to the Islamic State organization. Iran and the Central Asian states are expanding economic relations, perhaps in part to fit into China's "Belt and Road Initiative" (BRI) to build up infrastructure in countries west of China—akin to reviving the old "Silk Road. In December 2014, a new railway was inaugurated through Iran, Kazakhstan, and Turkmenistan, providing a link from the Persian Gulf to Central Asia. Iran was hoping that the 2016 lifting of sanctions would position Iran as central to energy and transportation routes linking East Asia with Europe—a vision that was discussed with Iranian leaders during the January 2016 visit to Iran of China's President Xi Jinping. However, the reimposition of U.S. sanctions in 2018 is likely to slow or halt that ambition. Along with India and Pakistan, Iran has been given observer status in a Central Asian security grouping called the Shanghai Cooperation Organization (SCO—Russia, China, Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan). In April 2008, Iran applied for full membership in the organization. Apparently in an effort to cooperate with international efforts to pressure Iran, in June 2010, the SCO barred admission to Iran on the grounds that it is under U.N. Security Council sanctions. Some officials from SCO member countries have stated that the JCPOA removed that formal obstacle to Iran's obtaining full membership, but opposition to Iran's full membership among some SCO countries has denied Iran from full membership. Rouhani attended the late May 2018 SCO meeting in China which discussed how to react to the U.S. exit from the JCPOA. Turkmenistan Turkmenistan and Iran have a land border in Iran's northeast. Supreme Leader Khamene'i is of Turkic origin; his family has close ties to the Iranian city of Mashhad, capital of Khorasan Province, which borders Turkmenistan. The two countries are also both rich in natural gas reserves. A natural gas pipeline from Iran to Turkey, fed with Turkmenistan's gas, began operations in 1997, and a second pipeline was completed in 2010. China has since become Turkmenistan's largest natural gas customer. Another potential project favored by Turkmenistan and the United States would likely reduce interest in pipelines that transit Iran. President Berdymukhamedov has revived his predecessor's 1996 proposal to build a gas pipeline through Afghanistan to Pakistan and India (termed the Turkmenistan-Afghanistan-Pakistan-India, or "TAPI" pipeline). In August 2015, Turkmenistan's state-owned gas company was named head of the pipeline consortium and Turkmenistan officials said the project was formally inaugurated in December 2015, with completion expected in 2019. U.S. officials have expressed strong support for the project as "a very positive step forward and sort of a key example of what we're seeking with our New Silk Road Initiative, which aims at regional integration to lift all boats and create prosperity across the region." Tajikistan Iran and Tajikistan share a common Persian language, as well as literary and cultural ties, but the two do not share a border and most Tajikistan citizens are Sunni Muslims. President Imamali Rakhmonov has asserted that Iran and Tajikistan face common threats from arms races, international terrorism, political extremism, fundamentalism, separatism, drug trafficking, transnational organized crime, and the proliferation of weapons of mass destruction, and that close ties with neighboring states such as Iran would be based on noninterference in each other's internal affairs and the peaceful settlement of disputes, such as over border, water, and energy issues. Some Sunni Islamist extremist groups that pose a threat to Tajikistan are allied with Al Qaeda or the Islamic State. Tajikistan's leaders appear particularly concerned about Islamist movements in part because the Islamist-led United Tajik Opposition posed a serious threat to the newly independent government in the early 1990s, and a settlement of the insurgency in the late 1990s did not fully resolve government-Islamist opposition tensions. The Tajikistan government has detained members of Jundallah (Warriors of Allah)—a Pakistan-based Islamic extremist group that has conducted bombings and attacks against Iranian security personnel and mosques in Sunni areas of eastern Iran. In part because the group attacked some civilian targets in Iran, in November 2010, the State Department named the group an FTO. Kazakhstan Kazakhstan is a significant power by virtue of its geographic location, large territory, and ample natural resources. It hosted P5+1-Iran nuclear negotiations in 2013 and, in September 2014, Kazakhstan's President Nursultan Nazarbayev met with President Rouhani and expressed the hope that a JCPOA would be achieved in order to better integrate Iran economically into the Central Asian region. Kazakhstan played a role in the commercial arrangements that produced the December 2015 shipment out to Russia of almost all of Iran's stockpile of low-enriched uranium, fulfilling a key JCPOA requirement. Kazakhstan's National Atomic Company Kazatomprom supplied Iran with 60 metric tons of natural uranium on commercial terms as compensation for the removal of the material, which Norway paid for. With sanctions eased, Iran is open to additional opportunities to cooperate with Kazakhstan on energy and infrastructure projects. Kazakhstan possesses 30 billion barrels of proven oil reserves (about 2% of world reserves) and 45.7 trillion cubic feet of proven gas reserves (less than 1% of world reserves). Two major offshore oil fields in Kazakhstan's sector of the Caspian Sea—Kashagan and Kurmangazy—are estimated to contain at least 14 billion barrels of recoverable reserves. Iran and Kazakhstan do not have any joint energy ventures in the Caspian or elsewhere, but after the finalization of the JCPOA in July 2015, the two countries resumed Caspian oil swap arrangements that were discontinued in 2011. The two countries are not at odds over specific sections of the Caspian Sea, and some aspects, but not all, of the territorial questions regarding the Caspian were settled in 2018. Uzbekistan During the 1990s, Uzbekistan, which has the largest military of the Central Asian states, identified Iran as a potential regional rival and as a supporter of Islamist movements in the region. However, since 1999, Uzbekistan and Iran—which do not share a common border or significant language or cultural links—have moved somewhat closer over shared stated concerns about Sunni Islamist extremist movements, particularly the Islamic Movement of Uzbekistan (IMU) extremist group. In February 1999, six bomb blasts in Tashkent's governmental area nearly killed then President Islam Karimov, who was expected to attend a high-level meeting there. The government alleged that the plot was orchestrated by the IMU with assistance from Afghanistan's Taliban, which was in power in Afghanistan and hosting Osama bin Laden. In September 2000, the State Department designated the IMU as an FTO. The IMU itself has not claimed responsibility for any terrorist attacks in Iran and appears focused primarily on activities against the governments of Afghanistan and Uzbekistan. Iran-Uzbekistan relations have not changed significantly since the August 2016 death of Uzbekistan's longtime President Islam Karimov and his replacement by Shavkat Mirziyoyev, who was at the time the Prime Minister. Uzbekistan has substantial natural gas resources but it and Iran do not have joint energy-related ventures. Most of Uzbekistan's natural gas production is for domestic consumption. Still, Mirziyoyev has sought to expand regional and international cooperation and his foreign policy departure from the Karimov era is likely to benefit Uzbekistan-Iran relations. South Asia The countries in South Asia face perhaps a greater degree of threat from Sunni Islamic extremist groups than do the countries of Central Asia. They also share significant common interests with Iran, which Iran used to foster cooperation against U.S. sanctions. This section focuses on several countries in South Asia that have substantial interaction with Iran. Afghanistan In Afghanistan, Iran is pursuing a multitrack strategy by helping develop Afghanistan economically, engaging the central government, supporting pro-Iranian groups and, at times, arming Taliban fighters. An Iranian goal appears to be to restore some of its traditional sway in eastern, central, and northern Afghanistan, where "Dari"-speaking (Dari is akin to Persian) supporters of the "Northern Alliance" grouping of non-Pashtun Afghan minorities predominate. Iran shares with the Afghan government concern about the growth of Islamic State affiliates in Afghanistan, such as Islamic State—Khorasan Province, ISKP, an affiliate of the Islamic State organization that Iran is trying to thwart on numerous fronts in the region. The two countries are said to be cooperating effectively in their shared struggle against narcotics trafficking. President Ghani and Iranian leaders meet periodically. Iran has sought influence in Afghanistan in part by supporting the Afghan government, which is dominated by Sunni Muslims and ethnic Pashtuns. In October 2010, then-President Hamid Karzai admitted that Iran was providing cash payments (about $2 million per year) to his government. It is not known whether such payments continue. Iran's ally, Dr. Abdullah Abdullah, who is half-Tajik and speaks Dari, is "Chief Executive Officer" of the Afghan government under a power-sharing arrangement with President Ashraf Ghani that followed the 2014 presidential election. Even though it engages the Afghan government, Tehran has in the recent past sought leverage against U.S. forces in Afghanistan and in any Taliban-Afghan government peace settlement. Past State Department reports on international terrorism have accused Iran of providing materiel support, including 107mm rockets, to select Taliban and other militants in Afghanistan, and of training Taliban fighters in small unit tactics, small arms use, explosives, and indirect weapons fire. In July 2012, Iran allowed the Taliban to open an office in Zahedan (eastern Iran). In December 2016, Iran invited several Taliban figures to an "Islamic Unity" conference in Tehran. Reflecting apparent concern about the U.S. military presence in Afghanistan, Iran reportedly tried to derail the U.S.-Afghanistan Bilateral Security Agreement (BSA), signed in September 2014, that allowed the United States to maintain troops in Afghanistan after 2014. It prohibits the United States from launching military action against other countries from Afghanistan. In his May 21, 2018, speech, Secretary Pompeo demanded that "Iran, too, must end support for the Taliban and other terrorists in Afghanistan and the region, and cease harboring senior Al Qaeda leaders." Purported Iranian support to Taliban factions comes despite the fact that Iran saw the Taliban regime in Afghanistan of 1996-2001 as an adversary. The Taliban allegedly committed atrocities against Shia Afghans (Hazara tribes) while seizing control of Persian-speaking areas of western and northern Afghanistan. Taliban fighters killed nine Iranian diplomats at Iran's consulate in Mazar-e-Sharif in August 1998, prompting Iran to mobilize ground forces to the Afghan border. Pakistan156 Relations between Iran and Pakistan have been uneven. Pakistan supported Iran in the 1980-1988 Iran-Iraq War, and Iran and Pakistan engaged in substantial military cooperation in the early 1990s, and the two still conduct some military cooperation, such as joint naval exercises in April 2014. The founder of Pakistan's nuclear weapons program, A.Q. Khan, sold nuclear technology and designs to Iran. However, a rift emerge between the two countries in the 1990s because Pakistan's support for the Afghan Taliban ran counter to Iran's support for the Persian-speaking and Shia Muslim minorities who opposed Taliban rule. Iran reportedly is concerned that Pakistan might harbor ambitions of returning the Taliban movement to power in Afghanistan. Two Iranian Sunni Muslim militant groups that attack Iranian regime targets— Jundullah (named by the United States as an FTO, as discussed above) and Jaysh al-Adl—operate from western Pakistan. A significant factor dividing them is Pakistan's relationship with Saudi Arabia. Pakistan declined a Saudi request that Pakistan participation in the Saudi-led coalition against the Houthis in Yemen, but Pakistan joined Saudi Arabia's 34-nation "antiterrorism coalition" in December 2015. The coalition was announced as a response to the Islamic State, but Iran asserts it is directed at reducing Iran's regional influence. The two nations' bilateral agenda has increasingly focused on a joint major gas pipeline project that would ease Pakistan's energy shortages while providing Iran an additional customer for its large natural gas reserves. As originally conceived, the line would continue on to India, but India withdrew from the project at its early stages. Then-President of Iran Ahmadinejad and Pakistan's then-President Asif Ali Zardari formally inaugurated the project in March 2013. Iran has completed the line on its side of the border, but Pakistan was unable to finance the project on its side of the border until China agreed in April 2015 to build the pipeline at a cost of about $2 billion. U.S. officials stated that the project could be subject to U.S. sanctions under the Iran Sanctions Act, which went into effect again on November 5, 2018, and there is little evident movement on the project. India161 India and Iran have overlapping histories and civilizations, and they are aligned on several strategic issues. Tens of millions of India's citizens are Shia Muslims. Both countries have historically supported minority factions in Afghanistan that are generally at odds with Afghanistan's dominant Pashtun community. India has generally cooperated with U.S. sanctions policy on Iran, even though India has obtained Iranian oil on concessionary terms and even though India's position has generally been that it will only enforce sanctions authorized by U.N. Security Council resolutions. Some projects India has pursued in Iran involve not only economic issues but national strategy. India has long sought to develop Iran's Chabahar port, which would give India direct access to Afghanistan and Central Asia without relying on transit routes through Pakistan. India had hesitated to move forward on that project because of U.S. opposition to projects that benefit Iran. India, Iran, and Afghanistan held a ceremony in May 2016 to herald the start of work. In December 2017, Iran inaugurated the $1 billion expansion of Chabahar—a project that U.S. officials have excepted from U.S. sanctions on Iran because of its pivotal contribution to Afghanistan's development. During Rouhani's visit to India in February 2018, he and India's Prime Minister Narendra Modi signed memoranda outlining future expanded energy cooperation. During the late 1990s, U.S. officials expressed concern about India-Iran military-to-military ties. The relationship included visits to India by Iranian naval personnel, although India said these exchanges involved junior personnel and focused mainly on promoting interpersonal relations and not on India's provision to Iran of military expertise. The military relationship between the countries has withered in recent years. Russia Iran attaches significant weight to its relations with Russia—a permanent member of the U.N. Security Council, a supplier of arms to Iran, a party to the JCPOA, and a key supporter of the Asad regime. Russia appears to view Iran as a de facto ally in combating Sunni Islamist extremist movements, which have conducted attacks in Russia. Russian President Vladimir Putin visited Iran on November 23, 2015, to attend a conference of major international natural gas producers, and also held talks with Supreme Leader Khamene'i and President Rouhani, resulting in an announcement of a $5 billion line of credit to Iran for possible joint projects, including additional natural gas pipelines, railroads, and power plants. Rouhani visited Moscow on March 28, 2017, to discuss with President Putin the issues discussed below. During Putin's visit to Tehran on November 1, 2017, the two countries agreed to collaborate on "strategic energy deals" valued at about $30 billion. Russia opposed the U.S. exit from the JCPOA and has said it would not cooperate with reimposed U.S. secondary sanctions on Iran. U.S. officials express concern primarily with Iran-Russia military cooperation, particularly in Syria. Russia-Iran cooperation has been pivotal to the Asad regime's recapture of much of rebel-held territory since 2015. Yet, the two countries' interests do not align precisely in Syria because Iranian leaders express far greater concern about protecting Hezbollah in any post-Asad regime than do leaders of Russia, whose interests appear to center on preserving the Asad regime and on Russia's overall presence in the Middle East. In August 2016, Iran allowed Russia to stage bombing runs in Syria from a base in western Iran, near the city of Hamadan. The Russian use of the base ran counter to Iran's constitution, which bans foreign use of Iran's military facilities, and Iran subsequently ended the arrangement after Russia publicized it. Russia has been Iran's main supplier of conventional weaponry and a significant supplier of missile-related technology. In February 2016, Iran's then-Defense Minister Hosein Dehgan visited Moscow reportedly to discuss purchasing Su-30 combat aircraft, T-90 tanks, helicopters, and other defense equipment. Under Resolution 2231, selling such gear would require Security Council approval - until the provision sunsets in October 2020 - and U.S. officials have said publicly they would not support such a sale. Russia previously has abided by all U.N. sanctions to the point of initially cancelling a contract to sell Iran the advanced S-300 air defense system—even though Resolution 1929, which banned most arms sales to Iran, did not specifically ban the sale of the S-300. After the April 2, 2015, framework nuclear accord was announced, Russia lifted its ban on the S-300 sale, and the system became operational in Iran in 2016. In January 2015, Iran and Russia signed a memorandum of understanding on defense cooperation, including military drills. Russia built and still supplies fuel for Iran's only operating civilian nuclear power reactor at Bushehr, a project from which Russia earns significant revenues. Since December 2015, Russia has shipped out of Iran of almost all of Iran's stockpile of low-enriched uranium—helping Iran meet a key requirement of the JCPOA. The U.S. ending of sanctions waivers that allowed for the shipments could complicate this technical assistance provided by Russia. Europe Iran's foreign policy is focused on urging the European countries to continue providing Iran with the economic benefits of the JCPOA in the wake of the May 2018 Trump Administration pullout from that accord. The EU is struggling with that effort, insofar as European countries have substantial engagement in the U.S. economy and are reluctant to risk that business to maintain economic ties to Iran. Still, Rouhani and his subordinates regularly visit European capitals and engage European leaders, daily flights from several European countries to Iran continue, and many Iranian students attend European universities. While the European countries oppose the U.S. withdrawal from the JCPOA, they are critical of Iran for recent alleged Iranian plots to assassinate dissidents in Europe (discussed above). 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 sanctioned the internal security unit of Iran's Intelligence ministry and two Iranian operatives for sponsoring acts of terrorism. It is the terrorism issue that has, in the past, disrupted Iran-Europe relations. During the 1990s, the United States had no dialogue with Iran at all, whereas the EU countries maintained a policy of "critical dialogue" and refused to join the 1995 U.S. trade and investment ban on Iran. But, that dialogue was suspended in April 1997 in response to the German terrorism trial ("Mykonos trial") that found high-level Iranian involvement in killing Iranian dissidents in Germany. East Asia East Asia includes three of Iran's five largest buyers of crude oil and one country, North Korea, that is widely accused of supplying Iran with missile and other military-related technology. The countries in Asia have not extensively intervened militarily or politically in the Middle East, and Iran rarely criticizes countries in Asia. China167 China, a permanent member of the U.N. Security Council and a P5+1 party to the JCPOA, is Iran's largest oil customer. During U.N. Security Council deliberations on Iran during 2006-2013, China tended to argue for less stringent sanctions than did the United States, but China's compliance with U.S. sanctions was pivotal to U.S. efforts to reduce Iran's revenue from oil sales during 2012-2016. China opposed the U.S. withdrawal from the JCPOA and the government has continued to buy substantial quantities of Iran oil, even while earning a U.S. exception from sanctions requiring Iran's oil customers to reduce buys from Iran. China faces a potential threat from Sunni Muslim extremists in western China and appears to see Shia Iran as a potential ally against Sunni radicals. China also appears to agree with Iran's view that the Asad regime is preferable to the Islamic State and other Islamist rebel organizations. Shortly after Implementation Day of the JCPOA in January 2016, China's President Xi Jinping included Tehran on a visit to the Middle East region. His trip to Iran generally focused on China's vision of an energy and transportation corridor extending throughout Eurasia (Belt and Road Initiative, BRI), and including Iran, and the two countries agreed to expand trade to $600 billion over the next decade. Iran's burgeoning economic and diplomatic relationships with the Central Asian states appear intended, at least in part, to enable Iran to take advantage of the substantial Chinese investment in the region that is required to implement its BRI vision. As an example, in February 2016, the first rail cargo from China arrived in Iran via the Kazakhstan-Turkmenistan-Iran link discussed above. China in the past supplied Iran with advanced conventional arms, including cruise missile-armed fast patrol boats that the IRGC Navy operates in the Persian Gulf; anti-ship missiles; ballistic missile guidance systems; and other WMD-related technology. A number of China-based entities have been sanctioned by the United States, including in 2017, for allegedly aiding Iran's missile, nuclear, and conventional weapons programs. Japan and South Korea Iran's primary interest in Japan and South Korea has been to expand commercial relations after sanctions were eased. Neither Japan nor South Korea has been heavily involved in security and strategic issues in the Middle East, but both countries are close allies of the United States. Both countries are wary of Iran's reported military and technology relations with North Korea. During the period when the United States was implementing the JCPOA, South Korea's then-President Geun-hye Park visited Tehran in May 2016 for the first tour of Iran by a South Korean president to Iran since 1962, accompanied by representatives of 236 South Korean companies and organizations. The two sides signed a number of agreements in the fields of oil and gas, railroads, tourism, and technology, and agreed to reestablish direct flights between Tehran and Seoul. Japan's Prime Minister Shinzo Abe reportedly had planned to visit Iran in late August 2016, but postponed the visit. During the U.N. General Assembly meetings in New York (September 18-21, 2017), Abe accepted an invitation from President Rouhani to visit Iran, according to Abe's spokesperson., but no date for the visit was announced. The visit, which would have been the first by a leader of Japan to the Islamic Republic, is unlikely now that the United States has exited the JCPOA. Japanese and South Korean firms are consistently unwilling to risk their positions in the U.S. market by violating any U.S. sanctions on Iran, and these companies are starting to leave the Iran market now that U.S. secondary sanctions are being reimposed. North Korea Iran and North Korea have been aligned as "rogue states" subjected to wide-ranging international sanctions. North Korea is one of the few countries with which Iran has formal military-to-military relations, and the two countries have cooperated on a wide range of military and WMD-related ventures, particularly the development of ballistic missile technology. In the past, Iran reportedly funded and assisted in the retransfer of missile and possibly nuclear technology from North Korea to Syria. North Korea also reportedly supplied Iran with small submarines. It is widely suspected that the two continue to cooperate on missile development, and possibly nuclear issues as well, but the extent of the cooperation, if any, is not known from published sources. North Korea has not at any time pledged to abide by international sanctions against Iran, but its economy is too small to significantly help Iran. According to some observers, a portion of China's purchases of oil from Iran and other suppliers is reexported to North Korea. After international sanctions on Iran's crude oil exports were removed, additional quantities of Iranian oil likely began reaching North Korea, most likely via China. However, the expansion of such retransfers are likely limited by the adoption in September 2017 of additional U.N. sanctions limiting the supply of oil to North Korea. Latin America169 Some U.S. officials and some in Congress have expressed concerns about Iran's relations with leaders in Latin America that share Iran's distrust of the United States. Some experts and U.S. officials have asserted that Iran has sought to position IRGC-QF operatives and Hezbollah members in Latin America to potentially carry out terrorist attacks against Israeli targets in the region or even in the United States itself. Some U.S. officials have asserted that Iran and Hezbollah's activities in Latin America include money laundering and trafficking in drugs and counterfeit goods. These concerns were heightened during the presidency of Mahmoud Ahmadinejad (2005-2013), who made repeated, high-profile visits to the region in an effort to circumvent U.S. sanctions and gain support for his criticisms of U.S. policies. However, few of the economic agreements that Ahmadinejad announced with Latin American countries were implemented, by all accounts. President Rouhani has expressed only modest interest in expanding ties in Latin America, perhaps in part because Latin America is not pivotal to Iran's economy. He made his first visit to the region in September 2016 in the course of traveling to the annual U.N. General Assembly meetings in New York. He went to several of the countries that Foreign Minister Zarif did in August 2016: Cuba, Chile, Bolivia, Ecuador, Nicaragua, and Venezuela—countries in that region that Ahmadinejad visited during his presidency as well. Iran's officials have stated that the purpose of the visits were to expand economic relations with Latin American countries. In the 112 th Congress, the Countering Iran in the Western Hemisphere Act, requiring the Administration to develop a strategy to counter Iran's influence in Latin America, was enacted ( H.R. 3783 , P.L. 112-220 ). The required report was provided to Congress in June 2013, asserting that "Iranian influence in Latin America and the Caribbean is waning" in part because of U.S. efforts to cause Latin American countries to assess the costs and benefits of closer relations with Iran. Observers have directed particular attention to Iran's relationship with Venezuela (an OPEC member, as is Iran) because of its avowed anti-U.S. posture, and Argentina, because of the Iran-backed attacks on Israeli and Jewish targets there. Iran's relations with Cuba have been analyzed by experts in the past, but the U.S. opening to Cuba that began in late 2014 have eased concerns about Cuba-Iran relations. U.S. counterterrorism officials also have stated that the tri-border area of Argentina, Brazil, and Paraguay is a "nexus" of arms, narcotics and human trafficking, counterfeiting, and other potential funding sources for terrorist organizations, including Hezbollah. Assertions in 2009 by some U.S. officials that Iran was significantly expanding its presence in Nicaragua were disputed by subsequent accounts. Venezuela175 During Ahmadinejad's presidency, Iran had particularly close relations with Venezuela and its president, Hugo Chavez, who died in office in March 2013. Neither Rouhani nor Chavez's successor, Nicolas Maduro, have expressed the enthusiasm for the relationship that Chavez and Ahmadinejad did, but Iran has expressed support for Maduro in 2019 in the face of the serious political challenge from the opposition led by Juan Guaido. In the context of stepped up unrest in Venezuela in April-May 2019, U.S. officials have accused Iran and Hezbollah of helping Maduro retain support within the Venezuelan military. Iranian leaders have publicly supported Maduro as the legitimate leader of Venezuela and, in April 2019, Iran resumed a long-dormant direct air route from Tehran to Venezuela. Still, the extent of any Iranian or Hezbollah involvement in current events in Venezuela remains unclear. Even during the presidencies of Chavez and Ahmadinejad, the United States did not necessarily perceive a threat from the Iran-Venezuela relationship. In July 2012, President Obama stated that Iran-Venezuela ties have not had "a serious national security impact on the United States." Very few of the economic agreements announced were implemented. A direct air link was reportedly restarted by President Maduro in January 2015 in order to try to promote tourism between the two countries. Petroleos de Venezuela (PDVSA)—which operates the Citgo gasoline stations in the United States—has been supplying Iran with gasoline since 2009, in contravention of U.S. sanctions, and PDVSA was sanctioned under the Iran Sanctions Act in May 2011. The United States "de-listed" PDVSA as stipulated in the JCPOA, but it was "re-listed" in concert with the reimposition of U.S. sanctions on Iran in 2018. Argentina181 In Argentina, Iran and Hezbollah carried out acts of terrorism against Israeli and Jewish targets in Buenos Aires that continue to affect Iran-Argentina relations. The major attacks were the 1992 bombing of the Israeli embassy and the 1994 bombing of a Jewish community center (Argentine-Israeli Mutual Association, AMIA). Based on indictments and the investigative information that has been revealed, there is a broad consensus that these attacks were carried out by Hezbollah operatives, assisted by Iranian diplomats and their diplomatic privileges. The Buenos Aires attacks took place more than 20 years ago and there have not been any recent public indications that Iran and/or Hezbollah are planning attacks in Argentina or elsewhere in Latin America. However, in February 2015, Uruguay stated that an Iranian diplomat posted there had left the country before Uruguay issued a formal complaint that the diplomat had tested the security measures of Israel's embassy in the capital, Montevideo. Many in Argentina's Jewish community opposed a January 2013 agreement between Iran and the government of then-President Cristina Fernandez de Kirchner to form a "truth commission" rather than to aggressively prosecute the Iranians involved. In May 2013, the Argentine prosecutor in the AMIA bombing case, Alberto Nisman, issued a 500-page report alleging that Iran has been working for decades in Latin America, setting up intelligence stations in the region by utilizing embassies, cultural organizations, and even mosques as a source of recruitment. In January 2015, Nisman was found dead of a gunshot wound, amid reports that he was to request indictment of Argentina's president for allegedly conspiring with Iran to downplay the AMIA bombing issue. President Kirchner was succeeded in December 2015 by Mauricio Macri, who has not sought to broaden relations with Iran. Africa Sub-Saharan Africa has not generally been a focus of Iranian foreign policy, perhaps because of the relatively small size of most African economies and the limited ability of African countries to influence the actions of Iran's main regional rivals. Former President Ahmadinejad sought to deepen diplomatic and commercial ties to some African countries, focusing on those that have had historically tense relations with Western powers (such as Sudan, Zimbabwe, and South Africa). Many African countries, however, apparently did not want to risk their relationships with the United States or blowback from domestic Sunni constituencies by broadening relations with Iran. The overwhelming majority of Muslims in Africa are Sunni, and Muslim-majority African countries have tended to be responsive to financial and diplomatic overtures from Iran's rival, Saudi Arabia. Amid the Saudi-Iran dispute in January 2016 over the Nimr execution, several African countries that Iran had cultivated as potential allies broke relations with Iran outright, including Djibouti, Comoros, and Somalia, as well as Sudan. Senegal, at one time seen as a primary focus of Ahmadinejad's Africa outreach, and Sudan have supported the Saudi-led military effort against the Iran-backed Houthis in Yemen—in Sudan's case with some forces. The UAE, in particular, has actively sought allies in the Horn of Africa to reduce Iranian influence, including by facilitating UAE operations against the Iran-backed Houthi rebels in Yemen. West Africa's large Lebanese diaspora communities may also be a target of Iranian influence operations and a conduit for Hezbollah financial and criminal activities. Rouhani has made few statements on relations with countries in Africa and has apparently not made the continent a priority. Tehran appears, however, to retain an interest in cultivating African countries as trading partners—an interest that might increase now that the Trump Administration has decided to exit the JCPOA and reimpose all U.S. sanctions. Iran's leaders also apparently see Africa as a market for its arms exports and as sources of diplomatic support in U.N. forums. African populations may also be seen as potential targets for Iranian "soft power" and religious influence. Iran's Al Mustafa University, which promotes Iran's message and Shia religious orientation with branches worldwide, has numerous branches in various African countries. The IRGC-QF has reportedly operated in some countries in Africa, in part to secure arms-supply routes for pro-Iranian movements in the Middle East but also to be positioned to act against U.S. or allied interests, to support friendly governments or factions, and act against Sunni extremist movements. Several African countries have claimed to disrupt purportedly IRGC-QF-backed arms trafficking or terrorism plots. In May 2013, a court in Kenya found two Iranian men guilty of planning to carry out bombings in Kenya, apparently against Israeli targets. In December 2016, two Iranians and a Kenyan who worked for Iran's embassy in Nairobi were charged with collecting information for a terrorist act after filming the Israeli embassy in that city. Senegal cut diplomatic ties with Iran between 2011 and 2013 after claiming that Iran had trafficked weapons to its domestic separatist insurgency. Sudan Iran's relations with the government of Sudan, which were extensive since the early 1990s, have diminished substantially since 2014 as Sudan has moved closer to Iran's rivals, Saudi Arabia and the UAE. Sudan, like Iran, is still named by the United States as a state sponsor of terrorism, although U.S. officials have praised the country's counterterrorism cooperation in recent years, possibly to the point where the Administration might decide to remove Sudan from the terrorism list. Iran's relations with Sudan provided Iran with a channel to supply weapons to Hamas and other pro-Iranian groups in the Gaza Strip. The relationship began in the 1990s when Islamist leaders in Sudan, who came to power in 1989, welcomed international Islamist movements to train and organize there. Iran began supplying Sudan with weapons it used on its various fronts, such as in its internal conflicts with rebels in what is now South Sudan as well as in the Darfur region, and the IRGC-QF reportedly armed and trained Sudanese forces, including the Popular Defense Force militia. Iranian pilots reportedly assisted Sudan's air force, and Iran's naval forces periodically visited Port Sudan. Iran also reportedly played a key role in helping Sudan build its own military industry. Israel repeatedly accused Iran of shipping weapons bound for Gaza through Sudan and, at times, took military action against sites in Sudan that Israel asserted were being used by Iran to arm Hamas. However, because Sudan is inhabited by Sunni Arabs, it has always been considered susceptible to overtures from Saudi Arabia and other GCC countries to distance itself from Iran. Since 2014, Saudi and UAE economic assistance to and investment in Sudan have caused Sudan to realign. In September 2014, the Sudan government closed all Iranian cultural centers in Sudan and expelled the cultural attaché and other Iranian diplomats on the grounds that Iran was using its facilities and personnel in Sudan to promote Shia Islam. In March 2015, Sudan joined the Saudi-led Arab coalition against the Houthis in Yemen, appearing to confirm that Sudan has significantly downgraded its strategic relations with Iran. In December 2015, Sudan joined the Saudi-led antiterrorism coalition discussed earlier. In January 2016, Sudan severed ties with Iran in connection with the Saudi execution of Nimr. Outlook Key questions include whether, and if so, how, U.S. actions might alter Iran's behavior, and whether the United States and Iran are on a collision course toward armed conflict. To date, no U.S. strategy, by any Administration, has reduced Iran's inclination to intervene in the region or otherwise try to enhance its regional influence. Trump Administration officials asserted that the sanctions relief of the JCPOA enabled Iran to increase its regional malign activities, and that pulling out of the accord and reimposing sanctions were required. However, it can be argued that the level of Iran's regional influence is linked more to opportunities provided by the region's conflicts than to the level of Iran's financial resources. Whereas deployments of additional U.S. military force to the region might deter some Iranian actions, U.S. buildups arguably have never caused Iran to alter its fundamental regional strategies. As noted throughout, Administration efforts against Iran included imposition of sanctions on various Iranian activities; provision of advice, training, and counterterrorism assistance to regional leaders and groups who seek to limit Iranian influence; and deployment of U.S. forces to intercept Iranian weapons shipments and deter Iranian ground action. Additional U.S. pressure on Iran—particularly if such pressure involves military action—could embroil the United States more deeply in regional conflicts. Those who argue that Iran is an increasingly challenging regional actor maintain the following: Iran is likely to continue to supply its regional allies and proxies with larger quantities of and more accurate weaponry, including short-range missiles. Iran might, through its allies and proxies in Syria and Iraq, succeed in establishing a secure land corridor extending from Iran to Lebanon and in pressuring Israel from the Syrian border as well as the Lebanese border. The potential for major Iran-Israel conflict in Syria is significant. A further prolongation of the intra-GCC rift could complicate U.S. efforts to contain Iran militarily and hinder U.S. military operations in the region. The lifting of the U.N. ban on arms sales to Iran in October 2020 will enable Iran to modernize its armed forces, possibly to the point where it can move ground forces across waterways such as the Strait of Hormuz. Iran could further increase its assistance to hardline opposition factions in Bahrain, which has apparently been limited to date to only small, militant underground groups. Iran might succeed in emerging as a major regional energy and trading hub, both within and outside its participation in China's BRI initiative, potentially expanding Iran's political influence to an even greater extent. Various regional powers might establish or expand military cooperation with Iran, a development that could strengthen Iran's conventional capabilities. On the other hand, in order to preserve at least some multilateral sanctions relief and avoid the potential for confrontation, Iran might be induced to accept regional settlements that benefit U.S. and allied interests. Those who take this view argue the following: Iran might be induced to cooperate in identifying an alternative to Asad in Syria that attenuates the civil conflict and permits Iran to draw down its forces. Iran might be persuaded to curtail its delivery of additional long-range rockets or other military equipment to Hezbollah and Hamas, although Iran is unlikely under any circumstances to reduce its political support for Hezbollah. Iran might support a political solution in Yemen that gives the Houthis less influence in a new government than they are demanding. Iran and the UAE might resolve their territorial dispute. Iran might gain admission to the SCO and cooperate more systematically with its members against the Islamic State or other terrorist organizations. Iran might seek to finalize regional economic projects, including development of oil and gas fields in the Caspian Sea; gas pipeline linkages between Iran and Kuwait, Bahrain, Oman, and Pakistan; and transportation routes to China. Domestic Iranian factors could cause Iran's foreign policy to shift. For example: Protests that have taken place since late 2017 could escalate and cause the regime to reduce the scope of its interventions, cut its defense budget, or limit its missile development program. If unrest escalates dramatically and the regime loses power, Iran's foreign policy could shift dramatically, likely becoming far more favorable to U.S. interests. The departure from the scene of the Supreme Leader could change Iran's foreign policy sharply, depending on the views of his successor.

Iran's national security policy is the product of many overlapping and sometimes competing factors such as the ideology of Iran's Islamic revolution, perception of threats to the regime and to the country, long-standing national interests, and the interaction of the Iranian regime's factions and constituencies. Iran's leadership: Seeks to deter or thwart U.S. or other efforts to invade or intimidate Iran or to bring about a change of regime. Has sought to take advantage of opportunities of regional conflicts to overturn a power structure in the Middle East that it asserts favors the United States, Israel, Saudi Arabia, and other Sunni Muslim Arab regimes. Seeks to enhance its international prestige and restore a sense of "greatness" reminiscent of ancient Persian empires. Advances its foreign policy goals, in part by providing material support to regional allied governments and armed factions. Iranian officials characterize the support as helping the region's "oppressed" and assert that Saudi Arabia, in particular, is instigating sectarian tensions and trying to exclude Iran from regional affairs. Sometimes disagrees on tactics and strategies. Supreme Leader Ali Khamene'i and key hardline institutions, such as the Islamic Revolutionary Guard Corps (IRGC), oppose any compromises of Iran's national security core goals. Iran's elected president, Hassan Rouhani, and Foreign Minister Mohammad Javad Zarif support Iran's integration into regional and international diplomacy. Supports acts of international terrorism, as the "leading" or "most active" state sponsor of terrorism, according to each annual State Department report on international terrorism since the early 1990s. The Administration insists that an end to Iran's malign activities is a requirement of any revised JCPOA and normalization of relations with the United States. The Trump Administration has articulated a strategy to counter Iran's "malign activities" based on: Applying "maximum pressure" on Iran's economy and regime through sanctions. President Trump withdrew the United States from the JCPOA on May 8, 2018, and reimposed all U.S. sanctions as of November 5, 2018. Attempting to diplomatically, politically, and economically isolate Iran. Training, arming, and providing counterterrorism assistance to partner governments and some allied substate actors in the region. Deploying U.S. forces to deter Iran and interdict its arms shipments to its allies and proxies. Indirectly threatening military action against Iranian actions that pose an immediate threat to U.S. regional interests or allies.

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Introduction The U.S. State Department welcomed opposition figure Felix Tshisekedi's victory in DRC's December 2018 presidential election, applauding the Congolese people "for their insistence on a peaceful and democratic transfer of power." Election day was indeed largely peaceful, and alternate scenarios that outgoing President Joseph Kabila might have preferred (e.g., his own reelection or the election of his chosen successor, former Interior Minister Emmanuel Ramazani Shadary) ultimately did not materialize. Many Congolese reacted positively to the results. Whether the election was "democratic" is debatable, however, as is the degree to which Tshisekedi's presidency represents a "transfer of power." Former President Kabila—whose decision to cling to power past the end of his two constitutionally permitted terms in 2016 sparked a national political crisis and widespread protests—appears poised to retain significant political influence. Kabila, who first assumed the presidency in 2000, now holds the title of "Senator-for-Life," while his Common Front for Congo (FCC) coalition won sweeping majorities in parliament and provincial assemblies, and in subsequent indirect elections for the Senate and provincial governors. Tshisekedi's Union for Democracy and Social Progress (UDPS) won very few sub-national contests, and it has agreed to form a coalition government with the FCC. These factors, along with evidence that a more hardline opposition figure won more votes than Tshisekedi, have led many observers to speculate that the official election results reflected a power-sharing deal between Tshisekedi and Kabila (see " Politics " ) . Attention has now turned to gauging President Tshisekedi's performance in office and the extent of his independence. The challenges facing DRC are stark. The country is rich in minerals, forest resources, freshwater, and agricultural potential, but most Congolese live in poverty. Prior to the 2016-2018 impasse over the elections delay and Kabila's political future, international attention toward DRC was overwhelmingly focused on addressing long-running conflicts in the east and supporting the extension of state authority. Security threats, political uncertainty, "endemic corruption," poor infrastructure, and unpredictable regulatory enforcement have contributed to a poor business climate. Ahead of a visit by Tshisekedi to Washington, DC in April 2019, the State Department pledged to work with the new president "to advance his agenda to combat corruption, strengthen the rule of law, enhance security, protect human rights and promote economic growth through increased foreign investment and trade, particularly with the United States." Enduring conflicts and humanitarian suffering in the east both reflect and contribute to regional instability. Neighboring countries such as Rwanda and Uganda have periodically backed Congolese rebel proxies, and the security vacuum has drawn in foreign-origin militias. State security forces have been implicated in serious abuses, including extrajudicial killings and mass rapes. There were 4.5 million internally displaced persons (IDPs) in DRC as of late 2017 (latest U.N. figure available), one of the highest numbers in the world, while another 825,000 Congolese are refugees in neighboring countries. About 12.8 million people (15% of the country's estimated population) were reportedly in "dire need of assistance" as of late 2018. A potential new security challenge emerged in April 2019, when the Islamic State (IS, a.k.a. ISIS/ISIL) organization claimed an attack on local security forces in eastern DRC. This appeared to be the latest in a series of developments linking the Islamic State to a nebulous locally based armed group known as the Allied Democratic Forces (ADF), although the extent of ties is subject to debate (see text box on the ADF under " Conflict in Eastern DRC ," below). DRC ranked 176 out of 189 countries on the 2018 U.N. Human Development Index, and its per capita gross domestic product (GDP) stood at $449 in 2018 (see Figure 1 ), among the world's lowest. Industrial mining—particularly of copper and cobalt—is the mainstay of DRC's formal economy, although much of the population is engaged in informal economic activity (including widespread small-scale artisanal mining). In recent years, DRC has produced over half of the world's supply of cobalt, a key ingredient in electric car batteries, among other industrial uses. Relations with international financial institutions have been poor since 2012, when the International Monetary Fund (IMF) ceased its concessional lending program in DRC due to a lack of transparency in state mining contracts. Historical Background Due to its resources, vast territory, and location ( Figure 1 ), DRC has long served as an arena of regional and international competition. Belgium's King Leopold II claimed "Congo Free State" as his personal possession. His administration of the territory became notorious for its plunder of Congo's natural resources, mismanagement, and egregious abuses against the local population, and the Belgian government transitioned the territory into a formal colony in 1908. Belgium granted Congo independence in 1960, shortly after parliamentary elections in which nationalist leader Patrice Lumumba became prime minister. The country's early years following independence were plagued by instability, including a secession movement in southeastern Katanga and an army mutiny that culminated in Lumumba's murder in 1961. One of the first U.N. peacekeeping operations deployed from 1960 to 1964 in response to the Katanga crisis. In 1965, Colonel Joseph Mobutu (a.k.a. Mobutu Sese Seko), who was involved in the mutiny against Lumumba, seized power in a coup and gradually instituted a more centralized and authoritarian form of government. Mobutu's pursuit of an "authentic" indigenous Congolese national identity led him to rename the country Zaire. Mobutu's 32-year reign was backed by the United States and other Western powers in the context of Cold War rivalry in Africa. He also relied on fraudulent elections, brute force, and patronage networks fueled by extensive corruption, leading many analysts to brand his regime a "kleptocracy." At the same time, petty corruption came to constitute a crucial economic safety net for many Congolese. Domestic and international pressures mounted on Mobutu as the Cold War drew to a close and as the aging president's health faltered. Mobutu agreed in principle to a multiparty democratic system in 1990 but repeatedly delayed elections. State institutions and the military fractured, while conflicts in neighboring states spilled into DRC, diverting state resources and destabilizing local communities. Hutu extremists who orchestrated the 1994 genocide in Rwanda fled across the border to Zaire, where they used refugee camps to remobilize against the new Tutsi-dominated Rwandan government, reportedly with Mobutu's backing. Rwanda launched cross-border military operations in response, reportedly also targeting civilians on a large scale. Rwanda and Uganda then backed a 1996 rebellion against Mobutu by Laurent Désiré Kabila, an exiled Congolese militant. The ensuing conflict came to be known as the "first" Congo war. With Mobutu's security forces and personal health in tatters, Laurent Kabila seized power in 1997 and renamed the country DRC. Mobutu died in exile in Morocco the same year. Tensions among the erstwhile allies soon erupted. In 1998, amid growing popular hostility toward Rwandan soldiers and Congolese of Rwandan descent who had comprised the core of his rebel army, Laurent Kabila attempted to expel these forces, provoking a mutiny. Rwanda and Uganda then deployed troops into DRC and cultivated rebel groups as proxies, this time against Kabila. They also fought each other. Angola, Zimbabwe, Sudan, and others intervened on the government's side. This conflict, dubbed "Africa's World War," caused a major humanitarian crisis and is estimated to have (directly and indirectly) caused 3.3 million deaths. In 2001, Laurent Kabila was assassinated by one of his bodyguards. His son, Joseph Kabila, assumed the presidency and advanced a U.N.-backed peace process. A 2002 peace accord called for foreign troops to withdraw and for Congolese rebels to be integrated into the military and government. Kabila headed a transitional government between 2003 and 2006, and citizens voted overwhelmingly to adopt a new constitution in a referendum in 2005. Landmark national elections were held in 2006, the first relatively open multiparty vote in the country since independence. International observers concluded that those elections were credible, despite procedural shortcomings and significant election-related violence. President Kabila won reelection, following a tense and violent run-off against former rebel leader Jean-Pierre Bemba. Kabila was reelected in 2011 in a vote that international and domestic observers characterized as extremely flawed. The late opposition leader Etienne Tshisekedi, Felix Tshisekedi's father, rejected the results and declared himself president, but his calls for mass protests did not materialize. Kabila's party lost seats in the legislature compared to 2006, but nonetheless assembled a majority coalition. DRC's relations with Uganda, Rwanda, and Angola remain complex and volatile. Tensions with Rwanda have periodically flared since the conclusion of the 1998-2003 war with reports of Rwandan support for Congolese rebel groups, which have fueled xenophobia in DRC. In 2008-2009, Kabila and Rwandan President Paul Kagame agreed to reestablish diplomatic ties and subsequently launched joint military operations in DRC's eastern border regions. Tensions surged during a 2012-2013 Rwandan-backed rebellion known as the M23, but they appear to have eased since then. In early 2018, the eastern province of Ituri experienced a resurgence of militia conflict that spurred a flood of refugees into Uganda and echoed similar dynamics from the early 2000s. Politics Felix Tshisekedi's inauguration as president in January 2019 represented DRC's first peaceful transfer of executive power in its postcolonial history. That he is the son of the late opposition leader Etienne Tshisekedi—who was revered by many Congolese for his role in DRC's political liberalization in the 1990s and uncompromising stance against former president Kabila—added potent symbolism. For the Western donor community, Tshisekedi's victory also averted several scenarios that might have sparked a popular backlash (and thus, a potential for increased instability) or posed other challenges. These included 1) an unconstitutional third-term bid by outgoing president Joseph Kabila; 2) further election delays; or 3) a victory by Kabila's unpopular choice of successor, Emmanuel Ramazani Shadary, who is under European Union (EU) sanctions due to his role in political repression. Whether Tshisekedi is able to deliver on Congolese hopes for change remains to be seen. As discussed above, Kabila appears poised to retain influence over state decision-making, including, potentially, over the security apparatus and lucrative mining sector. An electoral data leak and a parallel vote tabulation overseen by the widely respected Congolese Conference of Catholic Bishops (CENCO) reportedly each showed him losing by a wide margin to rival opposition candidate Martin Fayulu, who was backed by key exiled opposition figures and ran a campaign that was more ardently critical of Kabila. Fayulu has refused to recognize the official results. DRC's election commission (known as the CENI) has not published disaggregated results by polling station that could be checked against election observer data. These factors have led some observers to speculate that the official results reflected a backroom deal—a "Plan B" after voters resoundingly rejected Shadary—in which Kabila granted Tshisekedi victory in exchange for protection and continued influence via control of the legislature and provincial governments. The current electoral cycle is scheduled to be completed with local elections due in September 2019, which would be the first multiparty local-level polls since independence. Local elections have repeatedly been scheduled over the past decade, only to be canceled or indefinitely delayed. Uncertainty over the election process and Kabila's succession dominated national politics and preoccupied donors between 2014 and 2018, as it became clear that Kabila would seek to remain in office past the end of his term in 2016 and that this would provoke significant popular opposition and unrest. Local civil society groups, youth activists, CENCO, and regional powers (notably Angola) played a key role in pressuring the government to hold elections in which Kabila was not a candidate. Large street protests first erupted in 2015 in opposition to a ruling party proposal to delay elections pending a time-consuming national census. Local activists, opposition parties, and Catholic lay organizations organized periodic protests through 2018 despite violent repression by state security forces, which fired on civilians, arrested activists, shuttered media outlets, expelled international researchers, and besieged churches where marchers gathered. After the 2018 election results were announced, a few areas saw violent clashes, but much of the country appeared calm or celebratory. Overall, the election process was characterized by flaws and irregularities, and polls showed that voters held a dim view of the CENI. In addition to evidence of high-level CENI corruption, observers noted state restrictions on opposition activism and critical media, a problematic voter registry, a last-minute decision to cancel the presidential vote in four pro-opposition districts, and the fact that two prominent exiled opposition figures (former governor Moïse Katumbi and former rebel leader Jean-Pierre Bemba) were barred from running. Several of these factors, along with repeated election delays, violated a political agreement brokered by CENCO in December 2016 (known as the St. Sylvestre accord) that aimed to encourage relatively fair and timely elections. The DRC government also rejected U.N. logistical support for moving electoral materials around the vast, infrastructure-poor country, which could have averted some disenfranchisement and delays. Despite welcoming Tshisekedi's presidency, the U.S. government has assailed corruption and political repression tied to the electoral process that brought him to office and designated election officials for sanctions (see " U.S. Policy " below). Security and Humanitarian Trends Uncertainty over DRC's political future coincided with a surge in conflicts throughout the country between 2016 and 2018. Violence worsened in the east, while new conflicts emerged in previously stable areas, notably the central Kasai region (a stronghold of Tshisekedi's UDPS party) and southeastern Tanganyika province (see map, Figure 1 ). Violence also erupted along ethnic lines in northeastern Ituri in early 2018, reportedly fueled by competition over political influence and resource extraction. In the rural district of Yumbi in western DRC, hundreds of people were killed in December 2018 during an outbreak of violence fueled by local political and ethnic tensions. In some areas, government officials allegedly sought to bolster Kabila's political support by intervening in delicate local power dynamics, while elsewhere, armed groups appeared to jockey for position in anticipation of a power vacuum. The conflicts in Kasai and Tanganyika alone caused the displacement of nearly 2 million people at their peak. Political unrest in urban areas, a string of prison breaks, and attacks in Kinshasa by members of an opaque religious sect known as Bundu dia Kongo contributed to worsening security trends. The conflict in Kasai, which erupted in 2016 after state security forces killed a traditional leader, spawned a humanitarian crisis featuring widespread atrocities, the recruitment and abuse of children, and severe food insecurity. U.N. officials had documented at least 87 mass graves in the region as of 2017. The DRC government blamed the violence on a shadowy antigovernment militia known as Kamuina Nsapu, while U.N. officials attributed many of the killings to the Congolese military and state-backed militias known as the Bana Mura. In March 2017, two U.N. sanctions investigators—one of them a U.S. citizen—were murdered while probing human rights abuses in Kasai, and four Congolese who were with them disappeared. Researchers reported evidence of state security force involvement. Conflict and displacement underlie widespread food insecurity in DRC, despite ample surface water and arable land. Pest infestations and weather patterns also periodically limit harvests. Efforts to contain the ongoing Ebola outbreak in the east have been stymied by security threats as well as deeply entrenched distrust of state actors and outsiders. In the final years of Kabila's presidency (2017-2018), the government lashed out at the donor community as U.S. and European issued targeted sanctions and criticized election delays. In April 2018, the government refused to attend a U.N. humanitarian donor conference in Geneva, accusing aid groups of "a demonization campaign" and asserting that "there is no humanitarian crisis here." The government subsequently called for donors to send aid funds directly to a state agency. Aid organizations reported increasing bureaucratic impediments, and as of mid-2018, a draft bill to regulate nongovernmental organizations threatened to impose new constraints. Conflict in Eastern DRC Civilians have been the primary victims of 25 years of brutal violence in DRC's mineral-rich, agriculturally fertile, and densely inhabited east. Tensions over access to land and citizenship rights, as well as localized disputes, criminal activity, and regional geopolitics have helped drive conflict. The DRC armed forces (FARDC) and other state security forces such as the police and national intelligence service (known as the ANR) have been implicated in widespread atrocities, including during counter-insurgency operations and as part of illicit involvement in mining. The spillover of violence from Rwanda and Burundi in the early 1990s aggravated long-standing tensions between and among communities seen as "indigenous" and those that trace their origins (however distant) to Rwanda. Since then, various rebellions in the east have drawn backing from Rwanda and escalated into regional crises. Rwanda's proxy involvement in eastern DRC conflicts may have been motived by various factors, including its own national security concerns, solidarity with cross-border ethnic communities, and economic motivations. The most recent example was a 2012-2013 rebellion known as the M23, which originated as a mutiny among members of a Rwandan-backed insurgent group who had been integrated into the military. Anti-Rwandan sentiment, at times expressed as ethnic hate speech, has endured as a recurrent theme in DRC national politics and in grassroots dynamics in the east. Under a U.N.-brokered regional "Framework Agreement" signed in 2013, neighboring states agreed to respect DRC's sovereignty and not to sponsor DRC-based armed groups, while the DRC government committed to institutional and security sector reforms. Later that year, the DRC military, backed by a newly created U.N. "Intervention Brigade," defeated the M23. The DRC government never fully implemented its commitments under the 2013 accord or a separate peace process with the M23. In 2017, Human Rights Watch reported that senior DRC security officers had recruited ex-M23 members to suppress protests and protect then President Kabila. Multiple armed groups remain active in the east, including "Mai Mai" militias—disparate groups that operate variously as self-defense networks and criminal rackets—as well as foreign-origin groups seeking safe haven and illicit revenues. The latter include the Democratic Forces for the Liberation of Rwanda (FDLR), founded by perpetrators of the 1994 Rwandan genocide, and the aforementioned ADF, a Ugandan-origin group implicated in large massacres (see text box below). Elements of the South Sudanese rebel movement known as the SPLM-iO have also entered DRC. Smaller foreign-origin groups include elements of the Burundian ex-rebel group the National Liberation Forces (FNL) and the Ugandan-origin Lord's Resistance Army (LRA). Sexual Violence Particular international attention has been paid to the issue of sexual and gender-based violence in eastern DRC due to reports of gang rape, child rape, mutilation, and other abuses by armed groups and FARDC personnel. Attacks may be opportunistic and/or designed to systematically intimidate local populations. The prevalence of sexual violence in Congolese conflict zones has been attributed to factors such as the eroded status of women, weak state authority, a deeply flawed justice system, and a breakdown in community protection mechanisms. While women and girls are the primary targets, men and boys have also been victims. As with other human rights problems, sexual violence has also been linked to structural problems within the security sector. Donor efforts to improve accountability for perpetrators of serious abuses have produced legal reforms and some high-profile prosecutions, but appear to have had limited systemic impact. Wildlife Poaching Ivory poaching has been notable in two DRC national parks affected by armed conflict and insecurity: Virunga (Africa's oldest national park) in North Kivu, and Garamba in Haut-Uele. A range of actors reportedly participate, including state security force elements from DRC and neighboring states, Congolese militias, Sudanese poaching syndicates, and foreign-origin armed groups such as the FDLR in Virunga and the LRA in Garamba. Poachers are apparently increasingly well-armed and sophisticated, as are park rangers. According to U.N. sanctions monitors, poaching and ivory trafficking present a "catastrophic threat" to elephant survival in DRC, but "the widespread disappearance of elephant populations has made it an ever-diminishing and increasingly marginal source of armed group financing." U.N. Peacekeeping: Current Issues MONUSCO is the world's largest U.N. peacekeeping operation, authorized to comprise up to 16,875 military and 1,441 police personnel. Its mandate has long focused on protecting civilians in conflict zones and supporting stabilization in the east. U.N. Security Council Resolution 2409 (2018) identified two top "strategic priorities": (1) protection of civilians and (2) "support to the implementation of the 31 December 2016 [St. Sylvestre] agreement and the electoral process." In March 2019, the Security Council extended MONUSCO's mandate and authorized troop ceiling for nine months, while reorienting the mission's second priority task toward supporting state institutional strengthening and reforms. Other enduring tasks include the protection of U.N. personnel and facilities, support for demobilization of ex-combatants, and support for security sector reform. The Council has also called for an independent strategic review of the mission in 2019, including the articulation of a phased, progressive, and comprehensive "exit strategy." A previous strategic review of MONUSCO by the U.N. Secretary-General in 2017 found that the spike in violence in Kasai and urban locations since 2016 had "placed a major strain on limited resources." Prior to 2016, MONUSCO had positioned the bulk of its forces in the east, in part due to Security Council pressure to align itself with active conflict zones that posed the most pressing threats to civilians. Security Council members and troop-contributing countries continue to debate how MONUSCO should respond to threats to civilians posed by state security forces, as well as what conditions, if any, should be placed on any logistical assistance for future elections (including local elections due in September 2019). MONUSCO has drawn criticism for failing to protect Congolese civilians in various instances. Such shortfalls may be attributed to a combination of factors, including a wide-ranging mandate, logistical challenges, the DRC government's limited commitment to work with the mission to improve stability, and limited capacity and political will among troop-contributing countries. MONUSCO's mandate instructs it to support the DRC government in various ways, and its ability to operate is de facto contingent on government acceptance. MONUSCO personnel have also repeatedly been implicated in sexual abuse and exploitation. Ahead of MONUSCO's mandate renewal in March 2019, the U.S. acting Permanent Representative to the U.N. praised President Tshisekedi for committing to "work closely with MONUSCO to neutralize armed groups and pave the way for MONUSCO's drawdown and departure," but did not explicitly call for an immediate drawdown of personnel. In 2017, the Trump Administration successfully advocated a decrease in MONUSCO's troop ceiling, asserting that the mission was propping up a "corrupt" government in Kinshasa. Some observers expressed concern at the time that the troop reduction coincided with the emergence of new conflicts and threats to civilians, as well as election preparations. It also appeared to grant a concession to the Kabila administration, which repeatedly called for MONUSCO to draw down. The U.N. Secretary-General stated in 2017 that MONUSCO had pursued reforms to "yield efficiencies," but called for U.N. member states to "exercise caution in making further cuts to the Mission's budget that may compromise its ability to deliver on its core priorities." The Security Council did not alter the troop ceiling in 2018 or in the March 2019 renewal. Since 2013, the Security Council has authorized a Force Intervention Brigade (FIB) within MONUSCO to target armed groups, including through unilateral operations. The FIB has conducted such operations periodically, but the scope of FIB activity has been limited by troop contributors' evolving perceptions of their own national security interests in DRC, as well as a lack of capacity. A U.N. investigation into a deadly ADF attack on a Tanzanian FIB contingent in 2017 found "gaps in the training and posture" of FIB troops. Observers have debated whether the FIB concept could be a useful model for other situations, such as South Sudan and Mali. The Economy DRC has some of the world's largest natural resource endowments, but most Congolese depend on subsistence farming and/or informal activities for survival. Per-capita income and human development indicators are among the world's lowest. Industrial mining in the southeast is the mainstay of the formal economy, although small-scale artisanal miners also account for substantial production. DRC is a top global copper producer, and in 2018 it produced 64% of the global supply of cobalt (a key ingredient in batteries for electric cars as well as jet engines, among other industrial uses), along with 24% of natural industrial diamonds and 39% of tantalum. Private sector growth has been constrained by DRC's poor business environment, including its underdeveloped infrastructure, uneven contract enforcement, limited access to credit, continued insecurity in the east, endemic corruption, shortage of skilled labor, and lack of reliable electricity. The State Department assessed in 2018 that DRC's business climate had "deteriorated," reporting (among other concerns) that "government agencies … exert significant administrative pressure on businesses with audits and inspections that often result in questionable legal fines." The country ranked 182 out of 190 in the World Bank's 2018 Doing Business Report. China is the largest consumer of Congolese copper and cobalt, and is DRC's largest overall trading partner. China first emerged as a key player in the economy in 2007, when it pledged $6 billion in loans to DRC for infrastructure, to be repaid through joint-venture mining. A crash in global mineral prices, combined with political and regulatory uncertainty, produced a fiscal crisis in 2015-2017, but booming demand for copper and cobalt has since produced a rebound. GDP growth improved moderately to 3.8% in 2018, compared to 2.4% in 2016, although it remains well below the 2014 rate of 9.5%. During the price slump, major investors pulled back or divested of their assets. Notably, the U.S.-based multinational Freeport McMoRan sold its controlling stake in DRC's largest industrial mine, the Tenke Fungurume copper concession, to a Chinese firm, in an effort to alleviate its global debt. The government has approved oil production contracts around the perimeter of Virunga National Park, a UNESCO World Heritage site, and signaled plans in mid-2018 to open the park to oil exploration, raising concern from conservationists. In 2014, independent researchers accused a British oil company, SOCO, of bribing DRC military commanders to intimidate opponents of oil exploration in Virunga. SOCO later announced that it had ceased operations there. The Mining Sector: Policy Concerns DRC's "conflict minerals" are associated with the informal artisanal mining sector in the east. As of 2016, U.N. sanctions monitors reported that industry-led due-diligence measures had deprived armed groups of some opportunities to benefit from illicit mining of tin, tantalum, and tungsten, but that "supply chains face numerous challenges, such as the involvement of FARDC elements, corruption of government officials and smuggling and leakage of minerals from non-validated mining sites into the legitimate supply chain." Gold smuggling through Uganda and Rwanda, and via intermediaries in the Gulf, reportedly continues to provide financing for armed groups. Mineral smuggling also arguably continues to deprive the state of revenues. DRC's industrial mining operations have drawn a different set of concerns. The organization Global Witness has described DRC's mining parastatal Gécamines—headed by Albert Yuma, a prominent Congolese businessman—as central to corrupt networks that it labels a "regime cash machine." In 2012, the IMF ended its concessional loan program due to a lack of transparency in state mining contracts involving Gécamines. Dan Gertler, an Israeli businessman closely tied to President Kabila, has drawn particular international attention due to deals in which he has flipped state-held mining concessions for large profits. In recent years, firms linked to Gertler have been targeted in corruption probes in the United States, Canada, and the UK. In 2017 and 2018, the Trump Administration imposed sanctions on Gertler and various firms linked to him, asserting that he "used his close friendship with ... Kabila to act as a middleman for mining asset sales in the DRC." The Department of the Treasury cited an independent investigation that found DRC had lost over $1.36 billion in potential revenues from underpricing mining assets sold to firms linked to Gertler. Gertler has said he is being unfairly targeted, and that his success reflects his appetite for political risk and focus on DRC. In early 2018, the DRC government promulgated a new mining code that steeply elevates taxes and royalty payments that foreign mining firms will owe the state. President Kabila signed the law in the face of intense opposition from international firms, who objected to the government's decision to ignore "stability clauses" that would otherwise have protected existing contracts for 10 years. The new mining code appeared popular among Congolese, while adding to Western investor perceptions of risk. U.S. Policy The Trump Administration welcomed Tshisekedi's victory and has pledged to work with him (as noted), while strongly criticizing the process that delivered him the presidency. In March 2019, the Administration imposed targeted financial sanctions on three top CENI officials, citing "persistent corruption" and a "flawed electoral process" in which the CENI "failed to ensure the vote reflected the will of the Congolese people." This followed the State Department's decision in February to prohibit U.S. entry visas for the same CENI officials, along with the outgoing National Assembly speaker, the head of DRC's Constitutional Court (which confirmed Tshisekedi's victory), and other, unnamed DRC officials, citing corruption and political repression. In a media interview, U.S. Assistant Secretary of State for African Affairs Tibor Nagy asserted that the 2018 vote was "perhaps the most democratic election that Congo has ever known," while nonetheless acknowledging that it had been marked by "enormous problems." Some observers view these various statements as contradictory, while others perceive a U.S. effort "to help Tshisekedi to curb Kabila," and/or evidence of disagreements within the U.S. government on how to respond to the election results. The Administration's broad emphasis on encouraging trade and investment ties while countering "great power competitors" in Africa may contribute to its interest in establishing a positive relationship with Tshisekedi. China is DRC's largest trading partner by far, and Chinese firms are prominent in the mining sector. Russia has also intensified its outreach to the country, focusing on military cooperation. Generally, the Trump Administration continued its predecessor's efforts to ensure an electoral transfer of power from Kabila to a new president, and has maintained a high-level focus on DRC human rights issues. Although the Administration initially discontinued the post of Special Envoy to the DRC and Great Lakes region (which the Obama Administration maintained from 2013 to 2016), regional specialist J. Peter Pham was named to the position in late 2018. The Administration has also expanded a policy, initiated under President Obama, of sanctioning DRC state security officials for human rights abuses and obstruction of democracy. In 2017, the Administration further broadened the scope of U.S. sanctions in DRC by issuing an Executive Order pertaining to global human rights abuses and corruption, and using it to designate a prominent businessman and close Kabila associate, Dan Gertler, and his firms, for sanctions. As U.S. Permanent Representative to the U.N. in 2017-18, Ambassador Nikki Haley played a high-profile role in DRC policy by calling for fair elections and greater respect for human rights. Her trip to DRC in October 2017, during which she met with then President Kabila and called for elections by the end of 2018, appeared to spur the CENI's decision to announce an election date. U.S. diplomats then urged DRC authorities to adhere to the stated timetable and to confirm publicly that Kabila would not be a candidate. In February 2018, Ambassador Haley expressed concern about the electoral process and the government's failure to "release political prisoners, end politically motivated prosecutions, and guarantee the rights of peaceful assembly and freedom of expression." U.S. officials simultaneously rejected opposition calls for a "transition without Kabila"—that is, for Kabila to be replaced by a transitional government that would, in turn, organize elections—as "unconstitutional" and contrary to the 2016 St. Sylvestre accord. U.S. officials have called for a credible investigation into the murders of two U.N. sanctions investigators, U.S. citizen Michael Sharp and Swedish citizen Zaida Catalán, in Kasai in 2017. U.N. sanctions monitors reported in mid-2018 that cooperation between DRC authorities and U.N. experts tasked with assisting DRC's investigation into the case had been "deficient," adding that "the Congolese security services have interfered with the investigations." A colonel in the FARDC was reportedly arrested in connection with the killings in December 2018. Foreign Assistance U.S. bilateral aid programs in DRC seek to promote stability, economic growth, health, good governance, education, security force professionalization, and military justice. The Trump Administration's FY2020 aid budget request includes $201 million in bilateral funding for DRC, which would be a 25% decrease compared to FY2018 actual allocations. FY2018 bilateral aid levels were, in turn, higher than prior years (see Table 1 below). The United States provides additional funds for emergency humanitarian aid, and for MONUSCO's budget under the U.N. system of assessed contributions for peacekeeping. The Trump Administration's evolving policy toward implementing the Child Soldiers Prevention Act of 2008 (CSPA) and the Trafficking Victims Protection Act (TVPA), as amended, may reshape U.S. aid programs in FY2019. The State Department has repeatedly designated DRC under CSPA (in response to state-backed militias' use of child soldiers) and ranked it as "Tier III" (worst) under the TVPA; both designations trigger legal prohibitions on aid, subject to a presidential waiver. In FY2018, President Trump partially waived both types of restrictions for DRC, as the prior Administration had done. For FY2019, in contrast, President Trump did not grant waivers for DRC, meaning—pursuant to the TVPA—that no "nonhumanitarian, nontrade-related" assistance may be provided to the government. In principle, this means that military aid is generally prohibited, along with certain economic aid implemented by, or in coordination with, the DRC government. Some discretion may be involved in interpreting and applying the restrictions. The Administration has not publicly detailed which programs are affected by the policy, but it has notified some U.S. aid implementers that their funding may be discontinued. Recent Congressional Actions In the 115 th Congress, attention toward DRC focused on deterring President Kabila from clinging to power. H.R. 6207 , which passed the House, would have codified the U.S. sanctions framework for DRC (currently imposed under Executive Orders) and potentially compelled additional designations. The Senate agreed to S.Res. 386 , which called on President Trump to use "appropriate means" to assist elections in DRC and "deter further electoral calendar slippage and abuses against the people of Congo," among other provisions. The resolution also called on the DRC government to enable a credible independent investigation into the murders of the two U.N. sanctions investigators in Kasai. In the 114 th Congress, the Senate and House passed resolutions ( S.Res. 485 and H.Res. 780 ) expressing concern over DRC election delays and calling for punitive measures against those responsible for abusing human rights or undermining democracy. More broadly, Congress often focused on human rights challenges in DRC, such as sexual violence, child soldiers, and the international trade in "conflict minerals" (see Appendix ). As discussed above (" Foreign Assistance "), legislative restrictions on certain types of aid for countries that, like DRC, use child soldiers (Title IV of P.L. 110-457 , the Child Soldiers Prevention Act of 2008 or CSPA, as amended) or have a poor record on human trafficking ( P.L. 106-386 , the Trafficking Victims Protection Act or TVPA, as amended) have affected U.S. engagement and aid funding. The Administration's decision not to issue waivers for DRC in FY2019 has led to the suspension of military assistance and may have a significant impact on other U.S. programs and funding, although the full extent has not been publicly detailed. For the past decade, Congress has placed conditions on U.S. military aid to neighboring countries—at times specifically targeting Rwanda and/or Uganda—in order to deter proxy involvement in conflicts in DRC. Most recently, the Consolidated Appropriations Act, 2019, restricts International Military Education and Training (IMET) funds for any government in Africa's Great Lakes region until the Secretary of State reports that it is not involved in "destabilizing activities in a neighboring country" (§7042([a] of Division F, P.L. 116-6 ). Members continue to debate the impact of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 ), requiring the Securities and Exchange Commission (SEC) to regulate the disclosure by U.S. firms of their use of designated "conflict minerals" originating in DRC or neighboring states. The SEC issued a regulatory rule in 2012 but a court challenge partially stayed its implementation in 2014. In January 2017, the then acting SEC chairman directed staff to "consider whether the 2014 guidance is still appropriate and whether any additional relief is appropriate in the interim." During the 115 th Congress, many Members in the House backed legislation that would have repealed Section 1502 or prohibited its implementation, asserting that the provision has imposed burdensome compliance costs on U.S. firms and/or is harming the Congolese people by deterring trade and investment. Examples included H.R. 4248 , H.R. 10 (§862), and H.R. 3354 (§1108 of Division D). Other Members defended Section 1502 as an important contribution to international efforts to stabilize DRC. Outlook and Issues for Congress Achieving greater stability in DRC—a U.S. regional policy goal for over two decades—may depend on how President Tshisekedi and former president Kabila navigate their respective roles in policymaking, and how their rivals—such as Martin Fayulu, Moise Katumbi, and Jean-Pierre Bemba—choose to pursue their interests. Instability in DRC may be rooted in local-level grievances—namely, "poverty, unemployment, corruption, criminality, and poor access to land, justice, and education" —but such issues, and the decision by some to take up arms in response, have often been inflamed by absent, biased, or abusive political leadership. Events in the turbulent surrounding region—notably, rising tensions between Uganda and Rwanda, which have historically intervened in DRC when they feel their interests are threatened—may also impact DRC's stability. Humanitarian crises in neighboring South Sudan, Central African Republic, and Burundi will likely continue to divert international attention and resources. The Trump Administration has pledged to work with DRC's new president to advance reforms and economic prosperity, but similar previous efforts have been stymied by entrenched dysfunction, which appears to benefit certain elites. If President Tshisekedi owes his political survival to former president Kabila, and his electoral victory to flawed political institutions, he may be unlikely or unable to confront these problems. Reforming the security apparatus and the role of Gécamines in governing the mining sector are core challenges that could also be dangerous for a new and largely untested president to take on. Restrictions on U.S. bilateral aid stemming from DRC's designation under child soldiers and trafficking in persons legislation (see " Foreign Assistance ") may also constrain the kinds of support that the United States is able to provide for the reform of state institutions, including the military. Policymakers in Congress and the executive branch are likely to continue to debate the relative effectiveness of various tools for exerting U.S. influence in DRC, such as diplomacy, sanctions, foreign assistance, and U.S. actions in multilateral forums. Appendix. Selected Enacted Legislation P.L. 116-6 , Consolidated Appropriations Act, 2019 . Restricts certain International Military Education and Training (IMET) funds for any government in Central Africa' s Great Lakes region until the Secretary of State reports that it is not involved in "destabilizing activities" in a neighboring country. Similar provisions were included in appropriations measures for FY2017-FY2018. P.L. 114-231 , Eliminate, Neutralize, and Disrupt Wildlife Trafficking Act of 2016 (October 7, 2016). Requires the State Department annually to provide to Congress a list of foreign countries that are major sources, transit points, or consumers of wildlife trafficking products; urges the United States to continue providing certain military assistance to African security forces for countering wildlife trafficking and poaching; and other provisions to address the illegal trade in endangered and threatened wildlife. P.L. 113-235 , Consolidated and Further Continuing Appropriations Act, 2015 (December 16, 2015). Restricted Foreign Military Financing (FMF) for Rwanda, with various exceptions, unless the Secretary of State certified that Rwanda is "implementing a policy to cease political, military and/or financial support to armed groups" in DRC that have violated human rights or are involved in illegal exports; among other provisions. P.L. 113-76 , Consolidated Appropriations Act, 2014 (January 17, 2014). Restricted FMF for Rwanda, with various exceptions, unless the Secretary of State certified that Rwanda "is taking steps to cease ... support to armed groups" in DRC implicated in human rights violations or illegal exports of certain goods. P.L. 113-66 , National Defense Authorization Act for Fiscal Year 2014 (December 26, 2013). Authorized certain types of Defense Department support for foreign forces participating in operations against the LRA (as had P.L. 112-81 , the National Defense Authorization Act for Fiscal Year 2012). P.L. 112-239 , Nat ional Defense Authorization Act for Fiscal Year 2013 (January 2, 2013). Mandated the Secretary of the Treasury and Secretary of State to impose travel and financial sanctions against individuals found by the President to have provided support to the M23 rebellion, subject to a waiver. P.L. 112-74 , Consolidated Appropriations Act, 2012 (December 23, 2011). Restricted FMF for Rwanda and Uganda, with some exceptions, if the Secretary of State found that they were providing support to armed groups in DRC that violated human rights or were involved in illegal mineral exports. P.L. 111-212 , Supplemental Appropriations Act, 2010 (July 29, 2010). Provided $15 million in Economic Support Fund (ESF) for emergency security and humanitarian aid for civilians, particularly women and girls, in eastern DRC. P.L. 111-203 , Dodd-Frank Wall Street Reform and Consumer Protection Act (July 21, 2010). Required the Securities and Exchange Commission (SEC) to issue a regulation requiring U.S.-listed companies whose products rely on certain designated "conflict minerals" to disclose whether such minerals originated in DRC or adjoining countries, and to describe related due diligence measures. P.L. 111-172 , Lord's Resistance Army Disarmament and Northern Uganda Recovery Act (May 24, 2010). Directed the President to submit to Congress a strategy to guide U.S. support for multilateral efforts to eliminate the threat posed by the LRA, among other provisions. P.L. 111-117 , Consolidated Appropriations Act, 2010 (December 16, 2009). Restricted FMF grants for Rwanda if it was found to support DRC armed groups. P.L. 111-84 , National Defense Authorization Act for Fiscal Year 2010 (October 28, 2009). Required the executive branch to produce a map of mineral-rich areas under the control of armed groups in DRC. P.L. 111-32 , Supplemental Appropriations Act, 2009 (June 24, 2009). Provided $15 million in Peacekeeping Operations (PKO) funds for DRC, which were used to train a Light Infantry Battalion in an effort to promote security sector reform. P.L. 110-457 (Title IV), William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 (December 23, 2008). Prohibits certain security assistance for countries identified by the Secretary of State as supporting the recruitment and use of child soldiers, and to countries ranked as Tier 3 (worst) in the State Department's annual Trafficking in Persons Report , subject to waiver provisions (pursuant to P.L. 106-386 ; see below). P.L. 109-456 , Democratic Republic of the Congo Relief, Security, and Democracy Promotion Act of 2006 (December 22, 2006). Outlined U.S. policy toward DRC. Set a minimum funding level for bilateral foreign aid in FY2006-FY2007 and stated the sense of Congress that the Secretary of State should withhold certain aid if the DRC government was making insufficient progress toward policy objectives. Authorized the Secretary of State to withhold certain types of foreign assistance for countries acting to destabilize DRC. P.L. 106-386 (Division A), Trafficking Victims Protection Act of 2000 (October 28, 2000). Established a ranking system for measuring government efforts to eliminate human trafficking, and prohibits certain types of U.S. aid to the worst-ranked ("Tier 3") countries.

The United States and other donors have focused substantial resources on stabilizing the Democratic Republic of Congo (DRC) since the early 2000s, when "Africa's World War"—a conflict that drew in multiple neighboring countries and reportedly caused millions of deaths—drew to a close. DRC hosts the world's largest U.N. peacekeeping operation and is a major recipient of donor aid. Conflict has nonetheless persisted in eastern DRC, prolonging instability and an enduring humanitarian crisis in Africa's Great Lakes region. New unrest erupted as elections were repeatedly delayed past 2016, their scheduled date, leaving widely unpopular President Joseph Kabila in office. Security forces brutally cracked down on protests, while new conflicts emerged in previously stable regions, possibly fueled by political interference. An ongoing Ebola outbreak in the east has added to DRC's challenges. In April 2019, the Islamic State organization claimed responsibility for an attack on local soldiers in the Ebola-affected area, an apparent effort to rebrand a local armed group known as the Allied Democratic Forces. National elections were ultimately held on December 30, 2018, following intense domestic and regional pressure. Opposition figure Felix Tshisekedi unexpectedly won the presidential contest, though his ability to assert a popular mandate may be undermined by allegations that the official results were rigged to deny victory to a more hardline opposition rival. Many Congolese nonetheless reacted to the outcome with relief and/or enthusiasm, noting that Kabila would step down and that voters had soundly defeated his stated choice of successor, a former Interior Minister. Kabila's coalition nonetheless won sweeping majorities in simultaneous legislative and provincial-level elections, ensuring enduring influence for the former president and his supporters. Whether President Tshisekedi will make durable progress toward spurring inclusive economic growth, reforming state institutions, or ending security force abuses remains to be seen. The Trump and Obama Administrations expended significant efforts to encourage an electoral transfer of power in DRC, that is, "credible" elections in which Kabila was not a candidate. U.S. officials have welcomed Tshisekedi's election and pledged to work with him, but they also imposed sanctions against top election officials in the aftermath of the polls, citing corruption in the electoral process. The Trump Administration has more broadly maintained a high-level focus on human rights and governance in DRC, expanding a U.S. unilateral sanctions regime targeting high-level security commanders and appointing regional specialist J. Peter Pham as Special Envoy in 2018. U.S. diplomats have also called on DRC authorities to credibly prosecute the murder in 2017 of two U.N. sanctions investigators, one of whom was a U.S. citizen. The United States remains the largest humanitarian donor in DRC and the largest financial contributor to the U.N. peacekeeping operation, MONUSCO, though the Administration has advocated broad cuts to U.S. peacekeeping funding and secured a decrease in MONUSCO's troop level in 2017. U.S. bilateral aid to DRC totaled $375 million in FY2018, higher than in previous years. Congress has shaped U.S. policy toward DRC, often focusing on human rights and democracy. Recent foreign aid appropriations measures have directed bilateral economic assistance for DRC. In the 115th Congress, the House passed H.R. 6207, which would have codified Executive Orders authorizing U.S. targeted sanctions, while the Senate agreed to S.Res. 386, urging the U.S. President to "deter further electoral calendar slippage and abuses against the people of Congo." For more than a decade, Congress has also sought to deter Rwandan and Ugandan proxy involvement in DRC, including via provisions in aid appropriations legislation. Laws restricting U.S. aid to countries that, like DRC, have poor records on curtailing the use of child soldiers or human trafficking have also shaped U.S. engagement and aid. See also CRS In Focus IF11100, Ebola Outbreak: Democratic Republic of Congo; CRS Report R44402, Rwanda: In Brief; and CRS Report R42618, Conflict Minerals in Central Africa: U.S. and International Responses.

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Introduction The hundreds of Iraqi interpreters who work for the U.S. military conceal their identities in distinctive ways. One wears a bulletproof Kevlar helmet and a black mask. Another wears sunglasses and a balaclava that covers his entire head. What they share is the extraordinary danger of their job. Targeted for death by insurgents, they also face suspicion from their employers and often lie to relatives for fear that word of their job will get out. This excerpt from a January 2006 article in a Michigan newspaper suggests the dangerous work that Iraqi interpreters and translators performed in support of the U.S. war effort. Other sources similarly document the work performed by Afghan interpreters and translators and the danger they face. For example, a former Afghan interpreter for the U.S. military, profiled in a January 2017 article, said that it was too dangerous for him to return from the Afghan capital to his native province because of the Taliban. According to the interpreter: [Taliban] will stop the car and block the road, and say, 'Come here, I need you, bro' … Then hang me or shoot me. In January 2006, the 109 th Congress enacted the first in a series of legislative provisions to enable certain Iraqi and Afghan nationals to become U.S. lawful permanent residents (LPRs) based on their service to the U.S. government. Section 1059 of the FY2006 National Defense Authorization Act (NDAA) made certain Iraqi and Afghan nationals who had worked directly with U.S. Armed Forces as translators eligible for special immigrant visas (SIVs). Special immigrants comprise a category of permanent employment-based admissions under the Immigration and Nationality Act (INA). Upon admission to the United States, holders of SIVs are granted LPR status. A House Judiciary Committee report on a related bill in the 109 th Congress to provide special immigrant status for Iraqi and Afghan translators ( H.R. 2293 ) described the need for the legislation, as follows: A number of alien translators currently working in Iraq and Afghanistan embedded with units of the U.S. Armed Forces are providing extremely valuable services. Their cooperation and close identification with the U.S. military have put these individuals and their families in danger. This danger will only escalate after U.S. forces leave or reduce their strength in Iraq and Afghanistan. Congress subsequently broadened the special immigrant classification for translators and also authorized a second special immigrant classification for certain Iraqi and Afghan nationals who had worked for, or on behalf of, the U.S. government in Iraq or Afghanistan, respectively. This report analyzes the SIV classifications for Iraqis and Afghans within the context of both the larger INA special immigrant category and selected other permanent admissions categories. It discusses the legislative changes to the individual Iraqi and Afghan special immigrant programs since their initial authorization, provides statistics on visa issuances, and considers challenges that have faced the programs. Legislative History of the Special Immigrant Category The term special immigrant is defined in Section 101(a)(27) of the INA. The definition consists of an enumeration of classifications eligible for this category, such as LPRs who are returning from a temporary stay abroad. Most special immigrant classifications are subject to an annual numerical limitation. The special immigrant category was added to the INA by a 1965 immigration law, known as the 1965 amendments. The INA, as originally enacted in 1952, included a predecessor category of nonquota immigrants , immigrants who could be admitted to the United States without regard to numerical limitations. In the 1952 act, these nonquota immigrants included returning LPRs, natives of Western Hemisphere countries, ministers of religion, and long-serving employees of the U.S. government abroad, among other groups. The 1965 amendments to the INA redesignated the nonquota immigrants as special immigrants and made some changes to the various classifications. The Immigration Act of 1990 further amended the special immigrant provisions in the INA. It placed the special immigrant category under a revised INA section on permanent employment-based immigration and imposed an overall annual numerical limitation of 10,000 on special immigrants, with exemptions for certain classifications. In addition, the 1990 act amended the existing special immigrant classifications and added several new ones. A 1991 immigration act changed the overall annual limitation on special immigrants from 10,000 to 7.1% of the worldwide level of employment-based immigration. Subsequent laws added new special immigrant classifications. Today the special immigrant category encompasses a hodgepodge of classifications, but there are some commonalities among the seemingly disparate groups. Many of the classifications, for example, have a humanitarian element. In another commonality, some of the classifications are directed at individuals in certain fields of work that have a public service component. These include classifications for religious workers, graduates of foreign medical schools licensed to practice medicine in the United States, and international broadcasters. Particularly relevant for this report are special immigrant classifications that apply to individuals who have worked for the U.S. government. These include classifications for 15-year employees or former employees of the U.S. government abroad; nationals of Panama who are 15-year employees or former employees of the U.S. government in the former Canal Zone; and individuals who, after lawful enlistment abroad, have served or will serve on active duty in the U.S. Armed Forces for 12 years. Some of the classifications based on U.S. government employment apply to individuals who are placed in danger because of their work. For example, there is a special immigrant classification for individuals who were employees of the Panama Canal Company or Canal Zone Government on April 1, 1979, who provided faithful service for at least five years, and "whose personal safety, or the personal safety of whose spouse or children, as a direct result of such Treaty, is reasonably placed in danger because of the special nature of any of that employment." As discussed in the next section, the two special immigrant classifications for Iraqis and Afghans similarly apply to individuals who performed U.S. government-related service, with one requiring the presence of a serious threat to the individual as a result of that U.S. government employment. Special Immigrant Visas for Iraqis and Afghans There are two special immigrant classifications specifically for nationals of Iraq and Afghanistan: one for individuals who worked as translators or interpreters and one for individuals who were employed by, or on behalf of, the U.S. government in Iraq or by, or on behalf of, the U.S. government or by the International Security Assistance Force in Afghanistan. These classifications, in their current form, are the product of a series of legislative enactments, which initially established the classifications and then amended them (see Table 1 for a comparison of the main features of the programs within these classifications). A prospective Iraqi or Afghan special immigrant must submit a petition for classification; be otherwis e eligible to receive an immigrant visa; and be otherwise admissible to the United States, as specified. Regarding this last requirement, in order to gain admission to the United States, an individual must be admissible under the INA. The INA sets forth various grounds of inadmissibility, which include health-related grounds, security-related grounds, and public charge (i.e., indigence). The public charge ground does not apply to applicants under the special immigrant programs for Iraqis and Afghans; thus, these applicants are not required to demonstrate economic self-sufficiency. Aliens Who Worked as Translators or Interpreters Section 1059 of the FY2006 NDAA made certain Iraqi and Afghan nationals who had worked directly with U.S. Armed Forces for at least one year as translators, and their spouses and children, eligible to be classified as special immigrants. The provision capped the number of principal aliens who could become special immigrants at 50 annually and provided that these individuals would count against the overall special immigrant cap (see " Legislative History of the Special Immigrant Category "). Section 1059 was amended in 2007 to expand eligibility to certain Iraqi and Afghan nationals who had worked directly with U.S. Armed Forces, or under Chief of Mission authority, for at least one year as translators or interpreters. To be eligible for this special immigrant classification, as amended, the alien also had to obtain a favorable written recommendation from the Chief of Mission or a general or flag officer in the relevant Armed Forces unit. The 2007 legislation temporarily increased the numerical limit on this special immigrant program (to 500 for each of FY2007 and FY2008) and provided that the classification would be exempt from the overall numerical limits on special immigrants. Another 2007 amendment provided that if the numerical limits were not reached in a fiscal year any remaining numbers would be carried forward to the next year. Aliens Who Worked for the U.S. Government A second special immigrant classification for nationals of Iraq or Afghanistan and their spouses and children was established by Section 1244 of the FY2008 NDAA (for Iraqis) and by Title VI of the Omnibus Appropriations Act, 2009 (for Afghans). This classification, as subsequently amended, is for certain Iraqi and Afghan nationals who were employed by, or on behalf of, the U.S. government in Iraq or Afghanistan, respectively, as specified. The Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act for FY2015 expanded eligibility for the Afghan program to include certain employees of the International Security Assistance Force. To be eligible for this special immigrant classification for nationals of Iraq or Afghanistan, an alien must obtain a recommendation from a senior supervisor that documents the alien's "faithful and valuable service" as well as approval from the Chief of Mission. In addition, an applicant must have experienced "an ongoing serious threat" as a result of his or her employment. Iraqi Program The Section 1244 program for Iraqis who were employed by, or on behalf of, the U.S. government in Iraq requires not less than one year of employment on or after March 20, 2003. The law that originally established the program did not specify an end date for the employment period. The Iraqi program was initially capped at 5,000 principal aliens annually for five years (later specified as FY2008-FY2012) with a provision to carry forward any unused numbers from one fiscal year to the next, including from FY2012 to FY2013. This program expired for principal aliens at the end of FY2013. At the beginning of FY2014, however, the 113 th Congress approved a short-term extension of the program in P.L. 113-42 . For FY2014, P.L. 113-42 provided for the approval of cases that were pending when the program expired on September 30, 2013, as well as 2,000 new cases, as long as the principal aliens in the new cases completed the required one-year period of employment by September 30, 2013, and filed an application with the Chief of Mission in Iraq by December 31, 2013. The NDAA for FY2014 rewrote the extension language in P.L. 113-42 to provide for the issuance of no more than 2,500 visas to principal applicants after January 1, 2014, and to extend the application deadline to September 30, 2014 (for an overview of the application process, see " Iraqi and Afghan Special Immigrant Visa Application Process "). No changes to the numerical cap or application deadline have been made since then. Afghan Program A similar SIV program for Afghans who were employed by, or on behalf of, the U.S. government in Afghanistan, as originally enacted, required not less than one year of employment on or after October 7, 2001. It was initially capped at 1,500 principal aliens annually for FY2009 through FY2013 with a provision to carry forward any unused numbers from one fiscal year to the next, including from FY2013 to FY2014. Several laws passed by the 113 th Congress amended the Afghan program's numerical limitations to provide for additional visas. The FY2014 Consolidated Appropriations Act provided for the granting of special immigrant status to up to 3,000 principal aliens for FY2014 and the carrying forward and use of any unused balance for FY2014 through the end of FY2015. This law required the one-year employment period to end by December 31, 2014, and required principal aliens to file an application with the Chief of Mission in Afghanistan by September 30, 2014 (see " Iraqi and Afghan Special Immigrant Visa Application Process "). The Emergency Afghan Allies Extension Act of 2014 provided that an additional 1,000 principal aliens could be granted special immigrant status by December 31, 2014. This language required principal aliens to apply to the Chief of Mission no later than the same December 31, 2014, date. Making further changes to the Afghan program's numerical limitations, the FY2015 NDAA provided that an additional 4,000 principal aliens could obtain special immigrant status from the December 19, 2014, enactment date through September 30, 2016. For purposes of obtaining special immigrant status under the new provision, the law set the termination date for the required one-year employment period at September 30, 2015, the deadline to apply to the Chief of Mission at December 31, 2015, and the expiration date for the visa issuance authority at March 31, 2017. Legislation passed in the 114 th Congress further amended the Afghan SIV program. The NDAA for FY2016 increased from 4,000 to 7,000 the number of additional special immigrant visas available for issuance after December 19, 2014, and provided that these visas would remain available until used. The act also modified the employment requirements for certain applicants, requiring no less than two years of employment for those filing petitions after September 30, 2015, and extended both the employment period for eligibility and the application deadline until December 31, 2016. Regarding the future of the Afghan SIV program, the act included the following provision: It is the sense of Congress that the necessity of providing special immigrant status under this subsection should be assessed at regular intervals by the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives, taking into account the scope of the current and planned presence of United States troops in Afghanistan, the current and prospective numbers of citizens and nationals of Afghanistan employed ... and the security climate in Afghanistan. The NDAA for FY2017 increased the number of additional special immigrant visas to 8,500 and extended both the employment eligibility period and the application deadline to December 31, 2020. At the same time, it placed restrictions on qualifying employment for, or on behalf of, the U.S. government for visa issuance purposes for applications filed after the law's December 23, 2016, date of enactment. For these applications, eligibility is limited to Afghans employed in Afghanistan (1) to serve as interpreters and translators, particularly while traveling away from U.S. embassies and consulates with personnel of the Department of State or the U.S. Agency for International Development or traveling off-base with U.S. military personnel; or (2) to perform sensitive activities for the U.S. government in Afghanistan. In the 115 th Congress, the FY2017 Consolidated Appropriations Act increased the number of additional visas available under the SIV program for Afghans who were employed by, or on behalf of, the U.S. government from 8,500 to 11,000. The NDAA for FY2018 provided 3,500 additional visas under this program, for a total of 14,500 visas available for issuance after December 19, 2014. The employment termination date and the application deadline remained unchanged at December 31, 2020. In the 116 th Congress, the FY2019 Consolidated Appropriations Act makes an additional 4,000 visas available under the SIV program for Afghans who were employed by, or on behalf of, the U.S. government, for a total of 18,500 visas available for issuance after December 19, 2014. The employment termination date and the application deadline remain unchanged at December 31, 2020. This law also makes the funding for the additional 4,000 visas conditional on the Secretary of State developing a system for prioritizing the processing of Afghan SIV applications and submitting specified reports, including a report on processing improvements that was required under the NDAA for FY2019 (see " Application Processing "). Conversion of Petitions As noted, since FY2009, the annual numerical limit on the Section 1059 program for translators and interpreters has been 50, well below the numerical limits on the programs for Iraqis and Afghans who were employed by, or on behalf of, the U.S. government in Iraq or Afghanistan, respectively. A 2008 law authorized the Secretary of Homeland Security or the Secretary of State to convert an approved special immigrant petition under the former program (filed before October 1, 2008) for which a visa was not immediately available to an approved petition under the latter program and subject to the numerical limits of that latter program. Iraqi and Afghan Special Immigrant Visa Application Process The process of applying for an Iraqi or Afghan special immigrant visa has multiple steps. The application process described in this section is for Iraqis and Afghans who are abroad, who represent the vast majority of applicants. (An applicant in the United States whose petition for classification as a special immigrant is approved under the process described below could then submit an application to adjust status along with supporting documentation; applicants in the United States do not go through the visa process.) The first step under the programs for Iraqis and Afghans who worked for or on behalf of the United States is to apply for Chief of Mission approval. To apply, the principal applicant must submit documentation to the Department of State (DOS), including, among other required information, a letter from the applicant's employer confirming employment; a letter of recommendation from the applicant's direct U.S. citizen supervisor; and a statement from the applicant describing the threats he or she received as a result of his or her U.S. government employment. If approval is granted, the applicant receives a Chief of Mission approval letter. The next step for applicants under the special immigrant programs for Iraqis and Afghans who worked for, or on behalf of, the United States—and the first step for applicants under the program for translators and interpreters—is to file a petition with the Department of Homeland Security's U.S. Citizenship and Immigration Services (DHS/USCIS) along with accompanying documents. In the case of the program for those who worked for, or on behalf of, the United States, the required documents include copies of the Chief of Mission approval letter and of the letter of recommendation from the direct supervisor. In the case of the program for translators or interpreters, the required documents include evidence of qualifying employment, a letter of recommendation from the Chief of Mission or a general or flag officer in the relevant U.S. Armed Forces unit, and evidence of a background check and screening by the Chief of Mission or the U.S. Armed Forces. A petition for classification as an Iraqi or Afghan special immigrant that is approved by USCIS is forwarded to DOS's National Visa Center (NVC), which contacts the applicant to advise him or her to begin collecting required documents. The applicant must submit forms and documents for all family members applying for visas to the NVC. In addition to the immigrant visa application, these materials include copies of passport biodata pages, birth certificates, and civil documents; police certificates, if applicable; and a refugee benefits election form, indicating whether the applicant, if approved to receive a special immigrant visa, would like to participate in DOS's Reception and Placement program and receive associated benefits (see " Resettlement Assistance and Federal Public Benefits "). The NVC schedules an in-person visa interview for the principal applicant and any family members at a U.S. embassy or consulate abroad. The interview is required to determine eligibility for a visa. Applicants' fingerprints are taken at the time of the interview. Applicants are also required to have a medical examination at their own cost. After the interview, the consular office informs the applicant about any missing documentation and about any problems with the case that may prevent issuance of a visa. Many cases require additional "administrative processing" after the interview. Applicants who are issued visas and who have elected to participate in DOS's resettlement program must have their travel to the United States arranged by the International Organization for Migration. Visa recipients who have elected not to participate in DOS's resettlement program are responsible for making their own travel arrangements. Upon admission to the United States, SIV recipients obtain LPR status. Comparison of Special Immigrants to Other Selected Admissions Categories Special immigrant classifications have been established to provide for the permanent admission to the United States of specific populations. As noted, special immigrants comprise a subcategory of permanent employment-based immigrants in the INA, although they are not, in fact, admitted for employment purposes. While the special immigrant category is unique, it does bear similarities to other admission categories that are authorized by other sections of the INA. Refugees Unlike special immigrants, refugees comprise a category of humanitarian admissions under the INA. As defined in the INA, a refugee is a person who is unwilling or unable to return to his or her home country "because of persecution or a well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion." Refugees accepted for admission to the United States can be accompanied by their spouses and children. The admissions process for refugees is separate from and different than the process for immigrants. After one year in refugee status, they are required to apply to adjust to LPR status. By contrast, special immigrants, like immigrants generally, are granted LPR status upon admission to the United States. Despite the definitional and procedural differences, there is overlap between the refugee category and the special immigrant category, particularly the special immigrant classifications for Iraqis and Afghans. And the same individuals may be eligible to apply for both refugee status and for classification under one of the Iraqi or Afghan special immigrant programs. Unlike the refugee category, the special immigrant classifications for Iraqis and Afghans do not require a showing of persecution. At the same time, the statutory definitions of an eligible alien for the special immigrant programs for Iraqis and Afghans who worked for, or on behalf of, the United States include the following: "has experienced or is experiencing an ongoing serious threat as a consequence of the alien's employment by the United States Government." Another similarity between the special immigrant and refugee categories concerns the element of having a connection to the United States. As noted in the preceding legislative history discussion, U.S. government service is a common feature in special immigrant classifications, including those for Iraqis and Afghans. A U.S. connection also may facilitate access to the U.S. refugee admissions program. Overseas refugee processing is conducted through a system of three priorities for admission. The priorities provide access to U.S. resettlement consideration. Priority 1, which covers refugees for whom resettlement seems to be the appropriate durable solution, applies to all nationalities and requires no connection to the United States. A U.S. connection, however, is a factor under Priorities 2 and 3, which provide more direct access to the U.S. refugee admissions program. Priority 2 covers specified groups of special humanitarian concern to the United States, which may be defined by their nationalities, clans, ethnicities, or other characteristics. A U.S. connection is a required element for some Priority 2 groups, such as Iraqis associated with the United States. Priority 3, which is limited to designated nationalities, covers family reunification cases and requires the prospective refugee to have an eligible relative in the United States. Resettlement Assistance and Federal Public Benefits Iraqi and Afghan special immigrants are treated like refugees for purposes of federal public benefits. Under the refugee provisions in the INA, some inadmissibility grounds are not applicable to refugees. The inapplicable grounds include public charge, as is the case with Iraqi and Afghan special immigrants. Relatedly, needy refugees are eligible for resettlement assistance through programs administered by DOS and the Department of Health and Human Services' Office of Refugee Resettlement (HHS/ORR). Under DOS's Reception and Placement program, public and private, nonprofit entities provide new arrivals with initial resettlement services and referrals to other services, as needed. ORR's refugee resettlement programs provide transitional assistance to refugees and other designated groups. Refugees are also subject to special rules with respect to federal public benefits, such as Medicaid and Supplemental Security Income (SSI) for the Aged, Blind and Disabled. While Iraqi and Afghan special immigrants are now eligible for the same federal public assistance as refugees, this was not always the case. The original law establishing the special immigrant program for Iraqi and Afghan translators included no language on eligibility for resettlement support. Subsequent laws on the Iraqi and Afghan special immigrant programs made Iraqis and Afghans eligible for refugee assistance and benefits on a time-limited basis. With the enactment of the NDAA for FY2010, special immigrants from Iraq and Afghanistan became eligible for the same resettlement assistance, entitlement programs, and other benefits as refugees and for the same periods of time. Amerasian Children Amerasian children, like Iraqis and Afghans who have assisted the U.S. government, are the subject of special permanent admissions provisions in the INA. The Amerasian provisions have a humanitarian component, but, like the special immigrant provisions, are not a category of humanitarian admissions. Instead, Amerasian children are admitted to the United States under the permanent family-based immigration provisions of the INA (as opposed to the employment-based provisions under which special immigrants are admitted). A law enacted in 1982 amended the INA to provide for the admission to the United States as family-based immigrants of individuals born in Korea, Vietnam, Laos, Kampuchea (Cambodia), or Thailand between 1950 and 1982 with U.S. citizen fathers. An immigrant petition could be filed by the eligible individual or by another person on behalf of an eligible individual. Beneficiaries could not be accompanied to the United States by their mothers or other relatives. In the case of minors, the 1982 law required the mother or guardian to sign a written release and provided for placement of the child with a U.S. citizen or LPR sponsor. A subsequent law enacted in 1987, as amended, eliminated some of restrictions on the immigration of Amerasian children. The 1987 law, which provided for the admission to the United States as immigrants of Vietnamese nationals born in Vietnam between 1962 and 1976 and fathered by a U.S. citizen, permitted the beneficiary to be accompanied by a mother, a spouse, and children. The 1987 law, as amended, also made the public charge ground of inadmissibility inapplicable to these aliens and made them eligible for benefits under the refugee provisions of the INA. With these changes, the treatment of this group became more similar to that of refugees and today's Iraqi and Afghan special immigrants. Special Immigrant Visa Statistics Through the end of FY2018, more than 79,000 individuals had been issued special immigrant visas abroad, or been adjusted to LPR status in the United States, under the special immigrant classifications for Iraqi and Afghan nationals. Principal applicants accounted for about 26,000 of the total; dependent spouses and children accounted for the remaining 53,000. Table 2 provides data on the special immigrant classification for Iraqi and Afghan translators and interpreters. Table 3 provides data on the special immigrant classification for Iraqis and Afghans who were employed by, or on behalf of, the U.S. government in Iraq or Afghanistan, respectively. As shown in Table 3 and as discussed in the next section, there was a significant drop in visa issuances from FY2017 to FY2018. The tables are mutually exclusive; an individual appears in only one table. (The Appendix contains separate tables for Iraqis and Afghans for each special immigrant classification.) Selected Challenges There is a fundamental tension in the administration of the Iraqi and Afghan SIV programs between a sense of urgency to issue visas in a timely fashion to eligible individuals and a need to conduct appropriate security screening. This tension is quite sharp because on the one hand these programs are aimed at individuals who assisted the United States and face danger because of it, and on the other hand there are serious concerns that this population may pose security threats. Overlaying this dynamic is the structure of the SIV programs themselves, with statutory timeframes and numerical limitations. Application Processing The Iraqi and Afghan SIV application process has been subject to much criticism. According to a February 2014 PBS NewsHour piece on the SIV program for Afghans who worked for, or on behalf of, the U.S. government: Critics describe the process of applying for a visa as opaque, prohibitively complicated and painfully slow, putting the applicant's [ sic ] lives at risk with each passing month that their visas aren't approved. In a 2010 assessment of the SIV program for Iraqis who worked for, or on behalf of, the U.S. government, another observer characterized the application process as a series of procedural barriers and argued that it was impossible to navigate the process without English-speaking legal assistance. Anecdotal reports describe years-long waits for approval, layers of bureaucracy, and unexpected denials. DOS has acknowledged past problems processing Afghan SIV applications but has also cited changes to improve the efficiency of the system. In the 2014 PBS NewsHour piece, Jarrett Blanc, Deputy Special Representative for Afghanistan and Pakistan, identified the need for approval by the Chief of Mission committee in the U.S. embassy in Kabul, Afghanistan, as a "key bottleneck at the start of the process" that has been addressed. Blanc explained that by increasing the number of committees handling cases, applications could be reviewed within two weeks of filing. Other changes to the Iraqi and Afghan SIV programs implemented by DOS to decrease processing times were enumerated by Janice Jacobs, former Assistant Secretary of State for Consular Affairs, in written testimony for a July 2011 Senate hearing: We no longer require documentation that we found to be redundant; we have decreased the amount of paperwork that must be submitted by mail in favor of electronic submissions; and we have reorganized internal procedures so that the process moves faster. Incomplete applications also present problems. In response to questions on the SIV program for Iraqis who worked for, or on behalf of, the U.S. government following an October 2011 Senate Judiciary Committee oversight hearing, DHS referred to obstacles faced by SIV applicants in preparing their applications. The cited obstacles included difficulties obtaining a recommendation from a supervisor and a copy of the work contract. In his comments on the parallel Afghan SIV program for the PBS NewsHour piece, Blanc argued that the Afghan applicants share responsibility for the processing delays by failing to submit all the necessary paperwork. The Department of Homeland Security reported at a December 2012 House Homeland Security Committee hearing that it takes between 3 and 10 days, on average, to process an Iraqi or Afghan SIV petition. The department indicated in response to a question following the October 2011 Senate Judiciary Committee hearing that it did not need additional resources to expedite SIV petition processing (see " Iraqi and Afghan Special Immigrant Visa Application Process "). The 113 th Congress enacted legislation to amend the SIV programs for Afghans and Iraqis who worked for, or on behalf of, the U.S. government to address application processing-related concerns. The FY2014 NDAA established a review process for denial of Chief of Mission approval under each program. More generally, this law directed the Secretary of State and the Secretary of Homeland Security, in consultation with the Secretary of Defense, to make changes to the processing of applications under each program such that "all steps ... incidental to the issuance of such visas, including required screenings and background checks, should be completed not later than 9 months after the date on which an eligible alien submits all required materials to complete an application for such visa." At the same time, the act included an exception to the nine-month limit in "high-risk cases for which satisfaction of national security concerns requires additional time." The FY2014 NDAA included reporting requirements related to application processing under the SIV programs for Afghans and Iraqis who worked for, or on behalf of, the U.S. government. It required the Secretary of State and the Secretary of Homeland Security, in consultation with the Secretary of Defense, to report to Congress on the implementation of improvements to SIV application processing under both programs. The FY2019 NDAA subsequently required a new report on the implementation of SIV application processing improvements under the Afghan program. The July 2018 conference report on this legislation noted concern that "the SIV application process continues to suffer from inadequate interagency coordination which has resulted in undue delay, needless stress on applicants, and a sizable drop in SIV admissions this year." In addition to requiring a congressional report, the FY2014 NDAA provided for public reports on Iraqi and Afghan SIV application processing. It required the Secretary of State and the Secretary of Homeland Security, in consultation with the Secretary of Defense, to publish quarterly reports describing improvements in efficiency in SIV application processing. The first quarterly reports on the Iraqi and Afghan SIV programs, dated April 2014, stated that the "U.S. government has devoted resources to reducing the amount of time required to complete the SIV process." Similar language appears in all subsequent quarterly reports on the Iraqi program through the most recent July 2018 report, and in all subsequent quarterly reports on the Afghan program through the April 2017 report. Among other data, the quarterly reports on the Iraqi and Afghan SIV programs include average total U.S. government processing time for SIV applications. This statistic excludes any steps in the application process that are the responsibility of the applicant, such as filing a petition with USCIS (see " Iraqi and Afghan Special Immigrant Visa Application Process "). In the initial April 2014 quarterly reports, average total U.S. government processing time was 239 business days for the Iraqi program and 287 business days for the Afghan program. In the January 2016 reports, average total U.S. government processing time was 311 business days for the Iraqi program and 293 business days for the Afghan program. In the most recent quarterly reports for July 2018, average total U.S. government processing time was 252 calendar days for the Iraqi program and 692 calendar days for the Afghan program. A lawsuit challenging the delays in processing Iraqi and Afghan SIV applications was filed in federal court in the District of Columbia in June 2018. It remains pending as of the date of this report. Security Concerns As suggested by the "high-risk cases" language cited in the preceding section, protecting U.S. national security remains a major concern about the Iraqi and Afghan SIV programs. Iraqi and Afghan SIV applicants are subject to security checks conducted by DHS and DOS, a process that involves coordination with other agencies. Details of the security review process are not publicly available. In her written testimony for the July 2011 Senate hearing, Jacobs said, "While we cannot discuss specifics for security reasons, SIV applicants from Iraq as well as Afghanistan undergo multiple layers of review." In written responses to questions following an April 2013 Senate Foreign Relations Committee hearing, then-Secretary of State John Kerry identified the interagency security screening process as one of the "major obstacles" to the quick processing of Afghan SIV applications. Indicating that security screening "takes the most time," he offered that "the Department of State is working constantly with our interagency counterparts to streamline this comprehensive and essential process while eliminating bottlenecks." Scrutiny of the security review process for Iraqi and Afghan SIV applicants increased in 2011 following the arrest on terrorism charges of two Iraqi nationals who had entered the United States through the U.S. refugee program. The potential security risks posed by prospective refugees and special immigrants from Iraq and elsewhere were discussed at the December 2012 House hearing cited above, which was entitled Terrorist Exploitation of Refugee Programs . At the hearing, then-DHS Deputy Under Secretary for Analysis Dawn Scalici described U.S. government efforts to identify potential threats: When we look at on [ sic ] the potential in the future for terrorist groups to exploit the refugee program, we do have concerns. Hence, we have the enhanced security and vetting procedures.... I will tell you that we have intelligence-driven processes regardless of the immigration program that a terrorist actor may seek to use or just travel to the United States. We are reviewing intelligence on a regular basis, sharing that with interagency partners and developing the procedures by which we can help to identify and further [screen] individuals of concern. The quarterly reports on application processing under the SIV programs for Iraqis and Afghans who worked for, or on behalf of, the U.S. government mention security screening. For example, the July 2018 reports for both programs reference "thorough screening for national security concerns." Neither Iraq nor Afghanistan is among the countries subject to entry restrictions or limitations under President Donald Trump's September 2017 presidential proclamation on enhanced vetting. Regarding Iraq, however, the proclamation includes a recommendation from the Secretary of Homeland Security that "nationals of Iraq who seek to enter the United States be subject to additional scrutiny to determine if they pose risks to the national security or public safety of the United States." Visa Availability The SIV program for Iraqi and Afghan translators and interpreters is ongoing, while the programs for Iraqis and Afghans who worked for, or on behalf of, the U.S. government are temporary. As of the date of this report, the temporary Afghan program and the temporary Iraqi program are scheduled to end when all the available visas are issued. As detailed above, each of the three SIV programs has been subject to statutory numerical limitations from the start. The numerical limitations language in the statutes creating the programs for Iraqis and Afghans who worked for, or on behalf of, the U.S. government also provided for the carryover of unused visas from a given fiscal year to the next during a specified period (see " Special Immigrant Visas for Iraqis and Afghans "). In the case of the program for Iraqis who worked for, or on behalf of, the U.S. government, as amended, any of the 5,000 visas made available annually for principal aliens for FY2008 through FY2012 that were not used in a given fiscal year were carried forward to the next fiscal year , with unused visas for FY2012 carried forward to FY2013. Visas that were carried forward but not used in that next fiscal year were lost. At the end of FY2013, the Iraqi program ended and any remaining visas were lost. The program was subsequently revived and new visas were authorized. Currently, P.L. 113-66 provides for the issuance of 2,500 visas to principal aliens under the Iraqi program after January 1, 2014. This law required that applications be filed by September 30, 2014, but included no deadline for issuance of the visas. Under the program for Afghans who worked for, or on behalf of, the U.S. government, as originally authorized, any of the 1,500 visas made available annually for principal aliens for FY2009 through FY2013 that were not used in a given fiscal year were carried forward to the next fiscal year. P.L. 113-76 provided for the issuance of 3,000 visas to principal aliens for FY2014 and for the carrying forward of any unused balance for issuance in FY2015. As under the Iraqi program, carried-over visas that were not used in the second fiscal year were lost. Subsequent Afghan special immigrant visa provisions enacted by the 113 th Congress made additional visas available subject to specified employment periods, application deadlines, and visa issuance authority expiration dates. Legislation enacted by the 114 th , 115 th , and 116 th Congresses made additional visas available for issuance after December 14, 2014, but provided that these visas would remain available until used. Some of these laws also extended employment termination dates and application deadlines (see " Afghan Program "). In 2014 and 2017, DOS temporarily stopped scheduling interviews for Afghan special immigrant visa applicants due to a dwindling stock of available visas. The FY2019 Consolidated Appropriations Act provides for the issuance of a total of 18,500 visas to principal aliens under the Afghan program after December 19, 2014. The SIV program for translators and interpreters is capped at 50 visas for principal aliens per year. It has been capped at this level for each year except for FY2007 and FY2008, when the cap stood at 500. This program did not originally include carryover provisions, but such language was later added by amendment. As under the other SIV programs, visas that are carried forward but not used in the next fiscal year are lost. Consideration of these numerical limitation and carryover provisions, in conjunction with the visa issuance data for the SIV programs for Iraqis and Afghans who worked for, or on behalf of, the U.S. government (in Table A-3 and Table A-4 in the Appendix ), indicates that thousands of visas provided for these two programs are no longer available. As shown in the tables, through FY2013, visa issuances under both programs consistently fell well below the statutory limits. Under current statutory provisions for the SIV programs for Iraqis and Afghans who worked for, or on behalf of, the U.S. government, as described above, there are no deadlines for the issuance of the visas. Conclusion There seems to be broad agreement that the United States should admit for permanent residence Iraqis and Afghans who assisted the U.S. government overseas, provided that they do not pose security risks. Yet implementing the SIV programs intended to accomplish this policy goal has proven difficult. Given the seeming consensus that the U.S. government should assist its Iraqi and Afghan employees in need, an ongoing question for Congress is whether the existing SIV provisions are sufficient to accomplish this, or whether further extensions of the temporary SIV programs for Iraqis and Afghans who worked for, or on behalf of, the U.S. government, or other changes to the SIV provisions are warranted. Appendix. Additional Special Immigrant Data Iraqi and Afghan Translators and Interpreters Table 2 in the main body of the report provides data on visa issuances to Iraqis and Afghans (combined) under the special immigrant program for translators and interpreters. The tables here present visa issuance data under this program for Iraqis and Afghans separately. Table A-1 provides data on Iraqi nationals who were issued special immigrant visas, or who adjusted to LPR status in the United States, under the special immigrant program for translators and interpreters. Table A-2 provides comparable data for Afghan nationals. Both Table A-1 and Table A-2 exclude certain dependents that are included in Table 2 . These are dependents (27 in total) who received a special immigrant visa or adjusted status under the translator/interpreter program and are Iraqi or Afghan nationals but were born in a third country. These 27 dependents account for the discrepancy between these tables and Table 2 . The significant decreases in Table A-1 and Table A-2 after FY2008 reflect changes in the numerical limitations on this classification (see " Aliens Who Worked as Translators or Interpreters "). Iraqis and Afghans Who Worked for the U.S. Government Table 3 in the main body of the report provides data on visa issuances to Iraqis and Afghans (combined) under the special immigrant programs for Iraqis and Afghans who worked for the U.S. government. The tables here present visa issuance data under these programs for Iraqis and Afghans separately. Table A-3 provides data on Iraqi nationals who were issued special immigrant visas, or who adjusted to LPR status in the United States, under the special immigrant program for Iraqis who were employed in Iraq by, or on behalf of, the U.S. government. Table A-4 provides comparable data for Afghan nationals under the special immigrant program for Afghans who were employed in Afghanistan by, or on behalf of, the U.S. government or by the International Security Assistance Force. Both Table A-3 and Table A-4 exclude certain dependents that are included in Table 3 . These are dependents (477 in total) who received a special immigrant visa or adjusted status under these programs and are Iraqi or Afghan nationals but were born in a third country. These 477 dependents account for the discrepancy between these tables and Table 3 .

Congress has enacted a series of legislative provisions since 2006 to enable certain Iraqi and Afghan nationals to become U.S. lawful permanent residents (LPRs). These provisions make certain Iraqis and Afghans who worked as translators or interpreters, or who were employed by, or on behalf of, the U.S. government in Iraq or Afghanistan, eligible for special immigrant visas (SIVs). Special immigrants comprise a category of permanent employment-based admissions under the Immigration and Nationality Act (INA). While the special immigrant category is unique, it does bear some similarities to other admission categories that are authorized by other sections of the INA, including refugees and Amerasian children. To apply under the SIV programs for Iraqis or Afghans, a prospective special immigrant must submit a petition to the Department of Homeland Security; be otherwise eligible for an immigrant visa; and be otherwise admissible to the United States. An Iraqi or Afghan SIV applicant whose petition is approved and who is abroad is required to have an in-person visa interview at a U.S. embassy or consulate abroad to determine visa eligibility. Upon admission to the United States, SIV recipients are granted LPR status. Iraqi and Afghan special immigrants are eligible for the same resettlement assistance and federal public benefits as refugees. There are three SIV programs for Iraqi and Afghan nationals. One is a permanent program for certain Iraqis and Afghans who have worked directly with U.S. Armed Forces, or under Chief of Mission authority, as translators or interpreters. This program is currently capped at 50 principal aliens (excluding spouses and children) per year. The other two SIV programs for Iraqis and Afghans are temporary. One program is for certain Iraqis who were employed in Iraq by, or on behalf of, the U.S. government during a specified period. It was capped at 5,000 principal aliens annually for FY2008 through FY2012 and included a provision to carry forward any unused numbers from one fiscal year to the next. It expired at the end of FY2013, but was subsequently revived. Current statutory authority provides for the issuance of no more than 2,500 visas to principal applicants after January 1, 2014. Applications are no longer being accepted for this program because the application deadline has passed. There is a similar SIV program for certain Afghans who were employed in Afghanistan by, or on behalf of, the U.S. government or by the International Security Assistance Force during a specified period. The program was capped at 1,500 principal aliens annually for FY2009 through FY2013, with a provision to carry forward any unused numbers from one fiscal year to the next. Current statutory authority provides for the issuance of no more than 18,500 visas to principal applicants after December 19, 2014. The application period for this program remains open. Through the end of FY2018, more than 79,000 individuals were granted special immigrant status under the three SIV programs for Iraqi and Afghan nationals. Principal applicants accounted for about 26,000 of the total, and dependent spouses and children accounted for the remaining 53,000. The Iraqi and Afghan SIV programs have faced challenges with respect to application processing, security screening, and visa availability. The structure of the SIV programs themselves, with statutory timeframes and numerical limitations, introduces additional complication.

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Introduction Water infrastructure issues, particularly regarding funding, continue to receive attention from some Members of Congress and a wide array of stakeholders. Localities are primarily responsible for providing wastewater and drinking water infrastructure services. According to the most recent estimates by states and the U.S. Environmental Protection Agency (EPA), expected capital costs for such facilities total $744 billion over a 20-year period. While some analysts and stakeholders debate whether these estimates understate or overstate capital needs, most agree that the affected communities face formidable challenges in providing adequate and reliable water infrastructure services. Capital investments in water infrastructure are necessary to maintain high quality service that protects public health and the environment, and capital facilities are a major investment for local governments. The vast majority of public capital projects are debt-financed (i.e., they are not financed on a pay-as-you-go basis from ongoing revenues to the water utility). The principal financing tool that local governments use is the issuance of tax-exempt municipal bonds. At least 70% of U.S. water utilities rely on municipal bonds and other debt to some degree to finance capital investments. Beyond municipal bonds, federal assistance through grants and loans is available for some projects but is insufficient to meet all needs. Finally, public-private partnerships (P3s), which are long-term contractual arrangements between a public utility and a private company, currently provide only limited capital financing in the water sector. Although they are increasingly used in transportation and some other infrastructure sectors, especially P3s that involve private sector debt or equity investment in a project, most P3s for water infrastructure involve contract operations for operation and maintenance. Numerous drinking water utilities are privately owned and make significant private capital investments in water infrastructure, unlike the wastewater sector, in which facilities are generally owned by municipalities. In recent years, Congress has considered several legislative options to help finance water infrastructure projects, including projects to build and upgrade wastewater and drinking water treatment facilities. Some Members have offered proposals that would amend, supplement, and/or complement the existing clean water and drinking water State Revolving Fund (SRF) programs. Other proposals would address water infrastructure issues outside the framework of the SRF programs. In 2014, Congress established the Water Infrastructure Finance and Innovation Act (WIFIA) program, which creates a new mechanism of providing financial assistance for water infrastructure projects. The first section of this report provides an overview of the WIFIA program, including its origins, scope, and applicability. The second section describes WIFIA program appropriation levels and estimates of the amount of credit assistance the federal funding would provide. The third section discusses EPA's implementation of the WIFIA program, including recent developments. The fourth section identifies selected issues that may be of interest to policymakers. Program Overview The WIFIA approach for supporting investment in water infrastructure is modeled after the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which was established in 1998 (see textbox below for further details). As the name suggests, only transportation projects are eligible for TIFIA assistance. The TIFIA program generated interest in creating a similar program for water infrastructure. As discussed below, the Water Resources Reform and Development Act of 2014 (WRRDA 2014) established and authorized appropriations for the WIFIA program. Congress provided the first appropriations for EPA to offer credit assistance, such as direct loans, under the WIFIA program in FY2017. In 2018, America's Water Infrastructure Act of 2018 (AWIA) reauthorized appropriations for the program and amended certain WIFIA provisions. WRRDA 2014 WRRDA 2014 established a five-year WIFIA pilot program. The act authorized (1) EPA to provide credit assistance (loans or loan guarantees) for a range of drinking water and wastewater projects and (2) the U.S. Army Corps of Engineers to provide similar assistance for water resource projects, such as flood control or hurricane and storm damage reduction. Congress provided appropriations to EPA to administer the WIFIA program in FY2014. Congress has not appropriated analogous funds to the Corps (nor has the Administration requested funds for a Corps WIFIA program) that would enable the Corps to implement a WIFIA program as laid out in WRRDA 2014. Regardless, this section identifies WIFIA provisions relating to both EPA and the Corps. To implement the program, the act authorized appropriations of $175 million over five years to both EPA and the Corps (beginning with $20 million for each agency in FY2015 and increasing to $50 million in FY2019). Project costs must generally be $20 million or larger to be eligible for credit assistance. For projects in less populous communities (defined by WIFIA as populations of 25,000 or less), project costs must be $5 million or more. WIFIA credit assistance is available to state infrastructure financing authorities; a corporation; a partnership; a joint venture; a trust; or a federal, state, local, or tribal government (or consortium of tribal governments). In the case of projects carried out by private entities, such projects must be publicly sponsored. To meet this requirement, WIFIA allows a project applicant to demonstrate to the EPA or the Corps that the affected state, local, or tribal government supports the project. The maximum amount of a loan is 49% of eligible project costs, but the act authorizes EPA or the Corps to make available up to 25% of available funds each year for credit assistance in excess of 49% of project costs. Except for certain projects in rural areas, the total amount of federal assistance (i.e., WIFIA and other sources combined) may not exceed 80% of a project's cost. Activities eligible for assistance under the WIFIA pilot program include project development and planning, construction, acquisition of real property, and carrying costs during construction. Categories eligible for assistance by EPA include projects eligible for assistance through the clean water state revolving fund (CWSRF) and drinking water state revolving fund (DWSRF) programs (i.e., wastewater treatment and community drinking water facilities); enhanced energy efficiency of a public water system or wastewater treatment works; repair or rehabilitation of aging wastewater and drinking water systems; desalination, water recycling, aquifer recharge, or development of alternative water supplies to reduce aquifer depletion; prevention, reduction, or mitigation of the effects of drought; or a combination of eligible projects. Categories eligible for assistance by the Corps include flood control or hurricane and storm damage reduction projects, environmental restoration, coastal or inland harbor navigation improvement, or inland and intracoastal waterways navigation improvement. The EPA Administrator or Secretary of the Army, as appropriate, determines project eligibility based on creditworthiness and dedicated revenue sources for repayment. Selection criteria include the national or regional significance of the project, extent of public or private financing in addition to WIFIA assistance, use of new or innovative approaches, the amount of budget authority required to fund the WIFIA assistance, the extent to which a project serves regions with significant energy development or production areas, and the extent to which a project serves regions with significant water resources challenges. Responding to concerns from some groups that WIFIA could impair and diminish support for clean water and drinking water SRF programs under the Clean Water Act and Safe Drinking Water Act (see discussion below), the act requires the EPA Administrator, when the agency receives applications for WIFIA assistance, to notify state infrastructure financing authorities and give them the opportunity to commit funds to the project. WIFIA-assisted projects must use American-made iron and steel products. Projects must also comply with the prevailing wage requirements of the Davis-Bacon Act in the same manner that they would under the SRF provisions of the Clean Water Act. In addition, the act directed EPA and the Corps to provide information on a website concerning applications and projects that have received assistance, and the Government Accountability Office must report to Congress (four years after enactment, i.e., June 10, 2018) on the program and provide recommendations for continuing, changing, or terminating the WIFIA program. As discussed below, AWIA extended the deadline for this report. AWIA 2018 AWIA, enacted on October 23, 2018, amended WIFIA in several ways: It removed WIFIA's designation as a pilot program. It authorized appropriations of $50.0 million for each of FY2020 and FY2021 for EPA program implementation. It authorized EPA to administer the WIFIA program for relevant agencies (through an interagency agreement), specifically directing EPA to enter into such an agreement with the commissioner of the Bureau of Reclamation within the Department of the Interior. It required the Government Accountability Office to prepare a report for Congress by October 23, 2021. In addition, AWIA authorized an additional $5 million in WIFIA appropriations to provide credit assistance to state finance authorities to support combined projects eligible for assistance from the CWSRF and DWSRF. This additional appropriation authority is available for FY2020 and FY2021 and is available only if (1) Congress appropriates funding for both the CWSRF and the DWSRF at FY2018 levels or 105% or more of the previous year's funding, whichever is greater, and (2) EPA receives at least $50.0 million in WIFIA appropriations. State financing authorities may use funding from WIFIA appropriations to cover 100% of project costs, in contrast to the 80% federal financial assistance cap that applies to most WIFIA-financed projects. Appropriations For each of FY2015 and FY2016, Congress provided $2.2 million for EPA to hire staff and design the new water infrastructure assistance program. In FY2017, Congress provided the first appropriations to cover the subsidy cost of the program, thus allowing implementation of WIFIA (i.e., making project loans). Congress provided a total of $30 million for the WIFIA program for FY2017 through two appropriations acts: The Further Continuing and Security Assistance Appropriations Act, 2017 ( P.L. 114-254 ), enacted on December 10, 2016, provided the first appropriation of funds to cover the subsidy cost of the program. P.L. 114-254 appropriated $20 million to EPA to begin making loans and allowed the agency to use up to $3 million of the total for administrative purposes. The act authorized EPA to use these appropriations to subsidize costs to provide credit assistance not to exceed $2.1 billion. The Consolidated and Further Continuing Appropriations Act, 2017 ( P.L. 115-31 ), enacted on May 5, 2017, provided an additional $8 million for EPA to apply toward loan subsidy costs and $2 million for EPA's administrative expenses. The act authorized EPA to use funds to guarantee as much as $976 million in direct loans. For FY2018, the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), provided $63 million for the WIFIA program (including $8 million for administrative costs). The act authorized EPA to use funds to guarantee as much as $6.71 billion in direct loans. EPA estimated that its budget authority ($55 million) would provide approximately $5.5 billion in credit assistance. For FY2019, the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided $68 million for the WIFIA program, including $8 million for administrative costs. The act authorized EPA to use funds to guarantee as much as $7.31 billion in direct loans. EPA estimated that its budget authority ($60 million) would provide approximately $6 billion in credit assistance. Figure 1 illustrates the WIFIA appropriations for administrative purposes and for loan subsidy costs between FY2017 and FY2019. The appropriations acts for FY2017 through FY2019 state that the appropriations for the subsidy costs would be available until expended. In contrast, fiscal year appropriations for WIFIA administrative costs are not available after specific dates. As discussed above, WRRDA 2014 authorized a parallel program for water resources projects to be administered by the Corps. Congress has not yet appropriated funds (nor has the Administration requested funds for a Corps WIFIA program) that would enable the Corps to begin preparations or begin making WIFIA loans under the authority in the 2014 statute. EPA Implementation EPA began preparing for implementation of the WIFIA program, including through a series of public listening sessions in several U.S. cities, in 2014. The intended audience was municipal, state, and regional water utility officials; private sector financing professionals; and other interested organizations and parties. The purpose was to discuss project ideas, potential selection and evaluation criteria, and numerous other implementation issues. In 2016, EPA issued two rules intended to explain and clarify some provisions of the program and establish guidelines for the application process. One was an interim final rule that sets guidelines for the application and selection of projects, defines the requirements for credit assistance, and defines reporting requirements and a fee collection structure. In this rule, EPA said that it would initially give funding priority to four types of projects: 1. adaptation to extreme weather and climate change; 2. enhanced energy efficiency of wastewater treatment works and public water systems; 3. green infrastructure; and 4. repair, rehabilitation, and replacement of infrastructure and conveyance systems. Through the second rulemaking, EPA proposed a fee structure for WIFIA (application fee, credit processing fee, and servicing fee). EPA finalized this rule in June 2017. WIFIA authorizes EPA to charge fees to recover all or a portion of the agency's costs administering the program. EPA's final rule requires a nonrefundable fee for each project that is invited to submit a full WIFIA application. The application fee is $100,000, or $25,000 for projects serving small communities. The fees are not required in connection with submission of letters of interest but would be required for projects that EPA expects might reasonably proceed to closing on a credit assistance agreement. Enacted December 16, 2016, the Water Infrastructure Improvements for the Nation (WIIN) Act ( P.L. 114-322 , Section 5008(c)) amended WIFIA to allow fees to be financed as part of the loan at the request of an applicant. In 2018, AWIA amended WIFIA to clarify that state financing authorities cannot pass along application fees on to the parties that utilize WIFIA assistance. After EPA received its first appropriations to cover loan subsidy costs, it announced its first round of funding for the WIFIA program in January 2017. Additional rounds of funding have followed with each fiscal year's enacted appropriations. Table 1 provides details for each of EPA's funding rounds, including the project priorities EPA listed in its annual funding notices, the number of letters of interest submitted, selected projects, and loans closed. Selected Issues Subsidy Amount for Credit Assistance From the federal perspective, an advantage of the WIFIA program is that it can provide a large amount of credit assistance relative to the amount of budget authority provided. In federal budgetary terms, WIFIA assistance has less of an impact than a grant, which is not repaid to the U.S. Treasury. The volume of loans and other types of credit assistance that the program can provide is determined by the size of congressional appropriations and calculation of the subsidy amount. WIFIA defines the "subsidy amount" as follows: The amount of budget authority sufficient to cover the estimated long-term cost to the Federal Government of a Federal credit instrument, as calculated on a net present value basis, excluding administrative costs and any incidental effects on governmental receipts or outlays in accordance with the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.). The subsidy amount, which is often expressed in percentage terms or as a ratio (i.e., subsidy rate), largely determines the amount of credit assistance that can be made available to project sponsors. For example, if a project's subsidy rate is 10% and is the only charge against available budget authority, a $20 million budgetary allocation could theoretically support a $200 million loan. A lower subsidy rate would support a larger loan amount. As a reference point, the Office of Management and Budget (OMB) identified a TIFIA subsidy rate of 6.30% for direct loans in FY2020. Proponents of WIFIA have argued that loans for water projects are likely to be less risky than transportation projects, because water utility collections for services (i.e., water rates) provide an established revenue stream and repayment mechanism; thus the subsidy cost would be lower and the amount of credit assistance higher (per dollar of budget authority). Adding caution, however, analysts note that, even with stable revenue mechanisms, some communities and water utilities have recently experienced problems with borrowing and bond repayments, so repayment of a WIFIA loan is not a certainty. In the Trump Administration's FY2020 budget proposal, OMB estimated a 0.91% subsidy rate for WIFIA. This equates to a 1:110 ratio. At this subsidy rate, a $10 million appropriation could support a direct loan (or loans) totaling $1.10 billion. However, this subsidy rate is an estimate for budgetary purposes. In the context of WIFIA implementation, subsidy rates are project-specific. EPA stated that the subsidy rate is used for budgetary purposes and provides an estimate for what will be available for loans each year based on the anticipated riskiness of the future loan portfolio. The actual ratio will be determined for each project at the time of loan obligation. Project A with a higher credit quality would consume less of the credit subsidy than Project B with a lower credit quality, even if the projects are otherwise identical. Each applicant will be scored independently. Loan Interest Rates and Default Risk The WIFIA program provides capital at a low cost to the borrower, because even though the interest on 30-year Treasury securities is taxable, Treasury rates can be less expensive than rates on traditional tax-exempt municipal debt. Moreover, WIFIA financing may be characterized as patient capital, because loan repayment does not need to begin until five years after substantial completion of a project, the loan can be for up to 35 years from substantial completion, and the amortization schedule can be flexible. In addition, there is less perceived investment risk, because the project has been determined to be creditworthy (i.e., there is a revenue stream for repayment). Additionally, the WIFIA program has the potential to limit the federal government's exposure to default by relying on market discipline through creditworthiness standards and encouraging private capital investment. On the other hand, the Congressional Budget Office (CBO) has argued that the federal government underestimates the cost of providing credit assistance under such programs because it excludes the cost of market risk—the compensation that investors require for the uncertainty of expected but risky cash flows. The reason is that the [Federal Credit Reform Act] requires analysts to calculate present values by discounting expected cash flows at the interest rate on risk-free Treasury securities (the rate at which the government borrows money). In contrast, private financial institutions use risk-adjusted discount rates to calculate present values. In an effort to encourage nonfederal and private sector financing, WIFIA funding assistance generally cannot exceed 49% of project costs. In addition, WIFIA limits all sources of federal assistance to no more than 80% of a project's cost. Interactions with Existing Water Financing Programs In general, the WIFIA program is designed to support larger infrastructure projects with eligible costs exceeding $20 million. For this reason, some have argued that the WIFIA program complements existing water infrastructure financing tools—SRF programs under the Clean Water Act and Safe Drinking Water Act—which are often used for smaller-scale projects. Policymakers set a lower minimum threshold for project costs ($5 million) for WIFIA projects in communities with populations less than 25,000. One of 12 projects selected in the FY2017 funding round is located in a less populous community (Morro Bay, CA). Two of the 39 projects in the FY2018 funding round are located in less populous communities (Frontenac, KS, and Cortland, NY). Generally, the level of interest from less populous communities in WIFIA financing is uncertain, particularly considering the other financing options that may be available. The U.S. Department of Agriculture has a variety of water and waste disposal programs to provide loans and grants for wastewater and drinking water infrastructure in rural communities (10,000 people or fewer). In addition, both of the SRF programs authorize states to provide subsidized financial assistance—such as principal forgiveness, negative interest loans, or a combination—under certain conditions. Appropriations acts in recent years have required states to use minimum percentages of their federal grant amounts to provide additional subsidization. The FY2019 appropriations act requires 10% of the CWSRF grants and 20% of the DWSRF grants to be used "to provide additional subsidy to eligible recipients in the form of forgiveness of principal, negative interest loans, or grants (or any combination of these)." WIFIA financing can potentially support smaller projects by grouping, or aggregating, them through a single application for financial assistance. For example, during the first round of WIFIA funding (FY2017), one of the 12 entities selected to submit a loan application was the Indiana Finance Authority, which administers the clean water and drinking water SRF programs in Indiana. Indiana's prospective WIFIA loan would provide $436 million to support multiple projects in the state. A major source of debate among opponents and proponents has been and continues to be potential impacts of WIFIA on funds for the Clean Water Act and Safe Drinking Water Act SRF programs. Several groups representing state environmental officials opposed the establishment of a WIFIA program (in the 113 th Congress). They argued that WIFIA funding could result in reduced spending on the SRF programs, which are capitalized by federal appropriations. States are concerned that WIFIA would likely be funded (through congressional appropriations) to the detriment of the SRF programs. On the other hand, water utility groups that support WIFIA have argued that it would complement, not harm, existing SRF programs. In their view, WIFIA will provide a new funding opportunity for large water infrastructure projects that are unlikely to receive SRF assistance. As described above, in part to address concerns about impacts of WIFIA on the SRF programs, WIFIA requires EPA to notify state infrastructure financing authorities about WIFIA application and gives state infrastructure financing authorities an opportunity to commit funds to the project. Nevertheless, some states and environmental advocacy groups remain concerned that WIFIA will compete with SRFs for congressional funding and that WIFIA will not prioritize public health or affordability, as the SRFs can. The 2016 Water Infrastructure Improvements for the Nation Act includes a "sense of the Congress" that WIFIA funding should be in addition to robust funding for the SRFs. Potential Federal Revenue Loss from Tax-Exempt Bonds Enacting the WIFIA program raised a federal budgetary and revenue issue. Legislation reported by congressional committees is typically scored by the CBO for the effects on discretionary and mandatory, or direct, spending and by the Joint Committee on Taxation (JCT) for effects on revenue. The initial CBO cost estimate for S. 601 , as approved by the Environment and Public Works Committee in April 2013, concluded that the WIFIA provisions would cost $260 million over five years. In addition, it would result in certain revenue loss to the U.S. Treasury; thus, pay-as-you-go procedures would have applied to the bill. CBO cited the JCT estimate that enactment of the bill would reduce revenues by $135 million over 10 years, because states would be expected to issue tax-exempt bonds for water projects in order to acquire additional funds not covered by WIFIA assistance. To avoid the pay-as-you-go requirement in the bill, the committee added a provision to S. 601 to prohibit recipients of WIFIA assistance from issuing tax-exempt bonds for the non-WIFIA portions of project costs. CBO re-estimated the bill and concluded that, because the change would make the WIFIA program less attractive to entities, most of which rely on tax-exempt bonds for project financing, the cost of the bill would be $200 million less over five years. CBO also said that the bill would have no impact on revenues, because the demand for federal credit would be lower without the option of using tax-exempt financing. WRRDA 2014 retained the bar on tax-exempt financing for WIFIA-assisted projects. Thus, the apparent solution to one issue in the legislation—potential revenue loss to the U.S. Treasury—raised a different kind of issue for entities seeking WIFIA credit assistance, because tax-exempt municipal bonds are the principal mechanism used by local governments to finance water infrastructure projects. The restriction was widely criticized by potential users of WIFIA assistance. In their view, the bond financing restriction in WRRDA 2014, together with the provision that caps WIFIA assistance at 49% of project costs, would make it very difficult to finance needed projects. Congressional interest in addressing the tax-exempt bond restriction was soon evident. For example, H.R. 1710 in the 114 th Congress proposed to make an exception from the limitation on use of tax-exempt bonds for WIFIA loans made to finance water infrastructure projects in states in which the governor has issued a state of drought emergency declaration. More generally, in July 2015, the Senate passed H.R. 22 , a bill to reauthorize highway and transportation programs for six years. It included repeal of the provision in P.L. 113-121 that limits any project receiving federal credit assistance under the WIFIA program from being financed with tax-exempt bonds. However, repeal of the provision raised similar revenue questions to those that arose in connection with P.L. 113-121 . CBO's report on S. 1647 (the Senate Environment and Public Works Committee's bill, which was the basis of Senate-passed H.R. 22 ) stated that the Joint Committee on Taxation (JCT) estimated that repealing the WIFIA limitation would increase states' issuance of tax-exempt bonds for water projects and would decrease federal revenues by $17 million over the FY2016-FY2025 period. Further, CBO estimated that the change would increase demand for federal credit under the WIFIA program, resulting in additional spending stemming from the appropriation levels authorized in P.L. 113-121 . Consequently, CBO estimated that implementing the WIFIA program would cost $146 million over the FY2016-FY2025 period. The issue of identifying offsets, or "pay-fors," for the estimated federal revenue loss was addressed in the conference agreement on H.R. 22 , the FAST Act ( P.L. 114-94 ). CBO estimated that the conference agreement included offsets to fully cover the cost of the bill by reducing spending or raising revenues. Thus, the enacted bill retained the provision repealing the tax-exempt bond financing restriction on WIFIA assistance.

The Water Infrastructure Finance and Innovation Act (WIFIA) program provides financial assistance for water infrastructure projects, including projects to build and upgrade wastewater and drinking water treatment systems. Congress established the WIFIA program in the Water Resources Reform and Development Act of 2014 (WRRDA 2014, P.L. 113-121). The WIFIA concept is modeled after a similar program that finances transportation projects, the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Proponents of the WIFIA approach, including water utility organizations, cite several potential benefits: WIFIA provides credit assistance to large water infrastructure projects that may otherwise have difficulty obtaining financing. WIFIA provides credit assistance, namely direct loans, at U.S. Treasury rates, potentially lowering the cost of capital for borrowers. WIFIA assistance has less of a federal budgetary effect than conventional project grants that are not repaid, because only the subsidy cost of a loan (representing the presumed default rate on loans) is required to be appropriated. WIFIA support limits the federal government's exposure to default, because projects must be found creditworthy with a revenue stream for repayment to be eligible for assistance. On the other hand, opponents of the WIFIA approach, including organizations that represent state environmental agency officials, have cited several concerns: Federal funding for a WIFIA program could have a detrimental effect on federal support for established State Revolving Fund (SRF) programs that provide the largest source of water infrastructure assistance today. If WIFIA funding resulted in a decrease in SRF assistance, smaller projects may face financing challenges. The Congressional Budget Office has warned that the future costs of a WIFIA program to the federal budget may be underestimated. America's Water Infrastructure Act of 2018 (AWIA; P.L. 115-270), enacted on October 23, 2018, removed the pilot designation from the WIFIA program, reauthorized appropriations, and revised provisions related to program administration. Appropriations for the WIFIA program have increased since its inception, allowing EPA to provide increasing amounts of credit assistance each year: FY2017 appropriations totaled $30 million. FY2018 appropriations totaled $63 million. FY2019 appropriations totaled $68 million. On April 5, 2019, EPA announced a third round of WIFIA funding, inviting prospective borrowers to submit letters of interest to EPA. From these submittals, the agency will select projects for funding. EPA estimated that its budget authority would provide approximately $6 billion in credit assistance.

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Introduction Economic growth and expanded global trade have led to substantial increases in goods movement over the past few decades. The growth in freight transportation demand, along with growing passenger demand, has caused congestion in parts of the transportation system, making freight movements slower and less reliable. Because the condition and performance of freight infrastructure play a considerable role in the efficiency of the freight system, federal support of freight infrastructure investment is likely to be of significant congressional concern in the reauthorization of the surface transportation program. The program is currently authorized by the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ), which is scheduled to expire on September 30, 2020. Congress has begun to place greater emphasis on freight over the course of recent reauthorizations, but national policy is still vague or silent on a number of issues. There are ongoing disagreements about the best way to accomplish improvements in freight system infrastructure—notably, how to raise new funds for investment, the magnitude of the amounts required, which projects to prioritize, and the role of the federal government in the planning process. Meanwhile, technological advances in mobility have prompted new questions about how best to accomplish the efficient movement of people and goods in a multimodal transportation system. Autonomous vehicle technology could have potential applications in the trucking industry, as could greater deployment of automation in the rail and port industries. While the FAST Act concerns many aspects of surface transportation funding and safety policy, the focus of this report is on truck freight and that portion of the rail and port industries that transports truck trailers and containers (intermodal freight). This report does not address operational issues that also may be of interest during reauthorization, such as hours of service and hazardous material transport safety. Moreover, this report does not contain in-depth discussion of environmental issues associated with freight movements, such as carbon emissions and climate change, or air and noise pollution, though these issues may be germane to the topics of funding and project selection. The Freight Transportation System The freight transportation system is a complex network of different types of transportation, known as modes, that carries everything from coal to small packages. It handles domestic shipments of a few miles as well as international shipments of thousands of miles. Often, a shipment of cargo will move across multiple modes before reaching its destination, using road, rail, air, pipeline, and/or maritime infrastructure in the process; when freight changes modes in this way, it is referred to as multimodal . Freight moved in stackable containers is easier to move among ships, trains, and trucks; this is referred to as intermodal freight. Rail alone carries the second-largest share of domestic freight measured in ton-miles, but only a small proportion by value ( Table 1 ), reflecting the fact that major rail cargos such as coal and grain have low ratios of value to weight. Trucks carry by far the most freight by value but a smaller proportion of ton-miles, as the average truck shipment travels a much shorter distance than the average rail shipment. Air transportation is a relatively minor mode for domestic shipments because it is expensive to ship goods by air. The proportions for international shipments to and from the United States are quite different from those for domestic shipments, with about three-quarters of goods, measured by weight, arriving or departing by ship. Measured by value, nearly one-fourth of U.S. international freight moves by air. Trucks operate over a four-million-mile system of public access highways and streets. Of this, approximately 209,000 miles has been designated by the Federal Highway Administration (FHWA) as the "National Truck Network," a network of highways able to accommodate large trucks. This network includes the Interstate Highway system, which extends approximately 47,000 miles, plus principal arterial highways designated by the states. Trucks account for about 9% of vehicle miles traveled on the entire U.S. road system, but 15% of vehicle miles on Interstates and 24% on rural Interstates. The railroad sector is dominated by seven large railroads, or Class I carriers, that generally focus on long-distance moves. The Class I railroads are complemented by more than 500 short line and regional railroads (Class II and Class III, respectively) that tend to haul freight shorter distances, provide connections between the Class I networks, or connect the Class I networks and ports. For the most part, railroad infrastructure, including track and associated structures and the land they occupy, is owned by the carriers themselves. The U.S. railroad network consists of approximately 140,000 miles of railroad, of which approximately 94,000 miles could be considered transcontinental or mainline railroad and 46,000 miles could be considered regional or local railroad. In some places, freight trains share space with intercity and commuter passenger trains. The Flow of Freight Overall, freight traffic has recovered to the level prior to the 2007-2009 recession, but the modal composition of freight traffic is now quite different ( Figure 1 ). While truck tonnage has risen steadily and is now 33% higher than a decade ago, rail tonnage dropped sharply in 2008-2009 and has recovered more slowly. Increased intermodal traffic has offset declining volumes of coal and crude oil shipped by rail. Barge traffic on inland waterways recovered from recession lows in 2010, but since then has grown only slightly. Truck, Train, and Intermodal Freight The steady growth in truck traffic, which includes smaller delivery trucks in addition to tractor-trailer "combination" trucks, has been linked to the growth of e-commerce establishments and just-in-time delivery services. As companies push to offer quicker delivery, they are opening new distribution centers in urban areas. These centers depend on large trucks to replenish inventory, and on small trucks to quickly deliver products to consumers. Coal has been the most significant revenue source for the rail industry aside from intermodal traffic, and the decline in rail traffic reflects a general decline in demand for coal. Since 2011, the volume of coal carried by railroads has declined significantly despite rebounding slightly in 2017. This decline has been mitigated somewhat by an increase in intermodal traffic, and by more short-lived booms in other commodity groups. A spike in oil production and a shortage of pipeline capacity contributed to a bump in rail shipments from 2012 to 2016, but the quantity of oil moved by rail has since receded. Crude industrial sand, which includes sand used in hydraulic fracturing of oil and gas wells, saw a similar rise and fall in that period before spiking again in 2017. Tonnage carried by trucks as a single mode has increased a modest 2% over the past decade. Meanwhile, tonnage moving only by rail has decreased 16%, due largely to a significant decline in coal shipments. Most of the growth in surface freight has occurred in intermodal tonnage (mainly involving combined truck/rail shipment), which has increased by 188% in 10 years. The U.S. Department of Transportation (DOT) forecasts that domestic freight tonnage will increase by an average of about 1.4% per year from 2015 to 2045. In that span, truck tonnage is projected to increase by 38%, rail tonnage by 20%, and multimodal tonnage (of which intermodal is a subset) by 120%. Overall, this would represent an acceleration compared to recent trends. Freight tonnage in the United States grew at an average annual rate of 1.1% from 1993 to 2017, with truck tonnage growing slightly faster (1.4%) in that period. By contrast, DOT forecasts truck tonnage to grow more slowly than total tonnage over the coming decades. Maritime Freight River and coastal ports are hubs for considerable truck and rail activity, making the road and rail links to these facilities an important component of surface transportation infrastructure. Over the last two decades, barge traffic on inland rivers has been flat or declining. Meanwhile, the volume of containerized cargo grew rapidly from 17.9 million twenty-foot equivalent units (TEUs) in 2000 to 32.0 million TEUs in 2015. Container traffic declined during the 2007-2009 recession but has since recovered. In 2018 it was approximately 40% above its 2009 low. The Ports of Los Angeles and Long Beach together handled 29.9% of all container traffic at ocean ports in the United States in 2017. Container trade at these two ports increased by 64% between 2000 and 2017, but was outpaced by the growth in container trade for the entire United States, which grew by 106%. Congress has requested studies on the condition of road and rail links to ports (also known as intermodal connectors ) in past surface transportation reauthorization legislation. The most recent study by DOT indicates that of the approximately 1,484 miles of freight intermodal connectors in the National Highway System, roughly half are two lanes wide. Certain port projects are eligible for funding from surface transportation programs, including the BUILD and INFRA competitive grant programs discussed later in this report, but eligibility reflects a primary concern with the intermodal connections to these facilities. Most capital programs to benefit marine transportation, such as harbor dredging and lock repair, are undertaken by other federal agencies, notably the U.S. Army Corps of Engineers, rather than by DOT. Historically, these programs have not been included in surface transportation legislation. Evolution of National Freight Transportation Policy Until recently, there was no separate federal freight transportation program, but instead a relatively loose collection of freight-related programs that were embedded in a larger surface transportation program aimed at supporting both passenger and freight mobility. Historically, most highway funding has been distributed to the states via several large "core" formula programs, leaving states to decide how to use their allocated funds. Other, smaller programs provide grant awards for more targeted projects. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA; P.L. 109-59 ), which was enacted in 2005 and expired in 2012 after a series of extensions, funded over 70 highway programs. Almost all of these have now been combined into a handful of formula programs with broader objectives. Core surface transportation program funds are distributed to states by formula, but freight transportation is often interstate in nature. The funds received by a single state may not be sufficient to construct the infrastructure necessary to relieve congestion at freight bottlenecks whose effects are felt several states away. Recognizing this, Congress created the Projects of National and Regional Significance program within SAFETEA as a way of directing federal funds to large projects with wide-ranging benefits. All funds made available through the program were earmarked in the legislation and were not available for other projects. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) created a discretionary grant program for transportation infrastructure investments, originally known as the Transportation Investment Generating Economic Recovery (TIGER) program and now called the Better Utilizing Investments to Leverage Development (BUILD) program. BUILD grants are distributed at the discretion of the Secretary of Transportation, subject to a set-aside for rural areas and limits on maximum and minimum grant size. The program is not authorized in law, but has received funding in appropriations bills every year since its introduction in FY2009 through FY2018. Since its inception, roughly one-quarter of grants have gone to freight-specific projects, and almost half to road projects that could benefit freight as well as passengers (see Table 2 ). Moving Ahead for Progress in the 21st Century (MAP-21) Act The successor to SAFETEA, the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ) of 2012, contained the first articulation of a national freight policy. Whether the federal government should make a more focused effort toward funding projects that benefit freight movement was a major policy question in the reauthorization debate. The Senate version of MAP-21 ( S. 1813 , 112 th Congress) would have created a separate program for funding freight-related projects, but this was not enacted. Instead, MAP-21 allowed a larger share of project costs to come from federal sources if a project could be demonstrated to improve the efficient movement of freight: the state cost share for freight-specific projects on Interstate Highways was reduced from 10% to 5% and on other highways from 20% to 10%. MAP-21 enacted planning provisions related to identifying infrastructure components critical to freight transport. It directed DOT to designate a "Primary Freight Network" (PFN) consisting of 27,000 centerline miles of existing roadways (independent of the number of lanes), based primarily on freight volume and in consultation with shippers and carriers. The Secretary of Transportation could designate up to an additional 3,000 centerline miles of existing or planned roads as part of the PFN based on their future importance to freight movement. States could designate "critical rural freight corridors" based on the density of truck traffic if they connect the PFN or Interstate System with sufficiently busy freight terminals. The act designated a larger National Freight Network to include the critical rural freight corridors, portions of the Interstate System not designated as parts of the PFN, and roads in the PFN. DOT, in consultation with partners and stakeholders, was directed to develop a National Freight Strategic Plan that identifies highway bottlenecks and to report every two years on the condition and performance of the National Freight Network. Each state was encouraged, but not required, to create a state freight advisory committee comprising representatives of freight interests and a state freight plan "that provides a comprehensive plan for the immediate and long-range planning activities and investments of the State with respect to freight." Among other things, a state's freight plan was to describe how it will improve the ability of the state to meet the national freight goals established by DOT. Fixing America's Surface Transportation (FAST) Act National freight policy was updated significantly by the FAST Act. The act repealed the Primary Freight Network and National Freight Networks established by MAP-21. It instead directed DOT to create a National Freight Strategic Plan and identify the components of a National Highway Freight Network, consisting only of highways, and a National Multimodal Freight Network, which must include railroads, marine highways, and the infrastructure necessary to connect these networks to one another in order to facilitate the movement of containerized freight. The multimodal network was to be officially designated within a year of enactment. However, while DOT sought public comment on an interim network and released a draft strategic plan, it has not taken final action. No public comment was sought on the National Highway Freight Network, as the FAST Act defined it by expanding upon the Primary Freight Network already defined by MAP-21. The FAST Act also directed a portion of federal funds toward highway segments and other projects deemed most critical to freight movement. It did this by creating a new discretionary grant program and a new formula program for distributing federal funds to states. The stated goals of these two programs are very similar: to increase U.S. global economic competitiveness, reduce congestion and bottlenecks, increase the efficiency and reliability of the highway network, and reduce the environmental impact of freight movement. National Highway Freight Program The National Highway Freight Program created in the FAST Act is a formula program with funding of $1.1 billion in FY2016 rising to $1.5 billion in FY2020. Funds are administered by state departments of transportation and must be directed toward highway components designated as especially important to freight movement. These components include a Primary Highway Freight Network (PHFN) designated by the Federal Highway Administration, "critical rural freight corridors" designated by the states, and "critical urban freight corridors" designated by either states or metropolitan planning organizations, depending on the population size of an urban area. These components, along with other Interstate Highway segments, comprise the National Highway Freight Network. States containing 2% or more of the total mileage of the PHFN are required to spend their program funds on the PHFN, critical rural, or critical urban freight corridors. Other states may spend their program funds on any part of the larger National Highway Freight Network. Up to 10% of a state's apportionment can be directed toward projects within rail or port terminals "that provide surface transportation infrastructure necessary to facilitate direct intermodal interchange, transfer, and access into or out of the facility." Nationally Significant Freight and Highway Projects Program (FASTLANE/INFRA) The Nationally Significant Freight and Highway Projects Program is a discretionary grant program with funding of $800 million in FY2016 rising to $1 billion in FY2020. It was initially known as the Fostering Advancements in Shipping and Transportation for the Long-Term Achievement of National Efficiencies (FASTLANE) program, but is now called Infrastructure for Rebuilding America (INFRA). Public entities are eligible to apply, including states and groups of states, metropolitan planning organizations, local governments or groups of local governments, political subdivisions of states or local governments, transportation-related authorities such as port authorities, and tribal governments. Eligible uses of funds include highway projects, railway-highway grade crossing projects, connections to ports and intermodal freight facilities, and elements of private freight rail projects that provide public benefits. However, grants for freight intermodal or freight rail projects are capped at $500 million over the life of the program. A grant is to provide not more than 60% of the cost of a project, but other federal assistance can be used to provide up to a total federal share of 80% (i.e., the local cost share required must be at least 20%). This grant program is designed primarily for relatively high-cost projects; each grant awarded must be at least $25 million, and the project must have eligible costs amounting to at least $100 million or a significant share of a state's highway funding apportionment the previous fiscal year (e.g., 30% in the case of a project within a single state). However, 10% of grant funds are reserved for smaller projects with minimum grants of $5 million. DOT is to consider the dispersion of projects geographically, including between rural and urban communities. Congress has 60 days to disapprove a DOT grant approval. While not an explicit focus of federal freight programs, it can be argued that projects that do not serve freight directly can reduce traffic in areas where infrastructure is shared between passengers and freight, freeing up roadway capacity and alleviating some impacts of congestion. For example, reconstruction of the Memorial Bridge in Washington, DC, was partially funded by a $90 million FASTLANE grant in 2016. This bridge is not currently open to trucks, but supporters of the project argued that returning the infrastructure to a state of good repair for use by passenger vehicles would relieve congestion on other crossings of the Potomac River used by freight carriers. Implementation of Provisions in MAP-21 and FAST National Freight Strategic Plan In October 2015, DOT published a draft National Freight Strategic Plan, fulfilling one of the requirements of MAP-21 (three months after the deadline initially set by law). A comment period would have required a final version of that plan to be released by December 2016, but the passage of the FAST Act in the interim updated the requirements of the National Freight Strategic Plan with a new deadline of December 2017; DOT opted to complete the document required by the FAST Act rather than continue updating the MAP-21 strategic plan, now superseded. As of year-end 2018, this requirement of the FAST Act had not been met. Conditions and Performance Reports The Federal Highway Administration Conditions and Performance Report released in May 2018 was the first to fulfill the requirement of Section 1116 of the FAST Act to report specifically on the conditions of the National Highway Freight Network. This report found that in 2014, 77% of network mileage had "good" pavement, while 19% of miles were graded "fair" and the remaining 4% "poor." The report also found that there are approximately 57,600 bridges on the network, of which 4.3% are structurally deficient. The report contains measures of congestion at the 25 most congested points in the freight network, and for key freight corridors, generally dealing with speed and trip times. Since this is the first report to contain these figures, it can be used as a baseline to assess whether the condition and functioning of the network are improving over time. The FAST Act also required DOT to report on the conditions and performance of the National Multimodal Freight Network, but as this network has not yet been defined, no report has been issued. Financing Initiatives The federal government supports surface transportation projects mostly through funds distributed to the states. Financing initiatives, on the other hand, are arrangements that rely primarily on borrowing. The federal government supports freight infrastructure financing arrangements mainly through direct loans, loan guarantees, and tax preferences for certain types of bonds. The FAST Act created a new Surface Transportation Infrastructure Finance Bureau to consolidate some of the support functions for several of these programs. TIFIA Program The Transportation Infrastructure Finance and Innovation Act (TIFIA) program provides loans for highway projects, public or private freight rail facilities providing intermodal transfer, infrastructure providing access to intermodal freight facilities, and surface transportation improvements facilitating intermodal transfers or improved access at port terminals. Since FY1999, according to DOT, TIFIA financing for all types of projects amounted to $30.1 billion. This assistance was provided to 77 projects that have a total cost of $108.4 billion. Highway and freight projects account for approximately 60% of TIFIA assistance. The largest project specifically related to freight, receiving a $341 million TIFIA loan, is the Port of Miami Tunnel, which opened August 3, 2014, to improve truck access to and from the port. The FAST Act provided a total of $1.435 billion for TIFIA loans, including $300 million in each of FY2019 and FY2020. Because the government expects most of the loans to be repaid, the program's funding need only cover the subsidy cost of credit assistance and administrative costs. According to the Federal Credit Reform Act of 1990, Title XIII, Subtitle B of the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ), the subsidy cost is "the estimated long-term cost to the government of a direct loan or a loan guarantee, calculated on a net present value basis, excluding administrative costs." Consequently, the loan capacity of the TIFIA program is much larger than the budget authority available. DOT estimates that since each dollar of funding has historically allowed TIFIA to provide $14 in credit assistance, FAST Act funding levels could allow for up to $20 billion in total credit assistance over the life of the law. RRIF Program The Railroad Rehabilitation and Improvement Financing (RRIF) program provides loans and loan guarantees for rail infrastructure and equipment through the Federal Railroad Administration up to a total of $35 billion of unpaid principal, with $7 billion reserved for Class II and III railroads. Direct loans can be up to 100% of a project's cost and for a maximum term of 35 years. Interest is charged at the rate paid by the U.S. Treasury to issue bonds of a similar maturity. Eligible borrowers are state and local governments, government-sponsored authorities and corporations, railroads, joint ventures that include at least one railroad, freight rail shippers served by one railroad wanting to connect a facility to a second railroad, and interstate compacts. The RRIF program does not receive an appropriation from Congress, but allows project sponsors to pay the subsidy cost (termed the credit risk premium ). FRA evaluates applications for RRIF loans in terms of each applicant's creditworthiness and the value of collateral offered to secure the loan. These factors determine the credit risk premium. Since 2002, there have been 40 loan agreements totaling $6.3 billion. Loans for freight railroads have ranged in size from $234 million, made to the Dakota Minnesota and Eastern Railroad in 2004, to $56,000, made in 2011 to C&J Railroad. Loans are typically relatively small; while the mean size of a loan is $142 million, the median is $21 million. While Class II and Class III freight operators have received most of the loans, the largest loans by value have gone to Amtrak or commuter railroads. A 2018 loan for $6 million to the Port of Everett, WA, the first extended to a port authority, is to be used to increase rail freight capacity. Similar to the TIGER/BUILD program, many projects financed by TIFIA or RRIF loans may benefit passengers as well as freight. Issues and Options for Congress Funding Needs in Freight Infrastructure In reauthorizing federal surface transportation programs, the primary freight-related issues before Congress are likely to be setting funding levels and, if necessary, raising revenue. Key questions include whether there should be a dedicated revenue stream for freight-related purposes and whether additional federal funding should be dedicated to freight projects selected by DOT rather than distributed by formula for spending at the discretion of the states. Goods Movement Charges One idea that has come before Congress is the creation of a new dedicated revenue stream for freight infrastructure, funded not by the motor fuels taxes that fund most federal surface transportation spending, but by a charge on goods movement. Under one such proposal, which was introduced in the 113 th , 114 th , and 115 th Congresses but not passed, a 1% tax would be assessed on the cost of freight shipments, with the revenue deposited in a new trust fund. A National Freight Program would then distribute these funds to states by formula for exclusive use for freight projects. A similar proposal would reserve 5% of the import duties collected by Customs and Border Patrol for freight purposes, directing the money into a Freight Trust Fund. Proposals for taxes and fees on freight traffic have been raised before, including taxes based on trucking charges, a combined weight-distance or ton-mile tax such as those assessed already by certain states, and a tax on every maritime container imported and exported. Some proponents have advocated such fees specifically to raise money for freight-related projects, while others see them as a means of raising additional sums for general surface transportation use. Tolls Existing law generally permits tolling of existing federal-aid highways only when they are rebuilt or replaced. In the case of Interstate Highways, the existing non-tolled lane count must be maintained, even if the facility is reconstructed (with exceptions for some toll roads that predate the Interstate System). In 1998, Congress created the Interstate System Reconstruction and Rehabilitation Pilot Program, allowing up to three states to toll Interstate segments in order to repair or rehabilitate them. One of the states accepted into the pilot program, Missouri, considered reconstructing 200 miles of Interstate 70 to include two truck-only lanes in each direction, with the entire project to be funded by tolls. The proposal encountered strong resistance in the state and is no longer being pursued. The other states participating in the pilot program, Virginia and North Carolina, also did not undertake proposed projects. The only other way an existing toll-free federal-aid highway (including non-tolled existing Interstate Highway lanes) may be converted is under the Value Pricing Pilot Program, a separate program established in 1991 that is designed primarily to mitigate congestion. Congress has no direct control over the decision to impose highway tolls, which is up to the state or local entity that owns the infrastructure. It could, however, widen the circumstances under which states are permitted to toll Interstate Highways. Tolls could provide a source of funding for freight-related projects. Trucking interests generally oppose additional tolling, especially truck-only tolling, largely out of concern that political considerations will make it easier to raise tolls on trucks than on cars, and prefer higher motor fuels taxes to fund highway improvements. Studies have concluded that funding highways with motor fuels taxes provides trucks a cross-subsidy from automobile users' gas tax payments, due to the fact that the wear and tear caused by a heavy truck is much greater than that caused by a light vehicle. Addressing Congestion Growth in freight and passenger transportation demand has brought an increase in truck and rail congestion. This congestion is particularly pronounced in major urban areas that contain important freight hubs such as ports, airports, border crossings, and rail yards. Many of the trucks delayed may be simply passing through the region rather than serving local shippers. As identified by DOT, the 25 most congested segments for trucks are generally urban Interstate Highway interchanges. The most recent rankings published by DOT are based on 2014 data, so the impact of FAST Act programs on alleviating freight bottlenecks has not yet been assessed. However, a number of metropolitan areas have been at or near the top of the congestion list for several consecutive years. Five of the 25 most congested segments are in Houston and two are in each of Chicago, Atlanta, Los Angeles, Seattle, and Cincinnati. While the rankings of individual cities can fluctuate, 13 interchanges have been listed among the top 20 most congested for at least the last five years. The interchange of I-290 and I-90/94 in Chicago has ranked no better than second-worst since 2010, and the interchange of I-95 and SR 4 in Fort Lee, NJ, just outside New York City, has ranked no better than fourth-worst. A trucking industry study estimates that 86% of the total costs of congestion for trucks are concentrated on 17% of Interstate Highway mileage. Similarly, the projected increase in highway freight traffic over the coming decades is not likely to be uniformly distributed across the nation's highways. Segments of the Interstate Highway system that are projected to see an increase of more than 10,000 trucks per day are spread out over parts of 15 states (see Figure 2 ). This is roughly equivalent to an additional truck traveling on a segment every 8.6 seconds. At the same time, many Interstate Highway segments are projected to have only small increases in truck traffic through 2045. The formula used to distribute most federal surface transportation funds to the states, including formula grants under the National Highway Freight Program, does not incorporate anticipated increases in truck traffic volume, meaning that the states expected to face the largest increases in truck traffic are not entitled to greater federal funding to address capacity constraints. As Figure 2 indicates, the largest increases in truck traffic are expected to occur where Interstates intersect, but also along stretches of highway that connect busy nodes to each other. For example, a stretch of I-40 in Arkansas, connecting Little Rock to Memphis, TN, is one such segment. The nature of interstate commerce means that much of the truck traffic using this highway may simply be crossing Arkansas rather than moving freight to or from businesses in Arkansas. Although only Arkansas can use its federal highway funds to increase the capacity of the road, much of the benefit from such a project would likely accrue to other states, potentially limiting Arkansas's incentive to undertake the work. One way for Congress to address this situation would be to adjust the methodology for calculating each state's apportionment of funds distributed under the National Highway Freight Program to consider freight-related metrics. The NHFP currently takes into account each state's share of National Highway Freight Network miles. The dedicated freight funding proposals introduced in the 113 th , 114 th , and 115 th Congresses, discussed above, would have incorporated several other measures intended to reflect a state's importance to the national freight system into the distribution formula. These would have included each state's share of the nation's ports, miles of freight rail track, cargo-handling airports, freight tonnage, and freight value relative to the national total. Instead of adjusting formula programs to reflect freight-related needs, Congress has provided DOT with discretionary funds it can distribute for freight and other purposes through the INFRA and BUILD grant programs. These programs have proven to be popular and routinely receive applications for more funding than they can make available, but they have also been criticized for lacking transparent processes for project selection and for funding projects that may not have the highest estimated benefit/cost ratios. A 2017 Government Accountability Office report concluded that the INFRA (then known as FASTLANE) application review process allowed for broad discretion during certain team reviews, and that certain large projects were forwarded to the Secretary of Transportation for approval even if they did not initially meet certain statutory requirements. A third approach would be to direct spending congressionally. From the start of the 112 th Congress in 2011 until the end of the 115 th Congress in January 2019, the House and Senate observed a ban on congressionally directed spending, also known as earmarking. The earmark ban effectively blocked Members of Congress from inserting language in authorization or appropriations bills to designate funds for specific freight-related projects, as frequently occurred prior to 2011. The ban was established through rules adopted by the House Republican Conference, the Senate Republican Conference, and the Senate Appropriations Committee. The Democratic Party majority that has controlled the House since January 2019 has not adopted similar language, and it is unclear whether earmarks are permitted in proposed legislation in that chamber. Research, Development, and Technology Freight Performance Data and Statistics Because freight infrastructure decisions are often made at the state or local level, it would be helpful for transportation planners to know the characteristics of the trucks traveling particular highway segments. Information about the industries served, the origin and destination of the shipments, and daily or seasonal variations in volume could help planners identify freight users that share an economic interest in mitigating a bottleneck or determine the feasibility of moving some of the traffic to off-peak hours or to other modes. DOT's Bureau of Transportation Statistics and the Census Bureau conduct a survey of shippers every five years (the Commodity Flow Survey cited in Table 1 ) that provides information on outbound shipments. However, the sample size is not sufficient to provide reliable data for any specific urban area. The survey does not record through traffic, does not distinguish between imports and domestic freight, and occurs too infrequently to identify trends in freight patterns. The survey was designed more to provide a national picture of freight transport than to meet local or regional needs. In the FAST Act, Congress requested DOT to "... consider any improvements to existing freight flow data collection efforts that could reduce identified freight data gaps and deficiencies...." A policy decision for Congress is whether the federal government should be responsible for providing adequate freight data for state and local transportation planners. Autonomous Vehicles Autonomous vehicle technology has potential applications in the freight sector. Autonomous trucks potentially offer significant freight transportation savings, as driver compensation represents either the largest or second-largest cost component for truck carriers, depending on the price of fuel. Fuel and driver compensation typically each account for about one-third of total operating costs. A truck driver may not drive for more than 11 hours per day under federal regulations, so it is difficult for carriers to improve labor productivity except by using larger trucks. Because driver error is the overwhelming cause of vehicle accidents, automation that reduces accident rates could improve public safety. Also, long-distance truck carriers experience exceptionally high driver turnover, and automation may reduce the need for drivers. Despite the economic motivation, many in the trucking industry doubt whether driverless trucks are feasible in the foreseeable future given the current horizon of autonomous technology. An alternative scenario, at least for the next decade or two, is that truck driver jobs may come to resemble those of airline pilots in that drivers would spend part of their time monitoring an autonomous driving system rather than directly controlling the vehicle at all times. The skills of truck drivers when backing up an 18-wheeler to a warehouse or driving on local roads may be irreplaceable. In addition, some carriers may not be eager to forgo personal contact between drivers and customers, which may create sales opportunities. The 115 th Congress debated federal policy regarding autonomous vehicle technology at length. H.R. 3388 , passed by the House, sought to establish new rules for testing and adoption of autonomous technology for cars and light trucks, but had no provisions pertaining to commercial vehicles. In the Senate, S. 1885 would have subjected commercial vehicles to the same safety evaluation requirements as private vehicles. Neither measure was enacted, but in debating these bills, Congress evaluated to what extent federal policy should assist autonomous vehicle technology by granting exemptions to certain federal requirements that otherwise would impede testing and demonstrations of these vehicles. Congress also considered preempting states from issuing certain regulations that are contrary to federal regulations or contrary to other states' regulations in order to avoid differing state requirements. These provisions were relevant to a technology being tested in the trucking industry known as "platooning." In a platoon, trucks follow each other closely enough to save fuel by reducing drag at high speeds (around 10% for a following truck and 5% for the lead truck). All the trucks in a platoon have drivers, but only the driver of the lead truck is in full control of the vehicles. The drivers in the following trucks steer their vehicles, but their feet are off the accelerator and brake because truck speed is controlled by wireless communication from the lead truck. This communication reduces the braking response times of the following trucks and therefore allows trucks to follow closely enough to significantly reduce wind resistance. Absent federal legislation, it is possible that states would enact conflicting limits on platooning, reducing its utility in interstate commerce. What About Hyperloop? Congress may also be asked to support a technology known as Hyperloop, which proposes the use of pods or sleds to transport containers in vacuum-sealed tubes at high speed. While this technology has gone through some testing, it has not yet been commercially deployed. Hyperloop projects are not currently eligible for funding under surface transportation formula grant programs or any of DOT's discretionary grant programs, which are limited to road, rail, and some port projects. There is no federal program dedicated solely to research and development of freight-specific technology. The federal government supports research and development of some surface transportation technologies through the Highway Research and Development Program (23 U.S.C. §503(b)) and the Technology and Innovation Deployment Program (23 U.S.C. §503(c)). The FAST Act currently authorizes $250 million and $135 million, respectively, for these programs through FY2020.

Economic growth and expanded global trade have led to substantial increases in goods movement over the past few decades. The growth in freight transportation demand, along with growing passenger demand, has caused congestion in many parts of the transportation system, making freight movements slower and less reliable. Because the condition and performance of freight infrastructure play a considerable role in the efficiency of the freight system, federal support of freight infrastructure investment is likely to be of significant congressional concern in the reauthorization of the surface transportation program. The program is currently authorized by the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94), which is scheduled to expire on September 30, 2020. Until recently, the federal surface transportation program did not pay specific attention to freight movement. However, the two most recent surface transportation acts, the Moving Ahead for Progress in the 21st Century Act (MAP-21; P.L. 112-141), approved in 2012, and the FAST Act, passed in 2015, encouraged federal and state planning for freight transportation from a multimodal perspective. The FAST Act also directed a portion of federal funds toward highway segments and other projects deemed most critical to freight movement. It did this by creating two new programs: a discretionary grant program administered by the Secretary of Transportation and a formula program for distributing federal funds to states. Trucks continue to move the bulk of freight in the United States. Freight tonnage is projected to increase by an average of 1.4% per year through 2045, according to the Department of Transportation (DOT), and trucks are projected to carry the largest share of the additional freight traffic. Much of the growth in truck traffic has occurred in urban areas, and this trend is expected to continue. Consequently, most truck congestion occurs in urban areas, and comparatively few highway miles are responsible for a disproportionately large share of congestion costs. Highway infrastructure decisions are mainly made by the states, but federal fuel tax revenue is an important source of funds for the projects states pursue. With fuel taxes no longer able to fully cover the cost of existing highway infrastructure programs, Congress has considered strategies to raise new revenue and to make more effective use of federal dollars to facilitate the movement of freight. The trucking industry has favored raising additional revenue by increasing fuel taxes and has generally opposed greater use of highway tolls out of concern that these may disproportionately affect truckers. DOT studies have shown that the structure of motor fuel taxes provides a subsidy to heavily loaded trucks at the expense of passenger vehicles. One significant question is whether additional funding for freight-related infrastructure should be distributed to the states by formula or on a discretionary basis. Federal projections indicate that a relatively small number of Interstate Highway segments and interchanges are likely to face large increases in truck traffic by 2045. However, individual states may have limited incentives to use their federal formula funds to alleviate increasing congestion in those locations, as many of the trucks affected may be passing through rather than serving local businesses. Discretionary grants may be more effective in providing large amounts of federal funding for very costly freight-related projects, particularly those requiring interstate cooperation, but could also lead to fewer projects receiving federal funds. Besides appropriating funds for freight infrastructure, Congress has created programs to support research and development of new transportation technologies. Autonomous and connected vehicle technologies have potential applications in the freight sector, but many federal regulations are written assuming that a single person is in full control of a vehicle at all times. Congress has considered, but not advanced, proposals to update such regulations. Industry is eager to explore the cost-saving potential of new technology, so it will likely remain an issue for Congress.

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Introduction The federal government is vested with the exclusive power to create rules governing alien entry and removal. However, the impact of alien migration—whether lawful or unlawful—is arguably felt most directly in the communities where aliens reside . State and local responses to unlawfully present aliens within their jurisdictions have varied considerably, particularly in determining the role th at state or local police should play in enforcing federal immigration law. At one end of the spectrum, some states and localities actively assist federal immigration authorities in identifying and apprehending aliens for removal. For example, jurisdictions sometimes enter into "287(g) Agreements" with the federal government, in which state or local law enforcement are deputized to perform certain immigration enforcement activities. Some states and localities have attempted to play an even greater role in immigration enforcement, in many cases because of perceptions that federal efforts have been inadequate. In the past, some have adopted measures that criminally sanction conduct believed to facilitate the presence of unlawfully present aliens and have also instructed police to actively work to detect such aliens as part of their regular duties. The adoption of these kinds of measures has waned considerably, though, after the Supreme Court's 2012 ruling in Arizona v. United States held that several provisions of one such enactment, Arizona's S.B. 1070, were preempted by federal immigration law. Subsequent lower court decisions struck down many other state and local measures that imposed criminal or civil sanctions on immigration-related activity. At the other end of the spectrum, some states and localities have been less willing to assist the federal government with its immigration enforcement responsibilities. Often dubbed "sanctuary jurisdictions," some states and localities have adopted measures that limit their participation in enforcing federal immigration laws, including, for example, prohibiting police officers from assisting with federal efforts to identify and apprehend unlawfully present aliens within the state or locality's jurisdiction. That said, there is debate over both the meaning and application of the term "sanctuary jurisdiction." Additionally, state and local jurisdictions have varied reasons for choosing not to cooperate with federal immigration enforcement efforts, including reasons not necessarily motivated by disagreement with federal immigration enforcement policies, such as concern about potential civil liability or the availability of state or local resources to assist federal immigration enforcement efforts. During President Donald Trump's first month in office, he issued an executive order, "Enhancing Public Safety in the Interior of the United States," which, in part, seeks to encourage state and local cooperation with federal immigration enforcement and disincentivize state and local adoption of sanctuary policies. This report discusses legal issues related to state and local measures limiting law enforcement cooperation with federal immigration authorities, as well as the federal government's efforts to counter those measures. It begins by providing a general explanation of the term "sanctuary jurisdiction" for the purpose of this report. Next, it provides an overview of constitutional principles underlying the relationship between federal immigration laws and related state and local measures, namely, preemption and the anti-commandeering doctrine. Then, it discusses various types of laws and policies adopted by states and localities to limit their participation with federal immigration enforcement efforts, which may give rise to a label of "sanctuary jurisdiction," and federal efforts to counter those measures. Finally, the report concludes with a discussion of the lawsuits challenging the executive order targeting sanctuary jurisdictions and certain executive branch actions to implement the executive order. What Is a Sanctuary Jurisdiction? State or local measures limiting police participation in immigration enforcement are not a recent phenomenon . Indeed, many of the recent "sanctuary"-type initiatives can be traced back to church activities designed to provide refuge—or "sanctuary"—to unauthorized Central American aliens fleeing civil unrest in the 1980s. A number of states and municipalities issued declarations in support of these churches' actions. Others went further and enacted more substantive measures intended to limit police involvement in federal immigration enforcement activities. These measures have included, among other things, restricting state and local police from arresting persons for immigration violations, limiting the sharing of immigration-related information with federal authorities, and barring police from questioning a person about his or her immigration status. Still, there is no official definition of a "sanctuary" jurisdiction in federal statute or regulation. Broadly speaking, sanctuary jurisdictions are commonly understood to be those that have laws or policies designed to substantially limit involvement in federal immigration enforcement activities, though there is not necessarily a consensus as to the meaning of this term. Some jurisdictions have self-identified as a sanctuary (or some other similar term). For other jurisdictions, there might be disagreement regarding the accuracy of such a designation, particularly if state or local law enforcement cooperates with federal immigration authorities in some areas but not others. Any reference by this report to a policy of a particular jurisdiction is intended only to provide an example of the type of measure occasionally referenced in discussions of "sanctuary" policies. These references should not be taken to indicate CRS is of the view that a particular jurisdiction is a "sanctuary" for unlawfully present aliens. Legal Background The heart of the debate surrounding the permissible scope of sanctuary jurisdictions centers on the extent to which states, as sovereign entities, may decline to assist in federal efforts to enforce federal immigration law, and the degree to which the federal government can stop state action that undercuts federal objectives in a manner that is consistent with the Supremacy Clause and constitutional principles of federalism. . The Supremacy Clause and Preemption The federal government's power to regulate immigration is both substantial and exclusive. This authority derives from multiple sources, including Congress's Article I powers to "establish a uniform Rule of Naturalization" and to "regulate commerce with foreign nations, and among the several states," as well as the federal government's "inherent power as sovereign to conduct relations with foreign nations." Rules governing the admission and removal of aliens, along with conditions for aliens' continued presence within the United States, are primarily contained in the Immigration and Nationality Act of 1952, as amended (INA). The INA further provides a comprehensive immigration enforcement regime that contains civil and criminal elements. Arizona v. United States reinforced the federal government's pervasive role in creating and enforcing the nation's immigration laws. The ruling invalidated several Arizona laws designed "to discourage and deter the unlawful entry and presence of aliens and economic activity by persons unlawfully present in the United States" as preempted by federal law. In doing so, the Court declared that "[t]he Government of the United States has broad, undoubted power over the subject of immigration and the status of aliens." As Arizona highlights, the doctrine of preemption is relevant in assessing state policies related to immigration. The preemption doctrine derives from the Constitution's Supremacy Clause, which states that the "Constitution, and the laws of the United States ... shall be the supreme law of the land." Therefore, Congress, through legislation, can preempt (i.e., invalidate) state law. Preemption can be express or implied. Express preemption occurs when Congress enacts a law that explicitly expresses the legislature's intent to preempt state law. Preemption may be implied in two ways: (1) when Congress intends the federal government to govern exclusively, inferred from a federal interest that is "so dominant" and federal regulation that is "so pervasive" in a particular area (called "field preemption"); or (2) when state law conflicts with federal law so that it is impossible to comply with both sovereigns' regulations, or when the state law prevents the "accomplishment and execution" of Congress's objectives (called "conflict preemption"). Accordingly, any preemption analysis of the relationship between a federal statute and a state measure must be viewed through the lens of congressional intent. The Supremacy Clause establishes that lawful assertions of federal authority may preempt state and local laws, even in areas that are traditionally reserved to the states via the Tenth Amendment. One notable power reserved to the states is the "police power" to promote and regulate public health and safety, the general welfare, and economic activity within a state's jurisdiction. Using their police powers, states and municipalities have frequently enacted measures that, directly or indirectly, address aliens residing in their communities. Yet despite the federal government's sweeping authority over immigration, the Supreme Court has cautioned that not "every state enactment which in any way deals with aliens is a regulation of immigration and thus per se preempted" by the federal government's exclusive power over immigration. Accordingly, in Arizona the Supreme Court reiterated that, "[i]n preemption analysis, courts should assume that the historic police powers of the States are not superseded unless that was the clear and manifest purpose of Congress." For example, in Chamber of Commerce of the United States v. Whiting, the Supreme Court upheld an Arizona law—related to the states' "broad authority under their police powers to regulate the employment relationship to protect workers within the State" —that authorized the revocation of licenses held by state employers that knowingly or intentionally employ unauthorized aliens. Even though the Immigration Reform and Control Act of 1986 (IRCA) expressly preempted "any State or local law imposing civil or criminal sanctions ... upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens," the Supreme Court concluded that Arizona's law fit within IRCA's savings clause for state licensing regimes and thus was not preempted. The Anti-Commandeering Doctrine Although the federal government's power to preempt state or local activity touching on immigration matters is extensive, this power is not absolute. The U.S. Constitution establishes a system of dual sovereignty between the federal government and the states, including by creating a national legislature with enumerated powers and reserving most other legislative powers to the states by way of the Tenth Amendment. The anti-commandeering doctrine derives from this structural allocation of power, which "withholds from Congress the power to issue orders directly to the [s]tates" and prevents Congress from directly compelling states "to enact and enforce a federal regulatory program." Thus, the federal government cannot "issue directives requiring the [s]tates to address particular problems, nor command the [s]tates' officers, or those of their political subdivisions, to administer or enforce a federal regulatory program." Several Supreme Court rulings inform the boundaries of the anti-commandeering doctrine. First, in New York v. United States , the Court reviewed a constitutional challenge to provisions of a federal law that created a series of incentives for states to dispose of radioactive waste. The statute provided states the option of (1) regulating according to Congress's direction, or (2) taking title to, and possession of, the low-level radioactive waste generated within their borders and becoming liable for all damages suffered by waste generators resulting from the state's failure to timely do so. The law, in the Court's view, gave states a "choice" between two options concerning their maintenance of radioactive waste disposal, neither of which the Constitution authorized Congress, on its own, to impose on the states. By offering this "choice," Congress had, in the Court's view, "crossed the line distinguishing encouragement from coercion," and in doing so acted "inconsistent[ly] with the federal structure of our Government established by the Constitution." In so holding, the Court declared that "[t]he Federal Government may not compel the States to enact or administer a federal regulatory program." Then, in Printz v. United States, the Supreme Court reviewed whether certain interim provisions of the Brady Handgun Violence Prevention Act (Brady Act) violated the anti-commandeering doctrine. The relevant provisions required state and local law enforcement officers to conduct background checks (and other related tasks) on prospective handgun purchasers. The Court rejected the government's position that the challenged Brady provisions—which directed states to implement federal law—were distinguishable from the law at issue in New York —which directed states to create a policy—and thus was constitutionally permissible. Rather, the Court concluded that a federal mandate requiring state and local law enforcement to perform background checks on prospective handgun purchasers violated the anti-commandeering doctrine. Accordingly, the Court announced that "Congress cannot circumvent" the Constitution's prohibition against compelling states to enact or enforce a federal regulatory scheme "by conscripting the State's officers directly." But not every federal requirement imposed on the states necessarily violates the anti-commandeering principles identified in Printz and New York . A number of federal statutes provide that certain information collected by state entities must be reported to federal agencies. And the Court in Printz expressly declined to consider whether these kinds of requirements were constitutionally impermissible, distinguishing reporting requirements from the case before it, which involved "the forced participation of the States ... in the actual administration of a federal program." Additionally, in Reno v. Condon , the Supreme Court unanimously rejected an anti-commandeering challenge to the Driver's Privacy Protection Act (DPPA), which barred states from disclosing or sharing a driver's personal information without the driver's consent, subject to specific exceptions. The Court distinguished the DPPA from the federal laws struck down in New York and Printz because, in the Court's view, the DPPA sought to regulate states "as owners of databases" and did not "require the States in their sovereign capacity to regulate their own citizens ... [or] enact any laws or regulations ... [or] require state officials to assist in the enforcement of federal statutes regulating private individuals." The Court declined to address the state's argument that Congress may only regulate the states through generally applicable laws that apply to individuals as well as states, given that the Court deemed the DPPA to be a generally applicable law. The Supreme Court recently clarified the scope of the anti-commandeering doctrine in its 2018 ruling, Murphy v. National Collegiate Athletic Association . Murphy involved a challenge under the anti-commandeering doctrine to the Professional and Amateur Sports Protection Act (PASPA), which, as relevant here, prohibited states from "authorizing" sports gambling "by law." (This is sometimes referred to as PASPA's "anti-authorization" provision. ) In 2012—20 years after PASPA's enactment—New Jersey eliminated its constitutional ban on sports gambling and then, two years later, repealed state laws that prohibited certain sports gambling. Invoking PASPA's civil-suit provision, several sports leagues sued to enjoin New Jersey from enforcing its new law, arguing that it violated PASPA. The Third Circuit Court of Appeals, sitting en banc, agreed. Further, the Third Circuit rejected New Jersey's counterargument that PASPA unlawfully commandeered state legislatures. The Supreme Court concluded otherwise, holding that PASPA's anti-authorization provision violated the anti-commandeering doctrine. The sports leagues (and the United States, which appeared as amicus curiae ) had argued that under the anti-commandeering doctrine, Congress cannot compel states to enact certain measures, but it can prohibit states from enacting new laws, as PASPA does. The Court described this distinction as "empty," emphasizing that "[t]he basic principle—that Congress cannot issue direct orders to state legislatures—applies in either event." Further, the Court elucidated two situations in which the anti-commandeering doctrine is not implicated. First, the doctrine does not apply "when Congress evenhandedly regulates an activity in which both States and private actors engage" (as the Court characterized the situation in Reno ). Second, the federal government does not commandeer states when it enacts a scheme involving "cooperative federalism," in which a state is given a choice either to implement, on its own, a federal program, or opt-out and yield to the federal government's administration of that program. Finally, the Court rejected the sports leagues and the government's contention that PASPA validly preempts state and local gambling laws. The Court announced that "regardless of the language sometimes used by Congress and this Court, every form of preemption is based on a federal law that regulates the conduct of private actors, not the States ." But PASPA neither imposes federal restrictions, nor confers federal rights, on private actors, and so, the Court concluded, PASPA can be construed only as a law that regulates state actors and not as a valid preemption provision. Congress's Spending Powers and the Anti-Commandeering Doctrine Congress does not violate the Tenth Amendment or anti-commandeering principles more generally when it uses its broad authority to enact legislation for the "general welfare" through its spending power, including by placing conditions on funds distributed to the states that require those accepting the funds to take certain actions that Congress otherwise could not directly compel the states to perform. However, Congress cannot impose a financial condition that is "so coercive as to pass the point at which 'pressure turns into compulsion.'" For example, in National Federation of Independent Business v. Sebelius , the Supreme Court struck down a provision of the Patient Protection and Affordable Care Act of 2010 (ACA) that purported to withhold Medicaid funding to states that did not expand their Medicaid programs. The Court found that the financial conditions placed on the states in the ACA (withholding all federal Medicaid funding, which, according to the Court, typically totals about 20% of a state's entire budget) were akin to "a gun to the head" and thus unlawfully coercive. Select State and Local Limitations on Immigration Enforcement Activity Several states and municipalities have adopted measures intended to limit their participation in federal immigration enforcement efforts. These limitations take several forms. For example, some states and localities have sought to restrict police cooperation with federal immigration authorities' efforts to apprehend removable aliens, sometimes called "don't enforce" policies. Other measures may restrict certain state officials from inquiring about a person's immigration status, sometimes referred to as "don't ask" policies. Still others restrict information sharing between local law enforcement and federal immigration authorities, sometimes described as "don't tell" policies. The following sections discuss some state and local restrictions on law enforcement activity in the field of immigration enforcement along those lines, including the relationship between these restrictions and federal law. Limiting Arrests for Federal Immigration Violations Violations of federal immigration law may be criminal or civil in nature. Removal proceedings are civil, although some conduct that makes an alien removable may also warrant criminal prosecution. For example, an alien who knowingly enters the United States without authorization is not only potentially removable, but could also be charged with the criminal offense of unlawful entry. Other violations of the INA are exclusively criminal or civil in nature. Notably, an alien's unauthorized immigration status makes him or her removable but, absent additional factors (e.g., having reentered the United States after being formally removed), unlawful presence on its own is not a criminal offense. Some jurisdictions have adopted measures that restrict its police officers from making arrests for violations of federal immigration law. In some jurisdictions restrictions prohibit police from detaining or arresting aliens for civil violations of federal immigration law, like unlawful presence . Other jurisdictions prohibit police from making arrests for some criminal violations of federal immigration law, like unlawful entry. Still others prohibit law enforcement from assisting federal immigration authorities with investigating or arresting persons for civil or criminal violations of U.S. immigration laws. And some other jurisdictions have prohibitions that are broader in scope, such as a general statement that immigration enforcement is the province of federal immigration authorities, rather than that of local law enforcement. State or local restrictions on police authority to arrest persons for federal immigration law violations do not appear to raise significant legal issues. Even though the INA expressly allows state and local law enforcement to engage in specified immigration enforcement activities, nothing in the INA compels such participation. Indeed, any such requirement likely would raise anti-commandeering issues. Moreover, after Arizona , it appears that states and localities are generally preempted from making arrests for civil violations of the INA in the absence of a specific federal statutory authorization or the "request, approval, or other instruction from the Federal Government." Limiting Police Inquiries into Immigration Status Many sanctuary-type policies place restrictions on police inquiries or investigations into a person's immigration status. Some policies provide that police may not question a person about his or her immigration status except as part of a criminal investigation. Others bar law enforcement from initiating police activity with an individual for the sole purpose of discovering immigration status. And other policies prohibit law enforcement from questioning crime victims and witnesses about their immigration status. Still other policies more broadly limit officials from gathering information about persons' immigration status, except as required by law. Restricting the authority of police to question a person about his or her immigration status helps ensure that law enforcement lacks any information that could be shared with federal immigration authorities. As explained in the " PRWORA and IIRIRA " section below, two federal laws prevent state or local restrictions on sharing information about a person's immigration status with federal immigration authorities, but the provisions do not require state or local police to actually collect such information. Murphy has raised questions, though, about the continuing constitutional viability of these statutes. Limiting Information Sharing with Federal Immigration Authorities Some states and localities have restricted government agencies or employees from sharing information with federal immigration authorities. For instance, some jurisdictions prohibit law enforcement from notifying federal immigration authorities about the release status of incarcerated aliens, unless the alien has been convicted of certain felonies. Similarly, other jurisdictions prohibit their employees from disclosing information about an individual's immigration status unless the alien is suspected of engaging in illegal activity that is separate from unlawful immigration status. Some jurisdictions restrict disclosing information except as required by federal law —sometimes referred to as a "savings clause"—although it appears that the Department of Justice has interpreted those provisions as conflicting with federal information-sharing provisions. Federal Measures to Counteract Sanctuary Policies Over the years the federal government has enacted measures designed to counter certain sanctuary policies. Notably, in 1996 Congress enacted Section 434 of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), and Section 642 of the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), to curb state and local restrictions on information sharing. Most recently, the President issued Executive Order 13768, "Enhancing Public Safety in the Interior of the United States," which, as relevant here, seeks to encourage state and local cooperation with federal immigration enforcement and disincentivize state and local adoption of sanctuary policies that hinder federal immigration enforcement. These federal initiatives—and related legal issues—are described below. PRWORA and IIRIRA In 1996 Congress sought to end state and local restrictions on information sharing through provisions in PRWORA and IIRIRA. Neither PRWORA nor IIRIRA require s state or local government entities to share immigration-related information with federal authorities. Instead, these provisions bar restrictions that prevent state or local government entities or officials from voluntarily communicating with federal immigration authorities regarding a person's immigration status. IIRIRA § 642, codified at 8 U.S.C. § 1373, bars any restriction on a federal, state, or local governmental entity or official's ability to send or receive information regarding "citizenship or immigration status" to or from federal immigration authorities. It further provides that no person or agency may prohibit a federal, state, or local government entity from (1) sending information regarding immigration status to, or requesting information from, federal immigration authorities; (2) maintaining information regarding immigration status; or (3) exchanging such information with any other federal, state, or local government entity. PRWORA § 434, codified at 8 U.S.C. § 1644, similarly bars state and local governments from prohibiting or restricting state or local government entities from sending or receiving information, to or from federal immigration authorities, regarding the "immigration status" of an individual. Related Litigation Shortly after Congress enacted these information-sharing restrictions, New York City, which had a policy limiting information sharing with federal immigration authorities, brought suit challenging the constitutionality of Sections 1373 and 1644. Among other things, New York City alleged that the provisions facially violated the Tenth Amendment by barring states and localities from controlling the degree to which their officials may cooperate with federal immigration authorities. A federal district court dismissed this claim in City of New York v. United States , and the U.S. Court of Appeals for the Second Circuit affirmed the judgment. The Second Circuit observed that, unlike the statutes struck down on anti-commandeering grounds in New York and Printz , the information-sharing provisions in PRWORA and IIRIRA did not directly compel state authorities to administer and enforce a federal regulatory program. Instead, the court reasoned, these provisions prohibited state and local governments from restricting "the voluntary exchange" of immigration information between federal and state authorities. Further, the court added, "informed, extensive, and cooperative interaction of a voluntary nature" between states and federal authorities is an integral feature of the American system of dual sovereignty, and, in any event, the Supremacy Clause "bars states from taking actions that frustrate federal laws and regulatory schemes." Accordingly, the Second Circuit concluded that the Tenth Amendment does not provide states and municipalities with the "untrammeled right to forbid all voluntary cooperation by state or local officials with particular federal programs." The court therefore rejected New York City's constitutional challenge to the information-sharing provisions of PRWORA and IIRIRA, holding that that they did not violate the Tenth Amendment or principles of federalism. New York City sought to appeal the decision to the Supreme Court, but its petition for certiorari was denied. A few months later, though, the Court handed down Reno , which, as explained earlier, held that the DPPA (a federal statute regulating the dissemination of certain personal information collected by state authorities) did not violate federalism principles embodied in the Tenth Amendment. Since the Second Circuit's ruling, questions about Section 1373's constitutionality remained relatively quiet until President Trump issued the executive order targeting jurisdictions that do not comply with Section 1373. This sparked new litigation challenging Section 1373, some of which invoked Murphy after the ruling came down. Executive Order 13768 and Related Litigation Shortly after taking office, President Trump issued Executive Order (EO) 13768, "Enhancing Public Safety in the Interior of the United States," which, in Section 9, addresses sanctuary jurisdictions. Specifically, Section 9(a) of the EO seeks to encourage state and local cooperation with federal immigration enforcement and disincentivize—by threatening to withhold federal grant money—state and local adoption of sanctuary policies. Although EO 13768 did not explicitly define "sanctuary jurisdiction," later interpretive guidance from the Department of Justice (DOJ or Justice Department) defined the term, as it is used in the executive order, as a jurisdiction that willfully refuses to comply with 8 U.S.C. § 1373 (IIRIRA § 642). This section discusses recent litigation concerning efforts by the Trump Administration to deter the implementation of state or local "sanctuary" policies. It begins by providing a brief description of Section 9(a) of EO 13768 and the DOJ's implementation of its requirements. Next, it discusses ongoing litigation involving challenges to Section 9(a). Several of these cases involve direct challenges to the executive order. Other lawsuits involve challenges to the Justice Department's decision, in implementing the executive order, to attach new conditions for grant eligibility under the Edward Byrne Memorial Justice Assistance Grant (Byrne JAG) program and Community Oriented Policing Services (COPS) program, all of which are designed to encourage state and local law enforcement cooperation with federal immigration enforcement. Finally, this section discusses a lawsuit filed by the United States against California, claiming that three new state laws obstruct the federal government's immigration enforcement efforts and, as a result, violate the Constitution's Supremacy Clause. Section 9 of Executive Order 13768 On January 25, 2017, the President signed EO 13768, "Enhancing Public Safety in the Interior of the United States." Section 9 of the executive order seeks to encourage state and local cooperation with federal immigration enforcement and disincentivize state and local adoption of sanctuary policies. In particular, Section 9 declares that "[i]t is the policy of the executive branch to ensure, to the fullest extent of the law, that a State, or political subdivision of a State, shall comply with 8 U.S.C. 1373." To implement the policy set forth in the executive order, the President instructs the Attorney General and the Secretary of the Department of Homeland Security (DHS) under Section 9(a) to ensure that jurisdictions that "willfully refuse to comply with 8 U.S.C. 1373 (sanctuary jurisdictions) are not eligible to receive Federal grants," subject to limited exception. The executive order authorizes the DHS Secretary to designate a jurisdiction she determines to be a "sanctuary," and directs the Attorney General to take "appropriate enforcement actions" against "any entity" that violates Section 1373 or that "has in effect a statute, policy, or practice that prevents or hinders the enforcement of Federal law." Under Section 9(b), the President directs the DHS Secretary to publish, weekly, a list of jurisdictions that ignore or fail to honor detainer requests for incarcerated aliens, "[t]o better inform the public regarding the public safety threats associated with sanctuary jurisdictions." DOJ Implementation of EO 13768 A few months later, on May 22, 2017, Attorney General Sessions issued a memorandum interpreting EO 13768. First, he announced that "sanctuary jurisdictions," for the purposes of enforcing the executive order, are "jurisdictions that 'willfully refuse to comply with 8 U.S.C. 1373.'" Further, the Attorney General stated that the executive order applies only to grants that the DOJ or DHS administer. As a result, the Attorney General announced that the DOJ would "require jurisdictions applying for certain Department grants to certify their compliance with federal law, including 8 U.S.C. § 1373, as a condition for receiving an award." In addition, the certification requirement would apply to all existing grants administered by the DOJ's Office of Justice Programs and Office of Community Oriented Policing Services (COPS) that expressly contain the certification condition, and to future grants for which the DOJ has statutory authority to impose such conditions. Further, the Attorney General added that "[s]eparate and apart from the Executive Order, statutes may authorize the Department to tailor grants or to impose additional conditions on grantees to advance the Department's law enforcement priorities." Accordingly, "[g]oing forward," the Attorney General announced, "the Department, where authorized, may seek to tailor grants to promote a lawful system of immigration." As a follow up to that interpretive memorandum, two months later on July 25, 2017, the DOJ issued a press release and accompanying background document announcing new conditions for recipients of the Byrne JAG program. The Byrne JAG program provides federal funds to the states, District of Columbia, Puerto Rico, and other territories for various nonfederal criminal justice initiatives. The press release announced three new conditions: 1. Compliance Condition . Byrne JAG program grant recipients must certify compliance with Section 1373, which would notify the federal government that the jurisdiction does not restrict its offices and personnel from sending or receiving citizenship or immigration status to or from federal immigration authorities . 2. Access Condition . Grant recipients that have detention facilities housing aliens (e.g., local jails or state prisons where aliens may be confined) must permit DHS immigration enforcement personnel (i.e., enforcement officers with DHS's U.S. Immigration and Customs Enforcement [ICE]) to access those facilities to meet with housed aliens and inquire into their eligibility to remain in the country. 3. Notice Condition . When DHS believes that an alien in state or local custody is removable from the United States for a violation of federal immigration law, ICE officers may issue a "detainer" requesting that the state or local entity give notice of the alien's pending release from custody so that ICE may take control of the alien for possible removal proceedings. To be eligible for grants under the Byrne JAG program, DOJ announced that recipients generally must give DHS 48 hours' advance notice before releasing from custody an alien wanted for removal. These requirements were made applicable to Byrne JAG applications that were due six weeks later, on September 5, 2017, meaning that applying jurisdictions would need to be in compliance with all three conditions within six weeks. Additionally, the Justice Department announced a requirement for applicants seeking grants administered by the COPS Office to certify compliance with Section 1373. COPS grants are used to advance community policing, for example, through training, technical assistance, and developing "innovative policing strategies" in a number of "topic areas" selected by the DOJ. For FY2018, in the topic area for "Field Initiated Law Enforcement," priority consideration could be given to applicants that cooperate with federal immigration authorities "to address illegal immigration." Further, the COPS Office notified potential applicants that additional consideration would be given to applicants that partner with federal law enforcement to combat illegal immigration. To obtain that special consideration, applicants could sign a form certifying that they follow practices mirroring those of the notice and access conditions of Byrne JAG program: (1) allowing federal immigration authorities to access detention facilities where they may question known or suspected aliens about their immigration status; and (2) providing at least 48 hours' notice of those persons' expected custodial release. Litigation Challenging EO 13768 and its Implementation The lawsuits challenging Section 9(a) of EO 13768 and its implementation came in two waves. The first wave came shortly after President Trump signed the executive order, when several jurisdictions sued for injunctive relief. The second, larger wave of litigation came after the DOJ announced the new Byrne JAG and COPS conditions. In the litigation challenging the EO's implementation, the various challengers have brought arguments raising similar statutory and constitutional concerns, chiefly: the DOJ lacked statutory authority to impose the new conditions; the DOJ imposed the conditions arbitrarily and capriciously in violation of the Administrative Procedure Act; the executive branch violated principles of separation of powers by usurping the legislature's spending power; and the government violated the anti-commandeering doctrine by unconstitutionally conscripting the states into federal immigration enforcement. The County and City of San Francisco and the County of Santa Clara (collectively, the "Counties"), for example, filed suit within days of each other, and those lawsuits were considered jointly by a district judge in the Northern District of California. The district court presiding over the Counties' challenges ultimately issued an injunction blocking nationwide enforcement of Section 9(a). The Ninth Circuit agreed with the lower court that Section 9(a) violates the Constitution's principles of separation of powers. However, while agreeing that the injunction was appropriate to prevent Section 9(a) from having effect in California, the appellate court concluded that the current factual record was insufficient to support a nationwide injunction and remanded the case to the district court for further factfinding. As for the litigation challenging new Byrne JAG and COPS conditions, in one case, the U.S. District Court of the Northern District of Illinois enjoined the Byrne JAG conditions as applied to Chicago. The court held that, in imposing those conditions, the DOJ exceeded the statutory authority Congress delegated to implement the Byrne JAG program. In another case, the U.S. District Court for the Eastern District of Pennsylvania enjoined the federal government from enforcing the three Byrne JAG conditions against Philadelphia. The district court concluded, among other things, that the conditions were imposed arbitrarily and capriciously in violation of the Administrative Procedure Act (APA) because the government had failed to adequately justify imposing the new conditions. For reasons similar to the federal district courts in Chicago and Pennsylvania, a district court in New York enjoined the government from enforcing the new conditions against the City of New York and the States of New York, Connecticut, New Jersey, Rhode Island, Washington, Massachusetts, and Virginia (the collective plaintiffs in that case). Notably, all of the district judges held, post- Murphy , that Section 1373 violates the anti-commandeering doctrine. Finally, in another lawsuit brought by the City of Los Angeles, California, a district judge permanently enjoined the new considerations for COPS grant selections, concluding that they were imposed without statutory authority, violated the Spending Clause, and were arbitrarily and capriciously imposed in violation of the APA. City & Cty. of San Francisco v. Trump and Cty. of Santa Clara v. Trump Shortly after President Trump issued EO 13768, the City and County of San Francisco and the County of Santa Clara, California, filed suit, asking a federal court to enjoin Section 9(a) of the order. The Counties principally argued that Section 9(a) is unconstitutional in three ways. First, the Counties contended that the funding restrictions, by purporting to withhold, or impose new eligibility conditions on, congressional appropriations, violated the separation of powers by usurping the legislature's spending power granted in Article I, Section 8 of the Constitution. Alternatively, even assuming that the President had lawful authority to withhold, or impose conditions on, congressionally appropriated funds, the Counties argued that Section 9(a) would still violate the Spending Clause because it surpasses the constitutional limits of the Spending Clause set forth by the Supreme Court. Finally, the Counties argued that Section 9(a) violates the anti-commandeering doctrine, contending, for instance, that Section 9(a) coerces jurisdictions into complying with ICE-issued immigration detainers by threatening to withhold federal funding and take unspecified enforcement action against jurisdictions that "'hinder the enforcement of federal law.'" The district judge ultimately agreed with all three arguments and permanently enjoined—nationwide—Section 9(a) of the executive order. The Ninth Circuit, in a 2-1 ruling, affirmed the district court's judgment on the ground that Section 9(a) violates the separation of powers by usurping Congress's spending power. The Ninth Circuit vacated the injunction's nationwide application, however, and remanded for further factfinding on whether the injunction ought to be nationwide in scope. In holding that EO Section 9(a) violates the separation of powers, the Ninth Circuit recounted that "when it comes to spending, the President has none of his own constitutional powers to rely upon." That power, the court explained, is exclusively Congress's domain, subject to delegation. Yet, the court opined, Congress had not authorized the executive branch "to withdraw federal grant moneys from jurisdictions that do not agree with the current Administration's immigration strategies." Further, the court pointed to nearly a dozen failed congressional proposals to do just that during the 114th Congress. Thus, the Ninth Circuit concluded, "[n]ot only has the Administration claimed for itself Congress's exclusive spending power, it also attempted to coopt Congress's power to legislate." City of Richmond v. Trump Another California city unsuccessfully tried to challenge EO 13768 as it relates to sanctuary jurisdictions. Richmond, California, like Santa Clara and San Francisco, argued that (1) the President exceeded his constitutional authority by purporting to appropriate federal funds; (2) even assuming that the President has such spending authority, the conditions set forth in the executive order violate the Spending Clause's lawful parameters; and (3) the executive order unlawfully commandeers the states. The district court denied Richmond's request for injunctive relief, however, after concluding that the city could not establish pre-enforcement standing to challenge the executive order. In dismissing Richmond's suit, the district court applied the framework that the Supreme Court set forth in Babbitt v. Farm Workers National Union to determine whether a plaintiff has standing to challenge a statute before it is enforced against the plaintiff. Under Babbitt, the plaintiff must demonstrate "an intention to engage in a course of conduct arguably affected with a constitutional interest, but proscribed by a statute, and there exists a credible threat of prosecution thereunder." The district court assumed without deciding that Richmond had policies proscribed by the executive order, could lose federal funding if the order was enforced against it, and put forward claims that implicated constitutional interests. So the ruling on whether Richmond had pre-enforcement standing ultimately hinged on whether Richmond had demonstrated a "well-founded fear" that the executive order would be enforced against it, and the court concluded the city had not. The court opined that "[t]he likely targets of enforcement under the [Executive] Order are jurisdictions that have actually refused to cooperate with ICE and that ICE believes are hindering its immigration enforcement efforts." But according to Richmond's own complaint, the court found, the federal government had never asked Richmond to assist in enforcing immigration policy, nor had it been identified as a locality that restricts cooperation with ICE or regularly declines immigration detainers. Thus, the court decided that Richmond had "no real-world friction with ICE or the defendants over its policies" and thus was unlikely to be subjected to the executive order's funding restrictions. City of Seattle & City of Portland v. Trump The Cities of Seattle, Washington, and Portland, Oregon, jointly challenged President Trump's executive order. The cities asked a district court to declare that Section 9(a) of EO 13768 is unconstitutional under the Tenth Amendment, the Spending Clause, and separation-of-power principles, principally for the same reasons as the other jurisdictions challenging the executive order. Soon after the plaintiffs brought suit, though, the district court stayed the case, pending the resolution of the appeal in the Ninth Circuit of the injunction issued in the Santa Clara/San Francisco litigation. After the Ninth Circuit concluded that Section 9(a) was unconstitutional, the district judge in this case also ruled that Section 9(a) unconstitutionally violated the separation of powers. City of Chelsea & City of Lawrence v. Trump Two cities in Massachusetts, Chelsea and Lawrence, also filed suit shortly after President Trump issued EO 13768, challenging Section 9(a). Chelsea and Lawrence principally argued that that Section 9(a) violates the Tenth Amendment and the Constitution's separation-of-power principles, for reasons substantially similar to those argued by Santa Clara, San Francisco, and Richmond. However, after the district court in the Santa Clara/San Francisco litigation issued a nationwide preliminary injunction blocking the executive order, the parties agreed to stay the proceedings unless and until the injunction is lifted. City of Chicago v. Sessions After the Justice Department announced the new Byrne JAG conditions, the City of Chicago, Illinois, sued, asking a district court to enjoin the Attorney General from imposing them. Chicago's suit challenged each of the three conditions that the Justice Department imposed for grant eligibility (compliance with the information-sharing requirements of Section 1373, DHS access to state and local detention facilities, and providing notice to DHS when an alien wanted for removal is released from custody). First, Chicago argued that the DOJ lacked statutory authority to impose the new conditions because the Byrne JAG statute does not confer agency discretion to add substantive conditions to the receipt of those federal funds. And even though the Byrne JAG statute requires that recipients certify compliance with "all other applicable Federal laws," Chicago contended that conditioning the receipt of the grant on state and local compliance with Section 1373 is a new condition nevertheless. This is so because, Chicago asserted, Section 1373 is not an "applicable" law as intended by the JAG statute; rather, Chicago argued that the word "applicable" necessarily narrows the phrase from one that includes the entire body of federal law, to one that includes a subset of laws that "make[s] clear to grant recipients that their receipt of money is conditioned on compliance." In Chicago's view, the correct set of "applicable" laws is "the specialized body of statutes that govern federal grantmaking." Second, Chicago argued that the notice and access conditions violate the Constitution's separation-of-power principles because the DOJ—an executive branch agency—unlawfully exercised the spending authority exclusively granted to the legislative branch. Third, Chicago asserted that, even if the DOJ had been given the discretion to condition grant eligibility, the notice and access conditions exceeded constitutional spending authority. According to Chicago, the new conditions (1) are not germane to the federal interest in the Byrne JAG funds Chicago receives, and (2) by requiring grant recipients to provide immigration authorities with 48 hours' notice before releasing an alien in custody, would induce Chicago to engage in activities that violate the Fourth Amendment because, in practice, Chicago would have to hold detainees longer than constitutionally permitted. Finally, Chicago alleged that Section 1373, on its face, violates the Tenth Amendment, and thus the DOJ cannot condition the receipt of federal funds on state and local compliance with it. The district court initially granted a nationwide, preliminary injunction concerning the notice and access conditions. The Seventh Circuit upheld this ruling on interlocutory appeal but stayed its nationwide effect, making the injunction applicable to only Chicago. Before the district court made its final ruling, the Supreme Court issued Murphy , prompting the court to reconsider its earlier conclusion that the compliance condition was lawful. Ultimately, the court issued a nationwide, permanent injunction, holding that Section 1373 is unconstitutional on its face and blocking the enforcement of all three Byrne JAG conditions. However, because the en banc Seventh Circuit previously had stayed the nationwide effect of the preliminary injunction, the district court stayed the nationwide effect of the permanent injunction, pending appeal, in deference to the Seventh Circuit's earlier order. Turning to the merits of the district court's order, the court first concluded that Section 1373 violates the anti-commandeering doctrine. The court recounted that in Murphy, the Supreme Court held that, under the anti-commandeering doctrine, "Congress cannot issue direct orders to state legislatures" through a federal law that compels state action or that prohibits state action. Thus, because Section 1373 prohibits state policymakers from forbidding its employees to share immigration-status information with immigration authorities, the court concluded that this federal prohibition on state action runs afoul of the anticommandeering doctrine. The court further rejected the government's request to carve out an exception to the anti-commandeering doctrine for laws requiring states to share information with the federal government "in the face of clear guidance from Murphy " and without the Supreme Court ever creating such an exception. Next, the district court concluded that the notice, access, and compliance conditions were imposed without statutory authority and thus unlawful. The court's conclusion that Section 1373 is unconstitutional doomed the compliance condition. The Byrne JAG statute requires compliance with "all other applicable Federal laws." But, "[a]s an unconstitutional law," the court explained, "Section 1373 automatically drops out of the possible pool of 'applicable Federal laws.'" For the notice and access conditions, the court principally relied on the Seventh Circuit's reasoning in its order affirming the preliminary injunction, adding that "the Attorney General ha[d] not mustered any other convincing argument in support of greater statutory authority" and that "nothing ha[d] shaken this Court from the opinion it expressed at the preliminary injunction stage." For instance, the Seventh Circuit had rejected the government's contention that the conditions are authorized by 34 U.S.C. § 10102(a)(6), which sets forth the duties and functions of the Assistant Attorney General (AAG) in running the Office of Justice Programs, which administers the Byrne JAG program. The government had pointed to the statutory text granting the AAG the authority to exercise "powers and functions as may be vested in the Assistant Attorney General pursuant to this chapter or by delegation of the Attorney General, including placing special conditions on all grants, and determining priority purposes for formula grants . " But, according to the Seventh Circuit, "[t]he inescapable problem here is that the Attorney General does not even claim that the power exercised here is authorized anywhere in the chapter, nor that the Attorney General possesses that authority and therefore can delegate it to the Assistant Attorney General." City of Evanston v. Sessions The City of Evanston, Illinois (City), and the United States Conference of Mayors (Conference), together, brought a lawsuit that mirrored Chicago's and requested preliminary injunctive relief. The case was assigned to the same district judge who had presided over Chicago's lawsuit. For that reason, when considering whether the plaintiffs were likely to succeed on the merits of their claims, the district court relied on its earlier opinions and those of the Seventh Circuit. The district judge observed that, "though the plaintiffs at bar have changed, the legislation proscribing which conditions the Attorney General may attach has not." Accordingly, because the Seventh Circuit described as "untenable" the government's arguments for its statutory authority to impose the Byrne JAG conditions, the district court concluded that the City and Conference were likely to prevail. Consequently, the district court enjoined the government from enforcing the conditions against the plaintiffs. City of Philadelphia v. Sessions The City of Philadelphia, Pennsylvania, also sued to stop the Attorney General from imposing the new Byrne JAG conditions. Like Chicago, Philadelphia argued that the DOJ lacked statutory authority to impose the new conditions, violated constitutional principles of separation of powers, violated the Spending Clause, and unconstitutionally conscripted the states into federal immigration enforcement. Philadelphia also argued that the conditions were arbitrarily and capriciously imposed in violation of the APA. Initially, the district court found that all three of the conditions were unlawfully imposed and preliminarily blocked their enforcement against Philadelphia. Then, after a bench trial, the court permanently enjoined the DOJ from enforcing against Philadelphia the three new Byrne JAG conditions. The district court concluded that the Byrne JAG Statute contained no explicit authority for the notice and access conditions. The court further held that the Justice Department's decision to impose all three conditions was arbitrary and capricious in violation of the APA. The court reasoned that the DOJ did not adequately justify imposing the new conditions. For instance, the court found that, before imposing the certification condition, the government had not "assess[ed] the benefits or drawbacks of imposing a condition, but instead merely assessed whether jurisdictions would be compliant were such a condition imposed." Finally, the district court in Philadelphia concluded that Murphy mandates holding Section 1373 unconstitutional. The Third Circuit affirmed the district court's ruling but on narrower grounds: The court held that the conditions were imposed without statutory authority and thus are unlawful. The circuit court first concluded that the JAG statute did not authorize any of the challenged conditions. In support of the notice and access conditions, the government pointed to two provisions of the statute requiring the Attorney General to direct grant applicants (1) to report "data, records, and information (programmatic and financial)" that he may "reasonably require," and (2) to certify that "there has been appropriate coordination with affected agencies." In the government's view, "information" the Attorney General may "reasonably require" includes notification of an alien's release from custody from law-enforcement and corrections programs funded by the JAG grant. But the court disagreed, explaining that JAG statute explicitly limits information to programmatic and financial information, meaning "information regarding the handling of federal funds and the programs to which those funds are directed" and not "priorities unrelated to the grant program." The court also rejected the government's argument that the coordination provision authorizes access to aliens in Philadelphia's custody because that would amount to "appropriate coordination" with immigration authorities affected by those same JAG-funded law-enforcement and corrections programs. Because the statute refers to instances where "there has been " coordination, which the court understood to reference past coordination, the court concluded that the statutory language "does not serve as a basis to impose an ongoing requirement to coordinate." As for the lawfulness of the compliance condition, the government invoked another JAG statute provision, this one requiring applicants to certify compliance with "all other applicable Federal laws." The government contended that Section 1373 is an applicable federal law. The court rejected the government's expansive view of the term, however. The court reasoned, for instance, that if the Attorney General could condition funds based on compliance with any law in the U.S. Code , this practice would essentially turn the JAG formula grant—which is awarded to a jurisdiction through a formula that considers only population and violent crime statistics—into a discretionary grant. Next, the court rejected the government's other asserted source of statutory authority for imposing the conditions: the provision establishing the duties and functions of the AAG in 34 U.S.C. § 10102. This statute directs the AAG to "exercise such other powers and functions as may be vested in the [AAG] pursuant to this chapter or by delegation of the Attorney General, including placing special conditions on all grants." The court emphasized, however, that this provision authorizes the AAG to place conditions on grants only if that power has been vested by Title 34 of the U.S. Code or delegated by the Attorney General, and neither of those predicates had occurred. All told, based on the sole ground that the Attorney General lacked statutory authority to impose the notice, access, and compliance conditions, the Third Circuit affirmed the district court's order enjoining those conditions as applied to Philadelphia, and declined to address Philadelphia's additional arguments. City & Cty. of San Francisco v. Sessions In separate lawsuits considered together, the State of California and the City and County of San Francisco sued the Justice Department seeking to block the three new Byrne JAG conditions. The California plaintiffs argued that the notice and access conditions were imposed without statutory authority and, thus, violate the separation of powers, invoking the conclusions reached by the district courts who had enjoined those conditions. The plaintiffs further argued that, post- Murphy , Section 1373 is constitutionally unenforceable against the states. They contended that Section 1373 "dictates what a state legislature may and may not do," and Murphy forecloses Congress's ability to do that. The district court concluded that the Byrne JAG conditions violate the separation of powers and that Section 1373 is unconstitutional, declaring that he is "[i]n agreement with every court that has looked at these issues." And "follow[ing] the lead of the district court in City of Chicago ," the district judge entered a nationwide injunction, staying the nationwide aspect until the Ninth Circuit has an opportunity to review the order on appeal. Like the district courts in Chicago and Philadelphia, the district court here concluded that the Byrne JAG statute does not authorize the Justice Department to impose the notice and access conditions, given the sparse, inapplicable discretion the statute delegates. Without that delegated authority, the court continued, the Justice Department unlawfully exercised Congress's exclusive Spending Power and violated the separation of powers. Next, the court held that Section 1373 violates principles of federalism. The court explained that post- Murphy , "[t]here is no distinction for anti-commandeering purposes . . . between a federal law that affirmatively commands States to enact new laws and one that prohibits States from doing the same." And even if the Supreme Court eventually were to carve out an exception for federally required information-sharing, the district court opined that Section 1373 impacts jurisdictions much more than "a ministerial information-sharing statute." For example, the court found that Section 1373 "takes control over the State's ability to command its own law enforcement." States of New York v. Department of Justice The States of New York, Connecticut, New Jersey, Rhode Island, Washington, Massachusetts, and Virginia and the City of New York (collectively, the "States and City") sued the DOJ, challenging the three new Byrne JAG conditions. Like other jurisdictions, these plaintiffs contended that the conditions violate the separation of powers and the APA, and, further, that Section 1373 violates the anti-commandeering doctrine. A district judge in the Southern District of New York enjoined the Justice Department from imposing the notice, access, and compliance conditions on the States and City. The court first concluded that the conditions were imposed without statutory authority and thus, as the APA directs, must be set aside. Agreeing with the other courts, the district judge rejected the government's arguments that the statutory provision authorizing the Assistant Attorney General to exercise powers delegated by the Attorney General to impose grant conditions. Specifically, the government had contended that 34 U.S.C. § 10102(a)(6) authorizes the imposition of the conditions, and Department's compliance condition is authorized by the Byrne JAG statute's requirement, under 34 U.S.C. § 10153(a)(5)(D), to certify compliance with "all other applicable Federal laws." Concerning § 10102(a)(6), the district court concluded that the Assistant Attorney General could not impose the conditions because the Attorney General had no statutory authority to do so, and thus had no authority to delegate. As for § 10153(a)(5)(D), the court concluded that the term "all other applicable Federal laws" is ambiguous and thus violates the tenet that "if Congress intends to impose a condition on the grant of federal moneys, it must do so unambiguously." Accordingly, the court viewed the language "'from the perspective of a state official who is engaged in the process of deciding whether the State should accept [the] funds and the obligations that go with those funds,' and 'must ask whether such a state official would clearly understand that one of the obligations of the Act is the [purported] obligation.'" From that perspective, the court concluded that the applicable federal laws are limited to those applicable grant, given that the rest of § 10153 concerns requirements for the application and grant itself. Additionally, the district court concluded that the conditions constitute arbitrary and capricious agency action in violation of the APA. The court reasoned that, notwithstanding the government's evidence in support of the benefits of withholding Byrne JAG funds from jurisdictions that fail to comply with the three conditions, "[c]onspicuously absent" from the government's evidence "is any discussion of the negative impacts that may result from imposing the conditions, and the record is devoid of any analysis that the perceived benefits outweigh these drawbacks." Next, the district court concluded that Section 1373 violates the anti-commandeering doctrine and thus is unconstitutional. The court acknowledged that the Second Circuit—whose opinions are binding precedent on the Southern District of New York—held that Section 1373 is constitutional in City of New York v. United States . But the court concluded that the Second Circuit's earlier ruling "cannot survive the Supreme Court's decision in Murphy ." City of New York , the court explained, had relied on a distinction between affirmative commands, which were considered unconstitutional, and affirmative prohibitions, which the circuit court had considered permissible. But, the Second Circuit continued, the Supreme Court in Murphy described that distinction as "empty." Because Murphy concluded that the anti-commandeering doctrine forbids the federal government from imposing a direct prohibition on state legislatures, the district court held that Section 1373—by dictating what a state legislature may not do—is unconstitutional. The district court additionally held that the three Byrne JAG conditions violate the separation of powers. Harking back to its earlier analysis of the Byrne JAG statute provisions, the court explained that when Congress delegated spending authority to the executive branch in the statute, it did not delegate the authority to impose the new conditions. The Byrne JAG statute, the court continued, authorizes the distribution of funds "according to statutorily prescribed criteria" that the executive branch is powerless to disturb. City of Los Angeles v. Sessions The City of Los Angeles, California, separately challenged the new conditions attached to the Byrne JAG program and the additional consideration factors for the COPS program. Initially focusing on the COPS program, Los Angeles first asked the U.S. District Court for the Central District of California to enjoin the DOJ from implementing the new COPS considerations in any future grant solicitations, contending, among other things, that they were imposed without statutory authority, violate the Spending Clause, and are invalid under the APA. The district court agreed with Los Angeles and granted a permanent injunction. The court first concluded that the DOJ lacked statutory authority to consider the degree to which applying jurisdictions cooperate with federal immigration enforcement when assessing applications. The court pointed to 34 U.S.C. § 10381(c)—the statute authorizing the COPS program for community-policing grants—which identifies when the DOJ "may give preferential consideration" to applicants, and explained that none of the scenarios listed apply to federal immigration enforcement. Next, the court concluded that the challenged COPS considerations violate the Spending Clause. The federal government had contended that the challenged "considerations" on grant funding were not subject to the same Spending Clause requirements as grant "conditions" because compliance with the considerations was not required to receive the grant. But the court found no meaningful distinction between grant "conditions" and the challenged "considerations," declaring that "compliance is required in order for applicants to compete on a level playing field." Further, the court remarked, if the government's assertion were correct, "it would be simple for federal agencies to avert Spending Clause requirements by labeling all considerations 'plus factors.'" And because the COPS statute does not identify as a factor for preferential treatment a jurisdiction's cooperation with federal immigration enforcement, the court concluded that Congress did not, as the Spending Clause requires, "unambiguously condition" the receipt of funds on the recipients' compliance with federal authorities. "It is irrelevant" that the DOJ's COPS Office was forthcoming about the conditions because, the court added, it is Congress—not the agency—that "must be clear in its directives." Additionally, the added considerations violate the Spending Clause because, the court concluded, they are not germane to the goals of the COPS program: "[C]ommunity policing is about developing partnerships between local authorities and the community," and, in the court's view, "there is no relationship between local police partnerships with federal authorities and community policing." Finally, the district court concluded that the added considerations are arbitrary and capricious in violation of the APA because the government put forth no evidence, nor did it argue, that its explanation for adding the considerations—that "'[c]ities and states that cooperate with federal law enforcement make all of us safer by helping remove dangerous criminals from our communities,' including by ending 'violent crime stemming from illegal immigration'"—was based on any findings or data. Thus the court concluded that the government had no reasonable basis for adding the new conditions. Concerning the Byrne JAG notice and access conditions, the district court later entered a preliminary injunction blocking the government from enforcing those conditions against Los Angeles. In doing so, the court pointed to the text of the Byrne JAG statute, explaining that "[t]he authority explicitly granted to the Attorney General . . . is limited." That limited authority, the court concluded, does not include requiring states or localities to assist in immigration enforcement. Justice Department Lawsuit Against California On the other side of the coin, the Justice Department has sued California, seeking to invalidate three laws governing the state's regulation of private and public actors' involvement in immigration enforcement within its border. The government contends that these laws "reflect a deliberate effort by California to obstruct the United States' enforcement of federal immigration law, to regulate private entities that seek to cooperate with federal authorities consistent with their obligations under federal law, and to impede consultation and communication between federal and state law enforcement officials," and, thus, violate the Supremacy Clause. The government is challenging parts of the following three California laws: (1) The Immigrant Worker Protection Act, Assembly Bill 450 (AB 450); (2) Section 12 of Assembly Bill 103 (AB 103); and (3) the California Values Act, Section 3 of Senate Bill 54 (SB 54). In particular, the federal government principally contends that these laws violate the Supremacy Clause in two ways. First, the DOJ argues that the state measures violate the doctrine of intergovernmental immunity—a doctrine that derives from the Supremacy Clause and provides that "a State may not regulate the United States directly or discriminate against the Federal Government or those with whom it deals." Second, the government asserts that the California laws are preempted because they create an obstacle for the federal government's enforcement of certain immigration laws. The Challenged California Laws The Immigrant Worker Protection Act (AB 450) AB 450 imposes on public and private employers in California several requirements related to federal immigration enforcement actions taking place at the worksite. First, AB 450 prohibits an employer from allowing an immigration enforcement officer to enter any nonpublic areas of a worksite, unless the officer has a judicial warrant or "as otherwise required by federal law." Second, AB 450 bars employers from permitting immigration enforcement officers to access, review, or obtain employee records without a subpoena or judicial warrant, or "as otherwise required by federal law" (together, the "consent" provisions). Third, "[e]xcept as otherwise required by federal law," AB 450 requires employers to provide employees with written notice of any I-9 employment eligibility inspection (or other employment record inspections) within 72 hours after receiving notice of the inspection (the "notice" provision). Fourth, AB 450 prohibits an employer (or a person acting on the employer's behalf) from reverifying the employment eligibility of a current employee unless as required by 8 U.S.C. § 1324a(b) or "as otherwise required by federal law" (the "reverification" provision). Section 12 of AB 103 Section 12 of AB 103—part of California's omnibus budget bill—requires, for the next 10 years, the California Attorney General (or a designee) to review and report on county, local, and private detention facilities that house aliens in immigration proceedings, including those housing minors on behalf of, or by contract with, the U.S. Office of Refugee Resettlement or ICE. The review must include the conditions of confinement, standard of care, due process provided, and the circumstances surrounding the aliens' apprehension and transfer to the facility. California Values Act (Section 3 of SB 54) SB 54 enacts the California Values Act, which regulates to California's participation in federal immigration enforcement. As relevant here, the California Values Act generally prohibits law enforcement agencies from using agency money or personnel to investigate, interrogate, detain, detect, or arrest persons for the purpose of immigration enforcement, including inquiring into immigration status; detaining a person subject to a hold request; providing information about a person's release date; providing personal information such as a person's home or work address, unless it is publicly available; making or participating in arrests based on civil immigration warrants; or performing any functions of an immigration officer. The Act also prohibits California law enforcement agencies from placing their officers under the supervision of federal agencies or employing officers who are deputized as special federal officer for purposes of immigration enforcement. Further, under the Act, California law enforcement agencies may not use immigration authorities as "interpreters" for law enforcement matters relating to persons in custody. Nor may California law enforcement agencies transfer a person to immigration authorities unless authorized to do so by judicial warrant, a judicial probable cause determination, or otherwise in accordance with California law. Additionally, subject to limited exception, the agencies may not contract with the federal government to use California law enforcement facilities to house federal detainees. However, the Act specifies that it does not prevent California law enforcement from enforcing violations of 8 U.S.C. § 1326, which makes it a criminal offense to unlawfully enter the United States after being denied admission to, or being removed from, the United States. Nor does the Act prevent California law enforcement from responding to requests for information about a person's criminal history. Further, the Act does not prevent California law enforcement from engaging in certain joint law enforcement task force activities. Additionally, California law enforcement may still give immigration authorities access to interview an individual in custody, in compliance with California law, and to make inquiries related to determining whether a person is a potential crime or trafficking victim and thus eligible for certain visas. United States v. California On March 6, 2018, the United States sued California, requesting an injunction to preliminarily block the three California laws described above. In particular, the government contends that the contested California laws violate the Supremacy Clause. The government asserts that the California laws "reflect a deliberate effort by California to obstruct the United States' enforcement of federal immigration law, to regulate private entities that seek to cooperate with federal authorities consistent with their obligations under federal law, and to impede consultation and communication between federal and state law enforcement officials." Further, the United States contends that the California laws "have the purpose and effect of making it more difficult for federal immigration officers to carry out their responsibilities in California," and "[t]he Supremacy Clause does not allow California to obstruct the United States' ability to enforce laws that Congress has enacted or to take actions entrusted to it by the Constitution." The district court granted the government's request, in part, concluding only that parts of California's Immigrant Worker Protection Act (AB 450), as applied to private employers, violates the Supremacy Clause. The government appealed, arguing that the other challenged California provisions, too, likely are unconstitutional. But the Ninth Circuit sustained all but one of the district court's rulings, concluding that one subsection within Section 12 of AB 103 violates the doctrine of intergovernmental immunity. AB 450 The district court concluded that the United States was likely to succeed on its claim challenging AB 450's consent and reverification provisions. The court concluded that consent provision violates the doctrine of intergovernmental immunity because it imposes monetary penalties on employers for voluntarily consenting to immigration officers entering nonpublic areas of the worksite and to access employment records, and thus, the provision "impermissibly discriminates against those who choose to deal with the Federal Government." Concerning the reverification provision, the court reasoned that the government was likely to succeed on the merits of its claim that the provision is preempted by IRCA. The court concluded that the reverification provision likely stands as an obstacle to enforcing IRCA's continuing obligation imposed on employers to avoid knowingly employing an unauthorized alien. But the court concluded that the government was unlikely to succeed on its claim that AB 450's notice provision violates the Supremacy Clause. The court first concluded that this provision does not violate the intergovernmental immunity doctrine because, the court explained, it punishes employers for failing to communicate with its employees and not for choosing to deal with the federal government. The Ninth Circuit agreed, adding that "intergovernmental immunity attaches only to state laws that discriminate against the federal government and burden it in some way ." And the Ninth Circuit accepted California's contention that "[t]he mere fact that those notices" required by AB 450 "contain information about federal inspections does not convert them into a burden on those inspections." The district court also rejected the government's argument that the notice provision prevents an obstacle to enforcing IRCA's prohibition on employing unauthorized aliens because, the government asserted, if investigation targets are warned, investigations will be less effective. But the court opined that IRCA imposes obligations and penalties on employers , not employees, and so the "target" of any investigation is the employer , not the employee. Likewise, the Ninth Circuit concluded that AB 450's notice requirement does not impose "additional or contrary obligations that undermine or disrupt the activities of federal immigration authorities" in implementing IRCA. AB 103 The district court declined to preliminarily enjoin Section 12 of AB 103. The government had argued that California's "efforts to assess the process afforded to immigrant detainees" through the review and reporting requirements in AB 103, create an obstacle to administering the federal government's exclusive discretion in deciding whether and how to pursue an alien's removal. The court disagreed, though, opining that the California Attorney General's review would not give the state a role in determining whether an alien should be detained or removed from the United States. Rather, the court characterized the provision as one that harnesses power California's Attorney General lawfully possesses to investigate matters related to state law enforcement. Nor, the court concluded, would the government likely succeed on its claim Section 12 of AB 103 violates the doctrine of intergovernmental immunity. The court recognized that the law imposes inspections only on facilities that contract with the federal government. But the court opined that the burden imposed on the federal contractors is minimal, and the government had not shown that the burden imposed under AB 103 is higher than burdens imposed under independent California laws governing inspections of other detention facilities within the state. On appeal, however, the Ninth Circuit concluded that part of Section 12 of AB 103 (the requirement for the California Attorney General to review the circumstances surrounding detained aliens' apprehension and transfer to each facility) violates the doctrine of intergovernmental immunity. The Ninth Circuit characterized the district court's ruling as creating a "de minimis exception" to the doctrine of intergovernmental immunity. But the Ninth Circuit rejected this new exception, opining that "[ a ] ny economic burden that is discriminatorily imposed on the federal government is unlawful." Still, the court decided that only the provision requiring state inspectors to examine the circumstances surrounding the immigration detainees' apprehension and transfer to the facility likely violates the doctrine of intergovernmental immunity. In the Ninth Circuit's view, this "unique" requirement appeared distinct from any other inspection imposed under California law, and, thus, the Ninth Circuit concluded that the district court erred in finding that the review appears no more burdensome than other legally mandated inspections. SB 54 Finally, the district court rejected the government's argument that SB 54 acts as an obstacle to immigration enforcement and, thus, is preempted. The government had asserted that SB 54's limitations on information sharing and transferring to federal custody certain alien inmates "impede immigration enforcement from fulfilling its responsibilities regarding detention and removal because officers cannot arrest an immigrant upon the immigrant's release from custody and have a more difficult time finding immigrants after the fact without access to address information." The court opined, however, that "refusing to help is not the same as impeding." A state's refusal to help with federal immigration enforcement will always make obtaining the federal objective more difficult than if the state voluntarily assists, but, the court explained, "[s]tanding aside does not equate to standing in the way." The Ninth Circuit upheld the district court's ruling. First, the court concluded that SB 54 does not obstruct the government's implementation of the INA. The court reasoned that the INA (with the exception of Section 1373) "provides state and localities the option , not the requirement , of assisting federal immigration authorities," and "SB 54 simply makes that choice for California law enforcement agencies." Further, invoking the Supreme Court's ruling in Murphy , the Ninth Circuit opined that invalidating SB 54 under the principles of conflict preemption "would, in effect, 'dictate[] what a state legislature may and may not do,' because it would imply that a state's otherwise lawful decision not to assist federal authorities is made unlawful when it is codified as state law." Nor does Section 1373 preempt the information-sharing provisions of SB 54 because, the court concluded, the state measure expressly permits the type of information required by Section 1373, specifically, citizenship or information status. Moreover, the Ninth Circuit, again relying on Murphy , concluded that anti-commandeering principles likely precluded a preemption challenge to the information-sharing provisions. The court described the exception to the anti-commandeering doctrine for reporting requirements as existing only when the "Congress evenhandedly regulates an activity in which both States and private actors engage." But here, Section 1373 regulates only state actors, and therefore anti-commandeering principles preclude the government from requiring California to exchange information with it. Conclusion Ongoing lawsuits concerning sanctuary jurisdictions may offer clarity on some unsettled and cross-cutting issues involving immigration and federalism. The Tenth Amendment reserves for the states the "police power" to regulate and protect the health, safety, and welfare of the public, and, in adopting sanctuary policies, jurisdictions have sometimes invoked public safety concerns as a justification for enacting those measures. But the federal government's power to regulate immigration-related matters is substantial and exclusive, and on occasion the exercise of this power has been found to render unenforceable state or local initiatives that conflict with federal immigration enforcement priorities. Additionally, Congress generally may condition the receipt of federal funds on compliance with specific conditions that achieve federal goals. Still, the anti-commandeering doctrine restricts the federal government from compelling the states to administer or enforce a federal regulatory program, like the immigration laws, whether through direct compulsion or prohibition, or indirectly, through monetary incentives that are unduly coercive. With that background, the heart of the debate in the lawsuits challenging EO 13768 and its implementation has principally centered on what constitutionally permissible methods are available to the federal government to stop or deter state and local adoption of sanctuary policies, which the government views as hindering federal immigration enforcement objectives, and, on the flip side, whether and when state and local sanctuary policies do, in fact, undercut federal immigration enforcement efforts in a manner that contravenes the Supremacy Clause. In City & County of San Francisco v. Trump and County of Santa Clara v. Trump , for example, the district court's ruling that enjoined Section 9(a) hinged, in part, on its conclusion that the executive branch lacked statutory authority from Congress to withhold and create new conditions for federal grants, and that purporting to withhold all federal grants from what it labeled as sanctuary jurisdictions was unconstitutionally coercive, given the sheer amount of money a sanctuary jurisdiction would stand to lose if it didn't dispense with its policies. Congress could step in to ratify Section 9(a), at least in part, using its spending power to incentivize states to cooperate with immigration enforcement, so long as it doesn't threaten to withhold an amount of money that could be deemed coercive. And in City of Chicago v. Sessions and City of Philadelphia v. Sessions, the district courts and one appellate court concluded that the executive branch lacked statutory authority to impose some of the spending conditions that the DOJ attached to the Byrne JAG program. Likewise, Congress could amend the Byrne JAG statute to give the Attorney General, as it has done for other grant programs, the discretion to impose conditions on the receipt of the federal grant. Moreover, since Murphy, the courts considering the challenges to Section 1373 have concluded that the statute is no longer constitutionally viable, given the Supreme Court's application of the anti-commandeering doctrine to a federal statute that prohibits states from enacting certain kinds of laws. Accordingly, to achieve Section 1373's goals, Congress may consider using its power of the purse to incentivize states and localities to share immigration-related information with federal immigration authorities.

There is no official or agreed-upon definition of what constitutes a "sanctuary" jurisdiction, and there has been debate as to whether the term applies to particular states and localities. Moreover, state and local jurisdictions have varied reasons for opting not to cooperate with federal immigration enforcement efforts, including reasons not necessarily motivated by disagreement with federal policies, such as concern about potential civil liability or the costs associated with assisting federal efforts. But traditional sanctuary policies are often described as falling under one of three categories. First, so-called "don't enforce" policies generally bar state or local police from assisting federal immigration authorities. Second, "don't ask" policies generally bar certain state or local officials from inquiring into a person's immigration status. Third, "don't tell" policies typically restrict information sharing between state or local law enforcement and federal immigration authorities. One legal question relevant to sanctuary policies is the extent to which states, as sovereign entities, may decline to assist in federal immigration enforcement, and the degree to which the federal government can stop state measures that undermine federal objectives. The Tenth Amendment preserves the states' broad police powers, and states have frequently enacted measures that, directly or indirectly, address aliens residing in their communities. Under the doctrine of preemption—derived from the Supremacy Clause—Congress may displace many state or local laws pertaining to immigration. But not every state or local law touching on immigration matters is necessarily preempted; the measure must interfere with, or be contrary to, federal law to be rendered unenforceable. Further, the anti-commandeering doctrine, rooted in the Constitution's allocation of powers between the federal government and the states, prohibits Congress from forcing state entities to perform regulatory functions on the federal government's behalf, including in the context of immigration. A series of Supreme Court cases inform the boundaries of preemption and the anti-commandeering doctrine, with the Court most recently opining on the issue in Murphy v. NCAA. These dueling federal and state interests are front and center in numerous lawsuits challenging actions taken by the Trump Administration to curb states and localities from implementing sanctuary-type policies. Notably, Section 9(a) of Executive Order 13768, "Enhancing Public Safety in the Interior of the United States," directs the Secretary of Homeland Security and the Attorney General to withhold federal grants from jurisdictions that willfully refuse to comply with 8 U.S.C. § 1373—a statute that bars states and localities from prohibiting their employees from sharing with federal immigration authorities certain immigration-related information. The executive order further directs the Attorney General to take "appropriate enforcement action" against jurisdictions that violate Section 1373 or have policies that "prevent or hinder the enforcement of federal law." To implement the executive order, the Department of Justice added new eligibility conditions to the Edward Byrne Memorial Justice Assistance Grant (Byrne JAG) Program and grants administered by the Justice Department's Office of Community Oriented Policing Services (COPS). These conditions tied eligibility to compliance with Section 1373 and other federal immigration priorities, like granting federal authorities access to state and local detention facilities housing aliens and giving immigration authorities notice before releasing from custody an alien wanted for removal. Several lawsuits were filed challenging the constitutionality of the executive order and new grant conditions. So far the courts that have reviewed these challenges—principally contending that the executive order and grant conditions violate the separation of powers and anti-commandeering principles—generally agree that the Trump Administration acted unconstitutionally. For instance, the Ninth Circuit Court of Appeals upheld a permanent injunction blocking enforcement of Section 9(a) against California. Additionally, two separate district courts permanently enjoined the Byrne JAG conditions as applied to Chicago and Philadelphia. In doing so, these courts concluded that the Supreme Court's most recent formulation of the anti-commandeering doctrine in Murphy requires holding Section 1373 unconstitutional. These lawsuits notwithstanding, the courts still recognize the federal government's pervasive, nearly exclusive role in immigration enforcement. This can be seen in the federal government's lawsuit challenging three California measures governing the state's regulation of private and public actors' involvement in immigration enforcement within its border. Although a district court opined that several measures likely were lawful exercises of the state's police powers, it also concluded that two provisions regulating private employers are likely unlawful under the Supremacy Clause. This ruling was mostly upheld on appeal, in which the Ninth Circuit additionally opined that a provision requiring the California attorney general to review the circumstances surrounding detained aliens' apprehension and transfer to detention facilities within the state also violates the Supremacy Clause.

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T he federal crop insurance program offers subsidized crop insurance policies to farmers. Historically, the federal crop insurance program has covered primarily traditional field crops such as wheat, corn, and soybeans. In contrast, s pecialty crops —covering fruits, vegetables, tree nuts, and nursery crops—have not been a major part of the federal crop insurance program. However, legislative changes, coupled with ongoing administrative efforts by the U.S. Department of Agriculture (USDA), have expanded federal crop insurance coverage for specialty crops, and they now account for a small but growing number of federal crop insurance policies bought by farmers. Over the past few decades, total specialty crop insured liabilities rose from nearly $1 billion in 1989 to nearly $18.5 billion in 2017. Federal crop insurance policies currently cover around 38 specialty crop categories, which include roughly 80 types of fruits, vegetables, tree nuts, and nursery crops. Many specialty crops, however, do not have crop-specific insurance policies. Currently, about one-half of all U.S. specialty crop acres are covered by federal crop insurance policies. Some specialty crops may be covered under a Whole Farm Revenue Protection (WFRP) insurance policy, intended to fill in coverage gaps for producers of uninsured crops that lack individual policy coverage and for producers marketing to local, farm-identity preserved, or direct markets. Despite this expansion, coverage for specialty crops remains below that for traditional crops. Combined, federal crop insurance for specialty crops and WFRP together accounted for about 17% of the entire federal crop insurance portfolio by liability during crop year 2017. This report focuses on how specialty crops are covered under the federal crop insurance program. For detailed background and historical information on the federal crop insurance program as a whole, and on how the federal crop insurance program operates, see CRS Report R45193, Federal Crop Insurance: Program Overview for the 115th Congress . Crop Insurance Program Authority and Operation Overview of the Federal Crop Insurance Program The federal crop insurance program is permanently authorized by the Federal Crop Insurance Act, as amended (7 U.S.C. §1501 et seq .). The USDA's Risk Management Agency (RMA) regulates the program, and the Federal Crop Insurance Corporation (FCIC) funds it. Congress first authorized federal crop insurance in an effort to mitigate the effects on farmers of the Great Depression and of the crop losses seen in the Dust Bowl. In 1938, the FCIC was created to carry out the program, which focused on major crops like wheat in leading producing regions. During the same era, farm programs were established to support crop prices and boost farm income for producers of so-called program crops, including wheat, corn, and cotton. The availability of federal crop insurance expanded with the passage of the Federal Crop Insurance Act of 1980 ( P.L. 96-365 ), which brought coverage to many more crops and regions of the country. To increase participation, Congress enhanced the crop insurance program in 1994 by raising subsidy levels and in 2000 by expanding geographic availability and again raising subsidy levels. The changes also expanded the role of the private sector in developing new products that would help farmers manage their risks. Today, many banks, when making operating loans, require that farmers purchase crop insurance. The federal crop insurance program provides farmers with risk management tools to cope with yield and price declines. Under the program, farmers can purchase subsidized policies that pay indemnities when their production or revenue falls below a producer-selected coverage level. Insurance policies are sold and completely serviced through approved private insurance companies. The insurance companies' losses are reinsured by USDA, and their administrative and operating costs are subsidized by the federal government. In purchasing a crop insurance policy, a producer selects a level of coverage (i.e., deductible) and pays a portion of the premium that increases with higher coverage levels (or none of it in the case of catastrophic coverage). The federal government pays the rest of the premium (63%, on average, in 2017). The federal crop insurance program offers two main levels of coverage: Catastrophic Risk Protection (CAT) and buy-up coverage: 1. CAT coverage insures against losses in excess of 50% of normal yield, equal to 55% of the estimated market price of the crop (called 50/55 coverage). The premium is 100% subsidized. Producers pay an administrative fee of $655 per crop per county. Limited-resource producers may have this fee waived. CAT coverage is not available on all types of policies. 2. Buy- up coverage allows producers to obtain coverage beyond the catastrophic level and pay a premium that is subsidized by the federal government. Buy-up provides for additional coverage up to 85% of production per acre and 100% of a specified market price established for each crop and region. The premium subsidy for these policies ranges from 38% to 67%. Producers pay an administrative fee of $30 per crop per county. The availability of crop insurance for a particular crop in a particular region is an administrative decision made by RMA. The decision is made on a crop-by-crop and county-by-county basis based on farmer demand for coverage and the level of risk associated with the crop in the region, among other factors. In areas where a policy is not available, farmers may request that RMA expand the program to their county. The process usually starts with a pilot program in order for RMA to gain experience and test the program components before it becomes more widely available. Alternatively, a policy can be reviewed and later discontinued if it fails to perform at an acceptable level (e.g., it experiences low participation or high losses). RMA also regularly responds to requests from commodity organizations or industry representatives for enhancements to existing coverage, such as adding revenue coverage. RMA offers pilot programs with various types of coverage for new crops (particularly specialty crops) or that include new geographical areas. It uses the performance of these programs to inform its decision on whether to extend coverage permanently. Expansion of Coverage for Specialty Crops Efforts to expand federal crop insurance coverage to crops that had not traditionally been eligible under the program dates back to the 1990s. The Federal Crop Insurance Reform and Department of Agriculture Reauthorization Act of 1994 ( P.L. 103-354 ) helped initiate efforts to expand federal crop insurance coverage for specialty crop producers. It amended the Federal Crop Insurance Act to require (among other things) additional data collection, reporting to facilitate the development of new crop insurance policies, tracking the progress of newly developed policies, and an expected timetable for expanding crop insurance coverage to include "new and specialty crops." Since then RMA has submitted episodic reports to Congress tracking this progress. The Agriculture Risk Protection Act of 2000 ( P.L. 106-224 ) further emphasized increasing the availability of risk management tools for producers of crops with no individual policy coverage. Previous omnibus farm bills—including the Agricultural Act of 2014 ( P.L. 113-79 , "2014 farm bill") and the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 , "2008 farm bill")—also enhanced the federal crop insurance program by expanding its scope and broadening policy coverage for specialty crops, organic agriculture, and crops that are sold directly to local markets. These laws authorized and extended other USDA programs that help facilitate the formulation of crop insurance policies for specialty crop producers, including market data collection programs. The 2008 and 2014 farm bills further expanded provisions governing how RMA administers and implements Section 508(h) of the Federal Crop Insurance Act, which governs new policy development, including how it is contracted out and funded, how policy ratings are undertaken, and how a policy may start as a pilot and may (or may not) evolve to a full-fledged insurance policy. Additional information on the Section 508(h) process is described in " Development of New Policies and Section 508(h) ." The 2014 farm bill also directed RMA to develop the WFRP insurance policy as part of an effort to provide additional options for crops that lack crop-specific policy coverage. WFRP policies insure revenue of the entire farm, rather than an individual crop, under a single insurance policy that is not limited to specialty crop production. The types of producers eligible for whole farm policies include direct-to-consumer marketers and producers of multiple agricultural commodities, including specialty crops, industrial crops, livestock, and aquaculture products. Coverage is also expanded for the value of packing, packaging, or any other similar on-farm activity. WFRP can be combined with other policies with buy-up coverage. WFRP does not offer CAT-level coverage and cannot be combined with CAT-level policies. WFRP is discussed further in " Whole Farm Revenue Protection (WFRP) Insurance ." Despite expansion of the federal crop insurance program, coverage for specialty crops remains below that for traditional crops in terms of individual crop policies and covered acres. Often insurers face technical difficulties in developing new policies such as price discovery, non-weather risks, and premium ratings. In some cases, USDA has not pursued policies for particular commodities because producers have expressed concerns that offering insurance could adversely affect the market (i.e., because an insurance policy reduces producer risk, farmers may plant more acreage, which could drive down prices and total crop revenue). This has been a particular concern for vegetable crops and explains in part lower levels of insured vegetable acreage compared with other crops. These and other challenges are discussed later in " Challenges with Developing Specialty Crop Policies ." Specialty Crop Insured Coverage and Participation Definition of Specialty Crops In statute, specialty crops refers to "fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture)" [7 U.S.C. §1621 note]. This definition covers more than 300 individual agricultural commodities. It includes fresh and processed fruits and vegetables, tree nuts, a range of nursery plants (trees, shrubs, and flowering plants), culinary herbs and spices, coffee and tea, and also honey and maple syrup, according to guidelines established by USDA. The statutory definition of specialty crops ties to program eligibility and funding allocations for a number of USDA programs providing marketing and research assistance to eligible producer groups. Unlike many traditional commodity crops, specialty crops are generally not eligible for USDA farm revenue support programs—that is, programs such as the Agricultural Risk Loss Coverage (ARC), Price Loss Coverage (PLC), and Marketing Assistance Loans (MAL) programs. The federal government has historically supported specialty crops indirectly through research and marketing grants. The federal government provides direct assistance to individual specialty crop farmers via federal crop insurance and supplemental disaster assistance. Overview of Premiums, Product Introductions, and Participation Legislative changes coupled with USDA administrative efforts have contributed to broader federal crop insurance coverage of fruits, vegetables, tree nuts, and nursery crops over the past few decades. Total liability, or the estimated value of the insured portion of the crop, is a useful measure of program growth. Specialty crop insured liabilities rose from nearly $1 billion in 1989 to nearly $18.5 billion in 2017 ( Figure 1 ), reflecting increased production and participation. In contrast, total liabilities for all federally insured crops and livestock was $106.7 billion in 2017. At $18.5 billion, specialty crops represented about 17% of the federal crop insurance portfolio by liability in 2017 ( Figure 1 ). Table 1 provides summary statistics of federal crop insurance coverage for specialty crops for crop years 2015 through 2017. It provides total premium, premium subsidies, producer-paid premium, liabilities, indemnities (claim payments), and the number of policies earning premium. Premium subsidies across all commodities (not shown in the table) totaled $6.4 billion (63% of total premium), whereas premium subsidies for specialty crops totaled $701 million (64% of total specialty crop premium) in crop year 2017. Producer-paid premiums are the difference between total premium and premium subsidies. Looking back to 1999, insurance policies then covered 52 specialty crops with planned testing on another nine, according to the Government Accountability Office (GAO). These 61 crops reportedly accounted for a majority of the overall value of specialty crops at that time, but coverage on about 300 additional crops remained unavailable. Coverage expansion for specialty crops continued over the subsequent decade. By 2011, insurance was available for more than 80 specialty crops in counties considered to be major growing areas. Among the crops included were avocados, blueberries, grapes, citrus, onions, pumpkins, and tomatoes. The cumulative new crop insurance product introductions for specialty crops increased from 10 in 2000 to 52 in 2012 ( Figure 2 ). Figure 3 shows the number of specialty crop policies earning premium under the federal crop insurance program from crop years 2000 to 2017. While the number of specialty crop policies shows a general upward trend from 2000 to 2017, the total liability (amount insured) for specialty crops shows a more consistent upward trend during the same time period ( Figure 4 ). A larger increase in liability than in the number of policies could be attributed to several factors, among them more high-value crop policies, increases in commodity prices, farm consolidation, and inflation. Specialty Crops: Covered and Uncovered Crops About 9 million acres of specialty crops, approximately 800,000 bee colonies, about 100,000 tons of raisins, and roughly 60,000 fruit and coffee trees were covered by federal crop insurance during crop year 2017. As of 2015, federal crop insurance policies were offered for 38 specialty crop categories ( Table 2 ), which include roughly 80 types of fruits, vegetables, tree nuts, and nursery crops. In 1999, insurance policies covered about 50 types of specialty crops. Crops covered by individual federal crop insurance plans include almonds, apples, avocados, bananas, blueberries, cabbage, chili peppers, various citrus fruits, coffee, cranberries, cucumbers, dry beans, dry peas, figs, fresh market beans, fresh market sweet corn, fresh market tomatoes, grapes, green peas, macadamia nuts, mint, mustard, nursery, olives, onions, papaya, pears, pecans, peppers, pistachios, popcorn, potatoes, processing beans, pumpkins, raisins, policies on stone fruit (cherries, fresh apricots, fresh freestone peaches, fresh nectarines, peaches, plums, processing apricots, processing cling peaches, processing freestone peaches, prunes), strawberries, sweet corn, sweet potatoes, table grapes, tomatoes, other types of fruit and nut trees, and walnuts. Bee colonies are also covered. Although the availability of federal crop insurance has been expanding, it is not available for all specialty crops. Crops without insurance for which the USDA's National Agricultural Statistics Service (NASS) reports planted acreage include artichokes, asparagus, blackberries, boysenberries, broccoli, cantaloupes, carrots (fresh and for processing), cauliflower, celery, dates, garlic, guavas, hazelnuts, honeydews, kiwi fruit, lettuce, spinach, squash, tart cherries, and watermelons. In addition, specialty crops for which NASS does not report planted acreage that do not have crop-specific policies include cashews, chives, dates, eggplants, garlic, hazelnuts, leeks, lettuce, melons, most leafy greens, most herbs and spices, some tropical plants, and most root crops. Market Penetration RMA reports that nearly 300 million acres were covered by federal crop insurance policies in crop year 2015. Of those acres, about 8.1 million acres (3%) were specialty crops ( Table 2 ). For the 38 specialty crop categories for which federal crop insurance policies are measured by acreage (as opposed to bee colonies, tons, trees, or plant inventory value), the average participation rate in federal crop insurance was about 76% of eligible acres in crop year 2015. Figure 5 and Figure 6 show these data for selected fruit, tree nut, and vegetable categories. Market penetration often varies widely by crop. For fruits and tree nuts, the share of federally insured acres ranges from less than 1% (strawberries) to more than 80% (citrus and plums/prunes) ( Figure 5 ). For vegetables and melons, insured acres range from 5% of total acres (fresh beans and sweet potatoes) to more than 80% (dry peas, tomatoes) ( Figure 6 ). Insured acreage as a share of crop acreage is relatively high (about 70% of total specialty crop area) in major specialty crop states, including California, Florida, and Washington. Acreage participation for pulse crops (e.g., dry peas, dry beans) is high in Minnesota, Montana, North Dakota, and South Dakota. The 2015 FCIC report to Congress on specialty crops contains detailed acreage data by crop and state, along with maps showing crop insurance participation. Figure 7 shows liabilities for specialty crops with the highest liabilities for crop year 2017. Figure 8 shows a breakdown of crop insurance premium subsidies and producer-paid premium by specialty crop in crop year 2017. That year, the average premium subsidy amount across all specialty crop policies and WFRP was 64%, about 1 percent higher than the average premium subsidy rate for the entire crop insurance portfolio. Whole Farm Revenue Protection (WFRP) Insurance RMA provides a WFRP policy option to growers insuring 50% to 85% of revenue for all the commodities on a farm under one insurance policy. WFRP benefits farms with specialty or organic commodities that lack individual policy coverage, as well as those farms marketing to local, regional, farm-identity preserved, or direct markets. RMA estimates that 2,700 such policies received premium subsidies in 2017, up from 1,100 policies in 2015 ( Figure 9 ). WFRP premium subsidies totaled about $102 million in 2017, and producer-paid premium amounted to about $42 million, while total liability was estimated at $2.8 billion, up from $1.1 billion in 2015. The 2014 farm bill ( P.L. 113-79 ) required that RMA provide a WFRP policy option to agricultural producers and authorized higher premium subsidy levels for whole-farm policies than for other policy types. The WFRP pilot policy was first offered in 2015. Prior to that, USDA offered similar policies under other names (in particular, Adjusted Gross Revenue or "AGR" policies from 1999 to 2002, and AGR and AGR Lite policies from 2003 to 2014). WFRP insures 50% to 85% of revenue for all commodities on a farm under one insurance policy, including (but not limited to) farms with specialty or organic commodities or those marketing to local, regional, farm-identity preserved, specialty, or direct markets. WFRP is available in all counties nationwide—either as a stand-alone policy or in combination with other policies—to farms with up to $10 million in insured revenue at the 85% coverage level and up to $17 million in insured revenue at the 50% coverage level. WFRP does not offer CAT-level coverage (high deductible, 100% premium subsidy) and cannot be combined with CAT-level policies. WFRP premium subsidies range from 55% to 80%, and coverage levels range from 50% to 85%. In crop year 2017, the average premium subsidy for WFRP was 70%, whereas the average premium subsidy across the entire crop insurance portfolio was 63%. That year WFRP policies accounted for 3% of all federal crop insurance liabilities. WFRP requires producers to provide five consecutive years of Schedule F from their federal tax forms on which farm income and expenses are reported to determine their historical revenue guarantee. Some speculate that one of the reasons WFRP participation is not higher is that producers are reluctant to provide tax data. Select Policy Types Relevant to Specialty Crops Federal crop insurance policies for specialty crops (and all other crops) are generally either yield-based or revenue-based. For most yield-based policies, a producer can receive an indemnity if there is a yield loss relative to the farmer's "normal" (historical) yield. Revenue-based policies protect against crop revenue loss resulting from declines in yield, price, or both. Yield-Based Insurance Policies There are two types of yield-based insurance policies for specialty crops: (1) Actual Production History (APH) plans and (2) dollar plans. APH policies account for about 70% of specialty crops policies, with the exception of nursery crops, which tend to be mostly covered through dollar plans. Text Bo x 1 shows examples of an APH policy for citrus fruit with a 50% coverage level and a dollar plan for nursery products with a 65% coverage level. Actual Production History (APH) Plans APH policies insure producers against yield losses due to natural causes such as drought, excess precipitation, hail, frost, freeze, fire (if due to natural causes), and insects and disease. An indemnity is not paid if crop loss is caused by insufficient or improper applications of pest or disease control measures. The producer selects the amount of average yield to insure, ranging from 50% to 75% (in some areas up to 85%). The producer also selects the percent of the predicted price to insure, ranging between 55% and 100% of the crop price established annually by RMA. If the harvested crop plus any appraised production is less than the yield insured, the producer is paid an indemnity based on the difference. Indemnities are calculated by multiplying this difference by the insured percentage of the price selected when crop insurance was purchased and by the insured share (coverage level). When purchasing an APH policy, a producer is assigned a "normal" crop yield based on the producer's actual production history and a price for the commodity based on estimated market conditions. The producer can then select a percentage of his normal yield to be insured and a percentage of the price he or she wishes to receive when crop losses exceed the selected loss threshold. Dollar Plans Dollar plans provide protection against declining value due to damage that causes a yield shortfall. Unlike APH policies, a dollar policy guarantees a dollar amount of coverage and not a level of production, with the amount of insurance based on the cost of growing a crop in a specific area. A loss occurs when the annual crop value is less than the amount of insurance. The maximum dollar amount of insurance is stated on the actuarial document. The insured may select a percentage of the maximum dollar amount equal to CAT or higher coverage levels. The design and implementation of dollar plan policies have been criticized for not insuring actual losses and for covering fraudulent claims. A 1997 USDA Office of the Inspector General audit report on fresh market tomato dollar plans outlined several specific fraud, waste, and abuse concerns. More recently, in December 2017 an RMA-commissioned report on options for improving or replacing dollar plans concluded that the dollar plan as studied (limited area and three crops) "is not sustainable." Revenue-Based Insurance Revenue insurance is widely available for major program crops (e.g., wheat, corn, soybeans) and protects growers against losses from low yields, low prices, low quality, or any combination of these events. For specialty crops, designing revenue-based insurance products is challenging. These crops often do not have centralized price discovery mechanism such as a futures exchange for developing price projections prior to planting. They also often lack data on actual harvest-time prices. To address these types of data challenges, actual revenue history (ARH) insurance plans have been implemented on a pilot basis for certain specialty crops such as navel oranges and cherries. Rather than insuring historical yields, these pilot policies insure historical revenues using historical prices. This approach assumes that historical prices provide a reasonable estimate of expected future prices. This assumption is deemed viable for perishable crops, such as most fruit and vegetables, but is considered less tenable with storable crops where stock carryover from the previous year can affect current market-year prices. ARH insurance plans have parallels to the APH insurance plans, with the primary difference being that instead of insuring historical yields, the plan insures historical revenues. Text Box 2 shows an example of an ARH policy for California navel oranges. Designed as a catch-all for a variety of crops that may not have individual revenue insurance plans, WFRP policies insure 50%-85% of revenue for all commodities on a farm under one policy. For more information on WFRP, see " Whole Farm Revenue Protection (WFRP) Insurance ." Index-Based Policies RMA offers a few index-based policies, which trigger claim payments based on a predetermined index that is entirely independent of the individual farm operation (e.g., rainfall level). Indemnities are automatically triggered whenever the index falls below a producer-selected coverage level instead of requiring insureds to file claims. One of those policies covers a specialty crop—the Apiculture Pilot Insurance Program (API), which covers honey production. Text Box 3 provides detailed information on producers' choices under API. Development of New Policies and Section 508(h) The Federal Crop Insurance Act provides two methods for developing new crop insurance programs, including (1) internal products developed by RMA or under contract and (2) external products submitted through procedures specified in Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. §1508(h)). RMA-Developed Products Section 522 of the Federal Crop Insurance Act (7 U.S.C. §1522) grants RMA authority to develop new crop insurance policies. This authority was partially removed in 2000 but later reinstated by the 2014 farm bill ( P.L. 113-79 ). Before the enactment of Agricultural Risk Protection Act of 2000 (ARPA, P.L. 106-224 ), products were typically developed internally. ARPA added paragraph (e)(4) to Section 522, which stated, "on and after October 1, 2000, the Corporation shall not conduct research and development for any new policy for an agricultural commodity offered under this subchapter." The 2014 farm bill repealed paragraph (e)(4). Private Sector Developed Products ARPA expanded the role of the private sector, allowing private entities to participate in conducting research and development of new insurance products and features. With the expansion of the contracting and partnering authority, Congress authorized RMA to enter into contracts or to create partnerships for research and development of new and innovative insurance products. Private entities could also submit unsolicited proposals for insurance products to the FCIC Board of Directors for approval. In considering such proposals, the board is to evaluate whether the products (1) are in the best interests of producers, (2) follow sound insurance principles, and (3) are actuarially appropriate. Section 508(h) governs new crop insurance policy development, including how it is contracted out and funded, how policy ratings are undertaken, and how a policy may start as a pilot and may (or may not) evolve to a full-fledged insurance policy. FCIC is authorized to reimburse private entities for research, development, and maintenance costs if they develop insurance programs that are approved by the FCIC board. Private sector individuals may submit to the FCIC board (1) crop insurance policies, (2) provisions of policies, or (3) rates of premium. These submissions are commonly referred to as 508(h) submissions. If a private individual prefers, a concept proposal can be submitted to the board prior to fully developing a 508(h) submission. The board may approve an advance payment for the concept proposal for up to 75% of expected research and development expenses to aid in the development of the 508(h) submission. If approved by the board, these insurance products can receive reimbursement for research, development and operating costs, in addition to any approved premium subsidies and reinsurance. Private submitters are eligible to recoup maintenance costs for up to three years after products are offered on the market if they continue to provide support for the products. After three years, the private entity has the choice of turning the product over to RMA, thereby relinquishing all ownership rights in the product, or retaining ownership of the insurance product and continuing to update it in return for a user fee as approved by the board and paid by Approved Insurance Providers who sell the product. Pilot Status of New Products The FCIC board must approve all new products. This process can take up to a year and generally depends on the quality and thoroughness of the submission package presented to the board, as well as the responsiveness of the submitter to issues raised by the board and the reviewers, among other factors. In most cases, an independent external panel of experts reviews a proposed product and assesses its actuarial weakness and suggests product improvements. The revised product is submitted to the FCIC board for approval. Once approved, the product is typically implemented as a pilot program in a limited area to test it for effectiveness while limiting financial exposure. Pilot programs typically operate for four years but may be extended for additional testing if needed. Eventually the FCIC board either converts the pilot to a regular program or terminates it. Under law, RMA is not allowed to conduct pilot programs if insurance against the risk to be covered is generally available in the private sector without governmental support. RMA's 2010 Report to Congress describes selected pilot programs that have been developed through the internal procedure and authority, covering quarantine and policies based on actual revenue history (e.g., rather than yields). It also describes a range of private sector initiatives covering pumpkins, apiculture, plantains and bananas, sugarcane, and fresh market beans. Challenges with Developing Specialty Crop Policies Even though new crop insurance product introductions for specialty crops have been increasing, USDA and the industry continue to face a number of challenges when developing and making available new insurance policies for specialty crops that are not currently covered. Most challenges stem from the basic structure of the specialty crop industry, which is often characterized by relatively small acreages, multiple crop varieties (often targeting niche markets), differences in farming practices (which contribute to greater complexity and cost), quality and price discovery issues, grower interest, non-weather risks, and other coverage limitations. Factors such as these affect the potential marketability, actuarial soundness, and feasibility of an insurance policy. A small market reduces sales incentive for companies selling insurance while contributing to higher per-unit costs for developing the product, training staff, modifying computer programs, and other activities. Small acreage also results in low market volume or the establishment of production contracts between producers and buyers. Crops grown and marketed in smaller quantities and/or targeting niche markets often command a price premium, resulting in often highly variable market prices, further complicating price discovery. Moreover, most specialty crops are intended primarily for sale in the higher-value fresh market versus the typically lower-value crops sold for further processing. Fresh product is highly perishable and non-storable, unlike the field crops that are more widely covered by federal crop insurance policies. In general, lack of reliable pricing data for crops not traded on commodity exchanges has been an ongoing challenge for USDA in the federal crop insurance program. RMA's price discovery for specialty crops largely relies on Agricultural Marketing Service, NASS, and other USDA agency data and academic and industry sources. In the absence of a well-developed cash market, such "thin market" conditions make it difficult to observe and forecast market prices. For example, in 2015 FCIC cancelled the Dry Bean Revenue Endorsement because USDA did not have sufficient market data from processors to establish a harvest price from which to calculate whether indemnities would be triggered under the endorsement. Setting price guarantees correctly is critical for encouraging participation, the actuarial soundness of the program, and maintaining the overall market dynamics for the crop. If the insurance is priced (rated) too high, producers who tend to have few losses might decide against purchasing insurance, leaving only high-risk farmers in the pool (known as "adverse selection"). If the insurance is priced too low, premiums may not cover expected indemnities, potentially inflating the federal cost of the program by providing a greater premium and higher administrative and operating subsidies than was intended. Artificially low premiums might encourage additional crop production, further contributing to weak market prices, thereby adversely affecting financial returns for producers. Another challenge for insuring specialty crops is the diversity and multitude of crop varieties and production practices. Compared with field crops, specialty crops tend to have a wider variety of farming practices that depend on the crop variety, adding complexity to the policy and its development cost. For example, a vegetable crop may need to be grown on raised beds, use plastic, or have specific crop rotations. Various marketing claims made for products (such as that they are organic or other production or sustainability claims) can contribute to product complexity. Understanding how these factors affect potential yields is required for determining what practices can be insured and for developing and establishing underwriting standards. Variation across crops and variety within crop types also complicate the loss adjustment process (i.e., assessing the effect of weather on crop production). Finally, in some cases, USDA has reportedly not pursued policies for particular commodities because some producers have expressed concerns that offering insurance could adversely affect the market (i.e., because an insurance policy reduces producer risk, farmers may plant more acreage, which could drive down prices and total crop revenue). This has been a particular concern for producers of vegetable crops and explains in part lower levels of insured vegetable crop acreage compared with other crops. Producer interest in the availability of a new policy often starts at the local level and is channeled through RMA's regional offices. In general, for a policy to be viable, a crop must have established cultivars, defined farming practices, developed markets, and identified known perils. Significant producer interest (demand for the policy) is also critical. Perhaps more importantly, insurance policies are dependent on the availability of high quality data. High quality data , from an insurance standpoint, refers to data being timely (so that claims can be paid quickly), relevant (so the product offers reliable protection), audited to international reinsurance standards, and available over a sufficiently long time horizon (time series). Data availability and data quality often pose a challenge for crop insurance purposes. Alternatives to Crop Insurance USDA offers several programs to help farmers recover financially from natural disasters, including droughts and floods. These programs help to provide assistance to producers of noninsured crops or crops with no current individual policy coverage, including some specialty crops. Other supplemental disaster programs further provide assistance to some specialty crop producers from tree losses and the loss of bee colonies. USDA also provides low-interest emergency loans and land rehabilitation assistance to help farmers return land to production following natural disasters. Considerations for Congress Among the issues that may arise if Congress continues to consider the role of the federal crop insurance options for specialty crop producers are: Availability of crop-specific policies . Crop-specific policies have not been developed for a number of specialty crops, including artichokes, asparagus, blackberries, boysenberries, broccoli, cantaloupes, carrots (fresh and for processing), cashews, cauliflower, chives, celery, dates, eggplants, garlic, guavas, hazelnuts, honeydews, kiwi fruit, lettuce, spinach, squash, tart cherries, watermelons, most leafy greens, most herbs and spices, some tropical plants, and most root crops. Private submitters proposing to develop new policies must present evidence of marketability to FCIC and RMA. Congress might consider whether there are opportunities for USDA to facilitate market research and publish market data to assist with the development of new policies and spur greater competition among private submitters. Development cost benchmarks . Section 11120 of P.L. 115-334 modifies the definition of reasonable research and development costs related to policies that have been approved by the FCIC board for reimbursement. Costs are to be deemed reasonable if based on (1) for employees or contractors, wage rates equal to not more than two times the Bureau of Labor Statistics hourly wage rates, plus benefits; and (2) other actual documented costs incurred by the applicant. That section also limits the FCIC board's review of user fees. Given that Congress reinstated RMA's authority to develop new products in the 2014 farm bill ( P.L. 113-79 ), Congress might inquire whether costs incurred for RMA-developed policies could provide a benchmark for the reasonableness of private sector requests for reimbursement of development costs. Limited participation in WFRP policies . WFRP is available in every county of every state. Its premium subsidies range from 55% to 80%, and coverage levels range from 50% to 85%. In crop year 2017 the average premium subsidy for WFRP was 70%, whereas the average premium subsidy across the entire crop insurance portfolio was 63%. That year WFRP policies accounted for about 3% of all federal crop insurance liabilities. Some speculate that part of the reason that WFRP participation is not higher is that producers are reluctant to provide tax return data. These policies require producers to provide five consecutive years of Schedule F from their federal tax forms. Given the benefits of risk pooling achieved by insuring a whole farm's revenue and the fraud prevention benefits from requiring tax returns to set historical revenue guarantees, Congress might consider whether there are efficiencies to be gained from incentivizing greater participation in WFRP. Determining a " market price" for commodities not sold on exchanges . Lack of reliable pricing data for crops that are not traded on commodity exchanges has been an ongoing challenge for USDA in the federal crop insurance program. RMA's price discovery for specialty crops largely relies on Agricultural Marketing Service, NASS, and other USDA agency data and academic and industry sources. In the absence of a well-developed cash market, such "thin market" conditions make it difficult to observe and forecast market prices, which affects RMA's ability to set the appropriate level of price guarantees. Setting price guarantees correctly is critical to the actuarial soundness of the program and for maintaining overall market dynamics for the crop. Increased farm-level price data for commodities not sold on exchanges could also assist producers of those commodities in negotiating contracts and in their financial planning. Congress might consider whether there is a role for the federal government in supporting data collection of farm prices of commodities that are not sold on exchanges. Coverage of quality losses . Many crops are vulnerable to lower prices or to becoming unmarketable due to quality losses. Small markets for specialty crops that are not sold on commodity exchanges may be particularly price-sensitive to variations in quality (e.g., herbs and spices, certain fruits and vegetables, honey). Certain federal crop insurance policies cover some quality losses, but the range of such coverage is limited. Congress might consider (1) whether the current coverage for quality losses is available for all crops that are vulnerable to quality losses, (2) whether loss adjustment procedures for quality losses accurately assess the variations in quality and the effects on marketability and prices, and (3) whether the procedures for assessing quality losses properly balance cost efficiency and fraud prevention. Effect of ad h oc payments on demand for crop insurance . One of the stated policy goals of federal crop insurance has been to reduce the agricultural sector's reliance on supplemental or "ad hoc" disaster assistance payments. However, according to the Congressional Budget Office, it is difficult to assess whether this policy goal has been achieved. The 115 th Congress authorized ad hoc disaster assistance, and USDA has separately implemented a "trade aid" package, both of which apply to some specialty crops. Given the lower participation levels for certain specialty crop insurance policies as compared to non-specialty crops, Congress might consider whether repeated ad hoc payments in response to adverse events may have an effect on demand for federal crop insurance for crops generally and for specialty crops in particular.

The federal crop insurance program offers subsidized crop insurance policies to farmers. Farmers can purchase policies that pay indemnities when their yields or revenues fall below guaranteed levels. While the majority of federal crop insurance policies cover yield or revenue losses, the program also offers policies with other types of guarantees, such as index policies that trigger an indemnity payment based on weather conditions. The Federal Crop Insurance Corporation (FCIC), a government corporation within the U.S. Department of Agriculture (USDA), pays part of the premium—about 63%, on average—across the federal crop insurance portfolio during crop year 2017, while policy holders—farmers and ranchers—pay the balance. Private insurance companies, known as Approved Insurance Providers (AIPs), deliver the policies in return for administrative and operating subsidies from FCIC. AIPs also share underwriting risk with FCIC through a mutually negotiated Standard Reinsurance Agreement. The USDA Risk Management Agency (RMA) administers the federal crop insurance program. The federal crop insurance program primarily covers traditional field crops (such as wheat, corn, and soybeans) that are supported by USDA's revenue-support programs. Unlike these traditional crops, specialty crops—defined in statute as "fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture)" (7 U.S.C. §1621 note)—have not been a major part of federal crop insurance support. Specialty crops are also generally not eligible for USDA's revenue-support programs. USDA estimates that the statutory definition of specialty crops covers more than 300 agricultural commodities, including fresh and processed fruits and vegetables, tree nuts, nursery plants (trees, shrubs, and flowering plants), herbs, spices, coffee, tea, honey, and maple syrup. Legislative changes, coupled with ongoing administrative efforts by USDA, have expanded federal crop insurance coverage for specialty crops, and they now account for a small but growing number of federal crop insurance policies bought by farmers. Among the issues Congress may consider if it seeks to further expand coverage for specialty crops are data collection and price discovery for commodities not sold on exchanges (such as most fruits and vegetables), coverage of quality losses, and the effect of ad hoc payments on the demand for crop insurance. Federal crop insurance policies currently cover around 38 specialty crop categories, which include roughly 80 types of fruits, vegetables, tree nuts, and nursery crops. Over the past few decades, total specialty crop insured liabilities rose from nearly $1 billion in 1989 to nearly $18.5 billion in 2017. In 2017, federal crop insurance policies covered about 9 million acres of specialty crops, around 800,000 bee colonies, about 100,000 tons of raisins, and roughly 60,000 fruit and coffee trees. Across all specialty crops, coverage and the premium subsidy paid by the federal government may vary depending on the crop. Moreover, for many specialty crops, crop-specific insurance policies are not available. Currently, about one-half of all U.S. specialty crop acres are covered by federal crop insurance policies. Some specialty crops may be covered under a Whole Farm Revenue Protection (WFRP) insurance policy. WFRP is designed to fill in coverage gaps for producers of uninsured crops that lack individual policy coverage and for producers marketing to local, farm-identity preserved, or direct markets. The average premium subsidy rate for WRFP was about 70% in 2017. Federal crop insurance for specialty crops and WFRP together accounted for about 17% of the entire federal crop insurance portfolio, as measured by liability, during crop year 2017.

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

As congressional policymakers continue to debate telecommunications reform, a major discussion point revolves around what approach should be taken to ensure unfettered access to the internet. The move to place restrictions on the owners of the networks that compose and provide access to the internet, to ensure equal access and nondiscriminatory treatment, is referred to as "net neutrality." There is no single accepted definition of "net neutrality," but most agree that any such definition should include the general principles that owners of the networks that compose and provide access to the internet should not control how consumers lawfully use that network, and they should not be able to discriminate against content provider access to that network. The Federal Communications Commission (FCC) in its February 26, 2015, open meeting voted 3-2, along party lines, to adopt open internet rules and released these rules on March 12, 2015. One of the most controversial aspects of the rules was the decision to reclassify broadband internet access service (BIAS) as telecommunications service under Title II, thereby subjecting internet service providers to a more stringent regulatory framework. With limited exceptions, the rules went into effect June 12, 2015. Various parties challenged the legality of the FCC's 2015 Open Internet Order, but the U.S. Court of Appeals for the D.C. Circuit, in a June 14, 2016, ruling, voted (2-1) to uphold the legality of all aspects of the 2015 FCC Order. A petition for full U.S. Appeals Court review was denied and a subsequent petition for U.S. Supreme Court review was declined. The FCC on December 14, 2017, adopted (3-2) an Order that largely reverses the 2015 regulatory framework. The 2017 Order, among other things, reverses the 2015 classification of BIAS as a telecommunications service under Title II of the Communications Act, shifts much of the oversight from the FCC to the Federal Trade Commission and the Department of Justice, and provides for a less regulatory approach. This action has once again opened up the debate over what the appropriate framework is to ensure an open internet. Reaction to the 2017 Order has been mixed. Some see the 2015 FCC rules as regulatory overreach and welcome a more "light-touch" approach, which they feel will stimulate broadband investment, deployment, and innovation. Others support the 2015 regulations and feel that their reversal will result in a concentration of power to the detriment of content, services, and applications providers, as well as consumers, and refute the claim that these regulations have had a negative impact on broadband investment, expansion, or innovation. The 2017 Order was published in the Federal Register on February 22, 2018, and went into effect on June 11, 2018. Federal Register publication triggered timelines for both court challenges and Congressional Review Act (CRA) consideration. Petitions for review have been consolidated in the U.S. Court of Appeals, D.C. Circuit. CRA resolutions (S.J.Res. 52, H.J.Res. 129) to overturn the 2017 Order were introduced in the 115th Congress. S.J.Res. 52 passed (52-47) the Senate, but H.J.Res. 129 was not considered in the House. Additional bills to provide a regulatory framework to outline FCC authority over broadband internet access services were introduced, but not acted on, in the 115th Congress. Debate over what the appropriate regulatory framework should be for broadband access has continued in the 116th Congress. Two bills (H.R. 1644, S. 682) add a new title to the Communications Act that overturns the 2017 Order and restores the 2015 Order. An amended version of H.R. 1644 passed (232-190) the House on April 10, 2019. Additional bills (H.R. 1006, H.R. 1096, H.R. 1101, and H.R. 1860) that address the net neutrality debate have also been introduced.

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Overview Nigeria is considered a key power in Africa, not only because of its size, but also because of its political and economic role on the continent. Nigeria has overtaken South Africa as Africa's largest economy, and it is one of the world's major sources of high-quality crude oil. The country's commercial center, Lagos, is among the world's largest cities. Nigeria has the fastest-growing population globally, which is forecast to reach 410 million by 2050 and overtake the United States to become the world's third-most populous country. It also has one of Africa's largest militaries, and has played an important role in peace and stability operations on the continent. Few states in Africa have the capacity to make a more decisive impact on the region. Despite its oil wealth, Nigeria remains highly underdeveloped. Poor governance and corruption have limited infrastructure development and social service delivery, slowing economic growth and keeping much of the country mired in poverty. Nigeria has the world's second-largest HIV/AIDS-infected population and Africa's highest tuberculosis burden. The country is home to more than 250 ethnic groups, but the northern Hausa and Fulani, the southwestern Yoruba, and the southeastern Igbo have traditionally been the most politically active and dominant. Roughly half the population, primarily residing in the north, is Muslim. Southern Nigeria is predominantly Christian, and Nigeria's Middle Belt (which spans the country's central zone) is a diverse mix. Ethnic and religious strife have been common in Nigeria. Tens of thousands of Nigerians have been killed in sectarian and intercommunal clashes in the past two decades. Ethnic, regional, and sectarian divisions often stem from issues related to access to land, jobs, and socioeconomic development, and are sometimes fueled by politicians. The violent Islamist group Boko Haram has contributed to a major deterioration of security conditions in the northeast since 2009. It espouses a Salafist interpretation of Islam and seeks to capitalize on local frustrations, discredit the government, and establish an Islamic state in the region. The insurgency has claimed thousands of lives and exacerbated an already-dire humanitarian emergency in the impoverished Lake Chad basin region, comprising Nigeria, Niger, Chad, and Cameroon. Nigeria now has one of the largest displaced populations in the world—an estimated 2 million people—most of whom have fled Boko Haram-related violence. In late 2013, the State Department designated Boko Haram and a splinter group, Ansaru, as Foreign Terrorist Organizations (FTOs). Boko Haram's 2015 pledge of allegiance to the Islamic State raised its profile, though the extent of operational ties between the two groups remains unclear. A Boko Haram leadership dispute led, in 2016, to the emergence of a splinter group, the Islamic State-West Africa (IS-WA). The State Department designated IS-WA as an FTO in early 2018. In the southern Niger Delta region, local grievances related to oil production in the area have fueled conflict and criminality for decades. Intermittent government negotiations with local militants and an ongoing amnesty program have quieted the region, but attacks on oil installations surged briefly in 2016 and remain a threat to stability and oil production. Some militants continue to be involved in various local and transnational criminal activities, including maritime piracy and drug and weapons trafficking. These networks often overlap with oil theft networks, which contribute to maritime piracy off the coast of Nigeria and the wider Gulf of Guinea (see map). Already among the most dangerous bodies of water in the world, the Gulf of Guinea has seen a dramatic increase in piracy and attacks against ships in recent years. Presidential and legislative elections slated for mid-February 2019 and gubernatorial and state-level polls due two weeks later increase pressure on some of Nigeria's sociopolitical fault lines. Protests in the Igbo-dominated southeast over perceived marginalization by the government have led to clashes with security forces; separatist sentiment among some Igbo has arisen against the backdrop of a deadly civil war waged from 1967 to 1970, during which secessionists fought unsuccessfully to establish an independent Republic of Biafra. Economic frustration is reportedly widespread in the region, but by many accounts the majority of Igbo would not support insurrection. Meanwhile, an emerging conflict in border regions of neighboring Cameroon has led over 30,000 Cameroonians to seek refuge in Nigeria. In the Middle Belt, violent competition for resources between nomadic herders, largely Muslim, and settled farming communities, many of them Christian, has been on the rise in recent years and is spreading into Nigeria's southern states. Herder-farmer tensions in Nigeria are not new, but they overlap with ethnic and religious divisions and have been exacerbated by desertification, increasing access to sophisticated weapons, land-grabbing by politicians, and banditry. Politics Nigeria, which gained its independence from the United Kingdom in 1960, is a federal republic with 36 states. Its political structure is similar to that of the United States: it has a bicameral legislature with a 109-member Senate and a 360-member House of Representatives. Nigeria's president, legislators, and governors are directly elected for four-year terms. The country was ruled by the military for much of the four decades after independence before making the transition to civilian rule in 1999. Subsequent elections were widely viewed as flawed, with each poll progressively worse than the last. Elections in 2011 were seen as more credible, although they were followed by violent protests in parts of the north that left more than 800 people dead and illustrated northern mistrust and dissatisfaction with the government. The contest for power between north and south that has broadly defined much of Nigeria's modern political history can be traced, in part, to administrative divisions under Britain's colonial administration. Northern military leaders dominated the political scene from independence until the country's democratic transition in 1999. Since the election of President Olusegun Obasanjo in 1999, there has been a de facto power-sharing arrangement, often referred to as "zoning," between the country's geopolitical zones, through which the presidency is expected to rotate among regions. The death of President Obasanjo's successor, northern-born President Umaru Yar'Adua, during his first term in office in 2010, and the subsequent ascension of his southern-born vice president, Goodluck Jonathan, brought the zoning arrangement into question. Jonathan's decision to run in the 2011 elections was seen by many northerners as a violation of the arrangement, which contributed to the violence that followed the polls. The 2015 Elections Nigeria's 2015 elections were its most competitive contest to date and were viewed as a critical test for its leaders, security forces, and people. They were widely hailed as historic, with President Jonathan and the ruling People's Democratic Party (PDP) losing to a new opposition coalition led by former military ruler Muhammadu Buhari. Jonathan was Nigeria's first incumbent president to lose an election. Buhari's All Progressives Congress (APC) capitalized on popular frustration with rising insecurity, mounting economic pressures, and allegations of large-scale state corruption to win a majority in the legislature and a majority of state elections. Decreased turnout for the PDP appeared to be partly linked to broad discontent with the government's response to the Boko Haram threat, in particular the April 2014 kidnapping of 276 schoolgirls from the northeast town of Chibok and the group's subsequent territorial advances. U.S. government views on the 2015 elections were broadly positive. A White House statement described the event as demonstrating "the strength of Nigeria's commitment to democratic principles." There had been significant concern about the potential for large-scale political violence around the polls, and then-Secretary of State John Kerry traveled to Nigeria months prior to the elections to stress U.S. views about the importance of the event. President Buhari's popularity in the 2015 elections was notable, given his history. A Muslim from Katsina state in northern Nigeria, Buhari had formerly drawn support from across the predominately Muslim north, but had struggled to gain votes in the south. In 2014, his party joined with the other main opposition parties to form the diverse APC coalition. His vice president, Yemi Osinbajo, is an ethnic Yoruba (Nigeria's second-largest ethnic group) Pentecostal pastor and former state attorney general from the populous southwest. Osinbajo is reported to be widely respected, and he served as Acting President during Buhari's months-long stay in London in 2017, when the latter was receiving medical treatment for an undisclosed condition. Buhari's silence on the nature of his illness fueled speculation about his fitness for office. The 2019 Elections With presidential and legislative elections scheduled for February 16, 2019, and gubernatorial and state assembly polls on March 2, prospects for the ruling APC are uncertain. In October 2018, the party affirmed Buhari as its presidential candidate, but his political standing has arguably weakened since 2015. In advance of the APC primary, several prominent former military and government officials, including former President Obasanjo, publicly urged him to not run again. Buhari is set to run against Atiku Abubakar, a former vice president under Obasanjo and erstwhile Buhari ally who defected from the APC to rejoin the PDP in late 2017. Viewed as a successful businessman prior to his foray into politics, Abubakar has pledged to revive Nigeria's struggling economy. This will be his fourth attempt at the presidency; analysts expect the 2019 election to be closely fought. Abubakar, who like Buhari hails from the North and is Muslim, may be able to split the northern vote and thereby weaken what was previously an APC stronghold. Abubakar is one of several recent high-profile defectors from the APC. In mid-2018, an anti-Buhari faction known as the Reformed APC (R-APC) emerged within the ruling party. Shortly thereafter, Senate President Bukola Saraki, several governors, and dozens of representatives defected to the PDP. In turn, a number of high-ranking PDP officials have joined the ruling party. While not unusual in advance of Nigerian elections, such rearrangements threaten to further paralyze an unproductive legislature and widen rifts between the presidency and parliament, hindering the government's ability to respond to pressing humanitarian and security challenges. In July 2018, a joint preelection assessment by the National Democratic Institute (NDI) and International Republican Institute (IRI) met with senior officials of the Independent National Electoral Commission (INEC) as well as representatives from the government, political parties, civil society organizations, and media. In follow-up statements, the delegation praised INEC's efforts to reinforce the integrity of the electoral process, but noted a lack of public confidence in the neutrality of Nigeria's security services as well as popular concerns about "vote buying, illegal voting, and efforts to compromise the secrecy of the vote on election day." INEC has taken steps to enable voting by marginalized voters, notably those displaced by Nigeria's multiple conflicts. Whether displaced voters are ultimately able to cast their ballots remains to be seen. In December 2018 testimony before Congress, Assistant Secretary of State for African Affairs Tibor Nagy noted other factors that could threaten the credibility of the 2019 polls, including politically motivated attacks on the legitimacy of INEC, intimidation by state security forces, electoral violence, and the possible exclusion of displaced persons and individuals with disabilities from voting. President Buhari's suspension, just weeks before the election, of the country's chief justice, who is head of the judiciary and was accused of failing to declare assets, prompted widespread criticism. The United States and other donors questioned the constitutionality of the decision, which Buhari made without the support of the legislature, and noted concerns that it could affect the perceived credibility of the elections, given the judiciary's role in resolving election disputes. Observers have expressed concern over the potential for the elections to spark violence in parts of the country. In some areas, subnational contests for gubernatorial and state legislative seats may present greater risks for violence than the presidential election, though the latter has received more attention from donors and Nigerian officials. The International Crisis Group (ICG) has identified six states as especially vulnerable to violence owing to their political importance and/or the presence of prevailing social fissures or conflicts: Rivers and Akwa Ibom (in the Niger Delta), Plateau and Adamawa (in the Middle Belt), and Kaduna and Kano (in the northwest). With Nigeria's security forces reportedly overstretched in responding to a range of security threats across the country (discussed below), allegations of politicians stoking divisions for political ends, and concerns about partisanship among some security officials, ICG has described the conditions around the 2019 elections as "particularly combustible." Social Issues and Security Concerns Islamic Sharia Law Nigeria is home to one of the world's largest Muslim populations. The north is predominately Sunni Muslim, and 12 northern states use sharia (Islamic law) to adjudicate criminal and civil matters for Muslims. Under the Nigerian constitution, sharia does not apply to non-Muslims in civil and criminal proceedings, but Islamic mores are reportedly often enforced in public without regard to citizens' religion. In some areas, citizen groups known as hisbah provide social services and enforce sharia-based rulings—some with financial and legal backing from state governments. Communal Violence Divisions among ethnic groups, between regions, and between Christians and Muslims often stem from issues related to access to land and jobs and are sometimes fueled by politicians. In Nigeria's Middle Belt, violence between nomadic herdsmen, many of them belonging to the largely Muslim Fulani ethnic group, and settled farming communities, many—but not all—of them Christian, has increased in recent years. An estimate by the International Crisis Group suggests that over 2011-2016, roughly 2,000 Nigerians died annually in herder-farmer clashes, which surged in 2016 to claim some 2,500 lives—more than the total killed in Boko Haram-related violence that year. Amnesty International asserts that herder-farmer violence killed more than 2,000 Nigerians from January through October 2018 and contends that a failure by the Nigerian government to respond to the violence and hold perpetrators to account had fostered a climate of impunity and a cycle of violence characterized by retaliatory attacks. Reports suggest that weapons used by all sides have grown more sophisticated, and that the recent surge in violence has involved the rise of ethnic militias and community vigilante groups backed by local leaders. The nongovernmental organization (NGO) Search for Common Ground describes the violence as "neither an ethnic nor religious conflict, but rather a competition for resources playing out on ethno-religious lines in a fragile country characterized by impunity and corruption." Analysis by Reuters indicates that a decades-long expansion of farming activity into traditional grazing zones had resulted in a 38% decrease in land available for open grazing in the Middle Belt between 1975 and 2013. The U.S. Commission on International Religious Freedom (USCIRF) suggests, however, that the violence often takes on religious undertones and is perceived by some involved to be a religion-based conflict. Attackers have burned villages and destroyed a number of churches and mosques, even as the conflict has spread beyond the Middle Belt into southern states. The violence also affects northern states like Zamfara, where cattle rustling and banditry have fueled vigilantism; notably, in Zamfara the clashes are often occurring between settled Hausa communities and pastoralist Fulani, both Muslim. Illustrative of Nigeria's charged political climate, Buhari, himself an ethnic Fulani, has been accused of complicity in herder attacks due to what some call an insufficient state reaction to the violence. Anti-Shia Muslim sentiment in northern Nigeria has gained increased attention amid reports that the Nigerian army killed hundreds of members of the Islamic Movement of Nigeria (IMN), a Shia group led by Iranian-trained cleric Ibrahim Zakzaky, in December 2015. According to USCIRF reports, the army killed and buried 347 IMN members, injured hundreds more, and arrested almost 200 others over a two-day span in Zaria, Kaduna State. A Kaduna state commission of inquiry found the army responsible for the mass killing, but no soldiers have faced prosecution; instead, state prosecutors brought murder charges against 177 IMN members—dozens of whom, including Zakzaky, remained on trial as of December 2018. Zakzaky's supporters have called for his release and staged repeated demonstrations that have led to clashes with security forces and mass arrests. In October 2018, soldiers reportedly used live fire to disperse an IMN religious gathering and a separate peaceful protest, both in Abuja, killing dozens of IMN members over three days. Nigeria's Shia population has been estimated at between 4 million and 10 million people. Separately, protests in the ethnic Igbo-dominated southeast have raised concern about resurgent separatism in a region that fought a secessionist war (the Biafra War) from 1967 to 1970 in which up to 2 million people died. Igbo political grievances appear to have risen under Buhari. In October 2015, protests led to clashes with security forces, and in 2016, soldiers killed at least 150 pro-Biafra demonstrators, according to Amnesty International. Economic frustration is reportedly widespread in the region, and some experts suggest that the government's forceful response to separatist sentiments could fuel support for taking up arms. Boko Haram and Militant Islam in Nigeria Boko Haram has evolved since 2009 to become one of the world's deadliest terrorist groups, drawing in part on a narrative of vengeance for state abuses to elicit recruits and sympathizers. Key factors contributing to its rise in Nigeria include a legacy of overlapping intercommunal and Muslim-Christian tensions in the country; perceived disparities in access to development, jobs, state services, and investment in the north; and popular frustration with elite corruption and other state abuses. Some research suggests that the reportedly heavy-handed response of Nigerian security forces since 2009 has fueled extremist recruitment in some areas. The reported erosion of traditional leaders' perceived legitimacy among local populations in northeast Nigeria and northern Cameroon may also have contributed to the group's ascendance. Resource struggles related to the shrinking of Lake Chad, once one of Africa's largest lakes, have further exacerbated tensions among communities that Boko Haram has reportedly sought to exploit. The nickname Boko Haram was given by Hausa-speaking communities to describe the group's narrative that Western education and culture are corrupting influences and haram ("forbidden"). Boko Haram's ideology combines an exclusivist interpretation of Sunni Islam—one that rejects not only Western influence but also democracy, pluralism, and more moderate forms of Islam—with a "politics of victimhood" that resonates in parts of Nigeria's underdeveloped north. Some of its fighters have reportedly been recruited by financial incentives or under threat. Some 16,000 people are estimated to have been killed in Boko Haram violence since 2011, and more than 2 million Nigerians are internally displaced. The group has also abducted a large number of civilians, including schoolgirls from Chibok (in 2014) and Dapchi (in 2018); some have escaped or been rescued or released, but dozens from Chibok remain missing as of late 2018, in addition to hundreds of other abductees. Boko Haram has routinely used women and children as suicide bombers since 2014. The Nigerian Response Boko Haram commenced a territorial offensive in mid-2014 that Nigerian forces struggled to reverse until early 2015, when regional forces, primarily from Chad, launched a counteroffensive. Regional efforts to counter Boko Haram and its Islamic State-affiliated splinter group (see below) are coordinated within the African Union-authorized Multi-National Joint Task Force (MNJTF). The MNJTF has received U.S. and other donor support. The regional force has found success reclaiming some Boko Haram-held territory, but many areas remain insecure and militants continue to stage attacks in northeastern Nigeria and border areas of Cameroon and Niger. Multiple factors have undermined the Nigerian response to Boko Haram, notably security sector corruption and mismanagement. A July 2018 report by the Carnegie Endowment for International Peace concluded that "decades of unchecked corruption have hollowed out the Nigerian military and security services and rendered them unable to effectively combat Boko Haram or address ethno-religious and communal conflict." The State Department has also identified other dynamics limiting the response, including a lack of coordination and cooperation between Nigerian security agencies, limited database use, the slow pace of the judicial system with regard to charging and trying suspected militants, and a lack of sufficient training for prosecutors and judges to implement antiterrorism laws. The International Crisis Group, among others, has called for comprehensive defense sector reform, including "a drastic improvement in leadership, oversight, administration and accountability across the sector." Boko Haram's Fracture and the Emergence of Islamic State-West Africa Boko Haram currently appears to pose a threat primarily in northern Nigeria and surrounding areas in neighboring countries. The group also poses a threat to international targets, including Western citizens, in the region. Boko Haram's self-described leader, Abubakar Shekau, has issued threats against the United States, but to date no U.S. citizens are known to have been kidnapped or killed by the group. Boko Haram's 2015 pledge of allegiance to the Islamic State raised its profile and may have provided recruitment and fundraising opportunities, though the extent to which affiliation has facilitated operational ties remains unclear (see text box). In August 2016, the Islamic State recognized the leader of a breakaway faction, Abu Musab al-Barnawi, as the new leader of the Islamic State-West Africa (IS-WA). Barnawi is reported to be the son of Boko Haram founder Mohammed Yusuf and had previously served as Boko Haram's spokesman. His group has reportedly focused its attacks primarily on security force and government targets on both sides of the Nigeria-Niger border, mainly operating in Nigeria's Borno state, where both groups appear most active. The name "Boko Haram" is still often used to refer to both groups, reflecting their common history and underscoring debate over the extent to which they are perceived as distinct. Shekau apparently continues to head the other faction. The U.S. Department of Defense has estimated IS-WA to have approximately 3,500 fighters and Boko Haram to have roughly 1,500. The Barnawi-led faction, IS-WA, was reportedly responsible for the February 2018 kidnapping of over 100 schoolgirls from the northeast town of Dapchi. It has also been credited with a series of devastating attacks against Nigerian military bases in 2018, including a spate of raids in late 2018 that reportedly killed more than 100 soldiers. The military has struggled to defend these bases, and the attacks and resulting death toll have reportedly damaged morale. The State Department designated both Boko Haram and IS-WA as FTOs under Section 219 of the Immigration and Nationality Act, as amended, and as Specially Designated Global Terrorists (SDGTs) under Executive Order 13224. The FTO designations aim to assist U.S. and other law enforcement agencies in efforts to investigate and prosecute suspects associated with the group. The State Department had already designated three individuals linked to Boko Haram as SGDTs in June 2012, including Shekau, and in 2013 issued a $7 million reward for information on the location of Shekau through its Rewards for Justice program. The Nigerian government also formally designated Boko Haram and Ansaru as terrorist groups in 2013. The British government had named Ansaru as a "Proscribed Terrorist Organization" broadly aligned with Al Qaeda in 2012, and designated Boko Haram as such in July 2013. Boko Haram was added to the U.N. Al Qaeda sanctions list in May 2014. The State Department designated two more senior Boko Haram leaders as SDGTs in December 2015 and added IS-WA leader Barnawi in February 2018. The Niger Delta and its Militants Nigeria's oil wealth has long been a source of political tension, protest, and criminality in the Niger Delta region, where most of the country's oil is produced. Compared to national averages, the region's social indicators are low and unemployment is high. Millions of barrels of oil are believed to have been spilled in the region since production began, causing major damage to the fragile riverine ecosystem and to the livelihoods of many of the Delta's 30 million inhabitants. In 2011, the United Nations Environment Program (UNEP) estimated that it could take 25 to 30 years to clean up Ogoniland, a coastal region in Rivers State hard-hit by pollution. After several delays, the Nigerian government launched a $1 billion Ogoniland restoration program in 2017. Local grievances related to oil production have fueled conflict and criminality for years. An amnesty program launched in 2009 that includes monthly stipends for former militants largely quieted the area, but attacks on oil installations by a militant group that emerged in 2016 pushed production to a 30-year low and sent Nigeria's economy into recession. The resurgence of militant activity may have been linked to President Buhari's intention to end the amnesty, which had originally been scheduled to expire in late 2015, or his decision to cancel pipeline security contracts awarded to prominent former militant leaders by the Jonathan government. In response to renewed violence, Buhari agreed to extend the amnesty and later nearly tripled its budget; a fractious peace returned to the region in mid-2017 and oil production has since rebounded. Nevertheless, ex-militants routinely threaten to resume attacks, and little has been done to develop long-term solutions to the violence. Research suggests some former Delta militants have leveraged the resources and patronage opportunities presented by the amnesty to enter politics. Meanwhile, some reportedly remain involved in local and transnational criminal activities, including piracy and drug and arms trafficking. These networks overlap with oil theft and contribute to piracy off the Nigerian coast in the Gulf of Guinea, one of the world's most dangerous bodies of water (see below). Security Sector Abuses Nigerian military and police have been accused of serious human rights abuses, and activists contend that successive Nigerian administrations have done little to hold abusers accountable. The State Department's 2017 human rights report documents allegations by multiple sources of "extrajudicial and arbitrary killings" as well as "torture, periodically in detention facilities, including sexual exploitation and abuse; use of children by some security elements, looting, and destruction of property." While Nigerian officials have acknowledged some abuses by security forces, few security personnel have been prosecuted. The State Department's report suggests that authorities do not investigate the majority of cases of police abuse or punish perpetrators. Abuses by the Nigerian army have taken a toll on civilians and reportedly driven some support for Boko Haram; they have also complicated U.S. efforts to pursue greater counterterrorism cooperation (see below). Major incidents include the army's alleged massacre of more than 640 people at a military detention facility in northeast Borno state in 2014 and a January 2017 air force bombing raid on an internally displaced persons (IDP) camp in Borno that killed as many as 200 people, many of them children. The military also has been accused of committing human rights violations outside of the terror-affected northeast; in late 2017, for instance, an air raid in response to herder-farmer violence in Adamawa state reportedly killed dozens of villagers. The military also has cracked down on domestic and international civil society. In December 2018, citing national security concerns, Nigeria's military suspended activities by the U.N. Children's Fund (UNICEF)—a ban it promptly revoked under widespread pressure—and separately threatened to prohibit operations by Amnesty International. In January 2019, military personnel raided the offices of the Daily Trust , a respected Abuja-based newspaper, for "undermining national security" by reporting on a planned military operation in the northeast; soldiers reportedly confiscated computers and arrested several staff members. Human rights monitors have also documented serious abuses by the paramilitary Civilian Joint Task Force (CJTF), a militia that emerged to combat the Boko Haram insurgency. Some observers warn that the government may struggle to demobilize the CJTF, which reportedly numbers over 23,000; some of its members may be integrated into the military or police. Reform Initiatives Efforts to Combat Corruption Corruption in Nigeria has been characterized as "massive, widespread, and pervasive," by the State Department, and by many accounts, Nigeria's development will be hampered until it can address the perception of impunity for corruption and fraud. Several analyses have been done seeking to quantify the costs of corruption in Nigeria, which pervades a range of sectors and all levels of government. A 2017 study estimated that Nigeria had lost some $65 billion to power sector corruption from 1999 to 2015, for instance, while a nationwide survey estimated that Nigerian officials took some $4.6 billion in bribes in the year to May 2016. Several international firms have been implicated in Nigerian bribery scandals. Nigeria is also known globally for cybercrimes, including "419 scams," advance-fee fraud so-named for the article in the country's penal code that outlaws fraudulent e-mails. More recently, analysts have drawn particular attention to "security votes"—opaque discretionary funds widely used throughout the Nigerian government that are particularly vulnerable to embezzlement. Security votes are estimated to total over $670 million annually. According to Transparency International, the Buhari Administration has expanded the number and scale of such discretionary accounts in advance of the 2019 polls. In 2017, Nigeria ranked 148 th out of 180 countries on Transparency International's Corruption Perception Index , a measure of domestic perceptions of corruption. Most observers agree that the oil and gas industries form the core of illicit self-enrichment networks in Nigeria, where petroleum provides the majority of government revenues and export earnings. One expert considers petroleum revenues to be "the lifeblood of official corruption in Nigeria," whose "epicenter" is the state oil company, the Nigerian National Petroleum Corporation (NNPC). According to Nigeria's Economic and Financial Crimes Commission (EFCC), a law enforcement agency created in 2003 to combat corruption and fraud, billions of dollars have been expropriated by political and military leaders since oil sales began. Former dictator Sani Abacha reportedly stole more than $3.5 billion, much of it originating in the country's oil sector, during his five years as head of state (1993-1998). Some stolen funds have been repatriated, but other Abacha assets remain frozen abroad. In 2014, the U.S. Department of Justice (DOJ) announced that a federal court in the District of Columbia had ordered forfeited to the United States more than $480 million in Abacha corruption proceeds laundered through U.S. banks and held in foreign bank accounts. DOJ has authority to pay restitution to the victims of the corruption out of the forfeited funds. In 2017, the Swiss government agreed to restitute $321 million through a project overseen by the World Bank, resulting in a total return of $1.2 billion by Switzerland in Abacha assets. In 2017, a Nigerian NGO requested that the Trump Administration return $500 million in Abacha assets "separate from the $480 million" forfeited by the DOJ in 2014. In a mid-2018 visit to the White House, President Buhari announced that Nigeria and the United States were collaborating to secure "the return to Nigeria of over 500 million United States dollars of looted funds siphoned away in banks around the world." Other governments are reportedly assisting in that repatriation effort. Illicit expropriation of Nigeria's resources did not stop with Abacha. In a 2013 letter to President Jonathan later made public, central bank governor Lamido Sanusi asserted that up to $20 billion in NNPC revenue could not be accounted for and had likely been diverted in the course of opaque no-bid oil contracts and "swap deals" in which crude oil is exported in exchange for refined fuel, among other "leakages." The NNPC denied the allegations, yet then-Minister of Petroleum Resources Diezani Alison-Madueke has since come under investigation for corrupt practices during her tenure as NNPC chairwoman. In December 2018, the EFCC issued an arrest warrant for Alison-Madueke, who also faces charges in an ongoing UK global corruption inquiry. Separately, in 2017, the U.S. DOJ filed a civil complaint seeking the forfeiture of $144 million in ill-gotten assets resulting from corrupt oil dealings between Alison-Madueke and her associates. Observers have identified major structural challenges that render Nigeria's petroleum industry particularly vulnerable to corruption. One key shortcoming is the NNPC's reliance on direct sale-direct purchase (DSDP) contracts, whereby crude oil is exported in exchange for refined petroleum products—transactions associated with high corruption risks, in part due to the abundance of intermediaries involved. Other factors include a general lack of oversight of the NNPC's operations and financial management, amid repeated concerns that the NNPC has failed to remit sufficient revenues to the federal government. Underscoring the extent of corruption in Nigeria's oil industry, investigations continue into bribes attending the 2011 purchase, by Eni and Royal Dutch Shell, of a license for OPL 245, a massive offshore block. The scandal has spurred a series of lawsuits, including an ongoing trial in which top Shell and Eni executives, including Eni's CEO, are defendants; in late 2018, an Italian court sentenced two accused intermediaries in the deal to four-year prison sentences. Global Witness, an international resource governance NGO, asserts that OPL 245's sale at an artificially deflated price may have cost the Nigerian government an estimated $6 billion in expected revenue. The Buhari Administration has introduced legislation to increase transparency in the oil industry (see below), and the EFCC is pursuing investigations into alleged large-scale graft during the Jonathan government. Notable targets of such inquiries include Alison-Madueke as well as former National Security Advisor Colonel Sambo Dasuki, accused of embezzling more than $2 billion through fraudulent security sector procurements. Acting EFCC Chairman Ibrahim Magu has also probed allegations against members of the ruling party, including former APC governors. Yet observers warn that the political influence of beneficiaries of grand corruption in Nigeria may thwart attempts at comprehensive reform. Magu's efforts have reportedly stirred discontent across the country's political class, and key targets of his campaign have thus far escaped prosecution. Petroleum and Power Sector Reforms Despite its status as one of the world's largest crude oil exporters, Nigeria reportedly imported as much as 90% of the country's gasoline for domestic consumption in 2017 and suffers periodically from severe fuel and electricity shortages. In an effort to increase its refining capacity and halt oil imports by 2020, the government has granted permits in recent years for the construction of new independently owned refineries. Nigeria's domestic subsidy on gasoline may have limited the attractiveness of refining capacity expansion plans to foreign investors. For years, the government has subsidized the price its citizens pay for fuel, and economists have long deemed the subsidy benefit unsustainable. At the recommendation of the International Monetary Fund (IMF) and others, President Jonathan cut the subsidy in 2011, sparking strong domestic opposition, including riots. In the face of mass protests and a nationwide strike, the government backtracked and reinstated a partial subsidy, then estimated at 2% of GDP. Public scrutiny of the program has increased amid revelations that billions of dollars allocated for the subsidy may have been misappropriated under Jonathan. The subsidy remains in place despite calls for its elimination from international financial institutions; in March 2018, the NNPC estimated that the subsidy costs more than $2 million per day, while warning that much of the oil sold in Nigeria is smuggled for sale at higher prices in neighboring countries. Analysts contend that the subsidy hampers growth, as gains in revenue associated with global oil price increases are at least partly offset by rising subsidy costs. President Buhari has pledged to reform the oil and gas industry and to recover the "mind-boggling" amounts of money stolen from the sector over the years. His government overhauled and reintroduced the Petroleum Industry Bill (PIB), an ambitious piece of legislation aimed at increasing transparency in the industry, attracting investors, and creating jobs. First introduced during the Jonathan Administration, the PIB had stalled in parliament for years, and the regulatory uncertainty surrounding its passage has deterred investment. Lawmakers subsequently split the PIB into four different bills to enable more rapid passage; the first bill, the Petroleum Industry Governance Bill (PIGB), would restructure the NNPC to create four new entities to oversee and regulate bidding and exploration. The NNPC has long been criticized for its lack of transparency and observers have welcomed efforts to improve it, though substantive reform will likely face significant pushback from elites benefitting from the current system. Financial Sector Reforms Successive Nigerian administrations have made commitments to economic reform, but their track record has been mixed. According to the IMF, reforms initiated under Obasanjo—most importantly the policies of maintaining low external debt and budgeting based on a conservative oil price benchmark to create a buffer of foreign reserves—lessened the impact of the 2008-2009 global economic crisis on Nigeria's economy. Beginning in 2004, oil revenues above the benchmark price were saved in an Excess Crude Account (ECA), although the government drew substantially from the account in 2009-2010 in an effort to stimulate economic recovery. President Jonathan replaced the ECA with a sovereign wealth fund in 2011. In response to revenue shortfalls due to the slump in oil prices, Nigeria has increasingly sought loans from the international community. In 2015, then-Finance Minister Ngozi Okonjo-Iweala announced that Nigeria had borrowed nearly $2.38 billion to pay government salaries and fund the 2015 budget. Engagement with international financial institutions has expanded under Buhari: in June 2018, the World Bank announced that it had approved a total of $2.1 billion in concessionary loans to Nigeria through its International Development Association (IDA) entity to support access to electricity, promote nutrition, and enhance governance. The government's Eurobond sales garnered $4.8 billion in 2017, with an additional $2.5 million sold in February 2018. The IMF notes that reforms under the Buhari Administration have resulted in "significant strides in strengthening the business environment and steps to improve governance," but stresses the need for non-oil sector activity and revenue mobilization and further structural reforms. The Buhari Administration has sought to shift spending toward capital investment and expanding the social safety net, seeking to stimulate the ailing economy through increased public expenditure. The IMF has lauded Buhari's Economic Growth and Recovery Plan (ERGP), which is intended to drive diversification, create jobs, and secure macroeconomic stability. The Fund has also welcomed the decline of Nigeria's external debt to GDP ratio, though public debt remains highly sensitive to fluctuations in oil sales and the currency exchange rate. Economy Despite its oil wealth and large economy, Nigeria's population is among the world's poorest, and the distribution of wealth is highly unequal. The average life expectancy for Nigerians (estimated at 59 years in 2018) is rising, but the percentage of the population living on less than $1.90 per day has grown in the past decade to a projected 87 million, making Nigeria the country with the largest population living in extreme poverty. Over 30% of the population has no access to improved sources of water, less than one-fifth of households have piped water, and some 70% lack access to adequate sanitation, according to the World Bank. Nigeria ranked 157 out of 189 in the United Nations' 2018 Human Development Index (HDI). Decades of economic mismanagement, instability, and corruption have hindered investment in education and social services and stymied industrial growth. These challenges notwithstanding, Nigeria has attained notable success in public health provision. A small Ebola outbreak in mid-2014 was swiftly contained, enabling World Health Organization (WHO) authorities to declare the country Ebola-free in October 2014. The country has taken great strides to eradicate polio, though sporadic cases have precluded its designation as polio-free. Other successes include decreasing malaria and tuberculosis prevalence and reducing HIV prevalence among pregnant women. Nigeria's HIV/AIDS adult prevalence rate of 2.9% is relatively low in comparison to Southern African nations, but Nigeria comprises the largest HIV-positive population in the world after South Africa, with more than 3 million infected persons. Malaria remains the leading cause of death in Nigeria. In 2014, the Nigerian government announced the rebasing of its economy, which is now recognized as the largest in Africa. The rebased GDP, substantially larger than South Africa's, was almost double what it was previously thought to have been and less reliant on the petroleum sector than expected. Nigeria's GDP now ranks 30 th in the world, according to the World Bank, with notable nonoil contributions from the country's mining, services, manufacturing, and agriculture sectors. Economists suggest that the economy nevertheless continues to underperform, held back by poor infrastructure and electricity shortages. Low global oil prices, compounded by Niger Delta militant attacks on oil installations, led to a recession and sharp decline in real GDP growth in 2016. A subsequent rebound saw growth reach 1.9% in 2018; the IMF forecasts real GDP growth of 2.0% in 2019. The Organization of the Petroleum Exporting Countries estimated Nigeria's crude oil production to be 1.72 million barrels per day (BPD) in 2018, up from 1.66 BPD in 2017 yet below levels recorded in 2010-2015. Insecurity poses a perennial threat to this output: in June 2018, vandalism by oil thieves prompted Shell's Nigerian subsidiary to briefly declare force majeure on exports from one of its streams. China has played a growing role in Nigeria's economy, notably through investment in transport infrastructure, manufacturing, and agriculture and energy projects. According to the American Enterprise Institute, Chinese investments and contracts in Nigeria totaled $8 billion in 2018, when Nigeria ranked as the largest recipient of Chinese investment in sub-Saharan Africa. Notable projects include the 700MW Zungeru hydropower plant, projected to be completed in 2020; CNEEC-Sinohydro Consortium, a Chinese firm, is developing the $1.3 billion project, which is jointly funded by the Nigerian and Chinese governments. China is also involved in the development of the massive Mambilla hydropower project, which is slated to produce more than 3,000MW of energy once operational. The four-dam, $5.8 billion Mambilla project is being constructed by Chinese firms and is largely funded by China's Exim Bank and other Chinese lenders; it is reportedly expected to be completed in 2023. U.S.-Nigeria Trade Nigeria is the United States' second-largest trading partner in Africa and the third-largest beneficiary of U.S. foreign direct investment on the continent. Two-way trade was over $9 billion in 2017, when U.S. investment stood at $5.8 billion. Given Nigeria's ranking as one of Africa's largest consumer markets and its affinity for U.S. products and American culture, opportunities for increasing U.S. exports to the country, and the broader West Africa region, are considerable. Nigeria is eligible for trade benefits under the African Growth and Opportunity Act (AGOA). AGOA-eligible exports, nearly all of which are petroleum products, have accounted for over 90% of exports to the United States. Gulf of Guinea crude is prized on the world market for its low sulphur content, and Nigeria's proximity to the United States relative to that of Middle East countries had long made its oil particularly attractive to U.S. interests. The country regularly ranked among the United States' largest sources of imported oil, although U.S. purchases of Nigerian sweet crude have fallen substantially since 2012 as domestic U.S. crude supply increased. U.S. imports, which accounted for over 40% of Nigeria's total crude oil exports until 2012, made the United States Nigeria's largest trading partner. India has recently been the largest importer of Nigerian crude. U.S. energy companies may face increasing competition for rights to the country's energy resources; China, for example, has offered Nigeria favorable loans for infrastructure projects in exchange for oil exploration rights. The U.S. Export-Import (Ex-Im) Bank signed an agreement in 2011 with the Nigerian government that aimed to secure up to $1.5 billion in U.S. exports of goods and services to support power generation reforms. Nigeria is a partner country under USAID's Power Africa initiative, which aims to facilitate 60 million new connections to electricity and 30,000 megawatts of new power generation in Africa by 2030. Issues for Congress U.S. Policy Toward Nigeria After a period of strained relations in the 1990s, when a military dictatorship ruled Nigeria, U.S.-Nigeria relations steadily improved under President Obasanjo (1999-2007) and remain robust. Diplomatic engagement is sometimes tempered by U.S. concerns with human rights, governance, and corruption issues, which Nigerian officials sometimes reject as U.S. interference in their domestic affairs. In 2010, the Obama and Jonathan Administrations established the U.S.-Nigeria Binational Commission (BNC) as a strategic dialogue to address issues of mutual concern. Buhari's election in 2015 ushered in an improvement in bilateral relations, which became strained due to U.S. criticisms of the Jonathan Administration's corruption and poor handling of the Boko Haram crisis. President Obama hosted President Buhari at the White House in 2015. Bilateral relations under the Trump Administration appear broadly consistent with those pursued under the Obama Administration. President Trump's call to President Buhari in February 2017, his first to any sub-Saharan African leader, suggested continued emphasis on the importance of the bilateral relationship, and Nigeria was among the counties visited by then-Secretary of State Rex Tillerson in March 2018. President Buhari was the first sub-Saharan leader to visit the Trump White House, in April 2018. During the visit, President Trump lauded Nigeria's security efforts and U.S. cooperation while voicing the need to improve commercial and business ties. In November 2017, the Commerce Department launched the U.S.-Nigeria Commercial and Investment Dialogue (CID) with an initial focus on "infrastructure, agriculture, digital economy, investment, and regulatory reform." Deputy Secretary of State John Sullivan outlined security cooperation, economic growth and development, and democracy and governance as defining goals of U.S.-Nigerian relations during the 2017 meeting of the BNC. Assistant Secretary of State for African Affairs Tibor Nagy visited Nigeria during his first official trip to the continent, in November 2018. He indicated a U.S. interest in seeing Nigeria play a larger role in the region, both in terms of peacekeeping and advancing democracy. The Assistant Secretary described Nigeria as at the center of his efforts to increase U.S. trade and investment in Africa. He and other U.S. officials have stressed the importance of free, fair, transparent, and peaceful elections in 2019. The United States and like-minded donors expressed concern with reported intimidation, interference, and vote-buying during gubernatorial elections in 2018. The United States maintains an embassy in Abuja and a consulate in Lagos. The State Department also maintains "American Corners" in libraries throughout the country to share information on the culture and values of the United States. The State Department's travel advisory for U.S. citizens regarding travel to Nigeria notes the risks of armed attacks in the Niger Delta and the northeast as well as the threat of piracy in the Gulf of Guinea, and it warns against travel to Borno, Yobe, and northern Adamawa states. Nigeria's Role in Regional Stability and Counterterrorism Efforts Nigeria has played a significant role in peace and stability operations across Africa, and the United States has provided the country with security assistance focused on enhancing its peacekeeping capabilities. Given Nigeria's strategic position along the coast of the Gulf of Guinea, the United States has also coordinated with Nigeria through various regional forums and maritime security initiatives. Nigeria's waters have been named the most dangerous in the world for maritime piracy and armed robbery at sea. Nigeria is also considered a transshipment hub for narcotics trafficking, and several Nigerian criminal organizations have been implicated in the trade. The U.S. Navy has increased its operations in the Gulf of Guinea and in 2007 launched the African Partnership Station (APS) there. APS deployments have included port visits to Nigeria and joint exercises between U.S., Nigerian, European, and other regional navies. Bilateral counterterrorism cooperation increased in the aftermath of the 2009 bombing attempt of a U.S. airliner by a Nigerian national, but was constrained during the Jonathan Administration despite U.S. concern over the rising Boko Haram threat. The Nigerian government has coordinated with the Department of Homeland Security, the Federal Aviation Administration, and the International Civil Aviation Organization to strengthen its security systems. Cooperation with the Department of Defense has also expanded in recent years. Nigeria is a participant in the State Department's Trans-Sahara Counterterrorism Partnership (TSCTP), a U.S. interagency effort that aims to increase regional counterterrorism capabilities and coordination. Its role in that program, however, has been minor in comparison to Sahel countries. U.S. military assistance for regional efforts to counter Boko Haram has been channeled primarily through engagement with Nigeria's neighbors: Cameroon, Chad, and Niger. Support has also been focused on the region's Multinational Joint Task Force (MNJTF). The United States and several other foreign countries conduct periodic aerial surveillance operations in the region. Many U.S. officials, while stressing the importance of the bilateral relationship and the gravity of security threats in and potentially emanating from the country, have been concerned about abuses by security services, and about the government's limited efforts to address perceived impunity within the forces. Obama Administration concerns culminated in the 2014 decision to block the sale of U.S.-manufactured Cobra helicopters by Israel to Nigeria. Security cooperation subsequently improved and the Obama Administration proceeded with plans for the sale of 12 Super Tucano A-29 aircraft and accompanying ammunition and weaponry, but when a Nigerian jet struck an IDP camp in early 2017, the United States suspended the process. The Trump Administration revisited and approved the sale, worth an estimated $345 million, in December 2017. In a joint press conference during Buhari's 2018 visit to the White House, President Trump downplayed the Obama Administration's concerns. Buhari has faced domestic pressure around the purchase, particularly over his withdrawal, reportedly without parliamentary approval, of nearly $900 million from Nigeria's Excess Crude Account to fund the Super Tucano acquisition and other security-related purchases. According to the contract award, work on the Super Tucanos is expected to be completed in May 2024. Nigerian officials are reportedly sensitive to perceived U.S. interference in internal affairs and have sometimes rejected other forms of assistance, in particular some U.S. military training offers. Upon taking office, President Buhari pledged to "insist on the rule of law, and deal with any proven cases of deviation from laws of armed conflict, including human rights abuses." Nonetheless, observers question whether the government has taken serious steps to hold senior commanders responsible for abuses, and raise concern that "scorched earth" tactics may persist. U.S. Assistance to Nigeria Nigeria routinely ranks among the top recipients of U.S. bilateral foreign assistance in Africa. The United States is Nigeria's largest bilateral donor, providing an average of over $450 million annually (see Table 1 ). According to the State Department's FY2019 Congressional Budget Justification, "assistance will address the drivers of conflict by seeking to strengthen democratic governance, broaden economic growth by introducing methods that increase agricultural sector productivity and efficiency, and expand the provision of basic services to Nigerians at the state and local levels." Nigeria is a focus country under the President's Emergency Plan for AIDS Relief (PEPFAR) and the President's Malaria Initiative (PMI), and Nigerian farmers benefit from agriculture programs under the Feed the Future (FTF) initiative that focus on building partnerships with the private sector to expand exports and generate employment. Interventions to encourage private sector participation in trade and energy are also key components of economic growth initiatives in Nigeria. U.S. security assistance to Nigeria has focused on enhancing maritime security, counternarcotics, counterterrorism, and peacekeeping capacity. Counterterrorism assistance to Nigeria, while increasing, has been constrained by various factors, including human rights concerns. The State Department has included Nigeria on its Child Soldiers Prevention Act (CSPA) List since 2015 due to the CJTF's recruitment and use of children. Nigeria has received various equipment via the Excess Defense Articles (EDA) program, including naval vessels and Mine Resistant Ambush Protected vehicles (MRAPs). Nigeria was one of four country recipients of a $40 million Global Security Contingency Fund regional program launched in 2014 to counter Boko Haram. U.S. Africa Command (AFRICOM) has provided advanced infantry training for some of the troops deployed in the northeast and has deployed U.S. military advisors to the Nigerian military's operational headquarters in Maiduguri, in Borno. U.S. advisors have also supported the headquarters of the African Union-authorized, donor-supported MNJTF, which is commanded by a Nigerian general. U.S. military assistance has increased under the Trump Administration: the Department of Defense (DOD) has notified Congress of over $16 million in DOD Train-and-Equip support (10 U.S.C. 333) in FY2018 and FY2019. Congressional Engagement Terrorism-related concerns have dominated congressional action on Nigeria in recent years, although some Members have also continued to monitor human rights, governance, and humanitarian issues; developments in the Niger Delta; Nigeria's energy sector; and violence in the country's Middle Belt. Nigeria's elections are often a focus of congressional interest: two resolutions introduced in the final weeks of the 115 th Congress, H.Res. 1170 and S.Res. 716 , would have called for Nigeria to hold credible, transparent, and peaceful elections in 2019; those resolutions have been reintroduced in the 116 th Congress as H.Con.Res. 4 and S.Con.Res. 1 . Several congressional committees have held hearings on Boko Haram in recent years. The House Homeland Security Subcommittee on Counterterrorism and Intelligence held Congress's first hearing to examine the group in late 2011. Prior to the State Department's decision to designate the group as an FTO, several Members in the 113 th Congress introduced legislation, including H.R. 3209 and S. 198 , that would have advocated for the designation. Other recent Boko Haram-related legislation includes, but is not limited to, the following: P.L. 114-92 (FY2016 National Defense Authorization Act, 114 th Congress), with report language directing the Secretaries of Defense and State to provide an assessment of the Boko Haram threat and a description of U.S. counter-Boko Haram efforts. P.L. 114-266 (Boko Haram Regional Threat Strategy, 114 th Congress), requiring a regional strategy to address the threat posed by Boko Haram. P.L. 115-31 (Consolidated Appropriations Act, 2017, 115 th Congress), making funds available for assistance for Nigeria, including counterterrorism programs, activities to support women and girls targeted by Boko Haram, and efforts to protect freedoms of expression, association, and religion.

Successive Administrations have described the U.S. relationship with Nigeria, Africa's largest producer of oil and its largest economy, to be among the most important on the continent. The country is Africa's most populous, with more than 200 million people, roughly evenly divided between Muslims and Christians. Nigeria, which transitioned from military to civilian rule in 1999, ranked for years among the top suppliers of U.S. oil imports, and it is a major recipient of U.S. foreign aid. The country is the United States' second-largest trading partner in Africa and the third-largest beneficiary of U.S. foreign direct investment on the continent. Nigerians comprise the largest African diaspora group in the United States. Nigeria is a country of significant promise, but it also faces serious social, economic, and security challenges, some of which pose threats to state and regional stability. The country has faced intermittent political turmoil and economic crises since gaining independence in 1960 from the United Kingdom. Political life has been scarred by conflict along ethnic, geographic, and religious lines, and corruption and misrule have undermined the state's authority and legitimacy. Despite extensive petroleum resources, its human development indicators are among the world's lowest, and a majority of the population faces extreme poverty. In the south, social unrest, criminality, and corruption in the oil-producing Niger Delta have hindered oil production and contributed to piracy in the Gulf of Guinea. Perceived government neglect and economic marginalization have also fueled resentment in the predominately Muslim north, while communal grievances and competition over land and other resources—sometimes subject to political manipulation—drive conflict in the Middle Belt. The rise of Boko Haram has heightened concerns about extremist recruitment in Nigeria, which has one of the world's largest Muslim populations. Boko Haram has focused on a range of targets, but civilians in the impoverished, predominately Muslim northeast have borne the brunt of the violence. The group became notorious for its 2014 kidnapping of over 270 schoolgirls and its use of women and children as suicide bombers. It has staged attacks in neighboring countries and poses a threat to international targets in the region. Boko Haram appears primarily focused on the Lake Chad Basin region. Its 2015 pledge to the Islamic State and the emergence of a splinter faction, Islamic State-West Africa (IS-WA), have raised concerns from U.S. policymakers, though the extent of intergroup linkages is unclear. IS-WA is credited with a number of devastating attacks in 2018 against Nigerian military bases; the army has struggled to defend them. Domestic criticism of the government's response to corruption, economic pressures, and Boko Haram contributed to the election in 2015 of former military ruler Muhammadu Buhari. In what was widely hailed as a historic transition, the ruling People's Democratic Party and President Goodluck Jonathan lost power to Buhari and his All Progressives Congress, marking Nigeria's first democratic transfer of power. Buhari has since struggled to enact promised reforms amid persistent security challenges and a struggling economy. He faces a challenge from former vice president Atiku Abubakar in elections scheduled for February 2019; it is forecast to be a close race. As in previous elections, there are concerns about violence around the polls, and intense, high-stakes contests over a number of legislative and gubernatorial posts increase the risk of conflicts. U.S. officials and Members of Congress have called for credible, transparent, and peaceful elections. U.S.-Nigeria relations under the Trump Administration appear generally consistent with U.S. policy under the Obama Administration. Both Administrations have supported reform initiatives in Nigeria, including anticorruption efforts, economic and electoral reforms, energy sector privatization, and programs to promote peace and development. Congress oversees more than $500 million in U.S. foreign aid programs in Nigeria and regularly monitors political developments; some Members have expressed concern with corruption, human rights abuses, and violent extremism in Nigeria.

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Introduction Congress has created a wide array of advisory bodies, separate from each chamber's committees and officers, in order to better exercise its legislative, oversight, and investigative mandates, and to attend to both temporary and ongoing administrative tasks and responsibilities. During the past two decades, Congress has established or renewed the existence of hundreds of statutory entities to study, advise on, coordinate, or monitor matters of particular interest to Congress. These entities vary in several dimensions, including their official designation, purpose, lifespan, membership, and mechanism by which members are appointed. Many of these bodies are expressly identified as commissions, but others are designated as boards, advisory committees, or other terms. In this report, they are referred to generically as "congressional advisory bodies." These groups are sometimes created to address a single purpose—to study a discrete policy issue or to attend to one-time or recurring administrative functions. Often, they have a well-defined mandate, which typically includes the submission of a final report to Congress with detailed findings and recommendations. Although some have a specific lifespan, others have been created to provide ongoing support and advice (e.g., the boards of visitors for the U.S. military service academies, or the Commission to Recommend Individuals to the President for Appointment to the Office of Architect of the Capitol). The statutory provisions creating a substantial proportion of congressional advisory bodies provide for a membership that, either entirely or in part, (1) includes, (2) is chosen by, or (3) is recommended by Members of Congress. This report addresses only those statutory groups whose membership involves congressional participation in one or more of these forms. It provides selected background information on these groups and specific information relating to the role of Members of Congress in the appointment process. This report is intended to inform Members of Congress of their specific appointment responsibilities and to make them aware of their opportunities to serve as members of congressional advisory bodies. Additionally, observations regarding the rationale and effects for the many variations in the appointment schemes for existing bodies are intended to provide some alternatives to legislators to facilitate the drafting of membership language in potential future statutes. Scope Following an examination of the appointment schemes to various congressional advisory bodies, this compilation attempts to identify all congressional advisory bodies currently in existence on which Members of Congress serve directly, or for which they make appointments or recommend potential members to another appointing authority (e.g., the President). It includes any statutorily created advisory entity (e.g., boards, advisory panels, task forces) whose membership scheme mandates the participation of Members of Congress, either as potential members or as participants in the process of appointing the membership. Entities created by Congress that have neither congressional membership nor congressional involvement in the appointment process have been omitted. Boards and commissions for which the Senate has "advise and consent" authority are also omitted, unless Members of Congress otherwise participate in the appointment process. Also excluded are ad-hoc commissions and advisory groups empaneled by individual congressional committees under their general authority to procure the "temporary services" of consultants to "make studies and advise the committee with respect to any matter within its jurisdiction," pursuant to 2 U.S.C. §72a or under chamber rules or resolutions. The membership of these entities, such as the Advisory Commission to Study the Consumer Price Index, might be selected by the chairman and ranking minority member of the committee concerned, and these bodies are generally empaneled for short durations. This report also does not include caucuses, observer groups, or working groups created by means other than statute. Tracking the provisions of law that create congressional advisory bodies is an inherently inexact exercise. Although many such bodies are created in easily identifiable freestanding statutes, others are contained within the statutory language of lengthy omnibus legislation. It is also sometimes difficult to determine when such bodies have ceased to operate, as termination dates are not always included in the organic statute, or may be tied to ambiguous conditions. Membership Composition When making appointments to congressional advisory bodies, Members of Congress may be empowered to act independently or in concert with other Members. Structurally, variations in the authority of appointment officials fall within several common patterns. Direct Designation The statutory scheme may mandate that membership of a congressional advisory body be made up in whole or in part by specifically designated Members of Congress, typically members of the leadership or of specified committees. In most such cases, leadership service is limited to bodies concerned with the internal administrative functions of the House and Senate. For example, membership of the Commission to Recommend Individuals to the President for Appointment to the Office of Architect of the Capitol includes the Speaker of the House, the President pro tempore of the Senate, the majority and minority leaders of the House and the Senate, and the chairmen and the ranking minority members of the Committee on House Administration of the House of Representatives, the Committee on Rules and Administration of the Senate, the Committee on Appropriations of the House of Representatives, and the Committee on Appropriations of the Senate. Appointment Selected leaders, often with balance between the parties, may appoint congressional advisory body members, who may or may not be Members of Congress. For appointments made by congressional leaders, the statutory scheme generally mandates that appointments be made by leaders of both parties. The members of some congressional advisory bodies are selected by majority and minority party leaders in equal numbers. In other instances, the majority party appoints a greater number. In a few cases, the majority/minority ratio of appointments to a commission varies, depending upon whether the President is of the same party as the majority in the House or the Senate. One common component of statutory appointment schemes for certain congressional advisory bodies is the requirement that Members of Congress serve on these panels. Certain bodies, such as the British American Parliamentary Group, are composed entirely of Members of Congress. In other instances, a statute may require that a certain specified number of Senators or Representatives be selected, or may prohibit Members of Congress from serving. For appointments made by the President pro tempore of the Senate, 2 U.S.C. §199 specifies involvement of the majority and minority leaders of the Senate. Recommendation Selected leaders, again often with balance between the parties, may be authorized to recommend members, who may or may not be Members of Congress, for appointment to a congressional advisory body. They may do so either in parallel or jointly, and the recommendations may be made to other congressional leaders, such as the Speaker of the House and President pro tempore of the Senate, to the President, or to a cabinet official. Qualification Provisos Some statutory provisos may have the effect of limiting the degree of autonomy a Member has in appointing or making recommendations of individuals for congressional advisory body membership. For example, the appointing official may be required by law to select members who are specifically qualified by virtue of their education, knowledge, training, experience, expertise, distinguished service, or recognized eminence in a particular field or fields. In other instances, appointments are expressly limited to individuals occupying specific federal, state, or local government positions, representing a particular occupation, or serving as head of a particular public or private sector institution or organization. Separation of Powers In many instances, the authority to appoint members to the entities covered in this report is shared by the executive and legislative branches. When the appointment authority set out in a statute creating a congressional advisory body is shared by the President (or other executive branch officials) and Members of Congress, questions about implementation of the appointment scheme have sometimes prompted the President to comment on separation-of-powers issues raised under the Appointments Clause of the Constitution. Some statutes instruct the President to appoint congressional advisory body members from a list provided by congressional leadership. For example, the appointment scheme for the Commission on Interoperable Data Sharing provides for nine members, one member appointed by the President to serve as chairman, and eight members appointed by the President "from a list of nominees jointly provided by the Speaker of the House of Representatives, the minority leader of the House of Representatives, the majority leader of the Senate, and the minority leader of the Senate." In the signing statement accompanying the law, President George W. Bush noted that methods of selection included in the Appointment Clause of the Constitution include "appointment by the President with Senate consent, or by the President alone," but not by the President "from a pool of persons selected by congressional leadership." Similarly, in a statement accompanying the signing of legislation creating the Brown v. Board of Education 50 th Anniversary Commission, President Bush made it clear that he would not be bound by the membership recommendations of House and Senate leadership required by the statute, but would rather "welcome, as a matter of comity, the suggestions of the congressional leadership for those positions." Impact of Appointment Framework As the foregoing discussion suggests, several alternative approaches are available to legislators in drafting membership selection language. Inclusion of legislators on such panels insures that Congress will be able to exercise a certain degree of control over the operations of the entity concerned. At the same time, service by Members on congressional advisory bodies is arguably antithetical to at least one of the rationales for creating the entity in the first place, namely, to reduce the workload of Congress by delegating certain functions to temporary bodies. Even in the absence of direct membership on a congressional advisory body, in drafting the particulars of an appointment scheme, legislators can dictate, to some degree, the measure of autonomy an entity enjoys. For example, although the legislation creating the National Commission on Terrorist Attacks Upon the United States (the 9-11 Commission) did not stipulate that Members of Congress be included in the commission's membership, it did call for 9 of the 10 members of the commission to be selected by congressional leaders. Attention to the proper balance between the number of members appointed by congressional leaders and by other individuals, or to the number of Members of Congress required to be among the appointees, or to the qualifications of appointees, can be significant factors in enabling an advisory body to fulfill its congressional mandate. Organization of the Report Each currently functioning congressional advisory body that was identified, regardless of when it was initially established, is profiled following the narrative portion of this report. For each entity, a brief summary of its purpose or role is provided, as well as the following information: Statutory D uration of the A dvisory B ody . The termination date is provided for each advisory body, where appropriate. Occasionally, termination dates are ambiguous, due to their contingency upon an associated time line within the statute, such as the date of submission of a final report. FACA A pplicability . Advisory bodies established in the executive branch that report to the President are subject to the Federal Advisory Committee Act (FACA), which governs their creation, administration, and management. Advisory bodies that are appointed by Congress and report only to Congress are not specifically bound by the requirements set forth in FACA. Because many commissions involve both congressional and presidential participation, some of the entities in this report may be governed by FACA. Occasionally, statutes creating congressional advisory bodies will incorporate explicit statutory language exempting a commission from FACA requirements, in whole or in part. Membership Appointment Structure . Each entry includes the advisory body's membership appointment scheme. The particulars of congressional involvement in the appointment process are varied. The statutory language of membership appointment schemes detail a wide range of membership patterns that may be of interest to lawmakers who might be contemplating creation of advisory bodies. In the legislative branch, the individuals most commonly empowered to make appointments to commissions and similar bodies are the Speaker of the House, the President or President pro tempore of the Senate, and the majority and minority leaders of the House and Senate. The majority leader of the House is less often included in these mechanisms, since the appointment role of the minority leader may be paired with the Speaker's appointment role. For each board, the appointment structure is outlined, with the participation of Members of Congress highlighted. For Member appointments, the appointer's role is provided in (parentheses) in the left-hand column. Additionally, the role of noncongressional officials is also provided. Term of Appointment . Most ongoing congressional advisory bodies have fixed terms of appointment set by statute. Statutes creating temporary commissions often provide that appointments are for the "life of the commission." Additionally, commissions are divided into two groups: temporary advisory commissions (e.g., those with a statutory end date) and permanent entities. Listing of Individual Advisory Bodies The more than 90 entries on the following pages highlight the broad diversity of matters Congress has felt deserved examination beyond the established organizational structure of Congress. Entries are arranged alphabetically. Citations to the U.S. Code and the Statutes at Large are provided where particulars relating to the scope, purpose, and composition of these bodies may be located. The internet address of the entity's website is also provided, if available. Information on the involvement of Members of Congress in the appointment process for congressional commissions is also presented in a series of tables. Table 1 through Table 6 list the appointment responsibilities of each of these major congressional leaders. Table 7 lists other congressional leaders, namely the chair or ranking minority members of specified committees in the House and Senate who may also be granted authority to make or recommend appointments, or be designated as members of a commission. Temporary Advisory Commissions 400 Years of African-American History Commission Adams Memorial Commission Advisory Committee on International Exchange Rate Policy Alyce Spotted Bear and Walter Soboleff Commission on Native Children Commission on Farm Transactions-Needs for 2050 Coltsville National Historical Park Advisory Commission Creating Options for Veterans' Expedited Recovery Commission Cyberspace Solarium Commission Dwight D. Eisenhower Memorial Commission Frederick Douglass Bicentennial Commission National Commission on Military Aviation Safety National Security Commission on Artificial Intelligence Public Buildings Reform Board Public-Private Partnership Advisory Council to End Human Trafficking Syria Study Group United States Semiquincentennial Commission Western Hemisphere Drug Policy Commission Women's Suffrage Centennial Commission World War I Centennial Commission Permanent Entities Advisory Committee on Student Financial Assistance Advisory Committee on the Protection of Presidential and Vice-Presidential Candidates Advisory Committee on the Records of Congress American Folklife Center in the Library of Congress, Board of Trustees Barry Goldwater Scholarship and Excellence in Education Foundation, Board of Trustees British American Parliamentary Group Canada-United States Interparliamentary Group Citizen's Coinage Advisory Committee Commission for the Judiciary Office Building Commission for the Preservation of America's Heritage Abroad Commission on Security and Cooperation in Europe (Helsinki Commission) Commission on Social Impact Partnerships Commission to Recommend Individuals to the President for Appointment to the Office of Architect of the Capitol Congressional-Executive Commission on the People's Republic of China Congressional Advisers for Trade Policy and Negotiations Congressional Award Board Coordinating Council on Juvenile Justice and Delinquency Prevention Denali Commission Election Assistance Commission Election Assistance Commission, Board of Advisors Federal Judicial Center Foundation Board Federal Law Enforcement Congressional Badge of Bravery Board Federal Retirement Thrift Investment Board Financial Oversight and Management Board Gallaudet University, Board of Trustees Harry S Truman Scholarship Foundation, Board of Trustees Health Information Technology (HIT) Advisory Committee Help America Vote Foundation, Board of Directors Henry M. Jackson Foundation, Council of Directors House Commission on Congressional Mailing Standards (Franking Commission) House Child Care Center, Advisory Board House of Representatives Fine Arts Board House Office Building Commission Human Space Flight Independent Investigation Commission Institute of American Indian and Alaska Native Culture and Arts Development Board of Trustees International Clean Energy Foundation, Board of Directors James Madison Memorial Fellowship Foundation, Board of Trustees Japan-United States Friendship Commission John C. Stennis Center for Public Service Training and Development, Board of Trustees John F. Kennedy Center for the Performing Arts, Board of Trustees Library of Congress Trust Fund Board Medal of Valor Review Board (Public Safety Officer) Mexico-United States Interparliamentary Group Delegation Migratory Bird Conservation Commission Millennium Challenge Corporation, Board of Directors Morris K. Udall and Stewart L. Udall Foundation, Board of Trustees National Advisory Committee on Institutional Quality and Integrity National Capital Planning Commission National Committee on Vital and Health Statistics National Council on Disability National Council on the Arts National Historical Publications and Records Commission NATO Parliamentary Assembly, U.S. Group Office of Congressional Workplace Rights, Board of Directors Open World Leadership Center, Board of Trustees Senate Commission on Art Smithsonian Institution, Board of Regents Social Security Advisory Board State and Local Law Enforcement Congressional Badge of Bravery Board Tribal Advisory Committee United States Air Force Academy, Board of Visitors United States Capitol Preservation Commission United States-China Economic and Security Review Commission United States Coast Guard Academy, Board of Visitors United States Commission on Civil Rights United States Commission on International Religious Freedom United States Delegation to the Parliamentary Assembly of the Organization for Security and Cooperation in Europe United States Group of the United States Senate-China Interparliamentary Group United States Group of the United States Senate-Russia Interparliamentary Group United States Holocaust Memorial Council United States International Development Finance Corporation, Board of Directors United States Merchant Marine Academy, Board of Visitors United States Military Academy, Board of Visitors United States Naval Academy, Board of Visitors United States Senate Caucus on International Narcotics Control Utah Reclamation Mitigation and Conservation Commission Western Hemisphere Institute for Security Cooperation, Board of Visitors

Over the past several decades, Congress, by statute, has established a wide array of commissions, boards, and advisory bodies to provide it with assistance in meeting various legislative, investigative, and administrative responsibilities. Some of these entities are temporary and created to serve specific functions, such as studying a discrete policy area or performing one-time tasks. Others are permanent, serving an ongoing purpose, such as overseeing an institution or performing a regular administrative function. The majority of these congressional bodies provide that Members of Congress, particularly the leadership, be intimately involved in the appointment process, either through direct service on a commission, or by appointing or recommending candidates for membership. The choice of a particular mechanism for membership appointment may have implications for the ability of these entities to fulfill their congressional mandates. Examination of the statutory language creating these bodies reveals several common approaches to membership selection. Each alternative schema has its advantages. For example, a commission or board composed entirely of Members permits a high degree of congressional control over the entity's operations. Bodies composed mainly of qualified private citizens or executive branch appointees may provide a broader expertise than Member-only bodies. Assemblages of mixed membership provide some of the advantages of both Member and citizen-only appointment schemes. This report contains a compilation of existing commissions and boards that demonstrates the range of alternative membership-appointment structures. It includes any statutorily created advisory entity (e.g., boards, advisory panels, task forces) whose membership scheme mandates the participation of Members of Congress either as potential members or as participants in the process of appointing the membership. For each entity, information on the purpose, duration, appointment structure, and term of appointment is provided. Finally, information on the involvement of Members of Congress in the appointment process is presented in a series of tables.

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Congressional Interest in Surety Bonds The Small Business Administration (SBA) administers several programs to support small businesses, including loan guaranty programs to enhance small business access to capital; contracting programs to increase small business opportunities in securing federal contracts; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. Congressional interest in these programs has increased in recent years, primarily because assisting small business is viewed as a means to enhance economic growth. The SBA's Surety Bond Guarantee Program has been operational since April 1971. It is designed to increase small business' access to federal, state, and local government contracting, as well as private-sector contracting, by guaranteeing bid, performance, payment, and specified ancillary bonds "on contracts … for small and emerging contractors who cannot obtain bonding through regular commercial channels." The program guarantees individual contracts of up to $6.5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. The $6.5 million limit is periodically adjusted for inflation. The SBA's guarantee currently ranges from 80% to 90% of the surety's loss if a default occurs. In FY2018, the SBA guaranteed 10,800 bid and final surety bonds (a payment bond, performance bond, or both a payment and performance bond) with a total contract value of nearly $6.5 billion. Although the surety industry does not report the total value of the bonds it issues each year, estimates based on the total amount of premiums collected by the private sector in recent years suggest that the SBA's Surety Bond Guarantee Program represents, by design, a relatively small percentage of the market for surety bonds (from about 1.1% to 6.7% of the value of surety bonds issued by the private sector). A surety bond is a three-party instrument between a surety (that agrees to be responsible for the debt or obligation of another), a contractor, and a project owner. The agreement binds the contractor to comply with the contract's terms and conditions. If the contractor is unable to successfully perform the contract, the surety assumes the contractor's responsibilities and ensures that the project is completed. The surety bond reduces the risk of contracting. Surety bonds are viewed as a means to encourage project owners to contract with small businesses that may not have the credit history or prior experience of larger businesses and are considered to be at greater risk of failing to comply with the contract's terms and conditions. The four general types of surety bonds are bid bonds guarantee that the bidder on a contract will enter into the contract and furnish the required payment and performance bonds if awarded the contract, payment bonds guarantee that suppliers and subcontractors will be paid for work performed under the contract, performance bonds guarantee that the contractor will perform the contract in accordance with its terms and conditions, and ancillary bonds ensure completion of requirements outside of performance or payment, such as maintenance. Surety bonds are important to small businesses interested in competing for a federal contract because the federal government requires prime contractors, prior to the award of a federal contract exceeding $150,000 for the construction, alteration, or repair of any building or public work of the United States, to furnish a performance bond issued by a surety satisfactory to the officer awarding the contract, and in an amount the contracting officer considers adequate, to protect the government. Prime contractors are also required to post a payment bond with a surety satisfactory to the contracting officer for the protection of all persons supplying labor and material in carrying out the work provided for in the contract. Both bonds become legally binding upon award of the contract and their "penal amounts," or the maximum amount of the surety's obligation, must generally be 100% of the original contract price plus 100% of any price increases. Most state and local governments have adopted similar legislation, often called "Little Miller Acts," referencing the Miller Act of 1935 that established the federal requirement. Many private project owners also require contractors to furnish a surety bond before awarding them a contract. This report opens with an examination of the SBA's Surety Bond Guarantee Program's legislative origin and provides a historical summary of the major issues that have influenced the program's development, including the decision to supplement the original Prior Approval Program with a Preferred Surety Bond Guarantee Program (PSB program) that initially provided SBA-approved sureties a lower guarantee rate (not to exceed 70%) than those participating in the Prior Approval Program (not to exceed 80% or 90%, depending on the size of the contract and the type of small business) in exchange for allowing preferred sureties to issue SBA-guaranteed bonds to small businesses without the SBA's prior approval; P.L. 114-92 , the National Defense Authorization Act for Fiscal Year 2016, which increased the PSB program's guarantee rate from not to exceed 70% to not to exceed 90% of losses; and the decision to increase the program's bond limit. It then examines the program's current eligibility standards and requirements, and provides performance statistics, including the number and amount of bond guarantees issued annually. In addition, it provides data concerning the number and amount of final bonds guaranteed from FY1971 through FY2017 (see Table A-1 ) and for bid and final bonds combined from FY2000 through FY2017 (see Table A-2 ). Legislative Origin P.L. 91-609, the Housing and Urban Development Act of 1970, authorized the SBA's Surety Bond Guarantee Program. The act amended Title IV of the Small Business Investment Act of 1958 (P.L. 85-699, as amended) to provide the SBA authority to guarantee any surety against loss as the result of a breach of the terms of a bid bond, payment bond, or performance bond by a principal on any contract up to $500,000. The act specified that (1) the principal of the bond is a small business, (2) the bond is required as a condition of bidding on the contract or serving as a prime contractor or subcontractor on the project, (3) the small business is not able to obtain such bond on reasonable terms and conditions without the guarantee, (4) the SBA determines that there is a reasonable expectation that the small business will perform the covenants and conditions of the contract, (5) the contact meets SBA requirements concerning the feasibility of the contract being completed successfully and at a reasonable cost, and (6) the bond's terms and conditions are reasonable in light of the risks involved and the extent of the surety's participation. The act also required that the SBA's guarantee not exceed 90% of the loss incurred by the surety in the event of a breach of the bond's terms and conditions by the small business. The SBA was authorized to finance the program through the Leasing Guarantee Revolving Loan Fund within the Department of the Treasury, which renamed that fund the Lease and Surety Bond Guarantee Revolving Fund. The act authorized the transfer of $5 million from the SBA's Business Loan and Investment Revolving Fund to the Lease and Surety Bond Guarantee Revolving Fund, raising that fund's capital to $10 million available without fiscal year limitation, to support both the lease guarantee program and the surety bond guarantee program. The act also recommended that the program be appropriated up to $1.5 million each fiscal year for three fiscal years after its date of enactment (December 31, 1970) if additional funding were needed to offset the program's expenses. The SBA was directed to administer the program "on a prudent and economically justifiable basis." It was authorized to offset the program's administrative costs by charging a uniform annual fee, subject to periodic review to ensure that the fee is the "lowest fee that experience under the program shows to be justified," and uniform fees for the processing of applications for guarantees. The SBA also was authorized to "obligate the surety to pay the Administration such portions of the bond fee as the Administration determines to be reasonable in light of the relative risks and costs involved." The program's sponsors argued in 1970 that "there is widespread evidence that a significant number of construction contracting organizations find varying degrees of difficulty in obtaining surety bonds" and that "the major share of these organizations are small businesses, and many of them are headed by minority groups." They argued that the Surety Bond Guarantee Program would "facilitate the entry and advancement of small and minority contractors in the construction business." At that time, witnesses at congressional hearings testified that surety bonds were not necessarily required for most private sector construction contracts, but they were required for most public sector construction contracts. Initial Demand and Costs Exceed Expectations The SBA implemented the program on a pilot basis on April 5, 1971, in Kansas City. The program later was expanded to Los Angeles and became nationwide on September 2, 1971. Initially, the SBA guaranteed 90% of the amount of all of the surety bonds in the program and charged sureties 10% of the bond premium paid to the surety company by the contractor. It also charged small business applicants for payment and performance bonds 0.2% of the contract price upon their obtaining the contract. It did not charge for the processing of bid bonds, rejected applications, or applications that did not result in a contract award. Contractors wishing to participate in the program were required to have less than $750,000 in gross annual receipts for the past fiscal year or to have averaged less than $750,000 in gross annual receipts over the past three fiscal years. This size standard was more stringent than for other SBA programs, and it was designed "to reach that segment of small business which was obviously intended to benefit from the legislation as evidenced by the limit of $500,000 on any one contract." Demand for the program exceeded the SBA's expectations. In 1971, the SBA estimated that it would guarantee about 8,000 contracts amounting to about $540 million from FY1972 through FY1974. Instead, it guaranteed 16,118 contracts amounting to nearly $1.1 billion (see Table A-1 in the Appendix). Because the demand for the program exceeded expectations and the initial fees proved to be insufficient to recoup the program's expenses, in 1974, the SBA requested an additional $25 million for the program. The SBA argued that the additional funds were necessary to take into account the program's projected growth and to establish a reserve fund "to protect against having to suspend [the] program in the fact of more rapid growth than is projected." In response to the SBA's request for additional funding for the program, Congress held congressional hearings to reassess the need for the program and to explore options concerning how to finance the program's proposed expansion. The financing discussions focused on the relative merits of relying primarily on higher fees to increase the program's revenue, reductions in the guarantee percentage to reduce the program's expenses, or additional appropriations to finance the program's proposed expansion. Although the SBA has periodically increased the program's fees and later instituted a tiered system of guarantee percentages, historically, the SBA has tried to keep the program's fees as low as economically feasible and the guarantee percentage as high as economically feasible to encourage the program's use. As an SBA official testified before Congress in 1975: SBA's loss exposure could be reduced by a decrease in the guarantee extended to sureties from 90% to 80%. Before proceeding with this recommendation, a thorough analysis will have to be made of the adverse effect on the willingness of sureties to participate in the program which would result from the increase from 10% to 20% of the sureties' share of the loss potential. An increase in contractor's fees would obviously be beneficial to the operating income of the program, but would also increase the bids which small business-contractors would have to make, thus placing them at a competitive disadvantage with contractors with more ready access to bonding. Moreover, as mentioned previously, the SBA is required by statute to ensure that the fees are the lowest "that experience under the program shows to be justified." Determining the program's appropriate size became a recurring theme at congressional hearings, and continues to be of congressional interest today. For example, Congress has regularly requested testimony from representatives of the surety bond industry and various construction organizations concerning the extent to which the program is necessary to assist small businesses generally, and minority-owned small businesses in particular, in gaining access to surety bonds. Congress has also periodically asked the Government Accountability Office (GAO) to examine the need for the SBA's surety bond guarantee program and to recommend ways to improve the program's management. That testimony and GAO's reports have supported a need for the program, but, as will be discussed, have had somewhat limited usefulness in helping Congress determine the program's appropriate size. In 1974, Congress responded to the SBA's request for additional funding by passing P.L. 93-386 , the Small Business Amendments of 1974. It established a separate Surety Bond Guarantees Revolving Fund account (hereinafter Revolving Fund) within the Department of the Treasury to support the program. The act also increased the total contract amount that could be guaranteed to $1 million from $500,000 and recommended that the Revolving Fund receive $35 million in additional funding. The Ford Administration objected to providing additional appropriations for the Revolving Fund. Instead, the Administration recommended that the Revolving Fund receive a $20 million transfer from the SBA's Business Loan and Investment Revolving Fund. The transfer would provide the program access to additional capital without affecting the federal budget deficit. Congress approved the Administration's proposal. As shown in Table 1 , the Revolving Fund received $130.5 million in additional appropriations for FY1976 through FY1979 and continued to receive additional appropriations during the 1980s and 1990s. In addition, the program's bond limit was increased to $1.25 million from $1 million in 1986. As discussed below, the increased appropriations and bond limit were not sufficient to continue the program's growth. Instead, both the number and amount of final surety bonds guaranteed by the SBA began to slowly diminish. This general trend continued until the maximum individual surety contract amount was increased, first on a temporary basis by P.L. 111-5 , the American Recovery and Reinvestment Act of 2009, and later, on a permanent statutory basis, by P.L. 112-239 , the National Defense Authorization Act for Fiscal Year 2013. As shown in Table 1 , Congress did not appropriate funding for the Revolving Fund from FY2000 to FY2004, allowing the program to cover the cost of claim defaults through its reserve. Congress also increased the program's bond limit to $2 million from $1.25 million in 2000. Congress provided the Revolving Fund $2.9 million in FY2005, $2.86 million in FY2006, $2.86 million in FY2007, and $3 million in FY2008. During the 111 th Congress, P.L. 111-5 provided the Revolving Fund a separate appropriation of $15 million to support a temporary increase in the program's bond limit to $5 million, and up to $10 million if a federal contracting officer certified in writing that a guarantee in excess of $5 million was necessary, from $2 million. Those funds were in addition to the $2 million appropriation that had already been approved for FY2009. In FY2010, the Revolving Fund received $1 million. Congress has not approved appropriations for the Revolving Fund since then, noting that there have been sufficient funds in the program's reserve to cover the cost of anticipated claim defaults. As mentioned previously, the SBA relied primarily on increased appropriations to finance the program's expansion during the 1970s, but it also increased the program's fees charged to applicants and sureties. For example, in 1976, the SBA increased its fees to sureties to 20% from 10% of the bond premium, instituted a deductible clause on bond claims, and generally limited its approval for bid, participation, and performance bonds to $250,000 unless specified circumstances were met. In 1977, it increased the contractor applicant fee for payment and performance bonds to 0.5% from 0.2% of the contract price upon obtaining the contract. The program's current fee structure is discussed later in this report. Rapid Growth Is Not Sustained Both the number and amount of final surety bonds guaranteed by the SBA increased relatively rapidly during the 1970s (see Table A-1 in the Appendix). The number of final surety bonds guaranteed by the SBA increased from 1,339 in FY1972 to 20,095 in FY1979, and the amount guaranteed by the SBA increased from $94.4 million in FY1972 to $1.39 billion in FY1979. During the 1980s and 1990s, both the number and amount of final surety bonds guaranteed by the SBA generally declined, in both nominal and inflation-adjusted dollars. A review of congressional testimony during that period suggests that there was no single, discernible factor to account for the program's slow contraction. Because the demand for surety bonds tends to fluctuate with changes in the economy, the program might have been expected to contract somewhat during recessions, but the economy experienced periods of both economic growth and decline during the 1980s and 1990s. There also was no indication that the ability of small businesses to access surety bonds in the private marketplace without the SBA's assistance had materially improved, which, if that had been the case, might have contributed to the decline by reducing the number of small businesses applying for assistance. One possible contributing factor to the decline in SBA-guaranteed surety bonds during that period was the continuing reluctance of many surety companies to participate in the program, either because they did not view the program as particularly profitable or they "had developed alternative methods to the program, such as requiring collateral or funds controls and underwriting programs based in part on credit scores, in order to write small and emerging contractors." Another possible contributing factor was a change in the way the program was perceived by congressional leaders and their reluctance to provide additional resources to continue the program's expansion. During the 1970s, at congressional hearings, witnesses praised the program as a great success in helping small businesses access surety bonds and compete for government contracts. During the 1980s and 1990s, congressional hearings focused less on the program's successes and more on its shortcomings. For example, in 1982, the chair of the Senate Committee on Small Business indicted that the program was subject to "the most insidious types of fraud," including "evidence of involvement of organized crime figures." In addition, reports by both GAO and the SBA's inspector general questioned the SBA's management of the program, arguing, among other things, that the SBA lacked useful underwriting guidelines for surety companies and adequate procedures for verifying applicants' information. During the 1980s, the SBA guaranteed, on average, 11,840 final surety bonds each fiscal year, with the SBA's share of those bonds' value averaging $1.0 billion. During the 1990s, the SBA guaranteed, on average, 5,859 final surety bonds each fiscal year, with the SBA's share of those bonds' value averaging $823 million. During the first decade of the 2000s, the SBA guaranteed, on average, about 1,802 final surety bonds each fiscal year, with the SBA's share of those bonds' value averaging about $385 million. Since then, as indicated in Table 2 and Table A-1 , the number and amount of final surety bonds guaranteed by the SBA has generally increased. This increase is likely due to generally improving economic conditions and the increase in 2013 of the maximum individual contract amount that could be guaranteed from $2 million to $6.5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. The Preferred Surety Bond Guarantee Program The surety bonding process begins when a contractor applies for a bond. As GAO has reported Surety companies are generally corporations that are licensed under various insurance laws and, under their charters, have legal power to act as a surety (making themselves responsible for another's obligations) for others. Most surety companies accept business only through independent agents and brokers. In screening a bond applicant, a surety attempts to measure the contractor's ability to undertake and complete the job. When the surety's evaluation of the contractor's acceptability to perform the contract is favorable, the surety underwrites the bond. If the surety does not provide a bond to the bond applicant, the appropriate forms are forwarded to SBA for consideration of a surety bond guarantee. Initially, the SBA surety guaranteed program's bonds were underwritten and issued by large, "standard" surety companies. However, these companies' participation in the program soon began to decline, reportedly because of the administrative burdens associated with the program, such as the SBA's requirement that sureties submit all bond applications to the SBA for review and approval. In addition, the administrative costs of dealing with relatively small bonds versus relatively large ones may have also played a role in the larger, standard surety companies leaving the program. As a congressional witness testified in 1976: You have a professional underwriter, who ... is going to be asked to spend 3 or 4 days looking into a $25,000 first-time application. There are many expenses involved. That same underwriter could very easily be writing four or five bonds for $10 million for contractors that everyone knows can perform. And it becomes a matter of how much time and resources can the surety industry devote to this type of business. Another reason may have been the outbreak of the Israeli-Egyptian War in 1973, which was followed by a tripling of oil prices and double-digit inflation. This led to the failure of many smaller contracting companies. In response to the economic downturn, many surety companies enhanced their underwriting standards to protect themselves from rising defaults. As a result, many of the larger surety companies became increasingly reluctant to participate in a program in which the profit margins were relatively small given the required paperwork and the program's limitation on the bond amount, and when the risk of defaults was at a historically high level. As standard sureties left the program, "specialty" surety companies filled the void. Initially, specialty sureties devoted almost all their business exclusively to SBA-guaranteed surety bonds. These companies later expanded their business into offering other high-risk bonds not normally handled by standard sureties. Specialty sureties typically required the contractor to provide collateral for the projects they bonded, and, in most cases, charged higher premiums than standard sureties. In 1982, the SBA invited officials from the Surety Association of America, representing the standard surety companies, to recommend ways to encourage their participation in the program. As mentioned previously, at that time, some specialty surety companies had been accused of associating with organized crime and GAO and the SBA's inspector general had reported fraud and mismanagement in the program. This may help to explain why the SBA was interested in encouraging the larger, more established surety companies to return to the program. The SBA also hoped that greater participation by the larger sureties would lead to lower premiums for small business contractors. During this outreach period, standard surety companies indicated a willingness to increase their participation in the program if the SBA would create a second special program, similar to the SBA's 7(a) loan guarantee program's Preferred Lenders Program. Under the proposal, a surety meeting specified qualification standards would be designed as a "preferred surety" and would be allowed to issue SBA-guaranteed surety bonds prior to receiving the SBA's approval. To participate in the preferred program, the surety's underwriting and administrative standards and procedures would be pre-approved by the SBA, and the surety's decisions would be subject to regular, annual audits. In addition, the SBA's reporting and access to records requirements would be retained. As a measure of their confidence in their own underwriting standards and claims decisions, the standard surety firms indicated that they would accept a 70% guarantee against losses as opposed to the then-allowed 80% or 90% guarantee against losses, as long as firms would not be required to seek the SBA's prior approval for underwriting decisions, bond administration, and claims procedures. Congress subsequently authorized the proposed Preferred Surety Bond Guarantee Program in P.L. 100-590 , the Small Business Administration Reauthorization and Amendment Act of 1988 (Title II, the Preferred Surety Bond Guarantee Program Act of 1988). The program was initially authorized on a three-year trial basis, and it was provided permanent statutory authority by P.L. 108-447 , the Consolidated Appropriations Act, 2005. As discussed in " 114th Congress: Preferred Surety Bond Guarantee Rates " below, P.L. 114-92 , the National Defense Authorization Act for Fiscal Year 2016, increased the SBA's guarantee for preferred sureties from not less than 70% to not less than 90% of losses. Small Business Eligibility Standards and Program Requirements The SBA is authorized to guarantee surety bonds issued to contractors or subcontractors when the business, together with its affiliates, meets the SBA's size standard for the primary industry in which it is engaged; the bond is required; the applicant is not able to obtain such bond on reasonable terms and conditions without a guarantee; and there is a reasonable expectation that the applicant will perform the covenants and conditions of the contract, and the terms and conditions of the bond are reasonable in light of the risks involved and the extent of the surety's participation. The applicant must also "possess good character and reputation," as demonstrated by (1) not being under indictment, being convicted of a felony, or having a final civil judgment stating that the applicant has committed a breach of trust or has violated a law or regulation protecting the integrity of business transactions or business relationships; (2) not having a regulatory authority revoke, cancel, or suspend a license held by the applicant, which is necessary to perform the contract; and (3) never having obtained a bond guarantee by fraud or material misrepresentation or failing to keep the surety informed of unbonded contracts or of a contract bonded by another surety. Applicants must also certify the percentage of work under the contract to be subcontracted. The SBA does not guarantee bonds for applicants that are primarily brokers or have effectively transferred control over the project to one or more subcontractors. Applicants must also certify that they are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from transactions with any federal department or agency. In addition, the SBA will not guarantee a bond issued by a particular surety if that surety, an affiliate of that surety, or a close relative or member of the household of that surety or affiliate owns, directly or indirectly, 10% or more of the business applying for the guarantee. This conflict of interest prohibition also applies to ownership interests in any of the applicant's affiliates. As mentioned previously, the SBA guarantees contracts up to $6.5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. There is no limit to the number of bonds that can be guaranteed for any one contractor. The SBA guarantees up to 90% of the loss incurred and paid by a surety if the contract is $100,000 or less, or if the bond is issued on behalf of a socially and economically disadvantaged-owned and controlled small business, a qualified HUBZone small business, a veteran-owned and controlled small business, or a service-disabled veteran-owned and controlled small business. The guarantee rate is 80% if the contract is greater than $100,000, and the business is not owned and controlled by socially and economically disadvantaged individuals, a qualified HUBZone small business, or a veteran-owned or service-disabled veteran-owned small business. The SBA does not charge principals (small business applicants) application or bid bond guarantee fees. If the SBA guarantees a final bond, the principal must pay a contractor fee equal to a percentage of the contract amount, which is determined by the SBA and published in the Federal Register . The FY2019 contractor fee is 0.6% of the contract price for a final bond. The contractor fee is rounded to the nearest dollar, paid to the surety, and the surety remits the fee to the SBA. Sureties also charge principals a premium for issuing and servicing the bond. Sureties are not allowed to charge principals a premium that is more than the amount permitted under applicable state law. Premiums vary depending on the surety's assessment of the risk involved and job size; typically ranging from 1.5% to 3.0% of the contract amount. Surety Eligibility Standards and Program Requirements Sureties interested in participating in the Prior Approval Program or the Preferred Surety Bond Guarantee Program (PSB program) must apply in writing to the SBA. Applicants must be a corporation listed by the U.S. Treasury as eligible to issue bonds in connection with federal procurement contracts. The SBA considers several factors when evaluating sureties for the PSB program: the surety must have an underwriting limitation of at least $6.5 million on the Department of the Treasury's list of acceptable sureties; the surety must agree that it will neither charge a bond premium in excess of that authorized by the appropriate state insurance department nor impose any non-premium fee unless such fee is permitted by applicable state law and approved by the SBA; the surety's premium income from contract bonds guaranteed by any government agency (federal, state, or local) can account for no more than one-quarter of the surety's total contract bond premium income; and the surety must vest the underwriting authority for SBA guaranteed bonds to its own employees and final settlement authority for claims and recovery to employees in the surety's permanent claims department. The SBA also considers the surety's rating or ranking designation assigned by a recognized authority. Sureties participating in the PSB program are not eligible to participate in the Prior Approval Program. However, this prohibition does not apply to the surety's affiliates provided that the affiliate is not a participant in the PSB program, their affiliation has been fully disclosed to the SBA, and the affiliate has been approved to participate in the Prior Approval Program. Sureties in the Prior Approval Program must obtain the SBA's approval before issuing a guaranteed bond. Sureties in the PSB program may issue, monitor, and service SBA-guaranteed bonds without prior approval. However, these sureties must notify the SBA electronically of all bonds issued and, for final bonds, they must report and submit to the SBA on a monthly basis all contractor and surety fees that are due. These sureties are also subject to a periodic maximum guarantee authority amount set by the SBA. In addition, effective August 21, 2017, sureties are required, during their initial nine months in the PSB program, to obtain the SBA's prior written approval before executing a bond greater than $2 million. The SBA argued that it was in the taxpayer's interest to require newer sureties to "demonstrate an understanding of the program before being allowed to issue bonds larger than $2 million without SBA's oversight." The terms and conditions of the SBA's bond guarantee agreements with the surety, including the guarantee percentage, may vary from surety to surety, depending on past experience with the SBA. The SBA may take into consideration, among other things, the rating or ranking assigned to the surety by recognized authorities, the surety's loss rate, average contract amount, average bond penalty per guaranteed bond, and the ratio of bid bonds to final bonds, all in comparison with other sureties participating in the same SBA Surety Bond Guarantee Program (Prior Approval or PSB programs). Sureties are required, among other things, to evaluate the credit, capacity, and character of a principal using standards generally accepted by the surety industry and in accordance with the SBA's standard operating procedures on underwriting and the surety's principles and practices on unguaranteed bonds; reasonably expect that the principal will successfully perform the contract to be bonded; provide bond terms and conditions that are reasonable in light of the risks involved and the extent of the surety's participation; be satisfied as to the reasonableness of cost and the feasibility of successful completion of the contract; ensure that the principal remains viable and eligible for the program; monitor the principal's progress on guaranteed contracts; maintain documentation of job status requests; take all reasonable action to minimize risk of loss, including, but not limited to, obtaining from each principal a written indemnity agreement, secured by such collateral as the surety or the SBA finds appropriate, which covers actual losses under the contract and imminent breach payments; and in the case of loss, pursue all possible sources of salvage and recovery. Participating sureties are subject to audits by SBA-selected and -approved examiners. Prior Approval Program sureties are audited at least once each year and PSB sureties are audited at least once every three years. The SBA does not charge sureties (or small businesses) application or bid bond guarantee fees. It does require sureties to pay a guarantee fee on each SBA-guaranteed bond (other than bid bonds). The surety fee, which is determined by the SBA and published in the Federal Register , is a percentage of the bond premium. The FY2019 surety fee is 20% of the bond premium that the surety charges the small business, rounded to the nearest dollar. The surety fee is due within 60 days after the SBA's approval of the prior approval payment or performance bond. The SBA does not receive any portion of a surety's non-premium charges. Program Statistics As shown in Table 2 , the number and amount of bid bonds guaranteed by the SBA has generally increased in recent years. For example, in FY2007, the SBA guaranteed 4,192 bid bonds totaling $1.7 billion. In FY2018, the SBA guaranteed 7,354 bid bonds totaling $4.7 billion. Table 2 also shows that the number and amount of SBA-guaranteed final bonds declined somewhat from FY2007 through FY2009 (coinciding with the 2007-2009 recession), and has generally increased since then. Recent increases are likely due to generally improving economic conditions and legislation that temporarily ( P.L. 111-5 ) and then permanently ( P.L. 112-239 ) raised the program's maximum individual contract amount from $2 million to $5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. As shown in Table 3 , excluding program costs of about $4 million annually, the program has experienced a net positive cash flow in each of the past 12 fiscal years. There is about $97 million in the Surety Bond Guarantee Program Revolving Fund. Historically, the program's default rate has averaged about 3% to 5%. According to the SBA, on average, the default rate on larger contracts tends to be lower than for smaller contracts and the recovery rate for larger contract defaults tends to be greater than for smaller contract defaults. Currently, 28 sureties participate in the Prior Approval Program and 6 participate in the PSB program. Agents empowered to represent a participating surety company are located, or licensed, in all 50 states, American Samoa, the District of Columbia, Guam, the Marshall Islands, Micronesia, the Northern Mariana Islands, Palau, Puerto Rico, and the Virgin Islands. About 80% of the SBA's surety bonds are issued through the Prior Approval Program and 20% through the PSB program. Congressional Issues: Bond Limits and Guarantee Rates 111th Congress: Bond Limits P.L. 111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA), provided the program an additional appropriation of $15 million and temporarily increased, from February 17, 2009, through September 30, 2010, the maximum bond amount from $2 million to $5 million. The act also authorized the SBA to guarantee a bond of up to $10 million if a federal contracting officer certified in writing that a guarantee in excess of $5 million was necessary. It also revised the program's size standard to "the size standard for the primary industry in which such business concern, and the affiliates of such business concern, is engaged, as determined by the Administrator in accordance with the North American Industry Classification System." The new size standard (e.g., up to $36.5 million in average annual receipts over the previous three years for most heavy construction contractors, and up to $15 million in average annual receipts over the previous three years for specialty trade contractors) increased the number of businesses that qualified for the program. Using its rulemaking authority, the SBA made ARRA's temporary size standard permanent on August 11, 2010. Proponents argued that the increased bond limit and size were necessary to "ensure that small businesses are able to secure the surety bonds they need to compete for contracts, grow, and hire more employees." They also argued that "in our current economic recession, small businesses are finding it even more difficult to secure the credit lines necessary to get bonds in the private sector." In their view, the temporary changes would create "significant opportunities to create jobs now in which small businesses will participate and be the driving engine for creation of new jobs in our country." There was no apparent organized opposition to these specific temporary changes to the Surety Bond Guarantee Program. However, there was opposition to ARRA's package of program enhancements for the SBA as a whole, which among other things, provided the SBA $730 million in additional funding, including $255 million for a temporary, two-year small business stabilization program to guarantee loans of $35,000 or less to small businesses for qualified debt consolidation, later named the America's Recovery Capital (ARC) Loan program and $375 million to temporarily subsidize fees for the SBA's 7(a) and 504/CDC loan guaranty programs and increase the 7(a) program's maximum loan guaranty percentage to 90%. Instead of modifying the SBA's program requirements and increasing the SBA's appropriation, opponents advocated business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small businesses, generate economic growth, and create jobs. 112th Congress: Bond Limits On September 12, 2011, the Obama Administration advocated, as part of its proposed American Jobs Act, a temporary increase in the SBA surety bond limit to $5 million until the end of FY2012. The Administration argued that raising the program's bond limit "will make it easier for small businesses to take advantage of contracting opportunities generated by the American Jobs Act's proposed infrastructure investments." On December 7, 2012, the Administration also recommended, as part of its request for an additional $60.4 billion in federal resources to address damage caused by Hurricane Sandy, that the SBA surety bond limit be increased to $5 million to enable "more small businesses to participate in the recovery efforts." There were several legislative efforts during the 112 th Congress to increase the program's bond limit. S. 1334 , the Expanding Opportunities for Main Street Act of 2011, and its companion bill in the House, H.R. 2424 , would have reinstated and made permanent ARRA's higher limits (up to $5 million and up to $10 million if a federal contracting officer certifies in writing that a guarantee in excess of $5 million is necessary). Neither of these bills was reported by a committee for consideration by the House or the Senate. S. 1660 , the American Jobs Act of 2011, and its companion bill in the House, H.R. 12 , would have provided $3 million in additional funding to pay for the cost of temporarily increasing the program's bond limit to $5 million from $2 million until the end of FY2012. Cloture on a motion to proceed to S. 1660 was not invoked in the Senate on October 11, 2011, by a vote of 50 to 49. H.R. 12 was not reported by a committee for consideration in the House. On December 12, 2012, the Senate Committee on Appropriations released its draft of the Hurricane Sandy Emergency Assistance Supplemental bill. It included a provision to increase the program's bond limit to $5 million. This provision was later removed following congressional approval of H.R. 4310 , the National Defense Authorization Act for Fiscal Year 2013, which became law ( P.L. 112-239 ) on January 2, 2013. It increased the program's bond limit to $6.5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. There was relatively little discussion in the legislative record concerning the reasons for increasing the surety bond program's bond limits, and even less discussion of the reasons for not increasing the limits. Hearings were not held on S. 1334 and H.R. 2424 . Also, only one witness during hearings on H.R. 4310 addressed the SBA surety bond program. That witness supported an increase in the surety bond limit to $5 million, and up to $10 million if a contracting officer certifies its necessity. Advocates argued that bond limits should be raised to bring them more in line with the contracting amounts for other small business programs, such as the 8(a) Minority Small Business and Capital Ownership Development Program, the Historically Underutilized Business Zone (HUBZone) program, the Women-Owned Small Business Federal Contract program, and the Service-Disabled Veteran-Owned Small Business Concerns Program. For example, under 8(a) Minority Small Business and Capital Ownership Development Program, federal contracting officials, at that time, could provide a sole source award to a 8(a) small business if the anticipated award price of the contract did not exceed $6.5 million for manufacturing contracts (now $7.0 million) or $4 million for other contract opportunities, and the contracting officer believed that the award could be made at a fair and reasonable price. Advocates argued that raising the program's bond limit would provide more consistency across small business contracting programs and make it easier for agencies experiencing difficulty issuing contracts in increments of $2 million or less (e.g., the Department of Defense [DOD], the General Services Administration, and the Department of State) to participate in the program. Advocates also argued that small businesses awarded contracts exceeding $2 million under the other small business contracting programs are at risk of not being able to complete those contracts due to difficulties in securing a surety bond. For example, the House Committee on Armed Services' Panel on Business Challenges in the Defense Industry argued that the SBA surety bond program's limit should be increased to $6.5 million to match the 8(a) program's $6.5 million threshold for manufacturing contracts and to "increase the opportunities for small businesses to compete for federal contracts, especially in those departments, such as the Department of Defense, where the average size of construction contracts awarded to small businesses for FY2010 exceeded $5.9 million—nearly triple the size for which SBA can provide bonding support." There was no organized opposition to raising the program's bond limits. One possible argument that could have been raised is that higher limits could lead to higher amounts being guaranteed by the SBA and, as a result, increase the risk of program losses. However, the SBA's experience with Recovery Act bonds (over $2 million) suggested that raising the limit may not lead to an increased risk of program losses. The SBA reported that the program's default rate on Recovery Act bonds was lower, in 2009 and 2010, than for its other bonds. The SBA guaranteed 166 Recovery Act bid bonds valued at $518 million and 52 Recovery Act final bonds valued at $145.4 million. There were two defaults, with a bond value of $2.7 million and $2.2 million, respectively. 113th Congress: Guarantee Rates In an effort to enhance surety participation in the SBA's program, H.R. 776 , the Security in Bonding Act of 2013, introduced and referred to the House Committee on the Judiciary and the House Committee on Small Business on February 15, 2013, would have increased the PSB program's guarantee rate from not to exceed 70% to not to exceed 90% of losses. The bill was reported favorably by both committees on May 21, 2014, and included in H.R. 4435 , the Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015, which was passed by the House on May 22, 2014. This provision was not included in the final version of the bill which was subsequently passed by Congress. Advocates of increasing the PSB program's guarantee rate argued that Despite the different guarantee amounts and the differing levels of review, both the PAP [Prior Approval Program] and PSBP [Preferred Surety Bond Guarantee Program] have similar levels of default. However, over the years, the PSBP program has become less effective for small businesses since only four sureties currently participate in the program because the guarantee rates are no longer competitive enough to encourage commercial sureties to participate. Therefore, since the PSBP is the more efficient program and … does not expose taxpayers to any risk, this legislation amends the SBIA [Small Business Investment Act] to standardize the guarantee rate at 90 percent. The SBA did not formally endorse the proposed guarantee rate increase. However, in its FY2015 and FY2016 congressional budget justification documents, the SBA indicated that it "will investigate establishing a single guaranty percentage in the Prior Approval and PSB programs and restructuring the Prior Approval program." Also, when asked at a congressional hearing held on May 23, 2013, about the proposed guarantee rate increase, an SBA official testified that We are looking very closely at the program. We have seen a decline in the preferred sureties going down from 50% to 14% of our program, which is a very small number. We would like to see more participation in that program. Because of the additional cash flow we have, we do not expect it to increase our costs. And we have some history in our other programs that demonstrate that having the same guarantee level is not a disincentive. There was no discussion in the legislative record during the 113 th Congress opposing an increase in the guarantee rate for the PSB program. One possible objection might have been that increasing the guarantee rate could increase the risk of program losses and result in higher program fees. Higher fees, in turn, could cause hardship for some companies seeking a surety bond. 114th Congress: Preferred Surety Bond Guarantee Rates Increased H.R. 838 , the Security in Bonding Act of 2015, was introduced and referred to the House Committee on the Judiciary and the House Committee on Small Business on February 10, 2015. The bill would have increased the PSB program's guarantee rate from not to exceed 70% to not to exceed 90%, specify requirements concerning the pledge of assets by individual sureties, and require GAO to examine the effects of these changes on small businesses. The House-passed version of H.R. 1735 , the National Defense Authorization Act for Fiscal Year 2016, included H.R. 838 's provisions. The Senate-passed version of the bill did not. The conference agreement for H.R. 1735 , which became P.L. 114-92 , included H.R. 838 's provision to increase the PSB program's guarantee rate from not to exceed 70% to not to exceed 90% of losses and its provision to specify requirements concerning the pledge of assets by individual sureties, subject to a one-year delay "to allow for the necessary rulemaking." Congress specified additional requirements concerning the pledge of assets by individual sureties as a means to ensure that "individual sureties have sufficient assets to redeem the bonds." The SBA's final rule implementing the increased PSB program's guarantee rate was effective as of September 20, 2017. Congressional Issues: Program Structure The SBA has reported that it is focusing on "strengthening relationships with individual surety companies and the large network of bond agents and producers across the country in order to reach more small businesses in need of bonding." As part of this outreach effort, the SBA has reported that it will continue to emphasize "process improvements that will streamline the application requirements for small businesses and surety companies and their agents." For example, in August 2012, the SBA announced a "Quick APP" for surety bonds up to $250,000 that provides a streamlined underwriting and application process by combining "two applications into one to make it easier and faster for small businesses and contractors, including veteran-owned small businesses, to compete for contracts." The SBA increased the Quick APP (now called the Quick Bond Program) eligibility threshold to $400,000 in 2017. In addition, the SBA reported in 2016 that it was also considering combing the Prior Approval Program and PSB program into a single program featuring the streamlined bond approval and monitoring processes under the PSB program. Several industry groups, including the National Association of Surety Bond Producers and The Surety & Fidelity Association of America, have recommended that the programs be merged, the emphasis on reduced regulatory burdens under the PSB program be maintained, and the program's fees kept as low as economically feasible as a means to encourage more sureties to participate in the program. Perhaps because the proposal has not been formally introduced as a bill, there are no public statements opposing the merger of the two programs. Opposition might come from (1) those who are not convinced that the Surety Bond Guarantee Program is necessary to supplement the private market for surety bonds and would prefer that the program be eliminated rather than reformed or (2) those who believe that a federal program is necessary to supplement the private market for surety bonds, but the existing program is sufficient to meet that need and does not require changes to encourage its expansion. Still other opponents might argue that providing additional authority to sureties to approve and monitor bonds could increase the risk of defaults and program losses. Concluding Observations Throughout the program's history, both congressional testimony and GAO examinations have indicated that smaller contracting firms, and especially minority-owned and women-owned small business contracting firms, often have a more difficult time accessing surety bonds in the private marketplace than larger firms. For example, in 1995, GAO reported that "it is not unusual for a small construction company to have some difficulty in obtaining a surety bond." GAO found that about one in three of the smallest contracting firms it surveyed, compared with about one in six of the larger contracting firms it surveyed, reported that they were required to provide collateral. GAO also reported The experiences of the minority-owned firms differed from those of the firms not owned by minorities in several areas. For example, these firms were more likely to be asked to provide certain types of financial documentation, as well as to provide collateral or to meet other conditions; were more likely to be denied a bond and to report losing an opportunity to bid because of delays in processing their request for a bond; and were more likely to depend on jobs requiring bonds for a higher proportion of their revenues. The women-owned firms differed from the firms not owned by women in a few key respects. For example, they … were more likely to be asked to provide more types of financial or other documentation to obtain a bond. In addition, the minority-owned firms reported more often than the firms not owned by minorities that they had to (1) establish an escrow account controlled by the surety company, (2) hire a CPA or a management or consulting firm selected by the surety company to manage the contract, and (3) enter into an arrangement that allows the surety company to manage the job even when the firm is not in default. Although congressional testimony and GAO examinations have supported the need for a program such as the SBA's Surety Bond Guarantee Program, that testimony and GAO's surveys of businesses have been somewhat less useful in helping Congress determine the appropriate size for the program. For example, a review of congressional hearings since the program's inception suggests that congressional witnesses representing the surety companies and various construction organizations, including minority-owned small contracting businesses, have focused their testimony on the need to reduce the SBA's paperwork requirements, which are designed to prevent fraud but increase the sureties' costs; keep the program's fees as low as possible; and keep the program's guarantee rates as high as possible. The SBA's testimony has tended to focus on the need to attract more sureties to the program so that it can reverse the slow downward trajectory the program has experienced over the past two decades in the number and amount of final bonds guaranteed. There has been relatively little testimony provided concerning the broader issue of how large the program should be in comparison with the private sector and what measures or metrics could be used to help make that determination. One possible starting point for determining the program's size in comparison with the private sector is to examine congressional testimony concerning the supply and demand for sureties in the private sector. That testimony suggests that the supply and demand for sureties tends to fluctuate with changes in the overall economy, with the supply of sureties contracting during economic recessions and expanding during economic expansions and the demand for sureties slowing during economic recessions and increasing during economic expansions. Arguably, federal policies could take these fluctuations into account—enacting policies that expand federal support for surety guarantees when supply is tight and reducing federal support for surety guarantees when supply is more plentiful. Of course, when making these decisions, it is necessary to first establish measures or metrics to determine current market conditions. In addition, this line of reasoning assumes that having a federal presence in the surety marketplace is desirable, an assumption not held by all. Ultimately, although having established measures or metrics concerning the supply and demand for surety bonds might be helpful in determining the appropriate size for the SBA's Surety Bond Guarantee Program, that decision will largely rest on personal views concerning the role of the federal government in the private marketplace and the level of acceptable risk in assisting small businesses to gain greater access to surety bonds. Appendix. SBA Surety Bond Guarantee Program Statistics

The Small Business Administration's (SBA's) Surety Bond Guarantee Program is designed to increase small businesses' access to federal, state, and local government contracting, as well as private-sector contracts, by guaranteeing bid, performance, and payment bonds for small businesses that cannot obtain surety bonds through regular commercial channels. The program guarantees individual contracts of up to $6.5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. The SBA's guarantee currently ranges from 80% to 90% of the surety's loss if a default occurs. In FY2018, the SBA guaranteed 10,800 bid and final surety bonds with a total contract value of nearly $6.5 billion. A surety bond is a three-party instrument between a surety (who agrees to be responsible for the debt or obligation of another), a contractor, and a project owner. The agreement binds the contractor to comply with the contract's terms and conditions. If the contractor is unable to successfully perform the contract, the surety assumes the contractor's responsibilities and ensures that the project is completed. Surety bonds encourage project owners to contract with small businesses that may not have the credit history or prior experience of larger businesses and may be at greater risk of failing to comply with the contract's terms and conditions. Surety bonds are important to small businesses interested in competing for federal contracts because the federal government requires prime contractors—prior to the award of a federal contract exceeding $150,000 for the construction, alteration, or repair of any building or public work of the United States—to furnish a performance bond issued by a surety satisfactory to the contracting officer in an amount that the officer considers adequate to protect the government. P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, increased the program's bond limit to $6.5 million, or up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. The limit had been $2 million since 2000, with a temporary increase from February 17, 2009, through September 30, 2010, to $5 million, and up to $10 million if a federal contracting officer certified in writing that such a guarantee was necessary. Advocates of raising the program's bond limit argued that doing so would increase contracting opportunities for small businesses and bring the limit more in line with limits of other small business programs, such as the 8(a) Minority Small Business and Capital Ownership Development Program and the Historically Underutilized Business Zone (HUBZone) Program. Opponents argued that raising the limit could lead to higher amounts being guaranteed by the SBA and, as a result, increase the risk of program losses. This report examines the program's origin and development, including (1) the decision to supplement the original Prior Approval Program with the Preferred Surety Bond Guarantee Program that initially provided a lower guarantee rate (not to exceed 70%) than the Prior Approval Program (not to exceed 80% or 90%, depending on the size of the contract and the type of small business) in exchange for allowing preferred sureties to issue SBA-guaranteed surety bonds without the SBA's prior approval; (2) P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, which increased the Preferred Surety Bond Guarantee Program's guarantee rate from not to exceed 70% to not to exceed 90% of losses; and (3) the decision to increase the program's bond limit.

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Introduction Telecommunication providers and technology companies around the world have been working together to research and develop new technology solutions to meet growing demands for mobile data from consumers and industrial users. Fifth-generation (5G) mobile technologies represent the next iteration of mobile communications technologies that were designed to improve current (e.g., 3G, 4G) mobile networks. 5G networks are expected to provide faster speeds, greater capacity, and the potential to support new features and services. 5G technologies were developed to accommodate the increasing demands for mobile data (i.e., more people using more data on more devices). 5G technologies are expected to serve current consumer demands and future applications (e.g., industrial Internet of Things, autonomous vehicles). 5G technologies are expected to yield significant consumer benefits (e.g., assisting the disabled, enabling telemedicine), industrial benefits (e.g., automated processes, increased operational efficiencies, data analytics), and economic benefits (e.g., new revenues, new jobs). Past experience has shown that companies first to market with new technologies capture the bulk of the revenues. Hence, companies around the world are racing to develop and deploy 5G technologies, and many countries (e.g., central governments), seeing potential for economic gain, are taking action to support 5G deployment. This competition between companies and countries to lead 5G technologies and capture the bulk of the revenues is often called the "race to 5G." In the United States, Congress has monitored the progress of 5G deployment, and the U.S. position in the race to 5G. Congress has made spectrum available for 5G use, and directed the federal government to identify additional spectrum for future 5G use. Congress has also streamlined processes for deploying 5G equipment (also known as small cells ) on federal land; additionally, in 2018, legislation was introduced in the Senate which would have streamlined processes for deploying 5G small cells. To protect national security interests and to ensure the security of 5G networks, Congress restricted federal agencies from purchasing certain foreign-made telecommunications equipment. This report provides a background on mobile technologies, and addresses the race to 5G, focusing on three leading countries—the United States, China, and South Korea. This report discusses factors affecting 5G deployment, and U.S. actions to support 5G deployment, such as actions related to small cells and national security. Finally, this report discusses near-term policy considerations for Congress related to the deployment of 5G networks, and future policy considerations, including the privacy and security of 5G networks and devices. Background on Mobile Technologies The first mobile phones appeared in the 1980s. Since then, mobile phone use has increased exponentially. The number of smartphone users in the United States has grown from nearly 63 million in 2010 to an estimated 238 million in 2018. Worldwide, there are an estimated 4.5 billion mobile phone users, 2.5 billion of which are smartphone users. More people are using more data on more mobile devices; as a result, demand for mobile data is rapidly increasing. Telecommunication companies continually invest in their networks to provide faster, more reliable service, expand the capacity of networks to meet growing demands for data, and support new technology uses. Approximately every 10 years, a new technology solution emerges from industry studies and research that offers vastly improved speeds, supports new features and functions, and creates new markets and new revenue for providers. These technologies offer such significant improvements to networks and devices that they change the way people use mobile communications, and thus represent the next generation of mobile technology. In mobile communications, there have been five generations of technology. Figure 1 provides an overview of the technologies. First-generation (1G) technologies brought consumers the first mobile phone. The phone and the service were expensive, and the basic analog networks offered voice-only services, and limited coverage and capacity. Second-generation (2G) technologies used digital networks, which supported voice and texting. Networks were expanded and phones were made more affordable, increasing adoption. Third-generation (3G) technologies supported voice, data, and mobile access to the internet (e.g., email, videos). Smartphones were introduced, and people began using mobile phones as computers for business and entertainment, greatly increasing demand for data. Fourth-generation (4G) technologies offered increased speeds, and true mobile broadband that could support music and video streaming, mobile applications, and online gaming. Providers offered unlimited data plans and mobile devices that could be used as hotspots to connect other devices to the network, further increasing demand for mobile data. Each generation was built to achieve certain levels of performance (e.g., certain levels of speed, higher capacity, added features). To be called a "3G network" implied a specific network architecture and specific technologies were used, certain levels of speeds were offered, and new features were supported. In earlier generations, companies and countries adopted different technical standards to achieve performance requirements. In 3G and 4G, companies and countries began building networks to the same standards. This enabled equipment to be used in many countries, enabled manufacturers to achieve economies of scale, and enabled carriers to speed deployment. For example, for 4G, companies and countries adopted Long-Term Evolution (LTE) standards, which redefined the network architecture to offer greater speeds and capacity. Fifth-generation (5G) networks utilize 5G standards, which use new technologies and deployment methods to provide faster speeds, greater capacity, and enhanced services. 5G networks are expected to meet the increasing demand for data from consumers, and to support new services. 5G was also designed to meet growing demands for data from industrial users, and to support the growing use of mobile communications technologies across multiple industries (e.g., crop management systems, public safety applications, new medical technologies). Factors Driving the Need for Improved Wireless Networks Three factors are driving the need for improved wireless networks. First, there are more people using more data on more devices. Since 2016, more people worldwide have been using more data on mobile devices such as smartphones than on desktops. Globally, mobile data traffic is expected to increase sevenfold from 2016 to 2021, and mobile video is driving that increase. The spectrum used for mobile communications is becoming crowded and congested. Current networks (e.g., 3G, 4G) cannot always meet consumer demands for data, especially during periods of heavy use (e.g., emergencies). During periods of heavy use, consumers may experience slow speeds, unstable connections, delays, or loss of service. Second, the total number of internet-connected devices, both consumer devices (e.g., smart watches, smart meters) and industrial devices (e.g., sensors that assist with predictive maintenance), has increased. Market research indicates that in 2018 there were 17.8 billion connected devices globally; 7 billion of which were not smartphones, tablets, or laptops, but other connected devices (e.g., sensors, smart locks) that allow users to monitor and manage activities through a mobile device, such as a smartphone, further increasing demand on networks. Third, industries are relying on internet-connected devices in everyday business operations. Companies use devices to track assets, collect performance data, and inform business decisions. These devices, when connected, form the Internet of Things (IoT)—the collection of physical objects (e.g., health monitors, industrial sensors) that interconnect to form networks of devices and systems that can collect and compute data from many sources. More advanced IoT devices (e.g., autonomous cars, emergency medical systems) need networks that can provide persistent ("always-on") connections, low latency services (i.e., minimal lag time on commands), greater capacity (e.g., bandwidth) to access and share more data, and the ability to quickly compile and compute data. These are features that current mobile networks cannot consistently support. The Emergence of 5G Technologies Since 2012, telecommunications standards development organizations (SDO), with the help of their industry partners, have been researching ways to improve mobile communication networks; link people, devices, and data through a smart network; and enable a "seamlessly connected society." Companies are developing new technologies that are expected to improve networks, meet the growing demand for data, support IoT applications, and enable a seamlessly connected society. Telecommunication and technology companies experimented with new, higher-band spectrum (i.e., millimeter waves) that could provide greater bandwidth and speed. However, these waves cannot travel long distances or penetrate obstacles (e.g., trees, buildings); companies worked together to develop technologies that capitalize on the strengths of this spectrum (e.g., bandwidth and speed) and address its shortfalls through innovative technology solutions (e.g., placing smaller cell sites close together to relay signals around obstacles and over longer distances). The research identified several solutions that offer vastly improved speeds (from 10 times to 100 times faster than 4G networks), greater bandwidth, and ultra-low latency service (i.e., 1-2 milliseconds (ms) of lag time as opposed to 50 ms for 4G). These solutions address many of the perceived shortcomings of existing networks and offer new features that could support and expand the use of more advanced technologies for consumers and businesses. Uses of 5G Technologies 5G networks offer the increased bandwidth, constant connectivity, and low latency services which can enhance and expand the use of mobile technologies for consumers and businesses. Consumers are to be able to download a full-length, high-definition movie on their mobile device in seconds; engage in video streaming without interruption; and participate in online gaming anywhere. 5G technologies are expected to create new revenue streams for technology companies and telecommunications providers. 5G technologies are also expected to support interconnected devices (e.g., smart homes, medical devices), and advanced IoT systems, such as autonomous vehicles, precision agriculture systems, industrial machinery, and advanced robotics. IoT technologies are expected to be integrated into industrial systems to automate processes and to optimize operational efficiencies. 5G networks are expected to support the growing IoT industry, enabling device makers to develop and deploy new IoT devices and systems across multiple industries, and sell IoT products globally, yielding significant economic gains for technology companies and for the countries where those companies are located. Figure 1 shows an interconnected tractor system, and the progression of a single product to a connected product to an IoT system that can process data from many sources to inform decisions. Race to 5G During the deployment of 4G networks, U.S. companies took the lead in developing new technologies. U.S. companies drove industry standards, brought products to market, gained first-mover advantage, and achieved significant economic gains for themselves and the United States. Analysts conclude that "U.S. leadership on 4G added nearly $100 billion to [the U.S.] economy and brought significant economic and consumer benefits." Industry analysts predict 5G will generate new revenue for technology companies and for the countries where those companies are located. For example, in a study commissioned by the Cellular Telecommunications and Internet Association (CTIA), IHS Markit estimated that 5G could produce up to $12.3 trillion in global sales across multiple industries by 2035. In another analysis, Accenture reports that U.S. telecommunication providers are expected to invest approximately $275 billion in 5G infrastructure, which could create up to 3 million new jobs in the United States and add up to $500 billion to the nation's GDP. Past experience has shown that companies that are first to market capture the bulk of the economic benefits from new technologies. Hence, companies around the world are racing to bring 5G products to markets. Technology companies (e.g., network equipment manufacturers, chip makers, smartphone manufacturers, and software companies) are producing 5G equipment and devices for providers. Telecommunications providers are deploying 5G infrastructure and marketing new 5G products to gain domestic market share and increase revenues. Countries around the world (i.e., central governments) are supporting 5G efforts to ensure their companies are first to deploy 5G products and services, and positioned to capture the bulk of the economic benefits from the new technology—to "win the race to 5G." 5G Leaders There have been several industry reports on countries leading in 5G. In a 2018 report, Deloitte notes that "The United States, Japan, and South Korea have all made significant strides toward 5G readiness, but none to the same extent as China." A 2017 study by IHS Markit, a data analytics and information services firm, examined the economic activity for seven countries: the United States, China, South Korea, Japan, Germany, United Kingdom, and France. The 2017 IHS Markit study concluded, that based on projected research and development (R&D) and capital expenditure (Capex) investments in 5G from 2020 to 2035, the United States and China are expected to drive and dominate 5G technologies over the next 16 years. More recent reports paint a different picture of 5G leadership. An April 2018 report by Analysys Mason, commissioned by CTIA, concluded that with the first 5G standards approved in December 2017, there was a shift in readiness between nations. In the report, the United States ranked third in readiness behind China and South Korea. According to the report, China is showing greater signs of readiness due to government planning and coordination with industry. The government's "Made in China 2025" initiative (released in 2015) and its more recent five-year economic plan (China's 13 th Five-Year Plan for Economic and Social Development Plan for the People's Republic of China, 2016) established a path to gain leadership of 5G. China financed R&D projects, supported Chinese industry efforts to participate in standards development, and collaborated with international partners to test new equipment and technology solutions. China also provided $400 billion in 5G investments, coordinated with companies manufacturing 5G technologies, and worked with Chinese providers to deploy 5G infrastructure to achieve its goal to launch 5G by 2020. Analysts report that China's technology companies and telecommunications providers are committed to the national plan and 2020 timeline. Industry analysts have pointed to other actions by China that indicate China is positioning itself to dominate in 5G technologies. Analysts note that China has set targets to increase the use of Chinese equipment and components in its 5G networks. China wants locally-made chips to be used in 40% of smartphones sold domestically by 2025, and domestic firms to have 60% of the market in industrial sensors. China plans to deploy domestically; capture the revenues from its massive domestic market (e.g., consumers and industrial users); upgrade industrial systems to increase the efficiency, productivity, and competitiveness of Chinese technology companies; build its capacity to develop technology equipment and components; and become a leading supplier of 5G technologies to the world (e.g., network equipment and IoT devices). In the Analysys Mason report, South Korea was positioned ahead of the United States "based on a strong push for early 5G launch combined with government commitment to achieving 5G success." South Korea advanced in 5G readiness due to early investments in R&D and trial deployments at the 2018 Olympics. The early investment in 5G allowed South Korea to claim credit for the first large-scale pilot of 5G technologies. Some analysts rank China above the United States in 5G readiness, while other analysts assert that the competitive market in the United States spurs innovation, which could give the United States an edge in the global 5G market. Still others note that given the focus on 5G deployment by several Asian nations (e.g., China, South Korea, and Japan); the large Asian market; and the rapid rate of migration to new technologies in Asia, Asia may emerge as a 5G leader. Current 5G Deployment Status The Chinese government has advanced on its plan: investing in R&D, participating and leading in 5G standards development to benefit Chinese firms, engaging in international 5G projects to build knowledge, building capacity to provide 5G equipment, and reserving spectrum for 5G use. A 2018 study found that since 2015, China has outspent the United States by $24 billion in 5G infrastructure, having built 350,000 new cell sites, while U.S. companies have built 30,000 in the same timeframe. Recent reports indicate that after first 5G technical specifications were released in December 2017, Chinese providers began deploying 5G cell sites at a rapid pace, and announced plans to launch 5G in 2019, ahead of the 2020 timeline. Industry observers called this the "China Surge," and concluded that China was positioning to win the race to 5G. South Korea is also moving forward on spectrum. In June 2018, South Korea auctioned both mid-band and high-band spectrum for 5G use. And in July 2018, government officials announced its telecommunications providers would work together to build out a nationwide 5G network. Officials argued that a coordinated approach would reduce duplication, save costs, speed deployment, and enable South Korea to be the first to launch a nationwide 5G network. Telecommunication providers committed to the plan and to launching 5G on the same day—a day the government is calling "Korea 5G Day." According to articles from December 2018, South Korea's providers launched fixed 5G to business users on December 1, 2018, and announced plans to launch mobile 5G for consumers in March 2019 when 5G phones become available. In the United States, private telecommunication providers are driving deployment. For example, Verizon launched fixed 5G services in four cities on October 1, 2018. AT&T launched mobile 5G services in 12 cities on December 21, 2018, with at least 19 more cities targeted in 2019. T-Mobile is building out 5G networks in 30 cities and plans to launch 5G services after 5G cell phones are released in 2019. Sprint is moving ahead with its plans to deploy 5G in 9 cities in the first half of 2019. Analysts assert that the United States ranks near the top in readiness due to industry investment in 5G trial deployments and aggressive timelines for commercial deployment. In the United States, Congress has supported 5G deployment by identifying spectrum for 5G use and easing regulations related to the placement of 5G equipment. The FCC has developed a comprehensive strategy to free spectrum for 5G use and accelerate deployment. In the race to 5G, countries are leading in different ways and in different aspects. China assumed a top-down approach, and is leading on infrastructure deployment; however, China faces the same challenges as other countries in terms of spectrum (e.g., managing incumbent users, avoiding interference)—activities that take time. South Korea has auctioned 5G spectrum and is committed to being the first to deploy 5G nationwide; however, its cooperative approach to deployment may thwart competition and innovation needed to develop new 5G products and compete in the global 5G market. In the United States, industry is leading 5G efforts. The government has supported private deployment efforts by identifying and allocating spectrum for 5G use and reducing regulatory barriers for siting of 5G equipment. However, the lengthy spectrum allocation process, competing demands for spectrum, and local resistance to 5G cell siting regulations may slow 5G deployment in the United States; further, a purely market-based approach to deployment may not ensure that all areas and all industries will have access to 5G. Some industry analysts contend that the race to 5G has just started and is more of a marathon than a sprint, noting "Europe was quicker to roll out 2G, and Japan was the first with 3G, but that hardly deterred Apple and Google from dominating the smartphone market." 5G technologies have many areas of growth, and opportunities to achieve revenues from both the sale of the technology at initial deployment and the sale of products and services after deployment (e.g., innovative applications, subscription services, IoT devices). Industry analysts note that in the race to dominate the global 5G market, months may not matter; but if the United States falls years behind in deploying 5G networks and developing new 5G technologies, devices, and services, that may affect its ability to compete in the global technology market for many years to come. There are factors affecting 5G deployment in all countries, including international decisions on standards and spectrum, and factors affecting deployment in the United States such as resistance to the placement of 5G infrastructure and trade restrictions. Factors Affecting 5G Deployment There are several factors affecting all 5G deployments, including international decisions on standards and spectrum; the management of spectrum (e.g., auctioning spectrum, reconfiguring users to accommodate 5G, establishing agreements to share spectrum); the availability of 5G equipment and devices; and the installation of small cells needed to provide 5G services. Standards In earlier cellular networks, countries and companies built networks, equipment, and devices to different standards; as a result, not all equipment worked on all networks or in all countries. Technology companies and telecommunication providers saw value in developing standards, to enable technology companies to build to one standard, bring products to market faster, sell equipment globally, achieve economies of scale, and reduce the cost of equipment. Two organizations central to this effort for 5G are the 3 rd Generation Partnership Project (3GPP) and the United Nations International Telecommunications Union (ITU). 3GPP is a collaboration of seven telecommunication SDOs from Japan, China, Europe, India, Korea, and the United States. 3GPP has more than 370 members from leading companies from many nations. Members include leading telecommunication providers (e.g., AT&T, China Mobile, SK Telecom), technology companies (e.g., Intel, Qualcomm, Samsung, Ericsson, Huawei, ZTE), and government agencies. 3GPP is one of many organizations working to build consensus on technical specifications for mobile communications (3G, 4G, and 5G). 3GPP members have worked together to develop, test, and build specifications for 5G technologies. In 2018, 3GPP approved two 5G technical specifications: In December 2017, 3GPP approved the "Non-Standalone version of the New Radio standard," which supports enhanced mobile broadband (eMBB). These specifications allow carriers to supplement existing 4G networks with 5G technologies to improve speed and reduce latency. In June 2018, 3GPP completed the "Stand-Alone version of the New Radio standard." This specification supports the independent deployment of 5G, using core networks that are designed to support advanced IoT devices and functions. These specifications are important because they define how 5G networks will be designed and deployed, because they set technical specifications for 5G equipment, and because they have support from a wide array of stakeholders. 3GPP plans to submit these 5G specifications to the ITU in June 2019 as part of the global standards development process. If the ITU ratifies the specifications, those specifications would be recognized as the global standard for the technology. Other SDOs submit specifications to ITU as well; however, 3GPP is recognized as the major standards contributor. Thus, many companies and countries are moving forward on 5G plans based on approved 3GPP specifications. 3GPP is now focused on technical specifications and performance requirements for advanced functions (e.g., 5G for vehicle-to-vehicle communication, industrial IoT). These specifications are expected to be finalized by 3GPP in 2019; thus, networks, equipment, and devices that can support advanced 5G functions are not expected to arrive until 2020 or later. Why Standards Are Important in the "Race to 5G" During the development of 3G technologies, China adopted its own standard to avoid dependence on western technology. While equipment built to those standards was successful in China, the standards were not accepted globally, and equipment could not be successfully exported. Other countries participated in international projects, contributed to international standards, and implemented standards-based networks. By participating in SDOs, a company can shape standards, and ensure that the final standards and requirements for equipment align to its preferred specifications for the product. Companies that are able to gain acceptance of their preferred standards through the standards development process have a head start in bringing products to market and gaining first-mover advantage. This approach is "much more economical than trying to retrofit a product (and its manufacturing process) after a standard is approved." Many countries support industry efforts to participate in standards development. FCC Commissioner O'Rielly noted, "If standards properly reflect and include our industries' amazing efforts, they promote U.S. technologies and companies abroad, bringing investment, revenues, and jobs to this country." For 5G, China played a more cooperative role in standards development, participating in SDOs, leading technical committees, conducting 5G R&D, contributing to 5G specifications, and participating in international projects. Some experts assert that through its participation in SDOs, China is advancing its preferred standards and positioning itself to dominate the global 5G market. As an example, analysts note that many network operators are adopting the 5G Non-Stand Alone standard to leverage their legacy 4G networks as a first step to building out 5G. China is supporting the 5G Stand-Alone standard which would require operators to rebuild core networks and buy new base stations and equipment, and move all countries toward more advanced IoT devices (which China is focused on providing). However, in the development of standards for 5G, SDO members supported both Non-Stand-Alone and Stand-Alone specifications, which enabled them to leverage 4G networks, improve 4G services with 5G technologies, and provide better services as companies plan out 5G deployments. Even before specifications were finalized, some companies and countries advanced 5G plans and launched 5G services. For example, China began deploying 5G infrastructure before 5G specifications were approved, and Verizon launched fixed 5G services using proprietary standards. While these efforts provide some advantages in future deployments, in that companies can prepare for and learn from these deployments, there are also risks. For example, last-minute revisions to the specifications may require China to upgrade those pre-standard 5G sites. To offer mobile 5G technologies, companies need 5G phones, which were under development. So while companies began deploying 5G networks once specifications were approved, they would have to wait for 5G phones to offer mobile 5G services. Since 5G phones were slated for release around the same time (spring 2019), most major carriers in the leading countries announced launch dates that were within months of each other. South Korea is expected to launch mobile 5G services in March 2019. T-Mobile announced it would launch mobile 5G services in early 2019, as did Verizon. AT&T announced plans to offer a 5G smartphone in the first half of 2019. Sprint is expected to launch nationwide 5G in the first half of 2019. China Mobile announced plans to introduce 5G service by the end of 2019—ahead of its 2020 target date. Approval of technical specifications is an important milestone in the race to 5G. With approved specifications, technology companies can begin to manufacture equipment and devices. Once equipment become available, telecommunication companies can begin to build out networks and plan their launch of 5G services. Spectrum Allocation Another factor driving 5G deployment is spectrum. All wireless technologies use the electromagnetic spectrum to communicate. Spectrum refers to the radio frequencies used to communicate over the airwaves. Most countries have spectrum management agencies. In the United States, the FCC manages spectrum allocation for nonfederal users while the National Telecommunications and Information Administration (NTIA) manages spectrum for federal users. Agencies may assign the rights to use specific frequencies to certain users (e.g., public safety users), or sell the rights to use specific frequencies (e.g., telecommunication companies, broadcasters). Companies deploy infrastructure (e.g., towers, equipment) that will enable communications on their assigned frequencies. Error! Reference source not found. provides an overview of U.S. spectrum allocations in 2008 as an example of how the U.S. spectrum is allocated for various communications (e.g., mobile communications) and for other wireless uses (e.g., garage door openers, satellite radio, GPS). Most mobile devices (e.g., cell phones) use frequencies under 6 gigahertz (GHz) because the frequencies in this segment of the spectrum are conducive to wireless communications. For example, frequencies in this segment of the spectrum can travel long distances enabling coverage across wider areas, and can penetrate buildings and walls easily. However, as more people are using more mobile devices for more purposes, this segment of the spectrum (below 6 GHz) is becoming crowded, which can result in slower speeds, slower connections, and dropped calls. In 2015, companies began looking at new spectrum bands that could support mobile communications. Industry researchers identified waves between 30 GHz and 300 GHz (also known as millimeter waves or MMW) that offered greater bandwidth (e.g., higher capacity to handle more traffic) and increased speeds. Telecommunication providers had not considered MMW for mobile communications because the waves are shorter, cannot travel far, cannot travel well through buildings, and tend to be absorbed by trees and rain. Researchers proposed the use of small cells, placed close together, to relay shorter waves across longer distances, and to interconnect them to provide a high-speed network to specific areas, such as a city or a stadium. Typically, telecommunications equipment is designed to function on certain frequencies. Equipment and device manufacturers consider the characteristics of the assigned frequency bands and engineer equipment to take advantage of frequency strengths and mitigate weaknesses. 5G relies on multiple spectrum bands. 5G leverages low-band spectrum (below 1 GHz), mid-band spectrum (1 GHz-6 GHz), and high-band (MMW) spectrum. 5G calls for deployment of 5G technologies in high band spectrum (MMW) spectrum to offer ultra-fast services to high-density areas. 5G technologies deployed in mid-band spectrum offer improved capacity and coverage, faster service, and new features to existing customers. 5G technologies deployed in low-band spectrum can provide the widespread coverage needed for many IoT applications. Studies have shown that delays in spectrum allocation can delay deployments, and put countries at a disadvantage in technology markets. Hence, countries are working to identify spectrum in all three bands for 5G. They are also working together, and with industry, to harmonize spectrum (i.e., ensure all countries are using similar frequency bands) to create economies of scale, reduce costs for manufacturers and providers, and promote compatibility (e.g., roaming) across systems. Global Harmonization of Spectrum Companies around the world are interested in identifying common spectrum for 5G deployment. This would help ensure all companies deploy in the same bands, so that equipment works in all regions. According to one expert, "Harmonized global spectrum is important because with a commonality of spectrum the 5G ecosystem can optimize resources to achieve economies of scale, [reduce the cost of equipment and devices, and] spur rapid proliferation and adoption." Exact harmonization is not necessary; similar ranges of frequencies can support global harmonization. This provides countries (i.e., government agencies responsible for allocating spectrum) with flexibility to accommodate existing users who may be operating in certain bands, and cannot be easily relocated (e.g., military agencies). The ITU works with countries and industries to set standards and harmonize regulations and spectrum use worldwide. In 2019, the ITU is expected to discuss 5G spectrum at its World Radiocommunication Conference (WRC-19). Stakeholders involved in the development of 5G technologies agree that 5G needs spectrum in three key frequency ranges to operate effectively: sub-1 GHz to support widespread coverage across urban, suburban, and rural areas, provide in-building coverage, and support IoT devices and services; 1-6 GHz to provide additional capacity and coverage, including the 3.3-3.8 band, which is expected to form the basis of many initial 5G services; and above 6 GHz, including MMW, to provide ultra-high broadband speeds. Figure 3 shows 5G spectrum targets worldwide, and commonalities in spectrum that may help to inform global harmonization of spectrum for 5G. U.S. Actions on Spectrum The FCC has auctioned spectrum previously; hence telecommunication providers have substantial spectrum holdings in different bands, including frequency bands targeted for 5G. For example, T-Mobile is deploying 5G using its 600 MHz spectrum, and Verizon was able to launch 5G services using its 28 GHz spectrum. In 2018, Congress took action to identify additional spectrum for 5G use. In the Consolidated Appropriations Act, 2018, signed into law on March 23, 2018, Congress enacted two provisions related to spectrum. The Repack Airwaves Yielding Better Access for Users of Modern Services Act of 2018 (RAY BAUM'S Act of 2018), encourages the repurposing of federal spectrum to support 5G. The Making Opportunities for Broadband Investment and Limiting Excessive and Needless Obstacles to Wireless (MOBILE NOW) Act, directs the NTIA to study the impact of deploying in MMW band on federal users. The FCC initiated an auction of the 28 GHz band on November 14, 2018. The auction of the 24 GHz band is to follow. The FCC is preparing additional high-band spectrum for auction. With these auctions, the FCC will have released almost 5 GHz of high-band spectrum for 5G. The FCC stated it has "assigned more high-band spectrum for 5G than any country in the world," noting the United States is 4 GHz ahead of China in high-band spectrum for 5G. The FCC has also initiated proceedings to identify mid-band spectrum (e.g., 2.5 GHz, 3.5 GHz, and 3.7-4.2 GHz) for 5G use. The FCC has identified under-utilized mid-band spectrum that could support 5G, and is examining ways in which mid-band spectrum can be shared between users (e.g., educational, satellite, federal). The FCC is working with the NTIA to identify federal mid-band spectrum that can be repurposed for or shared to support commercial 5G use. The FCC has also granted applications to deploy in the low band (600 MHz), and has targeted changes for the 800 MHz and 900 MHz bands to support 5G use. Further, the FCC has identified additional spectrum for unlicensed (e.g., Wi-Fi) use that will be needed to support 5G networks. Although the FCC is striving to free up spectrum for 5G use, the United States has a complex spectrum allocation process that requires a lengthy rulemaking process, auction process, and relocation process, which takes time. Industry advocates have urged policymakers to plan, collaborate, and set timelines to expedite the availability of spectrum, and coordinate spectrum auctions so providers can plan spectrum acquisitions and deployments. The Trump Administration has focused on 5G planning. On September 28, 2018, the White House held a "5G Summit" with industry and government officials to discuss policies that would help ensure faster deployment of 5G technologies. On October 25, 2018, President Trump signed a Presidential Memorandum calling for a National Spectrum Strategy to assess current and future spectrum needs and support the deployment of 5G through incentives and reduced regulations. Even as the FCC is moving forward on multiple proceedings, U.S. telecommunications executives are arguing that more mid-band spectrum is needed to support 5G deployment. Some policymakers have called for additional spectrum and reduced regulations to spur 5G deployment. Others have stressed the need to ensure 5G benefits are available to all people. Other Countries' Progress on Spectrum In comparison, South Korea simultaneously completed auctions of high-band (28 GHz) and mid-band (3.5 GHz) spectrum in June 2018. South Korea's Ministry of Science and Information and Communications Technology (ICT) allowed operators to start using the 5G frequencies in December 2018, in preparation of the country's launch of mobile 5G planned for March 2019. China reserved spectrum for 5G use in 2017, and sought public comment on the planned use of the mid-band spectrum (3.4-3.6 GHz), and millimeter wave spectrum (24.75-27.5 GHz and 37-42.5 GHz) for 5G. During its public comment process, China noted the potential for disruption to existing users, which is a common issue in spectrum allocation. Experts assert that China has an advantage over the United States in freeing spectrum for 5G, in that it can "exert much stronger control over existing spectrum users." Industry experts have noted that China has eliminated "regulatory red tape to expedite deployment and make it easier for industry to access large blocks of higher frequency spectrum bands." In December 2018, China reportedly allocated large swathes of mid-band spectrum to its three state-owned mobile operators, "preparing the way for large-scale networks testing in 2019, and the launch of commercial 5G services by 2020." Equipment and Devices Just as telecommunications providers are racing to deploy 5G, technology companies and device makers are racing to be the first to deploy 5G equipment and phones, to achieve the economic benefits expected from 5G technologies. U.S. equipment manufacturers are developing 5G equipment and devices. In a July 2018 Senate hearing, Qualcomm announced that it is "on track to deliver chips that support 5G in both sub-6 GHz and millimeter wave spectrum in time to enable 5G data-only devices to launch before the end of 2018 and for the first 5G smartphones … to launch in the first half of 2019." U.S. equipment manufacturers are benefitting from the race to 5G, supplying other countries with 5G technologies, including China. For example, the American chip-maker, Intel, is working with Chinese telecommunications providers. Similarly, technology suppliers from other countries are supporting U.S. deployments. For example, T-Mobile signed a $3.5 billion agreement with the Swedish telecommunications equipment maker Ericsson to support T-Mobile's 5G plans. Most device makers have announced that 5G phones will be available in 2019. While both Verizon and AT&T launched 5G networks in select areas and offered some 5G services, neither offered access to 5G on a smartphone because 5G smartphones were not yet available. With the adoption of 5G specifications, 5G devices are in production and expected to be available in 2019. As a result, most providers have announced plans to launch 5G services in 2019, after devices are released. For example, both Verizon and AT&T have announced a launch of new Samsung 5G devices in the first half of 2019. South Korean device-maker LG announced that its 5G smartphone is expected to be available in the first half of 2019, as a Sprint exclusive. Technology experts have cautioned that since providers are using different spectrum bands to deploy 5G, the first 5G phones may be carrier exclusive (i.e., may only contain one carrier's frequencies). Experts note that "nobody has figured out how to cram the 28 GHz [spectrum] that Verizon and T-Mobile are using, and AT&T's 39 GHz into one box yet. And while T-Mobile and Verizon are using similar 28 GHz bands, T-Mobile is also putting 5G on the 600 MHz band, which Verizon is not." The telecommunications industry is global and co-dependent. Providers partner with technology companies and device makers from around the world to move forward on 5G deployment. The availability of 5G devices will drive adoption and revenues for all telecommunications providers. Hence, the availability of equipment and devices is an important factor in the race to 5G. Small Cell Siting As stated, deployment of 5G systems will rely on a range of technologies and different bands of spectrum. 5G systems using low- to mid-band spectrum can install new 5G equipment on existing cell sites (4G cell sites). This will increase the speed and functionality of existing 4G networks, but will likely not achieve the ultra-fast speeds provided by millimeter wave bands. For deployments that leverage higher bands, particularly above 6 GHz, a much higher density of cell sites is needed as the signals cannot travel as far or through obstacles. To overcome these challenges, providers will place many smaller cell sites (also called small cells ) close together to relay signals further distances and around obstacles. Small cells are low-powered radio access nodes with ranges of between 10 meters to two kilometers (in comparison, macro cell towers can cover up to 20 miles or around 32 kilometers). The lower end of small cell nodes is similar to today's Wi-Fi access points. Often compared in size to a pizza box or backpack, small cells can be installed on existing structures, such as buildings, poles, or streetlights. When attaching small cells to existing infrastructure, installation and operation requires connection to a power source, backhaul (e.g., fiber optic cable connection or wireless connection to a core network), and a permit for use of the space. Installations on existing structures can expand to include multiple small cells for use by different wireless carriers, wires, and adjacent boxes housing batteries or cooling fans. Small cells can also be placed in locations without such existing infrastructure, in which case construction of a pole with a power source and backhaul (i.e., wired connections) is required. In the United States, constructing new wireless towers or attaching equipment to pre-existing structures generally requires providers to obtain approval from federal, state, or local governmental bodies, depending on the location and current owner of the land or structure. The FCC has promulgated rules to ensure all people have access to communications services and to guide approval processes. Past FCC rules require localities to act on cell siting applications in a reasonable period of time; grant the FCC authority to regulate terms and rates of pole attachments unless states elect to regulate poles themselves; restrict state or local entities from prohibiting telecommunications services; grant state and local entities authorities to manage rights-of-way and charge reasonable fees for access to rights-of-way; and require state and local entities to approve eligible facilities requests. 5G small cell installation have sparked debate over the balance between streamlining siting regulations to facilitate 5G deployment nationwide and maintaining local authorities to review placement of cell sites in communities. U.S. industry executives claim that current regulations and local approvals required for placement of telecommunications equipment adds time and cost to deployment, which puts U.S. carriers at a disadvantage in 5G deployment. Local governments and residents have cited concerns about management of rights-of-way, fees charged to providers for access, and the impact of small cells on property values and health and safety. At the September 26, 2018, Commission meeting, the FCC approved new rules aimed at facilitating the deployment of wireless infrastructure for 5G networks. In its ruling, the FCC clarified when a state or local regulation of wireless infrastructure deployment effectively prohibits service; the FCC declared that a state or local government that restricts the entry of a new provider into a service area or inhibits a new service (e.g., 5G) materially inhibits service (which is not permitted under FCC rules); concluded that state and local governments should be able to charge fees that are no greater than a reasonable approximation of objectively reasonable costs for processing applications and for managing deployments in the rights-of-way for 5G deployments; identified acceptable fee levels for small wireless facility deployments; and provided guidance defining criteria for determining whether certain state and local non-fee requirements—such as aesthetic and undergrounding requirements—constitute an effective prohibition of service (which is not permitted under FCC rules). Further, the FCC established two new shot clocks for small wireless facilities which require localities to make decisions on cell siting applications within 60 days for collocation of equipment on preexisting structures and 90 days for new builds; codified the existing 90- and 150-day shot clocks for wireless facility deployments that do not qualify as small cells that were established in 2009; stated that all state and local government authorizations necessary for the deployment of personal wireless service infrastructure are subject to those shot clocks; and adopted a new remedy for missed shot clocks by finding that a failure to act within the new small wireless facility shot clock constitutes a prohibition on the provision of telecommunication services to an area, which is not allowed under FCC rules. The FCC noted that easing cell siting regulations will help to speed 5G deployment, encourage private sector investment in 5G networks, and give the United States an advantage in the global race to dominate the 5G market. Viewpoints on the Rules on Small Cells Prior to the FCC vote on the small cell siting rules in September 2018, nine Members of Congress wrote a letter to the FCC urging the FCC to remove the item from its September meeting agenda. The letter urged the FCC to "hit pause" on the issue to consider the perspectives of cities and municipalities, and to seek a solution that balances the interests of localities and industry. FCC Commissioner Carr, who led the effort to streamline the small cell placement process, invoked the race to 5G in his support of the rules, noting, "We're not the only country that wants to be first to 5G. One of our biggest competitors is China. They view 5G as a chance to flip the script. They want to lead the tech sector for the next decade. And they are moving aggressively to deploy the infrastructure needed for 5G." Industry officials praised the FCC's rules on the day of the vote, noting, "The FCC's action today addresses key obstacles to deploying 5G across the country by reducing unnecessary government red tape." Industry representatives noted that high fee rates and long approval processes cost providers money, delayed the deployment of telecommunications infrastructure, and resulted in fewer sites proposed, and less investment in and services to communities. FCC Commissioner Rosenworcel, who dissented in part, asserted the rules amounted to federal overreach and an override of state and local authorities and worried that "litigation that follows will only slow our 5G future." According to Rosenworcel, the FCC's decision "irresponsibly interferes with existing agreements and ongoing deployments across the country." She cited a recently approved partnership in San Jose, CA, that led to 4,000 small cells on city-owned light poles and $500 million of private investment to support broadband deployment. Many local governments opposed the ruling, saying the rules exceed the FCC's authorities, and preempt local authorities to manage public property, protect public health and safety, and manage small cell installments. Several localities have stated they would experience a loss in revenue due to the FCC's rules. The National Association of Counties and the National League of Cities, in a joint statement, noted, "The FCC's impractical actions will significantly impede local governments' ability to serve as trustees of public property, safety and well-being. The decision will transfer significant local public resources to private companies, without securing any guarantee of public benefit in return." On January 14, 2019, the FCC rules related to small cells went into effect. Various parties are challenging the rules in federal court. Small cell siting is a key issue in U.S. 5G deployment. FCC rules designed to advance national interests (e.g., accelerate 5G deployment, achieve the full benefits from 5G technologies) are conflicting with authorities and regulations designed to protect other interests (e.g., public safety, health, ensuring equal access to advanced technologies). Policies that enable U.S. companies to deploy 5G infrastructure and allow state and local entities to manage the placement of 5G small cells in communities could speed deployment of 5G technologies in the United States and enable the United States to achieve the broader consumer and economic benefits from 5G . National Security and Counterintelligence Concerns On December 18, 2017, the Trump Administration released its first National Security Strategy (NSS). In the context of the NSS's broader discussion of "rejuvenating" domestic economic competitiveness as one pillar of U.S. national security, the Administration identified the enhancement of American infrastructure as a priority action, to include "[improving] America's digital infrastructure by deploying a secure 5G capability nationwide." Security Concerns with 5G Deployments Concern over the rollout of 5G technology from a U.S. national security and intelligence standpoint has been directed at (1) a perceived lack of market diversity that some have argued would result in increased risk to the global telecommunications supply chain; and (2) concern over the potential vulnerability of 5G networks to targeting by foreign intelligence services. In a February 13, 2018, statement for the record prepared for a Senate Select Committee on Intelligence (SSCI) open hearing, Director of National Intelligence Daniel Coats stated The global shift to advanced information and communications technologies (ICT) will increasingly test U.S. competitiveness because aspiring suppliers around the world will play a larger role in developing new technologies and products. These technologies include next-generation, or 5G, wireless technology; the internet of things; new financial technologies; and enabling [artificial intelligence] and big data for predictive analysis. Differences in regulatory and policy approaches to ICT-related issues could impede growth and innovation globally and for U.S. companies. Some analysts and experts have highlighted the substantial investment in 5G technologies made by Chinese companies such as ZTE Corporation and Huawei Technologies Co., Ltd.—and the ties of such companies to the government of China—in raising concerns regarding China's relative position vis-à-vis the U.S. in 5G network development. Those who share this view believe China's ambition is 5G dominance using several methods, including continued investment in networks, products, and standards that support critical infrastructure and services that will rely on 5G technology; shaping industry standards, regulations, and policies; and "extracting concessions from large multinationals in exchange for market access." FBI Director Christopher Wray has also highlighted the potential threat associated with any increase in the integration of Chinese-made or designed devices and 5G cellular network equipment into the United States telecommunications network, stating that We're deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks. That provides the capacity to exert pressure or control over our telecommunications infrastructure. It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage. Others have pointed to the legal leverage the Chinese intelligence services have over companies like Huawei and ZTE to underscore concern over the potential threat Chinese firms could bring to 5G networks: If Huawei or ZTE were to win a contract to supply 5G equipment under market terms, the political and legal environment in China would prevent either company from refusing a subsequent entreaty from either the Chinese intelligence services or military for access to the technology or services…. The [Chinese] government treats Chinese companies operating abroad as subject to [Chinese] law, and multiple new Chinese laws dictate that telecoms operators must provide the Chinese intelligence services with unfettered access to networks for intercept, which raises concerns about Huawei or ZTE 5G support facilities being used for intelligence operations. Security Concerns with Specific Chinese Firms During the 112 th Congress, the House Permanent Select Committee on Intelligence (HPSCI) conducted an investigation into the U.S. national security issues posed by Huawei and ZTE, with the committee's report on the results of the investigation highlighting "the potential security threat posed by Chinese telecommunications companies with potential ties to the Chinese government or military." It found, "in particular, to the extent these companies are influenced by the state, or provide Chinese intelligence services access to telecommunication networks, the opportunity exists for further economic and foreign espionage by a foreign nation-state already known to be a major perpetrator of cyber espionage" and other forms of state-sponsored and corporate espionage. The HPSCI report concludes with a number of recommendations. Among them: (1) The intelligence community should remain focused on the threat of penetration of the U.S. telecommunications market by Chinese companies; and (2) the Committee on Foreign Investment in the United States (CFIUS) should block acquisitions, takeovers, and mergers that involve Chinese companies Huawei and ZTE. In March 2018, CFIUS blocked the takeover of Qualcomm Inc. of the United States—a leader in 5G research and development funding—by Broadcom of Singapore. A U.S. Treasury Department letter of March 5 explaining this decision noted that a takeover of Qualcomm by Broadcom "could pose a risk to the national security of the United States." Although details of the national security concerns are classified, they relate to Broadcom's relationships with third party foreign entities and the national security effects of Broadcom's business intentions with respect to Qualcomm. [Because of] well-known U.S. national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States. Additionally, Section 889 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 ( P.L. 115-232 ) prohibits the heads of federal agencies from procuring telecommunications equipment or services from Huawei, ZTE Corporation, and other telecommunications companies linked to the government of China that could pose a counterintelligence and national security threat to the United States. On January 28, 2019, the U.S. Department of Justice announced criminal charges against Huawei, its Chief Financial Officer, and two affiliates. Security Concerns with 5G Networks Many observers are concerned about the vulnerabilities of 5G networks to exploitation by foreign intelligence services. An individual's ability to use 5G-enabled networks and systems for positive purposes also suggests this same technology can be exploited by foreign intelligence to manipulate perceptions and behavior. That manipulation is likely to take various forms, including efforts to deceive and confuse people in various ways about what is happening and what the truth is … overloading people's senses with useless or irrelevant information so that we cannot accurately discern what adversaries are doing or what is important; and putting misinformation before us to erroneously confirm pre-existing biases and cause us to misperceive reality and to choose the wrong courses of action. They will also try to stoke long-standing animosities and fears so that Americans fight with each other and look foolish to the world we are supposed to be leading. The amount of personal information available for exploitation will expand exponentially with 5G technology, along with doubts as to the security of the networks. This raises concerns among privacy advocates and national security professionals. National security professionals foresee significant challenges for the U.S. intelligence, military, and diplomatic communities in terms of their ability to interact freely and discreetly with foreign nationals who may be deterred by the threat of an aggressive counterintelligence posture. Trade Restriction Concerns Some analysts argue that policies directed at discouraging Chinese investment in the United States not only contradict longstanding U.S. policy of encouraging China to participate in international standards processes, but also may be counterproductive. They suggest that to regard China's influence in 5G technology and standards development as a potential threat to national security may effectively encourage China to create national standards that may act as technical barriers to trade that, in and of themselves, threaten U.S. national security. Technological innovation in the private sector, to include 5G, relies on cooperation between the United States and China, they maintain. These critics also note that the Trump Administration's trade policy, which includes tariffs on Chinese telecommunications equipment, threatens to significantly increase the costs and slow the deployment of 5G infrastructure. Fencing off the U.S. technology sector from one-sixth of the world's population, they suggest, will only cede ground to Chinese competitors, drive up costs for U.S. consumers, and reduce the competitiveness of leading U.S. technology companies, all while isolating the United States from the places where innovation is happening. Policy Considerations for Congress Congress and other U.S. policymakers are faced with deciding how to address both interest in promoting U.S. competitiveness in the global race to 5G, and an efficient domestic 5G deployment. Congress may consider the role of the federal government in industrial policy and promotion, and the role of the federal government in domestic deployment of 5G technologies. In the rollout of previous technologies, U.S. telecommunications companies invested in research and development, participated in international projects to test the technologies, contributed to standards, and planned business strategies. This market-based approach sparked competition and innovation that gave the United States an edge in previous technologies. For 5G, other countries (i.e., central governments) have engaged in centralized planning and coordination with industry to gain a lead in the race to 5G. Congress may monitor U.S. progress on 5G deployment and technologies, consider whether there is a need for more planning and coordination with industry, and assess whether additional government involvement would help or hinder the efforts of U.S. companies in the global race to 5G. In terms of domestic deployment, Congress may be asked to consider the benefits and risks of 5G deployment. Nationally, 5G technologies are expected to create new revenues and new jobs. 5G technologies have also raised national security concerns, individual privacy concerns, and questions about how to assess the security of foreign-made equipment. Congress may consider policies that protect U.S. telecommunications networks, including policies that impose trade restrictions or economic sanctions on foreign technology providers, or policies limiting foreign participation in 5G build-outs. Congress may weigh how various policy approaches address threats to national security (e.g., threats to telecommunications networks, industrial systems, critical infrastructure, and government networks; cybersecurity threats; threats to privacy). Congress may also consider how trade policies may alter the ability of U.S. companies to deploy networks domestically, and to purchase and sell equipment abroad. 5G technologies are also expected to offer new services for consumers (e.g., telehealth to rural areas, new services for the disabled). However, localities have raised concerns regarding the siting of 5G small cells (e.g., authorities to make decisions about public rights-of-way, fees, ensuring rural access, health and safety). While some stakeholders are seeking U.S. government support to speed 5G deployment, others are calling on the U.S. government to assess 5G risks and concerns before deploying. Congress may consider how to weigh these competing interests and concerns. Congress may consider policies to allocate additional spectrum for future 5G use. Congress may weigh the spectrum needs of 5G and the spectrum needs of other users (e.g., other commercial, federal, and educational users) to ensure essential users will have adequate access to the nation's spectrum. Congress may also consider future spectrum needs—spectrum needed for advanced 5G technologies, and industrial IoT systems—when developing spectrum policies. Congress may consider policies related to the future use of 5G and IoT devices. As 5G and IoT technologies are integrated into various industries and applied to everyday life, Congress may consider new policies related to the privacy and security of data being transmitted across millions of IoT devices and through 5G networks. Congress may consider policies implementing security measurements (i.e., best practices) in devices, systems, and networks to ensure security of data. To retain U.S. leadership in telecommunications technologies, Congress may consider supporting or encouraging investment in research and development of new telecommunications technologies (e.g., IoT applications, 6G technologies). The challenge with new technologies is that while the free and open exchange of information (e.g., in the international standards process) promotes innovation, it also presents risks (e.g., sharing intellectual capital). As global standards emerge, and equipment is built to a common standard, companies around the world may use equipment and component parts from other countries. Policies and processes that assess and address security risks with 5G supply chains may enhance the security of U.S. telecommunications networks. Conclusion The deployment of 5G technologies is just beginning. Countries around the world are striving to be first to market with 5G technologies and services to capture the bulk of the economic benefits from this new technology. In the United States, private industry is leading deployment efforts. The U.S. government is supporting 5G deployment by identifying and allocating spectrum for 5G use and streamlining rules related to siting of 5G small cell. However, there are factors that may hinder 5G deployment in the United States, including the complex spectrum allocation process, local resistance to small cell rules, and limitations on trade that may affect the availability of 5G equipment and devices. Development and deployment of 5G technologies are expected to extend through 2035. The 116 th Congress may be asked to consider both issues related to the immediate deployment of 5G networks, and issues related to future use of 5G devices (including IoT devices). Policy decisions made now, at the start of the deployment, could affect the U.S. position in the race to 5G and the future use of 5G in the United States. Appendix. Congressional Actions Related to 5G The 115 th Congress considered several policies related to 5G technologies. Congress enacted two pieces of legislation related to 5G spectrum: The Repack Airwaves Yielding Better Access for Users of Modern Services Act of 2018 (RAY BAUM'S Act of 2018) ( P.L. 115-141 , Division P), was incorporated into the Consolidated Appropriations Act, 2018, which was enacted on March 23, 2018. This act includes provisions that improve and accelerate the spectrum auction process. The Making Opportunities for Broadband Investment and Limiting Excessive and Needless Obstacles to Wireless (MOBILE NOW) Act ( P.L. 115-141 , Division P, Title VI), which was also incorporated into the Consolidated Appropriations Act, 2018 (enacted on March 23, 2018), requires federal agencies to make decisions on applications and permit requests for placing wireless infrastructure on federal property in a timely and reasonable manner; this act also directs the federal government to conduct assessments of spectrum in the 3 GHz band and in the millimeter wave frequencies to determine whether authorizing licensed or unlicensed wireless broadband services in those bands is feasible, and, if so, which frequencies are best suited for such operations. The 115 th Congress considered legislation to allocate additional spectrum for mobile communications, and to expand wireless services in rural areas: The Advancing Innovation and Reinvigorating Widespread Access to Viable Electromagnetic Spectrum (AIRWAVES) Act ( S. 1682 ) was introduced in the Senate on August 1, 2017, and would have created a national pipeline of spectrum for commercial use, to incentivize industry to expand wireless services. If passed, the bill would have required the federal government to identify additional spectrum for commercial licensed and unlicensed use (including 5G), and to allocate 10% of the proceeds from the designated spectrums to expand wireless infrastructure in rural areas. The bill was referred to the Committee on Commerce, Science, and Transportation, where there was no further action on the bill. A related bill ( H.R. 4953 ) was introduced in the House on February 6, 2018, and referred to the Committee on Energy and Commerce, Subcommittee on Communications and Technology, where there was no further action on the bill. Some Members introduced resolutions in support of 5G technologies and services: S.Res. 242 and H.Res. 521 introduced in August and September 2017, respectively. The resolutions would have expressed the sense that the United States should commit to modernizing infrastructure policies to meet demand for wireless broadband services, to increase access, quality, and affordability of broadband services, and to promote economic development and digital innovation throughout the United States. If passed, the resolutions would have shown congressional support for the deployment of 5G technologies in the United States. Legislation was introduced to address the challenges of small site deployment: The Streamlining the Rapid Evolution and Modernization of Leading-edge Infrastructure Necessary to Enhance (STREAMLINE) Small Cell Deployment Act ( S. 3157 ), introduced on June 28, 2018, would have set criteria for state and local review of cell siting applications, deadlines for approvals of applications, and restrictions on fees that state and local governments may charge. The bill was referred to the Committee on Commerce, Science, and Transportation, where there was no further action on the bill. Four bills were introduced that addressed cybersecurity issues: The Securing the Internet of Things Act of 2017 or Securing IoT Act of 2017 ( H.R. 1324 ), introduced on March 2, 2017, would have required equipment using certain frequencies to meet new cybersecurity standards defined by the FCC and the National Institute of Standards and Technology. The State of Modern Application, Research, and Trends of IoT Act or SMART IoT Act ( H.R. 6032 ) was introduced on June 7, 2018. The bill would have directed the Department of Commerce to conduct a study on Internet-connected devices industry in the United States. This bill passed in the House on November 28, 2018; the bill was received in the Senate on November 29, 2018, where it was referred to the Committee on Commerce, Science, and Transportation; there was no further action on the bill. The Interagency Cybersecurity Cooperation Act ( H.R. 1340 ) introduced on March 2, 2017, would have required the FCC to create a new interagency committee to examine security reports related to telecommunications and produce recommendations for preventing and mitigating against attacks. It would have also defined communications networks as "critical infrastructure," subject to national security requirements. The bill was referred to the Committee on Energy and Commerce, Subcommittee on Communications and Technology and the Committee on Oversight and Government Reform where there was no further action on this bill. The Cyber Security Responsibility Act ( H.R. 1335 ) would have required the FCC to issue rules for securing communications networks and define communications networks as "critical infrastructure." The bill was referred to the Committee on Energy and Commerce, Subcommittee on Communications and Technology; there was no further action on this bill. Congress also addressed national security concerns related to telecommunications: The John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 ( P.L. 115-232 ), enacted on August 13, 2018, prohibited the heads of federal agencies from procuring telecommunications equipment or services from Huawei, ZTE Corporation, and other companies linked to the government of China that could pose a counterintelligence and national security threat to the United States. Hearings held during the 115 th Congress that have discussed 5G and related topics have included "Race to 5G: Exploring Spectrum Needs to Maintain U.S. Global Leadership," Senate Committee on Commerce, Science, and Transportation, July 25, 2018. "Realizing the Benefits of Rural Broadband: Challenges and Solutions," House Committee on Energy and Commerce, Subcommittee on Communications and Technology, July 17, 2018. "Oversight of the Federal Communications Commission," House Committee on Energy and Commerce, Subcommittee on Communications and Technology, July 18, 2018. "Race to 5G and Its Potential to Revolutionize American Competitiveness," House Committee on Energy and Commerce, Subcommittee on Communications and Technology, November 16, 2017. "Cybersecurity of the Internet of Things," House Committee on Oversight and Government Reform, Subcommittee on Information Technology, October 3, 2017.

Since the first mobile phones were made available in the 1980s, telecommunication providers have been investing in mobile networks to expand coverage, improve services, and attract more users. First-generation networks supported mobile voice calls but were limited in coverage and capacity. To address those limitations, providers developed and deployed second-generation (2G) mobile networks, then third-generation (3G), and fourth-generation (4G) networks. Each generation offered improved speeds, greater capacity, and new features and services. In 2018, telecommunication providers began deploying fifth-generation (5G) networks to meet growing demands for data from consumer and industrial users. 5G networks are expected to enable providers to expand consumer services (e.g., video streaming, virtual reality applications), support the growing number of connected devices (e.g., medical devices, smart homes, Internet of Things), support new industrial uses (e.g., industrial sensors, industrial monitoring systems), perform advanced data analytics, and enable the use of advanced technologies (e.g., smart city applications, autonomous vehicles). 5G is expected to yield significant economic benefits. Market analysts estimate that in the United States, 5G could create up to 3 million new jobs and add $500 billion to the nation's gross domestic product (GDP). Globally, analysts estimate that 5G technologies could generate $12.3 trillion in sales activity across multiple industries and support 22 million jobs by 2035. Experience has shown that companies first to market with new products can capture the bulk of the revenues, yielding long-term benefits for those companies and significant economic gains for the countries where those companies are located. Hence, technology companies around the world are racing to develop 5G products, and some countries (i.e., central governments) are acting in support of 5G deployment. This competition to develop 5G products and capture the global 5G market is often called the "race to 5G." In the race to 5G, the United States is one of the leaders, along with China and South Korea. Each country has adopted a different strategy to lead in 5G technology development and deployment. China's central government is supporting the deployment of 5G infrastructure in China. China has a national plan to deploy 5G domestically, capture the revenues from its domestic market, improve its industrial systems, and become a leading supplier of telecommunications equipment to the world. In South Korea, the central government is working with telecommunications providers to deploy 5G. South Korea plans to be the first country to deploy 5G nationwide, and to use the technology to improve its industrial systems. In the United States, private industry is leading 5G deployment. U.S. providers, competing against each other, have conducted 5G trials in several cities and were the first in the world to offer 5G services commercially. The U.S. government has supported 5G deployment, making spectrum available for 5G use and streamlining processes related to the siting of 5G equipment (e.g., small cells). While each country has taken a different approach to capturing the 5G market, there are factors that drive the timeline for all deployments, including international decisions on standards and spectrum. In the United States, 5G deployment may also be affected by the lengthy spectrum allocation process, resistance from local governments to federal small cell siting rules, and limitations on trade that may affect availability of equipment. The 116th Congress may monitor the progress of 5G deployment in the United States and the U.S. position in the race to 5G. Congress may consider policies that may affect 5G deployment, including policies related to spectrum allocation, trade restrictions, and local concerns with 5G deployment. Policies that support 5G deployment while also protecting national and local interests could provide significant consumer benefits, help to modernize industries, give U.S. companies an advantage in the global economy, and yield long-term economic gains for the United States. In developing policies, Members may consider the economic and consumer benefits of 5G technologies, as well as other interests, such as the need to preserve spectrum for other users and uses, the protection of national security and intellectual property when trading, the privacy and security of 5G devices and systems, and the respect of local authorities and concerns during 5G deployment.

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L aw enforcement officials have described money laundering—the process of making illegally obtained proceeds appear legitimate—as the "lifeblood" of organized crime. According to one estimate, criminals launder roughly $1 trillion to $2 trillion annually worldwide, a sum that represents between 2% and 5% of global gross domestic product. Without the ability to conceal and spend these large sums of "dirty" money, criminal organizations "could operate only at a small fraction of current levels, and with far less flexibility." Over the past decade, money launderers have turned to a new technology to conceal the origins of illegally obtained proceeds: virtual currency. Virtual currencies like Bitcoin, Ether, and Ripple are digital representations of value that, like ordinary currency, function as media of exchange, units of account, and stores of value. However, unlike ordinary currency, virtual currencies are not legal tender, meaning they cannot be used to pay taxes and creditors need not accept them as payments for debt. According to their proponents, virtual currencies (1) have the potential to offer cheaper and faster transactions than traditional bank-centric payment networks, (2) provide inflation-resistant alternatives to traditional fiat currencies, and (3) often involve promising new technologies (such as blockchain technology) that will spur innovation across a variety of fields. However, other commentators have argued that the anonymity offered by certain decentralized virtual currencies—that is, virtual currencies that are not issued or maintained by a central organization—makes them an attractive vehicle for money laundering. These observers have contended that criminals often use such virtual currencies not only to buy and sell illicit goods and services, but also to launder illegally obtained fiat currencies. While it is difficult to definitively assess the volume of money laundered through virtual currencies, the virtual currency security firm CipherTrace has estimated that criminals laundered roughly $2.5 billion of Bitcoin on major exchanges between January 9, 2009, and September 20, 2018. An official from the Treasury Department's Financial Crimes Enforcement Network (FinCEN) has similarly indicated that virtual currencies have been "exploited to support billions of dollars of . . . suspicious activity." While such figures represent only a fraction of both global money laundering and virtual currency transaction volume, government officials have identified virtual currencies as a growth industry for money launderers that presents regulators and law enforcement with unique challenges. This report provides a general overview of the application of federal anti-money laundering (AML) law to virtual currencies. First, the report outlines the basic architecture of federal AML law. Second, the report discusses administrative guidance concerning the application of federal AML law to virtual currencies. Third, the report reviews a number of prominent criminal prosecutions and administrative enforcement actions involving federal AML law and virtual currencies. Finally, the report discusses a number of legislative proposals to reform certain elements of the federal AML regime surrounding virtual currencies and further investigate the use of virtual currencies in criminal activities. Legal Background The federal AML regime consists of two general categories of laws and regulations. First, federal law requires a range of "financial institutions" to abide by a variety of AML compliance program, reporting, and recordkeeping requirements. Second, federal law criminalizes money laundering and various forms of related conduct. Requirements for "Financial Institutions" The Bank Secrecy Act (BSA) and its various amendments represent the centerpiece of the federal AML regime for "financial institutions"—a category that includes federally insured banks, securities brokers and dealers, currency exchanges, and money services businesses. Under the BSA and associated regulations, covered "financial institutions" must, among other things, establish AML programs that meet certain minimum standards, report certain types of transactions to the Treasury Department, and maintain certain financial records. Specifically, the BSA requires "financial institutions" to establish AML programs that include, at a minimum, (1) the development of internal policies, procedures, and controls, (2) the designation of a compliance officer, (3) an ongoing employee training program, and (4) an independent audit function to test the program. "Financial institutions" must also report certain large currency transactions and suspicious activities to FinCEN—the bureau within the Treasury Department responsible for administering the BSA. Finally, the BSA and associated regulations require "financial institutions" to maintain certain types of records. FinCEN regulations require banks, for example, to retain records related to certain large transactions involving foreign banks and the taxpayer identification numbers associated with certain accounts. Money services businesses (MSBs) represent one category of "financial institution" that must register with FinCEN and, like other "financial institutions," abide by AML program, reporting, and recordkeeping requirements. Under FinCEN's regulations, MSBs include a variety of specific categories of businesses, including "money transmitters"—that is, (1) persons who accept "currency, funds, or other value that substitutes for currency from one person" and transmit those items "to another location or person by any means," and (2) "[a]ny other person engaged in the transfer or funds." In addition to imposing regulatory requirements on MSBs, federal law makes it a crime to knowingly operate an "unlicensed money transmitting business." An entity qualifies as an "unlicensed money transmitting business" under this provision (Section 1960 of Title 18) if it 1. is "operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony"; 2. fails to comply with the BSA's federal registration requirement for "money transmitting businesses"; or 3. "otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity." Criminal AML Provisions In addition to imposing various AML requirements on "financial institutions," federal law also criminalizes money laundering and certain related conduct. Specifically, 18 U.S.C. § 1956(a)(1) (Section 1956) makes it unlawful for a person who "know[s] that the property involved in a financial transaction represents the proceeds of some form of unlawful activity" to "conduct[] or attempt[] to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity" — (A) (i) with the intent to promote the carrying on of specified unlawful activity; or (ii) with intent to engage in conduct constituting [tax evasion or tax fraud]; or (B) knowing that the transaction is designed in whole or in part— (i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or (ii) to avoid a transaction reporting requirement under State or Federal law. For purposes of this prohibition, the term "financial transaction" includes transactions "involving the movement of funds" and transactions "involving one or more monetary instruments." Similarly, 18 U.S.C. § 1957(a) (the so-called "Spending Statute") prohibits monetary transactions in criminally derived property. Specifically, Section 1957(a) makes it unlawful to "knowingly engage[] or attempt[] to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity." In other words, unlike Section 1956, Section 1957 makes it a crime to knowingly spend the proceeds of specified unlawful activity, even if such spending does not promote such activity and is not designed to conceal the origins of the proceeds. FinCEN Guidance Because neither Congress nor FinCEN has formally amended the BSA regulatory regime in response to the advent of virtual currencies, prosecutors and regulators have been required to analyze whether virtual currency transactions and business models fall within some of the preexisting legal categories discussed above. In 2013, FinCEN attempted to clarify certain aspects of this analysis by issuing administrative guidance addressing the circumstances in which participants in virtual currency transactions qualify as MSBs. In its 2013 guidance, FinCEN took the position that "users" of virtual currencies do not qualify as MSBs subject to federal registration requirements, while "administrators" and "exchangers" of virtual currencies may qualify as MSBs. Specifically, the guidance explained that users of virtual currencies—that is, persons who obtain virtual currencies to purchase goods or services—are not MSBs because they are not involved in money transmission. By contrast, FinCEN indicated that virtual currency administrators (persons "engaged as a business" in putting a virtual currency into circulation and who have the authority to withdraw such currency from circulation) and exchangers (persons "engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency") may be "money transmitters" and, by extension, MSBs. Specifically, FinCEN explained that virtual currency administrators and exchangers qualify as MSBs (unless they fall within a specific exemption) when they (1) "accept[] or transmit[] a convertible virtual currency," or (2) "buy[] or sell[] convertible virtual currency for any reason." Accordingly, under FinCEN's guidance, virtual currency issuers and exchangers will generally qualify as MSBs unless they fall within a specific statutory or regulatory exemption. Prosecutions and Enforcement Actions Over the past decade, federal prosecutors and regulators have pursued a number of cases involving the application of federal AML law to virtual currencies. In a number of criminal cases, federal prosecutors have brought money-laundering and certain related charges against the operators of online marketplaces and virtual currency payment systems used to disguise the proceeds of illicit activities. FinCEN has also brought civil enforcement actions against virtual currency exchangers for failure to comply with the BSA's AML program, reporting, and recordkeeping requirements. Online Marketplaces for Illicit Goods Federal prosecutors have brought money-laundering charges against the creators of online marketplaces that allowed their users to exchange virtual currency for a range of illicit goods and services. In one of these prosecutions, a federal district court held that transactions involving Bitcoin can serve as the predicate for money-laundering charges. Silk Road In 2013, federal authorities shut down Silk Road, which they alleged was "the most sophisticated and extensive criminal marketplace on the Internet," enabling tens of thousands of users to anonymously buy and sell illegal drugs, malicious software, and other illicit goods and services. Federal prosecutors charged the site's creator with, among other things, conspiracy to commit money laundering under Section 1956. The prosecutors alleged that the site's creator conspired to conduct "financial transactions" involving the proceeds of unlawful activity—namely, narcotics trafficking and computer hacking—with the intent to promote the carrying on of such activity. In defending this charge, Silk Road's creator argued that his alleged conduct—facilitating the exchange of Bitcoin for illegal goods and services—did not involve "financial transactions" within the meaning of Section 1956, which defines that term to include (among other things) transactions "involving one or more monetary instruments." Specifically, the site's creator contended that because Bitcoin does not qualify as a "monetary instrument"—which Section 1956 defines to mean the currency of a country, personal checks, bank checks, money orders, investment securities, or negotiable instruments—transactions involving Bitcoin do not represent "financial transactions" under Section 1956. The U.S. District Court for the Southern District of New York rejected this argument, holding that transactions involving Bitcoin can qualify as "financial transactions" under Section 1956 because they fall under a separate category of transactions identified by the relevant statutory definition: transactions involving "the movement of funds ." Specifically, the court reasoned that Bitcoin transactions involve "the movement of funds" because the term "funds" includes "money," which in turn refers to "an object used to buy things." Because Bitcoin can be used to buy things, the court reasoned that Bitcoin transactions involve "the movement of funds" and therefore qualify as "financial transactions" under Section 1956. As a result, the court explained, "[o]ne can money launder using Bitcoin." AlphaBay Similarly, in 2017, federal prosecutors brought money-laundering conspiracy charges against the creator of AlphaBay, another online marketplace that allowed its users to exchange virtual currency for illicit goods and services. The prosecutors alleged that by facilitating the exchange of virtual currencies (including Bitcoin, Monero, and Ether) for illegal narcotics and other illicit goods and services, the site's creator had conspired to conduct "financial transactions" involving the proceeds of unlawful activities. However, the federal government dismissed these charges after AlphaBay's creator died in July 2017. Virtual Currency Payment Systems Used for Illicit Purposes Federal prosecutors have also pursued charges against the developers of certain virtual currency payment systems allegedly designed to facilitate illicit transactions and launder the proceeds of criminal activity. Specifically, prosecutors have charged these developers with conspiring to commit money laundering and operating unlicensed money transmitting businesses under Sections 1956 and 1960, respectively. In adjudicating the second category of charges, courts have concluded that the relevant virtual currency payment systems were "unlicensed money transmitting businesses" under Section 1960, rejecting the argument that the provision applies only to money transmitters that facilitate cash transactions. e-Gold In 2007, federal prosecutors charged e-Gold—an "alternative payment system" and virtual currency purportedly backed by stored physical gold—and its founders and director with money laundering and operating an unlicensed money transmitting business. The prosecutors alleged that e-Gold "was widely accepted as a payment mechanism for transactions involving credit card and identification fraud, high yield investment programs and other investment scams, and child exploitation" because of the anonymity it offered its users. In charging the defendants for failing to register their business, prosecutors alleged that e-Gold operated as an "unlicensed money transmitting business" in each of the three ways identified by Section 1960—the provision criminalizing the operation of "unlicensed money transmitting businesses." Specifically, the prosecutors alleged that e-Gold (1) lacked a required state money transmitter license, (2) failed to comply with the BSA's federal registration requirements for "money transmitting businesses" (requirements set forth in Section 5330 of Title 31), and (3) was involved in the transmission of funds that were "known to have been derived from a criminal offense" or that were "intended to be used to promote and support unlawful activity." In defending these charges, the defendants presented an intricate argument for the proposition that Section 1960 applies only to businesses that facilitate cash (as opposed to virtual currency) transactions. Specifically, the defendants argued that because Section 1960 does not define the term "money transmitting business," it must "borrow" the definition of that term in Section 5330—the BSA provision establishing federal registration requirements for "money transmitting businesses." The defendants further reasoned that (1) Section 5330 provides that an entity is a "money transmitting business" only if it must file currency transaction reports (CTRs), and (2) businesses that do not facilitate cash transactions need not file CTRs. Accordingly, under the defendants' theory, a business like e-Gold that does not facilitate cash transactions does not qualify as a "money transmitting business" under Section 5330 and (by extension) Section 1960. The U.S. District Court for the District of Columbia rejected this argument, holding that e-Gold was indeed a "money transmitting business" under Section 1960 for two reasons. First, the court rejected the defendants' contention that Section 1960 must "borrow" Section 5330's definition of "money transmitting business." The court rejected this argument on the grounds that Section 1960 contains its own definition of the term "money transmitting" and does not reflect an intent to "borrow" the definition of "money transmitting business" from Section 5330. The court further explained that because e-Gold was a business engaged in "money transmitting" as defined by Section 1960—that is, "transferring funds on behalf of the public"—it was a "money transmitting business" under Section 1960. Second, the court evaluated whether e-Gold also qualified as a "money transmitting business" under Section 5330—an issue that remained relevant because of the federal government's charge that the defendants violated Section 1960 by violating Section 5330's registration requirements . The court concluded that e-Gold was indeed a "money transmitting business" under Section 5330, rejecting the defendants' argument that e-Gold did not fall within that category because it was not required to file CTRs. Specifically, the court rejected the argument that a business is required to file CTRs only if it facilitates cash transactions. Instead, the court explained that because the statute imposing CTR obligations imposes such obligations when money transmitting businesses facilitate cash transactions (as opposed to if they facilitate such transactions), all money transmitting businesses have a continuing obligation to file CTRs "in the eventuality that they ever are involved" in a reportable cash transaction. The court accordingly concluded that because e-Gold was required to file CTRs and satisfied the other elements of the relevant statutory definition, e-Gold was a "money transmitting business" under Section 5330 even though it did not process cash transactions. After the court denied the defendants' motion to dismiss the charges for operating an unlicensed money transmitting business, the defendants pleaded guilty to those charges and money laundering. Liberty Reserve Similarly, in May 2013, federal prosecutors charged the founder of Liberty Reserve—a Costa Rica-based virtual currency service—with conspiracy to commit money laundering, conspiracy to commit international money laundering, and operating an unlicensed money transmitting business. Liberty Reserve administered a virtual currency known as "LR" and described itself as a "payment processor and money transfer system." According to prosecutors, Liberty Reserve's founder "intentionally created, structured, and operated" the service "as a business venture designed to help criminals conduct illegal transactions and launder the proceeds of their crimes," facilitating a broad range of criminal activity that included identity theft, credit card fraud, computer hacking, child pornography, and narcotics trafficking. Specifically, Liberty Reserve allegedly facilitated such activity by allowing its users to set up accounts using fake names and, for an additional fee, hide their account numbers when sending funds within the system. Because of this anonymity, prosecutors alleged, Liberty Reserve became the "bank of choice for the criminal underworld," laundering over $6 billion between 2006 and 2013. In defending the charge for operating an unlicensed money transmitting business, Liberty Reserve's founder argued that Liberty Reserve was not an "unlicensed money transmitting business" under Section 1960 because it did not transfer "funds" within the meaning of that provision. However, the U.S. District Court for the Southern District of New York rejected this argument, relying on an earlier case from the same district to conclude that virtual currencies are "funds" under Section 1960 because they can be "easily purchased in exchange for ordinary currency, act[] as a denominator of value, and [are] used to conduct financial transactions." Liberty Reserve's founder was ultimately convicted of operating an unlicensed money transmitting business and pleaded guilty to conspiring to commit money laundering. FinCEN Enforcement Actions Against Virtual Currency Exchangers Consistent with its 2013 guidance, FinCEN has pursued a number of administrative enforcement actions against virtual currency exchangers, assessing civil penalties for failure to implement sufficient AML programs and report suspicious transactions. Ripple In 2015, FinCEN brought an enforcement action against California-based virtual currency developer and exchanger Ripple Labs, Inc. (Ripple), assessing a $700,000 civil penalty for failure to register as a MSB and failure to implement and maintain an effective AML program. At the time of the enforcement action, Ripple's virtual currency (XRP) was the second-largest virtual currency by market capitalization, trailing only Bitcoin. Ripple sold XRP in exchange for fiat currency without registering as a MSB until 2013, when it incorporated a subsidiary to engage in the relevant sales and transfers. While Ripple's subsidiary ultimately registered with FinCEN, it allegedly failed to fulfill its AML obligations under the BSA. Specifically, FinCEN alleged that Ripple's subsidiary failed to timely establish an AML program that met the BSA's requirements and lacked sufficient controls for implementing the program. Because of this absence of necessary controls, Ripple's subsidiary negotiated an approximately $250,000 transaction with a felon without adhering to its know-your-customer requirements and rejected a number of suspicious transactions without filing suspicious activity reports (SARs) with FinCEN. In response to FinCEN's allegations, Ripple and its subsidiary entered into a settlement agreement, committing to undertake a series of remedial measures and pay a $700,000 civil penalty. BTC-e In 2017, FinCEN brought another major enforcement action against BTC-e, one of the largest virtual currency exchanges in the world. FinCEN alleged that BTC-e facilitated transactions involving ransomware, computer hacking, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. FinCEN further contended that BTC-e willfully violated MSB registration requirements, failed to maintain an effective AML program, and failed to file required SARs. Specifically, FinCEN alleged that BTC-e did not verify basic information about its customers and failed to file SARs on thousands of suspicious transactions, including transactions involving Liberty Reserve and other entities that were widely known to be violating U.S. law. Because of this conduct, FinCEN assessed a $110 million civil money penalty against BTC-e and its founder. Issues for Congress and Proposed Legislation Regulatory Challenges Posed by Virtual Currencies As these prosecutions and enforcement actions demonstrate, virtual currencies have a number of features that make them attractive to criminals. Specifically, commentators have noted that money launderers have been attracted by the anonymity, lack of clear regulations, and settlement finality that accompanies virtual currency transactions. The ease of transferring virtual currencies across international borders further complicates AML efforts, as AML regulations "are not widely applied internationally to virtual currency despite increasing evidence of misuse." The Treasury Department's 2018 Money Laundering Risk Assessment accordingly identified virtual currencies as a vulnerability in U.S. AML efforts. Several bills introduced in the 116th Congress aim to address to these challenges. These bills would, among other things, commission agency analyses of the use of virtual currencies for illicit activities and clarify that FinCEN's statutory powers and duties include international coordination on issues related to virtual currencies. Commentators have also identified legal uncertainty as an additional challenge facing prosecutors, regulators, and participants in virtual currency transactions. Specifically, these observers have noted that applying the BSA's regulatory regime to virtual currencies requires analyzing novel business models using legal categories developed primarily for traditional financial institutions. While the weight of legal authority supports the application of some of these categories to certain virtual currency business models, at least one anomalous decision indicates that some judges demand more explicit indicia of congressional intent to apply existing law in this relatively new field. Moreover, a number of commentators have argued that providing greater legal certainty to legitimate virtual currency activities is necessary to preserve the United States' position as a "global leader" in encouraging technological innovation. This interest in legal clarity—in addition to a desire to shield certain virtual currency innovators from "expensive and onerous" AML requirements —has generated a legislative proposal to exempt certain blockchain developers from various money transmitter requirements. Bills in the 116th Congress Legislation Commissioning Agency Analyses In January 2019, the House passed three bills that would commission studies concerning the use of virtual currencies for illicit purposes. H.R. 56 , the Financial Technology Protection Act, would establish an Independent Financial Technology Task Force to Combat Terrorism and Illicit Financing (Task Force) led by the Treasury Secretary. The bill would direct the Task Force to (1) "conduct independent research on terrorist and illicit use of new financial technologies, including digital currencies," and (2) "develop legislative and regulatory proposals to improve counter-terrorist and counter-illicit financing efforts." H.R. 56 would further require the Task Force to annually report its findings to Congress. The bill would also establish two programs to incentivize members of the public to assist the federal government's efforts to combat the illicit use of virtual currencies. First, the bill would direct the Treasury Secretary to establish a reward of up to $450,000 for persons who "provide[] information leading to the conviction of an individual involved with terrorist use of digital currencies." Second, the bill would direct the Treasury Secretary to create a grant program "for the development of tools and programs to detect terrorist and illicit use of digital currencies." After passing the House in January 2019, H.R. 56 was referred to the Senate Committee on Banking, Housing, and Urban Affairs. A second bill, H.R. 428 , the Homeland Security Assessment of Terrorists' Use of Virtual Currencies Act, would similarly commission an analysis of the use of virtual currencies by terrorists. Specifically, H.R. 428 would direct the Under Secretary of Homeland Security for Intelligence and Analysis to conduct a "threat assessment" analyzing "the actual and potential threat posed by individuals using virtual currency to carry out activities in furtherance of an act of terrorism, including the provision of material support or resources to a foreign terrorist organization." After passing the House in January 2019, H.R. 428 was referred to the Senate Committee on Homeland Security and Governmental Affairs. Finally, H.R. 502 , the Fight Illicit Networks and Detect Trafficking Act (the FIND Trafficking Act), would direct the Government Accountability Office (GAO) to conduct a study "on how virtual currencies and online marketplaces are used to facilitate sex and drug trafficking." The bill would require GAO to provide Congress with a report summarizing the results of the study, together with any recommendations for legislative or regulatory action that would assist the federal government in combatting the use of virtual currencies to facilitate sex and drug trafficking. After passing the House in January 2019, H.R. 56 was referred to the Senate Committee on Banking, Housing, and Urban Affairs. H.R. 1414, FinCEN Improvement Act of 2019 In March 2019, the House passed H.R. 1414 , the FinCEN Improvement Act of 2019. The bill would, among other things, clarify that FinCEN's statutory power to coordinate with foreign financial intelligence units on antiterrorism and AML initiatives "includ[es] matters involving emerging technologies or value that substitutes for currency." After passing the House in March 2019, H.R. 1414 was referred to the Senate Committee on Banking, Housing, and Urban Affairs. H.R. 528, Blockchain Regulatory Certainty Act In January 2019, H.R. 528 , the Blockchain Regulatory Certainty Act, was introduced in the House of Representatives. The bill would create a safe harbor from federal and state money transmitter licensing and registration requirements for certain blockchain developers. Specifically, the bill would provide that non controlling "blockchain developers" and providers of a "blockchain service" shall not be treated as "money transmitters," MSBs, "or any other State or Federal legal designation[s] requiring licensing or registration as a condition to acting as a blockchain developer or provider of a blockchain service." A blockchain developer or provider of a blockchain service would qualify as a noncontrolling developer or provider as long as it does not have control over users' digital currency in the regular course of business. Some commentators have argued that such a safe harbor is necessary to provide legal certainty to actors in the virtual currency space, including persons who contribute code to virtual currency platforms or develop blockchain-related software but do not take custody of others' virtual currency. However, another commentator has noted that it is "debat[able]" whether federal registration requirements apply to such persons. H.R. 528 was referred to the House Committee on Financial Services and the House Committee on the Judiciary in January 2019.

Law enforcement officials have described money laundering—the process of making illegally obtained proceeds appear legitimate—as the "lifeblood" of organized crime. Recently, money launderers have increasingly turned to a new technology to conceal the origins of illegally obtained proceeds: virtual currency. Virtual currencies like Bitcoin, Ether, and Ripple are digital representations of value that, like ordinary currency, function as media of exchange, units of account, and stores of value. However, unlike ordinary currencies, virtual currencies are not legal tender, meaning they cannot be used to pay taxes and creditors need not accept them as payments for debt. While virtual currency enthusiasts tout their technological promise, a number of commentators have contended that the anonymity offered by these new financial instruments makes them an attractive vehicle for money laundering. Law enforcement officials, regulators, and courts have accordingly grappled with how virtual currencies fit into a federal anti-money laundering (AML) regime designed principally for traditional financial institutions. The federal AML regime consists of two general categories of laws and regulations. First, federal law requires a range of "financial institutions" to abide by a variety of AML program, reporting, and recordkeeping requirements. Second, federal law criminalizes money laundering and various forms of related conduct. Over the past decade, federal prosecutors and regulators have pursued a number of cases involving the application of these laws to virtual currencies. Specifically, federal prosecutors have brought money laundering charges against the creators of online marketplaces that allowed their users to exchange virtual currency for illicit goods and services. In one of these prosecutions, a federal district court held that transactions involving Bitcoin can serve as the predicate for money laundering charges. Federal prosecutors have also pursued charges against the developers of certain virtual currency payment systems allegedly designed to facilitate illicit transactions and launder the proceeds of criminal activity. Specifically, prosecutors charged these developers with conspiring to commit money laundering and operating unlicensed money transmitting businesses. In adjudicating the second category of charges, courts have concluded that the relevant virtual currency payment systems were "unlicensed money transmitting businesses," rejecting the argument that the relevant criminal prohibition applies only to money transmitters that facilitate cash transactions. Finally, the Financial Crimes Enforcement Network (FinCEN)—the bureau within the Treasury Department responsible for administering the principal federal AML statute—has pursued a number of administrative enforcement actions against virtual currency exchangers, assessing civil penalties for failure to implement sufficient AML programs and report suspicious transactions. As these prosecutions and enforcement actions demonstrate, virtual currencies have a number of features that make them attractive to criminals. Specifically, commentators have noted that money launderers are attracted to the anonymity, ease of cross-border transfer, lack of clear regulations, and settlement finality that accompanies virtual currency transactions. Several bills introduced in the 116th Congress are aimed at addressing these challenges. These bills would, among other things, commission agency analyses of the use of virtual currencies for illicit activities and clarify FinCEN's statutory powers and duties. Commentators have also identified legal uncertainty as an additional challenge facing prosecutors, regulators, and participants in virtual currency transactions. Moreover, a number of observers have argued that existing AML regulations are likely to stifle innovation by virtual currency developers. In response to these concerns about legal clarity and burdensome regulation, at least one legislative proposal contemplates exempting certain blockchain developers from various AML requirements.

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Introduction The combination of growing supplies of liquefied natural gas (LNG) and new requirements for less polluting fuels in the international maritime shipping industry has heightened interest in LNG as a maritime fuel. For decades, LNG tanker ships have been capable of burning boil-off gas from their LNG cargoes as a secondary fuel. However, using LNG as a primary fuel is a relatively new endeavor; the first LNG-powered vessel—a Norwegian ferry—began service in 2000. Several aspects of LNG use in shipping may be of congressional interest. LNG as an engine, or "bunker," fuel potentially could help the United States reduce harmful air emissions, it could create a new market for domestic natural gas, and it could create economic opportunities in domestic shipbuilding. However, U.S. ports would need specialized vessels and land-based infrastructure for LNG "bunkering" (vessel refueling) as well as appropriate regulatory oversight of the associated shipping and fueling operations. The storage, delivery, and use of LNG in shipping also has safety implications. These and other aspects of LNG bunkering may become legislative or oversight issues for Congress. One bill in the 115 th Congress, the Waterway LNG Parity Act of 2017 ( S. 505 ), would have imposed excise taxes on LNG used by marine vessels on inland waterways. This report discusses impending International Maritime Organization (IMO) standards limiting the maximum sulfur content in shipping fuels, the market conditions in which LNG may compete to become a common bunker fuel for vessel operators, and the current status of LNG bunkering globally and in the United States. A broader discussion of oil market implications is outside the scope of this report. IMO Emissions Standards and LNG The IMO is the United Nations organization that negotiates standards for international shipping. Its standards limiting sulfur emissions from ships, adopted in 2008, have led vessel operators to consider alternatives to petroleum-based fuels to power their ships. In 1973, the IMO adopted the International Convention for the Prevention of Pollution from Ships (MARPOL). Annex VI of the convention, which came into force in 2005, deals with air pollution from ships. The annex established limits on nitrogen oxide (NO x ) emissions and set a 4.5% limit on the allowable sulfur content in vessel fuels. In 2008, the IMO announced a timeline to reduce the maximum sulfur content in vessel fuels from 4.5% to 0.5% by January 1, 2020. Annex VI requires vessel operators to either use fuels containing less than 0.5% sulfur or install exhaust gas-cleaning systems ("scrubbers") to limit a vessel's sulfur oxide (SO x ) emissions to a level equivalent to the required sulfur limit. U.S. Obligations Under the IMO MARPOL is implemented in the United States through the Act to Prevent Pollution from Ships (). The United States effectively ratified MARPOL Annex VI in 2008 when President Bush signed the Maritime Pollution Prevention Act ( P.L. 110-280 ). The act requires that the U.S. Coast Guard and the Environmental Protection Agency (EPA) jointly enforce the Annex VI emissions standards. MARPOL's Annex VI requirements are codified at 40 C.F.R. §1043. They apply to U.S.-flagged ships wherever located and to foreign-flagged ships operating in U.S. waters. Emission Control Areas In addition to its global sulfur standards, MARPOL Annex VI provides for the establishment of Emissions Control Areas (ECAs), which are waters close to coastlines where more stringent emissions controls may be imposed. The North American ECA limits the sulfur content of bunker fuel to 0.1% of total fuel weight, an even lower bar than that set by the IMO 2020 standards. This standard is enforced by Coast Guard and EPA in waters up to 200 miles from shore. Currently, most ships operating in the North American ECA meet the emissions requirements by switching to low-sulfur fuels once they enter ECA waters. The European Union also has an ECA with a 0.1% limit on sulfur in bunker fuels, and the Chinese government is considering putting the same standard in place. Emissions Control Options for Ship Owners The IMO 2020 emissions requirement applies to vessels of 400 gross tons and over, which is estimated to cover about 110,000 vessels worldwide. However, analysts indicate that many of the smaller vessels in this group already burn low-sulfur fuel. Accounting for these smaller vessels, one estimate is that about 55,000 vessels currently burn high-sulfur fuel. Ship owners have two main options for meeting the emission requirements with existing engines: burn low-sulfur conventional fuel (or biofuels) or install scrubbers to clean their exhaust gases. Alternatively, ship owners may opt to install new LNG-fueled engines to comply with the IMO standard. Low-Sulfur Fuel Oils The simplest option for vessel owners to comply with the IMO sulfur standards, and the one that appears most popular, is switching to low-sulfur fuel oils or distillate fuels. Although switching to low-sulfur fuels would increase fuel costs compared to conventional, high-sulfur fuels, it would require little or no upfront capital cost and would allow ocean carriers to use existing infrastructure to bunker ships at ports. Anticipating widespread adoption of this approach, many analysts predict that the implementation of the IMO 2020 regulations will drive up demand for low-sulfur fuel and, therefore, significantly increase its price above current levels. Such a trend could also reduce demand for high-sulfur fuels, increasing the price spread between low- and high-sulfur bunkers fuels. Switching to lower-sulfur fuel could increase fuel cost across the industry by up to $60 billion in 2020 for full compliance with the IMO standards. Moreover, while it may allow vessels to meet the existing IMO sulfur standards, low-sulfur fuel does not necessarily support compliance with potential future IMO emissions standards, especially with respect to greenhouse gases (GHGs) such as carbon dioxide (CO 2 ) discussed later in this report. Scrubbers Scrubbers are systems which remove sulfur from a vessel's engine exhaust emissions. A ship with a scrubber would be capable of meeting the IMO 2020 standard while using conventional high-sulfur fuel. Retrofitting a scrubber on an existing engine can cost several million dollars, however, before factoring in the lost revenue from taking the ship out of service for a month for the installation. Therefore, while using a scrubber will allow a ship to continue using (currently) cheaper high-sulfur fuel, it may take years to recover the initial investment. For example, one industry study estimates that, in the case of a typical tanker, a scrubber installation could cost $4.2 million with a payback time of approximately 4.8 years. Furthermore, scrubbers installed to capture sulfur emissions might have to be further refitted or replaced to comply with any future IMO standards for GHG emissions. The rate of scrubber adoption could affect the financial impacts of installing them in terms of fuel costs. Scrubbers ultimately offset some or all of their initial costs because they allow vessel operators to continue using relatively inexpensive high-sulfur fuel. However, the return on investment for scrubbers depends on the relative prices of high- and low-sulfur bunker fuels. The demand—and therefore, prices—for low-sulfur and high-sulfur fuels will be affected by how many vessels use the respective fuels under the IMO standards that take effect in 2020. For example, limited scrubber adoption could result in more vessels demanding more low-sulfur fuel oil, creating upward pressure on low-sulfur fuel prices. Under such a scenario, scrubbers would provide greater fuel cost savings for vessels that installed them. Alternatively, high-sulfur fuel could become more costly due to refinery production cutbacks (because shippers will not be allowed to burn it without scrubbers). In this case, the economic benefits of scrubbers would be diminished. Given the uncertain fuel supply and demand dynamics, it is difficult for vessel operators to know how big the market distortions from scrubber installation could be or how many other operators may choose to install scrubbers. As of September 2018, there were approximately 660 ships retrofitted with scrubbers and over 600 ships under construction with plans to install scrubbers. By 2020, projecting additional construction orders, some analysts predict about 2,000 vessels could have scrubbers installed. However, even with higher demand for the technology, the ability of vessel owners to install scrubbers is constrained; analysts estimate that current maximum capacity for installing scrubbers is be between 300 to 500 ships per year. LNG-Fueled Engines Another option for ship owners to comply with the IMO 2020 sulfur standards is to switch to engines that burn LNG as a bunker fuel. LNG-fueled vessels emit only trace amounts of sulfur oxides in their exhaust gases—well below even the 0.1% fuel-equivalent threshold in some of the ECA zones—so they would be fully compliant with the IMO standards. As a secondary benefit, using LNG as an engine fuel also would reduce particulate matter (PM) emissions relative to both high- and low-sulfur marine fuel oils. Furthermore, LNG vessels have the potential to emit less CO 2 than vessels running on conventional, petroleum-based fuels. However, LNG vessels would have the potential to result in more fugitive emissions of methane, another GHG, because methane is the primary component of natural gas, further discussed below. Installing an LNG-fueled engine can add around $5 million to the cost of a new ship. Retrofitting existing ships appears to be less desirable because of the extra space required for the larger fuel tanks (new ships can be designed with the larger fuel tanks). The costs of retraining crews to work with LNG engines could also factor into a vessel operator's decision about switching to LNG. However, apart from their lower emissions, LNG-fueled engines may offset their capital costs with fuel cost advantages over engines burning petroleum-derived fuels. These savings would depend on the price spread between natural gas and fuel oil—which has been volatile in recent years. The likelihood that switching to LNG will produce long-term fuel costs savings relative to conventional fuels is, therefore, a critical consideration for many vessel owners. Jones Act Fleet Choosing LNG-Fueled Engines The 1920 Merchant Marine Act (known colloquially as the Jones Act) requires that vessels engaged in U.S. domestic transport be built domestically. Many newly built domestic ships receive a federal loan guarantee under the Maritime Administration's so-called "Title XI" program. In 2014, the program was modified to include the use of "alternative energy technologies" to power ships as part of the relevant criteria in evaluating a loan application. The Maritime Administration counts LNG-fueled engines as an "alternative energy technology" and may be more likely to approve loan applications for ships with LNG-capable engines. Since the North American ECA was established in 2015, Jones Act coastal ship operators have taken steps to transition their fleets to use cleaner burning fuels, including LNG. The three Jones Act operators that ship dry goods to Alaska, Hawaii, and Puerto Rico have taken delivery or have ordered LNG-fueled and LNG-capable vessels from U.S. shipyards in Philadelphia, PA, and Brownsville, TX. Harvey Gulf International has put into service five LNG-powered offshore supply vessels that service offshore oil rigs. Some Jones Act tanker operators that have recently built or ordered vessels have chosen to install LNG-ready engines while other operators have chosen to install scrubbers on their existing fleet. Ship engines and scrubbers for the Jones Act fleet do not have to be manufactured in the United States because they are not considered an integral part of the hull or superstructure of a ship. Seagoing barges, known as articulated tug barges, are also a significant portion of the domestic coastal fleet, especially for moving liquid cargoes. However, these vessels traditionally have burned lower-sulfur fuels and thus the ECA has not prompted fleet conversions. IMO fuel requirements do not apply to river barges operating on the nation's inland waterway system, although this fleet potentially could be a market for LNG as fuel. Bunkering vessels (small tankers with hoses for refueling ships) in U.S. waters must also be Jones Act compliant. Barges are the predominant method for bunkering ships in U.S. ports. An LNG bunkering vessel for the Port of Jacksonville—the first Jones Act-compliant LNG bunkering vessel to enter service in the United States—was built in 2017 by Conrad Shipyards in Orange, TX. LNG vs. Petroleum-Based Fuel Costs Recent energy sector trends suggest that LNG may be cheaper in the long-run than petroleum-based, low-sulfur fuels. However, these price movements are correlated to some extent. Many existing long-term LNG contracts link LNG prices to oil prices (although such contract terms are on the decline), even in the spot market. Starting in 2008, the advent of shale natural gas production dramatically decreased natural gas prices in the United States. Natural gas spot prices in the United States at the Henry Hub—the largest U.S. trading hub for natural gas—averaged around $3/MMBtu (million British Thermal Units) in 2018, about a quarter of the peak in average price a decade before, just prior to the shale gas boom ( Figure 1 ). Liquefying natural gas into LNG adds around $2/MMBtu to the production cost. Including additional producer charges and service costs would bring the total cost of LNG available at a U.S. port (based on the 2018 average price in Figure 1 ) to approximately $6/MMBtu. Shipping of LNG from the United States to Asia or Europe adds from $1 to $2/MMBtu, so, based on the 2018 average cost in Figure 1 , LNG delivered to a port overseas would cost on the order of $7 to $8/MMbtu under long-term contracts, depending upon timing and location. Higher or lower prices could occur for specific long-term contracts and in the LNG spot market (i.e., for individual cargoes), based on the location and the supply and demand balance at the time. In general, the U.S. market will have the lowest-priced LNG. Northern Asia will have the highest LNG prices due to the region's comparative lack of pipeline gas supplies and its distance from LNG suppliers. Figure 2 compares LNG spot market prices in the Japan LNG market—the highest-priced LNG market—to spot prices for two common petroleum-based bunker fuels, low-sulfur gas oil and high-sulfur fuel oil. As the figure shows, over the last five years, Japan LNG generally has been cheaper than low-sulfur fuel and more expensive than high-sulfur fuel on an energy-equivalent basis (i.e., per MMbtu). However, Japan LNG and high-sulfur fuel prices converged in 2018. As the figure shows, spot prices for LNG deliveries to the Japan market fell below $6/MMBtu in 2016 from a high above $16/MMBtu in 2013. Likewise, low-sulfur gas oil prices have doubled, and high-sulfur fuel oil prices have tripled, since 2016. The volatility of the bunker fuel markets and the global LNG market lead to considerable unpredictability about the relative prices among fuels going forward. LNG may become increasingly price-competitive versus low-sulfur fuel as the 2020 IMO sulfur standards take effect. As discussed above, many analysts predict prices for low-sulfur gas oil, which are already higher than those for high-sulfur fuel oil, to increase significantly after 2020 due to a standards-driven rise in demand. Although fuel prices as shown in Figure 2 indicate favorable economics for LNG versus low-sulfur fuel, if prices for high-sulfur fuel oils collapse as some expect after the 2020 IMO regulations enter into force, it is possible that LNG could lose its price advantage over residual fuel oils. Likewise, the price spread between low-sulfur gasoil and high-sulfur fuel oil would increase, incentivizing more carriers to install scrubbers to capitalize on the savings in fuel costs by continuing to burn high-sulfur fuel. An additional complication is the variability of LNG prices by region. Many shipping lines are global operators seeking low-priced fuel worldwide, but unlike the global oil market, natural gas markets are regional. Because the price of LNG can vary significantly by region, the relative economics of LNG versus other bunker fuels would also vary by region. Another uncertainty in the market for LNG bunkering is the discrepancy between the spot price for traded LNG and the price for LNG sold as bunker fuel in ports. Added costs associated with marketing, storing and transporting LNG in bunkering operations (discussed below) would likely require ports to charge a rate for LNG bunker fuel above spot market prices. These additional overhead costs are likely to vary among ports. Building an LNG-Fueled Fleet Before factoring in any effect of IMO standards on fuel prices, and assuming a favorable LNG-fuel oil price spread, it still could take years for the savings generated by using LNG to pay back the capital costs of switching fuels. Through May 2018, there were 122 LNG-powered vessels in operation and another 135 ordered or under construction. Many of the first LNG vessels delivered and ordered were Norwegian-flagged vessels, as the Norwegian government has subsidized LNG-fueled vessels with a "NO x Fund." The fund provides LNG-operated ships with an exemption from the country's tax on NO x emissions. As an alternative to committing to LNG as a fuel, some vessel owners may hedge their bets by opting to install "LNG-ready" engines, which can burn low-sulfur fuel oil currently, but are designed to make future LNG conversion easier. The number of LNG ships that may be in operation by 2030 is difficult to predict. First, as noted above, growth in LNG powered vessels is likely to be driven primarily by new builds rather than retrofits. However, the shipping industry has experienced nearly a decade of vessel overcapacity and slow growth. Weak growth in the shipping industry could result in slower growth in vessel orders overall and, therefore, fewer orders for LNG-powered vessels. Of new vessels ordered, or set to be delivered, in 2018 or after, 13.5% (by tonnage) are LNG-fueled—up from 1.4% in 2010. If this trend continues, demand for LNG from the shipping industry could still be relatively high, even if overall growth in the shipping industry remains slow. Because LNG bunkering infrastructure among global ports is currently limited, vessels that use large amounts of fuel and travel predictable routes—along which LNG is available—are the most suitable for LNG fuel. For this reason, cruise ships, vehicle ferries, and container ships initially may be the most likely vessel types to adopt LNG as bunker fuel. Order books have reflected this assessment: one quarter of all cruise ships on order by tonnage at the end of 2017 were LNG-powered. Likewise, a major container ship line, CMA CGM, recently announced that it was ordering nine extra-large container ships powered by LNG. The carrier stated that the fuel tanks will displace space for "just a few containers" and said it intends to refuel these ships just once on their round trip voyages between Asia and Europe. Conversely, LNG fuel adoption may be less likely for oil tankers. Half the global oil tanker fleet operates on the shipping spot market (also known as the "tramp" market), meaning that ship owners enter into contracts with cargo owners only for a single voyage. In this kind of trade, many oil tankers lack a consistent route. Having to limit spot contracts only to ports that may bunker LNG could reduce the arbitrage opportunities of tankers. Dry bulk cargo vessels (carrying grain, coal, and other commodities) also typically operate in the tramp market. LNG Engines and Greenhouse Gas Emissions LNG-powered vessels have lower direct exhaust emissions than comparable vessels using petroleum-derived fuels. However, the lifecycle—or "well-to-wake"—GHG emissions (especially of methane) and of volatile organic compound emissions from natural gas production, transportation, and liquefaction complicates the comparison. One study in 2015 concluded, "performing a ['well-to-wake'] GHG study on LNG used as a marine fuel is more complex than previously thought. Further studies are needed ... to investigate this subject." A 2016 study found that the relative GHG emissions benefits of LNG versus conventional fuel oil on a "well-to-wake" basis was highly dependent upon fugitive methane emissions in the LNG supply chain. A 2017 study funded by NGVA Europe, an association which promotes the use of natural gas in vehicles and ships, concluded that LNG as a bunker fuel provides a 21% well-to-wake reduction in GHG emissions compared to convention fuel oil. Evaluating such studies is beyond the scope of this report, although they indicate uncertainty about environmental benefits of LNG fuel, which may require further examination. Despite concerns over lifecycle emissions from the natural gas supply chain, in the short term, ships that pair LNG engines with newer vessel designs could reduce onboard GHG emissions. However, whether these GHG emission reductions would be sufficient to meet the future standards could become another issue for ship owners. The IMO has set a provisional goal of reducing GHG emissions from ships by 50% by 2050. Depending upon the state of engine technology, LNG-fueled ships might become less viable if GHG limits were to be established well before 2050. Concerns about such GHG limits might lead to a decrease in orders of LNG-powered ships over time. Commercial vessels have a typical lifespan of over 20 years, so firms ordering new ships have to take into account compliance with potential standards issued decades in the future. If renewable fuels, such as biodiesel, become more available and cheaper in the coming decades, renewable fuel-powered ships may take over part of the market that LNG-powered ships could occupy. Global Developments in LNG Bunkering A key requirement for ocean carriers to adopt LNG as an engine fuel is the availability of LNG bunkering facilities. Because LNG is extremely cold (-260 °F) and volatile, LNG bunkering requires specialized infrastructure for supply, storage, and fuel delivery to vessels. Depending upon the specific circumstances, LNG bunkering could require transporting LNG to a port from an offsite liquefaction facility for temporary storage at the port, or building an LNG liquefaction terminal on site. Alternatively, LNG could be delivered from offsite facilities directly to vessels in port via truck or supply vessel ( Figure 3 ). Truck-to-vessel LNG bunkering, in particular, provides some fueling capabilities without large upfront capital investments. LNG tanker trucks could also bring LNG to a storage tank built on site at the port, which could then bunker the LNG to arriving ships via pipeline. Supplying LNG using tanker trucks in this way may face capacity limitations due to truck size, road limitations, or other logistical constraints, but it has been demonstrated as a viable approach to LNG bunkering at smaller scales. The predominant method of bunkering today with high-sulfur fuel is vessel to vessel, either by a tank barge or smaller tanker. The type of infrastructure needed to temporarily store (if needed) and deliver LNG within a given port would depend on the size and location of the port, as well as the types of vessels expected to bunker LNG. Truck to ship bunkering is best suited for supporting smaller and mid-sized vessels, such as ferries or offshore supply vessels (OSVs) that support offshore oil platforms. Liquefaction facilities built on site can provide the greatest capacity of any LNG bunkering option, for example, to provide fuel for large vessels in transoceanic trade. However, constructing small-scale liquefaction facilities to produce and deliver LNG on site requires considerable planning and significant capital investment, in one case on the order of $70 million for a mid-sized port. Each LNG bunkering option in Figure 3 may be a viable means to begin LNG bunkering service in a given port. However, ports may face practical constraints as bunkering increases in scale. For example, a container port of significant size typically has multiple terminals, so even with an on-site liquefaction facility, it may need additional infrastructure or supply vessels for moving LNG to other port locations where a cargo ship might be berthed. There may also be port capacity and timing constraints upon the movement of LNG bunkering barges trying to refuel multiple large vessels in various locations around a crowded port. To date, the LNG bunkering operations already in place or in development are comparatively small, but scale constraints could become a factor as LNG bunkering grows and might require additional bunkering-related port investments. LNG Bunkering Overseas Early adoption of LNG bunkering occurred in Europe, where the first sulfur ECAs were created in 2006 and 2007. Through Directive 2014/94/EU, the European Union requires that a core network of marine ports be able to provide LNG bunkering by December 2025 and that a core network of inland ports provide LNG bunkering by 2030. This mandate has been promoted, in part, with European Commission funds to support LNG bunkering infrastructure development. In addition, the European Maritime Safety Agency published regulatory guidance for LNG bunkering in 2018. Over 40 European coastal ports have LNG bunkering capability currently in operation—primarily at locations on the North Sea and the Baltic Sea, and in Spain, France, and Turkey. These locations include major port cities such as Rotterdam, Barcelona, Marseilles, and London. Another 50 LNG bunkering facilities at European ports are in development. LNG bunkering is also advancing in Asia, led by Singapore, the world's largest bunkering port. Singapore has agreed to provide $4.5 million to subsidize the construction of two LNG bunkering vessels. The Port of Singapore plans to source imported LNG at the adjacent Jurong Island LNG terminal, loading it into the bunkering vessels for ship-to-ship fueling of vessels in port. Singapore also has signed a memorandum of understanding with 10 other partners—including a Japanese Ministry and the Chinese Port of Ningbo-Zhoushan—to create a focus group aimed at promoting the adoption of LNG bunkering at ports around the world. In Japan, one consortium is implementing plans to begin vessel-to-vessel LNG bunkering at the Port of Keihin in Tokyo Bay by 2020. Japan's NYK line, a large ship owner, recently announced that it had reached an agreement with three Japanese utilities to add LNG bunkering to ports in Western Japan. Asian countries, together with Australia and the United Arab Emirates, currently have around 10 coastal ports offering LNG bunkering, with another 15 projects in development. Some LNG bunkering operations in Europe and Asia are associated with existing LNG marine terminals, which already have LNG storage and port infrastructure in place. However, many smaller operations—including most of the projects in development—employ trucking, dedicated bunkering vessels, on-site liquefaction, and other means to extend LNG availability beyond the ports with major LNG terminals. LNG bunkering is not so advanced in South America, although with nine operating LNG marine terminals (one for export), and another six in development, South America also could support significant LNG bunkering operations in the near future. LNG Bunkering in the United States LNG bunkering in the United States currently takes place in two locations—Jacksonville, FL, and Port Fourchon, LA—with a third bunkering facility under development in Tacoma, WA. The LNG facilities in these ports serve the relatively small U.S.-flag domestic market. Bunkering of LNG-fueled cruise ships also is planned for Port Canaveral, FL. However, ports in North America have significant potential to expand the nation's LNG bunkering capability. Jacksonville, FL Jacksonville is the largest LNG bunkering operation at a U.S. port. One bunkering facility at the port, developed by JAX LNG, initially began truck-to-ship refueling operations in 2016 for two LNG-capable container ships. (The LNG is sourced from a liquefaction plant in Macon, GA. ) In August 2018, upon delivery of the Clean Jacksonville bunker barge, the facility began to replace truck-to-ship bunkering with ship-to-ship bunkering. In the future, the barge plans to source LNG from a new, small-scale liquefaction plant which JAX LNG is currently constructing at the port. A second facility at Jacksonville's port, operated by Eagle LNG, provides LNG bunkering sourced from a liquefaction plant in West Jacksonville. Eagle LNG also is constructing an on-site liquefaction and vessel bunkering facility in another part of the port, expected to begin service in 2019. Taken together, the JAX LNG and Eagle LNG facilities is expected to establish Jacksonville as a significant LNG-bunkering location with the capability to serve not only the domestic fleet but larger international vessels as well. Port Fourchon, LA In 2015, Harvey Gulf International Marine (Harvey) began LNG bunkering operations in the Gulf of Mexico to fuel its small fleet of LNG-powered offshore supply vessels serving offshore oil rigs. Harvey has since constructed a $25 million facility at its existing terminal in Port Fourchon to store and bunker LNG sourced from liquefaction plants in Alabama and Texas. The facility can provide truck-to-ship bunkering services for LNG-fueled offshore supply vessels, tank barges, and other vessels. A Harvey subsidiary has ordered two LNG bunkering barges to enable ship-to-ship fueling in the future. Tacoma, WA Puget Sound Energy has proposed an LNG liquefaction and bunkering facility at the Port of Tacoma, WA. Vessels traveling between Washington and Alaska typically spend the entire journey within the 200-mile North America ECA. Consequently, vessel owners operating along these routes have been interested in LNG as bunker fuel. TOTE Maritime, for example, a ship owner involved in trade between Alaska and the lower 48 states, has begun the process of retrofitting the engines of two of its container ships to be LNG-compatible. The proposed Tacoma LNG facility would be capable of producing up to 500,000 gallons of LNG per day and would include an 8 million gallon storage tank. The facility would serve the dual purposes of providing fuel for LNG-powered vessels and providing peak-period natural gas supplies for the local gas utility system. Its total construction cost reportedly is expected to be $310 million. Community and environmental concerns have slowed the progress of the proposal, which is still under regulatory review. Puget Sound Energy originally planned to put the LNG facility into service in late 2019; however, permitting issues appear likely to delay its opening until 2020 or later—if it is eventually approved. Port Canaveral, FL Q-LNG Transport, a company 30% owned by Harvey, has placed orders for two LNG bunkering barges to provide ship-to-ship LNG fueling as well as "ship-to-shore transfers to small scale marine distribution infrastructure in the U.S. Gulf of Mexico and abroad." Q-LNG's first barge initially is expected to provide fuel to new LNG-fueled cruise ships based in Port Canaveral (and, potentially, Miami), while service from its second barge is still uncommitted. Initial plans are for the LNG to be sourced from the Elba Island LNG import/export terminal near Savannah, GA—approximately 230 nautical miles away—although the company may seek to develop an on-site LNG storage facility in the future. Other U.S. Ports with Potential for LNG Bunkering As noted above, U.S. LNG bunkering activities thus far have been limited to a handful of vessels in domestic trade and tourism. LNG bunkering for the much larger fleet of foreign-flag ships carrying U.S. imports and exports is still to be developed. As in Europe and Asia, domestic ports located near major LNG import or export terminals may serve as anchors for expanded LNG bunkering operations. Figure 4 shows existing LNG import and export terminals in North America. LNG can be liquefied from pipeline natural gas (or imported natural gas) and stored in large quantities at these facilities. The LNG can then be bunkered on site or transported to bunkering facilities elsewhere in the region by truck, rail, or barge. As discussed above, the distance between Port Canaveral and Elba Island in Q-LNG's bunker sourcing plan is 230 nautical miles. Taking this distance as a measure of how far away LNG can be sourced and barged economically, it is possible to extrapolate which U.S. ports are within reach of a potential supply of LNG for vessel bunkering. Table 1 lists the top 20 U.S. container shipment ports in the United States and their proximity to existing LNG import/export terminals. Of these top 20 ports, 12 are less than 230 nautical miles from an operating LNG terminal. Distances between LNG terminals and the other East Coast ports are not much greater, suggesting that LNG for vessel bunkering could be within reach of every U.S. port along the Eastern Seaboard and in the Gulf of Mexico. On the West Coast, the ports of Los Angeles and Long Beach—the two largest U.S. ports—are relatively close to the Costa Azul LNG import terminal in Ensenada, MX. Seattle and Tacoma are far from Ensenada, but would be served by the proposed Tacoma LNG bunkering project, if constructed. LNG bunkering for Seattle and Tacoma alternatively could be sourced from an existing LNG port facility around 100 nautical miles north in Vancouver, BC, which is expanding to provide LNG bunkering services to international carriers. Alaska's existing LNG export terminal currently is inactive, but potentially could supply LNG bunker fuel in the Pacific Northwest as well. Although existing LNG import or export terminals in North America could supply LNG for regional bunkering operations, such activities would require additional investment for infrastructure such as LNG transfer facilities and bunker barges. CRS is not aware of any public announcements among the LNG terminals above to develop bunkering operations. However, at least one LNG terminal owner, Cheniere Energy, which operates LNG terminals in Louisiana and Texas, identifies vessel bunkering as one source of future LNG demand growth worldwide. U.S. Regulation of LNG Bunkering The IMO adopted safety standards for ships using natural gas as a bunker fuel in 2015. The standards, which took effect in 2017, apply to all new ships and conversions of ships (except LNG tankers, which have their own standards). The IMO standards address engine design, LNG storage tanks, distribution systems, and electrical systems. They also establish new training requirements for crews handling LNG and other low flashpoint fuels. As is the case for the sulfur standards, the IMO LNG safety standards apply to all IMO member nations, including the United States. In addition, a number of U.S. federal agencies, especially the Coast Guard and the Federal Energy Regulatory Commission, have jurisdiction over specific aspects of domestic LNG storage infrastructure and bunkering operations. Coast Guard Port Regulations The Coast Guard has the most prominent role in LNG bunkering, given its general authority over port operations and waterborne shipping. In 2015, the Coast Guard issued two guidelines for the handling of LNG fuel and for waterfront facilities conducting bunkering operations. In 2017, the Coast Guard issued additional guidelines to Captains of the Port, the local Coast Guard officials responsible for port areas, for conducting safe LNG bunkering simultaneously with other port operations. The guidelines advise on quantitative risk assessment of facilities bunkering LNG, which allows Captains of the Port to assess the risks posed to crews and facilities. FERC Siting Regulations The Federal Energy Regulatory Commission (FERC) plays a role in LNG bunkering due to its jurisdiction over the siting of LNG import and export terminals under the Natural Gas Act of 1938. Specifically, FERC asserts approval authority over the place of entry and exit, siting, construction, and operation of new LNG terminals as well as modifications or extensions of existing LNG terminals. Notwithstanding this siting authority, FERC reportedly does not intend to assert jurisdiction over the permitting of LNG bunkering facilities, but it may require amendment of permits it has issued for LNG import or export terminals to account for bunkering operations added afterwards. Other Federal Agencies In addition to the Coast Guard and FERC, other federal agencies may have jurisdiction over specific aspects of LNG bunkering operations in U.S. ports under a range of statutory authorities. For example, the Pipeline and Hazardous Materials Safety Administration within the Department of Transportation regulates the safety of natural gas pipelines and certain associated LNG storage facilities (e.g., peak-shaving plants). LNG facilities also may need to comply with the Occupational Safety and Health Administration's regulations for Process Safety Management of Highly Hazardous Chemicals. Other federal agencies, including the Environmental Protection Agency, the U.S. Army Corps of Engineers, and the Transportation Security Administration, may regulate other aspects of LNG bunkering projects. CRS is not aware of new regulations to date among these agencies specifically addressing LNG bunkering. Global Development of LNG Supply World production of LNG has been rising rapidly over the last few years, driven by growth in the natural gas sector in new regions—especially Australia and the United States. According to one industry analysis ( Figure 5 ), global LNG supply is expected to increase from 300 to 400 million metric tons per annum (MMtpa) from 2017 to 2021 based on new LNG liquefaction projects already operating or under development. An additional 150 MMtpa appears likely to come online after that. Collectively, LNG supply from these new liquefaction projects could exceed projections of demand, which would put downward pressure on LNG prices. While increases in the global supply of LNG do not necessarily translate directly into an increase in LNG available for bunkering, such increases could provide options for LNG bunkering in more ports. Estimating potential demand for LNG in the maritime sector is complicated and uncertain. One study of future LNG demand for bunkering, specifically, projects that LNG-powered vessels in operation and under construction as of June 2018 will require between 1.2 and 3.0 MMt of LNG per year. The study's review of several LNG consumption forecasts in the maritime sector shows a consensus projection between 20 to 30 MMt per year by 2030. This level of demand growth implies an increase in LNG-powered vessel construction from the current rate of around 120 ships per year to between 400 and 600 new builds per year. If these levels were reached, they could create a significant new market for LNG suppliers. Assuming a Henry Hub spot market price of $4/MMBtu in 2030, the annual market for LNG in shipping could be worth $2.9 billion to $5.8 billion, before accounting for liquefaction and transportation charges. Some studies have projected the LNG bunkering market to be even larger and to grow more quickly. However, key variables—such as the prices of Henry Hub natural gas and crude oil, the number of new vessel orders, and the future costs of emissions technology—are notoriously hard to predict with accuracy. Thus, it is not assured that natural gas consumption in the maritime sector will absorb more than a small amount of the global liquefaction capacity in development. Domestic Considerations The IMO sulfur standards apply to ship owners globally, as does the development of new LNG supply and bunkering infrastructure. In addition to these factors, domestic LNG bunkering also may be influenced by considerations more specific to the United States. These considerations include growth of the U.S. natural gas supply, domestic shipbuilding opportunities, and LNG safety and security. U.S. Natural Gas Producers Seek New Markets Because of its leading role in global natural gas production, the United States has a particular interest in any new source of natural gas demand. According to the Energy Information Administration, the United States has been the world's top producer of natural gas since 2009, when it surpassed Russia. In 2017, increases in production outstripped increases in domestic gas consumption, leading to the United States becoming a net exporter of natural gas for the first time in nearly 60 years. As discussed above, North America (primarily the United States) is expected to add the most new LNG production capacity through 2030 when including projects that are operating, under construction, and likely (according to investment analysts). Past increases in U.S. LNG exports were driven by greater throughput at the Sabine Pass LNG export terminal—the only operating U.S. LNG export terminal in 2017. In March 2018, the Cove Point terminal in Maryland became the second operating U.S. LNG export terminal. Four additional projects under construction or commissioning are set to nearly triple U.S. liquefaction by the end of 2019. This increase in liquefaction capacity likely will motivate LNG producers to secure new buyers. Figure 6 shows estimated LNG prices for various locations around the world as of October 2018. As the figure shows, LNG prices are substantially lower in North America than in Asia, Europe, and South America. Even after adding $1.00 to $2.00/MMBtu to transport the LNG to overseas ports, LNG produced in the United States is globally competitive at these prices. If LNG from the new liquefaction capacity coming online can be produced and delivered with similar economics, the cost advantage may create an opportunity for U.S. LNG in bunker supply. There are over 400 petroleum fuel bunkering ports in the world, but 60% of bunkering in recent years has happened in six countries: Singapore, the United States, China, the United Arab Emirates, South Korea, and the Netherlands. Of these countries, only the United States is a significant LNG producer. Therefore, the United States could be a favorable source of LNG for domestic bunkering and for bunkering at the other major ports. Safety of LNG Bunkering in Ports While the LNG industry historically has had a good safety record, there are unique safety risks associated with LNG in vessel operations. Leakage of LNG during LNG shipping or bunkering can pose several hazards. LNG is stored at temperatures below -162 °C (-260 °F), far below the -20°C at which the carbon steels typically used in shipbuilding become brittle. Consequently, extreme care must be taken to ensure that LNG does not drip or spill onto ship hulls or decking because it could lead to brittle fracture, seriously damaging a ship or bunkering barge. LNG spilled onto water can pose a more serious hazard as it will rapidly and continuously vaporize into natural gas, which could ignite. The resulting "pool fire" would spread as the LNG spill expands away from its source and continues evaporating. A pool fire is intense, far hotter and burning far more rapidly than oil or gasoline fires, and it cannot be extinguished; all the LNG must be consumed before it goes out. Because an LNG pool fire is so hot, its thermal radiation may injure people and damage vessels or property a considerable distance from the fire itself. Many experts agree that a large pool fire, especially on water, is the most serious LNG hazard. Leaks of boil-off gas (the small amount of LNG that vaporizes in storage) can also release natural gas into a port area and cause fires or explosions. Major releases of LNG from large LNG carriers would be most dangerous within 500 meters of the spill and would pose some risk at distances up to 1,600 meters from the spill. While a bunkering barge or a vessel using LNG for fuel contains far less LNG than large LNG carriers, LNG spills in bunkering operations could still be a significant concern. Risks associated with bunkering LNG are complicated in ports seeking to engage in "simultaneous operations" during the bunkering process. Simultaneous operations entail loading and unloading cargo and personnel from a ship, maintenance, and other logistical operations performed while a ship is bunkering. Accidents that occur during such operations (for example, the operation of heavy machinery near pipes transporting LNG) can result in a spill of LNG which can threaten workers positioned near the site of operations. Security Risks of LNG Bunkering LNG tankers, bunkering vessels, and land-based facilities could be vulnerable to terrorism. Bunkering tanks or vessels might be physically attacked to destroy the LNG they hold—and vessels might be commandeered for use as weapons against port or coastal targets. Potential terrorist attacks on LNG terminals or tankers in the United States have long been a key concern of the public and policymakers in the context of large scale LNG imports or exports because such attacks could cause catastrophic fires in ports and nearby populated areas. For example, a 2007 report by the Government Accountability Office stated that, "the ship-based supply chain for energy commodities," specifically including LNG, "remains threatened and vulnerable, and appropriate security throughout the chain is essential to ensure safe and efficient delivery." Affected communities and federal officials continue to express concern about the security risks of LNG. The potential risks from terrorism to LNG bunkering infrastructure may be different than those of larger LNG import or export operations due to smaller quantities of LNG involved, but the risks may become more widespread if LNG bunkering operations are established in more locations. The Maritime Transportation Security Act (MTSA, P.L. 107-295 ) and the International Ship and Port Facility Security Code give the Coast Guard far-ranging authority over the security of hazardous materials in maritime shipping. The Coast Guard has developed port security plans addressing how to deploy federal, state, and local resources to prevent terrorist attacks. Under the MTSA, the Coast Guard has assessed the overall vulnerability of marine vessels, their potential to transport terrorists or terror materials, and their use as potential weapons. The Coast Guard has employed these assessments to augment port security as necessary and to develop maritime security standards for LNG port facilities. Policy Implications The IMO's overall framework for controlling vessels emissions (MARPOL Annex VI) has been in place since 2005. While the United States, as an IMO member, is subject to the IMO's 2020 sulfur standards, the international standards apply equally to all parties and all vessels. The impacts of sulfur standards on bunker fuel have been an important consideration, but IMO member nations have agreed to the standards independent of any particular energy policies. Moreover, MARPOL Annex VI preceded the U.S. shale gas boom, so commitment to that initial IMO framework could not have anticipated United States' current role as a dominant energy producer. Any changes within the international shipping fleet to install sulfur scrubbers, fuel engines with LNG, or switch to other low sulfur fuels, are being driven primarily by market forces in fuel supply, shipbuilding, and shipping—not by any particular push to favor one fuel over another. Nonetheless, given its particular status, the question arises whether the standards may create an economic opportunity for the United States, in energy or otherwise. More specifically, could international adoption of LNG as a bunker fuel create an important new market for U.S. natural gas producers, shipbuilders, or infrastructure developers? U.S. Opportunities and Challenges As discussed above, depending upon the adoption of LNG bunkering in the global fleet, the LNG bunker fuel market could grow to several billion dollars by 2030. If U.S. LNG producers were to supply a significant share of this market—on the strength of comparatively low LNG production costs—LNG bunkering could increase demand for U.S. natural gas production, transportation, and liquefaction. Opportunities in LNG-related shipbuilding might be more limited, as most of this occurs overseas, with the exception of Jones Act vessels. In the latter case, demand for domestically-constructed LNG bunkering barges could be one significant area of economic growth. Engineering and construction firms could benefit from new opportunities to develop new port infrastructure for LNG storage and transfer. While likely limited in number, such port facilities could be complex, high value projects costing tens or hundreds of millions of dollars to complete. Such projects could create jobs in engineering, construction, and operation, which could be important to local communities. Although LNG bunkering could present the United States with new economic opportunities, it may pose challenges as well. Rising demand for LNG in the maritime sector could increase natural gas prices for domestic consumers. In addition to being the world's largest natural gas producer, as of 2018, the United States is also the world's largest producer of crude oil and the second largest bunkering hub. Consequently, while vessel conversion to LNG bunkering may increase demand for U.S.-produced natural gas, it could be partially offset by reduced demand for U.S.-produced crude oil or refined products. Exactly how changing demand in one sector could affect the other is unclear. Furthermore, while LNG can reduce pollutant emissions from vessels, emissions and environmental impacts from increased natural gas production and transportation could increase overall emissions. Much of the net environmental impact depends upon practices in the natural gas industry, which are the subject of ongoing study and debate. Although new LNG bunkering infrastructure can create jobs, as the Tacoma LNG projects shows, the construction of such port facilities can be controversial for reasons of safety, security, and environmental impact. Overarching the considerations above is uncertainty about how the global shipping fleet will adapt to the IMO sulfur standards over time. This uncertainty complicates decisions related to both private investment and public policy. LNG-fueled ships still account for only a fraction of the U.S. and global fleets, and it may take several decades for significant benefits of LNG-powered vessels to be realized. It is also possible that alternative ship fuels, including biofuels, electric engines, and hybrid engines, will become more economically viable in coming years. Given the uncertainty surrounding the future of LNG as a ship fuel, it is hard to predict the potential benefits or costs that LNG bunkering may provide to the United States. Considerations for Congress Until now, the private sector has added LNG-fueled vessels to fleets in the United States in a piecemeal manner under existing federal statutes and regulation. Congress could encourage the growth of LNG bunkering by various means, such as providing tax incentives to support the construction of LNG bunkering facilities and vessels, addressing any statutory or regulatory barriers to bunkering facility siting or operations, and providing funding for technical support to domestic carriers seeking to adopt LNG technology. Alternatively, Congress could seek to encourage competing bunker fuel options, such as biofuels, by incentivizing them in similar ways. In addition, Congress could also affect growth in LNG bunkering through policies affecting the LNG industry or domestic shipping industry as a whole. Changes in federal regulation related to natural gas production, or changes to the Jones Act, for example, while not directed at LNG bunkering, could nonetheless affect its economics. Therefore, evaluating the potential implications on LNG bunkering of broader energy, environmental, or economic objectives may become an additional consideration in congressional oversight and legislative initiatives. If LNG bunkering expands significantly in U.S. ports, Congress also may examine the adequacy of existing measures to ensure the safety and security of LNG vessels, storage, and related facilities.

The combination of growing liquefied natural gas (LNG) supplies and new requirements for less polluting fuels in the maritime shipping industry has heightened interest in LNG as a maritime fuel. The use of LNG as an engine ("bunker") fuel in shipping is also drawing attention from federal agencies and is beginning to emerge as an issue of interest in Congress. In 2008, the International Maritime Organization (IMO) announced a timeline to reduce the maximum sulfur content in vessel fuels to 0.5% by January 1, 2020. Annex VI of the International Convention for the Prevention of Pollution from Ships requires vessels to either use fuels containing less than 0.5% sulfur or install exhaust-cleaning systems ("scrubbers") to limit a vessel's airborne emissions of sulfur oxides to an equivalent level. An option for vessel operators to meet the IMO 2020 standards is to install LNG-fueled engines, which emit only trace amounts of sulfur. Adopting LNG engines requires more investment than installing scrubbers, but LNG-fueled engines may offset their capital costs with operating cost advantages over conventional fuels. Savings would depend on the price spread between LNG and fuel oil. Recent trends suggest that LNG may be cheaper in the long run than conventional fuels. LNG bunkering requires specialized infrastructure for supply, storage, and delivery to vessels. To date, the number of ports worldwide that have developed such infrastructure is limited, although growth in this area has accelerated. Early adoption of LNG bunkering is occurring in Europe where the European Union requires a core network of ports to provide LNG bunkering by 2030. LNG bunkering is also advancing in Asia, led by Singapore, the world's largest bunkering port. Asian countries, together with Australia and the United Arab Emirates, have about 10 coastal ports offering LNG bunkering, with another 15 projects in development. LNG bunkering in the United States currently takes place in Jacksonville, FL, and Port Fourchon, LA—with a third facility under development in Tacoma, WA. Bunkering of LNG-fueled cruise ships using barges also is planned for Port Canaveral, FL. The relative locations of other U.S. ports and operating LNG terminals suggest that LNG bunkering could be within reach of every port along the Eastern Seaboard and in the Gulf of Mexico. On the West Coast, the ports of Los Angeles and Long Beach, CA, are near the Costa Azul LNG terminal in Ensenada, MX. Seattle and Tacoma are adjacent to the proposed Tacoma LNG project. Since 2015, Jones Act coastal ship operators have taken steps to transition their fleets to use cleaner burning fuels, including LNG. Shippers of dry goods to Alaska, Hawaii, and Puerto Rico have taken delivery or have ordered LNG-fueled and LNG-capable vessels from U.S. shipyards in Philadelphia, PA, and Brownsville, TX. Another company operates five LNG-powered offshore supply vessels built in Gulfport, MS. Depending upon LNG conversions, the global LNG bunker fuel market could grow to several billion dollars by 2030. If U.S. LNG producers were to supply a significant share of this market—on the strength of comparatively low LNG production costs—LNG bunkering could increase demand for U.S. natural gas production, transportation, and liquefaction. Opportunities in LNG-related shipbuilding might be more limited, as most shipbuilding occurs overseas, although domestically-constructed LNG bunkering barges could be one area of economic growth. Finally, engineering and construction firms could benefit from new opportunities to develop port infrastructure for LNG storage and transfer. However, while vessel conversion to LNG fuel may increase demand for U.S.-produced natural gas, it partially could be offset by reduced demand for U.S.-produced crude oil or refined products. Furthermore, while LNG can reduce direct emissions from vessels, fugitive emissions and environmental impacts from natural gas production and transportation could reduce overall emissions benefits. While the LNG industry has experienced few accidents, the Coast Guard has been developing new standards to address unique safety and security risks associated with LNG in vessel operations. The overarching consideration about LNG bunkering in the United States is uncertainty about how the global shipping fleet will adapt to the IMO sulfur standards over time. This uncertainty complicates decisions related to both private investment and public policy. Although Congress has limited ability to influence global shipping, it could influence the growth of LNG bunkering through the tax code and regulation, or through policies affecting the LNG industry or domestic shipping industry as a whole. Evaluating the potential implications of LNG bunkering within the context of broader energy and environmental policies may become an additional consideration for Congress. If LNG bunkering expands significantly, Congress also may examine the adequacy of existing measures to ensure the safety and security of LNG vessels, storage, and related facilities.

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Introduction Prior to the September 2001 terrorist attacks on the United States, insurers generally did not exclude or separately charge for coverage of terrorism risk. The events of September 11, 2001, changed this as insurers realized the extent of possible terrorism losses. Estimates of insured losses from the 9/11 attacks are more than $45 billion in current dollars, the largest insured losses from a nonnatural disaster on record. These losses were concentrated in business interruption insurance (34% of the losses), property insurance (30%), and liability insurance (23%). Although primary insurance companies—those that actually sell and service the insurance policies bought by consumers—suffered losses from the terrorist attacks, the heaviest insured losses were absorbed by foreign and domestic reinsurers, the insurers of insurance companies. Because of the lack of public data on, or modeling of, the scope and nature of the terrorism risk, reinsurers felt unable to accurately price for such risks and largely withdrew from the market for terrorism risk insurance in the months following September 11, 2001. Once reinsurers stopped offering coverage for terrorism risk, primary insurers, suffering equally from a lack of public data and models, also withdrew, or tried to withdraw, from the market. In most states, state regulators must approve policy form changes. Most state regulators agreed to insurer requests to exclude terrorism risks from commercial policies, just as these policies had long excluded war risks. Terrorism risk insurance was soon unavailable or extremely expensive, and many businesses were no longer able to purchase insurance that would protect them in future terrorist attacks. In some cases, such insurance is required to consummate various transactions, particularly in the real estate, transportation, construction, energy, and utility sectors. Although the evidence is largely anecdotal, some were concerned that the lack of coverage posed a threat of serious harm—such as job loss—to these industries, in turn threatening the broader economy. In November 2002, Congress responded to the fears of economic damage due to the absence of commercially available coverage for terrorism with passage of the Terrorism Risk Insurance Act (TRIA). TRIA created a three-year Terrorism Insurance Program to provide a government reinsurance backstop in the case of terrorist attacks. The TRIA program was amended and extended in 2005, 2007, and 2015. Following the 2015 amendments, the TRIA program is set to expire at the end of 2020. (A side-by-side of the original law and the three reauthorization acts is in Table 1 .) The executive branch has been skeptical about the TRIA program in the past. Bills to expand TRIA were resisted by then-President George W. Bush's Administration, and previous presidential budgets under then-President Obama called for changes in the program that would have had the effect of scaling back the TRIA coverage. The current Administration has not called for specific changes to TRIA, but has indicated that it is "evaluating reforms…to further decrease taxpayer exposure." The insurance industry largely continues to support TRIA, as do commercial insurance consumers in the real estate and other industries that have formed a "Coalition to Insure Against Terrorism" (CIAT). However, not all insurance consumers have consistently supported the renewal of TRIA. For example, the Consumer Federation of America has questioned the need for the program in the past. Although the United States has suffered attacks deemed "terrorism" since the passage of TRIA, no acts of terrorism have been certified and no payments have occurred under TRIA. For example, although the April 2013 bombing in Boston was termed an "act of terror," by the President, the insured losses in TRIA-eligible insurance from that bombing did not cross the $5 million statutory threshold to be certified under TRIA. (See precise criteria under the TRIA program below.) Goals and Specifics of the Current TRIA Program The original TRIA legislation's stated goals were to (1) create a temporary federal program of shared public and private compensation for insured terrorism losses to allow the private market to stabilize; (2) protect consumers by ensuring the availability and affordability of insurance for terrorism risks; and (3) preserve state regulation of insurance. Although Congress has amended specific aspects of the original act, the operation of the program generally usually follows the original statute. The changes to the program have largely reduced the government coverage for terrorism losses, except that the 2007 amendments expanded coverage to domestic terrorism losses, rather than limiting the program to foreign terrorism. Terrorism Loss Sharing Criteria To meet the first goal, the TRIA program creates a mechanism through which the federal government could share insured commercial property and casualty losses with the private insurance market. The role of federal loss sharing depends on the size of the insured loss. For a relatively small loss, there is no federal sharing. For a medium-sized loss, the federal role is to spread the loss over time and over the entire insurance industry. The federal government provides assistance up front but then recoups the payments it made through a broad levy on insurance policies afterwards. For a large loss, the federal government is to pay most of the losses, although recoupment is possible (but not mandatory) in these circumstances as well. The precise dollar values where losses cross these small, medium, and large thresholds are uncertain and will depend on how the losses are distributed among insurers. For example, for loss sharing to occur, an attack must meet a certain aggregate dollar value and each insurer must pay out a certain amount in claims—known as its deductible. For some large insurers, this individual deductible might be higher than the aggregate threshold set in statute, meaning that loss sharing might not actually occur until a higher level than the figure set in statute. The criteria under the TRIA program in 2019 are as follows: 1. An individual act of terrorism must be certified by the Secretary of the Treasury, in consultation with the Secretary of Homeland Security and Attorney General; losses must exceed $5 million in the United States or to U.S. air carriers or sea vessels for an act of terrorism to be certified. 2. The federal government shares in an insurer's losses due to a certified act of terrorism only if "the aggregate industry insured losses resulting from such certified act of terrorism" exceed $180 million (increasing to $200 million in 2020). 3. The federal program covers only commercial property and casualty insurance, and it excludes by statute several specific lines of insurance. 4. Each insurer is responsible for paying a deductible before receiving federal coverage. An insurer's deductible is proportionate to its size, equaling 20% of an insurer's annual direct earned premiums for the commercial property and casualty lines of insurance specified in TRIA. 5. Once the $180 million aggregate loss threshold and 20% deductible are met, the federal government would cover 81% of each insurer's losses above its deductible until the amount of losses totals $100 billion. 6. After $100 billion in aggregate losses, there is no federal government coverage and no requirement that insurers provide coverage. 7. In the years following the federal sharing of insurer losses, but prior to September 30, 2024, the Secretary of the Treasury is required to establish surcharges on TRIA-eligible property and casualty insurance policies to recoup 140% of some or all of the outlays to insurers under the program. If losses are high, the Secretary has the authority to assess surcharges, but is not required to do so. (See " Recoupment Provisions " below for more detail.) Initial Loss Sharing The initial loss sharing under TRIA can be seen in Figure 1 , adapted from a Congressional Budget Office (CBO) report. The exact amount of the 20% deductible at which TRIA coverage would begin depends on how the losses are distributed among insurance companies. In the aggregate, 20% of the direct-earned premiums for all of the property and casualty lines specified in TRIA totaled approximately $42 billion in 2017, according to the latest data collected by the Treasury Department. TRIA coverage is likely, however, to begin well under this amount as the losses from an attack are unlikely to be equally distributed among insurance companies. Recoupment Provisions The precise amount TRIA requires the Treasury to recoup after the initial loss sharing is determined by the interplay between a number of different factors in the law and insurance marketplace. The general result of the recoupment provisions is that, for attacks that result in under $37.5 billion in insured losses, the Treasury Secretary is required to recoup 140% of the government outlays through surcharges on property and casualty insurance policies. For events with insured losses over $37.5 billion, the Secretary has discretionary authority to recoup all the government outlays and may be required to partially recoup the government outlays depending on the size of the attacks and the amount of uncompensated losses paid by the insurance industry. (See the Appendix for more information on exact recoupment calculations.) If the requirement for recoupment is triggered, TRIA requires the government to recoup all payments prior to the end of FY2024. Because the last reauthorization of TRIA occurred in January 2015, such recoupment would be completed within a 10-year timeframe following the previous reauthorization. For an attack causing significant insured loses, however, this requirement could result in high surcharges being applied for a relatively short time. The recoupment surcharges are to be imposed as a percentage of premiums paid on all TRIA-eligible property and casualty insurance policies, but the Secretary has the authority to adjust the amount of the premiums taking into consideration differences between rural and urban areas and the terrorism exposures of different lines of insurance. Program Administration The administration of the TRIA program was originally left generally to the Treasury Secretary. This was changed somewhat in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The act created a new Federal Insurance Office (FIO) to be located within the Department of the Treasury. Among the duties specified for the FIO in the legislation was to assist the Secretary in the administration of the Terrorism Insurance Program. TRIA Consumer Protections TRIA addresses the second goal—to protect consumers—by requiring insurers that offer TRIA-covered lines of insurance to make terrorism insurance available prospectively to their commercial policyholders. This coverage may not differ materially from coverage for other types of losses. Each terrorism insurance offer must reveal both the premium charged for terrorism insurance and the possible federal share of compensation. Policyholders are not, however, required to purchase coverage under TRIA. If a policyholder declines to purchase terrorism coverage, the insurer may exclude terrorism losses. Federal law does not limit what insurers can charge for terrorism risk insurance, although state regulators typically have the authority under state law to modify excessive, inadequate, or unfairly discriminatory rates. Preservation of State Insurance Regulation TRIA's third goal—to preserve state regulation of insurance—is expressly accomplished in Section 106(a), which provides that "Nothing in this title shall affect the jurisdiction or regulatory authority of the insurance commissioner [of a state]." The Section 106(a) provision has two exceptions, one permanent and one temporary (and expired): (1) the federal statute preempts any state definition of an "act of terrorism" in favor of the federal definition and (2) the statute briefly preempted state rate and form approval laws for terrorism insurance from enactment to the end of 2003. In addition to these exceptions, Section 105 of the law also preempts state laws with respect to insurance policy exclusions for acts of terrorism. Coverage for Nonconventional Terrorism Attacks The TRIA statute does not specifically include or exclude property and casualty insurance coverage for terrorist attacks according to the particular methods used in the attacks, such as nuclear, biological, chemical, and radiological (NBCR) and cyber terrorism risks. Such nonconventional means, however, have the potential to cause losses that may or may not end up being covered by TRIA and have been a source of particular concern and attention in the past. Nuclear, Biological, Chemical, and Radiological Terrorism Coverage Some observers consider a terrorist attack with some form of NBCR weapon to be the most likely type of attack causing large scale losses. The current TRIA statute does not specifically include or exclude NBCR events; thus, the TRIA program in general would cover insured losses from terrorist actions due to NCBR as it would for an attack by conventional means. The term insured losses , however, is a meaningful distinction. Except for workers' compensation insurance, most insurance policies that would fall under the TRIA umbrella include exclusions that would likely limit insurer coverage of an NCBR event, whether it was due to terrorism or to some sort of accident, although these exclusions have never been legally tested in the United States after a terrorist event. If these exclusions are invoked and do indeed limit the insurer losses due to NBCR terrorism, they would also limit the TRIA coverage of such losses. Language that would have specifically extended TRIA coverage to NBCR events was offered in the past, but was not included in legislation as enacted. In 2007, the Government Accountability Office (GAO) was directed to study the issue and a GAO report was issued in 2008, finding that "insurers generally remain unwilling to offer NBCR coverage because of uncertainties about the risk and the potential for catastrophic losses." In the past, legislation (e.g., H.R. 4871 in the 113 th Congress) would have provided for differential treatment of NBCR attacks under TRIA, but such legislation has not been enacted. Cyber Terrorism Coverage Concern regarding potential damage from cyber terrorism has grown as increasing amounts of economic activity occur online. The TRIA statute does not specifically address the potential for cyber terrorism, thus, there was uncertainty about such attacks would be covered in the same manner as terrorist attacks using conventional means. In 2016, state insurance regulators introduced a new Cyber Liability line of insurance, raising questions as to whether coverage under this line would be covered under TRIA, or whether it would not be covered under the law's exclusion of "professional liability" insurance. The Department of the Treasury released guidance in December 2016 clarifying that "stand-alone cyber insurance policies reported under the 'Cyber Liability' line are included in the definition of 'property and casualty insurance' under TRIA." Despite Treasury's guidance, cyber terrorism coverage remains a particular concern. The Treasury Department devoted a specific section of the latest report on TRIA to cyber coverage, reporting that 50% of standalone cyber insurance policies (based on premium value) included terrorism coverage. The take-up rate for those choosing cyber coverage that is embedded in policies covering additional perils was 54%. These rates are similar to, but slightly lower than, the 62% take-up rate for general terrorism coverage found across all TRIA-eligible lines. Background on Terrorism Insurance Insurability of Terrorism Risk Stripped to its most basic elements, insurance is a fairly straightforward operation. An insurer agrees to assume an indefinite future risk in exchange for a definite current premium. The insurer pools a large number of risks such that, at any given point in time, the ongoing losses will not be larger than the current premiums being paid, plus the residual amount of past premiums that the insurer retains and invests, plus, in a last resort, any borrowing against future profits if this is possible. For the insurer to operate successfully and avoid failure, it is critical to accurately estimate the probability of a loss and the severity of that loss so that a sufficient premium can be charged. Insurers generally depend upon huge databases of past loss information in setting these rates. Everyday occurrences, such as automobile accidents or natural deaths, can be estimated with great accuracy. Extraordinary events, such as large hurricanes, are more difficult, but insurers have many years of weather data, coupled with sophisticated computer models, with which to make predictions. Many see terrorism risk as fundamentally different from other risks, and thus it is often perceived as uninsurable by the private insurance market without government support for the most catastrophic risk. The argument that catastrophic terrorism risk is uninsurable typically focuses on lack of public data about both the probability and severity of terrorist acts. The reason for the lack of historical data is generally seen as a good thing—few terrorist attacks are attempted and fewer have succeeded. Nevertheless, the insurer needs some type of measurable data to determine which terrorism risks it can take on without putting the company at risk of failure. As a replacement for large amounts of historical data, insurers turn to various forms of terrorism models similar to those used to assess future hurricane losses. Even the best model, however, can only partly replace good data, and terrorism models are still relatively new compared with hurricane models. One prominent insurance textbook identifies four ideal elements of an insurable risk: (1) a sufficiently large number of insureds to make losses reasonably predictable; (2) losses must be definite and measurable; (3) losses must be fortuitous or accidental; and (4) losses must not be catastrophic (i.e., it must be unlikely to produce losses to a large percentage of the risks at the same time). Terrorism risk in the United States would appear to fail the first criterion as terrorism losses have not proved predictable over time. Losses to terrorism, when they occur, are generally definite and measurable, so terrorism risk could pass under criteria two. Such risk, however, also likely fails the third criterion due to the malevolent human actors behind terrorist attacks, whose motives, means, and targets of attack are constantly in flux. Whether it fails the fourth criterion is largely decided by the underwriting actions of insurers themselves (i.e., whether the insurers insure a large number of risks in a single geographic area that would be affected by a terrorist strike). Unsurprisingly, insurers generally have sought to limit their exposures in particular geographic locations with a conceptually higher risk for terrorist attacks, making terrorism insurance more difficult to find in those areas. International Experience with Terrorism Risk Insurance27 Although the U.S. experience with terrorism is relatively limited, other countries have dealt with the issue more extensively and have developed their own responses to the challenges presented by terrorism risk. Spain, which has seen significant terrorist activity by Basque separatist movements, insures against acts of terrorism via a broader government-owned reinsurer that has provided coverage for catastrophes since 1954. The United Kingdom, responding to the Irish Republican Army attacks in the 1980s, created Pool Re, a privately owned mutual insurance company with government backing, specifically to insure terrorism risk. In the aftermath of the September 11, 2001, attacks, many foreign countries reassessed their terrorism risks and created a variety of approaches to deal with the risks. The UK greatly expanded Pool Re, whereas Germany created a private insurer with government backing to offer terrorism insurance policies. Germany's plan, like the United States' TRIA, was created as a temporary measure. It has been extended since its inception, most recently until the end of 2019. Not all countries, however, concluded that some sort of government backing for terrorism insurance was necessary. Canada specifically considered, and rejected, creating a government program following September 11, 2001. Previous U.S. Experience with "Uninsurable" Risks Terrorism risk post-2001 is not the first time the United States has faced a risk perceived as uninsurable in private markets that Congress chooses to address through government action. During World War II, for example, Congress created a "war damage" insurance program and it expanded a program insuring against aviation war risk following September 11, 2002. Since 1968, the National Flood Insurance Program has covered most of the insured flooding losses in the United States. The closest previous analog to the situation with terrorism risk may be the federal riot reinsurance program created in the late 1960s. Following large scale riots in American cities in the late 1960s, insurers generally pulled back from insuring in those markets, either adding policy exclusions to limit their exposure to damage from riots or ceasing to sell property damage insurance altogether. In response, Congress created a riot reinsurance program as part of the Housing and Urban Development Act of 1968. The federal riot reinsurance program offered reinsurance contracts similar to commercial excess reinsurance. The government agreed to cover some percentage of an insurance company's losses above a certain deductible in exchange for a premium paid by that insurance company. Private reinsurers eventually returned to the market, and the federal riot reinsurance program was terminated in 1985. The Terrorism Insurance Market Post-9/11 and Pre-TRIA The September 2001 terrorist attacks, and the resulting billions of dollars in insured losses, caused significant upheaval in the insurance market. Even before the attacks, the insurance market was showing signs of a cyclical "hardening" of the market in which prices typically rise and availability is somewhat limited. The unexpectedly large losses caused by terrorist acts exacerbated this trend, especially with respect to the commercial lines of insurance most at risk for terrorism losses. Post-September 11, insurers and reinsurers started including substantial surcharges for terrorism risk, or, more commonly, they excluded coverage for terrorist attacks altogether. Reinsurers could make such rapid adjustments because reinsurance contracts and rates are generally unregulated. Primary insurance contracts and rates are more closely regulated by the individual states, and the exclusion of terrorism coverage for the individual insurance purchaser required regulatory approval at the state level in most cases. States acted fairly quickly, and, by early 2002, 45 states had approved insurance policy language prepared by the Insurance Services Office, Inc. (ISO, an insurance consulting firm), excluding terrorism damage in standard commercial policies. The lack of readily available terrorism insurance caused fears of a larger economic impact, particularly on the real estate market. In most cases, lenders prefer or require that a borrower maintain insurance coverage on a property. Lack of terrorism insurance coverage could lead to defaults on existing loans and a downturn in future lending, causing economic ripple effects as buildings are not built and construction workers remain idle. The 14-month period after the September 2001 terrorist attacks and before the November 2002 passage of TRIA provides some insight into the effects of a lack of terrorism insurance. Some examples in September 2002 include the Real Estate Roundtable releasing a survey finding that "$15.5 billion of real estate projects in 17 states were stalled or cancelled because of a continuing scarcity of terrorism insurance" and Moody's Investors Service downgrading $4.5 billion in commercial mortgage-backed securities. This picture, however, was not uniform. For example, in July 2002, The Wall Street Journal reported that "despite concerns over landlords' ability to get terrorism insurance, trophy properties were in demand." CBO concluded in 2005 that "[TRIA] appears to have had little measurable effect on office construction, employment in the construction industry, or the volume of commercial construction loans made by large commercial banks," but CBO also noted that a variety of economic factors at the time "could be masking positive macroeconomic effects of TRIA." After TRIA TRIA's "make available" provisions addressed the availability problem in the terrorism insurance market, as insurers were required by law to offer commercial terrorism coverage. However, significant uncertainty existed as to how businesses would react, because there was no general requirement to purchase terrorism coverage and the pricing of terrorism coverage was initially high. Analyzing the terrorism insurance market in the aftermath of TRIA is challenging as well since there was no consistent regulatory reporting by insurers until P.L. 114-1 required detailed reporting, which Treasury began in 2016. Before this time, data on terrorism insurance typically stemmed from insurance industry surveys or rating bureaus. In examining the terrorism insurance market since TRIA, it is also important to note that no terrorist attacks have occurred that reached TRIA thresholds, thus property and casualty insurance has not made any large scale payouts for terrorism damages. The initial consumer reaction to the terrorism coverage offers was relatively subdued. Marsh, Inc., a large insurance broker, reported that 27% of their clients bought terrorism insurance in 2003. This take-up rate, however, climbed relatively quickly to 49% in 2004 and 58% in 2005. Marsh reported that, since 2005, the overall take-up rate has remained near 60%, with Marsh reporting a rate of 62% in 2017. The Treasury reports based on industry data calls have found similar or higher take-up rates. For 2017, Treasury found that the take-up rate based on premium volumes was 62%, whereas based on policy counts, the rate was 78%. The price for terrorism insurance has appeared to decline over time, although the level of pricing reported may not always be comparable between sources. The 2013 report by the President's Working Group on Financial Markets, based on survey data by insurance broker Aon, showed a high of above 7% for the median terrorism premium as a percentage of the total property premium in 2003, with a generally downward trend, and more recent values around 3%. The trend may be downward, but there has been variability, particularly across industries. For example, Marsh reported rates in 2009 as high as 24% of the property premium for financial institutions and as low as 2% in the food and beverage industry. In the 2013 Marsh report, this variability was lower as 2012 rates varied from 7% in the transportation industry and the hospitality and gaming industry to 1% in the energy and mining industry. In 2017, Marsh found rates varying from 10% in hospitality and gaming to 2% in energy and mining and construction industries. The 2018 Treasury report, based on lines of insurance, not on industry category, found premiums varying from 6.1% in excess workers' compensation to 1.4% in ocean marine in 2017. Treasury found that the total premium amount paid for terrorism coverage in 2017 was approximately $3.65 billion, or 1.75%, of the $209.15 billion in total premiums for TRIA-eligible lines of insurance. Since the passage of TRIA, Treasury estimates that a total of approximately $38 billion was earned for terrorism coverage by non-related insurers, with another $7.4 billion earned by captive insurers (which are insurers who are owned by the insureds). In general, the capacity of insurers to bear terrorism risk has increased over the life of the TRIA program. The combined policyholder surplus among all U.S. property and casualty insurers was $686.9 billion at the end of 2017 compared to $408.6 billion (inflation adjusted) at the start of 2002. This $686.9 billion has been bolstered by the estimated $38 billion in premiums paid for terrorism coverage over the years without significant claims payments. The policyholder surplus, however, backs all property and casualty insurance policies in the United States and is subject to depletion in a wide variety of events. For example, extreme weather losses could particularly draw capital away from the terrorism insurance market, because events such as hurricanes share some characteristics—low frequency and the possibility of catastrophic levels of loss—with terrorism risk. Evolution of Terrorism Risk Insurance Laws Table 1 presents a side-by-side comparison of selected provisions from the original TRIA law, along with the reauthorizing laws of 2005, 2007, and 2015. Appendix. Calculation of TRIA Recoupment Amounts Table A-1 contains illustrative examples of how the recoupment for the government portion of terrorism losses under TRIA might be calculated in the aggregate for various sizes of losses. The total amount of the combined deductibles in the table is simply assumed to be 30% of the insured losses for illustrative purposes. (The actual deductible amount is, as detailed above, based on the total amount of premiums collected by each insurer.) Without knowing the actual distribution of losses due to a terrorist attack, it is impossible to know what the actual total combined deductible amount would be. Table conclusions with regard to recoupment, however, hold across different actual deductible amounts. The specific provisions of the law define the "insurance marketplace aggregate retention amount" (Column F) for 2019 as the lesser of $37.5 billion or the total amount of insured losses (Column A). The "mandatory recoupment amount" (Column G) is defined as the difference between $37.5 billion and the aggregate insurer losses that were not compensated for by the program (i.e., the total of the insurers' deductible (Column B) and their 19% loss share (Column C)). If the aggregate insured loss is less than $37.5 billion, the law requires recoupment of 140% of the government outlays (Column H). For insured losses over $37.5 billion, the mandatory recoupment amount decreases, thus the Secretary would be required to recoup less than 133% of the outlays. Depending on the precise deductible amounts, the uncompensated industry losses (Column D) may eventually rise to be greater than $37.5 billion, which would then mean that the mandatory recoupment provisions would not apply. The Secretary would still retain discretionary authority to apply recoupment surcharges no matter what level uncompensated losses reached.

Prior to the September 11, 2001, terrorist attacks, coverage for losses from such attacks was normally included in general insurance policies without additional cost to the policyholders. Following the attacks, such coverage became expensive, if offered at all. Moreover, some observers feared that the absence of insurance against terrorism loss would have a wider economic impact, because insurance is required to consummate a variety of transactions (e.g., real estate). For example, if real estate deals were not completed due to lack of insurance, this could have ripple effects—such as job loss—on related industries like the construction industry. Terrorism insurance was largely unavailable for most of 2002, and some have argued that this adversely affected parts of the economy, while others suggest the evidence is inconclusive. Congress responded to the disruption in the insurance market by passing the Terrorism Risk Insurance Act of 2002 (TRIA; P.L. 107-297), which created a temporary three-year Terrorism Insurance Program. Under TRIA, the government would share the losses on commercial property and casualty insurance should a foreign terrorist attack occur, with potential recoupment of this loss sharing after the fact. In addition, TRIA requires insurers to make terrorism coverage available to commercial policyholders, but does not require policyholders to purchase the coverage. The program expiration date was extended in 2005 (P.L. 109-144), 2007 (P.L. 110-160), and 2015 (P.L. 114-1). Over the course of such reauthorizations, the prospective government share of losses has been reduced and the recoupment amount increased, although the 2007 reauthorization also expanded the program to cover losses from acts of domestic terrorism. The TRIA program is currently slated to expire at the end of 2020. In general terms, if a terrorist attack occurs under TRIA, the insurance industry covers the entire amount for relatively small losses. For a medium-sized loss, the government assists insurers initially but is then required to recoup the payments it made to insurers through a broad levy on insurance policies afterwards—the federal role is to spread the losses over time and over the entire insurance industry and insurance policyholders. As the size of losses grows larger, the federal government covers more of the losses without this mandatory recoupment. Ultimately, for the largest losses, the government is not required to recoup the payments it has made, although discretionary recoupment remains possible. The precise dollar values where losses cross these small, medium, and large thresholds are uncertain and will depend on how the losses are distributed among insurers. The specifics of the current program are as follows: (1) a terrorist act must cause $5 million in insured losses to be certified for TRIA coverage; (2) the aggregate insured losses from certified acts of terrorism must be $180 million in a year for the government coverage to begin (this amount increases to $200 million in 2020); and (3) an individual insurer must meet a deductible of 20% of its annual premiums for the government coverage to begin. Once these thresholds are met, the government covers 81% of insured losses due to terrorism (this amount decreases to 80% in 2020). If the insured losses are less than $37.5 billion, the Secretary of the Treasury is required to recoup 140% of government outlays through surcharges on TRIA-eligible property and casualty insurance policies. As insured losses rise above $37.5 billion, the Secretary is required to recoup a progressively reduced amount of the outlays. At some high insured loss level, which will depend on the exact distribution of losses, the Secretary would no longer be required to recoup outlays. Since TRIA's passage, the private industry's willingness and ability to cover terrorism risk have increased. According to data collected by the Treasury, in 2017, approximately 78% of insureds purchased the optional terrorism coverage, paying $3.65 billion in premiums. Over the life of the program, premiums earned by unrelated insurers have totaled $38 billion. This relative market calm has been under the umbrella of TRIA coverage and in a period in which no terrorist attacks have occurred that resulted in government payments under TRIA. It is unclear how the insurance market would react to the expiration of the federal program, although at least some instability might be expected were this to occur. With the upcoming 2020 expiration of the program, the 116th Congress may consider legislation to extend TRIA; to date, no such legislation has been introduced.

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T he prices paid by consumers for prescription drugs have been a recent area of significant congressional interest. Several committees in the House and Senate have held hearings this year on drug pricing issues, and a number of bills have been introduced in the 116 th Congress that seek to address the perceived high costs of prescription drugs and other pharmaceutical products. Because intellectual property (IP) rights, including patent rights and regulatory exclusivities, play an important role in the development and pricing of pharmaceutical products, a key focus of this debate is whether existing IP law promptly balances the need for innovation with the costs that IP may impose on the public. Understanding the interplay between several complex legal regimes is necessary in order to fully make sense of this debate. IP law comprises a set of exclusive rights that prevent others from making, copying, or using certain intangible creations of the human mind. Federal law contains several different varieties of IP, depending on the type of intellectual creation at issue. For example, copyright law generally grants authors of original creative works (such as literary works or musical compositions) the exclusive right to reproduce their work, publicly perform and display it, distribute it, and adapt it, for a specified term of years. Other species of federal IP include patent law, which protects novel inventions, and trademark law, which protects symbols used to identify goods and services. Each form of IP covers a different type of creation, has a different procedure for obtaining rights, and grants the IP owner legal rights that vary in scope and duration. Although each of these forms of IP is legally distinct, they broadly share a common motivation: providing incentives to create. Patents and copyrights are typically justified by a utilitarian rationale that exclusive rights are necessary to provide incentives to produce new creative works and technological inventions. This rationale maintains that absent legal protections, competitors could freely copy such creations, denying the original creators the ability to recoup their investments in time and effort, and thereby reduce the incentive to create in the first place. IP incentives are said to be particularly necessary for products, such as pharmaceuticals, that are costly to develop but easily copied once marketed. In the words of the Supreme Court, IP rights are premised on an "economic philosophy" that the "encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors." From this perspective, the fundamental aim of IP law is to find the optimal balance between providing incentives for innovation and the costs that IP rights impose on the public. By design, IP rights may lead to increased prices for goods or services that are protected by IP. IP rights are often said to grant a temporary and limited "monopoly" to the rights holder. The existence of a patent on a particular manufacturing process, for example, generally means that only the patent holder (and persons licensed by the patent holder) can use that patented process for a set period of time. In some circumstances, this legal exclusivity may allow the patent holder (or her licensees) to charge higher-than-competitive prices for goods made with the patented process, as a monopolist would, because the patent effectively shields the patent holder from competition. New pharmaceutical products generally benefit from two main forms of IP protection: patent rights and regulatory exclusivities. These two sets of exclusive rights are distinct, yet often confused. Patents, which are available to a wide variety of technologies beyond pharmaceuticals, are granted by the U.S. Patent and Trademark Office (PTO) to inventions that are new, useful, nonobvious, and directed at patentable subject matter. The holder of a valid patent generally has the exclusive right to make, use, sell, or import a patented invention within the United States for a period beginning when the patent is issued by the PTO and ending 20 years after the date of the patent application. The Food and Drug Administration (FDA) grants regulatory exclusivities upon the completion of the FDA regulatory process necessary to market pharmaceutical products (i.e., drugs and biological products). Exclusivities are granted only to certain pharmaceutical products such as innovative products (e.g., a new active ingredient or new indication for an existing drug) or those that serve a specific need (e.g., treating rare diseases). Regulatory exclusivities prevent FDA from accepting or approving an application by a competitor for FDA approval of a follow-on product (i.e., a generic or biosimilar version) of a previously approved pharmaceutical for a set time period, and/or preclude a competitor from relying on safety and efficacy data submitted by the original manufacturer for a period of time. Depending on the type of pharmaceutical product at issue and other factors, regulatory exclusivities may last anywhere from six months to 12 years. In overlapping ways, both patent rights and regulatory exclusivities can operate to deter or delay the market entry of a generic drug or biosimilar. The Department of Health and Human Services (HHS) has found that national spending on pharmaceutical products has been rising in recent years, predicting that these expenditures would continue to rise faster than overall health spending. Many factors other than IP rights contribute to the price consumers pay for prescription drugs and biologics, including demand, manufacturing costs, R&D costs, the terms of private health insurance, and the involvement of a government insurance program such as Medicaid. That said, pharmaceutical products are frequently protected by IP rights, and some studies have shown that IP rights are among the most important factors driving high drug prices. For example, FDA has found that increased competition from generic drug manufacturers is associated with lower prices for pharmaceuticals. Given that IP rights may allow the rights holder to charge higher-than-competitive prices, and can deter or delay the market entry of generic drug or biosimilar competitors, changes to IP rights or otherwise facilitating competition is seen by some to offer a potential means of lowering prices for pharmaceutical products. Accordingly, several current proposed congressional reforms to lower drug prices would reform the existing legal structure of IP rights in the pharmaceutical context. This report explains how several of these congressional proposals to reduce drug prices would interact with and/or alter existing IP law for pharmaceutical products. First, the report reviews the basics of patent law, FDA law and regulatory exclusivities, and the interaction between patent rights and FDA approval of pharmaceutical products. With this legal background in hand, the report overviews the details of a number of current legislative proposals to change these laws in order to reduce the drug prices paid by consumers. Legal Background Several different legal and regulatory regimes create or affect IP rights in pharmaceutical products. As noted above, pharmaceuticals are subject to two principal forms of IP protection—patents and regulatory exclusivities—which are generally distinct, but at times overlap and interact. Complicating matters further is the fact that FDA regulates pharmaceutical products differently depending on whether they derive from natural sources. In particular, before they can be marketed or sold, nonbiological "drugs" must be approved by FDA under the Federal Food, Drug, and Cosmetic Act (FD&C Act), whereas "biologics" must be licensed by FDA under the Public Health Service Act (PHSA). Finally, patents on pharmaceutical drugs or biologics are subject to specialized patent dispute resolution procedures that can affect a manufacturer's ability to bring a follow-on product (i.e., a generic drug or biosimilar) to market. Specifically, provisions of the Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Act) govern FDA approval and patent disputes for generic drugs, whereas the Biologics Price Competition and Innovation Act of 2009 (BPCIA) governs FDA licensure and patent disputes for biosimilars. In light of these complexities, a fair amount of background is necessary to understand how IP rights are obtained in pharmaceuticals, how these rights may impact drug prices, and the various reforms that have been proposed in Congress to reduce drug prices for consumers. This section provides this background, proceeding in three parts. First, it reviews patent law, including the requirements for obtaining a patent, the rights granted to patent holders, and various limitations on those rights. Second, it overviews FDA requirements for obtaining approval to market a drug or biological product, the abbreviated pathways for generic drug approval under the Hatch-Waxman Act and biosimilar licensure under the BPCIA, and different regulatory exclusivities that FDA grants to certain types of approved pharmaceutical products. Finally, this section describes and compares the different specialized patent dispute procedures for generic drugs and biosimilars under Hatch-Waxman and the BPCIA, respectively. Patent Law Congress's authority to grant patents derives from the IP Clause of the U.S. Constitution, which grants Congress the power "[t]o promote the Progress of Science and useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries." The IP Clause was included in the Constitution to create a national, uniform law governing IP rights. In the view of the Framers, the states could not effectively protect copyrights or patents separately because obtaining IP rights in multiple states with differing standards would be difficult and expensive for authors and inventors, undermining the effectiveness of the legal regime. Patent rights do not arise automatically. Rather, to obtain patent protection under the Patent Act, an inventor must file a patent application with the PTO, and a PTO patent examiner must review the application and conclude that the application meets the statutory requirements before the PTO will issue a patent. This section briefly overviews the requirements for obtaining a patent, the scope of the legal rights granted to the holder of a valid patent, and an important limitation on patent rights: the authority of the federal government to grant compulsory licenses for a patent under certain circumstances. Requirements for Obtaining a Patent Patents are generally available to anyone who "invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." To obtain a patent, the inventor must formally file an application for a patent with the PTO, beginning a process called patent prosecution. During prosecution, a patent examiner at the PTO evaluates the patent application to ensure that it meets all the applicable legal requirements to merit the grant of a patent. In addition to requirements regarding the technical disclosure of the invention, the claimed invention must be (1) directed at patentable subject matter, (2) new, (3) nonobvious, and (4) useful. If granted, patents typically expire twenty years after the date of the initial patent application. Patentable Subject Matter The field of patentable inventions is broad, embracing nearly "anything under the sun that is made by man." By statute, patents are available on any new and useful "process, machine, manufacture, or composition of matter, or . . . improvement thereof." Examples of technological areas for patentable inventions include pharmaceuticals, biotechnology, chemistry, computer hardware and software, electrical engineering, mechanical engineering, and manufacturing processes. Although the subject matter of patents is wide-ranging, the Supreme Court has long held that "laws of nature, natural phenomena, and abstract ideas are not patentable." The Court has reasoned that to permit a monopoly on the "'basic tools of scientific and technological work' . . . might tend to impede innovation more than it would tend to promote it." In a series of recent cases, the Supreme Court has established a two-step test for patentable subject matter, sometimes called the Alice test. The first step addresses whether the patent claims are "directed to" ineligible subject matter, that is, a law of nature, natural phenomenon, or abstract idea. If not, the invention is patentable. If it is directed at ineligible subject matter, the invention is not patentable unless the patent claims have an "inventive concept" under the second step of the Alice test. To have an "inventive concept," the patent claims must contain elements "sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself," transforming the nature of the claim to a patent-eligible application of ineligible subject matter. Novelty and Nonobviousness Perhaps the most fundamental requirement for patentability is that the claimed invention must be actually new . Specifically, the PTO will not issue a patent if "the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention." In other words, if every element of the claimed invention is already disclosed in the "prior art"—the information available to the public at the time of the patent application—then the alleged inventor "has added nothing to the total stock of knowledge," and no valid patent may issue to her. Even if a claimed invention is novel in the narrow sense that it is not "identically disclosed" in a prior art reference (such as an earlier patent or publication), the invention must further be nono bvious to be patentable. Specifically, an invention cannot be patented if "the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious . . . to a person having ordinary skill" in the relevant technology. When determining obviousness, courts may evaluate considerations such as "commercial success, long felt but unsolved needs, [or] failure of others . . . to give light to the circumstances surrounding the origin of the subject matter sought to be patented." By its nature, obviousness is an "expansive and flexible" inquiry that cannot be reduced to narrow, rigid tests. Nonetheless, if an invention does no more than combine "familiar elements according to known methods," yielding only "predictable results," it is likely to be obvious. Utility In addition to being novel and nonobvious, an invention must be useful to be patentable, that is, it must have a specific and substantial utility. The utility requirement derives from the IP Clause's command that patent laws exist to "promote the Progress of . . . useful Arts." The constitutional purpose of patent law thus requires a "benefit derived by the public from an invention with substantial utility," where the "specific benefit exists in currently available form." This standard for utility is relatively low, however, requiring only that the claimed invention have some "significant and presently available benefit to the public" that "is not so vague as to be meaningless." Disclosure Requirements In addition to substantive requirements relating to the invention, the Patent Act imposes a number of requirements relating to the form of the patent application. These provisions are intended to ensure that the patent adequately discloses the invention to the public such that the public can use the invention after the expiration of the patent term. Section 112 of the Patent Act requires that patents must contain a "specification" that includes: a written description of the  invention , and of the manner and  process  of making and using it , in such full, clear, concise, and exact terms as to enable any person skilled in the art to . . . make and use the same, and shall set forth the best mode contemplated by the  inventor  or  joint inventor  of carrying out the  invention. This statutory language yields three basic disclosure requirements for patentability. First, to satisfy the written description requirement , the specification must "reasonably convey[] to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date" of the patent application. Second, to satisfy the enablement requirement , the specification must contain enough information to teach a person skilled in the art how "to make and use the invention without undue experimentation." Finally, to satisfy the best mode requirement , the specification must demonstrate that the inventor "possessed a best mode for practicing the invention" at the time of the patent application, and disclose that preferred way of practicing the invention. Patent Claims If granted, the legal scope of the patent is defined by the patent claims , words which "particularly point[] out and distinctly claim[] the subject matter which the inventor . . . regards as the invention." In essence, while the specification explains the invention in a technical sense, the claims set forth the legal effect of the patent. Much as a deed may describe the boundaries of a tract of land, the claims define the "metes and bounds" of the patent right. Patent claims must be sufficiently definite to be valid—that is, when the claims are read in context, they must "inform, with reasonable certainty, those skilled in the art about the scope of the invention." Rights of Patent Holders Once granted, the holder of a valid patent has the exclusive right to make, use, sell, or import the invention in the United States until the patent expires. Any other person who practices the invention (i.e., makes, uses, sells, offers to sell, or imports it) without permission from the patent holder infringes the patent and is liable for monetary damages, and possibly injunctive relief, if sued by the patentee. Patents have the attributes of personal property and may be sold or assigned to by the patentee to a third party. A patentee may also license other parties to practice the invention, that is, grant them permission to make, use, sell, or import the invention, usually in exchange for consideration (such as monetary royalties). Patents thus provide a negative right to exclude another person from practicing the claimed invention. However, patents do not grant the patentee any affirmative right to practice the invention. In the pharmaceutical context, this means that even if a manufacturer has a patent on a particular drug (or inventions related to making or using that drug), it nonetheless cannot market that drug without FDA approval. With some exceptions, a patent is generally granted "for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed." The Patent Act includes provisions that may modify the 20-year term, including to account for excessive delays in patent examination at the PTO, or delays associated with obtaining marketing approval from other federal agencies (including FDA). In the pharmaceutical context, patents claiming a drug product or medical device (or a method of using or manufacturing the same) may be extended for up to five years to account for delays in obtaining regulatory approval, if certain statutory conditions are met. Patents are not self-enforcing: to obtain relief from infringement, the patentee must sue in court. Patent law is an area of exclusive federal jurisdiction, and the traditional forum for most patent disputes is federal district court. Although patent suits may be filed in any district court across the country with jurisdiction over the defendant and proper venue, all appeals in patent cases are heard by a single specialized court, the U.S. Court of Appeals for the Federal Circuit (the Federal Circuit). If the patentee succeeds in proving infringement, the patent holder may obtain two major forms of judicial relief: monetary damages and injunctive relief. Damages must be "adequate to compensate for the infringement," and typically take the form of either (1) lost profits , that is, the net revenue "lost to the patentee because of the infringement," or (2) a reasonable royalty , which awards the amount that the patentee would have received in a "hypothetical negotiation" if the patentee and the infringer had negotiated a license in good faith prior to the infringement. Courts have discretion to increase the damages "up to three times the amount found or assessed," but such enhanced damages are "generally reserved for egregious cases of culpable behavior" by the infringer. Finally, courts have discretion to award attorneys' fees in "exceptional cases," that is, ones that "stand[] out from others with respect to the substantive strength of a party's litigating position" or "the unreasonable manner in which the case was litigated." In addition to monetary damages, a patent holder may also ask courts to order various forms of injunctive relief. At the outset of a patent litigation, a patent holder may seek a preliminary injunction , a court order that prevents the defendant from committing the allegedly infringing acts while the litigation proceeds. If a patent infringement lawsuit is successful, the patent holder may seek a permanent injunction , an order prohibiting the defendant from infringing the patent in the future. Parties accused of patent infringement may defend on several grounds. First, although patents are subject to a presumption of validity, the accused infringer may assert that the patent is invalid . To prove invalidity, the accused infringer must show, by clear and convincing evidence, that the patent should never have been granted by the PTO because it failed to meet the requirements for patentability. Thus, for example, the accused infringer may argue that the invention lacks novelty, is obvious, or claims nonpatentable subject matter; that the patent fails to enable the invention; or that the patent claims are indefinite. Second, the accused infringer may claim an "absence of liability" on the basis of noninfringement . In other words, even presuming the patent is valid, the patentee may fail to prove that the activities of the accused infringer fall within the scope of the patent claims. Finally, the accused infringer may argue that the patent is unenforceable based on the inequitable or illegal activities of the patent holder, such as obtaining the patent through fraud on the PTO. Following the passage of the 2011 Leahy-Smith America Invents Act (AIA), the Patent Trial and Appeal Board (PTAB) has become an increasingly important forum for patent disputes. The AIA created several new administrative procedures for challenging patent validity, including (1) post-grant revie w (PGR), which allows petitioners to challenge patent validity based on any of the requirements of patentability if the PGR petition is filed within nine months of the patent's issuance; (2) inter partes review (IPR), which allows any person other than the patentee to challenge patent validity on limited grounds (novelty or obviousness based on prior patents or printed publications) at any time after nine months following the patent's issuance; and (3) a transitional program for covered business method patents (CBM), a PGR-like process limited to certain patents claiming "business methods" that will be available only through September 2020. Of these procedures, IPR is by far the most widely used. Types of Pharmaceutical Patents If a person is the first to synthesize a particular chemical believed to be useful for the treatment of human disease, she may file for a patent on that chemical itself, and—presuming that the application meets all requirements for patentability—the PTO will grant the patent. Patents on a pharmaceutical product's active ingredient may be of particular value to the manufacturer because these patents are unusually difficult, if not impossible, to "invent around" (i.e., develop a competing product that does not infringe the patent). However, active ingredient patents are hardly the only patents relating to pharmaceuticals and not necessarily the most important to manufacturers as a practical matter. Indeed, in the case of biological products, if the active ingredient is naturally occurring, it may not be legally possible to patent the biologic itself because it constitutes patent-ineligible subject matter. Pharmaceutical patents may cover many different features of a drug or biologic beyond a claim on the active ingredient itself. Such patents may claim, among other things: 1. a formulation of the drug (e.g., an administrable form and dosage); 2. a method of using the pharmaceutical (e.g., an indication or use for treating a particular disease); 3. technologies used to administer the pharmaceutical or a method of administration; 4. a method of manufacturing or manufacturing technology used to make the pharmaceutical; 5. other chemicals related to the active ingredient, such as crystalline forms, polymorphs, intermediaries, salts, and metabolites. To be patentable, all of these types of inventions must be new, useful, and nonobvious, and sufficiently described in the patent application, like any other invention. In addition, if a person invents an improvement on any of these technologies—for example, a more effective formulation of the drug, a new use, a different manufacturing process, etc.—then the inventor can file for a patent on that improvement, which receives its own patent term. To be patentable, the improvement must be new and nonobvious, that is, "more than the predictable use of prior art elements according to their established functions." Any person wishing to practice the improved form of the invention will need permission from both the holder of the patent on the original technology and the holder of the improvement patent (who need not be the same entity), if neither patent has yet expired. In the case where the original patent has expired but the improvement patent has not, permission from the improvement patentee is required to practice the improved version, but as a matter of patent law any person is free to make and use the original, unimproved version. Because many different aspects of pharmaceutical products (and improvements thereon) are patentable, some pharmaceutical products are protected by dozens of different patents. For example, one recent study of the top 12 drugs by gross U.S. revenue found that pharmaceutical manufacturers had obtained an average of 71 patents on each of these drugs. AbbVie, the maker of the top-selling arthritis biologic Humira, was found to have filed 247 patent applications relating to that product, resulting in 132 issued patents claiming methods of treatment, formulations, methods of manufacturing, and other related inventions. The number and timing of nonactive ingredient patents (sometimes called "secondary" patents) have contributed to long-standing concerns by some commentators about so-called patent "evergreening." Evergreening, also known as patent "layering" or "life-cycle management," is an alleged practice by which "drug innovators [seek] to prolong their effective periods of patent protection [through] strategies that add new patents to their quivers as old ones expire." Critics of evergreening maintain that, by obtaining later patents on improvements or ancillary aspects of a pharmaceutical, pharmaceutical manufacturers effectively extend patent protection beyond the term set by Congress, deterring follow-on competitors and keeping prices high. In the view of evergreening critics, many secondary pharmaceutical patents are of questionable value and validity. A similar, but distinct, concern voiced by some commentators is the notion of a patent "thicket." This term is used in two slightly different ways, both relating to products with a high number of patents. First, a patent thicket may describe the situation where multiple parties have overlapping patent rights on one product, such that a "potential manufacturer must negotiate licenses with each patent owner in order to bring a product to market without infringing." Patent thickets, in this sense, raise concerns about inefficient exploitation of a technology because the multiplicity of owners increases transaction costs and creates coordination challenges. Second, the term may be used in a looser sense to describe an incumbent manufacturer's practice of amassing of a large volume of patents relating to a single product, with the intent to intimidate follow-on competitors from entering the market (or to make it too costly and risky to do so). AbbVie's Humira patent portfolio has been alleged to be an example of this sort of patent thicket. Although some critics deride patent thickets and evergreening, others assert that these are unfairly pejorative terms for legitimate uses of the patent system. On this view, much innovation is incremental in nature, and sound public policy permits patents on improvements: like any other form of technology, society ought to provide incentives to develop more effective formulations of a drug, methods of treatment, and the like. Secondary pharmaceutical patents may represent inventions with true medical benefits to patients, in which case the effect they may have on competition is arguably justified. Finally, even presuming that some improvement patents granted by the PTO are obvious or not truly innovative, defenders of evergreening may point out that existing law already has several mechanisms to challenge the validity of patents. Compulsory Licensing As explained above, the patent holder generally has the exclusive right to practice the invention. Thus, any other person who wishes to make, use, sell, or import the invention will ordinarily need a license (i.e., permission) from the patent holder, or else be exposed to legal liability. In certain cases, however, patents may be subject to a "compulsory license," which allows another person to use the invention without the prior consent from the patent holder. Compulsory licenses are typically a creation of statute and usually require the sanction of a governmental entity and the payment of compensation to the patent holder. Compulsory licenses differ from ordinary licenses in two important respects: (1) the person seeking to use the invention need not seek advance permission from the patent holder; and (2) the compensation paid to the patentee is ordinarily determined by operation of law, not by private contractual negotiations between the licensee and the patent holder. Current federal law contains a number of compulsory license provisions for patents. For example, under 28 U.S.C. § 1498, which is sometimes described as an "eminent domain" provision for patents, the U.S. government has the authority to use any patented invention "without license." The patentee, however, has the right to sue in the U.S. Court of Federal Claims for "reasonable and entire compensation" for the government's use of the patented invention. In no event, however, will a court issue an injunction against the United States to prevent its use of the invention. In effect, then, section 1498 allows the United States to issue itself a compulsory license to use any patented invention without obtaining the permission of the patentee, in exchange for the payment of reasonable compensation. The federal government uses its section 1498 authority with some frequency, although it has not been used recently in the pharmaceutical context. Compulsory licensing is also available for inventions made with federal funding under the provisions of the Bayh-Dole Act. In general, the Bayh-Dole Act permits certain government contractors to obtain patents on inventions produced with federal funding. However, the federal government retains the authority to "march in" and grant compulsory licenses to third parties for federally funded inventions under certain specified circumstances, such as a failure to practice the patented invention or health or safety needs. A license granted pursuant to Bayh-Dole's march-in provisions must be "upon terms that are reasonable under the circumstances," which may require some compensation to be paid by the licensee to the patentee. The federal government has never exercised its march-in rights under Bayh-Dole. Food and Drug Administration (FDA) Law Unlike patent law, which is centrally motivated by promoting innovation, FDA law generally arose to promote public health by protecting consumers from pharmaceuticals that are adulterated, misbranded, unsafe, or ineffective. To this end, new drugs and biologics cannot be marketed without FDA approval. FDA regulates which drugs and biologics may be marketed in the United States through similar but distinct approval processes. Nonetheless, the principle of balancing advancement through innovation against the benefits of competition applies to FDA law as well as patent law. To that end, federal law provides certain regulatory exclusivities for companies that obtain approval for pharmaceutical products that meet the requisite criteria. This section provides an overview of the approval processes for new and follow-on drugs and biologics. It also describes the exclusivities Congress has created to encourage research and development of new pharmaceutical products as well as competition from follow-on products. New and Generic Drug Approval Drugs are articles, generally chemical compounds, "intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease" or "intended to affect the structure or any function of the body." New drugs are those drugs that scientific experts do not generally recognize as safe and effective for their intended use. A new drug may contain an active ingredient that FDA has not previously approved or contain a previously approved active ingredient but modify another aspect of the drug, such as the indication, patient population, formulation, strength, dosage form, or route of administration. All new drugs require FDA approval before they are marketed. New Drug Approval New drugs are approved through the new drug application (NDA) process. To obtain approval for a new drug, a sponsor must conduct "costly and time-consuming studies" demonstrating the drug's safety and effectiveness for humans. Clinical trials, conducted after the company has completed basic research and animal testing, test the safety, efficacy, and effectiveness of the drug in volunteer human subjects under carefully controlled conditions. When the company is ready to begin clinical trials, it submits an investigational new drug (IND) application to FDA. The IND application provides FDA with information about the drug, including what the drug does, the condition(s) and population(s) the drug is intended to treat, and any data from and analysis of animal studies with the drug. It also includes a proposed clinical study design and written approval from an Institutional Review Board, which reviews the study design. FDA has 30 days to review the IND application and object before clinical investigations proceed. Clinical testing occurs in three phases. Phase I clinical trials test the drug in a small number of subjects and focus on evaluating the safety of the drug. During Phase I clinical trials, the company evaluates how the drug is processed (metabolized and excreted) in the body, determines the highest tolerable dose and optimal dose of the drug, and identifies any acute adverse side effects from the drug. Phase II and Phase III clinical trials evaluate the drug's efficacy and effectiveness in addition to safety. These trials use a larger group of test subjects who have the characteristic, condition, or disease the drug treats. Once clinical trials are complete, the company submits the results in an NDA to FDA's Center for Drug Evaluation and Research (CDER), along with a list of articles used as components of the drug; a statement of the drug's composition; a description of manufacturing methods, facilities, and controls; specimens of the proposed labeling; any required pediatric assessments; and patient information. In general, an NDA also contains the product description, the indication(s) (i.e., the disease or condition and population for which the drug will be used), information about the manufacturing process, and proposed labeling. The NDA may also include a proposed Risk Evaluation and Mitigation Strategy as needed. The FD&C Act provides for two types of NDAs: 505(b)(1) and 505(b)(2). Both types include "full reports of investigations of safety and effectiveness." However, the nature of the company's relationship to the underlying studies differs. For 505(b)(1) NDAs, the company has a right to all of the studies that support the investigational reports, either because the studies were conducted by or for the company, or because the company obtained the right to reference or use the studies from the person who conducted them. For 505(b)(2) NDAs, by contrast, at least some of the information contained in the application relies on studies that were not conducted by or for the company and for which the company has not obtained a right of reference or use. This information to which the company does not have reference takes two forms: (1) published literature where the applicant has not obtained a right to the underlying studies or (2) the FDA's finding of safety and effectiveness for an approved drug. The 505(b)(2) pathway is used to obtain approval for modifications of approved drugs—drugs that are "neither 'entirely new' nor 'simply a generic version of a branded drug.'" FDA regulations also permit NDA holders to make changes to the drug or label after approval. Minor changes require only notice, but changes to the drug's label, dosage, strength, or manufacturing methods require a supplemental NDA (sNDA). Because the sNDA relates to a drug already on the market, sNDAs must include post-market information, such as commercial marketing experience and reports in scientific literature and unpublished scientific papers, in addition to descriptions and analyses of clinical studies. FDA reviews the NDA to determine whether there is substantial evidence that the drug is safe and effective for the proposed use, including whether the benefits of the drug outweigh the risks. The agency also reviews the proposed labeling and the manufacturing controls. When FDA completes its review, it sends a letter to the company with the agency's determination. If the NDA meets the requirements for approval, FDA sends an approval letter or, if patent rights or exclusivities bar approval, a tentative approval letter. FDA may impose conditions on its approval of the NDA, such as requiring the company to conduct additional post-market clinical studies referred to as Phase IV clinical trials. If the NDA does not meet the requirements for approval, FDA sends a "complete response letter" explaining the deficiencies FDA identified in the NDA and how they could be remedied. Generic Drug Approval Before the Hatch-Waxman Act was enacted in 1984, every new drug submitted to the FDA for preapproval required a complete application under Section 505(b) supported by clinical trial data demonstrating safety and effectiveness. To encourage generic drug entry, the Hatch-Waxman Act established a pathway for abbreviated new drug applications (ANDAs), which allows generic manufacturers to rely on FDA's prior approval of another drug with the same active ingredient—the reference listed drug (RLD)—to establish that the generic drug is safe and effective. The ANDA pathway allows generic manufacturers to avoid the long, expensive process of conducting their own clinical trials. Instead, the generic manufacturer need only conduct studies with its generic product and samples of the RLD to demonstrate that the generic drug is pharmaceutically equivalent and bioequivalent to the RLD. The ANDA also includes the generic manufacturer's proposed labeling, which must be identical to the RLD labeling except for manufacturing information and any approved changes from the RLD specifications. ANDA filers submit this information, its proposed labeling, and any patent certifications to FDA to obtain approval. Biological Product and Biosimilar Licensure A biological product is derived from biological material, such as a virus, toxin, vaccine, blood component, or protein, and used for "the prevention, treatment, or cure of a disease or condition of human beings." Biological products "are generally large, complex molecules" that "may be produced through biotechnology in a living system, such as a microorganism, plant cell, or animal cell." "Inherent variations" between different batches of the same biological product are "normal and expected." According to FDA, the complexity and variability of biological products "can present challenges in characterizing and manufacturing these products that often do not exist in the manufacture of small molecule drugs." FDA's process for approving biological products and generic versions of previously approved products aims to account for these challenges. Biological Products To be marketed in the United States, a biological product must be (1) covered by a valid biologics license; and (2) marked with the product's proper name; the manufacturer's name, address, and applicable license number; and the product's expiration date. A biological product manufacturer may obtain a biologics license by submitting a biologics license application (BLA) to FDA's Center for Biologics Evaluation and Research (CBER) or CDER for approval. The BLA must include, among other things: "data derived from nonclinical laboratory and clinical studies"; "[a] full description of manufacturing methods; data establishing stability of the product through the dating period"; representative samples of the product; the proposed labels, enclosures, and containers to be used; "the address of each location involved in the manufacture of the biological product"; and if applicable, a proposed Medication Guide. FDA must also be able to examine the product and determine that it "complies with the standards established" in the BLA and other requirements, including good manufacturing practices. To approve a BLA, FDA must determine that the biological product is "safe, pure, and potent" and that the production and distribution process "meets standards designed to assure that the biological product continues to be safe, pure, and potent." As with drug approvals, FDA either issues the license or issues a complete response letter detailing the reasons for denying the license. After approval, BLA holders must notify FDA of any changes to "the product, production process, quality controls, equipment, facilities, responsible personnel, or labeling." Biosimilar or Interchangeable Products As with the Hatch-Waxman Act, Congress created an abbreviated approval process for biological products through the BPCIA. Under the abbreviated process, a company can obtain a license to market a biological product if it can demonstrate that the product is biosimilar to, or interchangeable with, an approved biological product, referred to as the "reference product." To obtain a BLA for a biosimilar, the manufacturer must submit data demonstrating that its product is "highly similar to the reference product notwithstanding minor differences in clinically inactive components" with no "clinically meaningful differences" between the two products "in terms of the safety, purity, and potency of the product." "[T]he condition or conditions of use prescribed, recommended, or suggested in the labeling" must have been approved for the reference product. The biosimilar product must use "the same mechanism or mechanisms of action" to treat any applicable conditions and have the same route of administration, dosage form, and strength as the reference product. Finally, the biosimilar product license application must demonstrate that the production and distribution facilities meet "standards designed to assure that the biological product continues to be safe, pure, and potent." To obtain a BLA for an interchangeable product, the manufacturer must submit data demonstrating that the product is biosimilar to the reference product and "can be expected to produce the same clinical result as the reference product in any given patient." Additionally, for a biological product administered to an individual more than once, the manufacturer must also show that the product does not create a greater "risk in terms of safety or diminished efficacy" from alternating from or switching between the biosimilar product and reference product than if the reference product was used alone. Interchangeable products "may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product." Regulatory Exclusivities In order to balance interests in competition—which the abbreviated approval pathways aim to encourage—with the countervailing interest in encouraging innovation, federal law establishes periods of regulatory exclusivity that limit FDA's ability to approve generic drugs and biosimilars under certain circumstances. This right to exclusivity aims to encourage new drug or biologics applicants to undertake the expense of generating clinical data and other information needed to support an NDA or BLA. It also encourages follow-on product manufacturers to submit abbreviated applications as soon as permissible. There are two general categories of regulatory exclusivity: (1) data exclusivity, which precludes applicants from relying on FDA's safety and effectiveness findings for the reference product (based on the NDA or BLA holder's data) to demonstrate the safety and effectiveness of the follow-on product; and (2) marketing exclusivity, which precludes FDA from approving any other application for the same pharmaceutical product and use, regardless of whether the applicant has generated its own safety and effectiveness data. During a period of data exclusivity, a company could submit an NDA or BLA for the same pharmaceutical product and use. Functionally, however, data exclusivity and marketing exclusivity may generate the same result due to the investment required to generate the necessary data. New Drugs or Biological Products Federal law provides regulatory exclusivities for new drug and biological products that differ based on such factors as how innovative the product was or the nature of the treatment population. For new drugs, an NDA filer that obtains approval for a drug that contains a new chemical entity (i.e., a new active ingredient) for which no other drug has been approved is eligible for five years of data exclusivity running from the time of NDA approval. During that period, no ANDA or 505(b)(2) NDA (i.e., applications that, by definition, would reference the NDA data) containing that same active ingredient may be submitted to FDA. The one exception is that after four years , FDA may accept for review an ANDA or 505(b)(2) application for the same active ingredient if the application contains a paragraph (IV) certification that a listed patent for the RLD is invalid or not infringed by the generic drug. NDA or sNDA sponsors that obtain approval for significant changes to approved chemical entities that require additional clinical studies are eligible for three years of data exclusivity running from the time of NDA approval. Significant changes would include new indications for or formulations of chemical entities that FDA previously approved. Unlike five-year exclusivity for new chemical entities, FDA may accept ANDA and 505(b)(2) submissions that reference the changes meriting exclusivity during the three year time period. The three-year exclusivity relates to when FDA may approve such applications. To obtain such three-year exclusivity, the NDA or sNDA must "contain[] reports of new clinical investigations (other than bioavailability studies)" that were "essential to the approval" of the application. In other words, the sponsor must have conducted or sponsored additional clinical trials that were necessary to obtain approval of the new use or formulation of the active ingredient in order to benefit from the three-year exclusivity for that new condition. For brand-name biological products, the BPCIA establishes two applicable periods of exclusivity. First, no biosimilar applications can be submitted for four years "after the date on which the reference product was first licensed." Second, approval of biosimilar application cannot become effective until 12 years "after the date on which the reference product was first licensed." Together, these exclusivity periods mean that for the first four years after a reference biological product is licensed, FDA does not accept any biosimilar applications for review; for the next eight years, FDA accepts biosimilar applications for review, but it would not approve any biosimilar application until 12 years after the date on which the reference product was first licensed. FDA has not adopted a formal position on whether these exclusivity periods are data or marketing exclusivity periods. Supplemental BLAs, for example to change the "indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength," are not eligible for these four and 12-year regulatory exclusivity periods. Generic Drug and Biosimilar Exclusivities In addition to providing incentives for innovation, regulatory exclusivities are also used to promote competition by encouraging the entry of follow-on products. When a patent listed for an RLD has not expired, potential ANDA applicants have two choices: (1) wait until the patent expires to be approved or (2) file a paragraph (IV) certification that the patent is invalid or not infringed by the generic product. The potential for ensuing patent litigation raises the expected costs for the first ANDA filer with a paragraph (IV) certification as compared to other ANDA filers. To incentivize generic manufacturers to be the first filer and challenge listed patents, the Hatch-Waxman Act provides 180 days of exclusivity to the first ANDA applicant that successfully challenges an active patent listed for the RLD using a paragraph (IV) certification that the patent is invalid. This exclusivity period precludes FDA from approving another ANDA for the same RLD during the 180-day period. The BPCIA similarly awards regulatory exclusivity to the first interchangeable biological product for a particular reference product. This exclusivity precludes FDA from making an interchangeability determination for a subsequent biologic relying on the same reference product for any condition of use until such exclusivity expires, the timing of which depends on the status of a relevant patent dispute. Specifically, the exclusivity period ends at the earlier of one year after the commercial marketing of the first interchangeable product, 18 months after a final court decision in a patent infringement action against the first applicant or dismissal of such an action, 42 months after approval if the first applicant has been sued and the litigation is still ongoing, or 18 months after approval if the first applicant has not been sued. Other Regulatory Exclusivities There are also a number of regulatory exclusivities aimed at encouraging entry into markets that serve smaller or underserved populations or have limited competition. For example, the FD&C Act provides a 180-day exclusivity to an ANDA filer if—at the applicant's request—FDA designates the drug as a "competitive generic therapy" (CGT) due to "inadequate generic competition." To receive the exclusivity, the first ANDA approved for the CGT drug must have submitted the ANDA when there were "no unexpired patents or exclusivities listed in the Orange Book for the relevant RLD," and the applicant must commercially market the drug within 75 days of approval. In addition, Congress passed the Orphan Drug Act in 1983 to encourage the development of drugs and biologics to treat rare diseases and conditions. Because these drugs—called "orphan drugs" —often treat small patient populations and thus may provide fewer financial incentives for pharmaceutical manufacturers to develop them, the law (among other measures) provides a seven-year marketing exclusivity for companies that obtain approval for these drugs. During the seven-year period, FDA cannot approve an NDA or BLA for the same drug or biologic to treat the same disease or condition, even if the second application generates its own safety and efficacy data. To receive this exclusivity, (1) the drug must treat "rare diseases or conditions," and (2) FDA must not have approved another drug "for the same use or indication." To encourage manufacturers to evaluate the safety and effectiveness of their pharmaceutical products for children, NDA and BLA filers may obtain a "pediatric exclusivity" if FDA determines the drug or biological product "may produce health benefits" in the pediatric population and the filer completes pediatric studies at FDA's request. Pediatric exclusivity adds six months to any existing exclusivity the NDA or BLA filer has obtained. For example, if the NDA filer obtains a five-year exclusivity for a new active ingredient and conducts the requested pediatric studies, it is entitled to five and a half years of exclusivity. Patent Dispute Procedures for Generic Drugs and Biosimilars As Table 1 summarizes below, patent rights granted by the PTO and regulatory exclusivities granted by FDA are legally distinct as a general matter. They are, however, motivated by similar purposes. Patents are designed to encourage innovation by providing an economic incentive for inventors to invest their time and resources in the development of novel inventions. Analogously, regulatory exclusivities granted by FDA can be viewed as providing an incentive for pharmaceutical manufacturers to undertake the investments necessary to complete the FDA approval process and bring new drugs and biologics to market. In some circumstances, patent rights can affect when a follow-on generic or a biosimilar can be marketed. For example, if a court hearing a patent dispute grants an injunction against a generic drug manufacturer that prohibits that manufacturer from infringing by making the generic drug, that product cannot be brought to market until after the patent expires. In addition, as discussed below, the Hatch-Waxman Act's specialized patent dispute procedures can affect FDA's ability to approve an ANDA, even prior to a judicial decision. Patent rights may also affect follow-on market entry indirectly , if a generic or biosimilar manufacturer declines to seek FDA approval because of the number of existing patents relating to a product or the costs of challenging them. Rationale for Specialized Pharmaceutical Patent Procedures One of the core aims of the Hatch-Waxman Act was to correct "two unintended distortions" in the patent term resulting from the interaction between the temporally limited patent monopoly and FDA premarketing requirements for products such as prescription drugs. The first distortion affected new drug manufacturers: because obtaining FDA marketing approval could take years, the effective patent life (i.e., the period during which the patentee can derive profit from the invention) was shortened by FDA regulatory requirements. In response, the Hatch-Waxman Act granted a patent term extension for certain inventions relating to drug products or medical devices based on delays in obtaining regulatory marketing approval. The other distortion concerned the end of the patent term and affected generic manufacturers. In general, once a patent is expired, the patented invention should be available for anyone to use. As a result, in the pharmaceutical context, generic manufacturers can (at least in theory) enter the market once the applicable patents and/or regulatory exclusivities have expired. However, prior to the Hatch-Waxman Act, some judicial decisions had held that uses of a patented drug necessary to obtain FDA approval, such as conducting tests on a patented drug, constituted patent infringement. Thus, as a practical matter, generic manufacturers could not even begin the process of seeking FDA approval until the applicable patents expired. The result was an "effective extension of the patent term" based on the "combined effect of the patent law and the premarket regulatory approval requirement." In response, the Hatch-Waxman Act created a "safe harbor," providing that making, using, or selling an invention "solely for uses reasonably related to the development and submission of information under a federal law which regulates the manufacture, use, or sale of drugs" is not patent infringement. A potential side effect of this safe harbor, however, was to limit the ability of a pharmaceutical patent holder to file a lawsuit for patent infringement prior to the generic manufacturer's marketing of the follow-on product. If actions relating to the FDA approval process are no longer infringing, patent litigation against an ANDA filer might not occur until the generic or biosimilar is actually marketed, following the completion of the FDA approval process. However, earlier resolution of such patent disputes is often considered beneficial, as it provides greater legal certainty to the parties. In particular, generic manufacturers can obtain clarity on patent issues before they market a drug and expose themselves to monetary damages. For this reason, the Hatch-Waxman Act made the filing of an ANDA or paper NDA itself an "artificial" act of patent infringement. For its part, the BPCIA contains an analogous provision making the filing of a biosimilar or interchangeable BLA an artificial act of patent infringement. Functionally, these artificial acts of infringement enable the original manufacturer, in some circumstances, to sue for patent infringement at the time of the follow-on application, enabling patent disputes to be litigated prior to the marketing of the follow-on product. In short, both of the laws that created an abbreviated pathway for the regulatory approval for follow-on products enacted specialized patent dispute resolution procedures intended to facilitate the early resolution of patent issues. This section reviews these procedures. The Hatch-Waxman Act: Patents and Generic Drug Approval Under the Hatch-Waxman Act, a drug manufacturer must list as part of its NDA any patent that claims the drug that is the subject of the application, or a method of using that drug. FDA includes information on listed patents in a publication known as the Orange Book . When a generic drug manufacturer files an ANDA, it must provide a certification for each patent listed in the Orange Book with respect to the referenced listed drug (RLD). In particular, with some exceptions, the generic applicant must provide one of four certifications: (I) there is no patent information listed; (II) the patent has expired; (III) the date the patent will expire; or (IV) the patent is invalid and/or not infringed by the generic applicant's product. Paragraph (I) and (II) certifications do not affect FDA's ability to approve the ANDA. If the generic applicant makes a paragraph (III) certification, however, FDA may not approve the ANDA until the patent at issue has expired. A paragraph (IV) certification triggers Hatch-Waxman's specialized patent dispute procedures, often resulting in litigation. First, the generic applicant must give notice of the ANDA and the paragraph (IV) certification to the patentee and the NDA holder. The patent holder then has 45 days in which to bring a lawsuit against the generic applicant. If the patent holder declines to file suit by the deadline, the ANDA applicant may file a "civil action for patent certainty" to obtain a declaratory judgment that the Orange Book -listed patents are invalid or not infringed. If the patent holder timely files suit after being notified of the paragraph (IV) certification, this lawsuit triggers the so-called "thirty-month stay": FDA generally cannot approve the ANDA for 30 months while the parties litigate their patent dispute. If, prior to the expiration of the 30-month stay, the district court concludes that the patent is invalid or not infringed by the ANDA applicant, FDA may approve the ANDA as of the date of the court's judgment or settlement order to that effect. If the court concludes that the patent is infringed (and that decision is not appealed or affirmed), then the effective date of ANDA approval must be "not earlier than the date of the expiration of the patent which has been infringed." FDA approval of a generic drug application can thus be significantly delayed based upon patent rights asserted by the NDA holder. By statute, the only patents that must be listed with an NDA are those that either (1) "claim[] the drug" that is the subject of the NDA or (2) claim "a method of using such drug." FDA regulations make clear that "drug substance (active ingredient) patents, drug product (formulation and composition) patents, and method-of-use patents" must be listed, whereas "[p]rocess patents, patents claiming metabolites, and patents claiming intermediates" must not be listed. As a result, patents on a process for manufacturing a drug, for example, should not be included in the NDA or listed in the Orange Book . However, FDA does not actively police the patent information listed in the Orange Book , viewing its role as merely "ministerial." This approach has raised concerns among some commentators that irrelevant or inapplicable patents may be listed by NDA holders and included in the Orange Book as a means to deter generic competition. Because of the availability of the 30-month stay and the requirement that ANDA filers make a certification for each patent listed in the Orange Book , it is generally in the interest of NDA holders to list all relevant patents. However, there is no statutory provision providing that the patentee or NDA holder forfeits the right to sue if she fails to list the applicable patents. In addition, because only certain types of patents relating to a drug may be included in the Orange Book , some patent litigation concerning generic drugs takes place outside the specialized procedures of the Hatch-Waxman Act. The BPCIA: Patents and Biosimilar Licensure A different patent dispute resolution scheme applies to biological products and biosimilars, which are subject to regulatory licensure under the PHSA, as amended by the BPCIA. Under the BPCIA, regulatory approval of biologics is not directly contingent on resolution of patent disputes. In contrast to the Hatch-Waxman approach, a BLA filed need not list any patent information as part of its BLA. As a result, no patent information is currently listed in the Purple Book , FDA's list of approved biological products that is the biologics analog of the Orange Book. Table 2 summarizes the key differences between the patent dispute resolution regimes for drugs under Hatch-Waxman and for biologics under the BPCIA. Instead of the Hatch-Waxman certification process, patent disputes regarding biosimilars may be resolved through the BPCIA's "patent dance." The patent dance is "a carefully calibrated scheme for preparing to adjudicate, and then adjudicating, claims of infringement." The first step in the patent dance process is triggered when, not later than 20 days after FDA accepts a biosimilar BLA, the biosimilar applicant provides its application to the reference product sponsor (i.e., the brand-name biologic manufacturer), along with information on how the biosimilar is manufactured. "These disclosures enable the [reference product] sponsor to evaluate the biosimilar for possible infringement of patents it holds on the reference product (i.e., the corresponding biologic)." The biosimilar applicant and reference product sponsor then engage in a series of back-and-forth information exchanges regarding the patents that each party believes are relevant, as well as the parties' positions as to the validity and infringement of those patents. Depending on their participation in this information exchange, each party has the opportunity to litigate the patents in two phases: either at the conclusion of the patent dance, or when the applicant provides a notice of commercial marketing no later than 180 days before the date that the biosimilar will be marketed. BLA holders cannot obtain injunctive relief to compel the biosimilar applicant to engage in the patent dance. In practice, this limitation means that biosimilar applicants can choose whether or not they wish to commence the patent dance. However, if the biosimilar applicant chooses not to commence the patent dance, the BPCIA "authorizes the [reference product] sponsor, but not the applicant, to bring an immediate declaratory-judgment action for artificial [patent] infringement." Thus, although the biosimilar applicant need not immediately reveal his manufacturing information if he chooses not to commence the patent dance, he exposes himself to an immediate lawsuit for a declaratory judgment of patent infringement. Unlike patent listing under Hatch-Waxman, the BPCIA contains an express statutory penalty for failing to list relevant patents during the patent dance. If the biosimilar applicant commences the patent dance, the reference product sponsor must provide a list of all "patents for which the reference product sponsor believes a claim of patent infringement could reasonably be asserted . . . if a person not licensed by the reference product sponsor engaged in the making, using, offering to sell, selling, or importing [the biological product at issue]" without permission of the patentee. Under the "list it or lose it" requirement, the patent holder may forfeit his right to sue if this list is not submitted or is incomplete. Specifically, if a patent "should have been included in the list [as required during the patent dance], but was not timely included in such list," then the patent owner "may not bring an action under this section for infringement of the patent with respect to the biological product." Selected Drug Pricing Proposals in the 115th and 116th Congresses This section reviews a number of legislative proposals in the 115 th and 116 th Congresses that seek to reduce pharmaceutical drug and biological product prices through reforming IP laws and/or facilitating increased competition from generic drug and biosimilar manufacturers. This review is not intended to be comprehensive, nor does it evaluate the merits of these proposals. Rather, proposals are reviewed merely as representative examples of the various types of legal changes under consideration. Related or similar proposals are referenced in the footnotes. As noted above, IP rights are only one factor that may contribute to consumer prices in a highly complex pharmaceutical market. Thus, congressional proposals related to IP rights are merely one potential means to reduce drug prices that is currently under consideration in Congress. Other legislative proposals seeking to reduce drug prices would, for example, permit the Secretary of HHS (the Secretary) to negotiate drug prices for Medicare Part D, allow consumers to import (often cheaper) pharmaceuticals from Canada under certain circumstances, or reform health insurance requirements to institute a cap on consumers' out-of-pocket costs for prescription drugs. Because these and other similar proposals relate only indirectly to IP rights in pharmaceuticals, they are outside the scope of this report. In part due to the complexity of the legal regimes governing IP rights in pharmaceutical products, there are many different approaches that legislators seeking to reduce drug and biologic prices might take. These approaches include efforts to facilitate generic and biosimilar market entry, curtail practices perceived to be anticompetitive, limit IP rights based on pricing behavior, and increase patent transparency. This section surveys some of the specific means used in existing legislative proposals. Facilitating Follow-On Product Entry: The CREATES Act of 2019 For many looking at how to reduce drug prices, encouraging the entry of follow-on products—which provide lower-cost alternatives to brand products—is often an area of focus. Accordingly, proposals have been made to overcome perceived barriers to follow-on product entry. One such proposal is the CREATES Act of 2019, which aims to facilitate the timely entry of certain follow-on products by addressing the concern that some brand manufacturers have improperly restricted the distribution of their products to deny follow-on product manufacturers access to samples of brand products (i.e., the reference drug or biological product). Because brand samples are necessary to conduct certain comparative testing required for an ANDA or biosimilar BLA, some have attributed the inability to timely obtain samples as a cause of delay in the entry of generic products. Restricted Distribution and Sample Denial While follow-on product manufacturers can usually obtain brand samples by purchasing them from licensed wholesalers, some brand products are subject to restricted distribution that limits how they can be sold. This restriction can occur in one of two ways. First, a brand manufacturer can voluntarily place its products into restricted distribution in order to have more control over who can purchase them. Second, some high-risk drugs are subject to restricted distributions under statute and FDA regulations. Under the FD&C Act, as amended by the Food and Drug Administration Amendments Act of 2007 (FDAA Act), where a pharmaceutical product entails serious safety concerns (e.g., potentially acute side effects that may warrant special monitoring), FDA may require the sponsor of the NDA or BLA to submit a proposed Risk Evaluation and Mitigation Strategies (REMS), a risk-management plan that uses strategies beyond labeling to ensure that the benefits of a drug or biological product outweigh its risks. Examples of less restrictive REMS requirements include medication guides for patients and communication plans for health care providers. More restrictive REMS programs have elements to assure safe use (ETASU), which can include prescriber and dispenser certification requirements, patient monitoring or registration, or controlled distribution that limits how the product can be sold. If a brand product is subject to REMS with ETASU, the brand manufacturer and the generic or biosimilar manufacturers generally must agree on a single, shared REMS system before the generic product goes on the market. However, FDA can waive the shared REMS requirement and allow the use of a different, comparable system by the generic or biosimilar manufacturer. Since the enactment of the FDAA Act, some generic manufacturers have complained that they have been improperly denied access to samples through restricted distribution. Some brand manufacturers have implemented voluntary, contractual restrictions that target generic manufacturers. Alternatively, if their products are subject to REMS with ETASU, some brand manufacturers have either (1) invoked the restricted distribution component of a REMS with ETASU to deny sales to generic manufacturers, or (2) used the existence of REMS with ETASU to substantially prolong negotiations over the sale of samples or the development of a single, shared REMS system. Existing Law Governing Sample Denials The existing statutory and regulatory framework provides limited legal recourse to generic manufacturers who have been denied access to or experience long delays in obtaining samples. As an initial matter, there are no statutes or regulations that specifically prohibit a company from imposing voluntary distribution restrictions on its products. For products subject to REMS, the brand manufacturers are generally prohibited from using their REMS to "block or delay approval of an application . . . to a drug that is subject to the abbreviated new drug application." The statute, however, does not expressly authorize FDA to enforce this provision. Accordingly, consistent with FDA's long-standing view that "issues related to ensuring that marketplace actions are fair and do not block competition would be best addressed by [the Federal Trade Commission]," FDA has not asserted that it has the authority to compel the sale of samples for comparative testing. Given the lack of recourse under federal drug law, generic manufacturers have attempted to seek relief by suing withholding brand manufacturers for violations of antitrust law. Specifically, they argue that the brand manufacturer's refusal to sell samples or its delay in selling samples constitutes an anticompetitive effort to maintain a monopoly in the brand product market in violation of section 2 of the Sherman Act . Whether this conduct violates antitrust law, however, is unclear because courts have not defined a clear standard for when a refusal to deal is anticompetitive. A generic manufacturer's ability to obtain relief for sample denial under antitrust law is therefore uncertain under existing law. The Proposed Bill The CREATES Act seeks to address the uncertainties in the existing legal framework by creating a private cause of action that follow-on product developers can use to initiate expedited litigation to obtain needed brand samples. Instead of asserting an antitrust claim, the bill would allow a follow-on product developer to sue to compel the provision of brand samples if specific statutory elements are met. For brand products not subject to a REMS with ETASU (including a product that is subject to voluntary restrictive distribution imposed by the brand manufacturer), the follow-on product developer would need to show that: 1. it had made a request for samples; 2. the brand manufacturer failed to deliver, on commercially reasonable, market-based terms, sufficient quantities of the samples within 31 days of receiving the request; and 3. as of the filing date of the action, the follow-on product developer is still unable to obtain sufficient quantities of the needed samples on commercially reasonable, market-based terms. For products subject to REMS with ETASU, the bill would create a process by which the follow-on product developer can request from FDA an authorization to obtain sufficient quantities of the relevant samples. FDA would issue the authorization if it determines that the follow-on product developer has agreed to comply with or otherwise met the safety conditions or requirements deemed necessary by FDA. In this situation, the follow-on product developer would need to show the first and third elements above, and that the brand manufacturer failed to deliver, on commercially reasonable, market-based terms, sufficient quantities of samples either within 31 days of receiving the request or within 31 days of receiving notice of FDA's authorization, whichever is later. If a follow-on product developer prevails under either cause of action, the bill would require the court to issue injunctive relief compelling the brand manufacturer to provide the samples without delay and award attorney's fees and costs. If the court finds that the brand manufacturer delayed providing the samples without a "legitimate business justification," the court could also award monetary damages. Monetary damages are not to exceed the revenue the brand manufacturer earned on the product during the period beginning on the day that is 31 days after the receipt of the request for samples (or, if the product is subject to REMS with ETASU, on the day that is 31 days after the receipt of the FDA notice of authorization, if that date is later), and ending on the date on which the follow-on product developer receives sufficient quantities of the brand sample. The bill would also provide FDA more latitude to approve a separate REMS system that the follow-on product developer could use if it cannot reach an agreement on a shared strategy with the brand manufacturer. Specifically, rather than requiring the use of a shared system as the default, the bill would amend the relevant statutory provisions to permit the use of a shared system or a different but comparable system as available alternative options. To address the concern that a more relaxed REMS requirement may expose the brand manufacturers to liability, the bill includes a provision that limits the brand manufacturer's liability against claims arising out of a follow-on product developer's failure to follow adequate safeguards during the development and testing of the generic product. Facilitating Public Production of Follow-On Products: The Affordable Drug Manufacturing Act of 2018 Rather than promoting follow-on product entry by providing production incentives to private parties (as the Hatch-Waxman Act did), or by removing certain barriers to entry for private parties (as the CREATES Act would), the Affordable Drug Manufacturing Act of 2018 (ADMA) would direct the government itself to manufacture certain pharmaceuticals. In particular, ADMA aims to facilitate competition in the market for pharmaceutical products by establishing an Office of Drug Manufacturing within HHS that would oversee the production of certain "applicable drugs." ADMA would define an "applicable drug" as a drug or biological product that FDA has approved or licensed under specified provisions of the FD&C Act or PHSA, and which would further satisfy one of two conditions. The first condition would require that any patent listed in the Orange Book with respect to such drug has expired, and that any period of regulatory exclusivity granted by FDA under listed provisions of the FD&C Act or PHSA has expired. Moreover, to meet the first condition for an "applicable drug," the drug would have to either (a) not be currently marketed in the United States or (b) be marketed by fewer than three manufacturers. In the case where the drug is being marketed by fewer than three manufacturers, the drug would be required to further meet one of a number of additional criteria such as experiencing a recent price increase or being included on FDA's drug shortage list. The second, alternative condition for meeting the "applicable drug" definition would be the existence of a license or other authorization of "patent use" under a number of provisions of federal law. These provisions include the United States' "eminent domain" authority for patents under 28 U.S.C. § 1498, and the United States' "march-in rights" under the Bayh-Dole Act, both of which are discussed above. In short, the "applicable drug" definition would generally limit the Office of Drug Manufacturing to producing drugs for which either (1) the applicable patent and regulatory exclusivities have expired (in addition to not being widely marketed currently) or (2) the government already has a patent license under current law. With respect to an applicable drug, the Office would be required to (1) prepare and submit the relevant applications for FDA approval or contract with other entities to do so; (2) acquire the relevant manufacturing rights and then either manufacture the drugs or contract with other entities to do so; (3) sell the drugs at a fair price, which takes into account certain specified factors, and (4) use the money received for the activities of the Office. In addition, the Office would also manufacture or contract with other entities to manufacture active pharmaceutical ingredients (APIs) under specified conditions, including if an API is not readily available from existing suppliers, and set the API's prices based on specified factors. The bill would set forth certain selection criteria for the applicable drugs and require a gradual increase in the number of drugs produced over time. Specifically, the bill would require the Office to prioritize the manufacturing of applicable drugs that would have the greatest impact on (1) lowering drug costs to patients, (2) increasing competition and addressing drug shortages, (3) improving the public health, or (4) reducing costs to Federal and State health programs. In the first year following enactment, the Office would be required to manufacture, or enter into contracts with entities to manufacture, at least 15 applicable drugs. During that time, the Office would also be required to begin the manufacturing of insulin. Within three years of enactment, the Office would be required to manufacture, or enter into contracts with entities to manufacture, at least 25 applicable drugs. Beginning three years after the date upon which the Office first begins manufacturing a drug and annually thereafter, the Secretary would also be required to make available for sale the approved FDA application. If the purchaser of the application either fails to market the applicable drug within six months of purchase or increase its price above the fair price (as adjusted by the consumer price index), the Secretary would be required to revoke the purchaser's approved application and resume production of that drug. The Office would be required to report to the President and Congress annually on specified topics, including a description of the status of applicable drugs for which manufacturing has been authorized. The bill would authorize the Office to be appropriated such sums as may be necessary. Reforming Pay-for-Delay Settlements: The Preserve Access to Affordable Generics and Biosimilars Act As described above, patent litigation can result when generic drug and biosimilar manufacturers seek to market a drug or biological product before patent rights expire by challenging the validity of the brand-name companies' patents and/or their applicability to the follow-on product. Some brand-name companies have resolved or settled such litigation through agreements with the generic manufacturer wherein the brand-name company pays the generic manufacturer a sum of money in return for the generic manufacturer agreeing to wait to enter the market. This practice, referred to as "reverse payment settlements" or "pay-for-delay settlements," allows the brand-name company to avoid the risk that its patent will be invalidated, delay the market entry of generic competition, and effectively extend its exclusive right to market the listed drug. A valid patent affords the owner the right to exclude infringing products from the market, but "an invalidated patent carries with it no such right," "[a]nd even a valid patent confers no right to exclude products or processes that do not actually infringe." Because these agreements terminate the litigation, the questions of validity and infringement remain open. The FTC and private parties have alleged that these pay-for-delay agreements entail the brand-name company paying the follow-on applicant "many millions of dollars to stay out of its market" and, accordingly, "have significant adverse effects on competition" in violation of antitrust laws. The Preserve Access to Affordable Generics and Biosimilars Act (PAAGBA) seeks to limit the ability of drug and biological product manufacturers (i.e., brand-name companies) to pay generic or biosimilar manufacturers to delay their entry into the market. Antitrust Law Pay-for-delay agreements may contravene existing antitrust laws if they have anticompetitive effects. Section 1 of the Sherman Act prohibits "contracts . . . in restraint of trade or [interstate] commerce." The Supreme Court has held that the Sherman Act prohibits only unreasonable restraints, recognizing that all contracts operate as a restraint on trade. Section 5 of the Federal Trade Commission Act (FTCA) further prohibits "unfair methods of competition," —a category that includes (but is not limited to) conduct that violates the Sherman Act. When evaluating agreements for potential antitrust violations, the court focuses its inquiry on "form[ing] a judgment about the competitive significance of the restraint . . . 'based either (1) on the nature or character of the contracts, or (2) on surrounding circumstances giving rise to the inference or presumption that they were intended to restrain trade and enhance prices.'" The Supreme Court has recognized that "reverse payment settlements . . . can sometimes violate the antitrust laws," and courts have allowed antitrust litigation challenging certain reverse payment settlements to proceed under existing law. In evaluating the reasonableness of contractual restraints on trade, courts have found that "some agreements and practices are invalid per se, while others are illegal only as applied to particular situations." Courts generally apply a "rule of reason" analysis unless the agreement falls within a per se illegal category. However, courts use "something of a sliding scale in appraising reasonableness" and, in certain instances, apply a more abbreviated rule of reason analysis to an agreement, referred to as a "quick look." Rule of Reason Analysis . While the Supreme Court has not developed a "canonical" analytical framework to guide this totality-of-the-circumstances inquiry, most courts take a similar approach in resolving rule-of-reason cases. Under the standard approach, a Section 1 plaintiff has the initial burden of demonstrating that a challenged restraint has anticompetitive effects in a properly defined product and geographic market—that is, that the restraint causes higher prices, reduced output, or diminished quality in the relevant market. If the plaintiff succeeds in making this showing, the burden then shifts to the defendant to rebut the plaintiff's evidence with a procompetitive justification for the challenged practice. If the defendant is unable to produce such a justification, the plaintiff is entitled to prevail. However, if the defendant rebuts the plaintiff's evidence, the burden then shifts back to the plaintiff to show either (1) that the restraint's anticompetitive effects outweigh its procompetitive effects or (2) that the restraint's procompetitive effects could be achieved in a manner that is less restrictive of competition. Per Se Illegal . Certain agreements are considered per se illegal "without regard to a consideration of their reasonableness" "because the probability that these practices are anticompetitive is so high." Only restraints that "have manifestly anticompetitive effects" and lack "any redeeming virtue" are held to be per se illegal. The most common categories are agreements for horizontal price fixing, market allocation, or output limitation. The plaintiff need only demonstrate that the agreement in question falls in one of the per se categories; "liability attaches without need for proof of power, intent or impact." Quick Look Analysis . A "quick look" is an abbreviated rule of reason analysis. In identifying this intermediate standard of review, the Court has explained that because "[t]here is always something of a sliding scale in appraising reasonableness," the "quality of proof required" to establish a Section 1 violation "should vary with the circumstances." As a result, the Court has concluded that in certain cases—specifically, those in which "no elaborate industry analysis is required to demonstrate the anticompetitive character" of a challenged agreement—plaintiffs can establish a prima facie case that an agreement is anticompetitive without presenting the sort of market power evidence traditionally required at the first step of rule-of-reason analysis. While there is no universally accepted "quick look" framework, several courts of appeals have endorsed an approach to "quick look" cases initially adopted by the FTC. Under this approach, if a Section 1 plaintiff can establish that the nature of a challenged restraint makes it likely to harm consumers, the restraint is deemed "inherently suspect" and therefore presumptively anticompetitive. A defendant can rebut this presumption by presenting "plausible reasons" why the challenged practice "may not be expected to have adverse consequences in the context of the particular market in question," or why the practice is "likely to have beneficial effects for consumers." If the defendant fails to offer such reasons, the plaintiff is entitled to prevail. However, if the defendant does offer such an explanation, the plaintiff must address the justification by either (1) explaining "why it can confidently conclude, without adducing evidence, that the restraint very likely harmed consumers," or (2) providing "sufficient evidence to show that anticompetitive effects are in fact likely." If the plaintiff succeeds in making either showing, "the evidentiary burden shifts to the defendant to show the restraint in fact does not harm consumers or has 'procompetitive virtues' that outweigh its burden upon consumers." However, if the plaintiff fails to rebut the defendant's initial justification, its challenge becomes a full rule-of-reason case. In Actavis v. FTC , the Supreme Court held that the rule of reason is the appropriate level of analysis for pay-for-delay agreements. Though it recognized the potential for such agreements to have anticompetitive effects, it acknowledged that "offsetting or redeeming virtues are sometimes present." Such justifications might include "traditional settlement considerations, such as avoided litigation costs or fair value for services." Accordingly, the FTC (or other plaintiff) has to fully prove the anticompetitive effects of a particular agreement before the burden shifts to the defendant. Proposed Legislation PAAGBA seeks to prohibit brand-name manufacturers from compensating follow-on product manufacturers to delay their entry into the market by creating a presumption of illegality, moving away from a rule of reason analysis. The proposed legislation would amend the FTCA to specifically authorize the FTC to initiate enforcement proceedings against parties to "any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product or biological product." Such agreements would be presumed to have anticompetitive effects and violate antitrust laws if the brand-name company agrees to provide the generic with "anything of value," including monetary payments or distribution licenses, in exchange for the generic company agreeing "to limit or forego research, development, manufacturing, marketing, or sales" of the generic product "for any period of time." The presumption would not attach, however, to agreements where the only consideration from the brand-name company is the right to market the product before relevant patents or exclusivities expire, reasonable litigation expenses, or a covenant not to sue for infringement. The presumption would not make the agreement per se illegal. The parties to the agreement would have the opportunity to overcome the presumption with "clear and convincing evidence" that (1) the agreement provides compensation "solely for other goods or services" from the generic company or (2) the agreement's "procompetitive benefits . . . outweigh the anticompetitive effects." In evaluating this evidence, the fact-finder cannot presume that entry would not have occurred—even without the agreement—until the patent or statutory exclusivity expired. It also cannot presume that allowing entry into the market before the patent or statutory exclusivity period expires is necessarily procompetitive. If the FTC proves that parties to an agreement violated these provisions, the proposed legislation provides for assessment of a civil penalty against each violating party. The civil penalty must be "sufficient to deter violations," but no more than three times the value gained by the respective violating party from the agreement. In the event the NDA holder did not gain demonstrable value from the agreement, the value received by the ANDA filer would be used to calculate the penalty. In calculating the penalty for a particular party, an FTC administrative law judge would consider "the nature, circumstances, extent, and gravity of violation," the impact on commerce of the agreement, and the culpability, history of violations, ability to pay, ability to continue doing business, and profits or compensation gained by all parties (i.e., the NDA or BLA holder(s) and ANDA or biosimilar BLA filer(s)). Any penalties assessed would be in addition to, rather than in lieu of, any penalties imposed by other federal law. The FTC would also be able to seek injunctions and other equitable relief, including cease-and-desist orders. In addition, an ANDA filer that was party to such an agreement would forfeit its 180-day exclusivity awarded for challenging a patent using a paragraph (IV) certification. Compulsory Licensing of IP Rights: The Prescription Drug Price Relief Act of 2019 Some commentators have proposed using the government's authority to grant compulsory licenses on patents as a means to lower prices for pharmaceutical products. This could be accomplished through reliance on existing legal authorities, or through legislation that either expands existing authority or specifies conditions for its exercise. An example of the latter approach is the Prescription Drug Price Relief Act of 2019 (PDPRA). PDPRA would create a process by which the Secretary would review the pricing of all brand-name drugs and biological products to determine whether the prices of any such products are "excessive." The Secretary would determine whether a brand-name drug price is excessive in part based on whether the average price in the U.S. exceeds the median price charged for the drug in five foreign "reference countries." If the Secretary determines that the price of a brand-name pharmaceutical product is excessive, he would have the authority to waive or void any government-granted exclusivities, including FDA regulatory exclusivities, and issue compulsory licenses allowing any person to make, use, sell, or import the excessively priced drug despite applicable patents. To accomplish this, the bill would require that NDA and BLA holders submit an annual report to HHS including detailed information about the pricing of "brand name drugs," including information on costs, revenues, R&D expenditures, and the "average manufacturer price of the drug in the United States and in the reference countries." "Brand name drugs" are prescription drugs and biologics approved or licensed by FDA under a nonabbreviated regulatory pathway (i.e., not generic drugs or biosimilars) and that are "claimed in a patent or the use of which is claimed in a patent." Using this information, the Secretary would, on at least an annual basis, determine whether the price of any brand-name drug is excessive. The bill envisions two ways in which the Secretary would determine that a brand-name drug price is excessive. First, the Secretary would be required to determine that a drug has an excessive price if the "average [U.S.] manufacturing price" exceeds "the median price charged for such drug in the 5 reference countries." Second, the Secretary would determine that a drug has an excessive price if "the price of the drug is higher than reasonable" taking into account a number of factors, including the value of the drug to patients, R&D costs, health outcomes, revenues, and recent price increases. Members of the public would be able to petition the Secretary to make an excessive price determination with respect to a particular drug under some circumstances. If the Secretary determines that the price of a brand-name drug is excessive, the Secretary would be authorized to (1) "waive or void any government-granted exclusivities" with respect to such drug, and (2) issue "open, non-exclusive [compulsory] licenses" that allow competitors to "make, use, offer to sell or sell, and import [the brand-name drug] and to rely upon the regulatory test data" of the brand-name drug manufacturer. "Government-granted exclusivity" is defined to explicitly include common FDA regulatory exclusivities as well as "[a]ny other provision of law that provides for exclusivity . . . with respect to a drug." The compulsory patent license, which the bill calls a "excessive drug price license," would permit the Secretary to authorize third parties to make and use the excessively priced drug despite patents that "claim[] a brand name drug or the use of a brand name drug." It would also allow third parties to "rely upon regulatory test data for such drug." However, any entity that accepts this compulsory license would be required to pay a "reasonable royalty" to the applicable patent holder and any NDA holder whose regulatory exclusivity was voided under the bill's provisions. The royalty rate would either be based on an average rate for pharmaceuticals estimated by the Internal Revenue Service or set by the Secretary based on a number of factors. Any party accepting a compulsory license for an excessively priced drug would still need to apply for FDA approval (or licensure) in order to market a generic (or biosimilar) version. Accordingly, the bill would require FDA to expedite review of such applications and "act within 8 months." During the period between the Secretary's excessive price determination and follow-on product approval, the bill would prohibit the brand-name drug manufacturer from increasing the price of the drug or biologic. In addition to excessive price determinations, the Secretary would use the information received pursuant to the bill to establish a "comprehensive, up-to-date database" of brand-name drugs and excessive price determinations. Further, the Secretary would be required to submit an annual report to Congress describing its excessive price reviews and determinations for the preceding year. The Secretary would be required to make both the report and the database available to the public online. Compulsory licensing provisions, like those of the PDPRA, may implicate the Takings Clause of the U.S. Constitution, to the extent that they retroactively affect property rights. The Takings Clause provides that private property shall not "be taken for a public use, without just compensation." Presuming that patents are treated as "private property" under the Fifth Amendment, and that the Secretary invoked the compulsory licensing authority, courts may be asked to address: (1) whether compulsory licensing provisions constitute a "taking" of private property; (2) whether any such taking was for "public use"; and (3) if so, whether the compensation (if any) provided to the rights holder suffices to provide the "just compensation" required by the Constitution. Legislative provisions that retroactively void regulatory exclusivities may raise analogous Takings Clause issues. Limiting Regulatory Exclusivities Based on Price Increases: The FLAT Prices Act469 Just as compulsory licensing proposals may limit patent rights based on pharmaceutical product pricing, other proposed reforms would limit FDA regulatory exclusivities based on pricing behavior. For example, the FLAT Prices Act aims to discourage pharmaceutical product manufacturers from significantly increasing the prices of their products. The bill would shorten the relevant periods of regulatory exclusivity for a pharmaceutical product if the manufacturer increases the price by certain percentages within specified time periods. Specifically, the regulatory exclusivity period would be shortened by 180 days if the price increases by more than: (1) 10% over a one-year period; (2) 18% over a two-year period, or (3) 25% over a three-year period. For every price increase that is 5% over the 10%, 18%, or 25% thresholds for these three respective time periods, the exclusivity period would be shortened by an additional 30 days (i.e., a total of 210 days). The bill would also require manufacturers to report any relevant price increases described above to the Secretary within 30 days of the increase. If a manufacturer fails to timely submit the report, the exclusivity period for the relevant drug or biological product would be shortened by an additional 30 days for each day that the report is late. The bill would authorize the Secretary to waive or decrease the reduction in the exclusivity period if (1) the manufacturer submits a report on the price increase that contains all the relevant information, and, (2) based on the report, the Secretary determines that "the price increase is necessary to enable production of the drug, does not unduly restrict patient access to the drug, and does not negatively impact public health." Orange Book and Purple Book Reform: The Biologic Patent Transparency Act478 Another potential reform under consideration concerns patent listings and other information included in FDA's lists of approved chemical drugs (the Orange Book ) and biologics (the Purple Book ). One such proposal is the Biologic Patent Transparency Act (BPTA), which would amend the PHSA and patent law to do three principal things: (1) require that BLA applicants (and current BLA holders) provide patent information to FDA; (2) mandate by statute that FDA publish and maintain the Purple Book as a single, searchable list; and (3) require that patent and regulatory exclusivity information be included in the Purple Book . The overall effect would be to make the Purple Book more similar to the Orange Book in some respects. The stated aim of the bill is to curtail patent thickets through greater transparency and limits on the enforcement of late-listed biologic patents. More specifically, the BPTA requires that, within 30 days, the holder of an approved BLA must submit to FDA "a list of each patent required to be disclosed." The patents that would be required to be disclosed include "any patent for which the holder of [an approved BLA] believes that a claim of patent infringement could reasonably be asserted by the [BLA] holder, or patent owner that has granted an exclusive license to the holder" if "a person not licensed by the holder engaged in the making, using, offering to sell, selling, or importing" the biological product at issue. The bill would also change the "patent dance" to require that (if the patent dance is initiated) the list of relevant patents that the reference product sponsor provides to the biosimilar applicant must be drawn from the list provided to FDA. Finally, the bill would enforce its patent listing requirement through a new "list it or lose it" provision, providing that the owner of a patent that "should have been included in the list" given to FDA, but "was not timely included in such list, may not bring an action under this section for infringement of the patent." The BPTA would codify FDA's practice of publishing the Purple Book and further require that the Purple Book include more information that it does presently, in a more accessible form. In particular, under the bill, the Purple Book would have to include: the official and brand name of each licensed biological product; the date of licensure for each licensed biological product; information about the marketing status, dosage, and route of administration of the biological product; if the product is a biosimilar or interchangeable, the relevant reference product (i.e., the brand-name biologic); and any determination related to biosimilarity or interchangeability for the biological product. Notably, FDA would be required to include patent information, information about whether the product is subject to a period of regulatory exclusivity, and when such exclusivity expires, and to make all the information publicly available as a "single, easily searchable list." Currently, the Purple Book lacks any patent information, contains only partial information on regulatory exclusivities, and is published as two separate files as opposed to a single searchable database. Conclusion Concerns about perceived high prices for prescription drugs and other pharmaceutical products implicate a complex set of legal regimes, including patent law, FDA law, and specialized patent dispute procedures for drugs and biological products. Much of the debate over allegedly high pharmaceutical prices is fundamentally a matter of public policy: in particular, finding the appropriate balance between providing incentives to create innovative new medicines versus the costs those incentives may impose on the public in the form of higher prices. Nonetheless, knowledge of the workings of the existing legal regimes governing IP rights in pharmaceutical products is necessary to fully understand the implications of the variety of legislative approaches to reduce pharmaceutical prices.

Intellectual property (IP) rights play an important role in the development and pricing of pharmaceutical products such as prescription drugs and biologics. In order to encourage innovation, IP law grants the rights holder a temporary monopoly on a particular invention or product, potentially enabling him to charge higher-than-competitive prices. IP rights, if sufficiently limited, are typically justified as necessary to allow pharmaceutical manufacturers the ability to recoup substantial costs in research and development, including clinical trials and other tests necessary to obtain regulatory approval from the Food and Drug Administration (FDA). However, because they may operate to deter or delay competition from generic drug and biosimilar manufacturers, IP rights have been criticized as contributing to high prices for pharmaceutical products in the United States. Two main types of IP may protect pharmaceutical products: patents and regulatory exclusivities. Patents, which are available to a wide range of technologies besides pharmaceuticals, are granted by the U.S. Patent and Trademark Office (PTO) to new and useful inventions. Pharmaceutical patents may claim chemical compounds in the pharmaceutical product, a method of using the product, a method of making the product, or a variety of other patentable inventions relating to a drug or biologic. The holder of a valid patent generally has the exclusive right to make, use, sell, and import the invention for a term lasting approximately 20 years. If a court concludes that a competitor's generic or biosimilar version infringes a valid patent, the court may issue an injunction precluding the competitor from making, using, selling, and importing that competing product until the patent expires. In some circumstances, FDA grants regulatory exclusivities to a pharmaceutical manufacturer upon the completion of the process required to market pharmaceutical products. Before a new drug or biologic can be sold in the United States, companies must apply for regulatory approval or licensure from FDA, which determines if the pharmaceutical is safe and effective. For certain pharmaceuticals, such as innovative products or those that serve particular needs, FDA provides a term of marketing exclusivity upon the successful completion of the regulatory process. If a product is covered by an unexpired regulatory exclusivity, FDA generally may not accept and/or approve an application seeking FDA approval of a follow-on product (i.e., a generic drug or biosimilar). Regulatory exclusivities vary in length from as little as six months to as much as 12 years depending on the specific type of drug or biologic at issue and other factors. Like regulatory exclusivities, patent rights can affect when generic and biosimilar manufacturers can market their follow-on products. Pharmaceutical patent disputes are subject to certain specialized procedures under the Hatch-Waxman Act and the Biologics Price Competition and Innovation Act (BPCIA). Under Hatch-Waxman, applicants seeking approval of a generic version of an existing FDA-approved drug must make a certification with respect to each patent that the brand-name drug manufacturer lists as covering the product. If the generic manufacturer challenges those patents, FDA generally cannot approve the generic drug application for 30 months while the patent dispute is litigated. For biologics, applicants seeking approval of a biosimilar version of an existing biological product may choose to engage in the BPCIA's "patent dance," a complex scheme of private information exchanges made in preparation for formal patent disputes between brand-name biologic and biosimilar manufacturers. The patent dance does not affect FDA's ability to approve a biosimilar application. Some pharmaceutical companies have been criticized for charging high prices and engaging in practices that are perceived by some to exploit the existing legal system governing IP rights on pharmaceutical products. For example, some generic manufacturers have claimed that brand-name drug manufacturers have unreasonably refused to sell them samples of brand-name drugs in order to impede their ability to obtain FDA approval and delay market entry of generic competition. Other commentators have criticized the practice of "pay-for-delay" settlements, through which brand-name drug companies settle patent litigation with generic or biosimilar manufacturers by paying them to delay their entry into the market. Still others criticize so-called patent "evergreening," in which pharmaceutical companies are alleged to serially patent minor improvements or ancillary features of their products in order to extend the effective term of patent protection. In recent years, a number of congressional proposals have been introduced that seek to address these and other issues in IP law that are perceived by some to contribute to high prices for pharmaceutical products. These proposed reforms range from relatively modest changes, such as increasing patent transparency, to more sweeping reforms such as pricing controls and government compulsory licensing provisions.

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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 2017. When federal crop insurance premium subsidies are included, annual farm payments have averaged $18.5 billion over the same period. This report discusses various eligibility factors and their interaction under the 2018 farm bill. 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. This report begins by discussing farm program eligibility, including the primary types of legal entities participating in farm programs. Other limiting requirements are discussed, such as participant identification, citizenship, the current interpretation of what constitutes "actively engaged in farming" (AEF), adjusted gross income (AGI) limits, and conservation compliance. This is followed by a discussion of the direct attribution of payments to individual recipients for assessing whether a person's payment limit has been exceeded. Next, annual payment limits for the major categories of farm programs are examined. Much of this information is summarized in Table 1 . This report also discusses several issues related to farm program payment limits, including policy design issues, that may be of interest to Congress. Finally, an Appendix contains a history of the evolution of annual payment limits for major commodity programs ( Table A-1 ). 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). Eligibility and payment limit determinations for farm programs are under the jurisdiction of the U.S. Department of Agriculture's (USDA's) Farm Service Agency (FSA). 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, 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 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. 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. 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 to 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 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. 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 2 ). 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 87% of U.S. farm operations in 2012. 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. Most incorporated farm operations are family held. As of 2012, these three categories represented over 98% of U.S. farm operations ( Table 2 ). 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 (less than 2%) of U.S. farm operations according to USDA's 2012 Census of Agriculture. Special rules also describe eligibility and payment limits in the event of the death of a previously eligible person. AEF Requirement To be eligible for certain Title I commodity program benefits under the 2018 farm bill, participants—individuals as well as other types of legal entities—must meet AEF requirements. The AEF requirements 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." 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. 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. 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. 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 continue 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. Foreign Person or Legal Entity Generally, if foreign persons or legal entities meet a particular farm program's eligibility requirements, then they are eligible to participate. One exception is the four permanent disaster assistance programs—Emergency Assistance for Livestock, Honeybees, 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, 2016, foreign persons held an interest in 28.3 million acres of U.S. agricultural land (including forest land). This accounts for 2.2% 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. In addition, 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. AGI Limit 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 ) ( Table 3 ). 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. 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. AGI Defined Since most U.S. farms are operated as sole proprietorships or partnerships ( Table 2 ), 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 adjusted gross income. 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 can be attributed to nonfarm income (80% in 2016). Farm operations overwhelmingly report operating losses for tax purposes (because of cash accounting, capital expensing via depreciation, and other practices). 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. Program participants are required to annually give their consent to the IRS to verify to USDA 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. Historical Development of the AGI Limit The initial AGI eligibility threshold established by the 2002 farm bill was for a total AGI of $2.5 million and covered most farm programs (listed in Table 3 ). However, the 2002 farm bill included an exemption if at least 75% of AGI was from farming. The 2008 farm bill replaced the single AGI limit of the 2002 farm bill with three separate AGI limits that distinguished between farm and nonfarm AGI. 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. A second farm-specific AGI limit of $750,000 applied to eligibility for direct payments. A third 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. The AGI limit could be waived in its entirety on a case-by-case basis if a conservation program would protect environmentally sensitive land of special significance. Also, the 2008 farm bill 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 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. 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 Food Security Act of 1985 (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. 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 social security number 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. 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 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. 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): Livestock Forage D isaster P rogram ( LFP ) . The LFP program is subject to an annual limit of $125,000 per person. Title I (Subtitle F ) : Noninsured Crop Disaster Assistance Program (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) are limited to $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. Two such programs are currently active—both are 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. Market Facilitation Program (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). When the farm program benefits for a qualifying recipient exceed the annual limits (as listed in Table 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. 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. 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. 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. Conservation Programs Subject to Annual Payment Limits Limits on conservation programs have existed long before limits on farm support programs. 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 annual 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. This limit may be waived for new Conservation Incentive Contracts authorized under Section 2304(g) of the 2018 farm bill. Payments for EQIP conservation practices related to organic production are limited to a total of $140,000 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. This limit does not apply to the new CSP Grassland Conservation Initiative authorized under Section 2309 of the 2018 farm bill. However, annual payments under the initiative are limited to $18 per acre, not to exceed the number of base acres on a farm. 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. 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 the 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 dairy margin protection program (MPP). 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 program s . 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), the 2018 farm bill allows USDA to make payments to producers in an amount necessary to achieve the purposes of the program with no 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. Death of a Principal Operator 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. 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. 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. Distributional Impacts on Farm Size The majority of farm payments go to a small share of large operators. According to USDA's 2012 Agricultural Census, farms with market revenue equal to or greater than $250,000 accounted for 12% of farm households but produced 89% of the value of total U.S. agricultural production and received 60% 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. 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 greater 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. 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. 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 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. 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. AGI 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. 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. Federal farm support programs and risk management programs, along with their current eligibility requirements and payment limits, are listed in Table 1. Terms for most of these programs are applicable for the 2019-2023 crop years. 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, 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. Current eligibility requirements that affect multiple programs include identification of every participating person or legal entity—both U.S. and non-U.S. citizens—the nature and extent of an individual's participation (i.e., actively engaged in farming criteria), including ownership interests in multiperson entities and personal time commitments (whether as labor or management) and means testing (persons with combined farm and nonfarm adjusted gross income in excess of $900,000 are ineligible for most program benefits); and conservation compliance requirements. In general, if foreign persons or legal entities meet a program's eligibility requirements, then they are eligible to participate. One exception is the four permanent disaster assistance programs created under the 2014 farm bill (P.L. 113-79) and the noninsured crop disaster assistance program (NAP) in which nonresident aliens are excluded. Current law requires direct attribution through four levels of ownership in multiperson legal entities. Current payment limits include a cumulative limit of $125,000 for all covered commodities under the Price Loss Coverage (PLC) and Agricultural Revenue 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. 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 program reduce the effectiveness of overall payment limits?

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T his report describes actions taken by the Administration and Congress to provide FY2020 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. 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 agencies such as the Census Bureau, the U.S. Patent and Trademark Office, the National Oceanic and Atmospheric Administration, and the National Institute of Standards and Technology. Appropriations for the Department of Justice (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. 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; Economics and Statistics Administration (ESA) 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 , a component of ESA, 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 enhancing economic security; and National Oceanic and Atmospheric Administration (NOAA) provides daily weather forecasts, severe storm warnings, climate monitoring to fisheries management, coastal restoration, and support of marine commerce. 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 prior to sentencing to their court hearings, 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. 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. 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. 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 previously existed from 1988 to 1993 and was reestablished by the Trump Administration in June 2017. 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. 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. 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 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. The Administration's FY2020 Budget Request The Administration requests $71.388 billion for CJS for FY2020, which is $1.520 billion (-2.1%) less than the $72.908 billion appropriated for CJS for FY2019 (see Table 1 ). When comparing the Administration's FY2020 request to the FY2019 funding, it should be considered that the Administration formulated its FY2020 budget request before full-year appropriations for FY2019 were enacted. The Administration requests the following: $12.214 billion for the Department of Commerce, which is $801 million (+7.0%) more than FY2019 enacted funding; $30.529 billion for the Department of Justice, which is $405 million (-1.3%) less than FY2019 enacted funding; $28.092 billion for the science agencies, which is $1.491 billion (-5.0%) less than FY2019 enacted funding; and $552 million for the related agencies, which is $425 million (-43.5%) less than FY2019 enacted funding. The increase in funding for the Department of Commerce is almost entirely the result of a proposed $2.334 billion (65.7%) increase for the Census Bureau's Periodic Censuses and Programs account. The funding is requested to help the Census Bureau conduct the decennial 2020 Census. The Administration's FY2020 budget for CJS proposes eliminating several agencies and programs: EDA, NIST's Manufacturing Extension Partnership, NOAA's Pacific Coastal Salmon Recovery Fund, the Community Relations Service (its functions would be moved to DOJ's Civil Rights Division), the COPS Office (grants for community policing activities would be moved to OJP), NASA's Office of STEM Engagement (formerly the Office of Education), and the Legal Services Corporation. The Administration requests some funding for the EDA ($30 million) and Legal Services Corporation ($18 million) to help provide for an orderly closeout of these agencies. The Administration proposes a $30 million (-75.0%) reduction for the Minority Business Development Administration. It proposes to change 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 proposes to move 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. The Administration's requested funding for many CJS accounts is below FY2019 levels; however, there are a few exceptions, which include the following: BIS (+$10 million, +8.1%), Economic and Statistical Analysis (+$7 million, +6.9%), NTIA (+$3 million, +7.4%), the Executive Office of Immigration Review (+$110 million, +19.6%), DOJ's general legal activities (+$23 million, +2.6%), the U.S. Marshals' Federal Prisoner Detention account (+$315 million, +20.3%), DOJ's National Security Division (+$8 million, +8.1%), ATF (+$52 million, +3.9%), and the Office of the U.S. Trade Representative (+$6 million, +11.3%). The Administration 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. Unlike the Administration's FY2019 budget, which proposed a new account structure for NASA, the FY2020 budget proposal does not appear to include a realignment of items that would be funded from these accounts. The annual CJS appropriations act traditionally includes an obligation cap of funds expended from the Crime Victims Fund (CVF). The Administration's FY2020 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, $492.5 million would be for the OVW, $10.0 million would be for oversight of OVC programs by the OIG, $12.0 million would be for developing innovative crime victims services initiatives, and a set-aside of up to $115.0 million would be for tribal victims assistance grants. From the remaining amount, the Office for Victims of Crime (OVC) would provide formula and non-formula grants to the states to support crime victim compensation and victims services programs. Also, the Administration's budget includes a proposal to transfer all of the ATF's responsibilities related to alcohol and tobacco enforcement to the Department of the Treasury's Tax and Trade Bureau. The Administration argues that the proposed realignment will allow the ATF to focus on its efforts to prevent violent crime. The proposal does not affect how much the Administration requests for the ATF for FY2020. Table 1 outlines the FY2019 funding and the Administration's FY2020 request for the Department of Commerce, the Department of Justice, the science agencies, and the related agencies. Historical Funding for CJS Figure 1 shows the total CJS funding for FY2010-FY2019, in both nominal and inflation-adjusted dollars (more-detailed historical appropriations data can be found in Table 2 ). The data show that nominal funding for CJS reached a 10-year high in FY2019, though in inflation-adjusted terms, funding for FY2019 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. 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. This is discussed in more detail below. 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 FY2019. 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-FY2019 by major component (i.e., the Department of Commerce, the Department of Justice, NASA, and the NSF). Although decreased appropriations for the Department of Commerce (a 47.4% reduction) mostly explain the overall decrease in CJS appropriations from FY2010 to FY2013, 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 decennial census. While funding for the Department of Commerce decreased from FY2018 to FY2019, it is partly the result 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 (+11.5%), NASA (+21.8%), and NSF (+12.6%), as higher discretionary spending caps have been used to provide additional funding to these agencies. Also, increased funding for the Department of Commerce is not only the result of more funding for the Census Bureau. Funding for NOAA increased by 41.0% from FY2014 to FY2018 and funding for NIST increased by 15.9% over the same time period. However, funding for both of these agencies decreased from FY2018 to FY2019, meaning that the increase in the Department of Commerce's funding during this time period was almost solely attributable to increased funding for the Census Bureau.

This report describes actions taken by the Trump Administration and Congress to provide FY2020 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts. The annual CJS appropriations act provides funding for the Department of Commerce, which includes agencies such as the Census Bureau, the U.S. Patent and Trademark Office (USPTO), the National Oceanic and Atmospheric Administration (NOAA), and the National Institute of Standards and Technology (NIST); the Department of Justice (DOJ), which includes agencies such as the Federal Bureau of Investigation (FBI), the Bureau of Prisons (BOP), the U.S. Marshals, the Drug Enforcement Administration (DEA), 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 and the Equal Employment Opportunity Commission. The Administration requests $71.388 billion for CJS for FY2020, which is $1.520 billion (-2.1%) less than the $72.908 billion appropriated for CJS for FY2019. The Administration's request includes $12.214 billion for the Department of Commerce, $30.529 billion for the Department of Justice, $28.092 billion for the science agencies, and $552 million for the related agencies. The Administration's FY2020 budget proposes eliminating 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 Legal Services Corporation. The Administration proposes reducing funding for many accounts in CJS, though there are a few exceptions—the most notable of which is the proposed $2.334 billion increase for the Census Bureau's Periodic Censuses and Programs account. The increased funding is requested to help the Census Bureau conduct the decennial 2020 Census.

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Introduction Commemorative coins are coins that are "produced with the primary intention of creating a special souvenir to be sold (at a premium above face value) to observe or memorialize an anniversary, special occasion, or other event." Produced by the U.S. Mint pursuant to an act of Congress, these coins celebrate and honor American people, places, events, and institutions. Although they are considered legal tender, they are not minted for general circulation. Instead, they are designed to be collected and to help designated groups raise money to support group activities. Commemorative coin legislation is often proposed by Members of Congress as part of their representational duties. The first commemorative coin was authorized in 1892 for the World's Columbian Exposition in Chicago. Issued as a silver half-dollar, the proceeds for the sale of the coin were used "for the purpose of aiding in defraying the cost of completing in a suitable manner the work of preparation for inaugurating the World's Columbian Exposition." Beginning in 1892 and continuing to the present day—with a hiatus between 1954 and 1981—coins have been a part of the commemoration of people, places, events, and institutions. This report examines the origins, development, and current practices for commemorative coins, including the authorization process; the design of coins; and issues for congressional consideration, including the disbursement of surcharges, the number of coins minted per year, differences between the number of authorized coins and coins sold, and requirements for legislative consideration in the House and Senate. Historical Commemorative Coins Since 1892, Congress has authorized 152 new commemorative coins. Sixty of these coins were authorized between 1892 and 1954. During this period, most commemorative coins celebrated state anniversaries (e.g., Connecticut's tercentennial in 1935), expositions and event anniversaries (e.g., the Lexington-Concord Sesquicentennial in 1925 or the Louisiana Purchase Exposition in 1903), or helped support memorials (e.g., the Grant Memorial in 1922 or the Stone Mountain Memorial in 1925). During this time period, coins "were sold to sponsoring organizations, which resold them to the public at higher prices as a means of fundraising." The authorization of new commemorative coins was "discontinued by Congress in 1939, with the exception of three coins issued through 1954." For a list of historical commemorative coins authorized between 1892 and 1954, see Appendix A . Between 1954 and 1981, Congress did not authorize any new commemorative coins. The moratorium on new commemorative coins was in part because public interest in the coins had waned and the Department of the Treasury was concerned that "multiplicity of designs on United States coins would tend to create confusion among the public, and to facilitate counterfeiting." In his February 1954 veto statement to Congress on S. 2474 (83 rd Congress), which would have authorized a 50-cent piece for the tercentennial of New York City, President Eisenhower cited a diminishing interest among the public for the collection of commemorative coins. President Eisenhower stated: I am further advised by the Treasury Department that in the past in many instances the public interest in these special coins has been so short-lived that their sales for the purposes intended have lagged with the result that large quantities have remained unsold and have been returned to the mints for melting. Modern Commemorative Coins In 1982, Congress resumed the authorization of commemorative coins with the enactment of a bill to issue a commemorative half-dollar for George Washington's 250 th birthday. With the issuance of new commemorative coins, the "range of subject matter expanded to include subjects such as women, historical events, and even buildings and landscapes." Additionally, the concept of surcharges as a method to direct money to designated groups was introduced. The idea of a surcharge—a statutorily authorized "dollar amount added to the price of each coin" —was not without controversy. "These related surcharges became controversial with collectors, many of whom resented making involuntary donations when they bought coins. Today, the practice ... is ... the linchpin that has ignited most commemorative programs—as potential recipients of the surcharge launch ... lobbying campaigns in Congress." Commemorative coins authorized during the modern period can be subdivided into coins minted between 1982 and 1997, and coins minted since 1998. In 1996, the Commemorative Coin Reform Act (CCRA) was enacted to (1) limit the maximum number of different coin programs minted per year; (2) limit the maximum number of coins minted per commemorative coin program; and (3) clarify the law with respect to the recovery of Mint expenses before surcharges are disbursed and conditions of payment of surcharges to recipient groups. The CCRA restrictions began in 1998. Commemorative Coins, 1982-1997 Between 1982 and 1997, Congress authorized 47 commemorative coins. In several cases, multiple coins were authorized to recognize specific events, including the 1984 Summer Olympics in Los Angeles and the 1996 Summer Olympics in Atlanta. See Appendix B for a list of commemorative coins authorized by Congress prior to the two-per-year limit imposed by the CCRA. Commemorative Coins, 1998-Present As noted above, the CCRA limited the U.S. Mint to issuing two coins per year, beginning in 1998. This action was taken in response to the proliferation of commemorative coins authorized since the program was restarted in 1982. Between 1982 and 1997, as many as six different coins were minted in a single year (1994). Ten distinct coins were issued each year (eight Olympic coins per year in addition to two other commemorative coin programs) in 1995 and 1996. Starting in 1998, a maximum of two coins were to be authorized for minting in a given year. Even with this restriction, however, three coins were minted in 1999. Additionally, on two occasions, only one coin was authorized for a given year—2003 and 2008. Table 1 lists authorized commemorative coins since 1998, including their authorizing statute. As listed in Table 1 , a total of 41 commemorative coins were struck by the U.S. Mint between 1998 and 2018. The average coin minted during this time period was authorized three years prior to being struck, with the longest time period between authorization and minting being the West Point Bicentennial commemorative coin, which was authorized in 1994 to be struck in 2002. The shortest time period between authorization and minting was the San Francisco Old Mint commemorative coin, which was authorized and struck in the same year: 2006. In addition to completed commemorative coin programs, Congress has authorized coins to be minted in 2019 and future years. Currently, coins are authorized for 2019 and 2020. No coins are currently authorized for 2021 or beyond. Table 2 lists current and future commemorative coins, including their authorizing statute. Each Congress, several proposals are introduced to authorize new commemorative coins. Table 3 lists proposals for new commemorative coins introduced in the 115 th Congress. These bills would have authorized coins for minting between 2017 and 2022. Legislation that became law—American Legion 100 th Anniversary and the Naismith Memorial Basketball Hall of Fame—is not included in Table 3 . Authorizing Commemorative Coins Legislative Features Commemorative coin legislation generally has certain features, including findings that summarize the commemorative subject's history and importance; specifications for denominations, weight, and metallic makeup; design requirements, including required dates, words, and images; start and end dates for minting coins and any other limitations; requirements for selling coins; coin surcharge and distribution to designated groups; and assurances that costs of the coin program are recouped by the U.S. Mint. The following provides examples of the features generally found in a commemorative coin bill. Findings Commemorative coin legislation typically includes a section of findings. These include historical facts about the people, places, events, and institutions being honored by the coin. For example, the legislation to authorize the Star-Spangled Banner commemorative coin stated: Coin Specification The coin specification section typically provides details on the type and number of coins authorized to be minted. Additionally, this section generally includes language that makes the coin legal tender and a numismatic item. In some cases, this section also includes specific language on coin design. For example, the legislation authorizing the National Baseball Hall of Fame commemorative coin includes language on the three types of coins authorized—$5 gold coin, $1 silver coin, and half-dollar clad coin—and a sense of Congress that the reverse side of the coin should be "convex to more closely resemble a baseball, and the obverse concave." Design of Coins Commemorative coin legislation also typically specifies requirements for the design of the coin. These include official language on words or dates that are to appear on the coin and instructions about how the design might be chosen. For example, the legislation to authorize the Civil Rights Act of 1964 commemorative coin stated: Issuance of Coins The issuance of coins section typically specifies the time period that the coin will be available for sale and provides any instructions to the Secretary of the Treasury as to which mint location should strike the coins and the quality of the coins to be issued. For example, the March of Dimes commemorative coin authorization stated: Sale of Coins The sale of coins section typically sets the sale price of the coin and provides instructions to the Mint on bulk sales and prepaid coin orders. For example, the statute authorizing the Five-Star Generals commemorative coin stated: Surcharges The surcharges section of the legislation typically sets the surcharges (amount above the face value that the U.S. Mint charges) per coin and designates the distribution of these surcharges to recipient organizations. For example, the statute to authorize the U.S. Army commemorative coin stated: More information on surcharges and disbursement to designated recipient organizations can be found below under " Disbursement of Surcharges ." Financial Assurances Some bills have included a section on financial assurances. This section generally states that minting coins will not result in a net cost to the government. The Mint is currently required to recover its expenses before it can disburse potential surcharges to recipient organizations designated in a commemorative coin statute. The Mint has stated that all commemorative coin programs have operated at no cost to the taxpayer since 1997. For example, the statute to authorize the American Legion 100 th Anniversary commemorative coin stated: Consideration of Legislation in Congress Once a commemorative coin bill is introduced, it is typically referred to the House Committee on Financial Services or the Senate Committee on Banking, Housing and Urban Affairs. Neither House nor Senate rules provide any restrictions specifically concerning consideration of commemorative coin legislation on the House or Senate floor. Pursuant to Senate and House rules, the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services have jurisdiction over commemorative coin legislation. In the Senate, the Banking, Housing and Urban Affairs Committee rules place a minimum on the number of cosponsors a commemorative coin bill must have before committee consideration. Committee Rule 8 requires that "at least 67 Senators must cosponsor any ... commemorative coin bill or resolution before consideration by the Committee." The rules of the House Financial Services Committee adopted for the 116 th Congress do not specifically address committee consideration of commemorative coin legislation, although informal practices may exist. Design of Coins After Congress has authorized a commemorative coin, the U.S. Treasury begins the coin design process. This process involves consultation with the Citizens Coinage Advisory Committee (CCAC) and a design recommendation by the U.S. Commission of Fine Arts (CFA). The final decision on a coin's design is made by the Secretary of the Treasury. Citizens Coinage Advisory Committee Established by P.L. 108-15 , the CCAC advises the Secretary of the Treasury on theme and design of all U.S. coins and medals. For commemorative coins, the CCAC advises the Secretary with regard to events, persons, or places to be commemorated, the mintage level of coins, and commemorative coin designs. The CCAC consists of 11 members appointed by the Secretary of the Treasury, with four persons appointed upon the recommendation of the congressional leadership (one each by the Speaker of the House, the House minority leader, the Senate majority leader, and the Senate minority leader). The CCAC meets several times each year to consider design suggestions for coins and medals. For each coin considered, the CCAC provides advice to the Secretary "on thematic, technical, and design issues related to the production of coins." Recommendations are then published to the committee's website, at http://www.ccac.gov . When making recommendations to the Secretary, the CCAC considers several design aspects. Figure 1 shows the CCAC's "Design Aspects We Look For," when advising groups on coin design. Figure 2 shows examples of U.S. Commemorative coins. These include the first U.S. commemorative coin (1893 World's Columbian Exposition half-dollar), one of the best-selling commemorative coin programs of all time (1986 Statue of Liberty half-dollar), and one of the most recent (2016 National Park Service Centennial). U.S. Commission of Fine Arts The U.S. Mint also makes a formal presentation of design options to the U.S. Commission of Fine Arts (CFA). Established in 1910, the CFA advises "upon the location of statues, fountains, and monuments in the public squares, streets, and parks in the District of Columbia, the selection of models for statues, fountains, and monuments erected under the authority of the Federal Government; the selection of artists; and questions of art generally when required to do so by the President or a committee of Congress." This includes review of commemorative coins when they are presented by the U.S. Mint and the issuance of recommendations for a coin's design. For example, in March 2016, the U.S. Mint presented several alternative designs for the Boys Town Centennial Commemorative Coin program. In a letter to the U.S. Mint, the CFA provided recommendations on the design for each of the three statutorily required coins. CFA's letter stated: U.S. Mint After receiving advice from the CCAC and the CFA, the Secretary of the Treasury, through the U.S. Mint, finalizes the coin's design and schedules it for production at the appropriate time. In some cases, the U.S. Mint holds a competition for coin designs. For example, in February 2016, the U.S. Mint announced a design competition for the 2018 commemorative coin to World War I American Veterans. Additionally, designers competed for the 2018 Breast Cancer Awareness commemorative coin. The final design was announced in October 2017. Commemorative Coin Timeline From authorization to coin launch, the CCAC has estimated that a commemorative coin takes a minimum of between 56 and 60 weeks. This includes the coin design process, engraving, marketing, printing materials, and coin launch. This timeline, however, does not account for coin programs that might be authorized years in advance of the coins' scheduled release. In those circumstances, the process from authorization to coin launch will be considerably longer. The process, as described by the CCAC, is shown in Figure 3 . Disbursement of Surcharges As discussed above under " Authorizing Commemorative Coins ," each authorizing statute sets a surcharge amount per coin and designates one or more recipient organizations to receive the surcharges. A designated recipient organization is "any organization designated, under any provision of law, as the recipient of any surcharge imposed on the sale of any numismatic item." Commemorative coin legislation generally includes the name(s) of the organization(s) that will benefit from the sale of the coin and how the surcharges will be divided, if necessary. For example, the legislation authorizing a commemorative coin for the U.S. Marshals Service specified four groups to receive distribution from the program. They were the U.S. Marshals Museum, Inc., the National Center for Missing & Exploited Children, the Federal Law Enforcement Officers Association Foundation, and the National Law Enforcement Officers Memorial Fund. Additionally, the law might also specify how much money the designated recipient organization should receive. For th e Marshals Service commemorative coin, the first $5 million was specified for the U.S. Marshals Museum. After that, additional surcharges were divided equally among the National Center for Missing & Exploited Children, the Federal Law Enforcement Officers Association Foundation, and the National Law Enforcement Officers Memorial Fund. Once a commemorative coin has been authorized, the CCRA requires that certain standards be met before surcharge payments can be distributed to designated recipient organizations: 1. The recipient organization must raise funds from private sources "in an amount that is equal to or greater than the total amount of the proceeds of such surcharge derived from the sale of such numismatic item." 2. The qualifying funds raised from private sources must be for the purposes specified by the enabling legislation. 3. The U.S. Mint must recover "all numismatic operation and program costs allocable to the program." 4. The recipient organization must submit an audited financial statement and submit the results of annual audits to demonstrate, to the satisfaction of the Secretary of the Treasury, that it has qualified for surcharge proceeds and is properly expending them. Guidance provided by the U.S. Mint in Surcharge Recipient Organization's Compliance Procedures for Surcharge Eligibility & Payments includes further details of the requirements placed on designated recipient groups before surcharge payments can be made . These include requirements for documentation on the amount of money raised from private sources and the period of fund raising. To document these requirements, designated recipient groups must fill out a "Schedule of Funds Raised From Private Sources," which is provided in an appendix to the Surcharge Recipient Organization's Compliance Procedures for Surcharge Eligibility & Payments publication. Following completion of these tasks, and after the Mint has recouped any expenses related to minting the commemorative coin, surcharges are then disbursed to the designated recipient organization. Since 1982, when the commemorative coin program was restarted, the U.S. Mint has raised more than $506 million in surcharges for various designated recipient groups. Production costs for each commemorative coin can differ based on design, administrative costs, and metals used. For example, Table 4 shows how the U.S. Mint calculated surcharges for a commemorative coin for the 2007 Benjamin Franklin Commemorative Coin. Issues for Congress As Members of Congress contemplate introducing legislation, and the House or the Senate potentially considers commemorative coin measures, there are several issues that could be considered. These can be divided into issues for individual Members of Congress with respect to individual coins, and issues for Congress as an institution. Individual issues include choices Member may make about which people, places, events, or institutions might be honored; which groups might receive surcharge payments; and whether specific design elements might be required for a proposed coin. Institutional issues might include committee or chamber rules on the consideration of commemorative coins and the limit on the number of commemorative coins minted per year. Individual Considerations Groups and Events Honored Some commemorative coin programs are more popular than others. For example, since the commemorative coin program was restarted in 1982, the average commemorative coin program has sold approximately 1 million coins. The 1986 U.S. Statue of Liberty coins (15,491,169 coins) sold the most, while the 1997 Franklin Delano Roosevelt gold $5 coin sold the fewest (41,368). The introduction of commemorative coin legislation often serves two purposes: to honor people, places, events, or institutions and to provide designated recipient groups with potential surcharge funds. These two purposes often go together. Since only two coins may be minted in a given year, Congress may face a ranking of which groups are honored at any given time. In making that decision, consideration might be given to coins that are likely to sell their authorized allotment and provide the designated recipient group with disbursed surcharges over coins that might be less popular and might not sell enough units to provide surcharges to the designated recipient group. Alternatively, Congress could decide that a person, place, event, or institution merits a commemorative coin regardless of the potential sales of the coin. In this instance, the authorization for a coin might not expect that the allotment would be fully sold, but that the recognition provided by the coin was nevertheless desirable. Disbursement of Surcharges An important part of commemorative coin legislation is the designation of groups to receive potential surcharges from the coin sales. Often, when drafting legislation, Members have specific organizations in mind as recipients of potential surcharges. As that legislation is being drafted, however, Members face a choice of whether surcharges should be directed to a single group, or to more than one entity. In order for a group to receive surcharge payments, it must go through two stages: (1) raise sufficient matching funds from private sources, and (2) be subject to annual audits on its use of surcharge payments. Designated recipient groups are required to raise matching funds from private sources prior to the disbursement of surcharges. A group's ability to raise sufficient funds is a potentially important consideration. Should a group not raise sufficient private funds, the full surcharge payment for which they could be eligible might not be disbursed. Authorizing legislation generally includes language about how the group might use surcharges. As shown in " Surcharges " above, these purposes are often broad. For example, the legislation that authorized the 1993 Thomas Jefferson Commemorative coin directed surcharges to two organizations: the Jefferson Endowment Fund and the Corporation for Jefferson's Poplar Forest. Funds for the Jefferson Endowment Fund were to be used "to establish and maintain an endowment to be a permanent source of support for Monticello and its historic furnishings; and for the Jefferson Endowment Fund's educational programs, including the International Center for Jefferson Studies." For the Corporation for Jefferson's Poplar Forest, funds were to be used for the "restoration and maintenance of Poplar Forest." Once sufficient funds are raised and surcharges are disbursed, designated recipient groups are subject to an audit of surcharge payments. Additionally, the surcharge payments must be "accounted for separately from all other revenues and expenditures of the organization." These audits are conducted "in accordance with generally accepted government auditing standards by an independent public accountant selected by the organization." Should a group not use payments properly, that information would likely be discovered by the required audit and could potentially result in a sanction, although no specific penalty is mentioned in law. Specification of Design Elements In some cases, commemorative coin authorizations have required the Mint to incorporate design elements beyond requirements for specific words (e.g., "Liberty," or "E Pluribus Unum"), the denomination (e.g., "one dollar"), or the year. In these cases, the authorizing legislation specifically states the design element. For example, it was a sense of Congress that the National Baseball Hall of Fame commemorative coin was to be curved to look more like a baseball. Similarly, the 2018 Breast Cancer Awareness $5 gold coin is to be minted using "pink gold." Should a Member wish to have a specific design element incorporated into a future commemorative coin, the authorizing legislation would likely need to contain that language either as a sense of Congress or as part of the coin specification section. Including language that would require a certain design element would likely ensure that the Member's vision for the commemorative coin would be incorporated into the design and minting process. Such specification, however, could serve to limit design choice for the commemorative coin and might alter the cost structure of striking a coin, if the required element diverges from standard coin-minting practices. Institutional Considerations Requirements for Legislative Consideration As discussed above under " Consideration of Legislation in Congress ," neither House nor Senate rules provide any restrictions specifically concerning consideration of commemorative coin legislation on the House or Senate floor. The Senate Committee on Banking, Housing, and Urban Affairs, however, does have a committee rule that requires that at "least 67 Senators must cosponsor any ... commemorative coin bill or resolution before consideration by the Committee." Currently, the House Financial Services Committee has not adopted any specific rules concerning committee consideration of commemorative coin legislation, although it has required a minimum number of cosponsors in past Congresses. As demonstrated by the discontinuation of the House Financial Services Committee rule requiring a minimum number of cosponsors for committee commemorative coin legislation, committee rules can be changed from Congress to Congress. Should the House want to place requirements on the consideration of commemorative coin legislation, the Financial Services Committee could readopt its former rule, or something similar. Adopting committee rules to require a minimum number of cosponsors might encourage bill sponsors to build support among Representatives for a commemorative coin bill to honor a specified group or event. Such a minimum requirement, however, could potentially limit the committee in the number or type of commemorative coin bills it considers. Since only the Senate Committee on Banking, Housing, and Urban Affairs has a rule that imposes a formal qualification on the potential consideration of commemorative coin legislation, the possible path forward for a bill can be different within each chamber. Should the House, the Senate, or both want to adopt similar language for the consideration of commemorative coin legislation, such language could be incorporated into future committee rules, into House and Senate Rules, or into law. Taking steps to formally codify the commemorative coin consideration process might provide sponsors with a single process for coin consideration, which could make it easier for coin bills to meet minimum requirements for consideration across both the House and Senate. Such codification could also limit congressional flexibility and might result in fewer proposals or authorizations to comply with new standards. Number of Coins Minted Per Year In 1996, Congress limited the U.S. Mint to issuing two coins per year beginning in calendar year 1998. This action was taken in response to the proliferation of commemorative coins authorized since the program was restarted in 1982. Should Congress want to increase or decrease the maximum number of commemorative coins minted per year, the law could be amended. Reducing the number of commemorative coins per year would also reduce the number of groups or events that might be commemorated and reduce the number of designated recipient groups that might be aided by the disbursement of coin surcharges. A decrease in the number of commemorative coins per year, however, could increase sales on authorized coins by reducing potential competition among coin programs. Should Congress desire to increase the number of coins, more people, places, events, or institutions could potentially be honored, and a larger variety of designated recipient groups might receive surcharges from the U.S. Mint. Authorizing additional commemorative coin programs, however, could increase the number of commemorative coins available and reintroduce problems associated with competition among commemorative coin programs and result in a proliferation of coins on the market at any given time. Such a scenario might result in decreased surcharge disbursement opportunities for individual designated recipient groups. Concluding Observations Commemorative coins have long been a popular way to honor people, places, and events. Historically, commemorative coins were issued to celebrate state anniversaries, expositions, and event anniversaries, or to support the building of memorials. Coins were generally sold to sponsoring organizations, who then resold them to raise funds. In the modern era, only two coins can be minted per year at the same time; according to the U.S. Commission of Fine Arts (CFA), the "range of subject matter [has] expanded to include subjects such as women, historical events, and even buildings and landscapes." Additionally, instead of selling coins to organizations to raise money, the concept of surcharges as a method to direct money to designated groups has been introduced. As Congress considers the authorization of new coins to support designated recipient groups, consideration might be given to coins that could maximize sales and provide groups with the ability to earn as much money as possible for surcharges to support group activities. On the other hand, if Congress's intent for a coin is to recognize a person, place, event, or institution, then smaller sales numbers might not factor into legislative decisionmaking. Some commemorations inherently have broader appeal than others and the sale of commemorative coins often reflects the popularity of a particular person, place, event, or institution to coin collectors and the broader general public. To potentially maximize the appeal and sale of commemorative coins to support designated recipient organizations, Congress might consider whether the people, places, events, or institutions to be commemorated have a broad appeal and whether design elements might be specified that would make the coin more appealing to the general public. For example, the 1986 Statue of Liberty commemorative coin (shown in Figure 2 ) sold over 15 million units, while other coins have sold as few as approximately 40,000. For a designated recipient organization to earn surcharges, the U.S. Mint's production costs must be recouped before payments can be made. As a result, coins that sell out of statutory allotments are more likely to generate significant surcharges than those that struggle to find a market beyond commemorative coin collectors. Similarly, on at least three occasions, Congress has provided specific requirements to the U.S. Mint on the design of commemorative coins—that the 2014 National Baseball Hall of Fame coin be curved to represent a baseball; that the 2018 National Breast Cancer Awareness coin be tinted pink, to reflect the color associated with breast cancer awareness efforts; and that the 2019 Apollo 11 50 th Anniversary coin be convex to resemble an astronaut's helmet. Evidence from the coin collecting community suggests that a coin with unique design features may be more attractive for coin collectors and noncollectors alike. For example, a coin-collecting publication reported that the National Baseball Hall of Fame coin was so popular that the U.S. Mint had difficulty meeting demand for orders, especially because it was the "first U.S. coin to utilize this [curved or dish design] production method and with a baseball theme, [it] ended up being a homerun with collectors." The goal of commemorative coins is twofold: to commemorate a person, place, event, or institution and to provide surcharges to groups. As Congress considers future commemorative coins, the ability to appeal to broad segments of the population to purchase coins in support of designated recipient groups might be a consideration. If Congress considers what people, places, events, or institutions might be honored and the coins' designs, the commemorative coin program could create innovative designs that raise significant monies for designated recipient groups. Since not all people, places, events, or institutions have the same appeal to the general public, consideration of which might be the best subject of commemorative coins would ensure that the U.S. Mint dedicates its resources to coins that are more likely to sell out authorized allotments and provide maximum surcharge payments. Alternatively, Congress could recognize important people, places, events, or institutions with a coin without consideration of the potential surcharges. In this case, historically important people, places, events, or institutions could be recognized by the United States regardless of potential amounts raised for these groups. Appendix A. Historical Commemorative Coins Between 1892 and 1954, 60 commemorative coins were authorized by Congress. Table A-1 provides a list of these coins organized by the year in which they were struck by the mint. The table also includes the type of coin, the subject, and the authorization statute. Appendix B. Modern Commemorative Coins, 1982-1997 Between 1982 and 1997, 47 commemorative coins were authorized by Congress. Table B-1 provides a list of these coins organized by the year in which they were struck by the Mint. The table also includes the coin's subject and authorizing statute. Coin denominations are not provided for modern commemorative coins because authorizing legislation generally provides for more than one denomination per commemorative coin series.

Commemorative coins are produced by the U.S. Mint pursuant to an act of Congress and are often proposed by Members of Congress as part of their representational duties. These coins are legal tender that celebrate and honor American people, places, events, and institutions. Overall, 152 commemorative coins have been authorized since 1892. Since 1982, when Congress reinstituted the commemorative program, 91 commemorative coins have been authorized. Since 1998, only two coins may be authorized for any given year. To date, Congress has authorized commemorative coins to be issued through 2020. The issuance of commemorative coins can be broadly divided into two eras: historical coins and modern coins. Historical commemorative coins were those authorized between 1892 and 1954 and generally celebrated anniversaries, public events, or the construction of new memorials. These coins were sold by the government to the sponsor organization, which then resold the coins to the public at a higher price to earn money to support their mission. In 1939, Congress stopped authorizing new coins because a glut of commemorative coins on the market had caused their value to decline, and the U.S. Treasury became concerned that so many coins might facilitate counterfeiting. These sentiments were echoed by President Dwight D. Eisenhower, who in 1954 vetoed legislation for a half-dollar honoring the tercentennial of New York City and remarked that "large quantities [of coins] have remained unsold and have been returned to the mints for melting." The historical era concluded with the minting of George Washington Carver and Booker T. Washington half-dollars between 1951 and 1954. The modern commemorative coin era began in 1982, when Congress authorized coins to celebrate the 250th anniversary of George Washington's birth. Between 1982 and 1997, prior to the Commemorative Coin Reform Act (CCRA) of 1996's statutory limitation of two commemorative coins issued per year, 47 commemorative coins were authorized and minted. Between 1998 and 2018, an additional 41 coins were authorized and minted. Three additional coins have been authorized, two in 2019 and one in 2020 (to date). Commemorative coin legislation generally has a specific format. Once a coin is authorized, it follows a specific process for design and minting. This process includes consultation and recommendations by the Citizens Coin Advisory Commission (CCAC) and the U.S. Commission of Fine Arts (CFA), pursuant to any statutory instructions, before the Secretary of the Treasury makes the final decision on a coin's design. Following the conclusion of a coin program, designated recipient organizations may receive surcharge payments, once the U.S. Mint has recouped all costs associated with producing the coin. Should Congress want to make changes to the commemorative coin process, several individual and institutional options might be available. The individual options include decisions made by Members of Congress as to which people, places, events, or institutions should be celebrated; which groups should receive potential surcharge payments; and any specific design requirements Congress might want to request or require. The institutional options could include House, Senate, or committee rules for the consideration of commemorative coin legislation and whether the statutory maximum of two coins minted per year is too many or too few.

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Introduction Essentially all of the outstanding debt of the federal government is subject to a statutory limit, which is set forth as a dollar limitation in 31 U.S.C. 3101(b). From time to time, Congress considers and passes legislation to adjust or suspend this limit. Legislation adjusting the debt limit takes the form of an amendment to 31 U.S.C. 3101(b), usually striking the current dollar limitation and inserting a new one. In recent years, such legislation has taken the form of suspending the debt limit through a date certain with an increase to the dollar limit made administratively at the end of the suspension period. At the beginning of the 116 th Congress, the House adopted a standing rule that would provide for legislation suspending the statutory debt limit to be considered as passed by the House, without a separate vote, when the House adopts the budget resolution for a fiscal year. This House rule is similar to a previous one related to the debt limit (commonly referred to as the "Gephardt rule," named after its original sponsor, former Representative Richard Gephardt), which was first adopted in 1979 but was repealed at the beginning of the 112 th Congress in 2011. The House may also consider debt limit legislation without resorting to the new debt limit rule (and also did so under the former Gephardt rule) either as freestanding legislation, as part of another measure, or as part of a budget reconciliation bill. The Senate does not have (and has never had) a comparable procedure. If it chooses under the new rule to consider such debt limit legislation, it would do so under its regular legislative process. This report first explains the current House debt limit rule, particularly in relation to the former Gephardt rule. Then, it describes the legislative history of the former rule and reviews how the former rule operated before it was repealed at the beginning of the 112 th Congress. Features of the House Debt Limit Rule House Rule XXVIII requires that the House clerk, when the House adopts the budget resolution for a fiscal year, automatically engross and transmit to the Senate a joint resolution suspending the public debt limit through the end of that year. In other words, such legislation suspending the debt limit would be passed by the House without a separate vote on the debt limit legislation. Instead of a separate vote, the rule stipulates that the vote on the budget resolution is to be considered as the vote on the debt legislation. The new House debt limit rule differs from the former rule in two respects. First, under the new rule, the debt limit legislation is passed and sent to the Senate when the House adopts the budget resolution, not when the House and Senate agree to the budget resolution. Second, the debt legislation would suspend the debt limit, not explicitly set a new debt limit. Under the former rule, the debt limit legislation would provide for a specific new debt limit, indicating the amount by which the debt limit would be increased. In contrast, as a suspension of the debt limit, the new rule would provide for legislation that accommodates the variability of federal collections and past obligations but retain the ability of Congress to revisit the effects of such revenues and existing obligations. The current rule, as well as the former rule, does not affect the House Ways and Means Committee's exclusive jurisdiction over debt limit legislation. The full text of the current debt limit rule is provided in the Appendix . Legislative History of the Gephardt Rule The Gephardt rule, initially codified as Rule XLIX of the Standing Rules of the House of Representatives, was established by P.L. 96-78 (93 Stat. 589-591), an act to provide for a temporary increase in the public debt limit. The House adopted the legislation ( H.R. 5369 ) by a vote of 219-198 on September 26, 1979. During consideration of the measure, Representative Gephardt explained that the purpose of the new House rule was to place the consideration of the public debt limit within the context of the overall budget policies contained in the annual budget resolution. In addition, it was intended to reduce the amount of time spent and the number of votes in the House and in committees on the issue of raising the public debt limit. One of the aggregate amounts required to be included in the annual budget resolution is the appropriate level of the public debt. The budget resolution, however, does not become law. Therefore, the enactment of subsequent legislation is necessary in order to change the statutory limit on the public debt. The Gephardt rule enables the House to combine the finalization of the budget resolution and the origination of debt limit legislation into a single step. Representative Gephardt stated that the new automatic engrossment process puts the consideration of the appropriate level for the debt ceiling where it legitimately and logically belongs. That is in the context of when we vote for the spending that creates the need to change the debt ceiling. In its original form, the rule required the engrossment of a joint resolution changing the temporary public debt limit. In 1983, the separate temporary and permanent statutory limits on the public debt were combined into one permanent statutory limit ( P.L. 98-34 ). Subsequently, the House amended the Gephardt rule to reflect this change by agreeing to H.Res. 241 (98 th Congress) by voice vote on June 23, 1983. Under the modified rule, the automatically engrossed joint resolution would contain a change to the permanent statutory limit. In addition to this modification, the rules change also provided that where a budget resolution contains more than one public debt limit figure (for the current and the next fiscal year), only one joint resolution be engrossed, containing the debt limit figure for the current fiscal year with a time limitation, and the debt limit figure for the following fiscal year as the permanent limit. During consideration of H.Res. 241 , Representative Butler C. Derrick explained the limitation of a single joint resolution by stating the following: The Committee on Rules ... believes that it is unnecessary and confusing to have ... a single concurrent resolution on the budget trigger the engrossment and passage of two separate joint resolutions to increase or decrease the public debt [limit]. At the beginning of the 106 th Congress (1999-2000), the House recodified the rule as House Rule XXIII. Certain language was deleted and modified from the existing rule, but the revisions were intended to continue the automatic engrossment process "without substantive change." The House repealed the rule at the beginning of the 107 th Congress (2001-2002). On the opening day of the 108 th Congress (2003-2004), however, the House reinstated this automatic engrossing process as a new rule, Rule XXVII. The reinstated rule contained the same language as Rule XXIII of the 106 th Congress. The rule was redesignated (without change) as Rule XXVIII during the 110 th Congress upon the enactment of the Honest Leadership and Open Government Act of 2007 ( S. 1 , P.L. 110-81 , September 14, 2007, see Section 301(a)). Finally, as noted above, the House repealed the previous rule at the beginning of the 112 th Congress (2011-2012). More recently, the House restored and revised the rule at the beginning of the 116 th Congress. Operation of the Gephardt Rule Table 1 provides information on the joint resolutions changing the public debt limit that were engrossed and deemed passed by the House pursuant to the Gephardt rule during calendar years 1980-2010. The rule, however, did not operate in all of these years. In 11 of the 31 years between 1980 and 2010, the rule was either suspended (1988, 1990-1991, 1994-1997, and 1999-2000) or repealed (2001-2002) by the House. In most cases, the House suspended the rule because legislation changing the statutory limit was not necessary. At the time, the existing public debt limit was expected to be sufficient. In three cases, the House passed or was expected to pass separate legislation to increase the statutory limit. As noted above, the rule was repealed at the beginning of the 107 th Congress and therefore did not apply in 2001 and 2002. During the remaining 20 years, when the rule was in effect, the House originated 20 joint resolutions under this procedure. The first seven of these 20 joint resolutions were generated under the Gephardt rule in its original form. As mentioned above, the rule was modified in 1983. It generally remained in this form through 2010. The subsequent 13 joint resolutions were generated under this modified language. In four years (calendar years 1998, 2004, 2006, and 2010), while the rule was in effect, the House and Senate did not agree to a conference report on the budget resolution, and therefore the automatic engrossment process under the Gephardt rule was not used. As Table 1 shows, although budget resolutions adopted during this period contained debt limit amounts for between three and 11 different fiscal years—as the time frame of each budget resolution dictated—the joint resolutions automatically engrossed under the Gephardt rule contained debt limit amounts for only one or two fiscal years, depending on the requirements of the rule at the time. The 1983 modification, as noted above, provided that the automatically engrossed joint resolution could include multiple debt limit increases—one temporary and another permanent. The first three of the 11 joint resolutions automatically engrossed pursuant to this modified version of the rule contained two different public debt limits, and the other eight contained a single public debt limit. The Senate passed 16 of the 20 joint resolutions automatically engrossed pursuant to the Gephardt rule, passing 10 without amendment and six with amendments. The 10 joint resolutions passed without amendment were sent to the President and signed into law. The six joint resolutions amended by the Senate required a vote of the House before being sent to the President. Five of these ultimately became law. Of the remaining four joint resolutions, the Senate began consideration on one but came to no resolution on it, and it took no action on three. Between 1980 and 2010, a total of 47 public debt limit changes were signed into law as independent measures or as part of other legislation. The Gephardt rule originated less than a third of these changes. That is, over two-thirds of the 47 public debt limit changes enacted into law during this period originated by procedures other than the House rule, each requiring the House to vote on such legislation. However, the rule effectively allowed the House to avoid a separate, direct vote on 10 (or 21%) of the 47 measures changing the debt limit that were ultimately enacted into law. Appendix. Text of Current House Debt Limit Rule RULE XXVIII STATUTORY LIMIT ON THE PUBLIC DEBT 1. Upon adoption by the House of a concurrent resolution on the budget under section 301 or 304 of the Congressional Budget Act of 1974, the Clerk shall prepare an engrossment of a joint resolution suspending the statutory limit on the public debt in the form prescribed in clause 2. Upon engrossment of the joint resolution, the vote by which the concurrent resolution on the budget was adopted by the House shall also be considered as a vote on passage of the joint resolution in the House, and the joint resolution shall be considered as passed by the House and duly certified and examined. The engrossed copy shall be signed by the Clerk and transmitted to the Senate for further legislative action. 2. The matter after the resolving clause in a joint resolution described in clause 1 shall be as follows: 'Section 3101(b) of title 31, United States Code, shall not apply for the period beginning on the date of enactment and ending on September 30, .' with the blank being filled with the budget year for the concurrent resolution. 3. Nothing in this rule shall be construed as limiting or otherwise affecting— (a) the power of the House or the Senate to consider and pass bills or joint resolutions, without regard to the procedures under clause 1, that would change the statutory limit on the public debt; or (b) the rights of Members, Delegates, the Resident Commissioner, or committees with respect to the introduction, consideration, and reporting of such bills or joint resolutions. 4. In this rule the term 'statutory limit on the public debt' means the maximum face amount of obligations issued under authority of chapter 31 of title 31, United States Code, and obligations guaranteed as to principal and interest by the United States (except such guaranteed obligations as may be held by the Secretary of the Treasury), as determined under section 3101(b) of such title after the application of section 3101(a) of such title, that may be outstanding at any one time.

Essentially all of the outstanding debt of the federal government is subject to a statutory limit, which is set forth as a dollar limitation in 31 U.S.C. 3101(b). From time to time, Congress considers and passes legislation to adjust or suspend this limit. At the beginning of the 116th Congress, the House adopted a standing rule that would provide for legislation suspending the statutory debt limit to be considered as passed by the House, without a separate vote, when the House adopts the budget resolution for a fiscal year. This House rule is similar to a previous one related to the debt limit (commonly referred to as the "Gephardt rule," named after its original sponsor, former Representative Richard Gephardt), which was first adopted in 1979 but was repealed at the beginning of the 112th Congress in 2011. The House may also consider debt limit legislation without resorting to the new debt limit rule (and also did so under the former Gephardt rule) either as freestanding legislation, as part of another measure, or as part of a budget reconciliation bill. The Senate does not have (and has never had) a comparable procedure. If it chooses under the new rule to consider such debt-limit legislation, it would do so under its regular legislative process. This report first explains the current House debt limit rule, particularly in relation to the former Gephardt rule. Then, it describes the legislative history of the former rule and reviews how the former rule operated before it was repealed at the beginning of the 112th Congress. Under the former Gephardt rule, in 11 of the 31 years between 1980 and 2010, the rule was either suspended (1988, 1990-1991, 1994-1997, and 1999-2000) or repealed (2001-2002) by the House. In most years in which the rule was suspended, legislation changing the statutory limit was not necessary—that is, at the time, the existing public debt limit was expected to be sufficient. During the years in which the rule applied (i.e., in the remaining 20 of the 31 years between 1980 and 2010), the rule led to the automatic engrossment of 20 House joint resolutions increasing the statutory limit on the public debt. In effect, under the rule, in these cases, the House was able to initiate legislation increasing the level of the public debt limit without a separate, direct vote on the legislation. Of these 20 joint resolutions, 15 became law. In 10 of these 15 cases, the Senate passed the measure without change, allowing it to be sent to the President for his signature without any further action by the House. In the remaining 5 cases, the Senate amended the rule-initiated legislation, requiring the House to vote on the amended legislation before it could be sent to the President. During this period, the House also originated and considered debt limit legislation without resorting to the Gephardt rule either as freestanding legislation, as part of another measure, or as part of a budget reconciliation bill. Of the 47 public debt limit changes enacted into law during the period 1980-2010, 32 were enacted without resorting to the Gephardt rule, each requiring the House to vote on such legislation. In total, between 1980 and 2010, the rule effectively allowed the House to avoid a separate, direct vote on 10 of the 47 measures changing the debt limit that were ultimately enacted into law. This report updates the previous one (dated July 27, 2015) with a description of the changes to the former rule.

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Introduction The Fifth Amendment to the U.S. Constitution provides that "[n]o person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury." This provision requires that a federal prosecutor, in order to charge a suspect with a serious federal crime, secure the assent of an independent investigative and deliberative body comprising citizens drawn from the jurisdiction in which the crime would be tried. Federal grand juries serve two primary functions: (1) they aid federal prosecutors in investigating possible crimes by issuing subpoenas for documents, physical evidence, and witness testimony; and (2) they determine whether there is sufficient evidence to charge a criminal suspect with the crime or crimes under investigation. Traditionally, the grand jury has done its work in secret. Secrecy prevents those under scrutiny from fleeing or importuning the grand jurors, encourages full disclosure by witnesses, and protects the innocent from unwarranted prosecution, among other things. The long-established rule of grand jury secrecy is enshrined in Federal Rule of Criminal Procedure 6(e), which provides that government attorneys and the jurors themselves, among others, "must not disclose a matter occurring before the grand jury." Accordingly, as a general matter, persons and entities external to the grand jury process are precluded from obtaining transcripts of grand jury testimony or other documents or information that would reveal "what took place" in the proceedings, even if the grand jury has concluded its work and even if the information is sought pursuant to otherwise-valid legal processes. At times, the rule of grand jury secrecy has come into tension with Congress's power of inquiry when an arm of the legislative branch has sought protected materials pursuant to its oversight function. For example, some courts have determined that the information barrier established in Rule 6(e) extends to congressional inquiries, noting that the Rule "contains no reservations in favor of . . . congressional access to grand jury materials" that would otherwise remain secret. Nevertheless, the rule of grand jury secrecy is subject to a number of exceptions, both codified and judicially crafted, that permit grand jury information to be disclosed in certain circumstances (usually only with prior judicial authorization). And because Rule 6(e) covers only "matters occurring before the grand jury," courts have recognized that documents and information are not independently insulated from disclosure merely because they happen to have been presented to, or considered by, a grand jury. As such, even if Rule 6(e) generally limits congressional access to grand jury information, Congress has a number of tools at its disposal to seek materials connected to a grand jury investigation. This report begins with an overview of the standards governing—and exceptions applicable to—grand jury secrecy under Federal Rule of Criminal Procedure 6(e). The report also addresses whether and how the rule of grand jury secrecy and its exceptions apply to Congress, including the circumstances under which Congress may obtain grand jury information and what restrictions apply to further disclosures. Concluding this report is a discussion of past legislative efforts to amend Rule 6(e) in order to provide congressional committees with access to grand jury materials. Brief Overview of the Federal Grand Jury12 Federal law requires the various United States District Courts to order one or more grand juries to be summoned when the public interest requires. Grand jurors must be "selected at random from a fair cross section of the community in the district or division wherein the court convenes," among other things. Grand jury panels consist of 16 to 23 members. After selection, the court swears in members of the grand jury; names a "foreperson and deputy foreperson"; and instructs the panel. Federal grand juries sit until discharged by the court, but generally for no longer than 18 months, with the possibility of one six-month extension. The authority of a federal grand jury is sweeping, but it is limited to the investigation of possible violations of federal criminal law triable in the district in which it is sitting. The grand jury may begin its examination even in the absence of probable cause or any other level of suspicion that a crime has been committed within its reach. The grand jury does not conduct its business in open court, nor does a federal judge preside over its proceedings. The grand jury meets behind closed doors, with only the jurors, attorney for the government, witnesses, someone to record testimony, and possibly an interpreter present. The grand jury acts on the basis of evidence presented by witnesses called for that purpose. The attorney for the government will ordinarily arrange for the appearance of witnesses before the grand jury, will suggest the order in which they should be called, and will take part in questioning them. The grand jury most often turns to the prosecutor for legal advice and to draft most of the indictments, which the grand jury returns. Grand jury witnesses usually appear before the grand jury under subpoena. Subpoenas may be issued and served at the request of the panel itself, although the attorney for the government usually arranges the case to be presented to the grand jury. Unjustified failure to comply with a grand jury subpoena may result in a witness being held in contempt. A witness who lies to a grand jury may be prosecuted for perjury or for making false declarations to the grand jury. Neither a potential defendant nor a grand jury target nor any of their counsel has any right to appear before the grand jury unless invited or subpoenaed. Nor does a potential defendant, a grand jury target, or their counsel have any right to present exculpatory evidence or substantive objection to the grand jury. There are four possible outcomes of convening a grand jury—(1) indictment; (2) a vote not to indict; (3) discharge or expiration without any action; or (4) submission of a report to the court under certain circumstances. A grand jury indictment may issue upon the vote of 12 of its members that probable cause exists to believe the accused committed the crime charged. Overview of Grand Jury Secrecy Historical Underpinnings "Since the 17th Century, grand jury proceedings have been closed to the public, and records of such proceedings have been kept from the public eye." An early justification for maintaining the secrecy of grand jury proceedings in England was to prevent suspected criminals from learning of an inquest and absconding. By the late 17th century, legal scholars had begun to recognize the need for secrecy in most matters pertaining to grand jury inquiries—including the identities of subjects and witnesses, the evidence collected, and the plans and deliberations of the jury—in order to realize the additional aims of preserving juror independence, sussing out witness bias and mendacity, and allowing evidence to be fully developed. When the right to grand jury indictment crossed the Atlantic Ocean from England to the American colonies, the rule of grand jury secrecy came with it. Prior to the adoption of the Federal Rules of Criminal Procedure, the federal courts developed a fairly robust, though not unyielding, conception of grand jury secrecy at common law. Secrecy challenges most often arose in the context of criminal defendants' motions to dismiss their indictments on the grounds that the evidence considered by the grand jury could not justify the charges or that some type of misconduct had occurred. Recognizing that these motions called for inspecting records of the proceedings before the grand jury, courts typically acknowledged that they had the discretionary power to permit such inspection "in the furtherance of justice" but found that the power should be "sparingly exercised" in light of the traditional rule of secrecy. Thus, although a number of courts identified a theoretical imperative for "removing the veil of secrecy whenever evidence of what has transpired before [the jury] becomes necessary to protect public or private rights," courts often declined to engage in such unveiling based merely on a defendant's "general allegations" or a potential "fishing expedition." Nevertheless, when deemed "essential" to "the purposes of justice," some courts would consider evidence of what occurred before a grand jury to determine whether an indictment against a criminal defendant should be dismissed. This unveiling apparently reflected an understanding that grand juries served not only an investigative function in furtherance of the governmental interest in law enforcement, but also as a "protector of citizens against arbitrary and oppressive governmental action." Thus, as these decisions suggested, disclosure could be appropriate when continuing secrecy would be inconsistent with the citizen-protective function. Federal Rule of Criminal Procedure 6(e) Background and Overview "[T]he federal courts' modern version" of the traditional rule of grand jury secrecy is established by Federal Rule of Criminal Procedure 6(e), in effect since 1946 and amended numerous times over the following 60 years. The Supreme Court has recognized that Rule 6(e) simply "codifie[d]" the pre-existing common law requirement "that grand jury activities generally be kept secret," an "integral part of [the United States] criminal justice system." An Advisory Committee Note reflects this understanding, making clear that the Rule "continues the traditional practice of secrecy . . . except when the court permits a disclosure." Courts have identified five principal justifications underlying Rule 6(e)'s secrecy requirement: 1. to prevent the escape of those whose indictment may be contemplated; 2. to insure the utmost freedom to the grand jury in its deliberations, and to prevent persons subject to indictment or their friends from importuning the grand jurors; 3. to prevent subornation of perjury or tampering with the witnesses who may testify before [the] grand jury and later appear at the trial of those indicted by it; 4. to encourage free and untrammeled disclosures by persons who have information with respect to the commission of crimes; 5. to protect [the] innocent accused who is exonerated from disclosure of the fact that he has been under investigation, and from the expense of standing trial where there was no probability of guilt. At the time of its adoption, Rule 6(e) ensured the secrecy of grand jury proceedings by authorizing "[d]isclosure of matters occurring before the grand jury" in only limited circumstances. First, such matters "other than [the jury's] deliberations and the vote of any juror" automatically could be disclosed to "the attorneys for the government for use in the performance of their duties." Beyond this, "a juror, attorney, interpreter or stenographer" could disclose matters occurring before the grand jury only with court authorization (1) "preliminarily to or in connection with a judicial proceeding," or (2) "at the request of the defendant upon a showing that grounds may exist for a motion to dismiss the indictment because of matters occurring before the grand jury." Amendments to Rule 6(e) from 1966 to 2014 have sought, among other things, to align the Rule's text with court-developed exceptions and clarifications that have sometimes extended beyond the literal terms of the version of the Rule in force at a given point in time. The current iteration of Rule 6(e) establishes a general rule of secrecy by setting out a list of persons, including grand jurors and attorneys for the government, who "must not disclose a matter occurring before the grand jury" unless the Federal Rules of Criminal Procedure "provide otherwise." Rule 6(e) then "provide[s] otherwise" by listing complex exceptions to the prohibition. The exceptions generally fall into two categories: (1) disclosures permitted without judicial authorization, and (2) disclosures permitted with judicial authorization. In the first category, persons prohibited by the Rule from disclosing matters occurring before the grand jury may nevertheless disclose such matters (other than grand jury deliberations or grand juror votes) to an attorney for the government "for use in performing that attorney's duty" and to non-attorney "government personnel" who are needed to help a government attorney enforce federal criminal law. Government attorneys may also disclose such matters (1) to another federal grand jury; (2) to federal law enforcement, intelligence, protective, immigration, national defense, or national security officials only with respect to matters involving foreign intelligence or counterintelligence; and (3) to "any appropriate . . . government official" only with respect to matters involving threats of attack or intelligence gathering by foreign powers or threats of sabotage or terrorism. In the second category of exceptions, the court under whose auspices the grand jury was empaneled may authorize disclosure of a grand jury matter (1) preliminarily to or in connection with a judicial proceeding; (2) to a defendant who shows grounds may exist to dismiss the indictment because of something that occurred before the grand jury; or (3) at the request of the government, to a foreign court or prosecutor or to an "appropriate" state, state-subdivision, Indian tribal, military, or foreign government official for the purpose of enforcing or investigating a violation of the respective jurisdiction's criminal law. Beyond the express terms of Rule 6(e), three circuits and a number of district courts have held that courts have inherent authority to disclose grand jury materials in situations where an enumerated Rule 6(e) exception is not otherwise applicable, though the authority may be exercised only in rare or special cases. Additional Rules and statutes also permit disclosure in particular circumstances. When a court-authorized disclosure is at issue, the person or entity seeking grand jury information must make a "strong showing of particularized need" that "outweighs the public interest in secrecy." If that showing is made, the court may authorize disclosure "at a time, in a manner, and subject to any other conditions that it directs." The following sections of this report provide more detail on the various provisions of Rule 6(e). Persons Subject to Rule 6(e) Rule 6(e)(2)(B) lists eight categories of persons who "must not disclose a matter occurring before the grand jury" unless an exception applies: 1. grand jurors; 2. interpreters; 3. court reporters; 4. operators of recording devices ; 5. persons who transcribe recorded testimony; 6. attorneys for the government; 7. government personnel needed to assist attorneys for the government; 8. persons authorized to receive grand jury materials under 18 U.S.C. § 3322. In other words, the Rule generally imposes an obligation of secrecy on each person permitted to be present while the grand jury is in session, as well as certain persons given access to grand jury information. Yet there is a notable exception to this general imperative: though a "witness being questioned" is authorized by Rule 6(d) to be present during grand jury proceedings (for obvious reasons), grand jury witnesses are not included on the list of persons precluded from disclosing grand jury matters. Viewed in conjunction with Rule 6(e)(2)(A)'s admonition that "[n]o obligation of secrecy may be imposed on any person except in accordance with Rule 6(e)(2)(B)," the Rule by its plain terms does not obligate grand jury witnesses to maintain the secrecy of the proceedings or their testimony. An Advisory Committee note to the original adoption of Rule 6(e) supports this reading, stating that "[t]he rule does not impose any obligation of secrecy on witnesses." According to the note, such an obligation would constitute "an unnecessary hardship [that] may lead to injustice if a witness is not permitted to make a disclosure to counsel or to an associate." Court decisions generally have been in accord, although a handful of courts have taken the position that an order requiring a witness to refrain from discussing grand jury matters may be entered in rare circumstances when justified by a compelling need. Courts taking this position have relied on "inherent judicial power" to "protect the integrity of the grand jury process," which the adoption of Rule 6(e) ostensibly did not undermine. Though a witness is ordinarily free to disclose grand jury information of which he is aware, witnesses cannot be compelled to disclose such information to investigation targets or in separate proceedings. Relatedly, courts have recognized that federal prosecutors may request (but not demand) that witnesses refrain from disclosing the existence of a subpoena or their testimony. Because Rule 6(e)'s language suggests that the list of persons prohibited from disclosing grand jury matters is exclusive, unlisted third parties who obtain grand jury information—even from persons obligated to maintain grand jury secrecy—are also generally not required to keep the information secret. That said, a court authorizing a disclosure under a Rule 6(e) exception may impose a condition that further disclosures not be made, subject to First Amendment limitations. At least one court has observed that courts themselves are not included on the list of those who must refrain from "disclos[ing] a matter occurring before the grand jury" under Rule 6(e)(2)(B), interpreting this omission to mean that courts have inherent authority to release grand jury materials regardless of whether a textual exception to grand jury secrecy in Rule 6(e) otherwise applies. This judicial "inherent authority" exception, which the Supreme Court has never endorsed, is discussed in more detail infra in the section addressing exceptions to grand jury secrecy. Disclosure of Matters Occurring Before the Grand Jury Rule 6(e) prohibits only "disclosure of matters occurring before the grand jury." Accordingly, the Rule is not contravened unless something is "disclos[ed]," meaning that a person "with information about the workings of the grand jury . . . [has] reveal[ed] such information to other persons who are not authorized to have access to it under the Rule." Thus, mere use of grand jury information by a person who has already been legitimately exposed to it does not constitute "disclosure" within the meaning of Rule 6(e). A more difficult issue is determining what types of information or materials fall within the meaning of "matters occurring before the grand jury." Though not defined in Rule 6(e), courts have tended to view the phrase as broadly encompassing anything that might reveal what took place in the grand jury room. Clear examples include transcripts of proceedings and witness testimony, as well as written "summaries" or "discussions" of the proceedings or evidence presented. Information about the composition and focus of the grand jury—including the identities of witnesses and jurors, the targets and subjects of the investigation, and even the dates and times a grand jury is in session —are also covered by the Rule. Particular challenges arise in the context of documents such as business records that have been subpoenaed or considered by the grand jury but do not on their face relate to the grand jury itself. In general, "[t]here is no per se rule against disclosure of any and all information which has reached the grand jury chambers," and thus "[t]he mere fact that information [or documents have] been presented to the grand jury" does not bar independent disclosure in other proceedings. For example, an agency or litigant may seek corporate records directly from a company, and the company has no basis to claim that the records are insulated from disclosure simply because a federal grand jury separately has subpoenaed them. However, utilizing various (and sometimes conflicting) tests, courts have acknowledged that independently generated documents presented to a grand jury may sometimes constitute "matters occurring before the grand jury" in a particular case if the context of a request would make production revelatory of the substance of the grand jury's investigation. For instance, a request for "documents subpoenaed by the grand jury" might impermissibly call for disclosure of grand jury matters, as production "would reveal to the requester that [the documents] had been subpoenaed" and potentially suggest the focus of the grand jury's investigation. By contrast, a request for documents presented to a grand jury, when coupled with broader requests for "all evidence" or documents related to a factual matter, would not necessarily call for disclosure of grand jury matters if production would leave the requester unable to "determine which documents," if any, "had been submitted to the grand jury." The framing of a particular request for documents, and the context in which the request is made, will thus impact whether documents presented to or obtained by a grand jury are considered "matters occurring before" it within the meaning of Rule 6(e). One court has addressed the difficulty inherent in parsing when and to what extent documents subpoenaed or reviewed by a grand jury constitute grand jury "matters" by applying a presumption that "confidential documentary information not otherwise public obtained by the grand jury by coercive means" is covered by the Rule. A party seeking disclosure may rebut the presumption, however, "by showing that the information is public or was not obtained through coercive means or that disclosure would be otherwise available by civil discovery and would not reveal the nature, scope, or direction of the grand jury inquiry." In practice, then, the showing required to rebut the presumption may result in an inquiry similar to that employed by other courts. In addition to the substance of grand jury matters themselves (e.g., transcripts of testimony), Rule 6(e) protects against the indirect revelation of grand jury matters in ancillary proceedings and filings, such as hearings or orders addressing claims of privilege or efforts to quash a subpoena. The Rule provides that the court must "close any hearing" and keep "[r]ecords, orders, and subpoenas relating to grand-jury proceedings" under seal "to the extent and as long as necessary" to prevent unauthorized disclosure of a grand jury matter. Arguing that the public ordinarily has a First Amendment or common law right of access to criminal proceedings, members of the media have sometimes sought to obtain sealed records and orders notwithstanding these provisions, but multiple circuits have rejected such efforts. The prohibition on disclosure of matters occurring before a grand jury is indefinite—in other words, the veil of secrecy is not lifted merely because a grand jury has completed its investigation and either issued an indictment or declined to do so. That said, because some of the "interests" underlying the rule of secrecy are "reduced" once a grand jury's work is completed, the passage of time may be relevant to whether a court will authorize disclosure pursuant to a Rule 6(e) exception in a particular case. Exceptions to Grand Jury Secrecy Federal Rule of Criminal Procedure 6(e)(3) contains a series of "[e]xceptions" to the general rule of grand jury secrecy that permit disclosure of grand jury matters to specified persons or in certain situations. The exceptions fall into two general categories: (1) disclosures that may be made without judicial authorization (though notice must in some cases be provided), and (2) disclosures that may be made only upon order of the court. Certain statutes and Federal Rules of Criminal Procedure beyond Rule 6(e) also permit disclosure of grand jury information in particular circumstances. Disclosures Without Judicial Authorization Disclosure to a Government Attorney Rule 6(e)(3)(A)(i) provides that disclosure of a grand jury matter "other than the grand jury's deliberations or any grand juror's vote" may be made without court authorization to "an attorney for the government for use in performing that attorney's duty." The term "attorney for the government" is defined elsewhere in the Federal Rules of Criminal Procedure as, in relevant part, (1) the Attorney General "or an authorized assistant"; (2) a United States attorney or an authorized assistant; or (3) "any other attorney authorized by law to conduct proceedings under these rules as a prosecutor." Thus, an "attorney for the government" under Rule 6(e)(3)(A)(i) encompasses attorneys within the United States Department of Justice, as well as local or federal agency attorneys that have been appointed to act as federal prosecutors. Attorneys outside the Department of Justice who have not been so appointed, however, are excluded. Concerning the Rule's limitation that disclosure to a government attorney be "for use in performing that attorney's duty," an Advisory Committee note states that attorneys are entitled to disclosure "inasmuch as they may be present in the grand jury room during the presentation of evidence." The Supreme Court accordingly has determined that disclosure under the Rule "is limited to use by those attorneys who conduct the criminal matters to which the materials pertain." Accordingly, "every attorney (including a supervisor) who is working on a [particular] prosecution," but not a related civil matter, "may have access to grand jury materials" underlying that prosecution. And at least one court has taken a more expansive view, reading the Rule as permitting disclosure to "government attorneys conducting other criminal matters to which the materials disclosed are relevant," even if such attorneys are located in a different jurisdiction than the empaneled grand jury. Once an attorney for the government has access to grand jury materials, he may use the materials as needed for the continued investigation and prosecution of the violations of federal criminal law to which they pertain, including in preparation for trial or during the examination of witnesses. Disclosures not connected to such violations of federal criminal law, however, are prohibited. Disclosure to Government Personnel Under Rule 6(e)(3)(A)(ii), disclosure of a grand jury matter, excluding grand jury deliberations and votes, may be made to "any government personnel—including those of a state, state subdivision, Indian tribe, or foreign government—that an attorney for the government considers necessary to assist in performing that attorney's duty to enforce federal criminal law." This provision was added to Rule 6(e) in 1977 to address the need of Justice Department attorneys "for active assistance from outside personnel" in the course of grand jury investigations, including "investigators from the F[ederal Bureau of Investigation], I[nternal Revenue Service], and other law enforcement agencies[,]" without the "time-consuming requirement of prior judicial interposition." The term "government personnel" has been interpreted to extend to non-attorney government employees such as law enforcement agents and subject-matter experts, as well as agency attorneys outside the Department of Justice who, because they have not been authorized to act as federal prosecutors, would not be entitled to disclosure under Rule 6(e)(3)(A)(i). One question that has arisen is the extent to which employees of private entities that are controlled by or connected to the government may be considered "government personnel." The few cases addressing this question have tended to find that purely private entities and contractors are excluded from the Rule, though a "quasi-governmental entity" that has both public and private attributes may not be, "depending on the facts of the situation." As the text of the Rule indicates, government personnel to whom disclosure of information is made may use that information only to assist government attorneys in enforcing federal criminal law. Resultantly, disclosure to government personnel is constrained to an equal degree as disclosure to government attorneys under Rule 6(e)(3)(A)(i), that is, for use in the investigation and prosecution of criminal law violations—but not related civil matters—to which the information pertains. To balance the benefit of disclosure to government personnel as needed against the risk that secrecy will thereby be compromised, Rule 6(e)(3)(B) requires prosecuting attorneys to "promptly" provide the court that impaneled the grand jury with the names of all government personnel to whom a disclosure is made under Rule 6(e)(3)(A)(ii). Though the text of this provision suggests that the names need only be provided after disclosure, the legislative history and an Advisory Committee note "contemplate[] that the names of such personnel will generally be furnished to the court before disclosure is made to them." The attorney who provides the court with the names of government personnel to whom disclosure has been made must also "certify" that he has "advised" those personnel "of their obligation of secrecy" under Rule 6(e). Added in 1985, this requirement stemmed from concern that, particularly with respect to state and local government personnel who "otherwise would likely be unaware of th[e] obligation[,]" disclosure could result in "inadvertent breach[es] of grand jury secrecy" if personnel were not expressly advised to keep the information secret. Disclosure to Another Grand Jury Rule 6(e)(3)(C) permits an attorney for the government to disclose "any grand jury-matter to another federal grand jury" without court authorization. The Advisory Committee note to the Rule's 1983 addition reflects practical reasons for the exception: courts already "permitted such disclosure in some circumstances" despite the absence of a specific provision to that effect, and secrecy would "be protected almost as well by the safeguards at the second grand jury proceeding . . . as by judicial supervision of the disclosure of such materials." In other words, when materials from one grand jury are disclosed to a second grand jury, "secrecy is not thereby compromised, since the second grand jury is equally under Rule 6's requirement of secrecy." Courts have held that the exception allows grand jury materials to be transferred not only to "successor" grand juries within the same judicial district, but to grand juries in other jurisdictions pursuing separate investigations as well. Disclosure of Intelligence and National Security Information Two of the most recent, and unique, exceptions to grand jury secrecy in Rule 6(e) permit disclosure of certain information to specified government officials based on the subject matter of that information. First, as part of the USA PATRIOT Act of 2001, Congress amended Rule 6(e) to allow an attorney for the government to disclose any grand jury matter involving foreign intelligence , counterintelligence , or foreign intelligence information to "any federal law enforcement, intelligence, protective, immigration, national defense, or national security official to assist the official receiving the information in the performance of that official's duties." The terms " foreign intelligence " and " counterintelligence " are respectively defined in a separate statute as information relating to the capabilities, intentions, or activities of foreign governments or elements thereof, foreign organizations, or foreign persons, or international terrorist activities," and "information gathered, and activities conducted, to protect against espionage, other intelligence activities, sabotage, or assassinations conducted by or on behalf of foreign governments or elements thereof, foreign organizations, or foreign persons, or international terrorist activities. The Rule itself defines the term " foreign intelligence informati on " as (a) information, whether or not it concerns a United States person, that relates to the ability of the United States to protect against— • actual or potential attack or other grave hostile acts of a foreign power or its agent; • sabotage or international terrorism by a foreign power or its agent; or • clandestine intelligence activities by an intelligence service or network of a foreign power or by its agent; or (b) information, whether or not it concerns a United States person, with respect to a foreign power or foreign territory that relates to— • the national defense or the security of the United States; or • the conduct of the foreign affairs of the United States. The Intelligence Reform and Terrorism Prevention Act of 2004 added another exception, allowing an attorney for the government to disclose any grand jury matter "involving, within the United States or elsewhere, a threat of attack or other grave hostile acts of a foreign power or its agent, a threat of domestic or international sabotage or terrorism, or clandestine intelligence gathering activities by an intelligence service or network of a foreign power or by its agent" to "any appropriate federal, state, state subdivision, Indian tribal, or foreign government official, for the purpose of preventing or responding to such threat or activities." As commentators have noted, these contemporary exceptions are fairly expansive in that they allow prosecutors to unilaterally disclose grand jury materials to persons not involved in the prosecution of federal crimes based on definitions that could arguably encompass a "broad range of information." In this sense, the exceptions appear to be a significant departure from the traditional practice of strictly limiting dissemination of grand jury materials. In recognition of the potentially expansive application of the new exceptions, the Rule stipulates that any official to whom a disclosure is made "may use the information only as necessary in the conduct of that person's official duties subject to any limitations on the unauthorized disclosure of such information." Additionally, with respect to state, local, Indian tribal, and foreign government officials, Rule 6(e) provides that they may "use the information only in a manner consistent with any guidelines issued by the Attorney General and the Director of National Intelligence." Finally, within a "reasonable time after" any disclosure is made under Rule 6(e)(3)(D), an attorney for the federal government must file a sealed notice with the court indicating that "such information was disclosed" and identifying "the departments, agencies, or entities to which the disclosure was made." Despite the facial breadth of the recently added exceptions, it does not appear that they have yet been subject to substantial judicial scrutiny or interpretation. At least one commentator, however, has anticipated that a constitutional challenge is inevitable, given the degree to which the exceptions impact grand jury secrecy (and thus potentially undermine the Fifth Amendment's grand jury requirement). Disclosures with Judicial Authorization Disclosure Related to a Judicial Proceeding Federal Rule of Criminal Procedure 6(e)(3)(E)(i) permits a court to authorize disclosure of a grand jury matter "preliminarily to or in connection with a judicial proceeding." This exception, which has been part of the Rule since its inception in 1946, is one of the most frequently litigated. An oft-cited definition of the term "judicial proceeding" comes from an early U.S. Court of Appeals for the Second Circuit opinion: "[A]ny proceeding determinable by a court, having for its object the compliance of any person, subject to judicial control, with standards imposed upon his conduct in the public interest, even though such compliance is enforced without the procedure applicable to the punishment of crime." Criminal and civil litigation qualify as judicial proceedings, but so too may quasi-judicial matters such as impeachment proceedings and certain disciplinary hearings. Purely administrative or nonjudicial investigations or hearings, on the other hand, typically do not qualify. One question that has arisen is whether the grand jury investigation itself is a "judicial proceeding" such that a court may permit materials generated by the investigation to be disclosed for use in connection with those proceedings. Answering this question in the affirmative would, for example, allow an expert witness to review grand jury material prior to testifying before the grand jury. Some courts have concluded either that a grand jury investigation is a judicial proceeding for these purposes or that it is "preliminary" to a judicial proceeding—the criminal trial that would follow indictment. Consistent with this approach, said criminal trial generally has been viewed as a judicial proceeding permitting disclosure of materials from the underlying grand jury, though there is authority to the contrary. Conversely, courts have rejected the argument that a proceeding instituted primarily or solely to obtain grand jury materials can itself be considered the "judicial proceeding" needed to justify disclosure, recognizing that such a reading of the exception would be circular and "rule-swallowing." With respect to the "preliminarily to or in connection with" requirement, the Supreme Court has said that the relevant inquiry is the use for which the grand jury information is being requested: "the Rule contemplates only uses related fairly directly to some identifiable litigation, pending or anticipated." Thus, "it is not enough to show that some litigation may emerge from the matter in which the material is to be used, or even that litigation is . . . likely to emerge . . . . If the primary purpose of disclosure is not to assist in preparation or conduct of a judicial proceeding, disclosure . . . is not permitted." What this limitation on the exception means is that a request for grand jury materials pursuant to a preliminary inquiry or investigation does not come within the scope of the exception where the prospect of a judicial proceeding stemming from the investigation is merely speculative. That said, an administrative or other investigative inquiry may be considered "preliminar[y]" to a judicial proceeding if "a clear pathway exists" between that process "and the judicial process and the ultimate judicial role is a very substantial one." Disclosure to Defendant on Showing of Ground to Dismiss Indictment Rule 6(e)(3)(E)(ii) permits a court to order disclosure "at the request of a defendant who shows that a ground may exist to dismiss the indictment because of a matter that occurred before the grand jury." Along with the "judicial proceeding" exception, this exception is the only other mechanism for seeking court authorization to disclose grand jury materials that has been in the Rule since its inception in 1946. There is a strong "presumption of regularity" in grand jury proceedings, and thus a defendant requesting court authorization for disclosure under this exception carries a heavy burden in seeking to make the requisite showing. First, dismissal of an indictment itself is a remedy only for misconduct before the grand jury that "amounts to a violation of one of those 'few, clear rules which were carefully drafted and approved by [the Supreme] Court and by Congress to ensure the integrity of the grand jury's functions'"—such as violations of Rule 6 or certain statutory provisions establishing prosecutorial standards of conduct. For example, indictment dismissal may be warranted where the prosecutor secures the indictment by actively misleading the grand jury about key evidence, but mere failure to present evidence favorable to the defendant will not justify dismissal. Second, to make the requisite showing that one of the above-mentioned grounds exists, the defendant must do more than make "conclusory or speculative allegations of misconduct." Rather, the defendant must identify a factual basis for inferring that misconduct warranting indictment dismissal has occurred. At least one court has described this as an "exceedingly high burden." For this reason, courts rarely grant requests by defendants under Rule 6(e)(3)(E)(ii), as "a defendant often can make the necessary showing only with the aid of the [very] materials he seeks to discover." Defendants have, at times, pointed out this conundrum, but courts have not been particularly sympathetic. Disclosure to a Foreign Court or Prosecutor Under Rule 6(e)(3)(E)(iii), a court "at the request of the government" may authorize disclosure of a grand jury matter "when sought by a foreign court or prosecutor for use in an official criminal investigation." This provision was added to the Rule as part of the Intelligence Reform and Terrorism Prevention Act of 2004, and appears to have been intended to address uncertainty as to whether a foreign criminal investigation could be considered "preliminar[y] to . . . a judicial proceeding" within the meaning of that separate exception. With the 2004 addition, the Rule now expressly recognizes that government attorneys may seek court authorization to disclose materials for use in the course of a foreign criminal investigation, rather than having to separately subpoena the same documents in order to provide them to foreign prosecuting authorities. Disclosure for State, Foreign, or Military Law Enforcement Closely related to the exception for court-authorized disclosures to foreign courts and prosecutors, Rule 6(e)(3)(E)(iv) permits a court, "at the request of the government" and upon a showing by the government that a grand jury matter "may disclose a violation of State, Indian tribal, or foreign criminal law," to order disclosure of a grand jury matter "to an appropriate state, state-subdivision, Indian tribal, or foreign government official for the purpose of enforcing that law." Rule 6(e)(3)(E)(v) extends the same exception to "an appropriate military official" for enforcement of "military criminal law under the Uniform Code of Military Justice." Before these exceptions were adopted in 1985, non-federal law enforcement officials could obtain federal grand jury materials for purposes other than federal law enforcement only with court authorization pursuant to the exception permitting disclosure "preliminarily to or in connection with a judicial proceeding." The judicial proceeding exception proved to be "of limited practical value" in such circumstances, however, given the requirement that there be some "identifiable litigation" to which the disclosure related; where state or other non-federal officials were not already aware of the facts tending to show a violation of the relevant jurisdiction's criminal law, there would likely be no "pending or anticipated" judicial proceeding prior to disclosure that would justify such disclosure under the "judicial proceeding" exception. According to an Advisory Committee note, "[t]his inability lawfully to disclose evidence of a [non-federal] criminal violation—evidence legitimately obtained by the grand jury"—was perceived as "an unreasonable barrier to the effective enforcement" of criminal law across jurisdictions. Thus, pursuant to the exceptions, courts may now permit disclosure to a non-federal official "when an attorney for the government so requests and makes the requisite showing." Department of Justice guidelines require that federal prosecutors request and receive internal authorization to apply for a court order under these exceptions before doing so. With respect to which officials are "appropriate" within the meaning of the Rule, the Department of Justice takes the position that the term "shall be interpreted to mean any official whose official duties include enforcement of the . . . criminal law whose violation is indicated in the matters for which disclosure authorization is sought." The few court decisions construing the term appear to take a similar view. Courts' Inherent Authority to Order Disclosure The Supreme Court has said that where a statute "explicitly enumerates certain exceptions to a general prohibition, additional exceptions are not to be implied, in the absence of evidence of a contrary legislative intent." As discussed above, Rule 6(e) provides that a matter occurring before a grand jury must not be disclosed "[u]nless these rules provide otherwise." Rule 6(e) then explicitly "provide[s] otherwise" by granting authority to courts to order disclosure of grand jury matters in particular, enumerated circumstances. Thus, based solely on Rule 6(e)'s text and general principles of statutory construction, it would seem that courts can authorize disclosure of grand jury matters only if one of the express exceptions in Rule 6(e) applies. Some courts have appeared to agree with this proposition, at least in the abstract. Nevertheless, a number of federal courts have determined that the list of court-authorized exceptions in Rule 6(e) is not exclusive, and that courts have "inherent authority" to permit disclosure of grand jury information and materials in circumstances not expressly provided for in the Rule. Courts in this camp have pointed to various justifications for recognizing such extra-textual judicial authority to breach grand jury secrecy, including that courts have always had supervisory authority over the grand juries that they impanel, which historically included the discretion to determine when grand jury materials should be released; the advent of the Federal Rules of Criminal Procedure did not eliminate a court's supervisory authority as a general matter, meaning that courts may still take certain actions that are consistent with, though not explicitly authorized by, the Rules; Rule 6(e)(2)(B)'s list of persons who are prohibited from disclosing a matter occurring before the grand jury does not include the court itself; Rule 6(e)(3)(E)'s list of circumstances in which a court "may" authorize disclosure does not indicate that those circumstances are exclusive, and the presence of limiting language elsewhere in Rule 6 suggests its absence in (e)(3)(E) was intentional; and the history of the Rules and Advisory Committee notes indicates that Rule 6(e) was meant to be responsive to and reflective of common exceptions that courts developed of their own volition over time. Fearing that an exception to grand jury secrecy not textually constrained could undermine secrecy writ large, courts recognizing their "inherent authority" to release grand jury materials in situations not governed by Rule 6(e) have generally cabined the exercise of such authority to "special" or "exceptional" circumstances. Though a determination that such circumstances exist is "highly discretionary and fact sensitive," factors that courts have considered include the identity of the party seeking disclosure; whether the defendant to the grand jury proceeding or the government opposes the disclosure; why disclosure is being sought in the particular case; what specific information is being sought for disclosure; how long ago the grand jury proceedings took place; the current status of the principals of the grand jury proceedings and that of their families; the extent to which the desired material—either permissibly or impermissibly—has been previously made public; whether witnesses to the grand jury proceedings who might be affected by disclosure are still alive; and the additional need for maintaining secrecy in the particular case in question. The circumstances in which courts have most often ordered disclosure of grand jury materials using their inherent authority have involved matters of significant public or historical interest related to grand jury proceedings that have long since concluded. For instance, one district court in the District of Columbia recently unsealed certain dockets associated with the 1998 investigation into the relationship between former President Clinton and a White House intern, citing the length of time that had elapsed and the substantial public interest in the information. Although the trend appears to be in favor of recognizing a court's extra-textual inherent authority to release grand jury materials, at least in exceptional circumstances, there is some reason to question whether the Supreme Court would agree that this authority exists if faced squarely with the question. Setting aside the text of Rule 6(e) and the general principles discussed above, the Supreme Court in recent years has expressed "reluctan[ce] to invoke the judicial supervisory power as a basis for prescribing modes of grand jury procedure," as the grand jury's status as an independent constitutional fixture "suggest[s] that any power federal courts may have to fashion" such procedures "is a very limited one[.]" These statements have led one treatise to refer to the existence of judicial inherent authority to release grand jury materials beyond the terms of Rule 6(e) as "exceedingly doubtful." Showings Required for Court Authorization to Disclose Grand Jury Matters Although Rule 6(e) enumerates the contexts in which a court is authorized to order disclosure of grand jury matters, courts have had to grapple with determining what standard governs the exercise of a court's discretion to order disclosure in a particular case—that is, the showing a requester must make in order for a court to agree that releasing grand jury material is warranted under one of the exceptions for court-authorized disclosure in Rule 6(e). The Supreme Court has said that "disclosure is appropriate only in those cases where the need for it outweighs the public interest in secrecy," and "the burden of demonstrating this balance" rests on the party seeking disclosure. Put differently, the secrecy of grand jury proceedings "must not be broken except where there is a compelling necessity," and the "instances when that need will outweigh the countervailing policy" of secrecy "must be shown with particularity" by the requester. From these general principles has emerged the standard that Rule 6(e) "require[s] a strong showing of particularized need for grand jury materials before any disclosure will be permitted." The Supreme Court announced the contours of this so-called "particularized need" standard in the context of the "judicial proceeding" exception to Rule 6(e), explaining that "[p]arties seeking grand jury transcripts under Rule 6(e) must show that the material they seek is needed to avoid a possible injustice in another judicial proceeding, that the need for disclosure is greater than the need for continued secrecy, and that their request is structured to cover only material so needed." When the cases describing the "particularized need" standard were decided, the only Rule 6(e) exceptions permitting a court to authorize disclosure of grand jury matters were (1) the "judicial proceeding" exception, and (2) the exception for a defendant upon showing grounds to dismiss the indictment. As the number of Rule 6(e) exceptions permitting court-authorized disclosure has grown over time, however, one question that has arisen is whether and how the Supreme Court's "particularized need" standard applies outside of the "judicial proceeding" context in which it was announced. Courts have typically recognized that the general requirement imposed on a requester to show a need for the grand jury materials at issue extends to any exception authorizing court-ordered disclosure. This requirement, whether given the appellation "particularized need" or not, will obligate a person seeking court authorization for disclosure to show some factual exigency outweighing the interest in secrecy, which will vary depending on the precise exception being invoked. Thus, for example and as discussed above, a defendant seeking an order authorizing disclosure under Rule 6(e)(3)(E)(ii) must be able to present a factual basis for inferring that misconduct that would warrant dismissal of the indictment has occurred, and a government attorney seeking authorization under Rule 6(e)(3)(E)(iv) must show that the grand jury matter for which disclosure is sought may disclose a violation of State, Indian tribal, or foreign criminal law. Likewise, courts addressing whether to authorize release of grand jury materials pursuant to their inherent authority engage in "a nuanced and fact-intensive assessment" of whether the need for the materials is greater than the need to maintain secrecy. Courts considering whether a "particularized need" exists in a given case have emphasized that although the standard is "highly flexible," a showing of "mere relevance, economy, and efficiency will not suffice" to meet it. Thus, the inquiry often focuses on the contemplated use of the materials at issue and whether alternative channels exist to obtain them. In the context of judicial proceedings, the need to impeach or refresh the recollection of a witness is a well-recognized and valid need, so long as the need is "real" and not merely a "bald assertion[.]" Other needs that courts have found valid include (1) to substantiate malicious prosecution allegations based on prosecutorial and witness misconduct; (2) to rehabilitate a witness at trial after he has been impeached on cross-examination; and (3) to avoid stymieing an investigation of official improprieties. On the other hand, the mere desire to discover what evidence the grand jury considered has been held to be insufficient. Consistent with the flexible and fact-dependent nature of the "particularized need" inquiry, the Supreme Court has said that "as the considerations justifying secrecy become less relevant, a party asserting a need for grand jury transcripts will have a lesser burden in showing justification." Thus, factors courts consider in weighing need against the interest in secrecy may include (1) the nature of the materials sought; (2) whether the requester is a government official or a private party; (3) the time that has elapsed between the grand jury proceedings and the request for disclosure; and (4) whether, in the case of witness testimony or documents, the witness objects to disclosure. Disclosures Authorized by Another Statute or Rule Despite the general presumption of grand jury secrecy established by Federal Rule of Criminal Procedure 6(e), other federal statutes and procedural rules sometimes permit (or even mandate) disclosure of grand jury information in particular circumstances. These statutes and rules are explicit in their limited retraction of grand jury secrecy, as they must be, for the Supreme Court has made clear that it "will not infer" that Congress has exercised its power to modify the secrecy requirement unless Congress has "affirmatively express[ed] its intent to do so." First, Rule 6(e) itself explicitly cross-references 18 U.S.C. § 3322, part of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which authorizes government attorneys and personnel who are privy to grand jury information to disclose that information, without a court order, to any other government attorney for use in enforcing the civil penalty provisions of FIRREA or "in connection with any civil forfeiture provision of Federal law." In other words, in the specified circumstances, Section 3322 acts as a statutory exception to the rule that government attorneys and personnel may not disclose grand jury matters for use in separate civil proceedings without a court order. The statute also establishes other specific circumstances in which a court may order disclosure of grand jury matters: during an investigation of a "banking law violation," a court may direct disclosure "to identified personnel of a Federal or State financial institution regulatory agency" for use "in relation to any matter within the jurisdiction of such regulatory agency" or "to assist an attorney for the government to whom matters have been disclosed" under the statute. In addition, Federal Rule of Criminal Procedure 16 requires that a criminal defendant be given access to any grand jury testimony he has given relating to the charged offense. With respect to the grand jury testimony of other witnesses, Federal Rule of Criminal Procedure 26.2 and the Jencks Act require that such testimony be provided to the defendant only after the witness in question has testified on direct examination at trial. Disclosure is limited to grand jury testimony that "relate[s] to the subject matter of the [trial] testimony of the witness." The purpose of these limitations is to balance a defendant's right to confront his accusers using information that may impeach their testimony with the need to protect government files "from unnecessary and vexatious fishing expeditions by defendants." Disclosure Mechanics and Review Federal Rules of Criminal Procedure 6(e)(3)(F) and (G) address the procedures for seeking court-authorized disclosure of grand jury materials for use in connection with another judicial proceeding. A party seeking disclosure must file a petition in the district "where the grand jury convened." If the petition is filed by "the government," the court may—but is not required to—hear the matter ex parte . Otherwise, the petitioner must provide notice of the petition to (1) an attorney for the government, (2) the parties to the judicial proceeding for which disclosure of the grand jury materials is sought, and (3) "any other person whom the court may designate." The court must "afford a reasonable opportunity" to these persons "to appear and be heard." Challenges arise when the judicial proceeding for which grand jury materials are sought is pending in a different judicial district than the district where the grand jury convened, as the latter court may be ill-suited to decide the disclosure question. The Supreme Court addressed this situation in Douglas Oil Co. v. Petrol Stops Northwest , and the Court's conclusions have essentially been adopted in Rule 6(e)(3)(G). The Rule provides that unless the court in which the petition is filed—that is, the court in the district where the grand jury convened—"can reasonably determine whether disclosure is proper," it must transfer the matter to the district where the separate judicial proceeding is pending for determination. This provision reflects "a preference for having the disclosure issue decided by the grand jury court," while recognizing that that court may be unable to reach a decision because it "will have no first-hand knowledge of the litigation in which the transcripts allegedly are needed, and no practical means by which such knowledge can be obtained." To facilitate resolution by the transferee court, the grand jury court must transmit to the transferee court "the material sought to be disclosed, if feasible, and a written evaluation of the need for continued grand jury secrecy." The first requirement "facilitate[s] timely disclosure if it is thereafter ordered" and assists the transferee court "in deciding how great the need for disclosure actually is." The Rule does not require transmittal of the grand jury material if it is impracticable to do so, as, for example if the material is "exceedingly voluminous." The requirement of a written evaluation of the need for continuing secrecy recognizes that the grand jury court "is in the best position to assess the interest in continued grand jury secrecy in the particular instance," and it is thus "important that the court which will now have to balance that interest against the need for disclosure receive the benefit of the [grand jury] court's assessment." Upon transfer, the same persons specified in Rule 6(e)(3)(F) must be given a reasonable opportunity to appear and be heard. The transferee court then makes the ultimate decision whether to disclose "based on its own determination of the need for disclosure and the transferring court's evaluation of the competing need for continued secrecy." Generally, a court's order regarding disclosure under Rule 6(e) is immediately appealable. Because the determination of whether "particularized need" exists to justify disclosure in a given case is highly fact-specific and discretionary, an appellate court's review will be under the deferential "abuse of discretion" standard. Establishing and Remedying Violations of Grand Jury Secrecy A knowing violation of Rule 6, including the obligation of secrecy, "may be punished as a contempt of court." Though not explicit in the Rule, courts have held that both criminal and civil contempt may be imposed, meaning that the remedy may include imprisonment, monetary sanctions, or equitable relief. In limited circumstances, an indictment may also be dismissed or evidence suppressed. For example, where the government unilaterally disclosed a defendant's grand jury testimony in a separate civil forfeiture proceeding to establish probable cause for seizure of the defendant's car, one court suggested that suppression of the testimony could be necessary to "protect the integrity of the grand jury system." Courts disagree on whether the contempt provision of Rule 6 establishes a private right of action based on an alleged violation of grand jury secrecy. A party seeking one of the remedies noted above will be required to establish a prima facie case that a violation of grand jury secrecy has occurred. This showing will ordinarily require some basis to infer that the source of any leaked grand jury information was one prohibited under Rule 6(e), and the court may consider evidence submitted to rebut the allegation of wrongdoing. If a prima facie case is established, the court will hold an evidentiary hearing in which the alleged source of the unauthorized disclosure (typically the government) will bear the burden of "attempt[ing] to explain its actions." For instance, the movants in one case made a prima facie showing that an independent counsel breached grand jury secrecy by submitting to the court "various news articles indicating that information relating to grand jury proceedings or witnesses was obtained from sources associated with the" independent counsel's office. The court thus recognized that the independent counsel would be called upon to attempt to rebut the inferences drawn from the news articles by submitting evidence (potentially including affidavits, documents, or live testimony) to show either that the information disclosed to the media did not constitute "matters occurring before the grand jury" or that the source of the information was not the government. An order denying a defendant's motion to dismiss the indictment based on a violation of Rule 6(e) is not immediately appealable, and any error may be considered harmless if the defendant is subsequently convicted. Grand Jury Secrecy and Congressional Oversight As the discussion of grand jury secrecy and Federal Rule of Criminal Procedure 6(e) above reflects, no exception to the general rule of secrecy explicitly authorizes disclosure of grand jury matters to Congress, either by agreement or pursuant to a congressional subpoena. Nevertheless, a few courts have addressed the applicability of Rule 6(e) and its exceptions to congressional requests for information, including in the course of committee investigations and preliminary to impeachment proceedings. At a minimum, these decisions indicate that Congress may be able to obtain grand jury materials by invoking a Rule 6(e) exception before a court under certain circumstances. Congress has also previously considered legislation that would have expressly permitted a court to authorize disclosure of grand jury matters to congressional committees, though the congressional-access provision ultimately did not become law. This section of the report addresses the circumstances in which Congress may obtain and disseminate grand jury materials under Rule 6(e) as it is presently construed; it then addresses legal issues to consider if Congress seeks to create a new Rule 6(e) exception for congressional committees. Congressional Investigative Authority Congress generally has broad authority to obtain information for oversight and investigative purposes. The power of Congress to conduct investigations is "inherent in the legislative process," and such power is "as penetrating and far-reaching as the potential power to enact and appropriate under the Constitution." As a corollary, the "[i]ssuance of subpoenas . . . has long been held to be a legitimate use by Congress of its power to investigate." Beyond subpoenas, Congress has exercised its power of inquiry through less formal means, such as by submitting letter requests for information. Congressional inquiries are broadly protected from judicial scrutiny. Provided that a committee's investigation is authorized and conducted pursuant to a valid legislative purpose, the Speech or Debate Clause of Article I of the Constitution creates "an absolute bar to [judicial] interference." Application of Grand Jury Secrecy to Congressional Disclosures Pursuant to its broad authority to investigate, Congress has on several occasions sought grand jury information based on legislative interest in particular executive branch activities, either through letters or subpoenas to executive branch officials or through petitions filed with the court. Faced with these legislative efforts to obtain otherwise-secret grand jury materials, courts have reached conflicting conclusions as to whether the rule of grand jury secrecy enshrined in Rule 6(e) applies to disclosures to Congress at all. Relying on an apparently novel conception of the "authority of Congress under the Speech or Debate Clause," two courts have held that Congress has a "constitutionally independent legal right" to obtain documents in furtherance of "legitimate legislative activity" regardless of whether the documents disclose matters occurring before a grand jury. First, in In re Grand Jury Investigation of Ven-Fuel , the chairman of the Subcommittee on Oversight and Investigations of the House of Representatives' Committee on Interstate and Foreign Commerce petitioned a district court for an order authorizing disclosure of documents presented to a federal grand jury in Florida in the course of its investigation of possible criminal conduct by a company called Ven-Fuel, Inc. The court recognized that the subcommittee's request implicated "the powers and operations of the coequal, but interdependent, branches of the federal government . . . over theoretical fault lines," but concluded there was no "direct conflict" because the subcommittee's legitimate legislative purpose in seeking the documents meant that it was "entitled to disclosure" regardless of grand jury secrecy rules. Ten years after the decision in Ven-Fuel , the issue of congressional access to grand jury materials came before a different court in connection with the potential impeachment of a federal judge. The judge had been indicted for conspiring to solicit a bribe to influence a judicial decision, causing the House of Representatives to introduce a resolution calling for his impeachment. The resolution was referred to the House Committee on the Judiciary, which subsequently requested that the district court deliver all records of the grand jury that had indicted the judge. The judge objected, but the district court concluded that the committee was entitled to the records for several reasons, one of which was that, in accordance with Ven-Fuel , a "congressional investigation relating to the impeachment of a federal judge" falls within the authorized legislative activities "embraced" by the Speech or Debate Clause. Criticizing the decision in Ven-Fuel , other courts have sharply disagreed with the conclusion that the Speech or Debate Clause provides a basis to ignore grand jury secrecy when Congress is the requester. In In re Grand Jury Investigation of Uranium Industry , for instance, the Senate Judiciary Committee petitioned a court for an order authorizing disclosure of documents in the possession of the Department of Justice related to its investigation of the uranium industry. The committee's interest in the documents apparently stemmed from the fact that an expansive grand jury investigation conducted by the department's Antitrust Division had yielded no indictments. In seeking court-ordered disclosure of the grand jury materials, the committee asserted, among other things, that it was not required to establish the applicability of a Rule 6(e) exception or make a showing of particularized need because the Speech or Debate Clause entitled it to the materials. The court, however, considered "the suggestion that Rule 6(e) does not apply to disclosures to Congress" to be "[un]acceptable." The court noted that Rule 6(e) "contains no reservations in favor of Congress" and rejected the Ven-Fuel court's suggestion that the Speech or Debate Clause may be "used as a sword to enable Congress to penetrate an otherwise secret function of one of the other branches." While, in the court's view, the Clause would protect Congress from collateral interference if it were attempting to "acquire materials which it has a legal right to obtain," the Clause would not sanction expansion of Congress's legal rights "to manufacture a new right to obtain grand jury materials" that could be affirmatively employed. As the court in Uranium Industry recognized, the Ven-Fuel decision's reliance on the Speech or Debate Clause as a font of constitutional authority permitting congressional access to grand jury materials finds little support in the broader case law on the Clause. Though the Clause functions to protect congressional activity, including lawful use of the subpoena power, from judicial interference when such activity is challenged by a third party, courts have not viewed the Clause to constitute a sword that Congress may use to affirmatively seek judicial authorization for disclosure of information in the possession of a coordinate branch. That said, the extent to which the rule of grand jury secrecy applies more generally along the "theoretical fault line[]" that exists between executive branch activity and Congress's Article I investigative authority remains unsettled. It is worth noting in this regard that although Congress's power to obtain information for legitimate legislative purposes is broad, it is not limitless. Though no federal appellate courts have spoken directly to the issue, decisions addressing the now-lapsed independent counsel statute appear to lend some support to the position that Congress enjoys no special constitutional solicitude in obtaining otherwise-secret grand jury materials. That statute required a duly appointed independent counsel to file a pre-termination "final report" with the court "setting forth fully and completely a description of the work of the independent counsel," and the statute permitted the court to release "to the Congress, the public, or any appropriate person, such portions of [the] report . . . as the division of the court considers appropriate." In several decisions considering whether to authorize such release of independent counsel reports to Congress and the public, the D.C. Circuit has recognized that Rule 6(e) applies to an independent counsel, meaning that "any release of grand jury material" in the final report authorized by statute "falls within the protective provisions" of the Rule unless an exception applies. Nevertheless, the court has read a provision of the independent counsel statute permitting a court to authorize disclosure of the report as establishing a "judicial proceeding" such that release of the report may fall within that exception to Rule 6(e). Pursuant to the exception, the court has proceeded to consider multiple factors in deciding whether to authorize the report's release. In other words, rather than finding an independent constitutional entitlement to grand jury material when faced with the question of whether to authorize the release to Congress of a report containing such material, the D.C. Circuit has simply applied Rule 6(e). It could be argued, however, that because these cases did not involve a congressional subpoena, the court was not faced with a direct exercise of Congress's constitutional power of inquiry. The Department of Justice, for its part, agrees that it may release grand jury material to Congress in response to a subpoena only to the extent that disclosure is permitted under Rule 6(e). It takes the opposite position from the Ven-Fuel court with respect to separation-of-powers implications when Congress requests grand jury material: in the department's view, recognizing a congressional "independent right of access" to grand jury material would amount to "legislative encroachment into the Executive's exclusive authority to enforce the law." Requests for Materials Not Constituting Grand Jury Matters Assuming that Rule 6(e) does apply to congressional requests, it is clear that Congress may nevertheless obtain materials that do not constitute "matters occurring before the grand jury" within the meaning of the Rule. Rule 6(e) protects from disclosure only those materials that "tend to reveal some secret aspect of the grand jury's investigation." Thus, where a congressional committee has an interest in the subject matter of an ongoing grand jury investigation, the committee may be able to obtain most, if not all, of the same evidence the grand jury is considering from other sources. For instance, although the court in Ven-Fuel viewed Congress as constitutionally entitled to disclosure of documents that had been presented to a grand jury, the court also determined that the documents were not necessarily cloaked in secrecy under Rule 6(e) in the first instance. And while not all courts may take such a narrow view of grand jury "matters," the principle that "[t]here is no per se rule against disclosure of any and all information which has reached the grand jury chambers" is a well-recognized one. Applicability of Rule 6(e) Exceptions to Congress Although no exception to grand jury secrecy explicitly encompasses disclosures to Congress, a few of the exceptions could apply to Congress in particular situations, which are discussed below in turn. Disclosures to Congress Without Judicial Authorization Members of Congress as Government Personnel As discussed, Rule 6(e) permits disclosure of grand jury matters, excluding grand jury deliberations and votes, to "any government personnel—including those of a state, state subdivision, Indian tribe, or foreign government—that an attorney for the government considers necessary to assist in performing that attorney's duty to enforce federal criminal law." The term "government personnel" is not defined in the Rule, and the provision's legislative history reflects a concern with information-sharing between federal prosecutors and federal law enforcement officers or agency subject-matter experts who were needed to understand certain issues in complex cases. That said, during the hearings on the proposed amendments that added the exception, there was some testimony indicating that the breadth of the term "government personnel" could mean that "even Members of Congress or the military" would be included. It is thus possible that a Member of Congress, or congressional staff, could be considered "government personnel" to whom disclosure could be made without a court order under this exception. Any such disclosure, however, would be exceedingly circumscribed in light of the exception's other requirements. First, disclosure would be at the discretion of the attorney for the government, and would be limited to a situation in which the attorney believed that the Member or staff was needed to assist the attorney in enforcing federal criminal law. Second, the Member or staff to whom disclosure was made could use the grand jury information only for the same purpose, that is, to assist the attorney in prosecuting the federal crimes to which the information related. Third, the Member or staff would be obligated to maintain the secrecy of the information and could further disclose it only in accordance with Rule 6(e). As such, even assuming Members of Congress or congressional staff fall within the meaning of "government personnel," the exception would not permit Congress to seek grand jury materials for broader independent investigative or legislative purposes. Congressional Access to Intelligence and National Security Information Rule 6(e)(3)(D) permits an attorney for the government to disclose, among other things, any grand jury matter involving threats of attack or intelligence gathering by foreign powers or threats of sabotage or terrorism to "any appropriate federal . . . government official" (among others). Similar to the exception for "government personnel," the Rule does not define the term "appropriate . . . government official." Nonetheless, other statutory provisions suggest that the term "government official" could be construed to include a Member of Congress. As with the "government personnel" exception, however, disclosure under this exception would be limited: only grand jury information pertaining to the specified subject matter would be available, at the discretion of the attorney for the government, and the Member receiving the information could use it "only as necessary in the conduct of [her] official duties subject to any limitations on the unauthorized disclosure of such information." Disclosures to Congress with Judicial Authorization Congressional Activities as "Judicial Proceedings" Rule 6(e)'s "judicial proceeding" exception may also be relevant to Congress. As previously described, the Rule provides that a court may authorize disclosure of a grand jury matter "preliminarily to or in connection with a judicial proceeding," with the term "judicial proceeding" generally contemplating some necessary resort to the judicial system. Two courts have determined that a congressional committee's request for grand jury materials pursuant to its ordinary investigative and oversight functions does not qualify under this exception, as the possibility that "the actions it is investigating may wind up in the courts if wrongdoing is uncovered" is "too remote to trigger the Rule 6(e) exception." By contrast, where a congressional committee has sought grand jury materials in connection with the contemplated impeachment of a specific public official, several courts have recognized that court-ordered disclosure may be available pursuant to the "judicial proceeding" exception. Under this view, though "impeachment proceedings before Congress . . . are not by a 'court,'" a "contemplated trial" in the Senate is still "very much a judicial proceeding." A committee seeking court-authorized disclosure on the basis of this exception must establish a "particularized need" for the materials at issue, which requires a showing that the need outweighs the public interest in secrecy. In the context of impeachment, courts have concluded that a congressional committee's need is sufficient to warrant disclosure, at least where the grand jury's work has concluded. Nevertheless, given that mere "relevance" or "efficiency" is generally insufficient to establish a particularized need for grand jury materials, the context of the request and the materials at issue could influence whether a committee can show such a need. "Inherent Authority" to Release Grand Jury Materials to Congress As discussed, some federal courts have recognized that courts have "inherent authority" to order the release of grand jury information in "special" or "exceptional" circumstances, regardless of whether an explicit Rule 6(e) exception would otherwise apply. One lower court has relied on this inherent authority over grand jury matters, among other things, to authorize the release to the House Judiciary Committee of a report prepared by the grand jury investigating the alleged—and potentially impeachable—improprieties of President Nixon. The D.C. Circuit essentially affirmed that decision, expressing "general agreement" with the lower court decision. Another court has also relied on its inherent authority to order the release of the records of a grand jury that had indicted a federal judge to an investigating committee of the judiciary, relying on the "exceptional circumstance[]" that the "question under investigation"—whether a federal judge should be recommended for impeachment or otherwise disciplined—was "of great societal importance." Recognizing that the investigating committee still was required to show a sufficient need for the grand jury materials, the court concluded such a showing had been made (and was not outweighed by the interest in secrecy) because (1) the investigating committee was composed of federal judges who were acting pursuant to express statutory authority; (2) the grand jury investigation and trial of the judge had already concluded; and (3) only by "examining all of the record" could the committee "determine the true state of the evidence for or against the charge." Assuming a court adopts the inherent authority view of Rule 6(e) based on the above decisions, it is possible that a court would be willing to authorize the disclosure of grand jury materials to a congressional committee pursuant to the court's inherent authority. Precedential support for disclosure is strongest in the context of an impeachment inquiry (assuming the court did not view such an inquiry as being "preliminar[y] to . . . a judicial proceeding"). It is less certain that an "inherent authority" disclosure order would be available to a congressional petitioner when not tied to a contemplated impeachment proceeding. In an appropriately "exceptional" situation, a court could be amenable to exercising its inherent authority to order the release of grand jury information in the face of a pressing congressional request. The outcome would depend in large part on whether Congress could establish a sufficiently weighty need for the materials, which would implicate a variety of circumstantial factors. Limitations on Further Disclosure by Congress Once grand jury materials find their way into the possession of a Member or committee of Congress, the question arises as to what limits exist on further dissemination of those materials. As previously discussed, Federal Rule of Criminal Procedure 6(e) imposes an obligation of secrecy only on specified persons, of which Congress (or, more generally, a recipient of grand jury information pursuant to the "judicial proceeding" or "inherent authority" exceptions) is not one. That said, Rule 6(e) does explicitly make court-authorized disclosures "subject to any . . . conditions that [the court] directs." It is thus conceivable that in ordering the release of grand jury information, a court could impose a requirement that the information not be further distributed. However, such a requirement would be in tension with the Constitution's Speech or Debate Clause in the case of Congress, at least where further dissemination occurs in the course of legitimate legislative activity, as the Clause prevents a court from blocking disclosure of information in Congress's possession in such a circumstance. In any event, courts will "presume that the committees of Congress will exercise their powers responsibly and with due regard for the rights of affected parties," though a court may consider the extent to which Congress has taken specific precautions to protect against further dissemination of grand jury materials in deciding whether disclosure is appropriate. Legal Considerations for Congress Past Congresses, faced with potential limitations on the ability to obtain grand jury materials, have considered legislation that would amend Federal Rule of Criminal Procedure 6(e) to, among other things, permit a court to authorize disclosure of grand jury matters "upon a showing of substantial need" to "any committee of Congress . . . for use in relation to any matter within the jurisdiction of such . . . congressional committee." A bill to this effect was introduced during the 99th Congress, prompting the Department of Justice's Office of Legal Counsel to issue a memorandum opinion "strongly oppos[ing] any provision that would permit Congress independently to petition the courts for Rule 6(e) material." In the Office's view, such a provision would "codify legislative encroachment into the Executive's exclusive authority to enforce the law." In other words, the Office took the position that creating a mechanism for Congress to obtain grand jury materials from the court, without any opportunity for interposition by the executive branch, would be inconsistent with the Constitution's separation of powers and would invite "legislative pressures" that would interfere with prosecutorial discretion and due process of law. The Senate Judiciary Committee held a hearing on the legislation and a similar bill as to their impacts on Rule 6(e) and grand jury disclosure practices, during which the bill's sponsor, Senator Charles Grassley, expressed concern that Rule 6(e) had been "utilized by the Justice Department as a shield against legitimate congressional inquiry." The Senator pointed out that the bill did not provide "automatic congressional access to grand jury information," but rather allowed "congressional committees[,] in performance of their constitutional duty to oversee the executive agencies, an opportunity to demonstrate to the court a 'substantial need' for access[.]" An Associate Deputy Attorney General reiterated in testimony the Department of Justice's position that the provision for congressional access "would raise substantial constitutional concerns in terms of separation of powers as to where the enforcement authority lies; due process issues in terms of fairness and the application of decisionmaking with respect to criminal prosecutions; as well as the issue of opening the door for raising concerns about potential political influence or persuasion upon criminal prosecutions." He did point out, however, that the department had "accommodate[d] requests from particular congressional committees for investigative materials on an ad hoc basis by appropriate application to the courts, and subject to necessary protective conditions," which it would continue to do. In separate testimony, representatives of the American Bar Association and the National Association of Criminal Defense Lawyers argued that the provision under consideration could violate the separation-of-powers doctrine and undermine the "fundamental tradition of grand jury secrecy" by "subvert[ing] the purpose of the grand jury" to legislative ends. An attorney with expertise on the subject of congressional access to information also testified at the hearing and expressed the view that a bill permitting a court to provide grand jury materials to a congressional committee "with legitimate oversight functions would not violate separation-of-powers principles." However, he believed that Congress should have access to grand jury materials only "in very limited circumstances" and suggested that an amendment to Rule 6(e) "should instruct a Federal court to weigh congressional needs against grand jury secrecy requirements in determining whether to grant access." In the attorney's view, this weighing would include consideration of whether the committee could acquire sufficient information from non-grand-jury sources, whether the grand jury proceedings for which information was sought had terminated or were ongoing, and whether the committee had "in place special provisions to protect the confidentiality of grand jury material." The attorney did not view the provision under consideration, as written, to be adequate in light of the considerations he identified. Ultimately, the bill was reported out of committee with the changes to Rule 6(e), including the congressional-access provision, excised, and it does not appear that the legislation was further pursued. Consequently, ambiguity remains regarding the relationship between grand jury secrecy and congressional access to grand jury materials. As the debate in the 99th Congress reflects, any change to the Rule could raise potentially difficult constitutional, interpretive, and policy questions. In any event, should Congress desire to create further exceptions to the secrecy framework beyond Rule 6(e), the Supreme Court has instructed that it must "affirmatively express its intent to do so."

The Fifth Amendment to the U.S. Constitution states that "[n]o person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury." This provision requires that a federal prosecutor, in order to charge a suspect with a serious federal crime, secure the assent of an independent investigative and deliberative body comprising citizens drawn from the jurisdiction in which the crime would be tried. Federal grand juries serve two primary functions: (1) they aid federal prosecutors in investigating possible crimes by issuing subpoenas for documents, physical evidence, and witness testimony; and (2) they determine whether there is sufficient evidence to charge a criminal suspect with the crime or crimes under investigation. Traditionally, the grand jury has conducted its work in secret. Secrecy prevents those under scrutiny from fleeing or importuning the grand jurors, encourages full disclosure by witnesses, and protects the innocent from unwarranted prosecution, among other things. The long-established rule of grand jury secrecy is enshrined in Federal Rule of Criminal Procedure 6(e), which provides that government attorneys and the jurors themselves, among others, "must not disclose a matter occurring before the grand jury." Accordingly, as a general matter, persons and entities external to the grand jury process are precluded from obtaining transcripts of grand jury testimony or other documents or information that would reveal what took place in the proceedings, even if the grand jury has concluded its work and even if the information is sought pursuant to otherwise-valid legal processes. At times, the rule of grand jury secrecy has come into tension with Congress's power of inquiry when an arm of the legislative branch has sought protected materials pursuant to its oversight function. For instance, some courts have determined that the information barrier established in Rule 6(e) extends to congressional inquiries, observing that the Rule contains no reservations for congressional access to grand jury materials that would otherwise remain secret. Nevertheless, the rule of grand jury secrecy is subject to a number of exceptions, both codified and judicially crafted, that permit grand jury information to be disclosed in certain circumstances (usually only with prior judicial authorization). Perhaps the most significant of these for congressional purposes are (1) the exception that allows a court to authorize disclosure of grand jury matters "preliminarily to or in connection with a judicial proceeding," and (2) the exception, recognized by a few courts, that allows a court to authorize disclosure of grand jury matters in special or exceptional circumstances. In turn, some courts have determined that one or both of these exceptions applies to congressional requests for grand jury materials in the context of impeachment proceedings, though there is authority to the contrary. Additionally, because Rule 6(e) covers only "matters occurring before the grand jury," courts have recognized that documents and information are not independently insulated from disclosure merely because they happen to have been presented to, or considered by, a grand jury. As such, even if Rule 6(e) generally limits congressional access to grand jury information, Congress has a number of tools at its disposal to seek materials connected to a grand jury investigation. Prior Congresses have considered legislation that would have expressly permitted a court to authorize disclosure of grand jury matters to congressional committees on a showing of substantial need. However, in response to such proposals, the executive branch has voiced concerns that the legislation would raise due-process and separation-of-powers issues and potentially undermine the proper functioning of federal grand juries. These concerns may have resulted in Congress declining to alter Rule 6(e). As a result, to the extent Rule 6(e) constrains Congress's ability to conduct oversight, legislation seeking to amend the rules governing grand jury secrecy in a way that would give Congress independent access to grand jury materials may raise additional legal and pragmatic issues for the legislative branch to consider.

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Introduction The Department of the Interior (DOI) is a federal executive department responsible for the conservation and use of roughly three-quarters of U.S. public lands. DOI defines its mission as to protect and manage the nation's natural resources and cultural heritage for the benefit of the American people; to provide scientific and scholarly information about those resources and natural hazards; and to exercise the country's trust responsibilities and special commitments to American Indians, Alaska Natives, and island territories under U.S. administration. Initially conceived as a "home department" in 1849 to oversee a broad array of internal affairs, DOI has evolved to become the nation's principal land management agency, charged with administering the use of more than 480 million acres of public lands, 700 million acres of subsurface minerals, and 1.7 billion acres of the outer continental shelf (OCS). As is the case for many federal departments, DOI's organizational structure and functions are under continual congressional examination as part of Congress's lawmaking and oversight functions. Similarly, DOI's executive branch structure and operations are also the subject of administrative scrutiny. Over the course of the department's roughly 170-year history, DOI has evolved in response to the needs of the nation and at the behest of Congress and the President (see Figure 1 for a timeline of selected events that influenced the current structure of the department). Some of these changes have been relatively broad in nature, such as the creation of a new agency or regulatory body. Other shifts have been smaller in scope, such as modifications to interagency processes or reorganizations in how resources or responsibilities are distributed among offices or programs. DOI reorganization proposals put forth by the Trump Administration have renewed attention to the structural relationship between the department's various bureaus and their regulatory responsibilities. In March 2017, President Trump signed an executive order calling on agency leaders to, "if appropriate," submit a proposed reorganization plan for their agencies to the director of the Office of Management and Budget within 180 days. In September 2017, then-Secretary of the Interior Ryan Zinke issued a reorganization proposal for DOI in response to this order. In June 2018, President Trump issued a more expansive government-wide reorganization proposal, which included further recommendations and proposals affecting the structure of DOI. In addition to these broader proposals, smaller interagency administrative changes either took effect in FY2019 or are proposed for FY2019 implementation, including the transfer and consolidation of several department offices and programs. This report is a primer to understanding the organizational framework under which DOI operates, while providing context for how ongoing and proposed reorganizations might affect these operations. The report provides a timeline of congressional and executive actions that have shaped the structure and function of DOI since its establishment. It also offers a brief summary of DOI's history, mission, and current structure, as well as an overview of the primary functions of its multiple bureaus and offices as of December 2018. Employment figures and corresponding maps illustrate the varying regional office structures among DOI bureaus, as they exist currently. In addition, the report includes an overview of the annual funding and appropriations process for the department. Although the report provides a broad summary of the proposed reorganization efforts under way or in effect as of December 2018, it does not offer a detailed analysis of these plans or their potential impact on DOI's structure and function. A list of CRS experts for the issue areas covered by DOI and its bureaus is at the end of the report. In general, this report contains the most recently available data and estimates as of December 2018. Establishment of the Department: A Brief History Prior to the establishment of DOI in 1849, Congress apportioned domestic affairs in the United States across the three original executive departments: Department of State, Department of War (now Department of Defense), and Department of the Treasury. The Department of State housed the nation's Patent Office, and the Department of War housed the Office of Indian Affairs and the Pension Office, which at the time administered pensions solely for military personnel. Meanwhile, the General Land Office (GLO), which oversaw and disposed of the public domain, was placed by Congress within the Department of the Treasury because of the revenue generated by the GLO from land sales. By the 1840s, the growing federal estate acquired through the Louisiana Purchase, the Mexican-American War, and the newly negotiated Oregon Territory placed an increasing burden on the departments and their leadership. In 1848, then-Secretary of the Treasury Robert J. Walker submitted to Congress a proposal that would bring together GLO, the Office of Indian Affairs, and several other disparate offices and functions under a single, separate executive department. Congress officially established the Department of the Interior on March 3, 1849. In addition to absorbing the functions of the Patent Office, the Office of Indian Affairs, Pension Office, and GLO, the newly established DOI assumed responsibility for a wide range of other domestic matters. As part of DOI's organic legislation, Congress conferred on the Secretary of the Interior the "supervisory and appellate powers" held by the President over the commissioner of Public Buildings, as well as oversight responsibility for both the U.S. Census and the Penitentiary of the District of Columbia. Over time, Congress further expanded the department's functions to include the construction of the national capital's water system, the colonization of freed slaves in Haiti, water pollution control, and the regulation of interstate commerce. Most of these early activities eventually were transferred from DOI's charge as Congress began to authorize and create new executive departments and independent agencies to handle this growing list of responsibilities. Now, DOI has evolved to focus primarily on protecting and managing natural resources, conducting scientific research, and exercising the nation's trust responsibilities to American Indians, Alaska Natives, and affiliated island communities. DOI Today: Leadership, Structure, and Functions Overview DOI is a Cabinet-level department that employs approximately 65,000 full-time employees across nine technical bureaus and various administrative and programmatic offices. In addition to its headquarters in Washington, DC, DOI has staff in roughly 2,400 locations across the United States, including both regional offices and field centers. Each of DOI's technical bureaus and programmatic offices has a unique mission and set of responsibilities, as well as a distinct organizational structure that serves to meet its functional duties. Figure 2 shows the DOI organization chart as of December 2018. Leadership The leadership team and senior executives of DOI provide oversight and guidance for the department's various offices, bureaus, and field locations. The department is administered and overseen by the Secretary of the Interior (referred to in this report as the Secretary ) and a Deputy Secretary, who serves in a leadership capacity under the Secretary. The President appoints both positions, and the U.S. Senate confirms them (see text box for a full list of DOI appointees requiring Senate confirmation). Serving under the Secretary and Deputy Secretary are six Assistant Secretaries, who oversee DOI's nine technical bureaus and different administrative and programmatic offices (see Figure 2 for these position titles and responsibilities). In addition to the Secretary, the Deputy Secretary, and the six Assistant Secretaries, DOI has a number of other congressionally mandated leadership positions. Like other Cabinet-level agencies, DOI has an inspector general, who administers the office responsible for providing oversight to DOI's programs, operations, and management. The DOI solicitor heads the Office of the Solicitor, which provides legal counsel, advice, and representation for the department. In 1994, Congress established the position of special trustee for Indian Affairs to manage DOI's fiduciary responsibilities to American Indians. Since its establishment, the Office of the Special Trustee (OST) has operated independently from the Bureau of Indian Affairs (BIA), which held these responsibilities prior to 1994. Finally, the chairperson of the National Indian Gaming Commission oversees an independent regulatory body within DOI responsible for administering and promoting economic development through gaming on Indian lands. Similar to the Special Trustee, the chairperson of the commission operates in an independent capacity separate from the Assistant Secretary of Indian Affairs. Technical Bureaus: History, Missions, and Current Structures Nine technical bureaus comprising more than 90% of the DOI workforce are responsible for implementing the department's mission and responsibilities. The names, structures, and duties of these bureaus have evolved over time in accordance with both administrative actions and shifts in the authorities provided to them by Congress. Below is a brief overview of each bureau, the historical context within which it was created, its organizational structure, and its current mission and responsibilities. Bureaus appear below in alphabetical order. An "At a Glance" box provides a snapshot of key information and data for each respective bureau. The "Established" date reflects the year in which a bureau was created. The "Key Statute" listed may represent the initial legislative authorization for a bureau to carry out its regulatory duties, or it may reference an agency's organic act, which articulates it mission and/or responsibilities. This information does not reflect the full list of governing statutes for DOI bureaus, as each bureau is subject to numerous laws. The number of employees listed for each bureau reflects the average for the four reporting periods from September 2017 to June 2018, with employment figures rounded to the nearest hundred, as reported to OPM. These annual averages differ from the figures included in the narrative sections of each agency, which reflect June 2018 figures, the most recently reported by OPM's Fedscope database as of the publication of this report. DOI employee data are discussed in more detail in the section "DOI Employment." Bureau of Indian Affairs (BIA) Established in 1824, the Bureau of Indian Affairs (BIA) is the oldest bureau within DOI, predating the department by 25 years. Then-Secretary of War John C. Calhoun established the Office of Indian Affairs to help centralize what was at the time a fractured administrative approach to Indian policy and relations in the United States. It was not until 1832 that Congress officially recognized the Office of Indian Affairs as a bureau of the War Department by appointing a commissioner to oversee the agency. The Office of Indian Affairs was transferred to DOI in 1849, when the department was created. DOI formally adopted the name Bureau of Indian Affairs in 1947. BIA provides services to federally recognized American Indian and Alaska Native tribes and their nearly 1.9 million members. These services include disaster relief, child welfare, and road construction, as well as the operation and funding of law enforcement, tribal courts, and detention facilities within native villages and reservations. The bureau also is responsible for protecting and administering assets on tribal lands, including the management of 55 million surface acres and 57 million acres of subsurface mineral estates held in trust by the United States. The BIA was also previously responsible for providing elementary and secondary education and educational assistance to Indian children through BIA's Office of Indian Education Programs. In 2006, however, the Secretary of the Interior separated the BIA education programs from the rest of the BIA and placed them in a new Bureau of Indian Education (BIE) under the Assistant Secretary—Indian Affairs. As of FY2018, the BIE education system served approximately 47,000 students through 169 elementary/secondary schools and 14 dormitories located in 23 states. For the purposes of this report, BIE is not considered a technical bureau of DOI. However, BIE employment figures are included in BIA totals listed above and in the " DOI Employment Levels " section. The BIA is administered by a director who oversees the agency's functions and reports to the Assistant Secretary of Indian Affairs. Similar to other DOI agencies, the BIA has a three-tiered organizational structure, with leadership and senior executives operating from headquarters in Washington, DC, and 12 regional offices that oversee 53 field offices (referred to as agencies by the BIA); these agencies deliver program services directly to tribal communities. As of June 2018, the BIA and BIE combined had roughly 7,000 employees. Bureau of Land Management (BLM) The Bureau of Land Management (BLM) was created in 1946, following the merger of DOI's General Land Office (GLO) and the U.S. Grazing Service, known previously as the Division of Grazing Control and subsequently as the Division of Grazing. BLM manages just under 250 million acres of public land — roughly 10% of the total U.S. land area. The vast majority of this land (more than 99%) is located in 12 western states, including Alaska. The agency also is responsible for approximately 800 million acres of the federal onshore subsurface mineral estate and for mineral development on about 60 million acres of Indian trust lands. BLM manages public lands under the dual framework of multiple use and sustained yield, as required under the Federal Land Policy and Management Act of 1976. These uses include a wide range of activities, such as energy and mineral development, livestock grazing, and preservation, as well as hunting, fishing, and other recreational activities. The BLM national headquarters in Washington, DC, is home to the agency's leadership, which provides strategic direction, policy guidance, and oversight of BLM's national-level activities. Twelve state offices—which are akin to the regional office structure of other agencies—carry out BLM's mission within their respective geographical areas of jurisdiction. Reporting to these 12 state offices are numerous district offices, which are further divided into localized field offices. Field offices oversee the day-to-day management of public land resources and the on-the-ground delivery of BLM programs and services. BLM also has several national-level support and service centers. As of June 2018, BLM had roughly 10,700 employees. Bureau of Ocean Energy Management (BOEM) Established in 2010, the Bureau of Ocean Energy Management (BOEM) manages development of the nation's energy and mineral resources on the outer continental shelf (OCS). The Outer Continental Shelf Lands Act (OCSLA) of 1953 defines the OCS as all submerged lands lying seaward of state coastal waters that are subject to federal jurisdiction, constituting approximately 1.7 billion acres. Under OCSLA, the Secretary of the Interior has the authority to manage the development of the OCS. Prior to BOEM's establishment, the Secretary delegated the leasing and management authority granted by OCSLA to the DOI agency known as the Minerals Management Service (MMS). During its existence, MMS had three primary responsibilities concerning offshore development: resource management, safety and environmental oversight and enforcement, and revenue collection. Following the Deepwater Horizon oil spill in 2010, concerns about perceived conflicts between these three missions prompted then-Secretary of the Interior Ken Salazar to reorganize the agency. MMS was formally abolished, and three new units were established within DOI: BOEM, the Bureau of Safety and Environmental Enforcement (BSEE), and the Office of Natural Resource Revenue (ONRR). As of June 2018, BOEM employed approximately 500 people to carry out its mission of managing offshore conventional and renewable energy resources on the OCS. The agency's leadership in Washington, DC, divides itself between three programmatic offices covering strategic resource development, environmental analysis and applied science, and offshore renewable energy development. Meanwhile, regional offices oversee on-the-ground operations and policy implementation in the four OCS regions in the Atlantic, the Gulf of Mexico, the Pacific, and Alaska. Bureau of Reclamation (Reclamation) The large-scale construction of federal dams and irrigation projects throughout the 20 th century was born, in part, out of a growing need for water supplies in the arid and rapidly expanding western United States. To meet this need, Congress passed the Reclamation Act of 1902, which set aside federal dollars to fund irrigation projects in 13 western states. Shortly thereafter, Congress established the U.S. Reclamation Service as a program within the U.S. Geological Survey (USGS). In its first five years, the service began work on more than 30 projects across the American West. In 1907, the Secretary of the Interior elevated the program to an independent bureau within DOI before renaming it the Bureau of Reclamation (Reclamation) in 1923. Since its establishment, Reclamation has constructed or overseen the completion of more than 600 projects across the western United States. Beneficiaries of these projects generally repay the costs for construction and operations of these facilities to the federal government over extended terms (in some cases without interest). The exception are costs deemed "federal" in nature, as federal costs are nonreimbursable. Whereas Reclamation originally focused almost entirely on building new water storage and diversion projects, the agency now largely focuses on the operation and maintenance of existing facilities. Reclamation's mission also has expanded to include support for other efforts to improve water supplies in the western United States, such as promoting water reuse and recycling efforts, desalination projects, and Indian water rights settlements. A presidentially appointed commissioner oversees the work of Reclamation and, along with other senior-level executives, manages the overall operations of the agency from its headquarters in Washington, DC. Due to the amount of projects and employees based in western states, Reclamation also maintains federal offices in Denver, CO, which administer many of Reclamation's programs, initiatives, and activities. These programs include efforts that address dam safety, flood hydrology, fisheries and wildlife resources, and research programs that seek to improve management and increase water supplies. Meanwhile, five regional offices manage Reclamation's water projects and oversee various local area offices responsible for the day-to-day operations of the nearly 180 projects currently under the agency's authority. As of June 2018, Reclamation had roughly 5,500 employees. Bureau of Safety and Environmental Enforcement (BSEE) Following the 2010 restructuring of MMS, the Bureau of Safety and Environmental Enforcement (BSEE) inherited the safety and environmental enforcement functions previously carried out by MMS. These functions are primarily concerned with the offshore energy industry on the OCS—largely oil and natural gas production. BSEE's responsibilities include regulation of worker safety, emergency preparedness, environmental compliance, and resource conservation. BSEE is administered by a director based out of the agency's headquarters in Washington, DC. The agency also has a second headquarters location in Sterling, VA, that oversees many of BSEE's national programs (see below) and provides technical and administrative support for the bureau. To carry out the duties of the department, BSEE coordinates between leadership in these two locations and staff operating across three regional offices (serving Alaska, the Pacific, and the Gulf of Mexico OCS regions), and five Gulf Coast district offices (Houma, Lafayette, Lake Charles, and New Orleans, LA, and Lake Jackson, TX).  Senior leadership sets the policies and performance goals implemented at these local offices across the agency's six national programs. As of June 2018, BSEE had approximately 800 employees across the United States. National Park Service (NPS) In 1916, the National Park Service Organic Act (Organic Act) centralized administration of the nation's national parks and national monuments. With the Organic Act, Congress created the National Park Service (NPS) and established the agency's dual mandate—to protect the country's natural and cultural resources while providing for their public use and enjoyment. In undertaking that mission, NPS administers approximately 80 million acres of federal land, including 418 units that comprise the National Park System across all 50 states and U.S. territories. Each NPS unit is overseen by a park superintendent, who manages day-to-day administration in accordance with both the agency's mission and any laws and regulations specific to the unit. These units and their leadership report to seven regional directors, who oversee park management and program implementation across defined geographic regions. At the national level, NPS is led by a director and senior executives who manage national programs, policy, and budget from the agency's headquarters in Washington, DC. As of June 2018, NPS employed roughly 23,000 employees. Office of Surface Mining Reclamation and Enforcement (OSMRE) The Office of Surface Mining Reclamation and Enforcement (OSMRE) was established as a bureau within DOI following passage of the Surface Mining Control and Reclamation Act (SMCRA) in 1977. The law provided the new agency with the statutory authority to carry out and administer a nationwide program aimed at regulating coal mining in the United States. In particular, OSMRE works with states and tribal communities to reclaim abandoned coal mines, and regulate active surface coal mining operations to minimize adverse impacts to the environment and local communities. SMCRA also authorizes OSMRE to issue federal payments to the United Mine Workers of America (UMWA) coal mineworker health benefits plans. OSMRE serves as the lead regulatory authority over surface coal mining and reclamation activities for states and tribal communities under the authority granted by Title V of SMCRA. SMCRA does, however, allow OSMRE to delegate regulatory primacy to states and tribes upon demonstration that a given state or tribe has established regulatory requirements consistent with federal standards. Although OSMRE operates in an oversight capacity for states that have established such regulatory primacy, no tribe has attained this delegated authority to date (although tribes are eligible to seek regulatory primacy as well). OSMRE fulfills its missions through a three-tiered organizational structure: headquarters in Washington, DC; three regional Offices (Appalachian, Mid-continent, and Western Offices); and multiple area and field Offices that report directly to the regional offices. OSMRE is the smallest of DOI's technical bureaus, employing approximately 400 people nationwide as of June 2018. U.S. Fish and Wildlife Service (FWS) The U.S. Fish and Wildlife Service (FWS) is the principal federal agency tasked with the conservation, protection, and restoration of fish, wildlife, and natural habitats across the United States and its insular territories. The history of FWS can be traced back to the creation of two now-defunct agencies in the late 1800s: the U.S. Commission on Fish and Fisheries in the Department of Commerce and the Division of Economic Ornithology and Mammalogy in the Department of Agriculture. These two agencies were transferred to DOI in 1939 and subsequently consolidated, creating a single agency known at the time as the Fish and Wildlife Service. In 1956, Congress established the U.S. Fish and Wildlife Service. The FWS has a primary-use mission "to conserve, protect and enhance fish, wildlife and plants and their habitats for the continuing benefit of the American people." Among its responsibilities, FWS manages the National Wildlife Refuge System (NWRS) under the authority granted by the National Wildlife Refuge System Administration Act of 1966. The NWRS is a network of lands and waters set aside to conserve the nation's fish, wildlife, and plants that has grown to include more than 560 refuges, 38 wetland management districts, and other protected areas. More than 836 million acres of lands and waters comprise the NWRS; of these lands and waters, 146 million acres are classified as National Wildlife Refuges. In addition, FWS, along with the National Oceanic and Atmospheric Administration (NOAA) in the Department of Commerce, is responsible for implementing the Endangered Species Act (ESA). The ESA aims to protect species that are in danger of becoming extinct or could be in danger of becoming extinct in the near future. FWS also assists in international conservation efforts, enforces federal wildlife laws, and administers grant funds to states and territories for fish and wildlife programs. Similar to most DOI agencies, FWS has a three-tiered organizational structure comprised of national, regional, and local field offices across the United States. The headquarters office—led by an agency director—is split between two locations in Washington, DC, and Falls Church, VA, which together have primary responsibility for policy formulation and budgeting across the agency's 13 major program areas. Eight regional offices oversee FWS field offices and science centers across the United States and U.S. territories, which implement these policies and programs at the local level. As of June 2018, FWS had roughly 9,000 employees across the country. U.S. Geological Survey (USGS) In 1878, the National Academy of Sciences issued a report to Congress asking Congress to provide a plan for surveying and mapping the western territories of the United States. In response, Congress passed an appropriations bill the following year that authorized the creation of the U.S. Geological Survey (USGS). Congress established the USGS for the express purpose of overseeing the "classification of the public lands, and examination of the geological structure, mineral resources, and products of the national domain." The authorities and responsibilities of USGS have shifted and evolved over time, with many of its prior activities leading to the formation of new governmental agencies. Today, however, USGS serves as the science agency of DOI, providing physical and biological information across seven interdisciplinary areas: (1) water resources, (2) climate and land use change, (3) energy and minerals, (4) natural hazards, (5) core science systems, (6) ecosystems, and (7) environmental health. Unlike other DOI bureaus, USGS has no regulatory or land management mandate. In addition to its seven programmatic areas, USGS is further organized into seven geographic regions, each under the supervision of a regional director. The regional directors report to a presidentially appointed director based out of the agency's headquarters in Reston, VA. Within each region, USGS operates science centers, laboratories, and field offices that monitor, assess, and conduct research on a wide range of topics. Overall, USGS had roughly 8,000 employees as of June 2018. Departmental Offices and Programs89 In addition to the nine technical bureaus, DOI has multiple departmental offices that provide leadership, coordination, and services to the department's various bureaus and programs. These offices coordinate department-wide activities and oversee specialized functions under DOI's jurisdiction not administered directly at the bureau level. Office of the Secretary The Office of the Secretary provides leadership for the entire department through the development of policy and through executive oversight of the annual budget and appropriations process. The Office of the Secretary also manages the administrative operations of DOI, including (but not limited to) financial services, information technology and resources, acquisition, and human resources. In addition, the Office of the Secretary manages six other department-wide programs, offices, and revolving funds: 1. Central Hazardous Materials Fund provides remediation services to national parks, national wildlife refuges, and other DOI-managed lands impacted by hazardous substances. This remediation process follows the guidelines established under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)—also known as the Superfund statute. 2. Natural Resource Damage Assessment and Restoration program coordinates and oversees DOI's restoration efforts for DOI-managed lands impacted by oil spills or the release of hazardous substances. In partnership with federal, state, and tribal co-trustees, the program conducts damage assessments, planning, and restoration implementation on DOI lands. 3. Office of Natural Resource s Revenue (ONRR) is responsible for the collection, accounting, and verification of any natural resource and energy revenue generated from federal and Indian leases and royalty payments. (See " Bureau of Ocean Energy Management " section for the history behind ONRR's creation.) 4. Payments in Lieu of Taxes (PILT) program makes payments to nearly 1,900 local government units across the United States and its insular areas where certain federal lands are located. The PILT payments are intended to help offset the loss in property taxes to local governments caused by the presence of federal lands, which largely are exempt from taxation. 5. Wildland Fire Management program is responsible for addressing wildfires on public lands. The program is comprised of the Office of Wildland Fire and the four DOI land management bureaus with wildland fire management responsibilities (BIA, BLM, FWS, and NPS). 6. Working Capital Fund (WCF) is a revolving fund that finances centralized administrative services and systems to DOI bureaus and offices. The WCF aims to reduce duplicative systems and staff across DOI; it provides financing for centralized functions that provide payroll, accounting, information technology, and other support services. Office of the Solicitor In 1946, Congress established the Office of the Solicitor to provide advice, counsel, and legal representation to DOI. The office manages DOI's Ethics Office and resolves Freedom of Information Act appeals. To accomplish this work, the Office of the Solicitor employs more than 400 employees, 300 of whom are licensed attorneys. The Office of the Solicitor is organized into the Immediate Office of the Solicitor, the Ethics Office, five legal divisions, an administrative division, and eight regional offices. Office of the Inspector General In 1978, Congress established inspector general positions and offices in more than a dozen specific departments and agencies, including DOI. The mission of the Office of the Inspector General (OIG) is to provide independent oversight and accountability to the programs, operations, and management of the department. OIG has three primary office divisions: (1) the Office of Management serves as the administrative arm; (2) the Office of Investigations conducts, supervises, and coordinates internal investigations on a variety of potential abuses; and (3) the Office of Audits, Inspections, and Evaluations reviews DOI programs and operations for effectiveness and evaluates the financial statements and expenditures of these programs. The OIG also operates three regional offices, located in Herndon, VA; Lakewood, CA; and Sacramento, CA. Office of the Special Trustee for American Indians The American Indian Trust Fund Management Reform Act established the Office of the Special Trustee for American Indians (OST) in 1994. The OST provides fiduciary oversight and management of the more than 55 million surface acres and 57 million subsurface mineral acres of tribal assets held in trust by the federal government. The office carries out its mission from a national office in Washington, DC, and through five regional offices across the nation. The OST operates independently from BIA, which carried out these trust responsibilities prior to the 1994 legislation. However, in 2016, Congress passed the Indian Trust Asset Reform Act (ITARA) requiring the Secretary to prepare "a transition plan and timetable for the termination of the Office of the Special Trustee" within two years. Although OST still exists, the 2019 Budget Justification proposes transferring some of the functions of OST to other DOI agencies and offices to comply with the reorganization requirements mandated by Congress in ITARA. The Budget Justification also includes a proposal to have OST — and the appointed Special Trustee — report directly to the Assistant Secretary of Indian Affairs starting in FY2019. More information regarding this change in OST organizational structure and function is provided in the " DOI Reorganization Plans and Proposals: Issues for Congress " section. Office of Insular Affairs The United States acquired its first insular territories in 1898 with the annexation of the Hawaiian Islands and the acquisition of Puerto Rico, Guam, and the Philippines from Spain following the Spanish-American War. For much of the early 20th century, territorial oversight of these new possessions fell largely to the War Department. In 1934, President Franklin D. Roosevelt created the Division of Territories and Island Possessions to centralize responsibility for coordinating oversight of the nation's insular regions. The division—now known as the Office of Insular Affairs—currently administers federal oversight of American Samoa, Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands, with the goal of promoting their economic, social, and political development. The office also administers federal assistance and U.S. economic commitments to the Freely Associated States: the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau. DOI Employment Levels As of June 2018, the total number of employees working for DOI was 69,563, according to OPM (see Table 1 ). The data reflect "on-board employment" figures, which calculate the number of employees in pay status at the end of the quarter. Data are published on a quarterly basis (March, June, September, and December); however, figures for September and December 2018 were not available prior to the publication of this report. Because OPM data include full-time, part-time, and seasonal staff, employment totals tend to spike during the summer months, when agencies such as NPS, BLM, and FWS increase their seasonal workforce. OPM figures differ from DOI Budget Office data. The DOI Budget Office calculates employment by full-time equivalents (FTEs), defined as the total number of regular straight-time hours (not including overtime or holiday hours) worked by employees, divided by the number of compensable hours applicable to each fiscal year. The OPM Fedscope data presented in Table 1 are available by location of employment for each bureau and office reflected. Table 2 shows DOI employment figures both within and outside the DC core-based statistical area (CBSA). OPM defines a CBSA as "a geographic area having at least one urban area of population, plus adjacent territory that has a high degree of social and economic integration with the core as measured by commuting ties." CBSAs differ from metropolitan statistical areas (MSAs)—a separate statistical definition also reported on by OPM—which typically encompass a smaller geographic area than CBSAs. For example, the DC MSA includes many but not all of the counties and surrounding cities covered under the DC CBSA. For instance, the DC MSA excludes Reston, VA, where the headquarters of USGS is located. Overview of DOI Appropriations Discretionary funding for DOI is provided primarily through Title I of the annual Interior, Environment, and Related Agencies appropriations bill. The Bureau of Reclamation (Reclamation) and the Central Utah Project are the exceptions, as they receive funding through the Energy and Water Development appropriations bill. Several of the agencies that receive discretionary funds through these two appropriations bills also receive mandatory funding under various authorizing statutes. DOI Discretionary Appropriations: FY2014-FY2018115 Figure 3 shows the budget trends for both the Interior and the Energy and Water appropriations bills over the past five fiscal years (FY2014-FY2018). From FY2014 to FY2018, total DOI appropriations increased 29% in current dollars. This increase includes the $566 million in FY2018 emergency supplemental appropriations for disaster relief appropriated to DOI in P.L. 115-72 and P.L. 115-123 . If supplemental appropriations are not considered, total DOI appropriations increased 23% over the same period. DOI Discretionary Appropriations: FY2018 by Agency Figure 4 shows the breakdown of enacted FY2018 appropriations for DOI bureaus, offices, and programs funded through the Interior and the Energy and Water appropriations bills. Figures are presented in total dollars (in millions) and as percentages of the department's $15.2 billion in enacted appropriations for FY2018. Supplemental emergency appropriations for FY2018 are shown as a separate segment of the total DOI budget; however, these funds were distributed across several DOI bureaus and programs. DOI Reorganization Plans and Proposals: Issues for Congress Executive branch reorganization efforts are an ongoing area of congressional interest and scrutiny as part of Congress's lawmaking and oversight functions. Congress uses a variety of tools—including authorizing legislation, appropriations legislation, and oversight activities—to shape and organize the executive branch and its agencies. Several changes to DOI and its organizational structure have taken effect starting in FY2019. Congress previously authorized and approved some of these changes and proposals in the form of appropriations and/or authorizing legislation. Other changes—including broader reorganization proposals put forth by the Trump Administration—have been proposed for FY2019 but are not in effect. The 115 th Congress approved several internal office transfers and realignments. For instance, Congress transferred appropriations for the Office of Natural Resources Revenue (ONRR) from DOI's Office of the Secretary to Department-Wide Programs for FY2018. Meanwhile, the 2019 Interior Budget in Brief reflects the transfer of both DOI's Oceans Program and the Office of International Affairs from the Office of the Assistant Secretary, Policy, Management and Budget to the Office of the Assistant Secretary, Insular and International Affairs. The 114 th Congress passed legislation authorizing the reorganization of the Office of the Special Trustee for American Indians (OST). In 2016, ITARA directed the Secretary to—among other things—"ensure that appraisals and valuations of Indian trust property are administered by a single bureau, agency, or other administrative entity within the Department" not later than 18 months after enactment. To comply with this requirement, the FY2019 budget request reflects the approved transfer of the Office of Appraisal Services within OST to the Office of the Secretary's Appraisal and Valuation Services Office, thereby consolidating all appraisal activities within a single entity. This change is in addition to a proposed shift in the reporting relationship of OST also included in the FY2019 request. Under this proposal, starting in FY2019, OST would report through the Office of the Assistant Secretary of Indian Affairs rather than directly to the Office of the Secretary (see Figure 2 ). As noted in the " Introduction " to this report, the Trump Administration also proposed additional, broader DOI reorganizational plans for consideration. On March 13, 2017, President Trump issued Executive Order 13781 to "improve the efficiency, effectiveness, and accountability of the executive branch." The order required executive agency heads to, "if appropriate," submit a proposed reorganization plan for their agencies to the director of the Office of Management and Budget within 180 days. Then-Secretary of the Interior Zinke subsequently submitted a proposal for reorganization aimed at—among other goals—improving agency coordination and service to the public. Included in this proposal is a plan to consolidate the various agency-specific regional boundaries (as seen in the "At a Glance" boxes included in each bureau summary) into 12 Unified Regional Boundaries. In addition, the plan looks to shift some resources and authority "to the field," potentially in the form of staff, budget, and/or facilities. President Trump issued a separate set of reorganization recommendations in June 2018 as part of the Delivering Government Solutions in the 21 st Century report. Two proposals in particular would affect DOI and its structure. The first would consolidate most of the U.S. Army Corps of Engineers' (USACE's) Civil Works Division within DOI, including USACE's activities related to flood and storm damage reduction and aquatic ecosystem restoration. The second recommendation would transfer NOAA's National Marine Fisheries Service from the Department of Commerce to DOI and merge it with the FWS. This proposal would consolidate administration of the ESA and other wildlife laws under one agency. The transfers and reorganization proposals discussed here illustrate the potential changes in the structure of DOI and its operations. They also provide insight into areas of possible congressional and executive branch interest moving forward. The 116 th Congress may consider additional oversight of these proposals and/or propose new initiatives and plans for the organization and administration of DOI and its bureaus.

The U.S. Department of the Interior (DOI) is a federal executive department responsible for the conservation and administration of the public lands and mineral estate of the United States. DOI describes its mission as protecting and managing the nation's natural resources and cultural heritage for the benefit of the American people; providing scientific and scholarly information about those resources and natural hazards; and exercising the nation's trust responsibilities and special commitments to American Indians, Alaska Natives, and island territories under U.S. administration. As part of its responsibilities, DOI oversees and fosters the use of more than 480 million acres of public lands, 700 million acres of subsurface minerals, and 1.7 billion acres of the outer continental shelf. Each year, Congress deliberates legislation that could affect DOI's management of this vast federal estate. As a result, understanding the roles and responsibilities of DOI's various components and offices is valuable when crafting legislation that affects the department's operations and ability to fulfill its mission. DOI primarily implements its responsibilities and mission through nine technical bureaus that make up more than 80% of the agency's workforce. These technical bureaus are the Bureau of Indian Affairs (BIA), Bureau of Land Management (BLM), Bureau of Ocean Energy Management (BOEM), Bureau of Reclamation (Reclamation), Bureau of Safety and Environmental Enforcement (BSEE), National Park Service (NPS), Office of Surface Mining Reclamation and Enforcement (OSMRE), U.S. Fish and Wildlife Service (FWS), and U.S. Geological Survey (USGS). Each of these bureaus has a unique mission and set of responsibilities, as well as a distinct organizational structure that serves to meet its functional duties. In addition to these technical bureaus, DOI has multiple departmental offices, which provide leadership, coordination, and services to DOI's various bureaus and programs. As of June 2018, DOI employed a staff of 69,563 nationwide across its bureaus and offices. However, total DOI employment figures fluctuate throughout the year, as some bureaus rely on seasonal and part-time staff, increasing staff totals during the summer months. The Office of Personnel Management (OPM) reports the average total DOI employment as 65,350 for the four reporting periods from September 2017 to June 2018. The largest bureau within DOI based on number of staff is NPS, which averaged close to 20,000 staff over the same time period—more than twice the size of the second-largest bureau, BLM. The smallest technical bureau by employment is OSMRE, which averaged just over 400 employees. Approximately 10% of all DOI staff are within the District of Columbia core-based statistical area (CBSA), which includes the District of Columbia and selected counties in Maryland, Virginia, and West Virginia. Congress provides discretionary appropriations for DOI through two annual appropriations bills: the Interior, Environment, and Related Agencies bill and the Energy and Water appropriations bill. Enacted discretionary appropriations for FY2018 totaled $14.6 billion. DOI also received $566 million in supplemental emergency appropriations in FY2018, for a total of $15.2 billion in discretionary appropriations for FY2018. The organizational structure of DOI is subject to continual congressional oversight and executive branch examination. In 2017 and 2018, President Trump and then-Secretary of the Interior Ryan Zinke submitted reorganization plans for the department and its bureaus. These plans put forth several recommendations, including the consolidation and transfer of most functions of the Army Corps of Engineers Civil Works Division to DOI, the merger of the Department of Commerce's National Marine Fisheries Service with FWS, and the creation of 12 "Unified Regional Boundaries" across DOI's various bureaus.

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Introduction Social Security provides dependent benefits and survivors benefits , sometimes collectively referred to as auxiliary benefits , to the spouses, former spouses, widow(er)s, children, and parents of retired, disabled, or deceased workers. Auxiliary benefits are based on the work record of the household's primary earner. Social Security spousal benefits (i.e., benefits for a wife or husband of the primary earner) are payable to the spouse or divorced spouse of a retired or disabled worker. Social Security survivors benefits are payable to the survivors of a deceased worker as a widow(er), as a child, as a mother or father of the deceased worker's child(ren), or as a dependent parent of the deceased worker. Although Social Security is often viewed as a program that primarily provides benefits to retired or disabled workers, 33% of new benefit awards in 2017 were made to the dependents and survivors of retired, disabled, and deceased workers. Spousal and survivors benefits play an important role in ensuring women's retirement security. However, women continue to be vulnerable to poverty in old age, due to demographic and economic reasons. This report presents the current-law structure of auxiliary benefits for spouses, divorced spouses, and surviving spouses. It makes note of adequacy and equity concerns of current-law spousal and widow(er)'s benefits, particularly with respect to female beneficiaries, and discusses the role of demographics, the labor market, and current-law provisions on adequacy and equity. The report concludes with a discussion of proposed changes to spousal and widow(er) benefits to address these concerns. Origins of Social Security Auxiliary Benefits The original Social Security Act of 1935 (P.L. 74-271) established a system of Old-Age Insurance to provide benefits to individuals aged 65 or older who had "earned" retirement benefits through work in jobs covered by the system. Before the Old-Age Insurance program was in full operation, the Social Security Amendments of 1939 (P.L. 76-379) extended monthly benefits to workers' dependents and survivors. The program now provided Old-Age and Survivors Insurance (OASI). The 1939 amendments established benefits for the following dependents and survivors: (1) a wife aged 65 or older; (2) a child under the age of 18; (3) a widowed mother of any age caring for an eligible child; (4) a widow aged 65 or older; and (5) a surviving dependent parent aged 65 or older. In its report to the Social Security Board (the predecessor to the Social Security Administration) and the Senate Committee on Finance, the 1938 Social Security Advisory Council justified creating spousal benefits on the grounds of the adequacy of household benefits: The inadequacy of the benefits payable during the early years of the old-age insurance program is more marked where the benefits must support not only the annuitant himself but also his wife. In 1930, 63.8 per cent of men aged 65 and over were married. Payment of supplementary allowances to annuitants who have wives over 65 will increase the average benefit in such a manner as to meet the greatest social need with the minimum increase in cost. The Council believes that an additional 50 percent of the basic annuity would constitute a reasonable provision for the support of the annuitant's wife. The Social Security Board concurred in its own report, which it wrote based on the council's report. The board also found that benefit adequacy was the primary justification for spousal benefits: The Board suggests that a supplementary benefit be paid for the aged dependent wife of the retired worker which would be related to his old-age benefit. Such a plan would take account of greater presumptive need of the married couple without requiring investigation of individual need. Since 1939, auxiliary benefits have been modified by Congress many times, including the expansion of benefits to husbands, widowers, and divorced spouses. The legislative history of auxiliary benefits is outlined in detail in Appendix A . Auxiliary Benefits Auxiliary benefits for a spouse, survivor, or other dependent are based on the benefit amount received by a primary earner (an insured worker). The primary earner may receive a Social Security retirement or disability benefit. Social Security retirement benefits are based on the average of a worker's highest 35 years of earnings (less up to 5 years for years of disability) from covered employment. A worker's basic benefit amount ( primary insurance amount or PIA) is computed by applying the Social Security benefit formula to the worker's career-average, wage-indexed monthly earnings ( average indexed monthly earnings or AIME). The benefit formula replaces a higher percentage of the preretirement earnings of workers with low career-average earnings than for workers with high career-average earnings. The primary earner's initial monthly benefit is equal to his or her PIA if benefits are claimed at full retirement age (FRA, which ranges from age 65 to age 67, depending on year of birth). A worker's initial monthly benefit will be less than his or her PIA if the worker begins receiving benefits before FRA, and it will be greater than his or her PIA if the worker begins receiving benefits after FRA. The purpose of the actuarial adjustment to benefits claimed before or after FRA is to ensure that the worker receives roughly the same total lifetime benefits regardless of when he or she claims benefits (assuming he or she lives to average life expectancy). Auxiliary benefits are paid to the spouse, former spouse, survivor, child, or parent of the primary earner. Auxiliary benefits are determined as a percentage of the primary earner's PIA, subject to a maximum family benefit amount. For example, the spouse of a retired or disabled worker may receive up to 50% of the worker's PIA, and the widow(er) of a deceased worker may receive up to 100% of the worker's PIA. As with benefits paid to the primary earner, auxiliary benefits are subject to adjustments based on age at entitlement and other factors. A basic description of auxiliary benefits is provided in the following sections, with more detailed information provided in Appendix B . Currently Married or Separated Spouses Social Security provides a spousal benefit that is equal to 50% of a retired or disabled worker's PIA. A qualifying spouse must be at least 62 years old or have a qualifying child (a child who is under the age of 16 or who receives Social Security disability benefits) in his or her care. A qualifying spouse may be either married to or separated from the worker. An individual must have been married to the worker for at least one year before he or she applies for spousal benefits, with certain exceptions. In addition, the worker must be entitled to (generally, collecting) benefits in order for an eligible spouse to become entitled to benefits. If a spouse claims benefits before FRA, his or her benefits are reduced to take into account the longer expected period of benefit receipt. An individual who is entitled to a Social Security benefit based on his or her own work record and to a spousal benefit in effect receives the higher of the two benefits (see " Dually Entitled Beneficiaries " below). Widows and Widowers Under current law, surviving spouses (including divorced surviving spouses) may be eligible for aged widow(er) benefits beginning at the age of 60. If the surviving spouse has a qualifying disability and meets certain other conditions, survivors benefits are available beginning at the age of 50. The aged widow(er)'s basic benefit is equal to 100% of the deceased worker's PIA. A qualifying widow(er) must have been married to the deceased worker for at least nine months and must not have remarried before the age of 60 (or before age 50 if the widow[er] is disabled). Widow(er)s who remarry after the age of 60 (or after age 50 if disabled) may become entitled to benefits based on the prior deceased spouse's work record. Widow(er)s who are caring for children under the age of 16 or disabled may receive survivors benefits at any age and do not have to meet the length of marriage requirement—see " Mothers and Fathers " below. If an aged widow(er) claims survivors benefits before FRA, his or her monthly benefit is reduced (up to a maximum of 28.5%) to take into account the longer expected period of benefit receipt. In addition, survivors benefits may be affected by the deceased worker's decision to claim benefits before FRA under the widow(er)'s limit provision (see Appendix B ). As with spouses of retired or disabled workers, a surviving spouse who is entitled to a Social Security benefit based on his or her own work record and a widow(er)'s benefit receives in effect the higher of the two benefits (see " Dually Entitled Beneficiaries " below). Mothers and Fathers Social Security provides benefits to a surviving spouse or divorced surviving spouse of any age who is caring for the deceased worker's child, when that child is either under the age of 16 or disabled. Mother's and father's benefits are equal to 75% of the deceased worker's PIA, subject to a maximum family benefit. There are no length of marriage requirements for mother's and father's benefits, whether the beneficiary was married to, separated from, or divorced from the deceased worker; however, remarriage generally ends entitlement to mother's and father's benefits. Divorced Spouses Spousal benefits are available to a divorced spouse beginning at the age of 62, if the marriage lasted at least 10 years before the divorce became final and the person claiming spousal benefits is currently unmarried. A divorced spouse who is younger than 62 years old is not eligible for spousal benefits even with an entitled child in his or her care. Survivors benefits are available to a divorced surviving spouse beginning at the age of 60 (or beginning at age 50 if the divorced surviving spouse is disabled) if the divorced surviving spouse has not remarried before the age of 60 (or before age 50 if disabled), or if the surviving divorced spouse has an entitled child in his or her care. Divorced spouses who are entitled to benefits receive the same spousal and survivors benefits as married or separated persons. If a divorced spouse claims benefits before FRA, his or her benefits are reduced to take into account the longer expected period of benefit receipt. In addition, a divorced spouse who is entitled to a Social Security benefit based on his or her own work record and a spousal or survivor benefit receives in effect the higher of the two benefits (see " Dually Entitled Beneficiaries " below). Data on Duration of Marriages A divorced person who was married to a primary earner for less than 10 years does not qualify for spousal benefits on that spouse's record (although he or she may qualify for benefits based on his or her own record or on another spouse's record). First marriages that end in divorce have a median duration of 8 to 12 years. Table 1 shows that the proportions of males and females who have a marriage that lasted longer than 10 years was higher from 1960 to 1964 than those in recent decades. About 83% of women who married for the first time during the early 1960s stayed married for 10 years or longer; however, for women who married between 1970 and 1999, about 71%-75% of women's first marriages have lasted for 10 years or more. This percentage dropped to 58% for women who first married during the early 2000s. Other data suggest that, for men and women aged 15 to 44 between 2006 and 2010, the probability of a first marriage lasting 10 years or longer was 68%. The probability that a first marriage would remain intact for at least 10 years was 73%, 56%, and 68% for Hispanic, black, and white women, respectively. In addition, among the women who were first divorced in 2012, 60% of them had a marriage lasting for 10 or more years. Dually Entitled Beneficiaries A person may qualify for a spousal or survivor benefit as well as for a Social Security benefit based on his or her own work record (a retired-worker benefit). In such cases, the person in effect receives the higher of the worker benefit and the spousal or survivor benefit. When the person's retired-worker benefit is higher than the spousal or survivor benefit to which he or she would be entitled, the person receives only the retired-worker benefit. Conversely, when the person's retired-worker benefit is lower than the spousal or survivor benefit, the person is referred to as dually entitled and receives the retired-worker benefit plus a spousal or survivor benefit that is equal to the difference between the retired-worker benefit and the full spousal or survivor benefit. In essence, the person receives a total benefit amount equal to the higher spousal benefit. Women have increasingly become entitled to Social Security benefits based on their own work records, either as retired-worker beneficiaries only or as dually entitled beneficiaries. As shown in Figure 1 , the percentage of women aged 62 or older entitled to benefits based on their own work records—as retired workers or as dually entitled beneficiaries—grew from 43% in 1960 to 79.3% in 2017. More than half of this growth was in the percentage of dually entitled beneficiaries. The percentage of women aged 62 or older entitled to benefits based solely on their own work records fluctuated between 36% and 42% between 1960 and 2005, before increasing to 54.2% in 2017. In 2017, 45.7% of women aged 62 or older relied to some extent on benefits received as a spouse or survivor: 25% of spouse and survivor beneficiaries were dually entitled and 20.7% received spousal or survivors benefits only. As shown in Table 2 , among wives who were dually entitled spousal beneficiaries in December 2017, the retired-worker benefit accounted for 68% of the combined monthly benefit (the retired-worker benefit with a top-up provided by the spousal benefit) and the spousal benefit accounted for 32% of the combined monthly benefit, on average. Among widows who were dually entitled survivor beneficiaries, the retired-worker benefit and the widow(er)'s benefit each accounted for about half of the combined monthly benefit, on average. Many more women than men are dually entitled to retired-worker benefits and spousal or widow(er)'s benefits. As shown in the table, in December 2017, about 6.9 million women and 235,533 men were dually entitled to benefits. Women, Social Security, and Auxiliary Benefits Spousal and survivors benefits play an important role in ensuring women's retirement security. In December 2017, about 25.4 million elderly (aged 65 and older) women received Social Security benefits, including 13.3 million women who received only retired-worker benefits, 2.1 million women who were entitled solely as the spouse of a retired worker, 3.2 million women who were entitled solely as the survivor of a deceased worker, and 6.7 million women who were dually entitled to a retired-worker benefit and a spousal or survivor benefit. In 2017, Social Security provided 50% or more of family income for more than 53% of elderly women in beneficiary families and 90% or more of family income for about 28% of elderly women in beneficiary families. Women, however, continue to be vulnerable to poverty in old age for several reasons. These reasons can generally be split into demographic reasons and economic reasons. In addition, the design of auxiliary benefits can lead to equity concerns. With respect to demographic and economic reasons that lead to adequacy concerns, Women on average live longer than men, and thus more women are likely to be widowed than are men. Women reaching the age of 65 in 2017 are likely to live another 20.7 years, on average, compared with another 18.2 years for men. About 5% of women aged 50-59, about 16% of women aged 60-75, and about 56% of women aged 75 and older are currently widowed. By comparison, about 2% of men aged 50-59, about 5% of men aged 60-75, and about 21% of men aged 75 and older are widowed. As a consequence, women may spend more time in retirement and are more vulnerable to inflation and the risk of outliving other assets. The real value of private pension benefits declines with age, as private pensions are generally not adjusted for inflation, and some private pensions cease with the death of the retired worker. Women are more likely to take employment breaks to care for children or parents, and thus have a lower labor force participation rate than men. During 2016, 88.5% of men and 74.3% of women aged 25-54 participated in the labor force. The rate for women with children under three years old was lower, at 63%. Breaks in employment result in fewer years of contributions to Social Security and employer-sponsored pension plans and thus lower retirement benefits. The median earnings of women who are full-time wage and salary workers are 82% of their male counterparts. Because Social Security and private pension benefits are linked to earnings, this "earnings gap" can lead to lower benefit amounts for women than for men. Social Security benefits are designed in a way that can result in inequities between households with similar earning profiles. Spousal and survivors benefits were added to the Social Security system in 1939. At that time, the majority of households consisted of a single earner—generally the husband—and a wife who was not in the paid workforce but instead stayed home to care for children. However, in recent decades, women have increasingly assumed roles as wage earners or as heads of families. A beneficiary who qualifies for both a retired-worker benefit and a spousal benefit does not receive both benefits in full. Instead, the spousal benefit is reduced by the amount of the retired-worker benefit; this effectively means the beneficiary receives the higher of the two benefit amounts. Because of this, a two-earner household receives lower combined Social Security benefits than a single-earner household with identical total Social Security-covered earnings, despite paying more in Social Security taxes. Moreover, after the death of one spouse, the disparity in benefits may increase: in a one-earner couple, the surviving spouse receives two-thirds of what the couple received on a combined basis, whereas in some two-earner couples with roughly equal earnings, the surviving spouse receives roughly one-half of what the couple received on a combined basis. Adequacy Issues Social Security is credited with keeping many of the elderly out of poverty. However, in 2017, 6.5% of Social Security beneficiaries aged 65 or older were below the poverty line. Figure 2 highlights the differences in poverty status among men and women aged 65 or older who received Social Security benefits in 2017, after Social Security is combined with other sources of income such as earnings from work, pensions, income from assets, and cash assistance. Figure 2 shows that married beneficiaries have significantly lower poverty rates than nonmarried beneficiaries and that nonmarried women aged 65 or older—including widowed, divorced, and never-married women—are more likely to be in poverty than their male counterparts. Particularly vulnerable among women are divorced beneficiaries and the never-married. Among women aged 65 and older, about 13.7% of divorced Social Security beneficiaries and 18.0% of never-married Social Security beneficiaries have total incomes below the official poverty line in 2017. Among Social Security beneficiaries aged 65 and over, poverty rates are also high among never-married men, at a rate of 17.5% in 2017. The reasons for the disparity in poverty rates among elderly men and women relate in part to women's lower lifetime earnings, which affect Social Security benefits and private pensions. Low lifetime earnings can be due to lower labor force participation of women and the earnings gap. In addition, women live two to three years longer than men on average, making them more likely to exhaust retirement savings and other assets before death. In addition, if the deceased husband was receiving a pension, the widow's benefit may be significantly reduced, or the pension may cease with the husband's death, depending on whether the couple had a joint and survivor annuity and how the joint and survivor annuity was structured. Elderly widows also may be at risk if assets are depleted by health-related expenses prior to the spouse's death. Labor Force Participation of Women During the past several decades, the labor force participation rate among women increased, but still remained below the rate among men. In 1950, about 34% of women aged 16 or older participated in the labor force, compared with about 86% of men aged 16 or older. By 2016, about 57% of women aged 16 or older participated in the labor force, compared with 69% of men in the same age group. Women are also more likely than men to work part-time (i.e., less than 35 hours per week in a sole or principal job). In 2016, 25% of women in wage and salary jobs worked part-time, compared with 12% of men. Women with children under the age of 18 have increasingly entered the labor force in recent decades (see Figure 3 ). However, women with children have fewer years of paid work, on average. By the age of 50, women without children who were born between 1948 and 1958 had worked on average about two years less than men overall (i.e., men with and without children). For a woman with two children, however, the gap at the age of 50 was about 6.5 years less than the average man with or without children. In 2017, about 69% of mothers were employed, compared with 91% of fathers. In addition to childcare, women are also more likely than men to provide care to a spouse, a parent, or some other adult relative. One survey estimates that, among 39.8 million caregivers who have provided unpaid care to an adult in 2015, 60% of them are female. Some researchers find that female caregivers tend to work fewer hours per week and earn a lower wage than non-caregivers. Another study shows that women who leave work to provide care may face relatively low probabilities of returning to work. Earnings Gap Another reason why women receive lower retired-worker benefits than men is that full-time women workers earn about 80%-82% of the median weekly earnings of their male counterparts. In 2016, women who were full-time wage and salary workers had median weekly earnings of $749, or about 82% of the $915 median earned by their male counterparts. The women's-to-men's earnings ratio was about 62% in 1979 and, after increasing gradually during the 1980s and 1990s, has ranged between 80% and 82% since 2004. In 2016, the earnings gap between women and men varied among age groups (see Table 3 ). Among full-time workers, women aged 16-24 earned about 95% as much as men; women aged 25-34 earned about 89% as much as men; and women aged 55-64 earned about 74% as much as men. Over time, the earnings gap between women and men has narrowed for most age groups. For example, among full-time workers aged 25-34, the women's-to-men's earnings ratio increased from 68% in 1979 to 89% in 2016. For workers aged 35-44, the earnings ratio increased from 58% in 1979 to 83% in 2016. Similarly, for workers aged 45-54, the earnings ratio increased from 57% in 1979 to 78% in 2016. Part of the earnings gap can be attributed to differences between men's and women's years of education, full-time work experience, and occupations. Comparing the annual earnings of women and men may understate differences in total earnings across longer periods. Using a 15-year time frame (1983-1998), one study found that women in the prime working years of 26 to 59 had total earnings that were 38% of what prime-age men earned, in total, over the same 15-year period. Another study found that women born between 1955 and 1959 who worked full-time, year-round each year would have an average lifetime loss of $531,500 by age 59, compared with men. As women enter the work force in greater numbers, more women will qualify for Social Security benefits based on their own work records, instead of a spousal benefit that is equal to 50% of the husband's PIA. However, retired-worker and disabled-worker benefits for women continue to be lower than those for men on average for a variety of reasons, as discussed above. Consequently, after the death of a husband, the survivor's benefit, which is equal to 100% of the husband's PIA, will continue to play an important role in the financial well-being of widows. Equity Issues Although Social Security provides essential income support to nonworking spouses and widows, the current-law spousal benefit structure can lead to a variety of incongruous benefit patterns that have been documented in the literature. For example, a woman who was never employed but is married to a man with high Social Security-covered wages may receive a Social Security spousal benefit that is higher than the retirement benefit received by a single woman, or a woman who was married less than 10 years, who worked a full career in a low-wage job. The current system provides proportionately more benefits relative to payroll-tax contributions to one-earner couples (which predominated when Social Security was created in the 1930s) than to single persons or to couples with two earners, on average. As a result, the current system can lead to situations in which Social Security provides unequal benefits to one-earner and two-earner couples with the same total household lifetime earnings. Putting this in a different perspective, some two-earner couples may have to contribute significantly more to Social Security to receive the same retirement and spousal benefits that the system provides to a one-earner couple with identical total household earnings. As women's share of household income has increased, and also as women have increasingly become heads of families, these anomalies could become more relevant. Table 4 illustrates the disparate treatment of one-earner and two-earner couples with examples developed by the American Academy of Actuaries. In the table, a one-earner couple with household earnings of $50,000 is compared with two different two-earner couples. The second couple in the comparison is a two-earner couple with the same total household earnings ($50,000) as the one-earner couple, with the earnings evenly split between the two spouses (each spouse earns $25,000). The third couple in the comparison is a two-earner couple in which one spouse earns $50,000 (the same as the primary earner in the one-earner couple) and the other spouse earns half that amount, or $25,000, for total household earnings of $75,000. As the table illustrates, a one-earner couple may receive higher retirement and survivors benefits than a two-earner couple with identical total household earnings. Specifically, the first couple with one earner receives a total of $2,655 in monthly retirement benefits, compared with the second couple with two earners, who receives a total of $2,240 in monthly retirement benefits. Similarly, the survivor of the one-earner couple receives $1,770 in monthly benefits (either as a retired worker or as a surviving spouse). In comparison, the survivor of the two-earner couple with identical total household earnings receives $1,120 in monthly benefits. In the third couple shown in Table 4 , both spouses work in Social Security-covered employment, but in this example one spouse earns $50,000 annually and the other spouse earns $25,000. This couple receives monthly benefits that are $235 higher than the monthly benefits received by the one-earner couple ($2,890 compared with $2,655); however, this couple has earned much more over time ($25,000 annually) and contributed commensurately more in Social Security payroll taxes ($1,550 annually). The survivor benefit received by the third couple is identical to that received by the one-earner couple. Thus, the current-law Social Security spousal benefit structure requires some two-earner couples to make substantially higher contributions for similar benefit levels. With higher earnings but similar benefits to the one-earner couple, the third couple's replacement rate of 46% (i.e., family total monthly benefits as a percentage of preretirement earnings) is lower than that of the one-earner couple, which is 64%. After the death of one spouse, the disparity in benefits between one-earner and two-earner couples may increase, as shown in the table. For the one-earner couple, the surviving spouse receives a benefit equal to two-thirds of the couple's combined benefit (for a reduction equal to one-third of the couple's combined benefit). For a two-earner couple with equal earnings (the second couple), the surviving spouse receives a benefit equal to one-half of the couple's combined benefit. Further, the surviving spouse in the first couple (the one-earner couple) receives a larger monthly benefit than the survivor of the second couple (a two-earner couple with earnings evenly split)—$1,770 compared with $1,120—although both couples paid the same amount of Social Security payroll tax contributions. Similarly, compared with the one-earner couple, the surviving spouse in the third couple (a two-earner couple with unequal earnings and higher total earnings than the one-earner couple) receives the same monthly benefit ($1,770) although the couple paid a higher amount of Social Security payroll tax contributions. For both two-earner couples in these examples, after the death of one spouse, the second earnings record does not result in the payment of any additional benefits. When spousal and survivors benefits were first established, most households consisted of a single earner—usually the husband—and a wife who cared for children and remained out of the paid workforce. As a result, benefits for nonworking spouses were structured to be relatively generous. Over the past six decades, women's earnings have increased and the share of households who have one earner has declined, and thus the share of women beneficiaries who received Social Security benefits solely based on husband's earnings record has decreased (see Figure 1 ). In addition to inequities among couples with different work histories and earnings levels, the current structure of Social Security auxiliary benefits creates inequities among the divorced. Divorced spouses with 9½ years of marriage, for example, receive no Social Security spousal and survivors benefits, whereas divorced spouses with 10 or more years of marriage may receive full spousal and survivors benefits. Other Program Design Considerations The current structure of Social Security spousal and survivors benefits raises other considerations for lawmakers with respect to potential policy changes. Social Security automatically provides pension rights to one or more eligible divorced spouses, in contrast to private pensions. Further, the benefit payable to the primary earner is not reduced for benefits paid to a current or one or more former spouses, again in contrast to private pensions. Divorced spouses receive a higher benefit after the death of their former spouse (the primary earner): benefits for a divorced spouse are equal to 50% of the primary earner's PIA, while benefits for a divorced surviving spouse are equal to 100% of the primary earner's PIA. This can create volatility in the income of divorced spouses. Widow(er)s who had high-earning spouses may face disincentives to marry a lower-earning second husband (if remarriage occurs before the eligibility age for widow[er]'s benefits). In response to the adequacy, equity, and other program design issues described above, policymakers and researchers have proposed a number of ways to restructure Social Security auxiliary benefits. Some of these proposals are discussed in the following section. Proposals for Restructuring Social Security Spousal or Survivors Benefits A number of proposals have been put forward to modify the current structure of Social Security spousal and survivors benefits. These proposals have different potential consequences for benefit levels of current, divorced, and surviving spouses; for the redistribution of benefits among couples from different socioeconomic levels; for the eligibility of means-tested programs such as Supplemental Security Income; and for work incentives. Earnings Sharing Earnings sharing has been suggested as a way to address the unequal treatment of one-earner versus two-earner couples under current law. As noted above, Social Security often provides higher benefits to one-earner couples than to two-earner couples with the same total household earnings. In addition, earnings sharing has sometimes been suggested as a way to provide benefits to divorced women whose marriages did not last long enough (at least 10 years) to allow them to qualify for divorced spousal or survivors benefits. By definition, earnings sharing would not affect never-married persons. Under the most basic form of earnings sharing, spousal and survivors benefits would be eliminated. Instead, for each year of marriage, a couple's covered earnings would be added together and divided evenly between the spouses. For years when an individual is not married, his or her own earnings would be recorded. If a person has multiple marriages, the earnings sharing would occur during each period of marriage. Both members of a couple would have individual earnings records reflecting shared earnings as a member of the couple as well as any earnings before or after the marriage. Social Security benefits would be computed separately for each member of the couple, based on the individual earnings records and using the current-law benefit formula. For couples who were married for the entire career of one or both members, both members of the couple would receive identical benefits and the couple's combined benefit would be equal to twice that of either member of the couple. The two spouses would receive different benefits, however, if either had earnings before or after the marriage. Earnings sharing proposals would reduce benefits for the majority of individuals, relative to current law, and in the absence of other benefit enhancements. For example, a 2009 Social Security Administration (SSA) study (hereinafter, 2009 SSA Study) found that 61% of individuals would receive average benefit reductions of about 17%. About 11% of individuals would experience no change in benefits, and 28% would experience benefit increases averaging about 10%. Among married couples, the benefit decrease under earnings sharing proposals would be substantially larger among individuals in one-earner married couples than two-earner married couples. This is mainly because the current system on average provides proportionately more benefits relative to payroll-tax contributions to one-earner couples than to couples with two earners, but under earnings sharing, couples with the same total lifetime earnings generally would receive the same benefits regardless of their individual earnings profiles, all things being equal. Studies have found that the largest benefit reductions under earnings sharing could affect widows and divorced women. The 2009 SSA study found that about 93% of widows would experience an average benefit reduction of 27% while 45% of divorced women would experience benefit reductions averaging about 22%. A 2016 study found that 39% of divorced women and 62% of widows would experience a median decrease in benefits of 6% and 14%, respectively. The decline in widow's benefits results from eliminating the surviving spouse benefit under current law and replacing it with earnings credits. The widow's benefit under current law is equal to 100% of the husband's PIA, where the husband's PIA is determined based on unshared earnings. Although earnings sharing would increase the amount of earnings credited to the surviving wife (assuming the husband was the higher earner), the benefit payable to the surviving wife based on shared earnings would be lower than the current-law widow's benefit. Another study found that the gains experienced by divorced spouses and some married women under earnings sharing would come largely at the expense of widowed men and women. Some earnings sharing proposals would mitigate these effects by providing enhanced benefits to survivors or other targeted groups. For example, an "inheritance provision" could allow a surviving spouse to count all (instead of half) of a deceased spouse's earnings (or those of a deceased former spouse) during each year of marriage, in addition to all of his or her own earnings. An inheritance provision would protect some, though not all, surviving spouses. For example, the 2009 SSA study found that 40% of widows would receive lower benefits relative to current law under earnings sharing with an inheritance provision (compared with 93% without the inheritance provision). Alternatively, benefits for surviving spouses could be based on an amount equal to two-thirds of the combined benefit the couple was receiving when both members of the couple were alive (see " Survivor's Benefit Increased to 75% of Couple's Combined Benefit " below), or special provisions could be targeted to surviving disabled spouses. Provisions to protect survivors from benefit reductions, however, would reduce the amount of savings that would otherwise be achieved through program changes. Similarly, provisions to increase benefits for survivors relative to current law would increase program costs. A higher survivor benefit could be self-financed by reducing, on an actuarially fair basis, the combined benefit the couple receives while both members of the couple are alive. Divorced Spouse Benefits Under the current Social Security program, a divorced spouse must have been married to the worker for at least 10 years to qualify for spousal and survivors benefits based on the worker's record, as discussed above. Benefits for divorced spouses are equal to 50% of the worker's PIA; benefits for divorced surviving spouses are equal to 100% of the worker's PIA. One approach to extend Social Security spousal and survivors benefits to more divorced spouses would be to lower the 10-year marriage requirement (for example, to 5 or 7 years). Proposals to lower the length-of-marriage requirement for divorced spouses would improve benefit adequacy for some, although not all, divorced women. One study estimated that lowering the marriage-duration requirement from 10 to 7 years would increase benefits for about 8% of divorced women and 2% of widowed women aged 60 or older in the year 2030. Lowering the marriage-duration requirement to 5 years (with a proportional decrease to benefit amounts) would increase benefits for about 11% of all divorced women in the year 2030. The study found that, among divorced women aged 60 and over who would receive higher benefits as a result of lowering the marriage-duration requirement to 5 or 7 years, the outcomes were moderately progressive in the sense that they channeled a greater share of benefit increases to low-income and non-college-educated divorced women in old age. For example, under a 7-year marriage-duration requirement, about 10% of divorced women in the lowest retirement income quintile would receive a benefit increase compared with around 4% in the highest quintile who would receive a benefit increase. Among divorced women who gain, women in the lowest retirement income quintile would see a median benefit increase of 79%, compared with a median increase of 25% among women in the highest quintile. An earlier study found a similar result. Some researchers contend that the 50% benefit rate for divorced spouses (50% of the worker's PIA) is not sufficient to prevent many divorced spouses from falling into poverty. The 50% benefit rate for spouses initially was established to supplement the benefit received by a one-earner couple (i.e., in 1939, a spousal benefit was provided for a dependent wife to supplement the benefit received by the worker). Some observers contend that it may not be sufficient for persons (divorced spouses) who may be living alone. As described above, about 13.7% of divorced women and 10.3% of divorced men aged 65 and older have incomes below the poverty line, compared with 2.1% and 2.4% of married women and men respectively in 2017 (see Figure 2 ). Increased Benefits for the Oldest Old Another type of benefit modification would increase benefits for the oldest old (for example, beneficiaries aged 80 or older, or after 20 years of benefit receipt) by a specified percentage such as 5%. One rationale for this proposal is that beneficiaries tend to exhaust their personal savings and other assets over time, becoming more reliant on Social Security at advanced ages. Another rationale is that, after the age of 60, Social Security retirement benefits do not keep pace with rising living standards. In particular, the formula for computing a worker's initial retirement benefit is indexed to national average wage growth through the age of 60 and then to price inflation (the Consumer Price Index for Urban Wage and Clerical Workers, or CPI-W) starting at the age of 62. Once a beneficiary begins receiving benefits, his or her benefits increase each year with price inflation (the annual cost-of-living adjustment, based on the CPI-W) so that the initial benefit amount is effectively fixed in real terms. Some argue that the CPI-W is an inaccurate measure of price inflation that seniors face. According to one study, a 5% bump-up in benefits at the age of 80 would result in a slight decline in poverty rates among widows and nonmarried retired-worker beneficiaries aged 80 or older (declines of 3 percentage points and 4 percentage points, respectively). The same study found that this option is not targeted toward low-income beneficiaries: less than 30% of the additional benefits would accrue to beneficiaries in the bottom quintile of the income distribution. Another SSA study finds that a 5% benefit increase in the individual's primary insurance amount for beneficiaries aged 85 or older in 2030 would decrease the projected poverty rate from 1.5% to 1.2%. Alternatively, a benefit increase for the oldest old could be limited to beneficiaries who receive a below-poverty-level benefit. One proposal along these lines would provide a benefit to persons aged 82 or older that would be prorated based on the number of years the person contributed to Social Security. Other proposals would link the Social Security COLA to the Experimental Consumer Price Index for Americans Aged 62 and Older (CPI-E), which grows faster than the CPI-W on average, and is projected to increase Social Security benefits. Although the changes were targeted to all Social Security beneficiaries, those who received COLAs under the new policy for many years, such as the very old or people who had been disabled for a long period, tend to receive the largest benefit increase. Minimum Benefit for Low Earners Social Security already has a "special minimum" benefit designed to help workers with long careers at low wages. A worker is awarded the special minimum benefit only if it exceeds the worker's regular benefit. The value of the special minimum benefit, which is indexed to prices, is rising more slowly than the value of the regular Social Security benefit, which is indexed to wages. As a result, the number of beneficiaries who receive the special minimum benefit under current law declines each year, and the Social Security Administration projected that the special minimum benefit provision would have no effect on people turning 62 years old in 2019 or later. Some observers argue that a carefully designed minimum benefit has the potential to reduce poverty rates among older women, including divorced and never-married women, more efficiently than existing spousal and survivors benefits. Minimum benefit proposals are aimed at improving the adequacy of benefits, in comparison with some other proposals that address issues of equity among individuals and couples with different marital statuses. Most minimum benefit proposals would require the worker to have between 30 and 40 years of Social Security-covered earnings to qualify for a minimum benefit at the poverty line or somewhat above it (for example, 120% of the poverty line). These work tenure requirements are intended to address, although not resolve, concerns that providing a minimum benefit could discourage work effort. Setting eligibility for a full minimum benefit at 30 to 40 years of covered earnings would allow many workers to take several years out of the labor force to care for children (or other family members) and still receive a higher benefit than they would have qualified for in the absence of a minimum benefit. Arguably, intermittent work histories play a greater role than long-term low earnings in leading to below-poverty-level benefits among women. Therefore, proposals for a minimum benefit based on a specified number of years of covered employment could be combined with modified spousal benefits or with a caregiver credit to balance recognition of longer work effort with recognition of the requirements of caregiving. To maintain the minimum benefit at a constant ratio to average living standards, some proposals would link the minimum benefit to wage growth instead of setting the minimum benefit equal to a specified percentage of the poverty line. The official poverty line is indexed to price growth, whereas living standards rise with increases in wages and productivity. Wage growth generally outpaces price growth. The 2010 National Commission on Fiscal Responsibility and Reform and the Bipartisan Policy Center both proposed packages that included, among other measures, provisions to create new minimum benefits. Some researchers propose modernizing the special minimum benefit by tying it to a poverty level that is in line with the recommendations of the National Academy of Social Insurance. If a new minimum benefit is provided, it would be necessary to address interactions between Social Security benefits and eligibility for Supplemental Security Income, Medicaid, and other means-tested programs for low-income individuals. Caregiver Credits and Drop-out Years for Caregiving Women are more likely than men to take career breaks to care for a child or other relative, as discussed above. The Social Security retired-worker benefit is based on the average of a worker's 35 highest years of covered earnings. If a worker has fewer than 35 years of earnings, for example due to years of unpaid caregiving, years of no earnings are entered as zeros in the computation of career-average earnings. Years of zero earnings lower the worker's career-average earnings, resulting in a lower initial monthly benefit. One approach is to replace years of low or zero earnings with a caregiver credit equal to a specified dollar amount. Some proposals would provide the same fixed credit to all eligible persons. Other proposals would link the amount of the credit to foregone earnings, so that higher earners would receive higher credits. The latter proposal would require that the caregiver have been in the paid labor force previously. Some proposals to base benefits on caregiving, rather than on marriage, would eliminate the current spousal benefit. A second approach is to drop years of caregiving , up to a fixed maximum number of years, from the benefit computation period. This approach could be implemented either by dropping years of zero earnings or by dropping years of low earnings. The proposal to drop years of zero earnings (rather than low earnings) would require a person to leave the workforce completely. This could be problematic for many women, making the proposal less likely to reach as many women as a caregiver credit. Allowing a parent to drop up to 5 years of zero (or low) earnings for caring for a child at home would cause the parent's AIME to be calculated based on the highest 30 years of earnings, rather than the highest 35 years of earnings (the benefit computation periods would be reduced from 35 years to 30 years). This change in the benefit computation would result in higher initial monthly benefits for these workers (and higher benefits for family members who receive benefits based on their work records). The Social Security Disability Insurance program allows up to three "drop-out" years for caregiving. Policies to credit years of caregiving in the provision of public pension benefits have been implemented in other countries in a variety of ways. In making such a provision, one question to consider is whether the credit should be available only to parents who have stopped working completely or also to parents who continue to work part-time or full-time. Another question to consider is whether to provide credits only for the care of young children or also for the care of other immediate family members such as an aging parent. For example, Canada excludes years of caring for children under the age of 7 from the averaging period in the pension calculation and from the contributory period under its earnings-related scheme, while Germany provides one pension point (equal to a year's contributions at the national average earnings) for three years per child, which can be taken by either the employed or nonemployed parent, or shared between parents (there are also credits for working while children are under the age of 10). Other recent proposals, however, would count additional years of earnings (more than 35 years) in the Social Security benefit computation. For example, some proposals would increase the averaging period from 35 to 38 years. These proposals are aimed at helping improve Social Security's projected long-range financial position and at encouraging people to work longer. Such proposals generally would affect women disproportionately. A criticism of proposals to drop or credit years of caregiving is that they may be of most benefit to higher-wage households that can afford to forego one spouse's earnings over a period of several years. Lower-wage spouses, and single working mothers, may not be in a position to stop working for any period of time. In addition, a practical issue involves ascertaining that years out of the workforce are actually spent caring for children or other family members. Survivor's Benefit Increased to 75% of Couple's Combined Benefit Under current law, an aged surviving spouse receives the higher of his or her own retired-worker benefit and 100% of the deceased spouse's PIA. This leads to a reduction in benefits compared with the combined benefit the couple was receiving when both members of the couple were alive. The reduction ranges from one-third of the combined benefit for a one-earner couple to one-half of the combined benefit for some two-earner couples. However, there is not always a corresponding reduction in household expenses for the surviving member of the couple. Some contend that 75% of the income previously shared by the couple more closely approximates the income needed by the surviving spouse to maintain his or her standard of living. One frequently mentioned proposal would increase the surviving spouse's benefit to the higher of (1) the deceased spouse's benefit, (2) the surviving spouse's own benefit, and (3) 75% of the couple's combined monthly benefit when both spouses were alive. The couple's combined monthly benefit when both spouses were alive would be the sum of (1) the higher-earner's benefit and (2) the higher of the lower-earner's worker benefit and spousal benefit. Some proposals for a 75% survivor benefit would target the provision to lower-income households by capping the survivor benefit, for example, at the benefit amount received by the average retired-worker beneficiary. A 75% minimum survivor benefit would increase benefits for many surviving spouses, both in dollar terms and as a replacement rate for the combined benefit received by the couple when both spouses were alive. For a one-earner couple, the benefit for the surviving spouse would increase from 100% to 112% of the worker's benefit (112% = 75% of 150% of the worker's benefit that the couple received when both spouses were alive). For a two-earner couple with similar earnings histories, the surviving spouse's benefit would increase from roughly 50% of the couple's combined benefit when both spouses were alive (under current law, the surviving spouse receives the benefit received by the higher-earning spouse while he or she was alive) to 75% of the couple's combined benefit when both spouses were alive. A 75% minimum survivor benefit provision would "reward" the second income of a two-earner couple and improve equity between one-earner and two-earner couples. Under current law, upon the death of either spouse, the earnings record of the lower-earning spouse does not result in the payment of any additional benefits (i.e., in addition to the benefits payable on the earnings record of the higher-earning spouse). Stated another way, the earnings record of the lower-earning spouse effectively "disappears" with the death of either spouse. Because a 75% survivor benefit would increase costs to the Social Security system, some have proposed financing it through a gradual reduction in the spousal benefit from 50% to 33% of the primary earner's benefit, while both spouses are alive. For a one-earner couple, the couple's combined benefit would be reduced from 150% to 133% of the worker's benefit. This is broadly consistent with the structure of private annuities, where the annuity payout is lower to adjust for a longer expected payout period. As a result, more dually entitled spouses would likely qualify for a retirement benefit based on their own work record only, because more dually entitled spouses would likely have a retired-worker benefit of their own that is equal to at least 33% (rather than 50%) of the higher-earning spouse's retired-worker benefit. Reducing a one-earner couple's combined monthly benefit to 133% of the worker's benefit, as a way to finance a 75% survivor benefit, could be problematic for low-income couples. Effectively, the increased survivor benefit would help the survivors of both one-earner and two-earner couples, but it would be financed by reducing the combined benefits of one-earner couples from 150% to 133% of the worker's benefit. In addition, unless this proposal were modified for divorced spouses, it would also reduce the spousal benefits received by divorced spouses from 50% to 33% of the primary earner's benefit. After the death of the primary earner, benefits for a divorced spouse would jump to 100% of the primary earner's benefit, creating income volatility unless this outcome is addressed for divorced spouses. Although the 75% survivor benefit option could increase benefits for vulnerable groups such as aged widows, it would not address the needs of other vulnerable groups, such as individuals who were never married or who divorced before reaching 10 years of marriage. In addition, a 75% survivor benefit option would provide somewhat more additional benefits to higher-income beneficiaries than to lower-income beneficiaries. To address this outcome, as noted above, some proposals would cap the 75% survivor benefit at the average retired-worker benefit. Conclusion Although more women have qualified for Social Security benefits based on their own earning records in recent decades, Social Security auxiliary benefits continue to play a crucial role in improving income security for older women, as well as for young surviving spouses and children of deceased workers. Some policymakers and researchers, however, have expressed concerns about the current structure of Social Security auxiliary benefits on both equity and adequacy grounds. For example, the current structure can lead to situations in which a one-earner couple receives higher retirement and survivors benefits than a two-earner couple with identical total household earnings. In addition, auxiliary benefits do not reach certain groups, such as persons who divorced before 10 years of marriage or mothers who never married. Some proposals have been suggested to increase Social Security benefits to certain, but not all, vulnerable groups. For example, an enhanced widow(er)'s benefit would provide income support to many elderly women and men, but it would not help those who divorced before 10 years of marriage or who never married. Similarly, a caregiver credit for workers who stay at home to care for young children would increase benefits for never-married and divorced women, but it would not help those without children, whether married or unmarried. The consideration of potential changes to Social Security spousal and survivors benefits involves balancing improvements in benefit equity, for example, between one-earner and two-earner couples, with improvements in benefit adequacy for persons who experience relatively higher poverty rates, such as never-married men and women. In addition, the policy discussion about auxiliary benefits may involve balancing benefit increases for spouses and survivors, divorced spouses, or never-married persons with other potential program changes to offset the higher program costs in light of the Social Security system's projected long-range financial outlook. Appendix A. Major Changes in Social Security Auxiliary Benefits Appendix B. Summary of Possible Adjustments to Social Security Spousal and Widow(er)'s Benefits Under Current Law Social Security benefits for spouses and widow(er)s are based on a percentage of the worker's primary insurance amount (PIA), with various adjustments for age at entitlement and other factors. The following section describes some of the adjustments that apply to benefits for spouses and widow(er)s. Age-Related Benefit Adjustment for Spouses Spousal benefits (including those for divorced spouses) are reduced when the spouse claims benefits before full retirement age (FRA) to take into account the longer expected period of benefit receipt (assuming the individual lives to average life expectancy). A spouse who claims benefits at the age of 62 (the earliest eligibility age for retirement benefits) may receive a benefit that is as little as 32.5% of the worker's PIA. Age-Related Benefit Adjustments for Widow(er)s The earliest age a widow(er) can claim benefits is age 60. If a widow or widower (including divorced and disabled widow(er)s) claims survivors benefits before FRA, his or her monthly benefit is reduced by a maximum of 28.5% to take into account the longer expected period of benefit receipt (assuming he or she lives to average life expectancy). In addition, survivors benefits may be affected by the deceased worker's decision to claim benefits before FRA. If the deceased worker claimed benefits before FRA (and therefore was receiving a reduced benefit) and the widow(er) claims survivors benefits at FRA, the widow(er)'s benefit is reduced under the widow(er)'s limit provision . Under the widow(er)'s limit provision, which is intended to prevent the widow(er)'s benefit from exceeding the deceased worker's retirement benefit, the widow(er)'s benefit is limited to (1) the benefit the worker would be receiving if he or she were still alive, or (2) 82.5% of the worker's PIA, whichever is higher. Benefit Adjustments Based on Other Factors Benefits for spouses and widow(er)s may be subject to other reductions, in addition to those based on entitlement before FRA. For example, under the dual entitlement rule, a Social Security spousal or widow(er)'s benefit is reduced or fully offset if the person also receives a Social Security retired-worker or disabled-worker benefit (see " Dually Entitled Beneficiaries " above). Similarly, under the g overnment p ension o ffset (GPO), a Social Security spousal or widow(er)'s benefit is reduced or fully offset if the person also receives a pension based on his or her own employment in certain federal, state, or local government positions that are not covered by Social Security. In some cases, a spousal or widow(er)'s benefit may be reduced to bring the total amount of benefits payable to family members based on the worker's record within the maximum family benefit amount. Under the Social Security retirement earnings test (RET), auxiliary benefits may be reduced if the auxiliary beneficiary is below the FRA and has earnings above specified dollar thresholds. Also, under the RET, benefits paid to spouses may be reduced if the benefits are based on the record of a worker beneficiary who is affected by the RET (excluding benefits paid to divorced spouses who have been divorced for at least two years). Table B-1 shows the percentage of a worker's PIA on which various categories of spousal and widow(er)'s benefits are based. It also shows the age at which benefits are first payable on a reduced basis (the eligibility age) and the maximum reduction to benefits claimed before FRA relative to the worker's PIA.

Social Security auxiliary benefits are paid to the spouse, former spouse, survivor, child, or parent of a Social Security-covered worker and are equal to a specified percentage of the worker's basic monthly benefit amount (subject to a maximum family benefit amount). For example, the spouse of a retired worker may receive up to 50% of the retired worker's basic benefit and the widow(er) of a retired worker may receive up to 100% of the retired worker's basic benefit. When auxiliary benefits were first established, most households consisted of a single earner—usually the husband—and a wife who cared for children and remained out of the paid workforce. As a result, benefits for nonworking spouses were structured to be relatively generous. A woman who was never employed but is married to a man with high Social Security-covered wages may receive a Social Security spousal benefit that is higher than the retirement benefit received by a single woman, or a divorced woman who was married less than 10 years, who worked a full career in a low-wage job. In recent decades, this household structure has changed in part because women have entered the workforce in increasing numbers. The labor force participation rate of women with children under the age of 18 increased from 47% in 1975 to 70.8% in March 2016. As a result, many women now qualify for Social Security benefits based on their own work records. Women are, however, more likely than men to take breaks in employment to care for family members, which can result in fewer years of contributions to Social Security and employer-sponsored pension plans. Beneficiaries who qualify for multiple benefits do not receive both benefits in full, however. For example, for a beneficiary eligible for his or her own retired-worker benefits as well as spousal benefits, the spousal benefit is reduced by the amount of the retired-worker benefit. The beneficiary receives a reduced spousal benefit (if not reduced to zero) in addition to his or her retired-worker benefit. This effectively means the beneficiary receives the higher of the two benefit amounts. Because of this, a two-earner household may receive lower total Social Security benefits than a single-earner household with identical total Social Security-covered earnings. Another change since 1939 has been an increase in the number of men and women who remain single or who have divorced. Persons who have never been married, or divorced before 10 years of marriage, do not qualify for Social Security spousal or survivors benefits under current law. Proposals to modify the Social Security auxiliary benefit structure are often motivated by desire to improve adequacy for certain beneficiaries, or equity between a two-earner household and a one-earner household with similar earning profiles. For example, some proposals address the adequacy of benefits for certain groups of beneficiaries, such as elderly and widowed women. Although Social Security plays an important role in the retirement security of aged women, about 13.9% of widowed women aged 65 or older, 15.8% of divorced elderly women, and 21.5% of never-married elderly women have family incomes below the official poverty line in 2017.

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Introduction The consumer data industry collects and subsequently provides information to firms about behavior when consumers conduct various financial transactions. Firms use this data to determine whether consumers have engaged i n behaviors that could be costly or beneficial to the firms. For example, lenders rely upon credit reports and scoring systems to determine the likelihood that prospective borrowers will repay their loans. The data may also be used to predict consumer behaviors that would financially benefit firms. Although the general public is likely to be more familiar with the use of credit reporting and scoring to qualify for mortgage and other consumer loans, the scope of consumer data use is much broader. Insured depository institutions (i.e., banks and credit unions) rely on consumer data service providers to determine whether to make checking accounts or loans available to individuals. Insurance companies use consumer data to determine what insurance products to make available and to set policy premiums. Some payday lenders use data regarding the management of checking accounts and payment of telecommunications bills to determine the likelihood that a consumer will fail to repay small-dollar cash advances. Merchants rely on the consumer data industry to determine whether to approve payment by check or electronic payment card. Employers may use consumer data information to screen prospective employees to determine, for example, the likelihood of fraudulent behavior. In short, numerous firms rely upon consumer data to identify and evaluate the risks associated with entering into financial relationships or transactions with consumers. Greater reliance by firms on consumer data significantly affects consumer access to financial products or opportunities. For example, negative or derogatory information, such as multiple overdrafts, involuntary account closures, loan defaults, and fraud incidents, may influence a lender to deny a consumer access to credit. Further, such information may stay on a consumer's reports for several years. The inclusion of negative information may be particularly limiting to consumers under circumstances in which such information is inaccurate or needs to be updated to reflect more current and possibly more favorable financial situations. Furthermore, consumers may find the process of making corrections to consumer data reports to be time-consuming, complex, and perhaps ineffective. The exclusion of more favorable information, such as the timely repayment of noncredit obligations, from standard credit reporting or scoring models may also limit credit access. This report first provides background information on the consumer data industry and various specialty areas. The report examines one prominent specialty area—consumer scoring—and describes various factors used to calculate credit scores. Next, the report provides a general description of the current regulatory framework of the consumer data industry. Finally, the report discusses selected policy issues pertaining to consumer data reports. Specifically, the report addresses policy issues concerning inaccurate or disputed consumer data provided in consumer data reports; how long negative or derogatory information should remain in consumer data reports; differences in billing and collection practices that can adversely affect consumer data reports, an issue of particular concern with medical billing practices; consumer's rights; whether uses of credit bureau data outside of the financial services, such as for employment decisions, adversely affect consumers and should be limited; whether the use of alternative consumer data or newer versions of credit scores may increase accuracy and credit access; and how to address data protection and security issues in consumer data reporting. For each policy issue, the report addresses corresponding legislative and regulatory developments. In the 116 th Congress, credit reporting and the consumer data industry is a topic of interest. On February 26, 2019, the House Financial Services Committee held a hearing on the consumer data industry, entitled, " Who ' s Keeping Score? Holding Credit Bureaus Accountable and Repairing a Broken System ." House Financial Services Committee Chairwoman Maxine Waters has also released two draft bills: the Comprehensive Credit Reporting Reform Act of 2019 (CCRRA) and the Protecting Innocent Consumers Affected by a Shutdown Act, which, if enacted, would address many of the policy issues discussed in this report. Where relevant, the report discusses the approach these bills would take to addressing the policy issues examined. The Consumer Data Industry and Specialty Services This section provides background information on the consumer data industry, which generally includes credit reporting agencies (CRAs), also referred to as credit bureaus (both terms are used interchangeably in this report). This section also provides background on credit scoring, a specialty service the industry provides, including a summary of the key factors known to affect credit scores. Consumer Reporting Services According to the Fair Credit Reporting Act (FCRA), which generally regulates the business of credit reporting, CRAs are firms that prepare consumer reports based upon individuals' financial transactions history data. Such data may include historical information about credit repayment, tenant payment, employment, insurance claims, arrests, bankruptcies, and check writing and account management. Consumer files, however, do not contain information on consumer income or assets. Consumer reports generally may not include information on items such as race or ethnicity, religious or political preference, or medical history. Equifax, Experian, and TransUnion are the three largest nationwide providers of credit reports. Other CRAs provide a variety of specialized consumer reporting services. Some specialty CRAs collect data regarding payment for phone, utilities (e.g., electric, gas, water), and telecommunication (e.g., cable) services. Utility and telecommunication service providers use the reports to verify the identity of customers and determine downpayment requirements for new customers. Property management companies and rent payment services may report to CRAs that specialize in collecting rent payment data for tenant and employment screening. Some CRAs specialize in consumer reporting for the underbanked, near prime, and subprime consumer segments, including consumers with minimal recorded data. Some CRAs specialize in debt collection (recovering past due funds) and fraud verification data. Firms that use consumer reports may also report information to CRAs, thus serving as furnishers . A tradeline is an account attached to a particular consumer that is reported to a CRA by a furnisher. A tradeline serves as a record of the transaction (payment) activity associated with the account. Furnishing tradelines is voluntary, and furnishers are not required to submit tradelines to all CRAs. Furnishers also have different business models and policies, resulting in different reporting practices. Some furnishers may report all unpaid customer obligations that were deemed uncollectible and written off their balance sheets; some report when money balances owed surpass minimum threshold levels; some report only the principal balances owed minus the penalties and fees; and others may report all monies owed. Furnishers also have discretion over the types of obligations they wish to report. Benefits to users of consumer data increase as more individual companies choose to participate as furnishers, but furnishers do incur costs to report data. To become furnishers, firms must be approved and comply with the policies of a CRA, such as fee registration requirements. The transfer of consumer data involves security risks, and many CRAs have adopted standardized reporting formats and requirements approved by the Consumer Data Industry Association (CDIA) for transferring data. Furnishers must be able to comply with industry data transfer requirements or some CRAs are unlikely to accept their data. Compliance may require investing in technology compatible with the computer systems of a CRA. Compliance costs may be more burdensome for smaller firms, causing some to choose not to be furnishers. In addition, entities that elect to become furnishers face legal obligations under the FCRA. The FCRA requires furnishers to report accurate and complete information as well as to investigate consumer disputes. Hence, reporting obligations could possibly, under some circumstances, result in legal costs, which may also influence a firm's decision to become a furnisher. Business models and policies of CRAs are also different. Different CRAs may collect the same information on the same individuals but adopt different conventions for storing the information. One CRA may report a delinquent debt obligation separately from the penalties and fees whereas another CRA may choose to combine both items into one entry. Consequently, consumer reports obtained from different CRAs on the same consumer are likely to differ due to different policies adopted by furnishers, CRAs, or both. Credit Scoring Services A consumer score is a (numeric) metric that can be used to predict a variety of financial behaviors. Consumer credit scores are prepared for lenders to determine, for example, the likelihood of loan default. Other consumer scores can be prepared to predict the likelihood of filing an insurance claim, overdrawing a bank account, failing to pay a utility bill, committing fraud, or a host of other adverse financial behaviors. Consumer scores are typically computed using the information obtained from one or more consumer reports. Rather than maintaining a repository of credit records, some firms are primarily engaged in the production of consumer scores. Hence, consumer scoring can be considered a specialty service in the consumer data industry. For example, if a user of a consumer report subsequently wants a consumer score, it may be charged an additional fee. Given the variety of different financial behaviors to predict, there are many consumer scores that can be calculated. Consumer scores for the same individual and behavior calculated by different scoring firms are also likely to differ. Consumer scoring firms may have purchased consumer information from different CRAs, which have their own policies for storing and reporting information. Each scoring firm has its own proprietary statistical model(s), meaning that each firm decides what consumer information should be included and excluded from calculations. Each firm can choose its own weighting algorithms. For example, included information can be equally weighted, or heavier weights can be placed on more recent information or on information otherwise deemed more pertinent. Sometimes the consumer scoring firm selects the appropriate weighting scheme, and sometimes the requestor of a consumer score may provide instructions to the preparer. Hence, consumers may not see the actual scores used until after the decisionmaking firms release them, particularly in cases when customized scores were requested and used in the decisionmaking process. Existing Consumer Protections and Regulation of CRAs This section provides a brief overview of existing consumer protections and regulation related to credit reporting. As noted, the Fair Credit Reporting Act, enacted in 1970, is the main statute regulating the credit reporting industry. The FCRA requires "that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information." The FCRA 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. The FCRA includes consumer protection provisions. Under the FCRA, consumers must be told when their information from a CRA has been used after an adverse action (generally a denial of credit) has occurred, and disclosure of that information must be made free of charge. Consumers have a right to one free credit report every year (from each of the three largest nationwide credit reporting providers) even in the absence of an adverse action (e.g., credit denial). Consumers also have the right to dispute inaccurate or incomplete information in their report. After a consumer alerts a CRA of such a discrepancy, the CRA must investigate and correct errors, usually within 30 days. The FCRA also limits the length of time negative information may remain on reports. Negative collection tradelines typically stay on credit reports for 7 years, even if the consumer pays in full the item in collection; a tradeline associated with a personal bankruptcy stays on a credit report for 10 years. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) established the Bureau of Consumer Financial Protection (CFPB), consolidating many federal consumer financial protection powers from other federal agencies. The CFPB has rulemaking and enforcement authorities over all CRAs for certain consumer protection laws; it has supervisory authority, or the authority to conduct examinations, over the larger CRAs. In July 2012, the CFPB announced that it would supervise CRAs with $7 million or more in annual receipts, which included 30 firms representing approximately 94% of the market. The CFPB conducts examinations of the CRAs, reviewing procedures and operating systems regarding the management of consumer data and enforcing applicable laws. In 2017, the CFPB released a report of its supervisory work in the credit reporting system. The report discusses the CFPB's efforts to work with credit bureaus and financial firms to improve credit reporting in three specific areas: data accuracy, dispute handling and resolution, and furnisher reporting. As the report describes, credit bureaus and financial firms have developed data governance and quality control programs to monitor data accuracy through working with the CFPB. In addition, the CFPB has encouraged credit bureaus to improve their dispute and resolution processes, including making it easier and more informative for consumers. Recently, Congress has also been interested in improving consumer protections in the credit reporting system, particularly in response to the 2017 Equifax data breach, which exposed personal information of millions of consumers. The Economic Growth, Regulatory Relief, and Consumer Protection Act ( P.L. 115-174 ), which was enacted in 2018, established new consumer protections relating to credit reporting, including the right to a free credit freeze. Credit freezes allow consumers to stop new credit from being opened in their name, to protect themselves from fraud and identity theft. Policy Issues This section examines selected policy issues pertaining to the use of credit reports and scores in consumer lending decisions. For each policy issue, the report highlights recent legislative and regulatory developments and discusses selected legislative proposals from the 116 th Congress that would address the issue. Inaccurate or Disputed Information The accuracy of consumer information in consumer data reports has been an ongoing policy concern. Inaccurate information in a credit report may limit a consumer's access to credit in some cases or increase the costs to the consumer of obtaining credit in others. In 2012, the Federal Trade Commission (FTC) reported that 26% of participants in a survey of credit report accuracy were able to identify at least one potentially material error on at least one of approximately three different credit reports prepared using their consumer information. After the reports were corrected, 13% of participants in the FTC study saw one or more of their credit scores increase. For those who saw an increase, over 40% of their scores rose by more than 20 points, which could increase the likelihood that the consumer would be offered less expensive credit terms. Credit reporting inaccuracies may occur for various reasons. Consumers may inadvertently provide inaccurate data when applying for financial services. Furnishers may inadvertently input inaccurate information into their databases. Matching information to the proper individual poses challenges, such as in cases when multiple individuals have similar names and spellings. In some cases, the information may be properly matched, but the individual could be a victim of fraud or identity theft. The predictive power of consumer data, or the ability to accurately predict a consumer's likelihood to default on a loan, would be enhanced to the extent that consumer tradelines are regularly updated with correct and current information. As mentioned in the previous section, the CFPB has recently encouraged credit bureaus and financial firms to improve data accuracy in credit reporting. For example, since 2014, the CFPB has required the largest consumer reporting firms to provide standardized accuracy reports on a regular basis. The accuracy reports must specify the frequency that consumers dispute information, list furnishers and industries with the most disputes, and provide dispute resolution information. According to the CFPB, the top 100 furnishers provide 76% of tradeline information to the largest nationwide CRAs, and the furnishers regularly update the account status of reported tradelines. In addition, the larger CRAs have also made improvements to the communication tool they use to facilitate the dispute resolution process between consumers and furnishers. Further, effective July 1, 2017, the CRAs enhanced public record data standards for the collection and timely updating of civil judgements and tax liens. Public record data must contain minimum identifying information (i.e., name, address, and Social Security number or date of birth) and must be updated at least every 90 days; otherwise, the tax lien and civil judgment information will no longer be reported. The accuracy of credit reports, nonetheless, ultimately depends upon consumers to monitor and dispute any discrepancies. If enacted, Chairwoman Waters' draft bill—the Comprehensive Credit Reporting Reform Act of 2019 (CCRRA)—would address some concerns relating to inaccurate or disputed data by establishing new consumer rights around the dispute process. These rights would include guaranteeing consumers more information about dispute investigations and granting consumers the right to appeal disputes to credit bureaus, thus formalizing the process. The CCRRA also would explicitly establish consumers' right to seek injunctive relief, a legal remedy where a court requires future behavior change (e.g., removing adverse information from a credit record). Lastly, the bill would provide credit restoration to consumers who are the victims of some predatory activities, such as deceptive lender acts or discrimination. Length of Time to Retain Negative Information Policymakers have also considered the appropriate length of time negative information should be allowed to remain on a credit report. Negative information generally refers to delinquencies or defaults, which typically remain on credit reports for seven years. Negative information in a credit report often results in a consumer appearing to pose a greater risk of default or other negative behavior. This may lead a consumer to either pay more for financial services or, in some cases, be denied access to credit entirely. Limiting a consumer's access to certain financial services, such as depository checking accounts or lower cost loans, may disproportionately affect the consumer's cost of engaging in financial transactions. Similarly, the use of consumer data reports by potential employers, discussed further below, may limit job opportunities that could arguably help applicants overcome financial challenges and thereby improve their credit histories. Retaining negative information on credit reports for an extended period of time may pose benefits and detriments. On the one hand, under circumstances in which the underlying information in a consumer data report is inaccurate or out of date, consumers may improperly be considered to pose a greater risk to a firm. In that case, the consumer may be offered costlier credit options (or even face denials of credit) that do not accurately reflect the consumer's actual risk of default. In other cases, consumers also may unfairly be considered to pose a greater risk now due to circumstances in the past that they have since overcome. On the other hand, the longer information remains on the credit report arguably allows lenders to see long-term trends that may be helpful for distinguishing between a rare occurrence and a consistent pattern in a consumer's behavior. Shorter or insufficient periods of time in which negative tradelines appear on consumer reports may also compromise the ability to compute reliable scores. If lenders view credit reports and scores as unreliable due to premature removal of negative information, they could increase downpayment requirements across the board for all credit applicants or reduce loan amounts. In short, lenders who are uncertain about data reliability might adopt stricter underwriting and lending policies. In addition to restricting credit access generally, this could reduce competition by allowing lenders with an established relationship and more information on a consumer to provide more favorable terms to that consumer than other companies. In addition, the Association of Certified Fraud Examiners (ACFE) found that poor credit can signal criminal activity, and earlier removal of negative information may make it more difficult for an organization to detect fraud, which may be particularly costly for small businesses and nonprofit organizations. Many preparers and users of credit scores have adopted weighting schemes that place less weight on older information in a consumer data report. Maintaining longer (rather than shorter) durations of negative tradelines on reports allows preparers to make greater use of variable-weighted algorithms to calculate scores, which may be useful when the importance of a weight needs to be modified over time. In addressing this policy issue, the CCRRA would shorten the time period that adverse information could remain on a person's credit report by three years (such that it remains on the report for a total of four years), among other things. Inconsistent Billing and Reporting Practices: Medical Tradelines Another policy issue that often arises in connection with credit reporting is that different holders of consumer debt bill differently and report to the CRAs differently. Inconsistent reporting practices result in variation of the timing with which unpaid debts appear on consumer reports. For example, medical providers may assign unpaid bills to debt collectors or sell outstanding debts to debt buyers. Some medical providers may assign or sell the debt after 60 days, but some may do so after 30 days (by comparison, most bank credit card delinquencies are assigned or sold after 180 days). Some firms may turn obligations over to collections as a tool to encourage consumers to settle unpaid balances, blurring the distinction between billing and collecting policies. Debt collectors or buyers subsequently furnish negative information to CRAs, causing tradeline accounts to appear on consumer reports. The CFPB used a random sample of approximately 5 million consumers as of December 2012 to determine what types of tradeline accounts were reported most frequently and the amounts. The CFPB found that approximately 33% of credit reports surveyed had collection tradelines, and approximately 52% of those collection tradelines were related to medical collections. After medical obligations, the CFPB found that the remaining collection tradelines of significant relevance were associated with unclassified debts (17.3%), cable or cellular bills (8.2%), utilities (7.3%), and retail stores (7.2%). All other categories of collectible tradelines were approximately 2% or less of the survey. For 85% of the respondents, the amounts owed for medical debt were for less than $1,000. In short, more than half of collection tradelines were associated with medical debt, and they were for relatively small amounts. Specifically, the median amount owed for the medical collection tradelines was $207, and 75% of all medical collection tradelines were under $490. One form of consumer debt—medical debt—is most often disputed by consumers and raises specific policy issues related to inconsistent billing and reporting practices. According to the CFPB study, consumers are unlikely to know when and how much various medical services cost in advance, particularly those associated with accidents and emergencies. People often have difficulty understanding co-pays and health insurance deductibles. Consequently, consumers may delay paying medical obligations as they either assume their insurance companies will pay or attempt to figure out why they have been billed, which often results in medical debt appearing unpaid on credit reports. Regulators and industry have taken actions that may reduce medical tradelines and their associated negative effects on consumer credit data. On December 31, 2014, the Internal Revenue Service (IRS) announced a final rule requiring the separation of billing and collection policies of nonprofit hospitals. Under the rule, hospitals that have or are pursuing tax-exempt status are required to make reasonable efforts to determine whether their patients are eligible for financial assistance before engaging in "extraordinary collection actions," which may include turning a debt over to a collection agency (thus creating a medical tradeline) or garnishing wages. In short, tax-exempt hospitals must allow patients 120 days from the date of the first billing statement to pay the obligation before initiating collection procedures. The IRS rule only impacts nonprofit hospitals, but, on September 15, 2017, the three major credit reporting agencies—Experian, Equifax, and TransUnion—established a 180-day (6 month) waiting period before posting a medical collection of any type on a consumer credit report. In addition, P.L. 115-174 , Section 302, amends the FCRA to provide credit reporting protections for veterans as follows: CRAs must exclude certain medical debt incurred by a veteran from his or her credit report if the hospital care or medical services relating to the debt predates the credit report by less than one year. CRAs must remove from the credit report a veteran's fully paid or settled medical debt previously characterized as delinquent, charged off, or in collection. CRAs must establish a dispute process and verification procedures for veterans' medical debt. Active duty military personnel receive free credit monitoring. The CCRRA would impose restrictions on the appearance of medical collections on consumer credit reports, codifying the CRA's 2017 180-day rule. It would also require expedited removal of all fully repaid or settled debts, including medical collections. Consumer Rights in the Credit Reporting System Consumers sometimes find it difficult to advocate for themselves when credit reporting issues arise because they are not aware of their rights and how to exercise them. According to a CFPB report, some consumers are confused about what credit reports and scores are, find it challenging to obtain credit reports and scores, and struggle to understand the contents of their credit reports. The CFPB receives more credit reporting complaints than complaints in any other industry it regulates. Currently, the CFPB provides financial education resources on its website to help educate consumers about their rights regarding consumer reporting. The credit bureaus' websites also provide information about how to dispute inaccurate information, and consumers can contact them by phone or mail. The CCRRA proposes that CRAs provide free credit scores and explanations of those scores to consumers in their annual free credit report. In addition, consumers would be entitled to these free credit reports at other times, for example, whenever they apply for a new mortgage, auto loan, or student loan, or if a consumer's identity is stolen. The report and score used to make underwriting decisions in connection with these events would be provided to the consumer. The CCRRA also would direct the credit bureaus to give consumers more information on dispute rights, and it would require hard inquires to be limited for a longer 120-day shopping window for certain consumer credit products (as described in the box "Some Factors Frequently Used to Calculate Credit Scores" above). Appropriate Purposes for Using Credit Bureau Data: Employment Decisions Policy questions exist regarding the appropriate uses of credit bureau data, particularly for uses outside of extending credit to consumers. For example, credit information can be used for employment decisions. According to the Society for Human Resource Management (a human resources professional society), in 2012, almost half of surveyed organizations in their membership used credit background checks on some of their job applications. Employers report that they use this information to reduce the likelihood of employee theft or embezzlement and to reduce legal liability for negligent hiring. To comply with the FCRA, employers must inform an applicant that his or her credit report is a part of a hiring decision, and acquire the applicant's written permission to obtain the report. If an applicant is denied a job, or if the employer takes another adverse action due to information on a credit report, then the applicant must be given a copy of the report and a summary of their FCRA rights. Whether the use of credit information in employment decisions unnecessarily harms prospective job applicants is debatable. For some occupations, past financial difficulties may increase the likelihood, for example, that the employee could be bribed or compromised in some way; however, this information may not be essential for success in all occupations. Currently, many states limit employers' use of credit information for employment decisions. The CCRRA would ban the use of credit information for employment decisions, unless required by law or for a national security investigation. Consumers with Limited Credit Histories and Use of Alternative Scoring Methods The CFPB estimates that credit scores cannot be generated for approximately 20% of the U.S. population due to their limited credit histories. The CFPB distinguishes between different types of consumers with limited credit histories. One category of consumers, referred to as credit invisibles , have no credit record at the three largest credit bureaus and, thus, do not exist for the purposes of credit reporting. According to the CFPB, this group represents 11.0% of the U.S. adult population, or 26 million consumers. Another category of consumers do exist (have a credit record), but they still cannot be scored or are considered non scorable . Nonscorable consumers either have insufficient (short) histories or outdated (stale) 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 according to the CFPB. Younger adults may be part of the credit invisible or nonscorable population because they lack a sufficient credit history. As consumers get older, however, the problem of being credit invisible or belonging to the insufficient part of the nonscorable group typically declines, but may begin to reoccur after the age of 60. Older adults, who may have considerably reduced their credit usage, perhaps as they prepare to enter retirement years, may encounter the problem of having stale credit records. Because credit scoring models vary by firms, consumers that cannot be scored by some models might still have the ability to be scored by other models; thus, the state of being nonscorable may depend upon the credit reporting data records and scoring models used. Borrowers with missing or impaired credit histories may be able to improve their ability to get reliable credit scores by using credit building loans, such as secured credit cards that require either security deposits as collateral for the amount of the line of credit or links to checking or savings accounts, thereby allowing lenders to recover funds if payments are missed. The security deposit is refunded if borrowers do not miss payments. Secured credit card lending can help borrowers build or repair their credit histories, assuming that the more favorable customer payment activity is reported to credit bureaus. In addition, the use of alternative credit scores may also help the credit invisibles because other types of consumer payment activity (discussed below) may be predictive in regard to how borrowers would manage credit. In short, options that increase the ability to calculate scores for the invisible or currently nonscoreable consumer groups could allow lenders to better determine the quantity and scope of financial relationships they can establish with such groups. A lternative credit scoring models could potentially increase accuracy by including additional information beyond that which is traditionally included in a credit report. For example, some credit score models do not distinguish between unpaid and paid (resolved) tradelines. Most credit scores are calculated without utility and rent payments information. Arguably, including this information would benefit the credit scores for some individuals with limited or no credit histories, potentially increasing their access to—and lowering their costs of—credit. Conversely, information about medical debts has often been included in credit scores, but the unevenness in medical reporting, as previously discussed, and possibly the consumers' lack of choice in incurring medical debt raises questions about whether medical debt tradelines should be considered reliable predictors of creditworthiness or credit performance. For this reason, some newer versions of credit scoring apply less weight to medical debt. In short, developing credit scores with new information might allow lenders to find new creditworthy consumers. Regulators and Congress have considered the potential for alternative credit scoring. In 2014, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac—the government-sponsored enterprises (GSEs) that purchase mortgages in the secondary market—to consider using more updated credit scoring models in their mortgage underwriting. Under P.L. 115-174 , FHFA is required to define, through rulemaking, the standards and criteria the GSEs will use for validating credit score models used when evaluating whether to purchase a residential mortgage. If enacted, the CCRRA would direct the CFPB to report to Congress on the impact of using nontraditional data on credit scoring. Full implementation of newer versions of credit scoring models, however, may not occur quickly. In the mortgage market, upgrading automated underwriting systems is costly for the GSEs, FHA, and loan originators. Not all originators will choose to update their automated underwriting systems. Even if alternative credit scoring models were widely adopted, the credit score is not the only variable considered during the underwriting process. Just as several factors are included in the development of a credit score, a credit score is only one of several factors included in an automated underwriting model (also referred to as an underwriting scorecard). The debt-to-income ratio, for example, may still be an important variable for mortgage underwriting. Higher levels of medical and student loan debts may still affect mortgage underwriting decisions. Hence, the use of alternative credit scores may help some borrowers close to a threshold or borderline, yet still not translate into significant changes in credit access across the board. Data Protection and Security Issues Congressional interest in data protection and security in the consumer data industry has increased following the announcement, on September 7, 2017, of the Equifax cybersecurity breach that potentially revealed sensitive consumer data information for 143 million U.S. consumers. CRAs are subject to the data protection requirements of Section 501(b) of the Gramm-Leach-Bliley Act (GLBA). Section 501(b) requires the federal financial institution regulators to "establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguard—(1) to insure the security and confidentiality of consumer records and information; (2) to protect against any anticipated threats or hazards to the security or integrity of such records; and (3) to protect against unauthorized access or use of such records or information which could result in substantial harm or inconvenience to any customer." The CFPB does not have the authority to prescribe regulations with regard to safeguarding the security and confidentiality of customer records. Instead, the FTC has the authority to enforce Section 501(b) as the federal functional regulator of nonbank financial institutions, including CRAs. The FTC has promulgated rules implementing the GLBA requirement. Because the FTC has little upfront supervisory or enforcement authority, the agency typically must rely upon its enforcement authority after an incident has occurred. In the 116 th Congress, bills such as H.R. 331 and H.R. 1282 would direct the FTC to ensure sufficient standards for safeguarding consumer information, including for the credit bureaus and data furnishers. In addition, in March 2019, a Government Accountability Office report became public that recommended actions for the FTC, the CFPB, and Congress to strengthen oversight of credit bureaus' data security. Meanwhile, P.L. 115-174 , Section 301, requires credit bureaus to provide fraud alerts for consumer files for at least a year under certain circumstances. In addition, credit bureaus must provide consumers with one free freeze alert and one free unfreeze alert per year. The law also established further requirements to protect minors. Currently, many credit bureaus provide consumers services such as credit monitoring for identity theft victims. In general, credit bureaus charge fees for these services, paid for by either a consumer or private company after a data breach incident. The CCRRA would expand protections for identity theft victims, including the right to free credit monitoring and identity theft services. It would require the CFPB to create new regulations to define the parameters for these new consumer benefits, including how long they should be provided and what services should be included.

The consumer data industry—generally referred to as credit reporting agencies or credit bureaus—collects and subsequently provides information to firms about the behavior of consumers when they participate in various financial transactions. Firms use consumer information to screen for the risk that consumers will engage in behaviors that are costly for businesses. For example, lenders rely upon credit reports and scores to determine the likelihood that prospective borrowers will repay their loans. Insured depository institutions (i.e., banks and credit unions) rely on consumer data service providers to determine whether to make available checking accounts or loans to individuals. Some insurance companies use consumer data to determine what insurance products to make available and to set policy premiums. Some payday lenders use data regarding the management of checking accounts and payment of telecommunications and utility bills to determine the likelihood of failure to repay small-dollar cash advances. Merchants rely on the consumer data industry to determine whether to approve payment by check or electronic payment card. Employers may use consumer data information to screen prospective employees to determine the likelihood of fraudulent behavior. In short, numerous firms rely upon consumer data to identify and evaluate potential risks a consumer may pose before entering into a financial relationship with that consumer. Greater reliance by firms on consumer data significantly affects—and potentially limits—consumer access to financial products or opportunities. Specifically, negative or derogatory information, such as late payments, loan defaults, and multiple overdrafts, may stay on consumer reports for several years and lead firms to deny a consumer access to credit, a financial product, or a job opportunity. Having a nonexistent, insufficient, or a stale credit history may also prevent credit access. Accordingly, various policy issues have been raised about the consumer data industry, most notably including the following: How to address inaccurate or disputed consumer data provided in consumer data reports; How long negative or derogatory information should remain in consumer data reports; How to address differences in billing and collection practices that can adversely affect consumer data reports, an issue of particular concern with medical billing practices; How to ensure that consumers are aware of their rights and how to exercise them in the event of a consumer data dispute; Whether uses of consumer data reports outside of the financial services, such as for employment decisions, adversely affect consumers and should be limited; Whether the use of alternative consumer data or newer versions of credit scores may increase accuracy and credit access; and How to address data protection and security issues in consumer data reporting. Congress has shown continuing interest in these and other policy questions surrounding the consumer data industry, particularly in its regulation and whether such regulation currently provides sufficient protection to consumers. In the 116th Congress, legislation has been introduced to address many of these concerns. The Comprehensive Credit Reporting Reform Act of 2019 (CCRRA) and the Protecting Innocent Consumers Affected by a Shutdown Act, both released as drafts by Chairwoman Maxine Waters, would amend the Fair Credit Reporting Act (FCRA) and create additional laws to address these concerns. Other relevant bills introduced in the 116th Congress address topics such as credit reporting and cybersecurity (H.R. 331 and H.R. 1282); credit information used for auto insurance (H.R. 1756); and federal employees affected by the shutdown (H.R. 935, H.R. 799, H.R. 1286, and S. 535).

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Introduction Congress enacted the Coastal Zone Management Act (CZMA; P.L. 92-583 , 16 U.S.C. §§1451-1466) in 1972 and has amended the act 11 times, most recently in 2009. Congress deliberated and passed the act at a time when concern about environmental degradation spurred passage of many of the nation's environmental statutes. CZMA sets up a national framework for states and territories to consider and manage coastal resources. If a state or territory chooses to develop a coastal management program and the program is approved, the state or territory (1) becomes eligible for several federal grants and (2) can perform reviews of federal agency actions in coastal areas (known as federal consistency determination reviews ). Since 1972, many of the trends that called congressional attention to coastal management have continued. Over a third of the U.S. population lived in shoreline counties in 2010, with more expected by 2020 as people continue to migrate to coastal areas to take advantage of economic opportunities, retire, and pursue recreational interests. Coastal areas are also home to economic sectors such as fishing, transportation, defense, offshore energy, and tourism and to natural resources such as estuaries, beach systems, and wetlands. The shoreline likely will continue to be affected by pressures to develop and preserve areas, large-scale events (e.g., hurricanes and tsunamis), and long-term changes (e.g., relative sea level, changes in rainfall, wetland loss, and increased temperatures). In addition to responding to these pressures, Congress may continue to consider whether CZMA is being effectively implemented and whether changes should be made to CZMA grant programs. This report provides a review of CZMA with a specific focus on the National Coastal Zone Management Program (NCZMP). The report discusses how and why states and territories may choose to participate in the national program (namely to access federal grant programs and undertake federal consistency determination reviews) and recent issues for Congress. The appendixes include information about amendments to CZMA over time and section-by-section summaries of current CZMA provisions. Coastal Zone Management Act Congress enacted CZMA "to establish a national policy and develop a national program for the management, beneficial use, protection, and development of the land and water resources of the nation's coastal zones." Although CZMA has been amended 11 times ( Appendix A ), the national policies as declared by Congress have stayed relatively consistent over time. They currently include the following six policies: 1. to preserve, protect, develop, and, if possible, restore or enhance coastal resources; 2. to encourage and assist states and territories to effectively exercise their development and management responsibilities in the coastal zone, giving full consideration to ecological, cultural, historic, and aesthetic values as well as the needs for compatible economic development; 3. to encourage the preparation of special area management plans to protect significant natural resources, support reasonable coastal-dependent economic growth, and improve protection of life and property; 4. to encourage the participation and cooperation of the public, state and local governments, interstate and other regional agencies, and federal agencies to carry out CZMA; 5. to encourage coordination and cooperation with and among appropriate federal, state, and local agencies, and international organizations, in collection, analysis, and dissemination of coastal management information and research; and 6. to respond to changing circumstances affecting the coastal environment and resources and their management by encouraging states and territories to consider ocean uses that may affect the coastal zone. Under CZMA, each level of government plays a role in coastal management. At the federal level, the National Oceanic and Atmospheric Administration's (NOAA's) Office for Coastal Management (OCM) in the Department of Commerce (DOC) implements CZMA's national policies and provisions. To participate in the NCZMP, states must adhere to guidelines as set in statute and related regulations. States and territories, however, determine the details of their coastal management programs (CMPs), including the boundaries of their coastal zones, issues of most interest to the state, and policies to address these issues, among other factors. Local governments implement the approved CMPs, often through land use regulations. National Coastal Zone Management Program OCM administers CZMA provisions under four national programs: NCZMP, National Estuarine Research Reserve System (NERRS), and Digital Coast. This report focuses on the NCZMP. The NCZMP encourages interested coastal states and territories (hereinafter referred to as states ) to work with NOAA to develop and implement coastal zone management programs. To join, states must develop CMPs pursuant to CZMA and federal regulations. States that join the NCZMP are eligible for several federal grants and have the right to review federal actions for consistency with state coastal policies. How States and Territories Become Part of the NCZMP If a state chooses to become part of the NCZMP, it must develop a CMP pursuant CZMA Section 306 and NOAA regulations. CMPs must contain "a broad class of policies for ... resource protection, management of coastal development, and simplification of governmental processes." The Secretary of Commerce (the Secretary) must conclude that the state has completed certain tasks (e.g., included required program elements and coordinated with local and regional agencies) to approve the CMP. Once the Secretary approves the state's CMP, the state is eligible to receive the NCZMP's benefits and is referred to as a participant of the national program. The Secretary is expected to evaluate participants at least once every three years to determine whether they are working toward their stated plans. Thirty-five states and territories (including states surrounding the Great Lakes, American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands) are eligible to participate. Although all 35 eligible states and territories have at some point chosen to participate, 34 are currently part of the NCZMP. Why States and Territories May Choose to Join the NCZMP Participation in the NCZMP provides various benefits to participants, including access to several federal grant programs and the right to review federal actions for consistency with state coastal policies. These provisions have been mainstays of CZMA since its development and enactment. Access to Federal Grant Programs Coastal states or territories with approved CMPs are eligible to apply for federal grants for coastal zone management. Grant programs have changed over time to reflect congressional priorities and have included grants for program development, coastal energy impacts, and research and technical assistance. Currently, CZMA authorizes the Secretary of Commerce to provide grants related to program administration (Section 306), coastal resource improvement (Section 306A), coastal and estuarine land conservation (Section 307A), coastal enhancement objectives (Section 309), technical assistance (Section 310), and coastal nonpoint pollution control (Section 6217) ( Table 1 ). Since 1972, NOAA has allocated over $2 billion in coastal zone management-related grants to eligible coastal states and territories ( Figure 1 ). NOAA disbursed the majority of the funds under Sections 306 and 306A grant programs. All 35 coastal states and territories received a portion of the funds since 1972, including Alaska, which is not currently a part of the NCZMP. States have received amounts ranging from $13 million to over $106 million in grant funding, depending on factors such as how long the state has been a part of the NCZMP, the state's size and population, and the extent of its success in competitive grant programs. In FY2017, Congress appropriated $85 million to NOAA for coastal management grants. Of that total, NOAA allocated nearly $58 million for Section 306 grants, with smaller amounts awarded for Sections 306A, 309, and 310 grants or withdrawn via government-wide rescissions and Department of Commerce NOAA assessments. The current CZMA grant program authorizations of appropriations have expired, but Congress has continued to fund the programs (see " Authorization of Appropriations for CZMA Grant Programs " for a longer discussion of the topic). Federal Consistency Determination Review CZMA Section 307 requires federal actions that have reasonably foreseeable effects on coastal uses or resources to be consistent with the enforceable policies of a participant's approved CMP. These actions may occur in the state's approved coastal zone or in federal or out-of-state waters (which may cause interstate coastal effects). Federal agencies or applicants proposing to perform these federal actions must submit a consistency determination to the potentially affected participant to consider whether the actions are consistent with state coastal policies. Legislation and NOAA regulation have defined several terms related to consistency review, including the following: Coastal zone is defined as the coastal waters and adjacent shorelands, strongly influenced by each other, and includes islands, transitional and intertidal areas, salt marshes, wetlands, and beaches. The zone extends in Great Lakes waters to the international boundary and in other areas seaward to the outer limit of the state title and ownership under various acts, such as the Submerged Lands Act. The zone extends inland from the shorelines only to the extent necessary to control shorelands and to control those geographical areas that are likely to be affected by or vulnerable to sea level rise. Identification of the coastal zone boundaries is a required part of an approved CMP. Effect on coastal use or resource refers to "any reasonable foreseeable effect on any coastal use or resource resulting from a federal agency activity or federal license or permit activity," including federal assistance to state and local governments. Effects may be environmental or impact coastal use; may be direct or secondary; and may result from the incremental impact of past, current, or future actions. The determination of whether the action will have a reasonably foreseeable effect is also known as the effects test. Enforceable policies are "state policies which are legally binding through constitutional provisions, laws, regulations, land use plans, ordinances, or judicial or administrative decisions, by which a state exerts control over private and public land and water uses and natural resources of the coastal zone." Federal actions include federal agency activities, federal license or permit activities, outer continental shelf plans, and federal assistance to state and local governments. NOAA requires participants to submit lists of federal actions that are subject to consistency determination reviews and their general geographic areas. Interstate coastal effect refers to any reasonably foreseeable effect resulting from a federal action occurring in one state on any coastal use or resource of another state that has an approved CMP. Effects may be environmental or impact coastal use; may be direct or secondary; and may result from the incremental impact of past, current, or future actions. A state must identify a list of federal actions in other states for approval by NOAA to perform interstate consistency determination reviews. Participant reviews of federal actions are context-specific and depend on the location and action in question, with different rights and responsibilities assigned to the federal agency, applicants, and participants involved. Details of the action—such as which party determines the foreseeable effects, the length of the participant review period, the effect of a participant's objection to the action, and the available conflict resolution or appeals options—depend on the federal action in question ( Table 2 ). Resolutions to participant objections to consistency determinations depend on the federal action in question, as follows: Federal agency activities and development projects: If a participant objects to a federal agency's consistency determination, the participant may request mediation from the Secretary of Commerce or OCM. Regardless of the mediation outcomes, the federal agency may proceed with its activities or development projects if the agency provides a legal basis for being consistent to the maximum extent practicable , or the agency has concluded that its proposed action is fully consistent with the participant's enforceable policies. Federal license or permit activities, outer continental shelf plans, and federal assistance to state and local governments: If the participant objects to the consistency certification, the federal agency cannot authorize the action unless the Secretary of Commerce overrides the objection. The applicant may appeal to the Secretary, who then will review the administrative record and may override a participant's objection if he or she finds that the action is consistent with the objectives of CZMA or is necessary for national security. For example, in 2008, the Secretary of Commerce overrode Maryland's objection to an applicant's consistency determination, finding that "the project [was] consistent with the objectives of CZMA." According to NOAA, participants review thousands of federal consistency determination each year, with more than half of the reviews being for federal license or permit activities. Remaining reviews are, in descending order, federal agency activities and development projects, federal financial assistance activities, and outer continental shelf plans. Over time, participants have concurred with 93% to 95% of the federal consistency determinations they have reviewed. The high concurrence rate may indicate that participants, federal agencies, and applicants often have negotiated project modifications or alternatives before the formal review process. Since the first CMP was approved in 1978, 45 consistency decisions have been subject to secretarial appeals, most recently in 2014 ( Figure 2 ). Of the 45 appeals, the Secretary overrode participant objections in 14 cases and agreed with the participant in the other 31 cases. An additional 65 appeals have been settled or withdrawn after they reached the secretarial level but before a determination was made, and 33 additional requests for appeals were dismissed or overridden on procedural grounds. As of April 2018, there were no appeals pending before the Secretary of Commerce. Issues for Congress Congress may continue to consider the effects of natural and man-made changes on the coast, the effectiveness of CZMA implementation, and the expired CZMA grant program authorizations of appropriations. These concerns have been considered in previous Congresses and/or have been recently raised by government agencies and various coastal stakeholders. Changes Along the Coast Congress may continue to examine CZMA in light of continued population and infrastructure growth along the coast, as well as coastal hazards such as flooding and erosion. According to the 2010 census, coastal shoreline counties were home to over 123 million people (39% of the U.S. population), and were expected to grow by another 10 million people by 2020. The ocean and Great Lakes economy accounted for 2.3% of total employment and contributed $320 billion to the total U.S. gross domestic product in 2015. Much of the population and infrastructure growth has occurred in shoreline communities amid ecosystems such as beaches, reefs, sea grasses, wetlands, estuaries, and deltas. The combination of built and natural systems has been and likely will continue to be affected by changes in sea level (and its impacts, such as higher tides, greater storm surge, saltwater intrusion, erosion, etc.), local rainfall, increasing water and air temperatures, and ocean acidification, among other factors. Several bills to amend CZMA would have addressed some of these changes. In the 115 th Congress, Members proposed bills focused on climate change preparedness or adaptation (e.g., H.R. 3533 and H.R. 4426 ) and "working waterfronts" (e.g., H.R. 1176 ). Other proposals would have expanded CZMA grant programs to locations (the District of Columbia, e.g., S. 3146 and H.R. 2540 ) and groups (Indian tribes, e.g., H.R. 2607 ) currently not eligible to apply to the grant programs. In previous Congresses, other bills proposed additional grant programs related to offshore activities, such as renewable energy siting surveys (e.g., H.R. 1690 , 111 th Congress), responses to oil spills and other disasters related to outer continental shelf energy activity (e.g., H.R. 3757 , 112 th Congress), aquaculture siting (e.g., H.R. 2046 , 104 th Congress), harmful algal blooms (e.g., H.R. 4235 , 105 th Congress), and Great Lakes restoration (e.g., S. 2337 , 108 th Congress). Some scholars have argued for substantial revision or improvements to CZMA to account for changes along the coast. Effectiveness of CZMA Implementation Congress may examine how NOAA has implemented CZMA and whether changes to the agency, the law, or the law's implementation are necessary. The effectiveness of CZMA implementation, specifically the NCZMP, has been evaluated since the law's enactment by a variety of entities, including the Department of Commerce inspector general, the Office of Management and Budget, the Government Accountability Office (GAO), and scholars. Evaluations have noted a range of issues, from monitoring and measuring the success of the program as a whole to issues concerning specific grant programs. GAO reported several issues with NOAA's implementation of CZMA and program evaluation in a 2014 report, including limitations to the coastal zone management performance measurement system, weaknesses in NOAA's method for selecting stakeholders for state program evaluations, and the agency's limited use of collected performance data. NOAA agreed with the recommendations. It is unclear whether NOAA has completed changes to address GAO's recommendations fully. In a separate 2016 study, GAO surveyed state coastal zone managers about the actions NOAA was taking under CZMA to support state efforts to make marine coastal ecosystems more resilient to climate change. GAO found that state coastal zone managers "generally had positive views of the actions NOAA [was] taking." Some have argued that the implementation of some CZMA programs has been inadequate. For example, some have questioned whether Section 6217 provisions have been properly implemented. Section 6217 of the Coastal Zone Reauthorization Amendments Act ( P.L. 101-508 ) amended CZMA to establish the Coastal Nonpoint Pollution Control Program (CNPCP). The CNPCP requires coastal states with approved CMPs to reduce polluted runoff to coastal waters through coastal nonpoint pollution control programs that include specific land-based measures. NOAA and the Environmental Protection Agency (EPA) jointly administer the CNPCP. Under Section 6217(c)(3), participants that fail to submit "approvable programs" lose a portion of their allotted funding under CZMA Section 306. Most participants received conditional approval between 1997 and 1998, and the majority have since received final approval. Several states have yet to receive final approval, including Alabama, Hawaii, Illinois, Indiana, Louisiana, Michigan, Mississippi, Ohio, Oregon, Texas, and Washington. In 2009 and 2016, a private organization sued NOAA and EPA for continuing to grant funds to Oregon and Washington, respectively. According to NOAA, the agency and EPA currently are working with the conditionally approved states to address the programs' remaining conditions. Authorization of Appropriations for CZMA Grant Programs Although Congress has continued to appropriate funding for CZMA grant programs, the program's authorizations of appropriations have expired. Current CZMA coastal zone management grant programs were last authorized for appropriations in the following years: Section 306 (Administrative Grants): FY1999; Section 306A (Coastal Resource Improvement Grants): FY1999; Section 307A (Coastal and Estuarine Land Conservation Program): FY2013; Section 309 (Coastal Zone Enhancement Grants): FY1999; and Section 6217 (Coastal Nonpoint Pollution Control Program): FY1995. Since 1995, two pieces of legislation have been enacted to reauthorize appropriations for a CZMA grant program ( P.L. 104-150 in 1996, which reauthorized appropriations for Sections 306, 306A, and 309 grant programs, and P.L. 111-11 in 2009, which established and authorized appropriations for the Section 307A grant program). Introduced pieces of legislation have proposed to reauthorize and increase appropriations for Sections 306, 306A, and 309 grant programs (e.g., S. 1142 in the 104 th Congress and S. 3038 in the 114 th Congress) or add additional authorizations for new grant programs (e.g., H.R. 3533 in the 115 th Congress and H.R. 1690 in the 111 th Congress). Congress appropriated $75 million to the NCZMP for "coastal zone management grants" in FY2018, despite the expired authorizations of appropriations. In FY2019, as in FY2018, NOAA has proposed to eliminate all coastal management grants. According to the FY2019 budget proposal, NOAA would "continue to support states' participation in the National CZM program by reviewing and supporting implementation of states' management plans, supporting Federal consistency reviews, and providing technical assistance services." Some stakeholders have contended that financial assistance to states from the NCZMP is important and more funding is necessary. For example, in a 2016 GAO survey, state coastal zone managers stated that "financial assistance provided by NOAA [was] critical" and that "the amount of financial assistance available [was] insufficient to address states' needs in implementing projects." NOAA officials also have stated that financial assistance for coastal zone management is in high demand. For example, the NOAA Regional Coastal Resilience grant program, administered under Section 310, received 132 applications requesting $105 million in FY2015; $4.5 million was available for grants. Others argue that funding should not be appropriated to the grant programs, as noted above, making the authorizations for appropriations no longer necessary. Appendix A. Coastal Zone Management Act of 1972 (CZMA) and Its Amendments Appendix B. Section-by-Section Summaries

Congress enacted the Coastal Zone Management Act (CZMA; P.L. 92-583, 16 U.S.C. §§1451-1466) in 1972 and has amended the act 11 times, most recently in 2009. CZMA sets up a national framework for states and territories to consider and manage coastal resources. If a state or territory chooses to develop a coastal zone management program and the program is approved, the state or territory (1) becomes eligible for several federal grants and (2) can perform reviews of federal agency actions in coastal areas (known as federal consistency determination reviews). Each level of government plays a role in coastal management under CZMA. At the federal level, the National Oceanic and Atmospheric Administration's (NOAA's) Office for Coastal Management (OCM) in the Department of Commerce implements CZMA's national policies and provisions. OCM administers CZMA under several national programs; the National Coastal Zone Management Program (NCZMP) is the focus of this report. To participate in the NCZMP, states and territories (hereinafter referred to as states) must adhere to guidelines set out in CZMA and related regulations. States determine the details of their coastal management programs (CMPs), including the boundaries of their coastal zones, issues of most interest to the state, and policies to address these issues, among other factors. Local governments then implement the approved CMPs, often through land use regulations. The Secretary of Commerce must approve state CMPs. Once the Secretary approves a state's CMP, the state is eligible to receive the NCZMP's benefits and is referred to as a participant in the program (16 U.S.C. §1455). Participation in the NCZMP provides several advantages to participants, including eligibility for federal grant programs and the right to review federal actions for consistency with state coastal policies. Thirty-five states and territories (including states surrounding the Great Lakes, American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands) are eligible to participate. Although all 35 eligible states have at some point chosen to participate, 34 are currently part of the NCZMP. Since 1972, NOAA has allocated over $2 billion in coastal zone management-related grants to eligible coastal states. States have received amounts ranging from $13 million to over $106 million in grant funding, depending on factors such as how long the state has been a part of the NCZMP, the state's size and population, and extent of the state's applications to grant programs. CZMA consistency provisions (Section 307) require federal actions that have reasonably foreseeable effects on coastal uses or resources to be consistent with the enforceable policies of a participant's approved CMP. These actions may occur in the state's approved coastal zone or in federal or out-of-state waters (which may cause interstate coastal effects). Federal agencies or applicants proposing to perform these federal actions must submit a consistency determination to the potentially affected participant, certifying that the actions are consistent with state coastal policies and providing participants the opportunity to review their determinations (16 U.S.C. §1456). The 116th Congress may consider changes to CZMA. These changes may address issues such as growing population and infrastructure needs and changing environmental conditions along the coast, questions about the effectiveness of CZMA implementation, and expired authorization of appropriations for CZMA grant programs. Some of these concerns were addressed in proposed legislation in the 115th Congress, such as legislation to expand grant programs to cover more topics and affected groups, and may be addressed in the 116th Congress.

crs_R45545

crs_R45545_0

Introduction The House of Representatives has standing rules that govern how bills and resolutions are to be taken up and considered on the floor. However, to expedite legislation receiving floor action, the House may temporarily set aside these rules for measures that are not otherwise privileged for consideration. This can be done by agreeing to a special order of business resolution (special rule) or by adopting a motion to suspend the rules and pass the underlying measure. In general, special rules enable the consideration of complex or contentious legislation, such as major appropriations or reauthorizations, while the suspension of the rules procedure is usually applied to broadly supported legislation that can be approved without floor amendments or extensive debate in the chamber. Most bills and resolutions that receive floor action in the House are called up and considered under suspension of the rules. The suspension procedure allows nonprivileged measures to be raised without a special rule, waives points of order, limits debate, and prohibits floor amendments. Motions to suspend the rules and pass the measure require a two-thirds vote, so the procedure is typically reserved for bills and resolutions that can meet a supermajority threshold. Decisions to schedule bills for consideration under suspension are generally based on how widely supported the measures are, how long Members wish to debate them, and whether they want to propose floor amendments. These decisions are not necessarily related to the subject matter of the measure. Accordingly, measures brought up under suspension cover a wide range of policy areas but most often address government operations, such as the designation of federal facilities. This report describes the suspension procedure, which is defined in clause 1 of House Rule XV, and provides an analysis of measures considered under suspension during the 114 th Congress (2015-2016). Figures 1- 8 display statistical data, including the prevalence and form of suspension measures, sponsors of measures, committee consideration, length of floor debate, voting, and resolution of differences between the chambers. Table 1 summarizes the final legislative status of measures initially considered in the House under the suspension of the rules. Finally, Figure A-1 depicts the use of the suspension procedure from the 110 th through the 114 th Congresses (2007-2016). House Rule XV (Clause 1) The suspension of the rules procedure is established by clause 1 of House Rule XV. Bills, resolutions, House amendments to Senate bills, amendments to the Constitution, conference reports, and other types of business may be considered under suspension, even those "that would otherwise be subject to a point of order … [or have] not been reported or referred to any calendar or previously introduced." Suspension motions are in order on designated days. As Rule XV states, "the Speaker may not entertain a motion that the House suspend the rules except on Mondays, Tuesdays, and Wednesdays and during the last six days of a session of Congress." Suspension measures, however, may be considered on other days by unanimous consent or under the terms of a special order of business (special rule) reported by the Committee on Rules and agreed to by the House. A motion to suspend the rules is a compound motion to suspend the House rules and pass a bill or agree to a resolution. When considering such a motion, the House is voting on the two questions simultaneously. Once recognized, the Member making the motion will say, "Mr. [or Madam] Speaker, I move to suspend the rules and pass___." The House rules that are suspended under this procedure include those that "would impede an immediate vote on passage of a measure … such as ordering the previous question, third reading, recommittal, or division of the question." A measure considered under the suspension procedure is not subject to floor amendment. The motion to suspend and pass the measure, though, may provide for passage of the measure in an amended form. That is, the text to be approved may be presented in a form altered by committee amendments or by informal negotiations. Suspension measures that are passed with changes incorporated into the text are passed "as amended." There are no separate votes on the floor approving such amendments. Suspension motions are "debatable for 40 minutes, one-half in favor of the motion and one-half in opposition thereto." However, in most instances, a true opponent never claims half the time, and most speakers come to the floor to express support for the measure. Debate time is controlled by two floor managers, one from each party, who sit on a committee of jurisdiction. Each manager makes an opening statement and may yield increments of the 20 minutes they control to other Members to debate the measure. Once debate has concluded, a single vote is held on the motion to suspend the rules and pass the measure. The motion requires approval by "two-thirds of the Members voting, a quorum being present." Should the vote fall short of the two-thirds required for passage (290, if all Members vote), the measure is not permanently rejected. Before the end of the Congress, the House may consider the measure again under suspension, or the Committee on Rules may report a special rule that provides for floor consideration of the measure. Prevalence and Form of Suspension Measures, 114th Congress As illustrated in Figure 1 , the majority of measures considered on the House floor during the 114 th Congress were called up under the suspension of the rules procedure. Sixty-two percent of all measures that received floor action were considered under suspension (743 out of the 1,200), compared to those under the terms of a special rule (14%), unanimous consent (7%), or privileged business (16%). Figure 2 displays the form of suspension measures. Most of the measures considered under suspension during the 114 th Congress (94%) were bills. House bills made up 83% of the suspension total, Senate bills 11%. Sponsors of Suspension Measures As represented in Figure 3 , most suspension measures were sponsored by members of the majority party during the 114 th Congress. House or Senate majority-party members sponsored 69% of all bills and resolutions initially considered in the House under suspension, while House majority-party members sponsored 467 (71%) of the 660 House-originated measures (designated with an H.R., H.Res., H.Con.Res. or H.J.Res. prefix). Suspension is, however, the most common procedure used to consider minority-sponsored legislation in the House by a wide margin. In the 114 th Congress, 85% of the minority-sponsored measures that were considered on the House floor were raised under the suspension procedure. Members of the House or Senate minority parties sponsored 31% of all suspension measures originating in either chamber, compared to 9% of legislation subject to different procedures, including privileged business (17 measures), unanimous consent (21 measures), and special rules (one Senate bill). Minority-party House Members sponsored 193 (29%) of the 660 House measures considered under suspension. No minority-party House Member sponsored a House-originated measure that was considered under a special rule. Committee Consideration Committee Referral Most suspension measures are referred to at least one House committee before their consideration on the chamber floor. In the 114 th Congress, 710 out of the 743 suspension measures considered (96%) were previously referred to a House committee. Of the 33 measures that were considered without a referral, 31 were Senate bills that were "held at the desk," and two were House resolutions that provided concurrence to Senate amendments. Measures may be referred to multiple House committees before receiving floor action. When a bill or resolution is referred to more than one House committee, the Speaker will designate one committee as primary, meaning it is the committee exercising jurisdiction over the largest part of the measure. Generally, the chair of the committee of primary jurisdiction works with majority party leadership to determine if and when a measure should be considered under suspension. Figure 4 shows the number and percentage of measures brought up under suspension from each House committee of primary jurisdiction. The House Committee on Oversight and Government Reform (now Oversight and Reform) was the committee of primary jurisdiction for the plurality of measures considered under suspension in the 114 th Congress: 106, or 14%, of the total number of suspension measures considered. Many of these bills designated names for post offices or other federal properties. For most House committees, the majority of their referred measures that reached the floor were raised under the suspension procedure. In the 114 th Congress, the four exceptions were the Committee on House Administration—which had several measures considered by unanimous consent—and the Committees on Appropriations, the Budget, and Armed Services, which had at least half of their measures considered pursuant to special rules. For the other committees, suspension measures ranged from 57% to 100% of the total number of the committee's measures receiving floor action ( Figure 5 ). Since suspension motions require a two-thirds majority for passage, House committees that handle less contentious subjects tend to have more of their measures considered under the suspension procedure in comparison to other committees. In the 114 th Congress, high-suspension committees included Small Business (100% of measures receiving floor action) and Veterans' Affairs (92%). The Small Business Committee's measures sought to authorize new business development programs. Veterans' Affairs measures included authorizations, reauthorizations, and bills designating federal facilities. Committee Markup and Reporting While suspension measures are not subject to floor amendments, committees may recommend amendments to legislative texts during markup meetings or through informal negotiations. The motion to suspend the rules can include these proposed changes when a Member moves to suspend the rules and pass the measure "as amended." In the 114 th Congress, 396 suspension measures (53% of the total) were considered "as amended," meaning that the text to be approved differed from the measure's introduced text. Clause 2 of House Rule XIII requires that measures reported by House committees must be accompanied by a written report. Otherwise, they are not placed on a calendar of measures eligible for floor consideration. However, the written report requirement is among those rules suspended under the suspension procedure. Thus, measures may be called up on the floor under suspension of the rules even if a committee never ordered them to be reported or wrote an accompanying committee report. Instead, the motion to suspend the rules discharges the committee and moves the legislation directly to the House floor. In the 114 th Congress, 517 (70%) suspension measures were ordered to be reported by a House committee. Of this number, 398 were reported with an accompanying House committee report. Twenty measures that did not have a House report did have a Senate report, while 325 measures had no written report from either chamber (43% of the total number of suspension measures). Floor Consideration Raising Measures (Day of Week) Pursuant to Rule XV, motions to suspend the rules are regularly in order on Mondays, Tuesdays, and Wednesdays or on the last six days of a session of Congress. However, suspension motions may be considered on other days by unanimous consent or under the terms of a special rule reported by the Committee on Rules and agreed to by the House. As displayed in Figure 6 , in the 114 th Congress, the plurality of suspension measures were considered on Tuesdays (312, 42% of the total number considered), followed by Mondays (291, 39%) and Wednesdays (114, 15%). In addition, 25 suspension measures were considered on Thursdays and one on a Friday. Of these, one was considered by unanimous consent, while 25 were called up under suspension pursuant to permission included in a special rule reported by the Rules Committee and agreed to by the full House. Such special rules included a provision stating, "It shall be in order at any time on the legislative day of ___ for the Speaker to entertain motions that the House suspend the rules as though under clause 1 of rule XV." Majority and Minority Floor Managers Pursuant to Rule XV, suspension measures are "debatable for 40 minutes, one-half in favor of the motion and one-half in opposition thereto." In practice, there is rarely a true opponent to a motion to suspend the rules, and the time is divided between two floor managers, usually one from each party, who both favor the motion. The floor managers each control 20 minutes of debate. The managers may be their parties' sole representative for or against the motion, or they may yield increments of the 20-minute allotment to other Members. Typically, the relevant committee chairs and ranking members select the majority and minority floor managers for particular bills and resolutions. These managers may be the measure's sponsor, the chair or ranking member of the measure's committee of primary jurisdiction, or another committee member. In the 114 th Congress, the measure's sponsor served as the majority manager on 26% of the suspension measures receiving floor action. The committee chair managed 29% of the measures. The minority manager was the measure's sponsor for 11% of the measures and the committee's ranking member for 26% of the measures considered. Occasionally, floor managers controlling time on a motion to suspend the rules ceded their control to other Members during debate. In two identified cases, both the majority and minority floor managers favored the measure, and another Member claimed the time in true opposition during the initial floor consideration of the measure. In at least one other instance, the minority manager asked unanimous consent to yield managerial control to another Member. Debate Managers and Additional Speakers A majority floor manager makes the motion to suspend the rules by stating, "Mr. [Madam] Speaker, I move to suspend the rules and pass the bill [or resolution] ____." The Speaker [or Speaker pro tempore] responds, "Pursuant to the rule, the gentleman[woman] from [state] and the gentleman[woman] from [state] each will control twenty minutes." The majority and minority managers then, in turn, make opening statements regarding the measure using the 20 minutes each controls. If the majority and minority managers have secured additional speakers, the speakers generally alternate between the parties within the 40-minute limit. During the 114 th Congress, on a motion to suspend the rules, the average number of speakers in addition to the floor managers was fewer than two. On 83% of the measures (620) considered, there were one or two additional speakers. On 27% of the measures (199) considered, there were no additional speakers, and in 16% of the measures (120) considered, there were 3 to 12 additional speakers. Three measures had 20, 21, and 25 additional speakers, respectively. At the start of the debate period, the majority manager may request "unanimous consent that all Members may have five legislative days in which to revise and extend their remarks and add extraneous materials on this bill [resolution]." This request enables general leave statements to be inserted into the Congressional Record . In 29% of the suspension measures considered in the 114 th Congress, a written general leave statement appeared in the Record following in-person remarks, indicating that the remarks were submitted on the day the legislation was considered. General leave statements submitted on a day other than the day of consideration appear in the Extension of Remarks section of the Congressional Record . Length of Consideration Suspension measures are limited to a maximum of 40 minutes of debate under Rule XV. However, if there are time gaps between speakers or procedural interruptions, such as a vote on a motion to adjourn, the time period between the start of the first speaker's remarks and the conclusion of debate may exceed 40 minutes. The statistics displayed in Figure 7 show the length of consideration of suspension measures as documented in Congress.gov, not the accumulated length of statements, as kept by official timekeepers in the chamber. In the 114 th Congress, the average length of consideration on a motion to suspend the rules was 13 minutes and 10 seconds, and half of the measures considered had a debate period of 10 minutes or less. Thus, while overall debate is limited to 40 minutes under the rule, on most suspension measures, only a fraction of that time was actually expended during consideration. Seventeen measures, however, had consideration periods that exceeded 40 minutes due to procedural delays or, in the case of one measure, a request for unanimous consent to extend debate by 10 minutes to each side. Voting and Passage in the House House leaders generally choose measures for suspension that are likely to achieve the two-thirds majority threshold for passage. Thus, almost all suspension measures were passed by the House in the 114 th Congress. The full House approved all House resolutions (28), concurrent resolutions (12), joint resolutions (2), and Senate bills (82) that were considered under suspension. The House also passed, via motions to suspend the rules, 612 of the 619 House bills that were initially considered under suspension. Seven bills did not receive the requisite supermajority. Two of these bills were later considered and approved under the terms of a special rule. The remaining five bills did not return to the floor and therefore did not pass the House. Voice Votes Most suspension motions are agreed to in the House by voice vote, which is the chamber's default method of voting on most questions. In 2015 and 2016, this method of voting led to the final approval of 72% (531) of the motions to suspend the rules and pass the measures (see Figure 8 ). Record Votes After the initial voice vote, Members triggered an eventual record vote (often called a roll call vote) on 212 (28%) of the suspension measures considered in the 114 th Congress. This was done by demanding the "yeas and nays," objecting to the vote "on the grounds that a quorum is not present," or, in one case, demanding a recorded vote. In most instances, the chair elected to postpone the vote to a later period, within two additional legislative days, pursuant to clause 8 of House Rule XX. Of the 212 record votes, 3 immediately followed debate on the measure. The remaining 209 votes were postponed to another time on the legislative schedule, usually later the same day. In the 114 th Congress, 205 suspension motions were adopted by record vote, and 7 motions to suspend the rules were defeated by record votes. The defeat of a motion to suspend the rules, however, does not necessarily kill the legislation. The Speaker may choose to recognize a Member at a later time to make another motion to suspend the rules and pass the bill, or the House may consider the measure pursuant to a special rule reported by the Committee on Rules. Accordingly, two of the initially unsuccessful measures were later called up and passed under the terms of a special rule. Five measures were not considered again, via any House floor procedure, before the end of the 114 th Congress. Final Disposition of Measures Considered Under Suspension of the Rules Passed by the Senate Although suspension measures generally receive broad support, measures that receive the requisite two-thirds majority in the House are not guaranteed passage in the Senate. As noted in Table 1 , in the 114 th Congress, the Senate passed 197 of the 619 House bills initially considered under suspension (32%). Additionally, the Senate agreed to 1 of the 2 House joint resolutions and 5 of the 11 House concurrent resolutions considered under suspension of the rules. Of the number of suspension measures that passed the House and Senate, 60 required a resolution of differences between the chambers. Forty-four House measures and 15 Senate bills were subject to an amendment exchange process, and on one occasion, a conference committee was used to resolve the differences between the House and Senate versions of a House bill. The Senate passed three House bills, initially approved in the House under suspension, that did not become public law because the House did not agree to the final bill text, as amended by the Senate. In those instances, the House did not reconsider the bills once the Senate returned the Senate-amended versions to the House chamber. Thus, 194 House bills were presented to the President for signature. Presidential Action Of the measures initially considered under suspension during the 114 th Congress, President Obama was presented with 194 House bills, 82 Senate bills, and 1 House joint resolution for signature or veto. The President vetoed H.R. 1777 (Presidential Allowance Modernization Act of 2016) and S. 2040 (Justice Against Sponsors of Terrorism Act). The House chose not to attempt a veto override on H.R. 1777 , so the measure did not become public law. Both the Senate and House voted to override the veto of S. 2040 , enabling it to become law without the President's signature ( P.L. 114-222 ). Thus, of the 703 law-making measures (bills and joint resolutions) initially considered under suspension of the rules, 193 House bills, 82 Senate bills, and 1 House joint resolution became public law (see Table 1 ). Appendix. Use of Suspension Motions, 110th-114th Congresses

Suspension of the rules is the most commonly used procedure to call up measures on the floor of the House of Representatives. As the name suggests, the procedure allows the House to suspend its standing and statutory rules in order to consider broadly supported legislation in an expedited manner. More specifically, the House temporarily sets aside its rules that govern the raising and consideration of measures and assumes a new set of constraints particular to the suspension procedure. The suspension of the rules procedure has several parliamentary advantages: (1) it allows nonprivileged measures to be raised on the House floor without the need for a special rule, (2) it enables the consideration of measures that would otherwise be subject to a point of order, and (3) it streamlines floor action by limiting debate and prohibiting floor amendments. Given these features, as well as the required two-thirds supermajority vote for passage, suspension motions are generally used to process less controversial legislation. In the 114th Congress (2015-2016), measures considered under suspension made up 62% of the bills and resolutions that received floor action in the House (743 out of 1,200 measures). The majority of suspension measures were House bills (83%), followed by Senate bills (11%) and House resolutions (4%). The measures covered a variety of policy areas but most often addressed government operations, such as the designation of federal facilities or amending administrative policies. Most measures that are considered in the House under the suspension procedure are sponsored by a House or Senate majority party member. However, suspension is the most common House procedure used to consider minority-party-sponsored legislation regardless of whether the legislation originated in the House or Senate. In 2015 and 2016, minority-party members sponsored 31% of suspension measures, compared to 9% of legislation subject to different procedures, including privileged business (17 measures), unanimous consent (21 measures), and under the terms of a special rule (one Senate bill). Most suspension measures are referred to at least one House committee before their consideration on the floor. The House Committee on Oversight and Government Reform (now called the Committee on Oversight and Reform) was the committee of primary jurisdiction for the plurality of suspension measures considered in the 114th Congress. Additional committees—such as Energy and Commerce, Homeland Security, Natural Resources, Foreign Affairs, and Veterans' Affairs—also served as the primary committee for a large number of suspension measures. Suspension motions are debatable for up to 40 minutes. In most cases, only a fraction of that debate time is actually used. In the 114th Congress, the average amount of time spent considering a motion to suspend the rules was 13 minutes and 10 seconds. The House adopted nearly every suspension motion considered in 2015 and 2016. Approval by the House, however, did not guarantee final approval in the 114th Congress. The Senate passed or agreed to 40% of the bills, joint resolutions, and concurrent resolutions initially considered in the House under suspension of the rules, and 276 measures were signed into law. This report briefly describes the suspension of the rules procedure, which is defined in House Rule XV, and provides an analysis of measures considered under this procedure during the 114th Congress. Figures and one table display statistics on the use of the procedure, including the prevalence and form of suspension measures, sponsorship of measures by party, committee consideration, length of debate, voting, resolution of differences between the chambers, and the final status of legislation. In addition, an Appendix illustrates trends in the use of the suspension procedure from the 110th to the 114th Congress (2007-2016).

crs_R44572

crs_R44572_0

Introduction1 This report focuses on selected U.S. airborne electronic attack programs. Such programs involve developing and procuring both the aircraft whose primary mission is electronic warfare (EW) and the EW systems that are mounted on U.S. aircraft. The President's FY2020 budget request for the Department of Defense (DOD) seeks funding for a number of airborne EW programs. These programs pose a number of potential oversight issues for Congress, and its decisions on these issues could affect future U.S. military capabilities and funding requirements. Congress has continually shown interest in EW, and airborne electronic attack in particular. Some Members have formed the EW Working Group, and they routinely discuss improving EW capabilities. The National Defense Authorization Acts over the past several years have included provisions related to EW and electronic attack. Most recently the FY2019 John S. McCain National Defense Authorization Act, discussed the Air Force's acquisition strategy for a new EW attack aircraft as well as a study to catalogue all EW capabilities. Background Electronic Warfare Overview2 Electronic warfare (EW)—sometimes also called electromagnetic maneuver warfare (EMW) —is a component of modern warfare, particularly in response to threats posed by technologically sophisticated potential adversaries such as Russia and China. EW generally refers to operations that use the electromagnetic spectrum (i.e., the "airwaves") to detect, listen to, jam, and deceive (or "spoof") enemy radars, radio communication systems and data links, and other electronic systems. It also refers to operations for defending against enemy attempts to do the same. More formally, DOD defines electronic warfare as "military action involving the use of electromagnetic and directed energy to control the electromagnetic spectrum or to attack the enemy." As shown in Figure 1 , DOD divides EW into electronic warfare support, electronic protection, and electronic attack. Electronic warfare support , sometimes also referred to as electronic support measures (ESM), involves listening to an adversary's radar and radio transmissions in order to detect, locate, and understand how to avoid, jam, or deceive those systems. Electronic protection involves limiting the electromagnetic signatures of one's own military equipment and hardening one's own military equipment against the effects of enemy EW operations. Electronic attack (EA) involves jamming and deceiving enemy radars and radio communications and data links. Developing ever-better EW systems is a component of the overall competition in military capabilities between major military powers. This issue is not frequently discussed publicly in much detail, because the specifics of EW programs tend to be classified and are closely related to intelligence systems and capabilities. EW in an Era of Renewed Great Power Competition During the Cold War, EW capabilities supported the overall competition in military capabilities between the U.S.-led NATO alliance and the Soviet-led Warsaw Pact alliance. The end of the Cold War and the shift in the early 1990s to the post-Cold War era—a period that featured reduced tensions between major powers and a strong U.S. military emphasis on countering terrorist and insurgent organizations—may have led to a reduced emphasis in U.S. defense plans and programs related to so-called high-end warfare, meaning high-intensity warfare against technologically sophisticated adversaries. In recent years, the shift in the international security environment from the post-Cold War era to an era of renewed great power competition has increased the focus on EW in U.S. defense planning and programming. In particular, attention has been given to aspects of EW related to high-end warfare and to concerns among some observers that the United States needs to strengthen its efforts in EW as part of its overall effort to preserve U.S. qualitative military superiority over potential adversaries such as Russia and China. DOD notes Russia has placed an emphasis on EW in its military modernization effort. For example, Russia reportedly has employed EW as part of its military operations in Ukraine and Syria. DOD similarly states that China recognizes the importance of EW in modern military operations and is developing its EW capabilities as an integral part of its broad-based military modernization effort. As China encourages greater integration between its civil and military technological and industrial bases, its EW capabilities may benefit from the sophistication of its extensive civilian electronics industry. Relationship of EW to Cyberwarfare EW emerged in the early and middle decades of the 20 th century with the invention and spread of radio and radar and their use in military operations. It therefore predates cyberwarfare, which emerged decades later with the invention and spread of computers and the internet. Today, some overlap exists between EW and cyberwarfare, though there is a key difference between the two. EW focuses on military operations that use the electromagnetic spectrum against radars and radio communication and data links, while cyberwarfare activities—which occur on a day-to-day basis, as well as during overt conflicts—target computers and servers, and involve significant use of the wired connections between them. EW and cyberwar activities can support one another. EW as an Element of U.S. Airpower Although dedicated U.S. EW aircraft are relatively few in number compared with the number of U.S. fighters, strike fighters, and attack aircraft, they play a role in helping to ensure the combat survivability and effectiveness of other aircraft and friendly forces on the ground. EW aircraft detect and jam enemy radars and air defense command-and-control equipment, so that U.S. fighters, strike fighters, attack aircraft, and bombers can more safely penetrate enemy airspace. EA-18G Growlers (discussed below) accompany U.S. fighters, strike fighters, and attack aircraft on missions to penetrate enemy airspace. Other U.S. EW aircraft, such as the EC-130H Compass Call aircraft (discussed below), perform their EW missions from standoff locations in less contested airspace. Fifth-generation stealthy U.S. aircraft such as the F-22 Raptor and the F-35 Joint Strike Fighter are less dependent on EW support than are less stealthy, earlier-generation U.S. aircraft. Even F-22s and F-35s, however, still benefit from EW support under certain circumstances. EW aircraft support the Navy's Naval Integrated Fires Counter-Air (NIF-CA) concept and help ensure the combat survivability and effectiveness of less stealthy, earlier-generation U.S. aircraft and friendly forces on the ground. EW Aircraft Although various U.S. manned and unmanned aircraft perform EW operations, this report focuses on DOD's three primary manned EW electronic attack aircraft: the EA-18G Growler, the EC-130H Compass Call, and the EC-37B Compass Call Re-Host. It also focuses on a fourth manned aircraft, the F-35 Joint Strike Fighter, which has extensive built-in EW capabilities. Each of these four aircraft is discussed briefly below. Boeing EA-18G Growler The Boeing EA-18G Growler ( Figure 2 ) is a Navy carrier-capable EW aircraft. Its primary mission is to detect and jam enemy radars. Among the 60 or more aircraft in an aircraft carrier's embarked air wing, typically four or five are EA-18Gs. These aircraft are also operated by the Royal Australian Air Force (RAAF). The EA-18G is the successor to the carrier-capable EA-6B Prowler, which was operated by both the Navy and Marine Corps. The EA-18G achieved initial operational capability (IOC) in September 2009, and EA-18Gs have gradually replaced EA-6Bs. The final operational EA-6Bs, operated by the Marine Corps, were retired in March 2019. Unlike the EA-6B, which was a four-seat aircraft, the EA-18G has a crew of two. The EA-6B was an EW variant of the Navy and Marine Corps carrier-capable A-6 Intruder attack plane; similarly, the EA-18G is an EW variant of the Navy and Marine Corps carrier-capable F/A-18F Super Hornet strike fighter. The EA-18G is equipped with an airborne electronic attack (AEA) avionics suite that has evolved from the EA-6B's Improved Capability III (ICAP III) AEA system. As discussed below, the EA-18G carries AN/ALQ-99 jamming pods, which are to be replaced by Next Generation Jammer jamming pods. The Navy states that "the EA-18G's electronic attack upgrades meet or exceed EA-6B Airborne… Electronic Attack capability to detect, identify, locate and suppress hostile [electromagnetic] emitters; provide enhanced connectivity to National, Theater and strike assets; and provide organic precision emitter targeting for employment of onboard suppression weapons to fulfill operational requirements." The Navy further states that [t]he EA-18G provides full-spectrum airborne electronic attack (AEA) capabilities to counter enemy air defenses and communication networks, most notably anti-radiation missiles. These capabilities continue to be in high demand in overseas contingency operations, where Growler operations protect coalition forces and disrupt critical command and control links. The Air Force does not operate an aircraft directly analogous to the EA-18G. The last such Air Force aircraft was the EF-111 Raven, an EW variant of the F-111 fighter. The Air Force retired the last of its EF-111s in 1998. The Navy states that "the [EA-18G] inventory objective of 160 aircraft will support ten carrier-based squadrons, five active expeditionary squadrons, and one reserve squadron." A total of 163 EA-18Gs were procured through FY2016, including a final procurement of 10 in FY2016. The Department of the Navy does not plan further procurement of EA-18Gs. EA-18Gs, like F/A-18E/Fs, currently are receiving funding for a service life extension; the Growler is expected to be replaced starting in the 2030s. Lockheed Martin EC-130H Compass Call20 The EC-130H Compass Call ( Figure 3 ) is an EW aircraft based on a modified version of the C-130 Hercules cargo aircraft. The EW system on the aircraft is called the Compass Call system. The Air Force states that the EC-130H "disrupts enemy command and control communications and limits adversary coordination essential for enemy force management." The Compass Call system employs offensive counter-information and electronic attack (or EA) capabilities in support of U.S. and Coalition tactical air, surface, and special operations forces. The EC-130H is operated by a crew of 14, most of whom are assigned to operate the aircraft's EW systems. The EC-130H can be considered a so-called "low-density, high-demand asset," meaning a specialized asset that exists in DOD in relatively low numbers but that DOD uses extensively. A February 2018 press report states that [t]he small, 14-aircraft EC-130H fleet has been flying since 1981—and near-constantly in the Afghanistan, Iraq, and Syrian conflicts, because of the unique capability it offers in communications jamming and electronic attack. It has been a key element in the fight against ISIS, an adversary that has adapted high technology to its tactics and strategy…. EC-130Hs there have been deployed nonstop since 2002, the longest continuously deployed Air Force unit in the Afghanistan war. The EC-130H achieved IOC in 1983. EC-130Hs are being replaced over time by new EC-37B Compass Call Re-Host aircraft (see next section). The Air Force projects in its FY2020 budget submission that it will have 13 EC-130Hs and no EC-37Bs in service at the end of FY2019, and 12 EC-130Hs and one EC-37B in service at the end of FY2020. While EC-130Hs remain in service, the Air Force plans to modernize them to improve their capabilities and reduce their maintenance costs, which have been rising as the aircraft have aged. EC-37B Compass Call Re-Host Aircraft Air Force plans call for replacing the service's EC-130Hs over time with a total of 10 new EC-37B Compass Call Re-Host aircraft ( Figure 4 ). The first EC-37B was procured in FY2018, two more were procured in FY2019, and the Air Force's proposed FY2020 budget requests $114.1 million for the procurement of a fourth in FY2020. Air Force plans call for procuring additional EC-37Bs at a rate of one per year until the planned total of 10 is reached. The Air Force's FY2020 budget submission projects that the first new EC-37B will enter the Air Force's inventory by the end of FY2020. The first two EC-37Bs are scheduled to achieve Initial Operational Capability (IOC) in 2023. L3 Technologies, a U.S. defense contractor involved in EW programs, is the prime contractor for the EC-37B. The EC-37B is based on the Gulfstream G550 commercial business jet, an aircraft that the Air Force also uses as the basis for its C-37B VIP transport aircraft. The Air Force states that EC-37Bs will receive Prime Mission Equipment (PME) from legacy donor EC-130H aircraft, as well as new, upgraded PME…. The re-hosted COMPASS CALL platform will utilize 70% of the PME off of the current airframe without modification; the remaining 30% of PME will be new or modified (repackaged) for the re-host. [Compared to the EC-130H,] the re-hosted COMPASS CALL aircraft will provide increased range, speed, endurance and operating altitude for better stand-off range and survivability. This will enable the USAF to effectively conduct Electronic Attack (EA) in an Anti-Access/Area Denial (A2AD) environment. The Air Force's acquisition strategy of replacing the EC-130H fleet by re-hosting their EW systems on new Gulfstream G550 aircraft was a subject of debate in Congress and contract-award protests. F-35 Joint Strike Fighter The Lockheed Martin F-35 Joint Strike Fighter ( Figure 5 ) is being procured in three versions for the Air Force (F-35A), Marine Corps (F-35B), and Navy (F-35C). Another CRS report provides an overview of the F-35 program, which is DOD's largest single acquisition program. While the F-35's primary missions are air-to-ground combat (i.e., strike operations) and air-to-air combat (i.e., fighter operations), the F-35 has a built-in EW capability that is claimed by Lockheed Martin officials—the prime contractor manufacturing the aircraft—to be significantly greater than that of previous U.S. fighters and attack aircraft. Lockheed officials state that the F-35's EW system, designated AN/ASQ-239 serves as a signals collector system which provides: radar warning, identifies the geolocation of electronic emitters, tracks multiple aircraft simultaneously, provides high-gain (i.e., a highly focused radio antenna), high gain counter measures, and high gain electronic attack through the radar. According to Lockheed officials these EW capabilities are designed to provide: wide-frequency coverage, quick reaction time, high sensitivity and probability of intercept, accurate direction finding, track multiple aircraft, and provide self-protection countermeasures and jamming. Lockheed Martin claims that due to the inherent, built-in electronic warfare capabilities the F-35 does not require a dedicated electronic attack aircraft to support it; this would potentially free up other aircraft to perform electronic attack missions to protect less stealthy aircraft. To provide its organic jamming capability the F-35uses its active electronically scanned array (AESA) radar which teamed with advanced jamming algorithm packages, can potentially provide 10 times the jamming power of legacy aircraft. Figure 6 shows the location of EW system-related equipment on the F-35. During a 2018 hearing on the Navy and Marine Corps aviation program review, Lieutenant General Steven Rudder stated that although the Marine Corps was retiring the EA-6B, the Marine Corps' new F-35Bs would have sufficient EW capability for most Marine Corps contingencies. Airborne EW Payloads DOD's primary airborne electronic attack payloads include the AN/ALQ-99 electronic attack suite, the Next Generation Jammer, and the Miniature Air Launched Decoy-Jammer. Each of these systems is discussed briefly below. AN/ALQ-99 Tactical Jamming System (TJS) The AN/ALQ-99 tactical jamming system ( Figure 7 and Figure 8 ; see also Figure 2 ) consists of a series of electronic jamming pods. The system was originally developed in the 1970s for the EA-6B, and it was also used by the EF-111A. The system has been updated over time and is currently carried by EA/18Gs. The current version of the system, called the ALQ-99F(V), achieved IOC in 1999. Navy plans call for replacing the ALQ-99 with the Next Generation Jammer (see next section). The Navy states that the ALQ-99 "is the only airborne tactical jamming system in the Department of Defense inventory. [The] ALQ-99 [system] is facing material and technological obsolescence and cannot counter all current, much less future, threats." Next Generation Jammer (NGJ) As mentioned above, Navy plans call for replacing the ALQ-99 with a new EW system called the Next Generation Jammer (NGJ) ( Figure 9 , Figure 10 , and Figure 11 ). The NGJ is being developed in three increments designed to jam across three radio frequency bands to prevent adversaries from using their communications and radar systems. The first increment, which is to provide EW capability in mid-band frequencies, was previously referred to as Increment 1, but is now called the AN/ALQ-249 system or the Next Generation Jammer—Mid Band (NGJ-MB). The next increment, which is to provide EW capability in low-band frequencies, was previously referred to as Increment 2, is now called the Next Generation Jammer—Low Band (NGJ-LB). The remaining increment, currently called Increment 3, is to provide EW capability in high-band frequencies. DOD states that "the order of development [of the increments] was determined by the assessed capabilities of the developing threat and shortfalls of the legacy system to counter those capabilities, with Inc 1 [the Increment 1 system] covering the most critical threats." Raytheon was awarded the contract for developing NGJ-MB. L3 Systems, Northrop Grumman, and Harris were awarded the contract for developing NGJ-LB. The Navy's FY2020 budget submission states that NGJ-MB is scheduled to achieve IOC in the fourth quarter of FY2022. The NGJ program has been a subject of congressional oversight for several years. An August 2018 press report states the Navy stalled in its development of the NGJ, however with the renewed focus of "great power competition," particularly with Russia and China, the NGJ has been given increased importance and priority. Frank Kendall, when he served as the Undersecretary of Acquisition, Technology and Logistics decided to accelerate the program. The Navy's FY2020 budget submission requests $524.3 million for PE 0604274N in FY2020. The budget submission projects annual funding to decline in subsequent years, to $178.4 million in FY2022 and zero funding thereafter as research and development work on NGJ-MB is completed and NGJ-MB transitions from research and development to procurement. The budget submission estimates the total research and development cost of NGJ-MB at $3,985.0 million (i.e., about $4.0 billion), of which $2,848.2 million (i.e., about $2.8 billion) has been received through FY2019. The Navy's FY2020 budget submission requests $6.2 million for PE0604274N—the first procurement funding requested for NGJ-MB. The submission projects that in subsequent years, as procurement of NGJ-MB ramps up, annual funding for this line item would increase to $144.7 million in FY2021 and $534.1 million by FY2024. The submission estimates the total procurement cost of NGJ-MB at $4,830.9 million (i.e., about $4.8 billion). The Navy's FY2020 budget submission requests $111.1 million for this PE in FY2020 and projects annual funding to increase in subsequent years, to $241.5 million in FY2024. The submission estimates the total research and development cost of NGJ-LB at $3,499.1 (i.e., about $3.5 billion), of which $178.3 million has been received through FY2019. Impact of Next Generation Jammer on Range of EA-18G Because the NGJ reportedly produces more drag on the EA-18G according to the Navy the Next Generation Jammer has the potential of reducing the operational range of the EA-18G. A November 28, 2018, press report states that the NGJ Mid-band pod produces more drag than the current ALQ-99. Raytheon's proposal for the low-band pod was partially rejected as a result of increased drag over competing designs. These increases in drag have been reported to reduce the operational range of the EA-18G. The specific impact on range is classified. Miniature Air-Launched Decoy (MALD) and Jammer (MALD-J) DOD states that the Miniature Air Launched Decoy (MALD) and Jammer (MALD-J), also designated ADM-160 ( Figure 12 and Figure 13 ), is designed as a low-cost, expendable vehicle that can replicate the flight and radar signatures of manned aircraft. The MALD-J adds an electronic attack component. According to the DOD "MALD-J is designed to support an airborne strike force to achieve mission success by jamming enemy radars and air‑defense systems by degrading/denying detection of friendly aircraft or munitions." MALD has a reported range of about 500 nautical miles. It was first developed in the mid-1990s, and more than 2,000 have been produced. A new version, designated MALD-X, is now being developed. An August 2018 press report states that MALD-X enhances the modular nature of the mini cruise missile with the ability to accommodate different electronic warfare payloads that are more advanced than those found on MALD-J. What is planned to come out of MALD-X is a networked decoy that can use its adaptive electronic warfare payload to deliver electronic attacks on air defense nodes autonomously or at the direction of operators from a afar in a semi-autonomous fashion. A derivative of MALD-J and MALD-X, designated MALD-N, is being developed for use on Navy F/A-18E/F strike fighters. Potential Issues for Congress Congressional EW Working Group (EWWG) Given their interest in, and concerns about, U.S. EW capabilities in the era of renewed great power competition, some Members of Congress have met in recent years through the Electronic Warfare Working Group (EWWG). In the 115 th Congress, Representative Bacon introduced the Joint Electromagnetic Spectrum Operations Readiness Act of 2018 ( H.R. 5522 ). This bill would have asked the DOD to develop a joint campaign modeling capability to model electromagnetic spectrum effect on operations, assess capabilities and capacities of EW platforms associated with operational plans, and develop an interim and annual report on programs and personnel assigned to EW missions. An identical bill in the Senate was referred to the Senate Armed Services Committee. Airborne EW as a DOD Priority One potential oversight issue for Congress is whether DOD is giving too little, too much, or the right amount of priority to airborne EW programs in its planning and budgeting relative to other U.S. military EW programs (such as those for U.S. ground forces or Navy surface ships) and to other DOD non-EW priorities, particularly in the context of renewed great power competition and improvements in air defense and EW capabilities by Russia, China, and other potential adversaries. Congress may consider developments such as Russia's deployment and sales to other countries of advanced air defense systems. Some observers have expressed concern about Russia's ability to use its advanced air defense systems, such as its S-400 surface-to-air (SAM) missile system, to establish hard-to-penetrate anti-access/area-denial (A2/AD) zones around defended areas in Europe and Middle East, and for countries that purchase Russian-made air defense systems, such as China, to do something similar in other regions. Other observers state that the capabilities of Russia's A2/AD air defense systems have been overrated. The Defense Intelligence Agency states that Russian air defense are among the best in the world, and they continue to develop highly-capable systems which they export to countries like China interested in acquiring long range defensive systems. DOD states that China's air force has one of the largest air defense forces, with a series of advanced long-range surface-to-air missiles. These consist of the Russian S-300PMU, the domestically produced CSA-9, and the recently fielded Russian S-400 system. An April 2018 press report stated (emphasis added): One of the "wicked problems" [U.S.] commandos are facing now is in Syria, which [U.S. Army General Tony] Thomas called the "most aggressive electronic warfare environment on the planet from our adversaries. They are testing us every day, knocking our communications down, disabling our EC-130s , etc." Another factor Congress may consider is how, in a situation of finite DOD funding, devoting more funding to airborne EW programs would affect funding for other EW priorities, or DOD non-EW priorities, and what the resulting net change would be in overall U.S. military capabilities. Mix of Airborne EW Capabilities and Investments Another potential oversight issue for Congress is whether DOD's proposed mix of airborne EW capabilities and investments is appropriate given the current and projected capabilities of potential adversaries such as Russia and China. Specifically, what is DOD's vision by combining specialized tactical EW aircraft such as the EA-18G, standoff EW aircraft such as the EC-130H and EC-37B, strike fighters with embedded EW capabilities such as the F-35, and air-launched decoys and jammers with growing numbers of stealthy fifth-generation F-35s? What evolutions are occurring in U.S. military operational concepts? Is it appropriate, for example, that the Air Force and Marine Corps no longer operate their own specialized tactical EW aircraft, while the Navy continues to operate and invest in the EA-18G and its Next Generation Jammer EW pods? More generally, to what degree do the airborne EW capabilities of the Air Force, Navy, and Marine Corps overlap, and is that overlap appropriate? Role of Emerging Technologies A third potential issue for Congress is how DOD uses advances in technology. Electronic attack platforms have evolved from the manned platforms with relatively large crew sizes, such as the EA-6B Prowler and the EC-130H Compass Call, to the EA-8G Growler with a crew of two and the MALD-J, which does not have crew and is a standoff weapon. Evolving A2/AD environments potentially make traditional stand-in jamming too dangerous for manned aircraft. Therefore, Congress may consider policy for DOD regarding developing platforms that are capable of operating in A2/AD environments. What unmanned EW programs does DOD currently fund? Does DOD plan to develop additional stand-in jamming systems? EC-37B Compass Call Re-Host Aircraft Procurement Another oversight issue for Congress concerns the Air Force's planned quantity and rate for procuring EC-37Bs and replacing EC-130Hs. The Air Force plans to replace 14 EC-130H aircraft with 10 EC-37Bs. The Air Force currently maintains 10 EC-130H Compass Calls for operations, with one aircraft devoted to testing and three additional aircraft in back-up inventory. How does the Air Force plan to use a smaller fleet of aircraft? Would 10 EC-37B aircraft be able to meet operational demands? Some Members of Congress have expressed an interest in procuring EC-37Bs more quickly than the Air Force plans, so as to accelerate the replacement of EC-130Hs with EC-37Bs. The committee and conference report language bearing on this issue for the John S. McCain National Defense Authorization Act for Fiscal Year 2019 and the FY2019 DOD appropriations act appear below. Appendix. Recent Congressional Action John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( H.R. 5515 / S. 2987 / P.L. 115-232 ) The House Armed Services Committee, in its report ( H.Rept. 115-676 of May 15, 2018) on H.R. 5515 , the FY2019 National Defense Authorization Act, stated that [t]he committee supports the Air Force's efforts to recapitalize the aging EC–130H Compass Call fleet with the more capable EC–37 type aircraft. The committee notes that the Air Force must first comply with the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328) and the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91) before it can carry on with the transition plan. The Air Force requested $108.1 million for fiscal year 2019 for one EC–37. The committee is concerned that the Air Force plan to procure one aircraft per year over 10 years in order to recapitalize this fleet is not the most efficient way to move the capability to the field quickly, and may put the Compass Call mission at unacceptable risk of mission failure. Therefore, the committee directs the Secretary of the Air Force to provide a briefing to the House Committee on Armed Services by February 1, 2019, on the Compass Call transition plan. This plan should include: (1) courses of action to accelerate the recapitalization of the EC–130H fleet and Baseline 4 development and deployment for incoming EC–37 aircraft; (2) attendant timelines for each course of action; (3) cost estimates for each course of action; (4) recommended course of action and a plan to manage both fleets while supporting combatant commander requirements; and (5) an assessment of the potential for future cooperative development and procurement of EC–37B Compass Call aircraft by the Royal Air Force of the United Kingdom and the Royal Australian Air Force in a way the leverages the best practices of the RC–135 cooperative program arrangement with the Royal Air Force of the United Kingdom. (Pages 23-24) The Senate Armed Services Committee, in its report ( S.Rept. 115-262 of June 5, 2018) on S. 2987 , the John S. McCain National Defense Authorization Act for Fiscal Year 2019, stated the following: The committee supports the Air Force's efforts to recapitalize the aging EC–130H Compass Call fleet with the EC–37 type aircraft. The committee notes that before it can carry on with the transition plan, the Department of Defense must first comply with the related provisions in the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328) and the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91). While the committee notes that Department has submitted the certification required by the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91), delays in satisfying the requirement has led to a work stoppage on the program lasting at least six weeks. The committee is concerned about the potential for further work stoppages should the Secretary of the Air Force fail to make a timely determination that the EC–37B has a high likelihood of meeting combatant requirements, as required by the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328). The committee encourages the Secretary of the Air Force to make a timely determination for this requirement to avoid further program delays and cost overruns. Therefore, the committee directs the Secretary of the Air Force, not more than 60 days after the determination required by the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328) is made, to provide a briefing to the congressional defense committees on the Compass Call transition plan. This plan should include: (1) Courses of action to accelerate the recapitalization of the EC–130H fleet and Baseline 4 development and deployment for incoming EC–37 aircraft; (a) attendant timelines for each course of action; (b) cost estimates for each course of action; and (2) Recommended course of action and a plan to manage both fleets while supporting combatant commander requirements. (Pages 40-41) FY2019 DOD Appropriations Act (Division A of H.R. 6157 / P.L. 115-245 ) The House Appropriations Committee, in its report ( H.Rept. 115-769 of June 20, 2018) on the FY2019 DOD appropriations act ( H.R. 6157 ), stated the following: The [committee's] recommendation [of FY2019 procurement funding for the program] includes an increase of $194,000,000 above the budget request to procure and modify one additional EC–37B Compass Call aircraft, with the expectation that such funds will allow the Air Force to accelerate the fielding of the fourth such aircraft to meet combatant commander needs and mitigate performance concerns regarding the legacy EC–130H fleet. The Committee recommends that the Secretary of the Air Force consider increasing the procurement of EC–37B aircraft to two per year if such a pace of recapitalization can be achieved without unduly disrupting the operational availability of Compass Call capability for the combatant commanders. (Page 188) In final action on the FY2019 DOD Appropriations Act (Division A of H.R. 6157 / P.L. 115-245 of September 28, 2018), Congress increased the requested amount for procurement of new EC-37Bs by $108 million for "Program increase - accelerate fourth EC-37B aircraft."

U.S. airborne electronic warfare (EW) programs involve developing and procuring EW aircraft and EW systems that are mounted on U.S. aircraft. The President's FY2020 budget request for the Department of Defense (DOD) proposes funding for a number of airborne EW programs. The Role of Airborne EW in Modern Warfare EW is a component of modern warfare, particularly in response to threats posed by potential adversaries such as Russia or China. EW refers to operations that use the electromagnetic spectrum (i.e., the "airwaves") to detect, listen to, jam, and deceive (or "spoof") enemy radars, radio communication systems, data links, and other electronic systems. EW also refers to operations that defend against enemy attempts to do the same. The shift in the international security environment from the post-Cold War era to an era of renewed great power competition has led to an increased focus on EW in U.S. defense planning and programming, particularly aspects of EW related to high-end warfare. U.S. Airborne Electronic Attack Capabilities Airborne EW capabilities are a component of U.S. military airpower. Although dedicated U.S. EW aircraft are relatively few in number compared with U.S. fighters, strike fighters, and attack aircraft, they play a role in helping to ensure the combat survivability and effectiveness of other aircraft and friendly forces on the ground. DOD's three primary manned EW electronic attack aircraft are the Navy EA-18G Growler, the Air Force EC-130H Compass Call, and the Air Force EC-37B Compass Call Re-Host. A fourth manned aircraft—the F-35 Joint Strike Fighter—has extensive, integrated EW capabilities. DOD's primary airborne electronic attack payloads include the AN/ALQ-99 electronic attack suite, the Next Generation Jammer, and the Miniature Air Launched Decoy-Jammer. EW Oversight Issues for Congress Congress has continually shown interest in EW, and the decisions it makes regarding EW could affect future U.S. military capabilities and funding requirements. In particular, EW programs pose several potential oversight issues for Congress Whether DOD is prioritizing appropriately airborne EW programs in its planning and budgeting relative to other U.S. military EW programs (such as those for U.S. ground forces or Navy surface ships) and to other DOD non-EW priorities. Whether DOD's proposed mix of airborne EW capabilities and investments is appropriate. The evolution of technology and how new technologies can be employed for EW operations. The Air Force's planned rate for procuring EC-37Bs and replacing EC-130Hs.

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Overview U.S. relations with the Kingdom of Cambodia have become increasingly strained in recent years in light of Prime Minister Hun Sen's suppression of the political opposition and his growing embrace of the People's Republic of China (PRC). During the previous decade, U.S. engagement with the Kingdom slowly strengthened as Western countries continued to pressure Hun Sen to abide by democratic norms and institutions and as the U.S. government attempted to prevent Cambodia from falling too heavily under China's influence. Following strong performances by the opposition in the 2013 and 2017 elections, the Cambodian government banned the largest opposition party, the Cambodia National Rescue Party (CNRP), in 2017. As a result, the ruling Cambodian People's Party (CPP) ran virtually unopposed in the July 2018 National Assembly election and won all 125 seats. The Trump Administration stated that the election "failed to represent the will of the Cambodian people" and represented "the most significant setback yet to the democratic system enshrined in Cambodia's constitution.…" Between 1975 and 1991, Cambodia endured the four-year reign of the Communist Party of Kampuchea (also known as the Khmer Rouge), during which an estimated 2 million Cambodians died; an invasion and occupation by Vietnam; and civil war. The Paris Peace Agreement, signed by Cambodia and 18 other nations pledging to support the country's sovereignty and reconstruction on October 23, 1991, ended the Cambodian-Vietnamese War and set out a framework for a liberal democracy with periodic and genuine elections. Since the United Nations administered the first postwar national elections in 1993, Cambodia has made fitful progress in its political and social development, including the conduct of elections, a vibrant civil society, and a relatively open mass media. Hun Sen, age 65, has been the nation's leader for over 30 years, including as Premier of the Vietnam-backed Republic of Kampuchea between 1985 and 1993, and as Prime Minister after the United Nations-sponsored national elections in 1993. National politics are highly personalized, with Hun Sen at the helm, while corruption is widespread and political, legal, and judicial institutions remain weak. Although democratic institutions and practices have developed since the Peace Accords, Hun Sen often has employed undemocratic means to remain in power. According to some experts, the Cambodian leader has bolstered his political strength through a combination of "guile and force"; electoral victories; legal and extralegal political maneuvers; influence over the judiciary, broadcast media, and labor unions; patronage; cronyism; and intimidation. Some scholars have described the Cambodian polity before the election as an example of "competitive authoritarianism," whereby multiparty elections are held and a civil society exists, but the national leader or political party maintains its dominance over them in undemocratic or unconstitutional ways. The Cambodian National Rescue Party (CNRP), a union of two opposition parties led by Sam Rainsy, a long-time opposition leader, and politician and human rights activist Kem Sokha, made significant gains in the 2013 parliamentary election and 2017 local elections. Following the party's strong showing in the 2017 commune council elections, many political observers predicted that the 2018 national elections would continue the trend of increasing competitiveness between the CPP and the CNRP. Furthermore, some observers reported fewer irregularities in 2017 compared to the 2013 National Assembly election, due in part to financial and technical assistance from Japan and the European Union that focused on improvements in the voter registration system. Hun Sen, on the one hand, has maintained electoral support, particularly in rural areas, due in part to Cambodia's three decades of relative political stability and economic development under his regime. The CNRP's growing electoral strength, on the other hand, reflected the will of a younger and more globalized electorate that is less focused on Cambodia's past turbulence, more concerned about corruption and inequality, and more demanding about government accountability and performance, according to observers. Nearly two-thirds of the country's population are under the age of 30 and half are under the age of 25. In November 2017, the Supreme Court of Cambodia, at the behest of the government, made a ruling that dissolved the CNRP for "conspiring with the United States to overthrow the government." Then-U.S. Ambassador to Cambodia William Heidt stated that Hun Sen's accusations that the United States is attempting to overthrow the government were "inaccurate, misleading, and baseless." In addition, the Supreme Court banned 118 CNRP members from participating in politics for five years. The government allowed 55 opposition seats to be filled instead by third parties, with many of them going to FUNCINPEC, the royalist party that dominated opposition politics until the late 2000s. The National Assembly also amended laws to remove CNRP commune councilors and village chiefs and replace them mostly with CPP members. Since 2008, the government has pursued several defamation charges against former CNRP president Sam Rainsy, a move regarded by many observers as politically motivated. Sam Rainsy subsequently has spent most of his time in self-imposed exile. In December 2017, the government charged Sam Rainsy with treason for posting a video on social media urging security personnel not to "obey orders from any dictators if they order you to shoot and kill innocent people." Former CNRP vice-president Kem Sokha was detained between September 2017 and September 2018, awaiting trial for treason , allegedly for collaborating with the United States to foment a popular overthrow of the CPP. Kem was released on bail and placed under house arrest in September 2018. A U.S. Embassy spokesperson stated, "We continue to call on the government of Cambodia to drop all charges against Mr. Sokha, remove restrictions on the political rights of him and other opposition leaders, and engage opposition leaders in an urgent dialogue aimed at building genuine national reconciliation." Crackdown on Government Critics and Civil Society Beginning in 2015 with new government restrictions on nongovernmental organizations (NGOs), and during the lead-up to the 2018 national elections, the Cambodian government placed increasing restrictions on political and social activism, civil society, free speech, and foreign-funded democracy programs. During 2015-2017, more than 25 opposition members and government critics were arrested, and many fled the country. In June 2016, government critic Kem Ley was killed under suspicious circumstances. In 2017, the Cambodian Foreign Ministry expelled the Washington, DC-based National Democratic Institute (NDI), which was engaged in democracy programs in Cambodia, on the grounds that NDI was not registered with the government. Government media outlets also alleged that NDI, which received financial support from the U.S. Agency for International Development (USAID), was involved in a conspiracy involving the CNRP and U.S.-funded NGOs to overthrow the government. In 2017, the government closed more than one dozen Cambodian radio stations that sold airtime to Voice of America (VOA) and Radio Free Asia (RFA). RFA, facing political and economic pressure from the government, closed its Phnom Penh office. Authorities also ordered the Cambodia Daily , known as an opposition newspaper, to shut down in September 2017, ostensibly for failing to pay taxes. In 2018, the government made its first arrest under a lèse-majesté law, passed by the National Assembly in February 2018, which makes insulting the monarch a crime. U.S. Responses Congress periodically has imposed conditions upon some U.S. assistance to Cambodia in order to promote democracy and human rights in the Kingdom. From 1998 to 2007, Congress prohibited government-to-government assistance to Cambodia in order to pressure Hun Sen into fully instituting democracy, but allowed U.S. assistance to NGOs and some humanitarian programs to continue. Congress lifted the ban in 2007 due in part to improving democratic processes, although most U.S. assistance efforts in Cambodia continue to be channeled through NGOs. The FY2014 and FY2017 Consolidated Appropriations Acts placed conditions related to democratic governance upon some assistance to Cambodia. The Administration and the 115 th Congress (2017-2018) took numerous steps in response to Hun Sen's recent suppression of the opposition, which include the following: In November 2017, the Trump Administration withdrew $1.8 million in assistance to the National Election Committee (NEC). On December 12, 2017, the Subcommittee on Asia and the Pacific of the House Committee on Foreign Affairs held a hearing on U.S. policy options to promote democracy and human rights in Cambodia. On November 16, 2017, the Senate passed S.Res. 279 , urging the Department of the Treasury to consider blocking the assets of senior Cambodian government officials implicated in the suppression of democracy and human rights abuses. In December 2017, the Trump Administration announced that the U.S. government would "restrict entry into the United States of those individuals involved in undermining democracy in Cambodia." In August 2018, in response to the National Assembly election, the Administration announced that it would "expand" the restrictions. Pursuant to Executive Order 13818, which implemented the Global Magnitsky Human Rights Accountability Act (Section 1261 of P.L. 114-328 ), in June 2018, the U.S. Department of the Treasury sanctioned Cambodian General Hing Bun Hieng, commander of Hun Sen's bodyguard unit, "for being the leader of an entity involved in serious human rights abuses" over a span of two decades. Sanctioned individuals are denied entry into the United States, and any assets that they hold in the United States are blocked. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), enacted on March 23, 2018, imposed conditions upon U.S. assistance to the Government of Cambodia related to democracy and regional security. The act mandated funds for democracy programs and "programs in the Khmer language to counter the influence of the People's Republic of China in Cambodia." In the 116 th Congress, on January 8, 2019, Senators Cruz and Coons introduced the Cambodia Trade Act of 2019 ( S. 34 ), which would require a report on the continuing participation of Cambodia in the U.S. Generalized System of Preferences (GSP) program. On January 11, 2019, Representatives Yoho, McCaul, and Engel introduced the Cambodia Democracy Act of 2019 ( H.R. 526 ), which would impose visa restrictions upon and block assets of Cambodian senior government officials that the President determines have undermined democracy or committed or directed serious human rights violations. Some policy experts maintain that continued U.S. engagement is the most effective course for promoting democratization from within and countering PRC influence. Some contend that many Cambodians view the United States favorably, and that Washington should continue to promote U.S. interaction with democratic forces in the Kingdom. In September 2018, Prime Minister Hun Sen, in a speech before the United Nations General Assembly, stated, "We are heartedly regretful to highlight the fact that human rights nowadays have become 'a mission to impose civilization' for some powerful nations or, perhaps, as their operating standards as the pretext for interference under the name of political right protection." U.S.-Cambodia Cooperation U.S.-Cambodian relations expanded after 2007, when political and human rights conditions in the Kingdom improved and the U.S. government lifted some restrictions on U.S. assistance. Principal areas of U.S. engagement have included U.S. foreign assistance programs, demining activities, limited military assistance and cooperation, U.S. missing-in-action (MIA) recovery efforts, and U.S. naval port visits. In 2017, the Cambodian government suspended Angkor Sentinel, an annual bilateral military exercise launched in 2010 that focuses on international peacekeeping, humanitarian assistance, and military-to-military cooperation. Some observers interpreted the unilateral action as a sign of Hun Sen's further distancing the Kingdom from the United States. The Cambodian government also postponed indefinitely a U.S. humanitarian mission in the Kingdom, the U.S. Navy Mobile Construction Battalion (also known as Seabees), without an explanation. The Seabees had worked with RCAF since 2008 and performed more than $5 million in community service projects throughout the country. In January 2019, U.S. Department of Defense Deputy Assistant Secretary for South and Southeast Asia Joseph H. Felter met with Cambodian military officials in Phnom Penh. The two sides discussed regional security issues and bilateral cooperation, including ways to improve defense ties and restart joint military activities. Felter also called on the Cambodian government to drop treason charges against Kem Sokha. U.S. and Other Foreign Assistance Postwar Cambodia has been heavily dependent upon foreign assistance from major foreign aid donors, particularly Japan, South Korea, the United States, Australia, and France. Official Development Assistance (ODA) for Cambodia totaled $797 million in 2016, not including assistance from China. The Kingdom's reliance upon foreign assistance, while still significant, has declined during the past decade-and-a-half. ODA fell from 120% of central government expenditures in 2002 to less than a third in 2015, according to World Bank figures. Some analysts contend that ODA for Cambodia, part of a "multibillion dollar international effort to transplant democracy in Cambodia since the early 1990s," long has kept Hun Sen's authoritarian tendencies in check, but has lost its effectiveness in doing so. The United States provided roughly $235 million in assistance related to good governance, democracy, and civil society between 1993 and 2018. In recent years, by some measures, assistance from China, which comes without conditions for good governance and human rights, has roughly matched the total assistance from major providers of ODA. The United States provided an estimated $79.3 million in foreign assistance to the Kingdom in FY2018, a decrease of 10% compared to FY2017. U.S. foreign assistance to Cambodia includes efforts to strengthen democratic institutions and civil society; reduce child and maternal mortality; and combat HIV/AIDS and other infectious diseases. International Military Education and Training (IMET) programs provide English language instruction and aim to expose the next generation of Cambodia's military leaders to "American ways and values." U.S. demining assistance supports the removal of landmines and other unexploded ordnance (UXO). The Trump Administration's FY2019 foreign operations budget request would reduce annual assistance to Cambodia by nearly 75% compared to FY2017. Khmer Rouge Tribunal The Extraordinary Chambers in the Courts of Cambodia (ECCC), an international tribunal established through an agreement between the government of Cambodia and the United Nations, began proceedings in 2006 to try Khmer Rouge leaders and officials responsible for grave violations of national and international law. The ECCC, which has convicted three Khmer Rouge senior figures at a reported cost of $300 million, has been financed through contributions by the Cambodian government and with donations by foreign countries, particularly Japan, both directly to the ECCC and to a U.N.-administered international trust fund. The U.S. government withheld assistance to the ECCC from 2006 to 2008 due to doubts about the court's independence due to alleged Cambodian government interference. In 2008, the United States began providing annual contributions to the international trust fund. In addition, the U.S. government has contributed to the Documentation Center of Cambodia (DC-Cam), an archive, library, and public service center focused upon Khmer Rouge atrocities, providing $9.8 million to DC-Cam since 2005. Since 2010, some U.S. foreign operations appropriations measures have placed conditions upon assistance to the tribunal in order to discourage corruption and political interference within the court and to ensure that the Cambodian government also was contributing to its costs. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) states that no assistance may be made available for the ECCC. ECCC prosecutors charged five former Khmer Rouge leaders with crimes against humanity and war crimes. In 2012, "chief executioner" Kaing Guek Eav, who ran the infamous Toul Sleng prison in Phnom Penh, was sentenced to life in prison. Former Foreign Minister Ieng Sary died in March 2013, before the completion of his trial, while his wife, former Minister of Social Affairs Ieng Thirith, was declared mentally unfit for trial. In August 2014, the court sentenced former leaders Nuon Chea and Khieu Samphan each to life in prison for some crimes against humanity, and in a separate trial in November 2018, each was convicted of additional crimes, including genocide. Although Cambodian and international human rights groups have advocated prosecuting midranking Khmer Rouge officials, Hun Sen has opposed further indictments, arguing that they would undermine national stability. At the end of the trials of Nuon Chea and Khieu Samphan in November 2018, Deputy Prime Minister Sar Kheng announced that the tribunal's work was finished. Unexploded Ordnance Cambodia is among the world countries most heavily contaminated by unexploded ordnance (UXO), including cluster munitions, landmines, and other undetonated weapons left from U.S. bombing during the Vietnam War, the Vietnamese invasion of Cambodia in 1978, and civil wars during the 1970s and 1980s. In 1969, the United States launched a four-year carpet-bombing campaign, dropping 2.7 million tons of ordnance, mostly cluster munitions, on Cambodia, more than the amount that fell on Germany and Japan combined during World War II. Up to 25% of the cluster bombs failed to explode, according to some estimates. There have been over 64,000 UXO casualties in Cambodia since 1979, including over 19,000 deaths. The economic costs of UXO include land prevented from being used for agricultural purposes, forestry, and cattle, and disruptions to irrigation and drinking water supplies. An estimated 761 square miles of the country remain contaminated with UXO. With the help of international assistance, Cambodia has reduced the UXO casualty rate from roughly 250 people per year a decade ago to about 100 annually in recent years, according to the Landmine and Cluster Munition Monitor. About 50% of contaminated land reportedly has been cleared, although many of the remaining areas are the most densely affected. The Cambodian Mine Action Authority is finalizing plans to clear all contaminated land by 2025. Despite progress, the migration of many poor Cambodians to areas that have high concentrations of UXO reportedly has contributed to a recent spike in casualties. Between 1993 and 2016, the U.S. government contributed over $124 million for UXO removal and disposal, related educational efforts, and survivor assistance programs in Cambodia. USAID's Leahy War Victims Fund has supported programs to help provide medical and rehabilitation services and prosthetics to Cambodian victims of UXO. Congress appropriated $5.5 million and $4.5 million in FY2016 and FY2017, respectively, for Department of State demining efforts in the Kingdom. U.S. Deportations of Cambodians More than 1,900 U.S. residents of Cambodian descent, of whom about 1,400 have felony convictions, are subject to deportation, according to U.S. Immigration and Customs Enforcement (ICE). Between 2002, when the two countries signed a Memorandum of Understanding on repatriation, and 2017, roughly 600 Cambodian nationals who were permanent U.S. residents and who had been convicted of felony crimes were deported to Cambodia. Many of them came to the United States during the 1980s as refugee children, and never have lived in Cambodia or had left when they were very young. Many Cambodians subject to deportation have jobs and families in the United States, and many served prison time in the United States for crimes committed during their youth. Under the Trump Administration, the number of Cambodian, Laotian, and Vietnamese nationals who have received orders of removal has risen significantly. In 2018, 110 U.S. residents of Cambodian descent were deported to Cambodia, compared to 29 in 2017 and 74 in 2016. In 2017, the Department of Homeland Security's Immigration and Customs Enforcement agency (ICE) deemed that the Cambodian government was uncooperative or hindering U.S. deportation efforts, and in violation of its international obligations, and placed Cambodia on a list of "recalcitrant countries." The U.S. government imposed limited visa restrictions upon Cambodian Foreign Ministry employees and their families pursuant to Section 243(d) of the Immigration and Nationality Act. Economic Conditions67 In the past decade-and-a-half, Cambodia, one of the poorest countries in Asia, has performed well on some socioeconomic indicators. The Kingdom's economy, which largely was destroyed by the Khmer Rouge and subsequent conflicts, has achieved an average annual growth rate of 7.7% since 1995 and 7.0% since 2014, driven largely by foreign investment and the development of the agricultural, construction, garment, real estate, and tourism sectors. China, Japan, South Korea, and Southeast Asian countries are the main sources of foreign investment in Cambodia. Cambodia's garment industry, largely run by companies from China, Hong Kong, and Taiwan, forms a growing pillar of the nation's economy, employing roughly 800,000 workers and constituting about 40% of the nation's GDP. Since 2000, Cambodia has risen from being the 39 th -largest exporter of textiles and apparel to the 15 th largest in 2016, according to World Bank trade data. Garment and footwear products constitute about 80% of Cambodian merchandise exports, with 43% reportedly going to the EU and 29% to the United States. Economic development has brought social and environmental costs. Hundreds of thousands of Cambodians reportedly have been displaced as government, business, and foreign entities, often in collusion, have confiscated their land and homes, sometimes forcibly or without proper compensation, to make way for agricultural, mining, logging, tourism, and urban development projects. Although forced relocations have continued, the number of cases reportedly has declined in recent years. Cambodia has one of the highest deforestation rates in the world and illegal logging continues, due to strong demand for wood from China and Vietnam, corruption, and suppression of environmental activists. Labor relations have shown some signs of strain in recent years, particularly as the garment industry has developed. Garment workers participated in large-scale demonstrations for higher wages in 2013-2014, which coincided with antigovernment demonstrations led by the CNRP. Cambodia's National Assembly adopted a new Law on Trade Unions in 2016, which some analysts say imposes greater restrictions on labor rights. In August 2017, the Cambodian government announced that it would enact a national minimum wage law, which some analysts surmise was done to boost labor support for the CPP. U.S. Trade In 2017, U.S.-Cambodia bilateral trade was worth nearly $3.46 billion, including $3.06 billion in Cambodian goods exported to the United States. Although China surpassed the United States as Cambodia's largest trading partner in 2012, the United States remains the largest single overseas market for Cambodian merchandise exports. According to the U.S. International Trade Commission, over half of U.S. imports from Cambodia in 2017 were knitted or crocheted clothing. Some Cambodian products, including handbags and travel goods, receive preferential or duty-free tariff treatment under the U.S. Generalized System of Preferences program. Some policymakers have considered suspending GSP treatment upon certain Cambodian exports to the United States worth about $400 million annually in order to pressure Hun Sen into reversing his suppression of democracy. Other experts argue that restrictions on Cambodian exports may hurt Cambodian workers and encourage Cambodia to seek even closer relations with China, while it is uncertain whether such economic sanctions would weaken Hun Sen politically. Cambodia acceded to the World Trade Organization in 2004, and the Kingdom has made commitments to reduce tariffs and fulfill other obligations by 2018 as a member of the Association of Southeast Asian Nations (ASEAN) Free Trade Area. Cambodia also is a party to the proposed Regional Comprehensive Economic Partnership (RCEP), a trade pact that includes the 10 ASEAN member states and 6 other Indo-Pacific countries, including China. Negotiations to reach a final agreement are expected to continue in 2019. Cambodia and China The PRC has become Cambodia's largest economic benefactor at a time when major ODA donors have become increasingly critical of Hun Sen's authoritarian policies. China's economic support has lessened the influence of foreign assistance conditions imposed by Western aid donors and given Hun Sen more political room to maneuver, both domestically and internationally, according to some analysts. In return, Cambodia has appeared increasingly willing to accommodate or support Beijing's positions on various regional issues, including territorial disputes in the South China Sea. Cambodia is said to be the Southeast Asian country upon which China exerts the greatest influence, and to be China's "most reliable partner in Southeast Asia." According to one assessment, China has provided Cambodia about $15 billion in assistance and concessionary loans over the past two decades, and around 42% of the kingdom's external debt is owed to China. PRC foreign assistance to Cambodia, which has included development financing and grants, Chinese-built infrastructure, government buildings, and sports facilities, as well as support for public health and education, has become a dominant influence on the Kingdom's development. A PRC entity is constructing one of Cambodia's largest development projects, a $3.8 billion deep-water port on the Gulf of Thailand. By some accounts, China is the largest foreign investor in Cambodia, with cumulative investment of between $14 billion and $16 billion. Major sectors for Chinese investment include agriculture, garments, hydropower, infrastructure, mining, and tourism. According to one report, China accounted for nearly 30% of investment capital in Cambodia in 2016, while that from the United States constituted less than 4%. Cambodians have expressed mixed views about China's economic influence. Some say that Chinese investments and infrastructure have brought tangible economic benefits and spurred economic development. Cambodian social and political activists have expressed concerns about Chinese economic projects, including their quality, effects on the environment, and lack of transparency. Furthermore, many Cambodians have been evicted from their homes to make way for Chinese-backed economic projects, or their communities have been adversely affected by an influx of Chinese businesses, workers, and tourists. Domestic and regional demand for energy and foreign investment largely from China have driven hydropower projects in Cambodia and neighboring countries. Chinese firms reportedly have invested roughly $2 billion in the construction of seven dams in the Kingdom. Many experts have warned about environmental degradation and ecological damage, loss of fish stocks, displacement of communities, and adverse effects on livelihoods due to unregulated hydropower projects on the Mekong River. A proposed, Chinese-backed, 2,600-megawatt hydropower project, the Sambor Dam, would dwarf other dams in Cambodia. According to a government-commissioned report that reportedly was leaked in 2018, the Sambor megadam, if built, would have devastating impacts on food security in the region, particularly in Cambodia and Vietnam. Experts say that it would block fish migrations between southern Laos and Cambodia's Tonle Sap Lake, destroy fish habitats, and prevent sediment from flowing downstream and fertilizing agricultural areas in the Mekong Delta. Beijing has become a principal provider of military assistance to Cambodia, extending loans and military equipment, including small arms, tanks, trucks, helicopters, and aircraft, to the Royal Cambodian Armed Forces. China reportedly also has provided military education and training and sponsored exchanges of senior military leaders. Some analysts see PRC-Cambodian military cooperation as a response to growing security ties between the United States and Vietnam. Since 2016, China and Cambodia twice have carried out Golden Dragon , a joint military exercise involving over 400 People's Liberation Army (PLA) and RCAF soldiers involved in combat, counterterrorism, UXO removal, humanitarian, and disaster response exercises. The two countries reportedly plan a larger Golden Dragon event in 2019.

U.S. relations with the Kingdom of Cambodia have become increasingly strained in recent years in light of Prime Minister Hun Sen's suppression of the political opposition and his growing embrace of the People's Republic of China (PRC). During the previous decade, U.S. engagement with the Kingdom slowly strengthened as Western countries continued to pressure Hun Sen to abide by democratic norms and institutions and as the U.S. government attempted to prevent Cambodia from falling too heavily under China's influence. Following strong performances by the opposition in the 2013 and 2017 elections, the Cambodian government banned the largest opposition party, the Cambodia National Rescue Party (CNRP), in 2017. As a result, the ruling Cambodian People's Party (CPP) ran virtually unopposed in the 2018 National Assembly election. The Trump Administration and Congress have imposed sanctions in order to pressure Hun Sen into restoring democratic rights and dropping criminal charges against opposition leaders. While the U.S. government has criticized Hun Sen's backtracking on democracy, it also has sought to remain engaged with Cambodia. During the past decade, U.S. interests and foreign assistance efforts in Cambodia have included strengthening democratic institutions and norms, promoting the rule of law, increasing bilateral trade and investment, supporting economic growth, reducing poverty, and improving public health. The U.S. government has supported demining and related activities in Cambodia, which is among the countries most heavily affected by unexploded ordnance (UXO). Military engagement has included U.S. naval port visits, U.S. military assistance and training, and joint exercises. The United States and other countries have provided funding for the Extraordinary Chambers in the Courts of Cambodia (ECCC), also known as the Khmer Rouge Tribunal, established through a 2003 agreement between the government of Cambodia and the United Nations. Since the court commenced proceedings in 2006, it has convicted and sentenced three former Khmer Rouge leaders for crimes against humanity and war crimes committed during the period of Khmer Rouge rule (1975-1978). Following the conclusion of two trials in November 2018, the Cambodian government announced that the ECCC's work was concluded, despite calls by some Cambodians and international human rights groups to prosecute additional Khmer Rouge officials. In recent years, PRC assistance to Cambodia, by some measures, has begun to match total annual foreign aid flows from traditional major providers of official development assistance to Cambodia. China's economic support has given Hun Sen greater political room to maneuver, according to some analysts. In return, Cambodia has appeared increasingly willing to accommodate or support Beijing's positions on various regional issues, including territorial disputes in the South China Sea. Japan is the largest provider of Official Development Assistance and second-largest source of foreign direct investment in Cambodia. One of the poorest countries in Asia, Cambodia has performed well on some socioeconomic indicators since the United Nations brokered a peace settlement in 1991 and restored a constitutional monarchy in 1993. The Kingdom's economy has achieved an average annual growth rate of 7.7% since 1995, driven by growth in the agricultural, construction, garment, real estate, and tourism sectors. China, Japan, South Korea, and Southeast Asian countries are the main sources of foreign investment. The United States is the single largest overseas market for Cambodian merchandise exports, which consist mostly of garments and footwear.

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Pension Benefit Guaranty Corporation The Pension Benefit Guaranty Corporation (PBGC) is a federal agency established by the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ). It was created to protect the pe nsions of participants and beneficiaries covered by private sector defined benefit (DB) plans. These pension plans provide a specified monthly benefit at retirement, usually either a percentage of salary or a flat dollar amount multiplied by years of service. Defined contribution (DC) plans, such as 401(k) plans, are not insured. PBGC runs two distinct insurance programs: one for single-employer pension plans and a second for multiemployer plans. Single-employer pension plans are sponsored by one employer and cover eligible workers employed by the plan sponsor. Multiemployer plans are collectively bargained plans to which more than one company makes contributions. PBGC maintains separate reserve funds for each program. In FY2018, PBGC insured about 25,000 DB pension plans covering about 37 million people. It paid or owed benefits to 1.4 million people. PBGC is the trustee of 4,919 single-employer plans. PBGC provided financial assistance to 78 multiemployer pensions. PBGC pays a maximum benefit to plan participants. Most workers in single-employer plans taken over by PBGC and multiemployer plans that receive financial assistance from PBGC receive the full pension benefit that they earned. However, among participants in multiemployer plans that were terminated and likely to need financial assistance in the future, 49% have a benefit below the PBGC maximum guarantee and 51% have a benefit larger than the PBGC maximum guarantee. PBGC Administration PBGC is a government-owned corporation. A three-member board of directors, chaired by the Secretary of Labor, administers the corporation. The Secretary of Commerce and the Secretary of the Treasury are the other members of the board of directors. The Director of PBGC is appointed by the President with the advice and consent of the Senate. ERISA also provides for a seven-member Advisory Committee, appointed by the President, for staggered three-year terms. The Advisory Committee advises PBGC on issues, such as investment of funds, plan liquidations, and other matters. The Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ) altered some of the governance structures of PBGC. Some of these changes include setting the term of the PBGC Director at five years, unless removed by the President or by the board of directors; requiring that the Board of Directors meet at least four times each year; and establishing a Participant and Plan Sponsor Advocate within PBGC to act as a liaison between PBGC, participants in plans trusteed by PBGC, and the sponsors of pension plans insured by PBGC. PBGC Financing PBGC is required by ERISA to be self-supporting and receives no appropriations from general revenue. ERISA states that the "United States is not liable for any obligation or liability incurred by the corporation," and some Members of Congress have expressed a reluctance to consider providing financial assistance to PBGC. The most reliable source of PBGC revenue is the premiums set by Congress and paid by the private-sector employers that sponsor DB pension plans. Other sources of income are assets from terminated plans taken over by PBGC, investment income, and recoveries collected from companies when they end underfunded pension plans. The Multiemployer Pension Plan Amendments Act of 1980 ( P.L. 96-364 ) requires that PBGC's receipts and disbursements be included in federal budget totals. Premiums The sponsors of private-sector pension plans pay a variety of premiums to PBGC. The sponsors of single-employer and multiemployer pension plans pay a flat-rate, per-participant premium. The sponsors of underfunded single-employer pension plans pay an additional premium that is based on the amount of plan underfunding. In addition, pension plans that are terminated in certain situations pay a per-participant premium per year for three years after termination. The premiums for 2019 are as follows: Single-employer flat-rate premium : The sponsors of single-employer DB pension plans pay an annual premium of $80 for each participant in the plan. Single-employer variable-rate premium : In addition to the flat-rate premium, the sponsors of underfunded single-employer DB pension plans pay an additional annual premium of $43 for each $1,000 of unfunded vested benefits. There is a per-participant limit of $541 for this premium. Single-employer termination premium : The sponsors of single-employer DB pension plans that end in certain situations pay an annual premium of $1,250 per participant per year for three years following plan termination. Multiemployer flat-rate premium : The sponsors of multiemployer DB pension plans pay an annual premium of $29 for each participant in the plan in 2019. In the Appendix, Table A-1 and Table A-2 provide a history of PBGC premium rates. Table 1 details the amounts of premium income in FY2017 and FY2018. Requirements for PBGC Coverage PBGC covers only those DB plans that meet the qualification requirements of Section 401 of the Internal Revenue Code (IRC). DC plans (such as 401(k) and 403(b) plans) are not insured by PBGC. Plans must meet these requirements to receive the tax benefits available to qualified pension plans. If a plan meets the requirements of IRC Section 401, the employer's contributions to the plan are treated as a tax-deductible business expense, and neither the employer's contributions to the plan nor the investment earnings of the plan are treated as taxable income to the participants. When a pension plan participant begins to receive income from the plan, it is taxed as ordinary income. In general, to be qualified under the IRC, a pension plan must be established with the intent of being a permanent and continuing arrangement; must provide definitely determinable benefits; may not discriminate in favor of highly compensated employees with respect to coverage, contributions, or benefits; and must cover a minimum number or percentage of employees. Pension plans specifically excluded by law from being insured by PBGC include governmental plans, church plans, plans of fraternal societies financed entirely by member contributions, plans maintained by certain professionals (such as physicians, attorneys, and artists) with 25 or fewer participants, and plans established and maintained exclusively for substantial owners of businesses. Pension Benefit Guaranty PBGC's single-employer and multiemployer insurance programs operate differently and PBGC maintains separate reserve funds for each program. Funds from the reserve of one program may not be used for the other program. In the single-employer program, PBGC becomes the trustee of the terminated, underfunded single-employer DB pension plans. The assets of the terminated plan are placed in a trust fund operated by PBGC. The participants in the trusteed plans receive their benefits from PBGC. In the multiemployer program, PBGC does not become the trustee of plans. PBGC makes loans to multiemployer DB pension plans when the plans become insolvent. An insolvent multiemployer plan has insufficient assets available from which to pay participant benefits. Single-Employer Insurance Program An employer can voluntarily terminate a single-employer plan in either a standard or distress termination. The participants and PBGC must be notified of the termination. PBGC may involuntarily terminate an underfunded plan if the sponsor is unable to fund its pension obligations. Standard Terminations A company may voluntarily end its pension plan if the plan's assets are sufficient to cover benefit liabilities. In such cases, PBGC does not pay any benefits to plan participants. Its role is to confirm that the requirements for termination have been met by the plan. Generally, benefit liabilities equal all benefits earned to date by plan participants, including vested and nonvested benefits (which automatically become vested at the time of termination), plus certain early retirement supplements and subsidies. Benefit liabilities also may include certain contingent benefits. If assets are sufficient to cover benefit liabilities (and other termination requirements, such as notice to employees, have not been violated), the plan distributes benefits to participants. The plan provides for the benefit payments it owes by purchasing annuity contracts from an insurance company, or otherwise providing for the payment of benefits, for example, by providing the benefits in lump-sum distributions. Assets in excess of the amounts necessary to cover benefit liabilities may be recovered by the employer in an asset reversion. The asset reversion is included in the employer's gross income and is subject to a nondeductible excise tax. The excise tax is 20% of the amount of the reversion if the employer establishes a qualified replacement plan or provides certain benefit increases in connection with the termination. Otherwise, the excise tax is 50% of the reversion amount. PBGC Trusteeship When an underfunded plan terminates in a distress or involuntary termination, the plan goes into PBGC receivership. PBGC becomes the trustee of the plan, takes control of any plan assets, and assumes responsibility for liabilities under the plan. PBGC makes payments for benefit liabilities promised under the plan with assets received from two sources: (1) assets in the plan before termination and (2) assets recovered from employers. The balance, if any, of guaranteed benefits owed to beneficiaries is paid from PBGC's revolving funds. Distress Terminations If assets in the plan are not sufficient to cover benefit liabilities, the employer may not terminate the plan unless the employer meets one of four criteria necessary for a "distress" termination: 1. The plan sponsor, and every member of the controlled group (companies with the same ownership) of which the sponsor is a member, has filed or had filed against it a petition seeking liquidation in bankruptcy or any similar federal law or other similar state insolvency proceedings; 2. The plan sponsor, and every member of the sponsor's controlled group, has filed or had filed against it a petition to reorganize in bankruptcy or similar state proceedings. This criterion is also met if the bankruptcy court (or other appropriate court) determines that, unless the plan is terminated, the employer will be unable to continue in business outside the reorganization process and approves the plan termination; 3. PBGC determines that termination is necessary to allow the employer to pay its debts when due; or 4. PBGC determines that termination is necessary to avoid unreasonably burdensome pension costs caused solely by a decline in the employer's work force. These requirements were added by the Single Employer Pension Plan Amendments Act of 1986 (SEPPAA; P.L. 99-272 ) and modified by the Omnibus Budget Reconciliation Act of 1987 ( P.L. 100-203 ) and the Retirement Protection Act of 1994 (RPA; P.L. 103-465 ). They are designed to ensure that the liabilities of an underfunded plan remain the responsibility of the employer, rather than PBGC, unless the employer meets strict standards of financial need indicating genuine inability to continue funding the plan. Involuntary Terminations PBGC may terminate a plan involuntarily, either by agreement with the plan sponsor or pursuant to a federal court order. PBGC may institute such proceedings only if the plan in question has not met the minimum funding standards, the plan will be unable to pay benefits when due, the plan has a substantial owner who has received a distribution greater than $10,000 (other than by reason of death) and the plan has unfunded vested benefits, or the long-run loss to PBGC with respect to the plan is expected to increase unreasonably if the plan is not terminated. PBGC must terminate a plan if the plan is unable to pay benefits that are currently due. A federal court may order termination of the plan to protect the interests of participants, to avoid unreasonable deterioration of the plan's financial condition, or to avoid an unreasonable increase in PBGC's liability under the plan. Table 2 provides information on the number of terminations since 1974 by single-employer DB pension plans and the number of these terminations that resulted in PBGC becoming trustee of the pension plan. From FY1974 through FY2016, PBGC became the trustee of 4,769 single-employer DB pension plans. The number of single-employer plan terminations that result in claims against PBGC is a relatively small fraction of all plan terminations. Most pension plan terminations are standard terminations. Employer Liability to PBGC Following a distress or involuntary termination, the plan's sponsor and every member of that sponsor's controlled group are liable to PBGC for the plan's shortfall. The shortfall is measured as the value of the plan's liabilities as of the date of the plan's termination minus the fair market value of the plan's assets on the date of termination. The liability is joint and several, meaning that each member of the controlled group can be held responsible for the entire liability. Generally, the obligation is payable in cash or negotiable securities to PBGC on the date of termination. Failure to pay this amount upon demand by PBGC may trigger a lien on the property of the contributing employer's controlled group. Often, however, a plan undergoing a distress termination is sponsored by a company that is in bankruptcy proceedings, in which case PBGC does not have legal authority to create (or perfect) a lien against the plan sponsor. In such instances, PBGC has the same legal standing as other creditors of the plan sponsor, and its ability to recover assets is limited. Benefit Payments When an underfunded plan terminates, the benefits PBGC will pay depend on the statutory limit on guaranteed benefits, the amount of the terminated plan's assets, and recoveries by PBGC from the employer that sponsored the terminated plan. Guaranteed Benefits Within limits set by Congress, PBGC guarantees any retirement benefit that was nonforfeitable (vested) on the date of plan termination other than benefits that vest solely on account of the termination, and any death, survivor, or disability benefit that was owed or was in payment status at the date of plan termination. Generally, only that part of the retirement benefit that is payable in monthly installments (rather than, for example, lump-sum benefits payable to encourage early retirement) is guaranteed. Retirement benefits that commence before the plan's normal age of retirement are guaranteed, provided they meet the other conditions of guarantee. Contingent benefits (for example, early retirement benefits provided only if a plant shuts down) are guaranteed only if the triggering event occurs before plan termination. Following enactment of the Pension Protection Act of 2006 (PPA; P.L. 109-280 ), PBGC guarantee for such benefits is phased in over a five-year period commencing when the event occurs. Maximum Benefits for Participants in Single-Employer Pension Plans ERISA sets a maximum on the individual benefit amount that PBGC can guarantee. The ceiling for single-employer plans is adjusted annually for national wage growth. The maximum pension guarantee is $67,295 a year for workers aged 65 in plans that terminate in 2019. This amount is adjusted annually and is decreased if a participant begins receiving the benefit before the age of 65 (reflecting the fact that they will receive more monthly pension checks over their expected lifetime) or if the pension plan provides benefits in some form other than equal monthly payments for the life of the retiree. The benefit is increased if a participant begins receiving the benefit after the age of 65 (reflecting the fact that they will receive fewer monthly pension checks over their expected lifetime). Table 3 contains examples of PBGC's annual maximum benefit for individuals who begin receiving benefits at the ages of 60, 65, or 70 and who receive either a straight-life annuity or a joint and 50% survivor annuity. The reduction in the maximum guarantee for benefits paid before the age of 65 is 7% for each of the first 5 years under age 65, 4% for each of the next 5 years, and 2% for each of the next 10 years. The reduction in the maximum guarantee for benefits paid in a form other than a straight-life annuity depends on the type of benefit, and if there is a survivor's benefit, the percentage of the benefit continuing to the surviving spouse and the age difference between the participant and spouse. Only "basic benefits" are guaranteed. These include benefits beginning at normal retirement age (usually 65), certain early retirement and disability benefits, and benefits for survivors of deceased plan participants. Only vested benefits are insured. The average monthly benefit received by retirees in FY2015 was $606. In a study released in 2008, PBGC indicated that more than 80% of PBGC recipients in single-employer plans trusteed by PBGC received their full benefits. Among participants whose benefits were reduced, the average reduction was 28%. Assets of a terminated plan are allocated to pay benefits according to a priority schedule established by statute. Under this schedule, some nonguaranteed benefits are payable from plan assets before certain guaranteed benefits. For example, benefits of participants who have been receiving pension payments for more than three years have priority over guaranteed benefits of participants not yet receiving payments. PBGC also is required to pay participants a portion of their unfunded, nonguaranteed benefits based on a ratio of assets recovered from the employer to the amount of PBGC's claim on employer assets (called Section 4022(c) benefits). Multiemployer Pension Insurance Program In the case of multiemployer plans, PBGC insures plan insolvency, rather than plan termination. Accordingly, a multiemployer plan need not be terminated to qualify for PBGC financial assistance. A plan is insolvent when its available resources are not sufficient to pay the plan benefits for the plan year in question, or when the sponsor of a plan in reorganization reasonably determines, taking into account the plan's recent and anticipated financial experience, that the plan's available resources will not be sufficient to pay benefits that come due in the next plan year. If it appears that available resources will not support the payment of benefits at the guaranteed level, PBGC will provide the additional resources needed as a loan, which PBGC indicates are rarely repaid. PBGC may provide loans to the plan year after year. If the plan recovers from insolvency, it must begin repaying loans on reasonable terms in accordance with regulations. Only one multiemployer plan has repaid any of its financial assistance. Benefits for Participants in Multiemployer Pension Plans PBGC guarantees benefits to multiemployer plans as it does for single-employer plans, although a different guarantee ceiling applies. Multiemployer plans determine benefits by multiplying a flat dollar rate by years of service, so the benefit guarantee ceiling is tied to this formula. The benefit guarantee limit for participants in multiemployer plans equals a participant's years of service multiplied by the sum of (1) 100% of the first $11 of the monthly benefit rate and (2) 75% of the next $33 of the benefit rate. For a participant with 30 years of service, the guaranteed limit is $12,870. This benefit formula is not adjusted for increases in the national wage index. PBGC estimated in 2015 that 79% of participants in multiemployer plans that receive financial assistance received their full benefit. However, in plans that may need financial assistance in the future, only 49% of participants would receive their full benefit payment. Among ongoing plans (neither receiving PBGC financial assistance nor terminated and expected to receive financial assistance), the average benefit is almost twice as large as the average benefit in terminated plans. This suggests that a larger percentage of participants in plans that receive PBGC financial assistance in the future are likely to see benefit reductions as a result of the PBGC maximum guarantee level. Current Financial Status The most commonly used measure of PBGC's financial status is its net financial position, which is the difference between PBGC's assets and its liabilities. At the end of FY2018, PBGC's assets were $112.3 billion, PBGC liabilities were $163.7 billion, and its net financial position was -$51.4 billion. PBGC's main assets are the value of its trust fund and revolving funds. The trust fund contains the assets of the pension plans of which PBGC becomes trustee and the returns on the trust fund investments. The revolving funds contain the premiums that plan sponsors pay to PBGC, transfers from the trust fund that are used to pay for participants' benefits, and returns on the revolving funds' investments in U.S. Treasury securities. PBGC's main liabilities are the estimated present values of (1) future benefits payments in the single-employer program and (2) future financial assistance to insolvent plans in the multiemployer program. Table 4 provides information on the net financial position of PBGC from FY1999 through FY2018. PBGC has had an end of fiscal year deficit each year since FY2002. The weakness in the economy in 2001, particularly in the steel and airline industries, led to large and expensive plan terminations that created a deficit for PBGC. By the end of 2004, the single-employer program had a deficit of $23.3 billion. For the first time since FY2001, partly as a result of increases to the premiums that employers pay, the single-employer program showed a surplus in FY2018. The multiemployer program had a surplus from FY1982 to FY2002, but PBGC reported deficits each year since. PBGC projects that the multiemployer program will be likely become insolvent in FY2025 and there is a less than 1% chance that the program will remain solvent in FY2026. Both the single-employer and multiemployer programs are on the Government Accountability Office's (GAO's) list of high-risk government programs. Benefit Payments in the Single-Employer Insurance Program Table 5 shows that approximately 825,000 participants received monthly payments from PBGC in FY2015 (the most recent year for which comprehensive data on benefit payments are available). The average monthly payment was $536 and the median monthly payment was $279. Among retiree payees, the average monthly benefit was $606 and among beneficiary payees, the average monthly benefit was $307. Approximately 40,000 participants received a lump-sum payment in FY2015, and the average amount of the lump-sum payment was $2,054. Finances of the Single-Employer Insurance Program Figure 1 displays the net financial position of PBGC's single-employer program from FY1980 to FY2018. In FY1996, PBGC showed a surplus in its single-employer program for the first time in its history. That surplus peaked at $9.7 billion in FY2000, helped by the strong performance of the equity markets in the mid- and late 1990s. In FY2018, PBGC the single-employer program showed a surplus of $2.44 billion. The improvement in the financial condition of the single-employer program is a result of several factors, such as investment income (there has not been an investment loss since FY2008) and increase in premium income (premium income was 3.6 times greater in FY2018 compared to FY2008). Finances of the Multiemployer Insurance Program Table 6 provides data on the number of plans that have received financial assistance and the annual amounts of the financial assistance from FY1995 to FY2018. Seventy-eight multiemployer plans received financial assistance in FY2018. The FY2018 annual report indicated that approximately 62,300 multiemployer plan participants received financial assistance in FY2018 and that approximately 27,800 participants will receive benefits in the future because they are in plans that are currently receiving financial assistance. Figure 2 indicates that the financial condition of the multiemployer insurance program has been worsening. The deficit in the multiemployer insurance program increased from $8.3 billion in FY2013 to $42.4 billion in FY2014, and $65.1 billion in FY2017. It decreased to $53.8 billion in FY2018. The large increase in the deficit in FY2014 was the result of the increase in the likelihood of the insolvency of several large multiemployer pension plans in financial distress. PBGC and the Federal Budget PBGC's budgetary cash flows are based on its premium income, interest income, benefit outlays, and the interaction of PBGC's trust and revolving funds. The trust fund contains the assets of the pension plans of which PBGC becomes trustee and the returns on the trust fund investments. Revolving funds contain the premiums that plan sponsors pay to PBGC, transfers from the trust fund that are used to pay for participants' benefits, and returns on the revolving funds' investments in U.S. Treasury securities. PBGC Trust Fund When PBGC becomes trustee of a single-employer pension plan, the assets of the terminated pension plan are transferred to PBGC and placed in a nonbudgetary trust fund. Transfers of assets to the trust fund do not appear in the federal budget and the assets of this trust fund do not appear on the federal balance sheet. The assets of the trust fund are managed by private-sector money managers in accordance with an investment policy established by PBGC's Board of Directors. The current investment policy establishes assets allocations of 30% for equities and other nonfixed income assets, and 70% for fixed income. Trust fund investments totaled $70.2 billion at the end of FY2018. PBGC Revolving Funds ERISA authorized the creation of seven revolving funds for PBGC, although only three revolving funds have been used by PBGC. The revolving funds contain the premiums paid by single-employer and multiemployer pension plan sponsors, returns on revolving funds' investments, and transfers from the trust fund that are used to pay benefits. Each year, PBGC transfers funds from the trust fund to the revolving funds to pay for a share of participants' benefits. The investments of the revolving funds are, by law, invested exclusively in U.S. Treasury securities. The revolving funds' assets at the end of FY2018 were $1.8 billion for Fund 1, $2.1 billion for Fund 2, and $29.3 billion for Fund 7, for a total of $33.2 billion. The revolving funds are on-budget accounts: increases or decreases in the revolving funds appear as on-budget federal receipts and outlays. The funds' gross outlays include PBGC benefit payments and administrative expenses and receipts include premiums paid, interest on federal securities, and reimbursements from the trust fund. Because increases in the premiums paid by pension plan sponsors to PBGC are increases in federal revenue, some stakeholders and policymakers have criticized recent PBGC premium increases because they feel increases in premiums are used to offset other federal spending, do not address the financial condition of PBGC, and may discourage employers from maintaining their DB pension plans. Future Financial Condition In its FY2017 Projections Report, PBGC estimated its financial condition over the next 10 years. The report indicated that the single-employer program's deficit is likely to shrink and the multiemployer program is likely to run out of money in FY2025. PBGC projected that the single-employer program was likely to emerge from deficit by FY2018 (which it did). The average estimate of PBGC's simulations was a $26 billion surplus for the single-employer program in 10 years. PBGC projected that there is a 90% chance that the multiemployer program will be insolvent before the end of FY2025 and a 99% chance that the multiemployer program will be insolvent by 2026. This is a result of the likely insolvency of several large multiemployer pension plans. PBGC's FY2018 Annual Report indicated that the multiemployer program's probable exposure to future financial assistance would be $53.8 billion. Premium levels are likely inadequate to provide continued financial assistance to insolvent multiemployer plans. The financial assistance to these plans could exhaust PBGC's ability to guarantee participants' benefits. PBGC has indicated that once resources are exhausted in the PGBC's multiemployer program, insolvent plans would be required to reduce benefits to levels that could be sustained through premium collections only. The Multiemployer Pension Reform Act of 2014 (MPRA, enacted as part of P.L. 113-235 ), allowed, among other provisions, multiemployer DB pension plans that expect to become insolvent to reduce benefits to participants in these plans. An insolvent plan has no assets from which to pay any benefits. Plans that reduce benefits to forestall insolvency would not require financial assistance from PBGC, and would reduce the amount of future financial assistance PBGC would expect to provide. This would likely improve PBGC's financial condition. PBGC indicated that there is uncertainty in how the provisions of MPRA that allow benefit suspensions and plan partitions will be used. PBGC estimated that the effect of MPRA would likely not change PBGC projections of future solvency. In response to the increasing concerns of policymakers and stakeholders (such as participants, participating employers, and plans), the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) created a new joint select committee of the House and Senate: The Joint Select Committee on Solvency of Multiemployer Pension Plans. The committee was tasked with formulating recommendations and legislative language by November 30, 2018, that would "significantly improve the solvency of multiemployer pension plans and the Pension Benefit Guaranty Corporation." The committee did not release a report containing recommendations or legislative language by the deadline. Appendix. Historical PBGC Premium Rates Table A-1 provides historical data on the single-employer program premium levels. Table A-2 provides historical data on the multiemployer program premium levels.

The Pension Benefit Guaranty Corporation (PBGC) is a federal agency established by the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406). It was created to protect the pensions of participants and beneficiaries covered by private sector defined benefit (DB) plans. These pension plans provide a specified monthly benefit at retirement, usually either a percentage of salary or a flat dollar amount multiplied by years of service. Defined contribution (DC) plans, such as 401(k) plans, are not insured. PBGC is chaired by the Secretary of Labor, with the Secretaries of the Treasury and Commerce serving as board members. PBGC runs two distinct insurance programs: one for single-employer pensions and a second for multiemployer plans. Single-employer pension plans are sponsored by one employer and cover eligible workers employed by the plan sponsor. Multiemployer plans are collectively bargained plans to which more than one company makes contributions. PBGC maintains separate reserve funds for each program. A firm must be in financial distress to end an underfunded single-employer plan and for PBGC to become the trustee of the plan. Multiemployer plans do not terminate. When a multiemployer plan becomes insolvent and is not able to pay promised benefits, PBGC provides financial assistance to the plan in the form of loans, although PBGC does not expect the loans to be repaid. In FY2018, PBGC insured about 25,000 DB pension plans covering approximately 37 million people. PBGC became the trustee of 58 newly terminated single-employer pension plans and began providing financial assistance to an additional 6 multiemployer pension plans. PBGC paid benefits to 861,371 participants in 4,919 single-employer pension plans and 62,300 participants in 78 multiemployer plans. There is a statutory maximum benefit that PBGC can pay. Participants receive the lower of their benefit as calculated under the plan or the statutory maximum benefit. If a participant's benefit is higher than the statutory maximum benefit, the participant's benefit is reduced. Participants in single-employer plans that terminate in 2019 and are trusteed by PBGC may receive up to $67,295 per year if they begin taking their pension at the age of 65. The single-employer maximum benefit is adjusted depending on the age at which the participant begins taking the benefit and on the form of the benefit (e.g., the maximum benefit is lower for a joint-and-survivor annuity). The maximum benefit for participants in multiemployer plans that receive financial assistance depends on the number of years of service in the plan. For example, a participant with 30 years of service may receive up to $12,870 per year. Currently, most workers in single-employer plans taken over by PBGC and multiemployer plans that receive financial assistance from PBGC receive the full pension benefit that they earned. However, among participants in multiemployer plans that were terminated and likely to need financial assistance in the future, 49% have a benefit below the PBGC maximum guarantee and 51% have a benefit larger than the PBGC maximum guarantee. At the end of FY2018, PBGC had a total deficit of $51.4 billion, which consisted of a $2.4 billion surplus from the single-employer program and a $53.9 billion deficit from the multiemployer program. PBGC's single-employer program has been on the Government Accountability Office's (GAO's) list of high-risk government programs since 2003. PBGC's multiemployer program was added in 2009. PBGC projects the financial position of the single-employer program to improve slightly, but the financial position of the multiemployer program is expected to worsen considerably over the next 10 years.

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Introduction Medicare is a federal insurance program that pays for covered health care services of most individuals aged 65 and older and certain disabled persons. Medicare serves approximately one in six Americans and virtually all of the population aged 65 and over. In calendar year (CY) 2019, the program is expected to cover about 61 million persons (52 million aged and 9 million disabled) at a total cost of about $798 billion, accounting for approximately 3.8% of gross domestic product. The Medicare program is administered by the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS), and individuals enroll in Medicare through the Social Security Administration (SSA). Medicare consists of four parts—Parts A through D. Part A covers hospital services, skilled nursing facility services, home health visits, and hospice services. Part B covers a broad range of medical services and supplies, including physician services, laboratory services, durable medical equipment, and outpatient hospital services. Enrollment in Part B is voluntary; however, most Medicare beneficiaries (about 91%) are enrolled in Part B. Part C (Medicare Advantage) provides private plan options, such as managed care, for beneficiaries who are enrolled in both Part A and Part B. Part D provides optional outpatient prescription drug coverage. Each part of Medicare is funded differently. Part A is financed primarily through payroll taxes imposed on current workers (2.9% of earnings, shared equally between employers and workers), which are credited to the Hospital Insurance (HI) Trust Fund. Beginning in 2013, workers with annual wages over $200,000 for single tax filers or $250,000 for joint filers pay an additional 0.9%. Beneficiaries generally do not pay premiums for Part A. In 2019, total Part A expenditures are expected to reach about $328 billion, representing about 41% of program costs. Parts B and D, the voluntary portions, are funded through the Supplementary Medical Insurance (SMI) Trust Fund, which is financed primarily by general revenues (transfers from the U.S. Treasury) and premiums paid by enrollees. In 2019, about $2.8 billion in fees on manufacturers and importers of brand-name prescription drugs also will be used to supplement the SMI Trust Fund. In 2019, Part B expenditures are expected to reach about $367 billion, and Part D expenditures are expected to reach about $104 billion, representing 46% and 13% of program costs, respectively. (Part C is financed proportionately through the HI and SMI Trust Funds; expenditures for Parts A and B services provided under Part C are included in the above expenditure figures.) Part B beneficiary premiums are normally set at a rate each year equal to 25% of average expected per capita Part B program costs for the aged for the year. Higher-income enrollees pay higher premiums set to cover a greater percentage of Part B costs, while those with low incomes may qualify for premium assistance through one of several Medicare Savings Programs administered by Medicaid. Individuals who receive Social Security or Railroad Retirement Board (RRB) retirement or disability benefits have their Part B premiums automatically deducted from their benefit checks. Part B premiums are generally announced in the fall prior to the year that they are in effect (e.g., the 2019 Part B premiums were announced in October 2018). In 2019, the standard monthly Part B premium is $135.50. However, about 3.5% of Part B enrollees are protected by a hold-harmless provision in the Social Security Act that prevents their Medicare Part B premiums from increasing more than the annual dollar amount of the increase in their Social Security benefit payments. These individuals pay premiums of less than $135.50. In addition to premiums, Part B beneficiaries may pay other out-of-pocket costs when they use services. The annual deductible for Part B services is $185.00 in 2019. After the annual deductible is met, beneficiaries are responsible for coinsurance costs, which are generally 20% of Medicare-approved Part B expenses. This report provides an overview of Medicare Part B premiums, including information on Part B eligibility and enrollment, late-enrollment penalties, collection of premiums, determination of annual premium amounts, premiums for high-income enrollees, premium assistance for low-income enrollees, protections for Social Security recipients from rising Part B premiums, and historical Medicare Part B premium trends. This report also provides a summary of various premium-related issues that may be of interest to Congress. Specific Medicare and Social Security publications and other resources for beneficiaries, and those who provide assistance to them, are cited where appropriate. Medicare Part B Eligibility and Enrollment An individual (or the spouse of an individual) who has worked in covered employment and paid Medicare payroll taxes for 40 quarters is entitled to receive premium-free Medicare Part A benefits upon reaching the age of 65. Those who have paid in for fewer than 40 quarters may enroll in Medicare Part A by paying a premium. All persons entitled to Part A (regardless of whether they are eligible for premium-free Part A) are also entitled to enroll in Part B. An aged person not entitled to Part A may enroll in Part B if he or she is aged 65 or over and either a U.S. citizen or an alien lawfully admitted for permanent residence who has resided in the United States continuously for the immediately preceding five years. Those who are receiving Social Security or RRB benefits are automatically enrolled in Medicare, and coverage begins the first day of the month they turn 65. These individuals will receive a Medicare card and a "Welcome to Medicare" package about three months before their 65 th birthday. Those who are automatically enrolled in Medicare Part A also are automatically enrolled in Part B. However, because beneficiaries must pay a premium for Part B coverage, they have the option of turning it down. Disabled persons who have received cash payments for 24 months under the Social Security or RRB disability programs also automatically receive a Medicare card and are enrolled in Part B unless they specifically decline such coverage. Those who choose to receive coverage through a Medicare Advantage plan (Part C) must enroll in Part B. Persons who are not receiving Social Security or RRB benefits, for example because they are still working or have chosen to defer enrollment because they have not yet reached their full retirement benefit eligibility age, must file an application with the SSA or RRB for Medicare benefits. There are two kinds of enrollment periods, one that occurs when individuals are initially eligible for Medicare and one annual general enrollment period for those who missed signing up during their initial enrollment period. A beneficiary may drop Part B enrollment and reenroll an unlimited number of times; however, premium penalties may be incurred. Initial Enrollment Periods Those who are not automatically enrolled in Medicare may sign up during a certain period when they first become eligible. The initial enrollment period is seven months long and begins three months before the month in which the individual first turns 65. (See Table 1 .) Beneficiaries who do not file an application for Medicare benefits during their initial enrollment period could be subject to the Part B late-enrollment penalty. (See " Late-Enrollment Premium Penalty and Exemptions .") If an individual accepts the automatic enrollment in Medicare Part B, or enrolls in Medicare Part B during the first three months of the initial enrollment period, coverage will start with the month in which an individual is first eligible, that is, the month of the individual's 65 th birthday. Those who enroll during the last four months will have their coverage start date delayed from one to three months after enrollment. The initial enrollment period of those eligible for Medicare based on disability or permanent kidney failure is linked to the date the disability or treatment began. General Enrollment Period An individual who does not sign up for Medicare during the initial enrollment period must wait until the next general enrollment period. In addition, persons who decline Part B coverage when first eligible, or terminate Part B coverage, must also wait until the next general enrollment period to enroll or reenroll. The general enrollment period lasts for three months from January 1 to March 31 of each year, with coverage beginning on July 1 of that year. A late-enrollment penalty may apply. Late-Enrollment Premium Penalty and Exemptions Beneficiaries who do not sign up for Part B when first eligible, or who drop it and then sign up again later, may have to pay a late-enrollment penalty for as long as they are enrolled in Part B. Monthly premiums for Part B may go up 10% for each full 12-month period that one could have had Part B but did not sign up for it. (See " Calculation of Penalty .") Some may be exempt from paying a late-enrollment penalty if they meet certain conditions that allow them to sign up for Part B during a special enrollment period (SEP). (See " Penalty Exemptions .") In 2018, about 1.4% of Part B enrollees (about 760,000) paid this penalty. On average, their total premiums (standard premium plus penalty) were about 28% higher than what they would have been had they not been subject to the penalty. Those who receive premium assistance through a Medicare Savings Program do not pay the late-enrollment penalty. Additionally, for those disabled persons under the age of 65 subject to a premium penalty, once the individual reaches the age of 65, he or she qualifies for a new enrollment period and no longer pays a penalty. The penalty provision was included in the original Medicare legislation enacted in 1965 to help prevent adverse selection by creating a strong incentive for all eligible beneficiaries to enroll in Part B. Adverse selection occurs when only those persons who think they need the benefits actually enroll in the program. When this happens, per capita costs are driven up and premiums go up, causing more enrollees (presumably the healthier and less costly ones) to drop out of the program. With most eligible persons over the age of 65 enrolled in Part B, the costs are spread over the majority of this population and per capita costs are less than would be the case if adverse selection had occurred. As the Part B late-enrollment penalty is tied to Medicare eligibility and not to access to covered services, individuals who live in areas where Medicare benefits are generally not provided, such as outside of the United States or in prison, could still be subject to the Part B late-enrollment penalty if they do not sign up for (or if they drop) Part B when eligible. To illustrate, if a retired Medicare-eligible individual stopped paying Part B premiums while living overseas for a three-year period and reenrolled when returning to the United States, he or she would not be entitled to a SEP. This individual would instead need to enroll during the general enrollment period and could also be subject to late-enrollment penalties based on that three-year lapse in coverage. Additionally, Part B does not have a "creditable" coverage exemption similar to that under the Part D outpatient prescription drug benefit. Except for certain circumstances discussed below, having equivalent coverage does not entitle one to a SEP should one decide to enroll in Part B later. For example, an individual who has retiree coverage similar to Part B and therefore decides not to enroll in Part B when first eligible could be subject to late-enrollment penalties if he or she enrolls in Part B at a later time (for example, because the retiree coverage was discontinued). Calculation of Penalty The late-enrollment penalty is equal to a 10% premium surcharge for each full 12 months of delay in enrollment and/or reenrollment during which the beneficiary was eligible for Medicare. The period of the delay is equal to (1) the number of months that elapse between the end of the initial enrollment period and the end of the enrollment period in which the individual actually enrolls or (2) for a person who reenrolls, the months that elapse between the termination of coverage and the close of the enrollment period in which the individual enrolls. Generally, individuals who do not enroll in Part B within a year of the end of their initial enrollment period would be subject to the premium penalty. For example, if an individual's initial enrollment period ended in September 2016 and the individual subsequently enrolled during the 2017 general enrollment period (January 1 through March 31), the delay would be less than 12 months and the individual would not be subject to a penalty. However, if that individual delayed enrolling until the 2019 general enrollment period, the premium penalty would be 20% of that year's standard premium. (Although the elapsed time covers a total of 30 months of delayed enrollment, the episode includes only two full 12-month periods.) An individual who waits 10 years to enroll in Part B could pay twice the standard premium amount. The late-enrollment surcharge is calculated as a percentage of the monthly standard premium amount (e.g., $135.50 in 2019), and that amount is added to the beneficiary's premium each month. The hold-harmless provision does not provide protection from increases in the penalty amounts. This means that although those who are held harmless in 2018 pay reduced premiums, any late-enrollment penalties are based on the 2019 premium of $135.50 per month. Using the example above in which an individual is subject to a 20% premium penalty, the total monthly premium in 2019 would be calculated as follows (see text box): For those subject to the high-income premium (see " Income-Related Premiums "), the late-enrollment surcharge applies only to the standard monthly premium amount and not to the higher-income adjustment portion of their premiums. Using the example of a 20% penalty for a beneficiary with an income of between $85,000 and $107,000, the applicable income-related adjustment of $54.10 would be added on to the penalty-adjusted premium of $162.60 ($135.50 + $27.10 penalty), for a total monthly premium of $216.70. There is no upper limit on the amount of the surcharge that may apply, and the penalty continues to apply for the entire time the individual is enrolled in Part B. Each year, the surcharge is calculated using the standard premium amount for that particular year. Therefore, if premiums increase in a given year, the dollar value of the surcharge will increase as well. Penalty Exemptions Under certain conditions, select beneficiaries may be exempt from the late-enrollment penalty. Beneficiaries who are exempt include working individuals (and their spouses) with group coverage, some international volunteers, and those who based their nonenrollment decision on incorrect information provided by a federal representative. Individuals who are permitted to delay enrollment have their own SEPs. Current Workers A working individual and/or the spouse of a working individual may be able to delay enrollment in Medicare Part B without being subject to the late-enrollment penalty. Delayed enrollment is permitted when an individual aged 65 or older has group health insurance coverage based on the individual's or spouse's current employment (with an employer with 20 or more employees). In 2018, about 2.0 million of the 3.8 million working aged population were enrolled in Part A only, with most of the rest enrolled in both Parts A and B. Delayed enrollment is also permitted for certain disabled persons who have group health insurance coverage based on their own or a family member's current employment with a large group health plan. For the disabled, a large group health plan is defined as one that covers 100 or more employees. Specifically, persons permitted to delay coverage without penalty are those persons whose Medicare benefits are determined under the Medicare Secondary Payer program. Under Medicare Secondary Payer rules, an employer (with 20 or more employees) is required to offer workers aged 65 and over (and workers' spouses aged 65 and over) the same group health insurance coverage that is made available to other employees. The worker has the option of accepting or rejecting the employer's coverage. If he or she accepts the coverage, the employer plan is primary (i.e., pays benefits first) for the worker and/or spouse aged 65 or over, and Medicare becomes the secondary payer (i.e., fills in the gaps in the employer plan, up to the limits of Medicare's coverage). Similarly, a group health plan offered by an employer with 100 or more employees is the primary payer for its employees under 65 years of age, or their dependents, who are entitled to Medicare because of disability. Such individuals may sign up for Medicare Part B (or Part A) anytime that they (or their spouse) are still working, and they are covered by a group health plan through the employer or union based on that work. Additionally, those who qualify for Medicare based on age may sign up during the eight-month period after retirement or the ending of group health plan coverage, whichever happens first . (If an individual's group health plan coverage, or the employment on which it is based, ends during the initial enrollment period , that individual would not qualify for a SEP.) Disabled individuals whose group plan is involuntarily terminated have six months to enroll without penalty. Individuals who fail to enroll during this special enrollment period are considered to have delayed enrollment and thus could be subject to the penalty. For example, even though an individual may have continued health coverage through the former employer after retirement or have COBRA coverage, he or she must sign up for Part B within eight months of retiring to avoid paying a Part B penalty if he or she eventually enrolls. Individuals who return to work and receive health care coverage through that employment may be able to drop Part B coverage, qualify for a new special enrollment period upon leaving that employment, and reenroll in Part B without penalty as long as enrollment is completed within the specified time frame. International Volunteers Some international volunteers may also be exempt from the Part B late-enrollment penalty. The Deficit Reduction Act of 2005 ( P.L. 109-171 ) permits certain individuals to delay enrollment in Part B without a late-enrollment penalty if they volunteered outside of the United States for at least 12 months through a program sponsored by a tax-exempt organization defined under Section 501(c)(3) of the Internal Revenue Code. These individuals must demonstrate that they had health insurance coverage while serving in the international program. Individuals permitted to delay enrollment have a six-month SEP, which begins on the first day of the first month they no longer qualify under this provision. Equitable Relief Under certain circumstances, a SEP may be created and/or late-enrollment penalties may be waived if a Medicare beneficiary can establish that an error, misrepresentation, or inaction of a federal worker or an agent of the federal government (such as an employee of the Social Security Administration, CMS, or a Medicare administrative contractor) resulted in late Part B enrollment. To qualify for an exception under these conditions, the beneficiary must provide documentary evidence of the error, which "can be in the form of statements from employees, agents, or persons in authority that the alleged misinformation, misadvice, misrepresentation, inaction, or erroneous action actually occurred." Time-limited equitable relief also may be granted for certain categories of individuals. For example, CMS may provide a special enrollment period to those affected by a weather related emergency or a major disaster. Additionally, as described in more detail below, CMS determined that it did not provide adequate information regarding Part B enrollment to certain individuals with exchange coverage who enrolled in Medicare Part A and is allowing equitable relief to these individuals through September 2019. Limited Time Equitable Relief for Individuals with Medicare Part A and Exchange Coverage CMS generally encourages those who have coverage through an individual exchange (also known as marketplace) plan, and subsequently become eligible for Medicare, to drop the exchange coverage and enroll in Medicare during their initial enrollment period. After an individual has become eligible for Medicare Part A, any tax credits and cost-sharing reductions that individual receives through an exchange plan end. CMS recognized that "these individuals did not receive the information necessary at the time of their Medicare [initial enrollment period], Part B SEP for the working aged or disabled, or initial enrollment in the Exchange to make an informed decision regarding their Part B enrollment." This may have resulted in these individuals not enrolling in Part B, or enrolling in Part B late and being subject to a late enrollment penalty. CMS is thus offering time-limited equitable relief through September 30, 2019, for certain individuals enrolled in both premium-free Medicare Part A and in a plan provided through the health insurance exchanges. Specifically, those who are currently, or had previously been, enrolled in an exchange plan and in premium-free Medicare Part A, and had an initial enrollment period that began on or after April 1, 2013 (or a Part B SEP that ended on or after October 1, 2013) may enroll in Part B without penalty through September 30, 2019. Additionally, the Part B late enrollment penalties of those who had both Part A and exchange coverage and signed up for Part B outside of their initial enrollment period may be reduced or eliminated. To request this equitable relief, qualifying individuals must contact the Social Security Administration and provide appropriate documentation indicating that they were enrolled in an exchange plan and eligible for Medicare during the specified period. Collection of the Part B Premium Part B premiums may be paid in a variety of ways. If an enrollee is receiving Social Security or Railroad Retirement benefits, the Part B premiums must, by law, be deducted from these benefits. Additionally, Part B premiums are deducted from the benefits of those receiving a Federal Civil Service Retirement annuity. The purpose of collecting premiums by deducting them from benefits is to keep premium collection costs at minimum. This withholding does not apply to those beneficiaries receiving state public assistance through a Medicare Savings Program because their premiums are paid by their state Medicaid program. (See " Premium Assistance for Low-Income Beneficiaries .") Part B enrollees whose premiums are not deducted from Social Security, Railroad Retirement, or Civil Service Retirement monthly benefits; are paid by Medicaid; or are paid by another person or organization must pay premiums directly to CMS. Deduction of Part B Premiums from Social Security Checks By law, a Social Security beneficiary who is enrolled in Medicare Part B must have the Part B premium automatically deducted from his or her Social Security benefits. Automatic deduction from the Social Security benefit check also applies to Medicare Advantage participants who are enrolled in private health care plans in lieu of traditional Medicare. In 2018, about 68% of Medicare Part B enrollees (40.7 million) had their Part B premiums deducted from their Social Security benefit checks. Social Security beneficiaries who do not pay Medicare Part B premiums include those who are under the age of 65 and do not yet qualify for Medicare (e.g., began receiving Social Security benefits at the age of 62); receive low-income assistance from Medicaid to pay the Part B premium; have started to receive Social Security disability insurance (SSDI) but are not eligible for Medicare Part B because they have not received SSDI for 24 months; or chose not to enroll in Medicare Part B. The amount of an individual's Social Security benefits cannot go down from one year to the next as a result of the annual Part B premium increase, except in the case of higher-income individuals subject to income-related premiums. (See " Protection of Social Security Benefits from Increases in Medicare Part B Premiums .") For those beneficiaries "held harmless," the dollar amount of their Part B premium increases would be held below or equal to the amount of the increase in their monthly Social Security benefits. Part B Enrollees Who Do Not Receive Social Security Benefits A small percentage of Medicare Part B enrollees do not receive Social Security benefits. For example, some individuals aged 65 and older may have deferred signing up for Social Security for various reasons, for instance if they have not yet reached their full Social Security retirement age or are still working. Additionally, certain persons who spent their careers in employment that was not covered by Social Security—including certain federal, state, or local government workers and certain other categories of workers—do not receive Social Security benefits but may still qualify for Medicare. For those who receive benefit payments from the RRB or the Civil Service Retirement System (CSRS), Part B premiums are deducted from the enrollees' monthly benefit payments. While RRB retirement benefit amounts are protected by the hold-harmless provision, CSRS benefits are not held harmless from annual increases in the Part B premium. For those who do not receive these types of benefit payments, Medicare will generally bill directly for their premiums every three months. The enrollee who is being billed does not necessarily have to pay his or her own premiums; premiums may be paid by the enrollee, a relative, friend, organization, or anyone else. In cases where an organization wants to be billed for the Part B premiums of a number of Medicare beneficiaries, it may enter into a formal group-billing arrangement with CMS. Those approved as group billers include such entities as city and county governments, state teacher retirement systems, and certain religious orders. In instances in which a beneficiary's monthly Social Security benefit is not sufficient to cover the entire Part B premium amount, Medicare may bill the beneficiary for the balance. Nonpayment of premiums results in termination of enrollment in the Part B program, although a grace period (through the last day of the third month following the month of the due date) is allowed for beneficiaries who are billed and pay directly. Determining the Part B Premium Each year, the CMS actuaries estimate total per capita Part B costs for beneficiaries aged 65 and older over for the following year and set the Part B premium to cover 25% of expected Part B expenditures. However, because prospective estimates may differ from the actual spending for the year, contingency margin adjustments are made to ensure sufficient income to accommodate potential variation in actual expenditures during the year. (See " Contingency Margin .") The Part B premium is a single national amount that does not vary with a beneficiary's age, health status, or place of residence. Premiums may be adjusted upward for late enrollment (see " Late-Enrollment Premium Penalty and Exemptions ") and for beneficiaries with high incomes (see " Income-Related Premiums "), or they may be adjusted downward for those protected by the hold-harmless provision (see " Protection of Social Security Benefits from Increases in Medicare Part B Premiums "). Monthly Part B premiums are based on the estimated amount that would be needed to finance Part B expenditures on an incurred basis during the year. In estimating needed income and to account for potential variation, CMS takes into consideration the difference in prior years of estimated and actual program costs, the likelihood and potential impact of potential legislation affecting Part B in the coming year, and the expected relationship between incurred and cash expenditures (e.g., payments for some services provided during a particular year may not be paid until the following year). Once the premium has been set for a year, it will not be changed during that year. While both aged and disabled Medicare beneficiaries may enroll in Part B, the statute provides that Part B premiums are to be based only on the expected program costs—that is, the monthly actuarial rate —for the aged (those 65 years of age and older). The actuarial rate for the aged is defined as one-half of the expected average monthly per capita program costs for the aged plus any contingency margin adjustments. Standard Part B premiums are one-half of the actuarial rate. (See Appendix A for a discussion of the history of the premium methodology.) Part B costs not covered by premiums are paid for through transfers from the General Fund of the Treasury. The monthly actuarial rates for both aged and disabled enrollees are used to determine the needed amount of matching general revenue funding. Starting in 2016, a $3.00 per month surcharge is being added onto the standard premium (higher amounts for high-income individuals). To mitigate the expected large premium increases for those not held harmless in 2016, the Bipartisan Budget Act of 2015 (BBA 15; P.L. 114-74 ) required that 2016 Medicare Part B premiums be set as if the hold-harmless rule were not in effect—in other words, to calculate premiums as if all enrollees were paying the same annual inflation-adjusted standard premium. (For additional information on the changes made by BBA 15, see Appendix D .) To compensate for the lost premium revenue (below the required 25%) and to ensure that the SMI Trust Fund had adequate income to cover payments for Part B benefits in 2016, the act allowed for additional transfers from the General Fund of the Treasury to the SMI Trust Fund. To offset the approximately $9 billion in increased federal spending in 2016 resulting from the reduction in standard premiums for those not held harmless, a $3.00 surcharge was added to the monthly premium in 2016, and will continue to be applied in subsequent years until the additional federal costs are fully offset. For those who pay high-income premiums, the surcharge increases on a sliding scale up to $9.60. (See " Income Categories and Premium Adjustments .") It is estimated that the surcharge will be applied to premiums through 2021. Premium Calculation for 2019 To determine the 2019 monthly Part B premium amount, CMS first estimated the monthly actuarial rate for enrollees aged 65 and older using actual per-enrollee costs by type of service from program data through 2017 and projected these costs through 2019. CMS estimated that the monthly amount needed to cover one-half of the total benefit and administration costs for the aged in 2019 would be $263.47. However, because of expected variations between projected and actual costs, a contingency adjustment of $3.74 was added to this amount. (See " Contingency Margin ," below.) After a reduction of $2.31 to account for expected interest on trust fund assets, the monthly actuarial rate for the aged was determined to be $264.90. The 2019 Part B standard premium is one-half of $264.90, or $132.50 per month (25% of the monthly expected per capita costs of the aged). The BBA 15 repayment surcharge of $3.00 was then added onto that amount for a total monthly premium of $135.50. (As noted, only those not held harmless pay the standard 2019 premium and surcharge. Those held harmless in 2019 pay lower amounts.) Contingency Margin The contingency margin is the amount set aside to cover an appropriate degree of variation between actual and projected costs in a given year. For example, in some years, legislation that resulted in increased Medicare Part B expenditures for the year was enacted after the premium for the year had been set. The Medicare actuaries consider a contingency reserve ratio—net assets at the end of a year in the Part B account of the SMI Trust Fund compared to the following year's expected expenditures—in the amount of 15% to 20% to be adequate, and normally aim for a 17% ratio when determining Part B financing for the upcoming year. Financing fell short of this goal in 2018; however, the CMS actuaries estimate that the 2019 premium rates will allow asset levels in the Part B account to increase to appropriate levels by the end of 2019. The contingency margin in 2019 is affected by a number of factors. Because about 3.5% of Part B enrollees are being held harmless and pay reduced premiums in 2019, the premiums of the remaining 96.5% were adjusted so that aggregate premiums would still cover 25% of Part B costs in 2019. This increase is included in the contingency margin. Additionally, starting in 2011, manufacturers and importers of brand-name drugs began paying a fee that is allocated to the SMI Trust Fund. The contingency margin was thus reduced to account for this additional revenue. Further, certain payment incentives to encourage the development and use of health information technology (HIT) by Medicare physicians are excluded from premium determinations. (HIT bonuses or penalties are directly offset through transfers of general funds from the Treasury.) The 2019 contingency margin adjustment of $3.74 reflects the expected net effects of all of the above factors. Income-Related Premiums For the first 41 years of the Medicare program, all Part B enrollees paid the same Part B premium, regardless of their income. However, the Medicare Modernization Act of 2003 (MMA; P.L. 108-173 ) required that, beginning in 2007, high-income enrollees pay higher premiums. About 3.6 million Medicare Part B enrollees (about 6.6%) paid these higher premiums in 2018. Adjustments, known as income-related monthly adjustment amounts (IRMAA), are made to the standard Part B premiums for high-income beneficiaries, with the share of expenditures paid by beneficiaries increasing with income. This share ranges from 35% to 85% of the value of Part B coverage. In 2019, individuals whose incomes exceed $85,000 and couples whose combined income exceeds $170,000 are subject to higher premium amounts. The hold-harmless provision that prevents a beneficiary's Social Security benefits from decreasing from one year to the next as a result of the Part B premium increase does not apply to those subject to an income-related increase in their Part B premiums. (See " Protection of Social Security Benefits from Increases in Medicare Part B Premiums .") Determination of Income To determine those subject to the high-income premium, Social Security uses the most recent federal tax return provided by the Internal Revenue Service. In general, the taxable year used in determining the premium is the second calendar year preceding the applicable year. For example, the 2018 tax return (2017 income) was used to determine who wo uld pay the 2019 high-income premiums. The income definition on which the high-income premiums are based is modified adjusted gross income (MAGI), which is different from gross income. Specifically, gross income is all income from all sources, minus certain statutory exclusions (e.g., nontaxable Social Security benefits). From gross income, adjusted gross income (AGI) is calculated to reflect a number of deductions, including trade and business deductions and losses from sale of property. MAGI is defined as AGI plus certain foreign-earned income and tax-exempt interest. If a person had a one-time increase in taxable income in a particular year (such as from the sale of income-producing property), that increase would be considered in determining the individual's total income for that year and thus his or her liability for the income-related premium two years ahead. It would not be considered in the calculations for future years. In the case of certain major life-changing events that result in a significant reduction in MAGI, an individual may request to have the determination made for a more recent year than the second preceding year. Major life-changing events include (1) death of a spouse; (2) marriage; (3) divorce or annulment; (4) partial or full work stoppage for the individual or spouse; (5) loss by individual or spouse of income from income-producing property when the loss is not at the individual's direction (such as in the case of a natural disaster); and (6) reduction or loss for individual or spouse of pension income due to termination or reorganization of the plan or scheduled cessation of the pension. Certain types of events, such as those that affect expenses but not income or those that result in the loss of dividend income because of the ordinary risk of investment, are not considered major life-changing events. If Medicare enrollees disagree with decisions regarding their IRMAAs, they may file an appeal with Social Security. Enrollees may either submit a "Request for Reconsideration" or contact their local Social Security office to file an appeal. (An enrollee does not need to file an appeal if he or she is requesting a new decision based on a life-changing event described above or if the enrollee has shown that Social Security used the wrong information to make the original decision.) Income Categories and Premium Adjustments Depending on their level of income, Medicare beneficiaries may be classified into one of six income categories. In 2019, individuals with incomes less than $85,000 a year ($170,000 for a couple) pay the standard premium, which is based on 25% of the average Part B per capita cost. Individuals with incomes over $85,000 per year and couples with combined income over $170,000 per year pay a higher percentage of Part B costs. Depending on one's level of income over these threshold amounts, premiums may be adjusted to cover 35%, 50%, 65%, 80%, or 85% of the value of Part B coverage (with the rest being subsidized through federal general revenues). Additionally, high-income individuals pay surcharges ranging from $4.20 to $10.20 per month to offset increased federal spending in 2019 due to premium reductions under BBA 15 (compared to a $3.00 surcharge for those who pay the standard premium). In 2019, total IRMAAs for the five high-income levels, including the additional BBA 15 surcharges, are $54.10, $135.40, $216.70, $297.90, and $325.00 respectively. The income categories and associated premiums for 2019, including the applicable BBA 15 repayment surcharges, are shown below in Table 2 . When both members of a couple are enrolled in Part B, each pays the applicable premium amount. Married persons who lived with their spouse at some point during the year but who filed separate returns are subject to different premium amounts. The income levels and premium amounts are shown in Table 3 . Income Thresholds The original provision establishing the Part B income-related premiums set the initial income threshold and high-income-level ranges. Prior to 2010, annual adjustments to these levels were based on annual changes in the consumer price index for urban consumers (CPI-U), rounded to the nearest $1,000. However, Section 3402 of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) froze the income thresholds and ranges at the 2010 level through 2019 rather than allowing them to rise with inflation. As a result, as incomes have increased with inflation, a greater share of Medicare enrollees are reaching the high-income thresholds and paying the high-income premiums than would have been the case without this freeze. Additionally, beginning in 2018, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10 ) changed the income thresholds of the top two income categories at that time. Individuals with incomes between $133,500 and $160,000 per year are now in the 65% applicable percentage category (which previously applied to those with incomes between $160,000 and $214,000 in 2010-2017). The income threshold for the highest category at that time (80%) was changed to $160,000 (which previously applied to $214,000 in 2010-2017). The thresholds for the lower two income categories were not changed. (See Table 4 .) With the exception of the addition of a new top threshold category described below, the 2019 income thresholds for the high-income categories are the same as in 2018. For years 2020 and after, the thresholds will be adjusted annually for inflation based on the new (2018 and 2019) threshold levels. Section 53114 of the Bipartisan Budget Act of 2018 (BBA 18; P.L. 115-123 ) added an additional high-income category beginning in 2019 for individuals with annual income of $500,000 or more or couples filing jointly with income of $750,000 or more. (See Table 4 .) Enrollees with income equal to or exceeding these thresholds pay premiums that cover 85% of the average per capita cost of the Parts B and D benefits instead of 80%. The threshold for couples filing jointly in this new income tier is calculated as 150% of the individual income level rather than 200% as in the other income tiers. This new top income threshold will be frozen through 2027 and will be adjusted annually for inflation starting in 2028 based on the CPI-U. Premium Assistance for Low-Income Beneficiaries Medicare beneficiaries with limited incomes and resources may be able to qualify for assistance with their premiums and other out-of-pocket expenses. About one in five Medicare beneficiaries receives Part B premium subsidies. Medicare beneficiaries who qualify for full Medicaid benefits ( full dual-eligibles ) have most of their health care expenses paid for by either Medicare or Medicaid. For these individuals, Medicaid covers the majority of Medicare premium and cost-sharing expenses, and it supplements Medicare by providing coverage for services not covered under Medicare, such as dental services and long-term services and supports. In cases where services are covered by both Medicare and Medicaid, Medicare pays first and Medicaid picks up most of the remaining costs. Each state has different rules about eligibility and applying for Medicaid. Beneficiaries who do not meet their respective state's eligibility criteria for Medicaid may still qualify for assistance with Part B premiums if they have incomes of less than 135% of the federal poverty level (FPL) and assets of less than $7,730 for an individual or $11,600 for a couple in 2019. These assistance programs are commonly referred to as Medicare Savings Programs (MSPs). Three of these programs provide assistance with Part B premiums. The type of assistance is based on a beneficiary's level of income. Qualified Medicare Beneficiaries Aged or disabled persons with incomes at or below FPL may qualify for the Qualified Medicare Beneficiary (QMB) program. In 2019, the QMB monthly qualifying income levels are $1,061 for individuals and $1,430 for a couple (annual income of $12,732 and $17,160, respectively). QMBs are entitled to have their Medicare Parts A and B cost-sharing charges, including the Part B premium and all deductibles and coinsurance, paid by Medicaid. (See Table 5 .) For QMBs, Medicaid coverage is limited to the payment of Medicare premiums and cost-sharing charges (i.e., the Medicare beneficiary is not entitled to coverage of Medicaid plan services, unless the individual is otherwise entitled to Medicaid). Specified Low-Income Medicare Beneficiaries Individuals whose income is more than 100% but less than 120% of FPL may qualify for assistance as a Specified Low-Income Medicare Beneficiary (SLMB). In 2019, the monthly income limits are $1,269 for an individual and $1,711 for a couple (annual income of $15,228 and $20,532, respectively). Medicaid pays the Medicare Part B premiums for SLMBs, but not other cost sharing. Qualifying Individuals Individuals whose income is between 120% and 135% of FPL may qualify for assistance as Qualifying Individuals (QIs). In 2019, the monthly income limit for a QI is $1,426 for an individual, and for a couple, it is $1,923 (annual income of $17,112 and $3,076, respectively). Medicaid protection for these individuals is limited to payment of the monthly Medicare Part B premium. Expenditures under the QI program are, however, paid for (100%) by the federal government from the Medicare SMI Trust Fund up to the state's allocation level. A state is required to cover only the number of people that would bring the state's spending on these population groups in a year up to its allocation level. Any expenditures beyond that level are voluntary and paid entirely by the state. Funding for the QI program was first made available by the Balanced Budget Act of 1997 (BBA97; P.L. 105-33 ). Subsequent legislation extended the program and the amounts available through allocation. MACRA permanently extended the QI program. Protection of Social Security Benefits from Increases in Medicare Part B Premiums After a person becomes eligible to receive Social Security benefits, his or her monthly benefit amount is adjusted annually to compensate for increases in the prices of goods and services over time. Near the end of each year, the Social Security Administration announces the cost-of-living adjustment (COLA) payable in January of the following year. The amount of the COLA is based on inflation as measured by the Consumer Price Index-Urban Wage Earners and Clerical Workers (CPI-W). If the CPI-W decreases, Social Security benefits stay the same—benefits are not reduced during periods of deflation. When the annual Social Security COLA is not sufficient to cover the standard Medicare Part B premium increase, most Medicare beneficiaries are protected by a hold - harmless provision in the Social Security Act. Specifically, if in a given year the increase in the standard Part B premium would cause a beneficiary's Social Security check to be less, in dollar terms, than it was the year before, then the Part B premium is reduced to ensure that the amount of the individual's Social Security check does not decline. This determination is made by the Social Security Administration. To be held harmless in a given year, a Social Security beneficiary must have received Social Security benefit checks in both December of the previous year and January of the current year, and the beneficiary must also have had Part B premiums deducted from both checks. The hold-harmless provision operates by comparing the net dollar amounts of the two monthly benefit payments; if the net Social Security benefit for January of the current year is lower than in December of the previous year, then the hold-harmless provision applies to that person. Premiums of those held harmless are then reduced to an amount that would not cause their Social Security benefits to decline in the next year. The premium paid by those held harmless is called the Variable Supplementary Medical Insurance premium. Those not held harmless pay the standard premium as determined for that year. Typically, the hold-harmless provision affects only a small number of beneficiaries and has had minimal impact on Part B financing. In most years, this rule primarily protects those with relatively low Social Security payments. However, in years in which there is no or a very low Social Security COLA, such as in 2010, 2011, 2016, and 2017, a large number of beneficiaries may be protected by this provision. (See " Application of the Hold-Harmless Rule in Years Prior to 2016 ," " Application of the Hold-Harmless Rule in 2016 ," and " Application of the Hold-Harmless Rule in 2017 .") Some Beneficiaries Are Not Protected by the Hold-Harmless Provision Not all beneficiaries are protected by the hold-harmless provision and, under some circumstances, may be subject to significantly higher premiums than those who are held harmless. Groups that are not protected include the following: Higher- I ncome B eneficiaries. Higher-income beneficiaries who are required to pay income-related Part B premiums are explicitly excluded by law from protection under the hold-harmless provision. They are required to pay the full amount of any increase in their Part B premiums. (See " Income-Related Premiums .") Lower- I ncome B eneficiaries. Lower-income beneficiaries who receive premium assistance from Medicaid are not held harmless as their premiums are not deducted from their Social Security benefits. However, the Medicaid program pays the full amount of any increase in their Part B premiums. (See " Premium Assistance for Low-Income Beneficiaries .") Those W ho D o N ot R eceive Social Security. This group includes those who have not yet signed up for Social Security for various reasons, for example because they have deferred signing up because they have not reached full retirement age or are still working. It also includes disabled beneficiaries whose Social Security Disability Insurance (SSDI) cash benefits have been discontinued because they have returned to work but who are still eligible for Medicare. Additionally, those who receive benefits exclusively through a different retirement plan are not held harmless. This group includes certain federal retirees under the Civil Service Retirement System as well as certain state and local government workers—such as teachers, law-enforcement personnel, and firefighters—who have their own pension programs. Those W ho D id N ot H ave Medicare P remiums D educted from T heir Social Security C hecks at the E nd of O ne Y ear and the B eginning of the N ext. This category includes those who enroll in Social Security or Medicare during the year in which the hold-harmless provision is in effect, including SSDI recipients who become eligible for Medicare that year after the 24-month waiting period. It also includes those who had Medicare premiums paid on their behalf one year, for example by Medicaid, but lost that coverage during the next year. Some people protected by the hold-harmless provision may still see a decrease in their Social Security checks due to an increase in Medicare Part D premiums. Part D premiums are not covered by the hold-harmless provision, although beneficiaries with low-income subsidies would not be affected. Additionally, those who pay the late-enrollment penalty are not fully protected from the hold-harmless rule. (See " Late-Enrollment Premium Penalty and Exemptions .") In a year in which the hold-harmless provision is in effect, the late-enrollment surcharges are calculated as a percentage of the premiums of those not held harmless. These surcharges are considered "nonstandard" premiums and thus are not limited by the hold-harmless provision. Application of the Hold-Harmless Rule in Years Prior to 2016 As described earlier, an individual's Social Security COLA is determined by multiplying his or her benefit amount by the inflation rate, the CPI-W. Part B premiums are determined by projected Part B program costs. Thus, the number of people held harmless can vary widely from year to year, depending on inflation rates and projected Part B costs. For most years, the hold-harmless provision has affected a relatively small number of beneficiaries. However, due to low inflation, no COLA adjustments were made to Social Security benefits in 2010 and 2011. Most Medicare beneficiaries (about 73%) were protected by the hold-harmless provision and continued to pay the 2009 standard monthly premium of $96.40 in both 2010 and 2011. Because Part B expenditures were still expected to increase in those years, and because beneficiary premiums are required to cover 25% of those costs, the premiums for those not held harmless (27% of beneficiaries) were higher than they would have been had the rest of the beneficiaries not been held harmless. The standard monthly premiums paid by those not held harmless were $110.50 in 2010 and $115.40 in 2011. In 2011, of the 27% who were not eligible to be held harmless, about 3% were new Medicare enrollees, about 5% were high-income, about 17% had their premiums paid for by Medicaid, and the remaining 2% did not have their premiums withheld from Social Security benefit payments. In 2012 and 2013, Social Security beneficiaries received a 3.6% and a 1.7% COLA, respectively, which more than covered the Part B premium increases in those years; therefore, the hold-harmless provision was not applicable for most beneficiaries. Similarly, in 2014 and 2015, with a Social Security COLA increase of 1.5% and 1.7%, respectively, and no increase in Part B premiums, the hold-harmless provision also was not broadly applicable in those years. Application of the Hold-Harmless Rule in 2016 In 2016, for a third time, there was no Social Security COLA increase, but there was a projected increase in Medicare Part B premiums—from $104.90 per month in 2015 to about $121 per month in 2016. Similar to its application in 2010 and 2011, the hold-harmless provision as applied in 2016 protected some beneficiaries but not others. In 2016, about 70% of Part B enrollees were held harmless and continued to pay the 2015 monthly premium amount of $104.90 through 2016. Those not held harmless included those eligible for premium assistance through their state Medicaid programs (about 19%), those who paid the high-income premiums (about 6%), those who did not receive Social Security benefits (3%), and new enrollees in 2016 (5%). Absent legislation, the premiums of those not held harmless (the remaining 30%) would have been higher than the premiums would have been had the hold-harmless provision not been in effect. However, BBA 15 mitigated the expected large increases for those not held harmless and required that their premiums be calculated as if the hold-harmless rule were not in effect. BBA 15 also required that a monthly surcharge of $3.00 be added to standard premiums (more for those with high incomes) until the increased cost to the federal government of reducing the premiums is offset. (See Appendix D .) The total standard premium amount for those Part B enrollees not held harmless in 2016, including the $3.00 per month surcharge, was $121.80. Application of the Hold-Harmless Rule in 2017 Should there have been a 0% Social Security COLA in 2017, BBA 15 would have allowed for a similar Medicare Part B premium setting mechanism for 2017 as in 2016. However, as there was a very small (0.3%) Social Security COLA in 2017, this provision did not apply. Because the Social Security COLA was not large enough to cover the full Medicare Part B premium increase, about 70% of enrollees were held harmless in 2017. Those held harmless in 2017 pa id , on average, about $109.00 per month for their Part B premiums. However, their actual premiums var ied depending on the dollar amount of the increase in their Social Security benefit. Additionally, many of those not held harmless in 2016 because they were new to Medicare in that year may have qualif ied to be held harmless in 2017. If they qualif ied , t he premiums for those individuals would have been equal to the 2016 premium of $121.80, plus the dollar amount of the increase in their monthly Social Security benefit. As the prem iums of those not held harmless ( the remaining 30% of enrollees) had to cover both their share of the premium increases plus that of the 70% held harmless, the Medicare trustees estimated that their 2017 Part B premiums could be as high as $149 per month. However, in setting the 2017 premiums, the Secretary "exercised her statutory authority to mitigate projected premium increases for these beneficiaries" by setting a lower - than - normal contingency reserve ratio for the SMI T rust F und in 2017 . This had the effect of reducing premiums below what they might have been had the ratio been set at a more conventional level. In 2017, those not held harmless pa id monthly premiums of $134.00 . Application of the Hold-Harmless Rule in 2018 In 2018, there was a 2.0% Social Security COLA and no increase in the 2018 Medicare Part B premiums (i.e., the Part B premium was $134.00 per month in both 2017 and 2018). For many Part B enrollees who were held harmless in 2017, the Social Security COLA was large enough to cover the difference between the full Medicare premium of $134.00 and the reduced premium amount they paid in 2017. Therefore, many of those held harmless in 2017 no longer saw reduced premiums in 2018 and returned to paying the standard premium amounts (which include the $3.00 BBA 15 surcharge). To illustrate, for someone receiving a Social Security benefit of $1,404.00 per month in 2017 (the average amount for retired workers in that year), a 2.0% Social Security COLA would have resulted in an increased benefit of about $28.00 per month in 2018. If that person had been held harmless in 2017 and was paying a Medicare Part B premium of $109.00 per month, this Social Security benefit increase would have been more than enough to cover the $25.00 difference between that individual's reduced Part B 2017 premium amount of $109.00 and the 2018 premium of $134.00. Therefore, that person's Medicare Part B premiums could have increased up to the full premium amount of $134.00 in 2018. CMS estimated that about 72% of Part B enrollees were not held harmless in 2018. About 42% of enrollees were held harmless in 2017 but no longer qualified for reduced premiums in 2018 because they did not meet the requirement that their Social Security benefits would decrease as a result of the increase in their Part B premiums. The remaining 30% included those who normally do not qualify to be held harmless, for instance, because they paid high-income premiums, had their premiums paid on their behalf by Medicaid, or did not receive Social Security benefits. About 28% of Part B enrollees did not receive a large enough increase in their Social Security COLAs to cover the full amount of the Part B premium and thus qualified to be held harmless and paid reduced premiums in 2018. Their premiums could have increased from the premium amount they paid in 2017, plus the dollar amount of the increase in their monthly 2018 Social Security benefit. For example, for someone with a monthly Social Security benefit of $600.00 in 2017, the 2.0% 2018 COLA would have provided an increase of about $12.00. If that individual had been paying $109.00 per month for Medicare premiums in 2017, the $12.00 increase would not have been sufficient to cover the full $134.00 per month. In this example, the individual would have paid $109.00 plus $12.00 ($121.00) per month in 2018. Application of the Hold-Harmless Rule in 2019 The 2019 Social Security COLA of 2.8% was large enough to increase the benefits of most of those who were held harmless in 2018 to levels sufficient to cover the difference between the amount of the (reduced) premiums they paid in 2018 and the 2019 premiums of $135.50. In 2019, only about 3.5% of beneficiaries (about 2 million) are being held harmless and pay premiums lower than the 2019 premium of $135.50. Part B Premiums over Time Part B premium changes over time generally reflect the growth in total Part B expenditures, although the exact relationship between Part B expenditures covered by the Part B premium has been changed by statute at various points. (See Appendix A .) The standard monthly Part B premium has risen from $3.00 in 1966 to $135.50 in 2019. (See Figure 1 .) For comparison, during a similar time period, average annual Part B benefit costs per beneficiary have increased from about $101.00 in 1970 (about $8.42 per month) to a projected $6,391 per beneficiary (about $532.60 per month) in 2019. Prior to 2000, the Part B premium decreased from year to year twice. The first instance was from 1989 ($31.90) to 1990 ($28.60) as a result of the repeal of the Medicare Catastrophic Coverage Act of 1988 ( P.L. 100-360 ). The second was from 1995 ($46.10) to 1996 ($42.50) as a result of the transition from a premium as determined by a fixed dollar amount under the Omnibus Reconciliation Act of 1990 ( P.L. 101-508 ) to 25% of costs as directed under the Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ). More recently, because of the absence of a Social Security COLA in 2010 and 2011, most beneficiaries were held harmless and paid the 2009 premium of $96.40 per month during those years. The standard 2010 and 2011 premiums, paid by those who were not held harmless, were thus higher than they would have been had the hold-harmless provision not been in effect. (See prior section " Protection of Social Security Benefits from Increases in Medicare Part B Premiums " for additional detail.) Since 2000, the standard Medicare Part B premium has almost tripled, from $45.50 in 2000 to the current premium of $135.50 in 2019. This growth has been due to a number of factors that have increased per capita Part B expenditures during that time, including the rising prices of health care services and equipment, new technologies, and increased utilization of Medicare Part B services. While Part B expenditure growth has slowed in recent years, the Medicare trustees project faster benefit spending growth over the next five years (an 8.2% Part B average annual growth rate compared with a 5.5% growth rate over the last five years). The Medicare trustees estimate that 2020 premiums will increase to about $141.10 per month, and that premiums will increase thereafter at an average rate of about 5.3% per year through 2027. (For estimates of premiums in future years through 2027, see Appendix C .) Current Issues Premium Amount and Annual Increases The Medicare trustees estimate that Medicare Part B premiums will increase from $135.50 per month in 2019 to about $202.70 in 2027. (See Appendix C .) Rising Medicare premiums could have a large effect on Social Security beneficiaries, particularly on those who rely on Social Security as their primary source of income. For example, in 2018, Social Security benefits represented about 33% of the income of Americans aged 65 and older. About 48% of married couples and 69% of unmarried persons received more than half of their income from Social Security, and 21% of married couples and 44% of unmarried persons received more than 90% of their income from Social Security. Some of these beneficiaries may see a decline in their standard of living as their Medicare premiums rise. Once a person receives Social Security, his or her benefit is indexed to inflation and thereafter grows with annual Social Security COLAs. However, Medicare premiums are based on the per capita cost growth of Part B benefits, which reflects the growth in the cost of medical care and in the utilization and intensity of services used by beneficiaries, factors that have historically grown faster than CPI-W. Additionally, as there has been a continuing shift from providing care in inpatient (Part A) to outpatient settings (Part B), a greater portion of Medicare spending is expected to be covered by beneficiary premiums. This means that, over time, Medicare premiums are expected to represent a growing proportion of most beneficiaries' Social Security income. Since 2000, Social Security's annual COLA has resulted in a cumulative benefit increase of about 50%, significantly less than the Part B premium growth of close to 200%. The Medicare trustees estimated that average Part B plus Part D premiums would represent close to 12% of the average Social Security benefit in 2018 and would increase to an estimated 17% in 2092. (See Appendix B and Appendix C for historical, current, and projected Part B premiums.) Additionally, while the hold-harmless provision provides protection against increases in the Part B premium, the rule does not apply to Part D premiums or to late-enrollment penalties. Therefore, even in a year with a 0% or a very low Social Security COLA, beneficiaries may still see a decline in benefits as a result of increases in Part D premiums and/or any applicable late-enrollment penalties. Impact of the Hold-Harmless Provision on Those Not Held Harmless The law does not specify how Medicare Part B financing (premiums and general revenues) should be established in years in which the hold-harmless provision applies to a large number of Medicare beneficiaries. Under current law, the only way to generate enough premium revenue to cover 25% of Part B costs is to have those not held harmless shoulder the entire beneficiary share of any increase in premiums. Absent legislation such as BBA 15, the premiums of those not held harmless can therefore be significantly greater than if there were no hold-harmless provision. As the Medicare trustees pointed out in their 2010 annual report, "(t)his approach to preventing exhaustion of the Part B trust fund account is the only one available under current law," despite the "serious equity issues" that this method raises. In years in which there has been both a 0% or a very low Social Security COLA and a Medicare premium increase, concerns have been raised about the potential financial impact of the premium increases on those not held harmless as well as on the state Medicaid agencies that pay Part B premiums on behalf of low-income beneficiaries. For example, individuals in retirement systems other than Social Security or RRB may also have not received a COLA but could face significantly higher Medicare premiums than those who qualified for protection under the hold-harmless provision. Some have proposed changes to the hold-harmless provision to avoid the disproportionate impact of premium increases on those not held harmless, such as holding all Part B enrollees harmless in years in which there is no Social Security COLA or allowing Social Security checks to decline as a result of Medicare premium increases in some years. Others have proposed linking the Social Security COLA to a measure of inflation that is based on purchasing patterns of the elderly, such as the BLS's Experimental Consumer Price Index for Americans Aged 62 and Older (CPI-E) or requiring a minimum annual Social Security COLA. Proposals to Modify the Late-Enrollment Penalty Periodically, proposals have been offered to modify or eliminate the Part B premium penalty either for all enrollees or alternatively for a selected population group. As an increasing number of new Medicare-eligible beneficiaries must actively sign up for Medicare because they are not yet receiving Social Security benefits (e.g., their full retirement Social Security age exceeds the Medicare age of eligibility), there is concern that more people could become subject to late-enrollment penalties. For example, the Medicare Rights Center reported a large number of calls to its hotline related to transitioning to Medicare. Their report notes that "(m)any individuals who call Medicare Rights are confused by Medicare enrollment rules, and specifically by decision-making related to taking or declining Part B" and that "Medicare-eligible people who do not understand Part B enrollment rules and fail to enroll in Medicare when they first became eligible may face late-enrollment penalties, gaps in coverage, and disruptions to access to needed care." Some proposals have suggested modifying the penalty provision to limit both the amount and the duration of the surcharge, as is the case for delayed Part A enrollment, which has a maximum 10% surcharge and a duration of twice the number of years that enrollment was delayed. (See Appendix E for information on the Part A premium and late-enrollment penalty.) Some have also suggested that Medicare Part B have a creditable-coverage exemption, similar to that under Part D, that would allow Medicare beneficiaries with equivalent coverage to postpone enrollment in Part B without being subject to a penalty. For example, under the Part D prescription drug benefit, individuals are not subject to a late-enrollment penalty if they have maintained "creditable" prescription drug coverage prior to enrollment—that is, coverage that is expected to pay at least as much as Medicare's standard prescription drug coverage. Creditable prescription drug coverage includes employer-based prescription drug coverage, qualified State Pharmaceutical Assistance Programs, and military-related coverage (e.g., Veterans Affairs health care system and TRICARE). Other suggestions include formally training employers about Medicare coverage and interaction with other insurance; improving education on Medicare, including late-enrollment penalties, for those nearing Medicare-eligibility age; and expanding equitable relief to include remedies for actions based on misinformation provided by entities in addition to an agent of the federal government, such as an agent of state or local government, and/or an employer or insurer. In recent Congresses, a number of bills have been introduced that would address some of the issues associated with the Part B late-enrollment penalty. For example, in the 116 th Congress, H.R. 1788 would limit the penalty to 15% and twice the period of no enrollment, and would exclude periods of COBRA, retiree, and VA coverage when determining the late enrollment penalty. In the 115 th Congress, H.R. 2575 and S. 1909 would have required Medicare to provide advance notification to those approaching Medicare eligibility, required the creation of a centralized enrollment webpage containing both Social Security and Medicare online tools, restructured Medicare enrollment periods and coverage periods, and expanded the eligibility for special enrollment periods for those who meet exceptional conditions as defined by the Secretary of HHS. Also introduced in the 115 th Congress, H.R. 2342 would have required that employers notify employees about the availability of special enrollment periods to obtain marketplace coverage and Medicare coverage upon termination or separation, and H.R. 5104 would have established a special Medicare Part B enrollment period for individuals enrolled in COBRA (Consolidated Omnibus Budget Reconciliation Act) continuation coverage who elected not to enroll in Part B during their initial enrollment period. Additionally, H.R. 707 would have, among other changes, eliminated late-enrollment penalties for those between the ages of 65 and 70. As introduced in the 112 th Congress, in addition to creating a special enrollment period for those with COBRA coverage, H.R. 1654 would have created a continuous enrollment period that would have allowed Medicare-eligible beneficiaries to sign up for Part B outside of the general enrollment period and to receive health coverage the following month. H.R. 1654 would have also expanded eligibility for equitable relief to those who based enrollment decisions on incorrect information provided by group health plans and plan sponsors, and it would have directed the Government Accountability Office to study problems with Part B enrollment. In the 111 th Congress, H.R. 2235 would have limited the penalty for late Part B enrollment to 10% and limited the duration to twice the period of no enrollment, similar to the Part A late-enrollment penalty. It also would have excluded periods of COBRA and retiree coverage from the penalty. Deficit Reduction Proposals As Medicare currently represents about 14% of federal spending, many proposals to reduce federal deficits include suggestions to reduce Medicare program spending and/or increase program income. For example, some proposals would increase Medicare premiums as a portion of total program funding, whereas others would limit the amount of federal contributions. Increasing Medicare Premiums Certain proposals suggest limiting premium increases to high-income beneficiaries. For example, the President's FY2017 budget proposal would have increased the percentage of per capita expenditures paid by high-income enrollees from 35% to 80% of expenditures to a range of between 40% and 90%, and it would have increased the number of high-income brackets from four to five. The proposal also would have continued the freeze on income thresholds until 25% of beneficiaries were subject to the high-income premiums. (Subsequent to that proposal, the BBA 18 added a fifth high-income bracket with premiums set at 85% of per capita expenditures. See " Income-Related Premiums .") Other proposals suggest increasing premiums paid by all Part B enrollees. For example, a proposal introduced in 2011 by then-Senators Lieberman and Coburn suggested raising the standard Part B premium from the current 25% of program costs to 35% over five years. Impose a Part B Premium Surcharge for Beneficiaries in Medigap Plans with Near First-Dollar Coverage In 2016, about 34% of beneficiaries enrolled in traditional Medicare bought Medigap policies from private insurance companies that cover some or all of Medicare's cost sharing. Individuals who purchase Medigap must pay a monthly premium, which is set by, and paid to, the insurance company selling the policy. There are 10 standardized Medigap plans with varying levels of coverage. Two of the 10 standardized plans cover Parts A and B deductibles and coinsurance in full (i.e., offer first-dollar coverage). In 2015, 65% of all beneficiaries who purchased Medigap insurance were covered by one of these two plans. Some are concerned that beneficiaries enrolled in Medigap plans with low cost-sharing requirements may have less incentive to consider the cost of health care services and may thus increase costs to the Medicare program. To address this, Section 401 of MACRA prohibits the sale of Medigap policies that cover Part B deductibles to newly eligible Medicare beneficiaries beginning in 2020. Some have also proposed imposing a Part B premium surcharge for Medicare beneficiaries who purchase certain types of Medigap plans. For example, the President's FY2016 budget proposal suggested imposing a Part B premium surcharge of approximately 15% of the average Medigap premium (about 30% of the Part B premium) for new Medicare beneficiaries who enroll in a near first-dollar Medigap plan. Limit Federal Subsidies Finally, other proposals, such as that put forth in the FY2019 House Budget Resolution, would place limits on the amount of the federal subsidy for Medicare, and premiums would vary depending on the Medicare plan in which the beneficiary enrolled. In general, such premium support proposals would limit federal spending by changing the current Medicare program from a defined-benefit to a defined-contribution system. Most such proposals would limit the growth in the annual federal premium subsidy. Depending on how such a proposal is designed, and should Medicare costs grow more quickly than the limit, beneficiary premiums could increase more rapidly than the amount of the premium subsidy. Considerations Some of the issues that would need to be addressed when evaluating these types of deficit reduction proposals include (1) the ability of Medicare beneficiaries to absorb increased costs given their current levels of income and assets, as well as their other out-of-pocket expenditures (both health and non-health related); (2) the willingness of high-income beneficiaries to continue participating in Medicare Part B should their premiums be increased; and (3) the capacity of the Medicaid program to continue providing premium assistance to low-income beneficiaries should premiums increase. Appendix A. History of the Part B Premium Statutory Policy and Legislative Authority The basis for determining the Part B premium amount has changed several times since the inception of the Medicare program, reflecting different legislative views of what share beneficiaries should bear as expenditures have increased. When the Medicare program first went into effect in July 1966, the Part B monthly premium was set at a level to cover 50% of Part B program costs. Legislation enacted in 1972 limited the annual percentage increase in the premium to the same percentage by which Social Security benefits were adjusted for changes in the cost-of-living adjustments (i.e., COLAs). Under this formula, revenues from premiums soon dropped from 50% to below 25% of program costs because Part B program costs increased much faster than inflation as measured by the Consumer Price Index on which the Social Security COLA is based (see Table A-1 ). From the early 1980s, Congress regularly voted to set Part B premiums at a level to cover 25% of program costs, in effect overriding the COLA limitation. The 25% provisions first became effective January 1, 1984, with general revenues covering the remaining 75% of Part B program costs. Premiums increased in 1989 as a result of the Medicare Catastrophic Coverage Act of 1988 ( P.L. 100-360 ), which added a catastrophic coverage premium to the Part B premium. The act was repealed in November 1989, and the Part B premium for 1990 fell as a result. Congress returned to the general approach of having premiums cover 25% of program costs in the Omnibus Budget Reconciliation Act of 1990 (OBRA 90; P.L. 101-508 ). However, OBRA 90 set specific dollar figures, rather than a percentage, in law for Part B premiums for the years 1991-1995. These dollar figures reflected Congressional Budget Office estimates of what 25% of program costs would be over the five-year period. However, program costs grew more slowly than anticipated, in part due to subsequent legislative changes. As a result, the 1995 premium of $46.10 actually represented 31.5% of Medicare Part B program costs. The Omnibus Budget Reconciliation Act of 1993 (OBRA 93; P.L. 103-66 ) extended the policy of setting the Part B premium at a level to cover 25% of program costs for the years 1996-1998. As was the case prior to 1991, a percentage rather than a fixed dollar figure was used, which meant that the 1996 premium ($42.50) and the 1997 premium ($43.80) were lower than the 1995 premium ($46.10). The Balanced Budget Act of 1997 (BBA 97; P.L. 105-33 ) permanently set the premium at 25% of program costs so that, generally speaking, premiums rise or fall with Part B program costs. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA; P.L. 108-173 ), as modified by the Deficit Reduction Act of 2005 (DRA; P.L. 109-171 ), required that beginning in 2007, higher-income beneficiaries pay higher Part B premiums. The income thresholds used to determine eligibility for the high-income premium are to be adjusted each year by the growth in the Consumer Price Index. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended, Section 3402), however, froze these thresholds for the period of 2011 through 2019 at the 2010 levels. In 2020, the thresholds were to return to the levels they would have been had they been adjusted for inflation each year during the freeze and again indexed to inflation each year. As this would have resulted in higher income thresholds, it would have had the effect of reducing the number of beneficiaries who pay the high-income premiums in 2020. Section 402 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10 ) maintains the freeze on the income thresholds for all income categories through 2017 and on the lower two high-income premium tiers through 2019. Beginning in 2018, MACRA reduces the threshold levels for the two highest income tiers so that more beneficiaries will fall into the higher percentage categories. (See " Income Thresholds .") Additionally, starting in 2020, the income thresholds for all income categories will be adjusted annually for inflation based on the 2019 income thresholds. This will, in effect, maintain the proportion of beneficiaries who pay the high-income premium. Due to a 0% Social Security COLA coupled with an increase in Medicare premiums, a large percentage of Medicare Part B enrollees were protected by the hold-harmless provision in 2016 and continued to pay the 2015 premium of $104.90 per month. The Medicare trustees estimated that the standard premiums of those not held harmless in 2016 would therefore need to be increased to approximately $159 per month for aggregate premiums to still cover 25% of per capita benefit costs. The Bipartisan Budget Act of 2015 (BBA 15; P.L. 114-74 ), however, mitigated this sharp premium increase and required that the 2016 Part B standard premium be calculated as if the hold-harmless rule were not in effect and the increased costs had been spread across all beneficiaries. (See Appendix D .) Instead of having those not held harmless bear the increase for all of the Part B enrollee population, the act allowed for the transfer of additional general revenues to the SMI Trust Fund to make up for the shortfall in premium revenue. As a result of this change, Part B enrollees not held harmless paid a standard monthly premium of $121.80 in 2016. To offset the increased costs, a $3.00 surcharge was added to the monthly premium in 2016 (the $121.80 premium amount included this surcharge), and will continue to be applied in subsequent years until the additional federal cost of about $9 billion is fully offset (the surcharge increases on a sliding scale for those who pay high-income premiums, up to $9.60). BBA 15 provided for similar premium adjustments in 2017 if there were a 0% Social Security COLA again in that year. However, as there was a 0.3% 2017 Social Security COLA, this provision was not applicable in 2017. Section 53114 of the Bipartisan Budget Act of 2018 (BBA 18; P.L. 115-123 ) added an additional high-income category beginning in 2019 for individuals with annual incomes of $500,000 or more or couples filing jointly with incomes of $750,000 or more. Enrollees with income equal to or exceeding these thresholds pay premiums that cover 85% of the average per capita cost of Part B benefits instead of 80%. The threshold for couples filing jointly in this new income tier is calculated as 150% of the individual income level rather than 200% as in the other income tiers. The BBA 15 premium surcharge for this category is $10.20. This new top income threshold will be frozen through 2027 and will be adjusted annually for inflation starting in 2028 based on the CPI-U. Appendix B. Standard and High-Income Part B Premiums and Income Thresholds: 2007-2019 Appendix C. Estimated Future Part B Premiums Appendix D. Bipartisan Budget Act of 2015 Changes to 2016 Part B Premiums Under normal circumstances, standard Medicare Part B premiums are set at an amount to cover 25% of projected average per capita Part B expenditures plus an appropriate contingency margin. Due to expected growth in the cost of Part B benefits, the Medicare trustees projected that in order to cover 25% of benefit costs as well as to build up adequate contingency reserves, the 2016 Part B premiums would need to be increased to about $121 per month from the 2015 amount of $104.90. However, due to the absence of a Social Security COLA in 2016 and the resulting widespread application of the hold-harmless provision, most Part B enrollees continued to pay the 2015 premium amount of $104.90 through 2016. With about 70% of enrollees continuing to pay $104.90, the only way that premiums could cover 25% of per capita expenditures would have been if those not held harmless (the remaining 30%) bore the entire cost increase (i.e., if the aggregate increase in premiums were spread out over fewer people). The Medicare trustees estimated that the premiums of those not held harmless would therefore need to be increased to about $159 per month. The trustees also estimated that high-income beneficiaries (i.e., those earning more than $85,000) would need to pay significantly higher monthly premiums of about $223, $319, $414, or $510 depending on their level of income (compared to their respective 2015 premiums of $147, $210, $273, and $336 per month). To mitigate the expected large premium increases for those not held harmless, the Bipartisan Budget Act of 2015 (BBA 15; P.L. 114-74 ) required that 2016 Medicare Part B premiums be set as if the hold-harmless rule were not in effect—in other words, to calculate premiums as if all enrollees were paying the same annual inflation-adjusted standard premium (about $121 per month). To compensate for the lost premium revenue (below the required 25%) and to ensure that the Supplementary Medical Insurance (SMI) Trust Fund had adequate income to cover payments for Part B benefits in 2016, the act allowed for additional transfers from the General Fund of the Treasury to the SMI Trust Fund. To offset the approximately $9 billion in increased federal spending in 2016 resulting from the reduction in standard premiums for those not held harmless (i.e., the additional amounts transferred from the General Fund), as well as the loss of income due to reductions in the income-related monthly adjustment for high-income enrollees, the law required that a $3.00 per month surcharge be added to standard premiums in 2016, and each subsequent year, until the $9 billion is fully offset. (For those who pay high-income premiums, the surcharge increases on a sliding scale, up to $9.60.) It is expected that this surcharge will be applied to premiums through 2021. The monthly repayment surcharge is paid only by those not held harmless. Should there have been a 0% Social Security COLA in 2017, BBA 15 allowed for a similar Medicare Part B premium setting mechanism for 2017. However, as there was a 0.3% COLA in 2017, this provision did not apply. BBA 15 did not allow for similar adjustments beyond 2017. Appendix E. Part A Premiums The vast majority of persons turning the age of 65 are automatically entitled to Medicare Part A based on their own or their spouse's work in covered employment. However, individuals aged 65 and older who are not otherwise eligible for Medicare Part A benefits and certain disabled individuals who have exhausted other entitlement may voluntarily purchase Part A coverage. In most cases, persons who voluntarily purchase Part A must also purchase Part B. The periods during which one can enroll are the same as those for Part B (see " Medicare Part B Eligibility and Enrollment "). The monthly Part A premium is equal to the full average per capita value of the Part A benefit ($437.00 per month in 2019). Persons who have at least 30 quarters of covered employment (or are married to someone who has such coverage) pay a premium that is 45% less than the full Part A premium ($240.00 per month in 2019). CMS estimates that in 2019, about 679,000 individuals will voluntarily enroll in Part A by paying the full premium and about 75,000 will pay the reduced premium. Similar to Part B, a penalty is imposed for persons who delay Part A enrollment beyond their initial enrollment period (which is the same seven-month period applicable for enrollment in Part B). However, both the amount of the penalty and the duration of the penalty are different than under Part B. Persons who delay Part A enrollment for at least 12 months beyond their initial enrollment period are subject to a 10% premium surcharge. The surcharge is 10% regardless of the length of the delay. Further the surcharge only applies for a period equal to twice the number of years (i.e., 12-month periods) during which an individual delays enrollment. Thus, an individual who delays enrollment for three years under Part A would be subject to a 10% penalty for six years, whereas a person who delays enrollment for the same three-year period under Part B would be subject to a permanent 30% penalty.

Medicare is a federal insurance program that pays for covered health care services of most individuals aged 65 and older and certain disabled persons. In calendar year 2019, the program is expected to cover about 61 million persons (52 million aged and 9 million disabled) at a total cost of $798 billion. Most individuals (or their spouses) aged 65 and older who have worked in covered employment and paid Medicare payroll taxes for 40 quarters receive premium-free Medicare Part A (Hospital Insurance). Those entitled to Medicare Part A (regardless of whether they are eligible for premium-free Part A) have the option of enrolling in Part B, which covers such things as physician and outpatient services and medical equipment. Beneficiaries have a seven-month initial enrollment period, and those who enroll in Part B after this initial enrollment period and/or reenroll after a termination of coverage may be subject to a late-enrollment penalty. This penalty is equal to a 10% surcharge for each 12 months of delay in enrollment and/or reenrollment. Under certain conditions, some beneficiaries are exempt from the late-enrollment penalty; these exempt beneficiaries include working individuals (and their spouses) with group coverage through their current employment, some international volunteers, and those granted "equitable relief." Whereas Part A is financed primarily by payroll taxes paid by current workers, Part B is financed through a combination of beneficiary premiums and federal general revenues. The standard Part B premiums are set to cover 25% of projected average per capita Part B program costs for the aged, with federal general revenues accounting for the remaining amount. In general, if projected Part B costs increase or decrease, the premium rises or falls proportionately. However, some Part B enrollees are protected by a provision in the Social Security Act (the hold-harmless provision) that prevents their Medicare Part B premiums from increasing more than the annual increase in their Social Security benefit payments. This protection does not apply to four main groups of beneficiaries: low-income beneficiaries whose Part B premiums are paid by the Medicaid program; high-income beneficiaries who are subject to income-related Part B premiums; those whose Medicare premiums are not deducted from Social Security benefits; and new Medicare and Social Security enrollees. Most Part B participants must pay monthly premiums, which do not vary with a beneficiary's age, health status, or place of residence. However, since 2007, higher-income enrollees pay higher premiums to cover a higher percentage of Part B costs. Additionally, certain low-income beneficiaries may qualify for Medicare cost-sharing and/or premium assistance from Medicaid through a Medicare Savings Program. The premiums of those receiving benefits through Social Security are deducted from their monthly payments. Each year, the Centers for Medicare & Medicaid Services (CMS) determines the Medicare Part B premiums for the following year. The standard monthly Part B premium for 2019 is $135.50. However, in 2019, the hold-harmless provision applies to about 3.5% of Part B enrollees, and these individuals pay lower premiums. (The premiums of those held harmless vary depending on the dollar amount of the increase in their Social Security benefits.) Higher-income beneficiaries, currently defined as individuals with incomes over $85,000 per year or couples with incomes over $170,000 per year, pay $189.60, $270.90, $352.20, $433.40, or $460.50 per month, depending on their income levels. Starting in 2018, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10) reduced the income thresholds in the highest two income tiers so that more enrollees will pay higher premiums. The Bipartisan Budget Act of 2018 (BBA 18; P.L. 115-123) added an additional income tier beginning in 2019 for individuals with annual incomes of $500,000 or more or couples filing jointly with incomes of $750,000 or more. Current issues related to the Part B premium that may come before Congress include the amount of the premium and its rate of increase (and the potential net impact on Social Security benefits), the impact of the hold-harmless provision on those not held harmless, modifications to the late-enrollment penalty, and possible increases in Medicare premiums as a means to reduce federal spending and deficits.

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Introduction Both the Capitol Rotunda and the Capitol Grounds have been used as the setting for a variety of events, ranging from memorial ceremonies and the reception of foreign dignitaries to the presentation of awards and the hosting of public competitions. This report identifies and categorizes uses of the Capitol Rotunda and Capitol Grounds authorized by concurrent resolutions since the 101 st Congress. In most cases, use of the Capitol Rotunda requires a concurrent resolution agreed to by both the House and Senate. A concurrent resolution for the use of the Rotunda typically identifies the event and date for which use is authorized. Often, the resolution also directs physical preparations to be carried out "in accordance with such conditions as the Architect of the Capitol may provide." Use of the Capitol Grounds requires either the passage of a concurrent resolution or permit approval from the Capitol Police. Events that entail the use of the West Front Steps of the Capitol, electricity on the Lower West Terrace of the Capitol, require more than 24 hours from setup to cleanup, require vehicles on Capitol Grounds for setup, or will have a large number of Members in attendance typically require a concurrent resolution. All other events can typically be issued permits by the U.S. Capitol Police. Upon the completion and opening of the Capitol Visitor Center (CVC) during the 110 th Congress, Emancipation Hall of the CVC became available for use in the same manner as the Rotunda and Capitol Grounds. Use of Emancipation Hall requires the passage of a resolution agreed to by both houses of Congress authorizing its use. Additionally, Congress has provided an ongoing authorization for holiday concerts on Capitol Grounds. Held on Memorial Day, the Fourth of July, and Labor Day, these concerts feature the National Symphony Orchestra and are free and open to the public. Concurrent Resolutions for Use of the Rotunda Methodology A database search was conducted using Congress.gov for the 101 st through the 115 th Congresses (1989-2018). The search was conducted by running a query across all agreed-to concurrent resolutions using the subject term "rotunda." The results of the search were then examined individually to differentiate resolutions for the use of the Rotunda from references to it in otherwise unrelated legislation. Results The search identified a total of 99 concurrent resolutions that were agreed to by the House and Senate. Between the 101 st Congress and the 115 th Congress, the House and Senate agreed to between one and nine concurrent resolutions per Congress that authorized the use of the Rotunda. Table 1 reports the total number of resolutions agreed to in each Congress. Appendix A , which lists the results of the database search, provides the following information for each concurrent resolution: the Congress in which the resolution was introduced, the resolution number, and the subject of the resolution. Concurrent resolutions authorizing the use of the Rotunda can be divided into seven categories: (1) commemoration ceremonies; (2) Congressional Gold Medal ceremonies; (3) artwork unveilings; (4) presidential inauguration activities; (5) receptions or ceremonies honoring living people; (6) persons lying in state or honor; and (7) prayer vigils. The following sections provide a brief explanation of each category and examples of activities. Table 2 contains the number of concurrent resolutions agreed to by Congress since 1989, by category. Commemoration Ceremonies The largest percentage of concurrent resolutions (34.3%) authorized the use of the Rotunda for a commemoration ceremony, often of an historical event. For example, concurrent resolutions authorizing the use of the Rotunda for a ceremony as part of the commemoration of the days of remembrance of victims of the Holocaust were passed during each Congress. In recent Congresses, resolutions were also agreed to for Rotunda ceremonies to commemorate the 60 th anniversary of the integration of the U.S. Armed Forces, the 200 th birthday of Constantino Brumidi, the 50 th anniversary of President John F. Kennedy's inauguration, and the 50 th anniversary of the Civil Rights Act of 1964. Congressional Gold Medal Ceremonies Ceremonies to award Congressional Gold Medals account for 24.2% of the concurrent resolutions for the use of the Rotunda agreed to since the 101 st Congress. These award ceremonies include presentations of Congressional Gold Medals to Rosa Parks, cartoonist Charles M. Schulz, the Tuskegee Airmen, and other recipients. Artwork Unveilings Since the 101 st Congress, 15.2% of concurrent resolutions have been agreed to for the use of the Rotunda for ceremonies to unveil artwork. These have included unveiling ceremonies for portrait busts of former Vice Presidents, as well as presentation ceremonies of statues prior to placement in Statuary Hall. Presidential Inaugural Activities In preparation for the quadrennial Presidential inauguration activities that take place at the Capitol, concurrent resolutions were passed during the 102 nd , 104 th , 106 th , 108 th , 110 th , 112 th , 113 th , and 115 th Congresses. These resolutions have authorized the Joint Congressional Committee on Inaugural Ceremonies to use the Rotunda "in connection with the proceedings and ceremonies conducted for the inauguration of the President-elect and the Vice President-elect of the United States." Since the 101 st Congress, 10.1% of concurrent resolutions have authorized the use of the Rotunda for inaugural activities. Receiving or Honoring Living Persons Since the 101 st Congress, 6.1% of concurrent resolutions have authorized the use of the Rotunda for the purposes of receiving foreign dignitaries or honoring a living person. For example, during the 102 nd Congress, use of the Rotunda was authorized for a ceremony and reception for the Dalai Lama. During the 105 th Congress, use of the Rotunda was authorized for a ceremony honoring Mother Teresa. During the 114 th Congress, the use of the Rotunda was authorized for events surrounding the visit by His Holiness Pope Francis to address a joint session of Congress. Persons Lying in State or Honor Use of the Rotunda for individuals to lie in state or honor accounted for 8.1% of Rotunda events authorized by concurrent resolution. These events have included President Reagan, Senator Claude Pepper, and Senator Daniel K. Inouye lying in state; Rosa Parks lying in honor; and the memorial service for Detective John Michael Gibson and Private First Class Jacob Joseph Chestnut of the U.S. Capitol Police. In the 115 th Congress, one individual—Reverend Billy Graham—lay in honor, while two—Senator John McCain and President George H.W. Bush—lay in state. Prayer Vigils On two occasions during the 107 th Congress (2.0%), concurrent resolutions were agreed to for the use of the Rotunda for prayer vigils. H.Con.Res. 233 authorized the use of the Rotunda for a prayer vigil in memory of those who lost their lives on September 11, 2001. S.Con.Res. 83 authorized the use of the Rotunda for a ceremony as part of a National Day of Reconciliation. Concurrent Resolutions for Use of the Capitol Grounds Methodology A database search was conducted using Congress.gov for the 101 st to the 115 th Congresses (1989-2019). The search was conducted by running a query using the subject term "Capitol Grounds." The results of the search were then examined individually to differentiate resolutions for the use of the Capitol Grounds from references to it in otherwise unrelated legislation. The uses of the Capitol Grounds identified here are restricted to those authorized by concurrent resolution of the House and Senate. Results The search identified a total 112 concurrent resolutions that were agreed to by the House and Senate. Between the 101 st Congress and the 115 th Congress, the House and Senate agreed to between 3 and 14 concurrent resolutions per Congress that authorized the use of the Capitol Grounds. Table 3 reports the total number of resolutions agreed to in each Congress. Appendix B , which lists the results of the database search, provides the following information for each concurrent resolution: the Congress in which the resolution was introduced, the resolution number, and the subject of the resolution. Concurrent resolutions authorizing the use of the Capitol Grounds can be divided into one of four categories: (1) events sponsored by nonfederal-government groups; (2) memorial services; (3) events sponsored by the federal government; and (4) award and dedication ceremonies. The following sections provide a brief explanation of each category with examples of the types of activities concurrent resolutions provided for on the Capitol Grounds. Table 4 contains the number of concurrent resolutions agreed to by Congress since 1989 by category. Nonfederal-Government-Sponsored Events The largest percentage of concurrent resolutions agreed to (65.5%) authorized events that are sponsored by nonfederal-government entities. For example, concurrent resolutions authorizing the use of the Capitol Grounds for the Greater Washington Soap Box Derby and the District of Columbia Special Olympics Law Enforcement Torch Relay are typically agreed to each Congress. Memorial Services Memorial services held on the Capitol Grounds account for 23% of the concurrent resolutions passed since the 101 st Congress. Each year since 1989, the House and Senate have agreed to a concurrent resolution allowing the National Peace Officers' Memorial Service to be conducted on Capitol Grounds. The ceremony honors law enforcement officers who gave their lives in the line of duty during the previous year. Federal Government Sponsored Events Events sponsored by the federal government compose 8.8% of events on the Capitol Grounds authorized by concurrent resolution. These events have included authorizing the John F. Kennedy Center for the Performing Arts to hold performances on the East Front of the Capitol, allowing the National Book Festival to run programs on the Capitol Grounds, and authorizing a celebration for the Library of Congress's 200 th birthday. Award and Dedication Ceremonies Award and dedication ceremonies account for 2.7% of events authorized by concurrent resolution for the Capitol Grounds. Since 1989, three award and dedication ceremonies have been authorized through concurrent resolution. In the 106 th Congress (1999-2001), Congress authorized the use of the Capitol Grounds for the dedication of the Japanese-American Memorial to Patriotism; in the 108 th Congress (2003-2005), the dedication ceremony for the National World War II Memorial was authorized for the Capitol Grounds; and in the 110 th Congress (2007-2009), the presentation ceremony for the Congressional Gold Medal awarded to Tenzin Gyatso, the Fourteenth Dalai Lama, took place on the Capitol Grounds. Use of Emancipation Hall of the Capitol Visitor Center Upon the completion and opening of the Capitol Visitor Center (CVC) during the 110 th Congress, Emancipation Hall of the CVC became available for use in the same manner as the Rotunda and Capitol Grounds. Use of Emancipation Hall requires the passage of a resolution agreed to by both houses of Congress authorizing its use. The first concurrent resolution authorizing the use of Emancipation Hall was agreed to during the 110 th Congress. It provided for the use of the Hall in connection with "ceremonies and activities held in connection with the opening of the Capitol Visitor Center to the public." Consistent with previous resolutions authorizing the use of the Rotunda, the concurrent resolution for the use of Emancipation Hall directed that physical preparations be carried out "in accordance with such conditions as the Architect of the Capitol may provide." Methodology A database search was conducted using Congress.gov for the 110 th through the 115 th Congresses (2007-2017). The search was conducted by running a query using the subject term "Emancipation Hall." The uses of Emancipation Hall identified here are restricted to those authorized by concurrent resolution of the House and Senate. Results The search identified a total 43 concurrent resolutions that were agreed to by the House and Senate. Between the 110 th Congress and the 115 th Congress, the House and Senate agreed to between 1 and 15 concurrent resolutions per Congress that authorized the use of Emancipation Hall. Table 5 reports the total number of resolutions agreed to in each Congress. Appendix C , which lists the results of the database search, provides the following information for each concurrent resolution: the Congress in which the resolution was introduced, the resolution number, and the subject of the resolution. Concurrent resolutions authorizing the use of Emancipation Hall can be divided into one of four categories: (1) commemoration ceremonies, (2) congressional gold medal ceremonies, (3) artwork unveilings, and (4) presidential inauguration activities. The following sections provide a brief explanation of each category with examples of the types of activities concurrent resolutions provided for on Emancipation Hall. Table 6 contains the number of concurrent resolution agreed to by Congress since 2007 by category. Commemoration Ceremonies The largest percentage of concurrent resolutions agreed to (46.5%) authorized the use of Emancipation Hall for commemoration ceremonies. For example, concurrent resolutions authorizing the use of Emancipation Hall are agreed to annually to celebrate the birthday of King Kamehameha. Congressional Gold Medal Ceremonies Ceremonies to award Congressional Gold Medals account for 32.6% of the concurrent resolutions for the use of Emancipation Hall agreed to since the 110 th Congress. These award ceremonies include presentations of Congressional Gold Medals to Women Air Force Service Pilots, the Montford Point Marines, and Native American Code Talkers. Artwork Unveilings Since the 110 th Congress, 11.6% of concurrent resolutions have been agreed to for the use of Emancipation Hall for ceremonies to unveil artwork. These have included unveiling ceremonies for a bust of Sojourner Truth, a marker acknowledging the role of slaves in building the Capitol, a statue of Frederick Douglass, and the American Prisoners of War/Missing in Action (POW/MIA) Chair of Honor. Presidential Inauguration Activities Since Emancipation Hall opened in the middle of the 110 th Congress, Congress has also utilized the space for inaugural activities. Just like the resolutions authorizing the use of the Rotunda for inaugural activities, these resolutions have authorized the Joint Congressional Committee on Inaugural Ceremonies to use Emancipation Hall "in connection with the proceedings and ceremonies conducted for the inauguration of the President-elect and the Vice President-elect of the United States." Since the 110 th Congress, 9.3% of concurrent resolutions have authorized the use of the Rotunda for inaugural activities. Appendix A. Concurrent Resolutions for the Use of the Capitol Rotunda Appendix B. Concurrent Resolutions for the Use of the Capitol Grounds Appendix C. Concurrent Resolutions Agreed to for the Use of Emancipation Hall

The Capitol Rotunda and the Capitol Grounds have been used as the setting for a variety of events, ranging from memorial ceremonies and the reception of foreign dignitaries to the presentation of awards and the hosting of public competitions. This report identifies and categorizes uses of the Capitol Rotunda and Capitol Grounds authorized by concurrent resolutions since the 101st Congress. In most cases, use of the Capitol Rotunda requires a concurrent resolution agreed to by both the House and Senate. A concurrent resolution for the use of the Rotunda typically identifies the event and date for which use is authorized. Often, the resolution also directs physical preparations to be carried out under the supervision of the Architect of the Capitol. Ninety-nine concurrent resolutions were agreed to by the House and the Senate authorizing the use of the Rotunda between the 101st and the 115th Congresses. These resolutions can be divided into seven categories: (1) commemoration ceremonies; (2) Congressional Gold Medal ceremonies; (3) artwork unveilings; (4) presidential inauguration activities; (5) receptions or ceremonies honoring living people; (6) persons lying in state or honor; and (7) prayer vigils. Use of the Capitol Grounds can be authorized either by the passage of a concurrent resolution or through an application process with the Capitol Police. A concurrent resolution is typically needed for events longer than 24 hours in duration, for events that require vehicles on the Capitol Grounds for setup, for events requiring electronics on the Lower West Terrace of the Capitol, and for events where a large number of Members will be in attendance. The Capitol Police's special events office handles permits and approval for all other events. One hundred twelve concurrent resolutions were agreed to by the House and the Senate authorizing the use of the Capitol Grounds between the 101st and the 115th Congresses. These resolutions can be divided into four categories: (1) events sponsored by nonfederal-government groups; (2) memorial services; (3) events sponsored by the federal government; and (4) award and dedication ceremonies. Upon the completion and opening of the Capitol Visitor Center (CVC) during the 110th Congress, Emancipation Hall of the CVC became available for use in the same manner as the Rotunda and Capitol Grounds. Use of Emancipation Hall requires the passage of a resolution agreed to by both houses of Congress authorizing its use. These resolutions can be divided into four categories: (1) commemoration ceremonies, (2) congressional gold medal ceremonies, (3) artwork unveilings, and (4) presidential inauguration activities. As of the date of this report, 43 concurrent resolutions authorizing the use of Emancipation Hall have been agreed to. This report will be updated at the end of each session of Congress.

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Introduction Between 1819 and 1857, the room currently called Statuary Hall served as the Hall of the House of Representatives. Upon the completion of the current House chamber in 1857, the fate of the old "Hall of the House" was debated for many years. Perhaps the simplest was that it be converted into additional space for the Library of Congress, which was still housed in the Capitol. More drastic was the suggestion that the entire Hall be dismantled and replaced by two floors of committee rooms. Eventually, the idea of using the chamber as an art gallery was approved, and works intended for the Capitol extensions were put on exhibit; among these was the plaster model for the Statue of Freedom, which was later cast in bronze for the Capitol dome. The lack of wall space effectively prevented the hanging of large paintings, but the room seemed well suited to the display of statuary. Beginning in November 1879, Statuary Hall was first used for events. The first two events were a reception and dinner for the Society of the Army of the Cumberland on November 20, 1879, and a ceremony to close the Centennial Safe on November 22, 1879. Today, Statuary Hall is the home to many of the statues in the National Statuary Hall collection, which consists of two statues from each state. Scheduling Statuary Hall Events A room in the House Wing of the Capitol may be reserved in one of two ways: through a chamber resolution or pursuant to the Speaker's authority. House Rule I, clause 3 provides the Speaker with the authority to assign unappropriated rooms (i.e., not already assigned to a committee, House leadership, or an officer of the House). House Rule I, clause 3 states Except as otherwise provided by rule or law, the Speaker shall have general control of the Hall of the House, the corridors and passages in the part of the Capitol assigned to the use of the House, and the disposal of unappropriated rooms in that part of the Capitol. For rooms jointly controlled by the House and Senate (e.g., the Rotunda and Emancipation Hall), a concurrent resolution is generally required to authorize use. Initially adopted in 1811 to provide the Speaker with approval authority over events in the House chamber, clause 3 was last amended in 1911, to provide the Speaker with control over unappropriated rooms elsewhere in the House Wing of the Capitol. Since 1911, the Speaker has generally authorized use of rooms in the House Wing of the Capitol not otherwise appropriated. Events in Statuary Hall, 2005-2018 Since 2005, 170 events have been held in Statuary Hall. The House Sergeant at Arms, whose office provided data for this report, defines an event as activity that prevents public access to Statuary Hall for a period of time. As a result, activities such as a brief wreath laying at a particular statue are not included. Table 1 reports the total number of events held in Statuary Hall since 2005. The Appendix provides the date of each event and a brief description. Following receipt of the data from the House Sergeant at Arms, the Congressional Research Service (CRS) examined the events and divided them into four categories: (1) receptions and dinners, (2) ceremonies, (3) media events, and (4) memorial services. The following sections provide a brief explanation of each category and examples of activities. Table 2 reports the number of events since 2005, by category. Receptions/Dinners The largest percentage of events held in Statuary Hall (57.6%) were receptions or dinners, hosted by both official congressional entities and private groups. For example, the Joint Congressional Committee on the Inaugural Ceremonies held the Inaugural Luncheon in Statuary Hall in 2005, 2009, and 2013; and the Capitol Historical Society held a reception for new Members of Congress in the Hall in 2005 and 2013. Ceremonies Ceremonies account for 28.8% of the events held in Statuary Hall since 2005. These ceremonies include presentations of awards, unveiling of official portraits, commemorations of event anniversaries, formal wreath layings, and prayer services. For example, the annual National Moment of Remembrance is held in Statuary Hall. In addition, prior to moving the statue to Emancipation Hall in the Capitol Visitor Center, an annual lei draping ceremony at King Kamehameha statue was held in Statuary Hall. Media Events Statuary Hall has also been occasionally used as the location for media availability, primarily after a presidential address to a joint session of Congress in the House chamber. Media events represent 5.9% of the events held in Statuary Hall. Memorial Services Since 2005, 13 memorial services (7.6%) for current or former Members of Congress have been held in Statuary Hall: for Representatives Robert Matsui (January 5, 2005); Juanita Millender-McDonald (May 17, 2007); Tom Lantos (February 14, 2008); Stephanie Tubbs Jones (September 10, 2008); John P. Murtha (March 30, 2010); Donald M. Payne (April 25, 2012); Speaker Thomas Foley (October 29, 2013); Mark Takai (September 14, 2016); Robert Michel (March 9, 2017); Louise Slaughter (April 18, 2018); and since 2016, an annual U.S. Association of Former Members of Congress memorial service to honor former Members who died in the past year. Appendix. Events Held in Statuary Hall, 2005-2018 Since January 1, 2005, 170 events have been held in Statuary Hall. Table A-1 contains a chronological list of these events, the date of the event, and the event type.

Statuary Hall has been used as the setting for a variety of events, including memorial ceremonies and receptions for new Members of Congress, award presentations, and as media space after presidential addresses. This report identifies and categorizes uses of Statuary Hall since 2005. Use of Statuary Hall is at the discretion of the Speaker of the House of Representatives. Under House Rule I, clause 3, the Speaker has the authority to assign unappropriated rooms on the House of Representatives side of the Capitol, including Statuary Hall. Use of Statuary Hall could also be authorized by House resolution, but no events since 2005 have been held in Statuary Hall on such authority. Since 2005, 170 events have been held in Statuary Hall. Events held in Statuary Hall can be divided into four categories: (1) receptions and dinners, (2) ceremonies, (3) media events, and (4) memorial services. The report provides a brief explanation of each category and examples of activities in each category.

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Political Conditions President Jimmy Morales, then a relative political newcomer, ran in 2015 on a platform of governing transparently and continuing to root out corruption. He is now being investigated for corruption himself. During the election campaign, as mass protests calling for then-President Pérez Molina's resignation and an end to corruption and impunity grew, so did Morales's popular appeal. Morales framed his lack of political experience as an asset. His campaign slogan was "Neither corrupt nor a thief." He won Guatemala's 2015 presidential election by a landslide with 67% of the vote. Morales initially supported the International Commission against Impunity in Guatemala (CICIG), which Guatemala asked the United Nations (U.N.) to form in 2007 to help the government combat corruption, human rights violations, and other crimes. After he became a target of investigations, he said he would not renew their mandate, which ends in September 2019. The President tried to terminate CICIG early unilaterally. Many observers are concerned that Morales's efforts could undermine ongoing investigations by the Guatemalan attorney general's office and judicial proceedings, make political reform more difficult, and heighten instability in Guatemala. The Guatemalan Congress is also moving legislation that, if passed, would reverse progress made in holding government officials and others accountable for corruption and crimes against humanity. Guatemala faces many political and social challenges in addition to widespread corruption and impunity. Guatemala has some of the highest levels of violence, inequality, and poverty in the region, as well as the largest population. Indigenous people, about half of the population, experience higher rates of economic and social marginalization than nonindigenous citizens, and have for centuries. Almost half of the country's children are chronically malnourished. Guatemala's homicide rate decreased to 26.1 per 100,000 in 2017, which nonetheless remains one of the highest rates in the region. Guatemala has a long history of internal conflict and violence, including a 36-year civil war (1960-1996). For most of that time, the Guatemalan military held power and violently repressed and violated the human rights of its citizens, especially its majority indigenous population. Reports estimate that more than 200,000 people were killed or disappeared during the conflict, with the state bearing responsibility for 93% of human rights violations. More than 83% of the victims were identified as Mayan. In 1986, Guatemala established a civilian democratic government, but military repression and human rights violations continued. Peace accords signed in 1996 ended the conflict. The United States maintained close relations with most Guatemalan governments, including the military governments, before, during, and after the civil war. Since the late 1980s, Guatemala has sought to consolidate its transition from military and autocratic rule to a democracy. Democratically elected civilian governments have governed for over 30 years, but democratic institutions remain fragile due to high levels of corruption, impunity, drug trafficking, and inequitable distribution of resources. Although state institutions have investigated and arrested high-level officials, including a sitting president, for corruption, high levels of impunity in many cases continue due to intimidation of judicial officials, deliberate delays in judicial proceedings, and widespread corruption. The Supreme Electoral Tribunal (TSE) investigated multiple political parties for violations of election campaign finance laws in 2014 and 2015, as part of its auditing process. As a result, the TSE dissolved two major parties, the Partido Patriota—former President Pérez Molina's party—and LIDER. These investigations are ongoing and may affect the 2019 elections. President Morales presented his General Government Policy for 2016-2020 in February 2016. The five pillars of this plan are zero tolerance for corruption, and modernization of the state; improvement in food security and nutrition; improvement in overall health and quality education; promotion of micro, small, and medium enterprises, and tourism and housing construction; and protection of the environment and natural resources. Halfway into his four-year term (2016-2020), however, Morales was being investigated for corruption and criticized for seemingly backing off his pledge of zero tolerance for corruption. In 2017, the president's brother and son were arrested on corruption charges. In August and September 2017, Guatemala's attorney general and CICIG announced they were seeking to lift the president's immunity from prosecution as they investigated alleged violations of campaign finance laws and bonuses paid to him by the military. Shortly thereafter, the president tried unsuccessfully to expel the head of CICIG, Commissioner Ivan Velásquez. In 2018, his third year in office, he prevented Velásquez from reentering the country. In January 2019 Morales tried unilaterally to terminate CICIG's mandate. The Constitutional Court ruled that he lacks the authority to do so. (See " Efforts to Combat Impunity and Corruption ," below.) Various observers see Morales's moves against CICIG as part of an effort to impede anticorruption investigations against him, his relatives and associates. Morales will lose his immunity from prosecution when his term ends in January 2020. A recent opinion poll found that more than 72% of the population has little or no trust in the police, and about 65% has little to no trust in the government. Conversely, 83% of the population said they supported CICIG and the Public Ministry—which is headed by the attorney general—making them Guatemala's most trusted institutions. So far, the judicial process, protests, and mass mobilizations in the wake of high-level government corruption scandals have remained peaceful. Nonetheless, tensions have heightened as President Morales's efforts to impede CICIG have escalated, and the Guatemalan Congress has tried to reduce criminal penalties for corruption and human rights violations. In January 2019, thousands of Guatemalans joined renewed public protests supporting CICIG and calling for the resignations of President Morales and members of Congress seen as protecting corrupt practices. (See " Tension ," below.) Continued impunity, coupled with the state's failure to provide basic public services to large parts of the population and limited advances in reducing Guatemala's high poverty levels, could prolong tensions. Military-criminal enterprises and other powerful interests that have benefited from corruption and the status quo have fought against anticorruption and anti-impunity work since it began. They have threatened public prosecutors, the attorney general, and members of the judiciary. The promote legislation that would protect them from prosecution. Continued prosecution of corruption could provoke increasingly violent responses from those whose wealth or power are threatened. Powerful interests also use more subtle methods to try to weaken CICIG, the Public Ministry, and groups pushing for political reform. These include tactics such as discrediting the reputations of officials, activists, and their organizations; delays or cuts in the judicial system's budget; spurious legal actions that delay trials and drain fiscal and human resources; and attempts to change CICIG's mandate or terms. A 2016 International Commission of Jurists report maintains that the Guatemalan state has responded passively to defamation campaigns and attacks on judicial independence. The report suggests that criminal allegations are fabricated against judges, community leaders, human rights defenders, and others to demobilize their anticorruption activities and silence them. Since mid-2017, those opposed to anticorruption efforts have escalated many of these tactics. 2019 Elections Guatemala is scheduled to hold national elections for president, the entire 158-seat Congress, 340 mayors, and other local posts on June 16, 2019. President Morales will not be running for reelection, since the Guatemalan constitution limits presidents to one term. If no presidential candidate wins the first round with more than 50% of the vote, the top two candidates will compete in a second round on August 11. Only a few of Guatemala's 27 parties have named a presidential candidate so far; a final list is supposed to be published on March 17. As in the last elections, corruption is a major theme for voters this year. In response to public outcry over past illegal campaign financing and other electoral crimes, Guatemala adopted electoral law reforms in 2016. Eleven of the 27 parties face charges of illicit or unreported campaign financing, and several candidates face judicial proceedings. Registered candidates have immunity from prosecution. Former Attorney General Thelma Aldana (2014-2018) is the presidential candidate for the new Seed Movement party. Aldana has been internationally recognized for her anticorruption and judicial reform work. She, along with CICIG Commissioner Ivan Velasquez, was awarded the 2018 Right Livelihood Award, known as the "Alternative Nobel Prize," for their "innovative work in exposing abuse of power and prosecuting corruption, thus rebuilding people's trust in public institutions." The U.S. Departme nt of State awarded her its International Women of Courage Award in 2016. Aldana has reportedly said she is on the right wing politically, although more recently indicated that she would be interested in an "inclusive platform that was open to people from the left and the right, to women, to immigrants, to young people, to indigenous people, to the private sector." The day that Aldana announced her candidacy, a Guatemalan judge ordered her arrest on charges including embezzlement. Aldana has denied wrongdoing, and said that many people in Guatemala are afraid of her continuing fight against corruption. Sandra Torres, a 2015 presidential candidate and former first lady, is again running for president with the National Unity of Hope (UNE) party. Public prosecutors sought to lift Torres's immunity as a presidential candidate on February 6, over $2.5 million in illicit campaign financing in 2015. Torres said, without offering evidence, that the request was a move to benefit Aldana's campaign. As mentioned above, the TSE has been investigating illegal campaign financing of the 2015 election process since 2014, and several parties have been dissolved as a result of illegal activities. Zury Rios, whose father was the late Guatemalan military dictator Efrain Rios Montt, intends to run for president. Officials initially said she would not be allowed to run, and then a legal judgment ruled in her favor. Some observers have expressed concern that President Morales's efforts to hinder CICIG before the elections could strengthen parties involved in corruption. CICIG helps Guatemalan institutions enforce campaign finance laws. Weakening these efforts could facilitate continued financing of politicians by drug cartels and other criminal organizations. President Jimmy Morales's Administration President Morales's administration achieved a few significant reforms in the first year and a half. For example, the administration developed tax reform policies covering tax collection, the tax authority administration, and the customs office structure. Since Morales and some of his inner circle became the targets of investigations, however, he has tried to terminate CICIG and fired some of his more reformist Cabinet ministers and other officials who worked closely with CICIG and the attorney general's office, replacing them with closer allies. This has raised concerns both domestically and internationally that Morales is trying to protect himself and others from corruption charges and appears to be reversing reformist policies. The tax administration (SAT), under the leadership of Juan Francisco Solórzano for the first two years of the Morales administration, used judicial measures and intervention to increase recovery of unpaid taxes and substantially increased tax collection. Solórzano, a former head of the criminal investigation unit at the attorney general's office, had the endorsement of CICIG as well as the Inter-American Development Bank, World Bank, and International Monetary Fund. Under his leadership, the SAT collected $297 million in recovered taxes in 2016 compared to $5 million in 2015. Following austerity measures in 2016 that limited government spending and decreased the deficit, the Guatemalan Congress passed an expansionary budget for 2017. This was possible in part because of increased state revenues from improved tax collection. Solórzano also played a key role in prominent anticorruption cases. President Morales fired Solórzano in January 2018. The interior ministry, which includes Guatemala's National Civil Police (PNC) force, oversaw a drop in the homicide rate from 27.3 homicides per 100,000 people in 2016 to 26.1 per 100,000 in 2017, the lowest rate in nine years. In February 2018, the Morales administration dismissed the three senior officials of the national police, saying it sought "to generate more positive results to benefit citizen security and the fight against organized crime." A wide range of people, including human rights activists and business leaders, expressed concern at their dismissal. The country's Human Rights Ombudsman, Jordán Rodas, said Guatemalans must be "very alert" to any movement that represents "regression." A prominent trade association known by its acronym CACIF criticized the ouster, saying that outgoing police Director Nery Ramos had reduced crime. The U.S. Embassy in Guatemala congratulated Ramos just a few weeks before his dismissal for his team's work in reducing homicides by 10% compared to January 2017 and for the PNC's "fight against corruption and to improve security throughout Guatemala." In response to the high level of violence over many years, a number of municipalities asked for military troops to augment their ineffective police forces; the Guatemalan government has been using a constitutional clause to have the army "temporarily" support the police in combating crime. Despite efforts to develop a comprehensive, whole-of-government approach to security, the previous five administrations' actions often have been reactive and dependent on the military. The Morales administration announced a two-phase plan to remove the military from citizen security operations by the end of 2017. The new plan includes shuffling military currently involved in citizen security efforts to the country's borders to control land routes used by traffickers and gangs. This would be a significant effort to comply with provisions of the 1996 peace accord calling on the army to focus solely on external threats. The interior minister who initiated the plan, Francisco Rivas, was fired by the president in January 2018. Morales said that the plan would continue, however, and military troops would be withdrawn from the streets by March 2018. Morales's current Minister of the Interior, Enrique Degenhart Asturias, indicated a shift in priorities away from fighting corruption to fighting gangs. One of his first actions was to ask the Guatemalan Congress to designate criminal gangs as "terrorist organizations." On August 30, 2018, the Constitutional Court ruled that the government must justify the appointment of Degenhart, and his Vice Minister, Kamilo Rivera, in response to a complaint that their actions had put the security of Guatemalans at risk. Morales had already faced criticism for not acting forcefully enough on his pledge to crack down on corruption, and for his links to family and friends under investigation, before he tried to expel Commissioner Velásquez. Then-Attorney General Aldana worked closely with the commissioner of CICIG to prosecute high-level corruption and human rights violation cases. Both said that the president initially had not interfered directly in corruption cases—even those involving his family. But both also expressed disappointment that he had not spoken out in support of them and their anticorruption efforts when attacked by antireform elements. They also voiced concern that Morales has publicly portrayed himself and his family as victims of the judicial system, potentially biasing the judicial process. Initially, President Morales's political power was limited as a result of his own inexperience and his party's weak position in the legislature. Morales's small party, the right-wing National Convergence Front-Nation (FCN-Nación), won 11 of 158 seats in the legislature. The Guatemalan Congress elected an opposition member to be president of the unicameral chamber. At the beginning of Morales's term, deputies defected from other parties, bringing the FCN-Nación's seat total to 37. People criticized Morales for allowing the deputies to join his party just before the Congress outlawed the practice. The public prosecutor received complaints alleging that bribery motivated some defections to the FCN-Nación. Morales has since formed an alliance able to pass legislation, however, and consolidated his support in the Congress. In 2017, the legislature twice voted against prosecutors' requests to lift the president's immunity for violations of campaign finance laws and bonuses paid to him by the military, blocking further investigations into the president's role in the scandals. The Congress tried to weaken anticorruption laws with a measure to reduce penalties for illegal campaign financing that the public dubbed the "Pact of the Corrupt." Public outcry was so strong that Congress repealed the law two days after passing it. Nonetheless, the Congress elected a new leadership in February 2018, all of whom, according to the State Department, voted for that pact. In August 2018, the newly appointed Attorney General, Maria Consuelo Porras, submitted a third request to lift the President's immunity. The Guatemalan Congress voted again to maintain the President's immunity from prosecution. Almost half of the deputies in Congress are under investigation or have legal processes pending against them for corruption or other crimes. Morales has also come under fire for two contracts with an Indiana lobbying firm that reportedly has ties to U.S. Vice President Mike Pence. The firm was hired to improve relations between the U.S. and Guatemalan governments outside of normal diplomatic channels. Guatemalan politicians without the authority to act in foreign affairs signed the contracts. Morales denies knowing about the contract, though one was signed on his behalf, and only he and the foreign ministry are authorized to intervene in foreign affairs. Furthermore, observers criticize his reclusiveness with the press: he has removed journalists' access to the presidential palace, and rarely holds press conferences. Morales's administration and the secretariat for Social Welfare came under scrutiny after a fire killed 41 girls in a state-run home in March 2017. The director of the shelter, the minister of Social Welfare, and his deputy were dismissed after the fire. Later that year a judge charged the former minister, his deputy, and five additional people (two police officers with abuse, and three senior members of social and child protection agencies with manslaughter or negligence). Trials against public officials charged in the case began in February 2019. Links Between Morales's Party and the Military Before the current controversy between Morales and CICIG, human rights and other observers expressed concern that Morales's party's ties to former military officers might put pressure on Morales's support of CICIG, as well as limit his government's investigation of military corruption and human rights violations. Before the new government was sworn in, then-Attorney General Aldana requested legal action against retired army colonel Edgar Ovalle, a key advisor to Morales and a legislator-elect with the FCN-Nación, for alleged civil war-era (1960-1996) human rights violations. After declining the request in 2016, Guatemala's Supreme Court lifted Ovalle's immunity in 2017. Ovalle fled, his whereabouts unknown since March 2017. Over a dozen other military officers have been arrested on similar charges. Many of them support the FCN-Nación and belong to a military veterans' association, Avemilgua, which Ovalle helped found. Avemilgua members created the FCN-Nación in 2004, and testified in court in defense of former dictator Efrain Rios Montt in 2013. Rios Montt, found guilty in 2013 of committing genocide and crimes against humanity during the civil war, had his conviction effectively vacated a short time later. In 2016, a retrial began. In 2017, a judge ordered Rios Montt to stand trial in a different case for the massacre of 201 people between 1982 and 1983 in Dos Erres. Rios Montt died in 2018 before the trials concluded. Morales reportedly said he did not believe genocide had been committed during the war, but that crimes against humanity had. The Defense Ministry said in 2017 that it had been paying President Morales a substantial salary bonus since December 2016 (see " Tension " below). Two former presidents, Alfonso Portillo and Alvaro Colom, reportedly said they received no such bonus. Morales's former defense minister has been arrested in the case. Efforts to Combat Impunity and Corruption In what many observers see as a step forward in Guatemala's democratic development, the Public Ministry's corruption and human rights abuse investigations in recent years have led to the arrest and trial of high-level government, judicial, and military officials. They have also led to a backlash against those reform efforts, threats against the attorneys general and the head of an international commission, and a political crisis involving current President Jimmy Morales. The Public Ministry, which is headed by the Attorney General, is responsible for public prosecution and law enforcement, and has worked in conjunction with CICIG to strengthen rule of law in Guatemala. President Morales appointed a new attorney general, Maria Consuelo Porras, in May 2018, when Aldana's term expired. Since 2007, CICIG has worked with the Public Ministry and the attorney general's office to reduce the country's rampant criminal impunity by strengthening Guatemala's capacity to investigate and prosecute crime. The government invited CICIG to assist with constitutional reforms and restructuring the judicial system. As a result of collaboration with CICIG, prosecutors have increased conviction rates in murder trials, and targeted corruption and organized crime linked to drug trafficking. The Guatemalan public widely supports CICIG. The United States, other governments, and international institutions have expressed broad support for the work of both the attorney general's office and CICIG over the years, and offered praise for their accomplishments. A 2018 U.S. State Department report highlights these accomplishments: CICIG's hundreds of investigations have resulted in charges against more than 200 current and former government officials—including two recent presidents and several ministers, police chiefs, military officers, and judges. CICIG Commissioner Ivan Velasquez and [then-] AG [Thelma] Aldana forged a strong cooperative alliance to pursue many high-profile corruption cases. CICIG also builds the capacity of prosecutors, judges, and investigators working on high-profile and corruption-related cases. A January 2019 CICIG statement reports that the commission has supported the Public Ministry in more than 100 cases, including against former President Otto Pérez Molina and Vice President Roxana Baldetti, both of whom subsequently resigned. It also has promoted more than 34 legal reforms to strengthen transparency and judicial independence, helped identify over 60 criminal structures, and secured more than 300 convictions. A recent International Crisis Group study estimated that CICIG-backed justice reforms contributed to a 5% average annual decrease in murder rates in Guatemala from 2007 to 2017, in contrast to a 1% average annual increase in the murder rates among other countries in the region. The president-elect of El Salvador has called for a similar commission to be established in his country. Impeachment of a Former President, Arrest of Another Public Ministry investigations, coupled with mass public protests, forced the resignations of the sitting president and vice president in 2015. Then-Attorney General Aldana and CICIG exposed an extensive customs fraud network, now known as the "La Linea" case, at the national tax agency (SAT), leading to the arrest of dozens of people, including the previous and then-directors of the SAT. After the Guatemalan Congress lifted then-President Otto Pérez Molina's immunity so he could be investigated, the attorney general's office indicted him, Vice President Roxana Baldetti, and other officials, who then resigned. The country proceeded lawfully and peacefully to form an interim government, hold scheduled lawful elections, and elect a new president, Jimmy Morales, who took office in January 2016. The related corruption case implicated dozens of high-level government officials and private-sector individuals as well. The Attorney General at the time asserted that the "La Linea" case represented "just a sliver of a sprawling criminal enterprise run by the state," which widely tolerated corruption, leading to impunity and the strengthening of criminal structures within the government. The attorney general and other observers have raised concerns about unnecessary delays in the sentencing process due to appeals and other litigation by defense teams. Pérez Molina remains in prison as his case proceeds. Baldetti was found guilty and is serving a 15½-year sentence in another case of embezzling millions of dollars from a fund for decontaminating a lake. Following the historic "La Linea" case, more former and current high-level officials in the executive branch, the legislature, and the judicial system have been implicated in corruption cases. Three justices of the Supreme Court of Justice (CSJ) had their immunity removed to face charges of corruption and influence trafficking. In late March 2017, authorities arrested various congressional representatives for corruption. According to Transparency International, Guatemala ranked 143 rd out of 180 countries on the organization's Corruption Perceptions Index for 2017, the second-worst score in Central America, behind Nicaragua. Guatemalan police arrested another former president, Alvaro Colom, in February 2018. Colom was arrested along with nine former members of his cabinet, including former Finance Minister Juan Fuentes Knight, who has chaired Oxfam International since 2015. The group faces charges related to a $35 million fraud case involving a new bus system in the capital. Colom is free on bail while under investigation. He denies the charges. Tensions over President Morales's Dispute with CICIG34 Early in his term, President Morales had reached out to policy experts and international donors for advice on fighting corruption. In April 2016, President Morales praised CICIG and formally requested its extension until 2019—which the U.N. granted. Morales said previously that before he left office, he would extend CICIG's term again, until 2021. In August 2017, two days after the attorney general and CICIG announced they were seeking to lift President Morales's immunity from prosecution, however, Morales declared the head of CICIG, Iván Velásquez, persona non grata and ordered him expelled from the country. One of Morales's ministers resigned rather than carry out the order, and the constitutional court—Guatemala's highest court—blocked the order. A Guatemalan congressional committee recommended that the president lose his immunity. Two-thirds of the 158-member legislature, or 105 deputies, are needed to remove an official's immunity. On September 11, 2017, though, the Guatemalan Congress as a whole voted to protect the president from further investigation; only 25 deputies voted to remove his immunity. About 20% of the legislators are also under investigation, with more likely to become so. The legislature fell one vote short of shelving the request permanently, however, so a member of the Congress could reintroduce the question of lifting President Morales's immunity at a later date. On September 13, the Guatemalan Congress passed a "national emergency" bill to reduce penalties for violations of campaign finance laws, and make party accountants—rather than party leaders—responsible for such violations. Public outcry was such that the Congress repealed the bill two days later. Thousands of protesters demanded the resignation not only of Morales, but also of the 107 legislators who voted to weaken anticorruption laws. On September 21, the Guatemalan Congress again defeated a vote to lift the president's immunity. This time, however, the number voting to rescind his immunity had risen to 70. In 2015, public protests contributed to the legislature reversing itself and rescinding the previous president's immunity. Also in September 2017, Guatemala's federal auditor's office said that it was investigating a substantial salary bonus that the Defense Ministry acknowledged paying to the president since December 2016. The monthly bonus increased Morales's salary by more than a third, reportedly making him one of the most highly paid leaders in Latin America. The Attorney General again asked that Morales's immunity be lifted, this time so that her office could investigate his bonus from the army. The Congress again voted against lifting Morales's immunity from prosecution. Morales was losing support within his own government. Several officials were fired or resigned rather than carry out his order to expel Commissioner Velasquez. Three Cabinet ministers resigned, saying that as a result of the political crisis, "spaces of opportunity to carry out our work programmes have rapidly closed down." Initially, Morales persuaded some of those officials to stay, but in January 2018 he fired several of them and replaced them with people he considered stronger allies. A new civic organization was launched in February 2018, the Citizens' Front against Corruption. This group of prominent businesspeople, indigenous leaders, academics, activists, and others expressed public support for both the Attorney General and CICIG Commissioner Velásquez. In 2018 the President reversed on his earlier pledge, and said he would not renew CICIG's term. Morales made the announcement on August 13, flanked by members of the military. In what was widely seen as an act of intimidation, Guatemalan police deployed armored vehicles outside CICIG headquarters and embassies of the United States and other CICIG donors. The United States had provided the vehicles to the Guatemalan police for counternarcotics and border enforcement operations. Some Members of the U.S. Congress demanded Guatemala return the jeeps. Morales then barred CICIG Commissioner Velásquez from reentering the country, in defiance of two Constitutional Court rulings that he lacks the authority to do so. In January 2019, Morales unilaterally tried to end CICIG's mandate, and gave CICIG staff 24 hours to leave the country. The U.N., European Union, advocates for government transparency and human rights, and others expressed concerns over Morales's decision, and thousands of Guatemalan citizens protested the decision and again called on Morales to resign. The Morales administration is trying to impeach members of the Constitutional Court who have ruled in favor of CICIG. CICIG continued its work in compliance with the judicial finding from abroad, and in February most staff returned to Guatemala under contingency safety plans. Velásquez and 11 investigators whose visas were revoked have not returned. The Trump Administration expressed support for CICIG and for Commissioner Velásquez in 2017. In 2018, however, the Administration did not join other donors in doing so again. (See " U.S.-Guatemalan Relations " below.) Despite some differences of opinion over CICIG's efforts, many in Congress are concerned that Morales's efforts to hinder or oust CICIG could undermine objectives of the U.S. Strategy for Engagement in Central America, by undermining efforts to strengthen the rule of law and heightening instability in Guatemala. Some Members support Morales's claims that CICIG has violated Guatemala's sovereignty and maintain that the United States should end its financial support of CICIG. Other Members of Congress are calling for punitive measures against the Morales administration, including suspending foreign aid and imposing Global Magnitsky sanctions on corrupt individuals. Prosecutions for Wartime Human Rights Violations and Efforts to Stop Them As noted above, the Guatemalan Truth Commission found that more than 200,000 people were killed or disappeared during the country's internal conflict. It also concluded that state forces and related paramilitary forces were responsible for 93% of documented human rights violations, and that the vast majority of victims were noncombatant civilians and Mayan. Guatemala was the first country to convict a former leader of genocide, when ex-dictator Rios Montt was found guilty in 2013, during the term of former Attorney General Claudia Paz y Paz. (His conviction was overturned, and he died before a retrial was concluded.) Then-Attorney General Aldana and CICIG made progress in pursuing justice for human rights violations that occurred during the civil war. In March 2016 they tried a historic case known as the "Creompaz case"—the first prosecution for sexual violence committed during the civil war. A Guatemalan high-risk court convicted two former military commanders at the Sepur Zarco military base of murder, sexual violence, sexual and domestic slavery, and enforced disappearances. In March 2017, a judge sent to trial a former military chief of staff and four other high-ranking military officials accused of crimes against humanity, aggravated assault, sexual violence, and forced disappearance. Also in March, the Supreme Court ruled to remove immunity from FCN-Nación deputy Edgar Ovalle for his alleged involvement in the case. As noted previously, Ovalle, a key advisor to President Morales, has since disappeared. Another case dealing with forced disappearances allegedly committed by the Guatemalan military during the civil war took a dramatic turn in March 2016 when a judge seized and made public previously unknown documents detailing information about military counterinsurgency objectives, operations, and campaigns from 1983 to 1990. Since the Peace Accords were signed in 1996, the Guatemalan army had repeatedly denied such documents existed. Observers have expressed concern that Morales has failed to protect human rights. During his election campaign, U.S. embassy officials expressed concern that Morales's campaign team refused to cooperate with certain elements of Guatemalan civil society, particularly human rights advocates working on the protection of children and trafficking victims, and LGBTI (lesbian, gay, bisexual, transgender, intersex) issues. Human Rights Ombudsman Rodas recently said that the Morales administration refused to meet with indigenous leaders to discuss a surge in violence against indigenous people. The Guatemalan Union of Human Rights Defenders has reportedly documented over 200 attacks against human rights defenders in Guatemala in 2018. Twenty-six indigenous people were killed in 2018, many of them activists defending indigenous rights in land and mineral conflicts. Proposed amnesty for crimes against humanity and reforms to penal code . Guatemalan legislators are moving a bill through their Congress that would grant amnesty to perpetrators of crimes against humanity. The bill would amend the National Reconciliation Law, which was passed after the peace accords that ended the civil war. While the original law includes amnesty for some crimes, it does not include amnesty for torture, forced disappearance, and crimes against humanity. The proposed amendment would order the release within 24 hours of people serving prison time for those crimes, including more than 30 former military officials. It would also end all current and future criminal investigations into rights abuses committed during the civil conflict. Passage of the amendment requires three separate votes on the bill; the legislature passed the first vote in January 2019, the second in February. The third vote was suspended on March 13, when some members of the Congress walked out and left the session without a quorum, in the face of protests from human rights advocates, victims' groups, international organizations, and foreign governments. The G13 group of donors to Central America, including the United States, issued a statement saying that providing amnesty "would contravene Guatemala's international obligations; would harm reconciliation efforts; and could seriously erode faith in the rule of law in Guatemala." The Inter-American Court of Human Rights ordered Guatemala to cease discussion of the amnesty bill and to permanently shelve it. Advocates of the bill reportedly dismissed such admonitions as interference in Guatemala's internal affairs. Because the vote was suspended, amnesty proponents can still schedule the bill for a third and final vote, and say they will do so. The legislature is also moving forward amendments to the penal code that could accomplish some of the same objectives of the amnesty. The bill would prevent the imprisonment of people older than 70, and limit pretrial detention to one year. Final passage of the bill, which has already passed two of the three required readings, would free many former military officers convicted of crimes against humanity, and prevent the imprisonment of others. It would also free many people convicted or charged for corruption. Judicial Reforms to Combat Corruption and the Backlash Against Them Various Guatemalan and international organizations consider judicial reforms necessary to solidify progress against widespread corruption and to strengthen the judicial branch so it can continue consolidating the rule of law in Guatemala. Nonetheless, forces opposed to the reforms have emerged as well. As anticorruption efforts prove successful, the circle of those feeling threatened by investigations broadens, and attacks against CICIG and the judicial system have intensified. The U.N. Office of the High Commissioner for Human Rights (OHCHR) issued a report in March 2017 saying it was "seriously concerned" about threats and attacks against various judicial authorities, including both Aldana and Judge Miguel Angel Galvez. The International Commission of Jurists noted concern about efforts to criminalize lawyers, as well as community leaders, human rights defenders, and public employees, such as Supreme Court justices. Civil society groups and elements of the government have called for further reforms to combat impunity. An April 2017 report from the International Commission of Jurists found that despite tackling historic cases, Guatemalan courts still show signs of irregularity and impunity, such as many judges' failure to condemn litigation that results in delays of trials. Many of the accused in the La Linea case still await sentencing three years after the scandal broke in late 2015, in part because of litigation filed by their own lawyers in what are widely seen as delaying tactics. According to CICIG head Iván Velásquez, the work of CICIG and the attorneys general has resulted in more than 300 people either in prison, facing trial, or being charged. These include high-level officials, such as the former president and vice president, five former Cabinet ministers, three former presidents of Congress and various deputies, two former CSJ magistrates, the former president of the Instituto Guatemalteco de Seguridad Social (IGSS), two former banking superintendents, and a director of the prison service, among others. President Morales spoke before the U.N. General Assembly in September 2017. He pledged to strengthen and support CICIG, but he also said Guatemala was revising the interpretation and application of its agreement with CICIG and no institution should interfere in Guatemala's administration of justice. On the same day, three of Morales's Cabinet members resigned over the political crisis instigated by the president's effort to expel CICIG's commissioner. In February 2018, Morales sent a representative to the U.N. to express his administration's concerns about CICIG. Many in the U.S. Congress expressed concern over President Morales's effort to expel CICIG's commissioner. The House Foreign Affairs Committee chairman at the time issued a statement reading, "The U.S. Congress has spoken with one voice in support of the International Commission against Impunity in Guatemala. We will continue to stand with the Guatemalan people, and especially those in poverty, who are hurt most by corruption." The Guatemalan Congress approved changes concerning judge and magistrate selection and requirements. A recent International Commission of Jurists (ICJ) report concluded that reforming the selection process of judges and separating judicial processes from administrative processes could strengthen Guatemala's judicial system. CICIG and others launched a judicial observatory of criminal justice to analyze judiciary rulings and make recommendations to improve the justice system in other ways as well. The ICJ found that the Guatemalan state has responded passively to defamation campaigns, attacks on judicial independence, and other forces trying to influence judges, prosecutors, and investigators. According to the director of the Guatemalan Institute of Comparative Studies in Criminal Sciences, the groups seeking to stop the reforms are the same elements that launched defamation campaigns on social media against CICIG head Iván Velásquez in early 2017. Shortly after then-President Perez Molina was forced to resign and was arrested on corruption charges in 2015, the Guatemalan legislature took some actions to advance various types of reform. The Guatemalan Congress passed two major reform packages in 2016, for example, that were designed to streamline legislative procedures and make political and electoral system procedures more transparent and equitable. In late 2017, the legislature passed two laws intended to improve the judicial process. One created a Judicial Career Council to relieve the Supreme Court of having to address internal human resources administrative matters, and the other created a National Bank of Genetic Data to be used in judicial processes as well as a Register of Sexual Aggressors. Other of its actions, however, reflect an effort to reverse or stall reform efforts. A lengthy national process produced 60 proposed amendments to the constitution and other laws to promote judicial reform. Congress did not pass an initial package of the reforms in 2016 and has not brought it up again. The most divisive proposed change was a stronger recognition and use of the indigenous justice system. Some observers express concern that the current Congress does not wish to pass the reforms due to their links to people under investigation for corruption, or because they themselves are under investigation. This latter view was reinforced by congressional actions in September 2017 preserving the president's immunity and trying to reduce penalties for violations of campaign finance laws. The bill amending the penal code mentioned in the previous section would free many former government officials and businesspeople facing charges for corruption, including former President Perez Molina. Many of those people were placed in pretrial detention over concerns they would flee the country. Some of their trials have not proceeded, as noted above, in part because of motions filed by their own lawyers, in what are widely viewed as delaying tactics. Economic and Social Conditions Guatemala enjoyed relatively stable economic growth in recent decades, and the World Bank named it a top performer in Latin America. As economic growth rates have slowed in more recent years, however, Guatemala has struggled to address its high poverty rates. The country has the largest economy in Central America, with a gross domestic product (GDP) of $75.62 billion and a per-capita income of $4,060 in 2017. The World Bank characterizes Guatemala as a lower-middle-income country, and it ranks 127 th out of 189 on the 2018 Human Development Index. Guatemala's stable growth rates have not been enough to decrease some of the highest levels of economic inequality and poverty in the region. Instead, Guatemala has backtracked. After decreasing the overall poverty rate from 56% to 51% between 2000 and 2006, the rate increased to 59% in 2014, with a rate just over 79% for indigenous people, according to a national survey. Some elements of Guatemalan society and government have tried to bring about equitable development, yet its rural and indigenous populations remain socially and economically marginalized. For rural municipalities, which constitute 44% of the country, almost 8 out of 10 people live in poverty. Demonstrating the difference in economic and social conditions, literacy rates for the nonindigenous population were 88.9% for men and 83.7% for women, but rates decreased to 77.7% for indigenous men and 57.6% for indigenous women 15 years and older. The International Monetary Fund (IMF) concluded that Guatemala lags behind similar countries in terms of development outcomes. While the government has incorporated global Sustainable Development Goals into their national strategy, the IMF reports that the steps necessary to implement those policies "remain largely unaddressed." Furthermore, extreme poverty increased and school enrollment decreased. Nonindigenous children average twice as many years of schooling as indigenous children. To improve social conditions, the World Bank calls for rapid economic growth coupled with increased public investment and pro-poor policies. According to the Economist Intelligence Unit (EIU), Guatemala's economic growth rate is expected to average out at 2.9% in 2019. EIU projects average growth from 2019 to 2023 at 3% but with a dip to 2.4% for 2020. The IMF concludes that slowed economic growth and rapid population growth will keep per-capita income growth too low to reduce poverty. A recent major economic analysis found that economic growth in Guatemala is "largely a result of the strong inflow of family remittances from abroad." Factors that impede economic growth and development include corruption, limited government revenues, weak institutions, and weak transportation and energy infrastructure. A recent economic analysis concluded that corruption has a negative impact on economic activity across Central America. It also concluded that ... anti-corruption measures, such as those launched by the MP and CICIG help create a favorable environment for increasing economic growth in Guatemala because they reduce the avenue for corruption and strengthen the government's effectiveness as a provider of wellbeing. Guatemala's persistent failure to deliver services and improve the quality of education and health care contribute to a low-skilled workforce, which also limits growth. According to the U.N. Educational, Scientific, and Cultural Organization (UNESCO), Guatemalan adults had only 3.6 years of education, on average, in 2005, and "if Guatemala had matched the regional average, it could have more than doubled [emphasis in original] its average annual [economic] growth rate between 2005 and 2010." Current mean years of education is 6.4 for men and for women. Guatemala has the lowest tax-to-GDP ratio in the region at 12.6%, compared to 22.7% for Latin America in 2016. This is due in part to the high rate of employment in the informal economy—the Instituto Nacional de Estadística found that 71% of the population held informal employment in 2018. The percentages were even higher for women, people aged 15-24, and rural and indigenous segments of the population. Another contributing factor includes the business and elite sectors' historical resistance to paying taxes. While the tax administration improved tax collection in 2016-2017 (see " President Jimmy Morales's Administration "), an IMF report on Guatemala cautions that maintaining an improved rate "will require strong and sustained political commitment," which previous efforts have lacked. Tax reforms in 2012, for example, gave the government tools to increase revenues through taxes, but, the same report notes, weak implementation left Guatemala "with virtually unchanged tax-to-GDP ratio [several years] after the reform." The IMF has called for a tax revenue rate increase to at least 15% of GDP in order to address social, security, and infrastructure needs. Land conflicts, especially those involving mining, are contentious, and often violent, in Guatemala and elsewhere throughout the region. Governments often see mines as a source of revenue, potentially for poverty reduction and social programs. Indigenous populations often object to mining under current conditions, however, because they say it violates their ancestral land rights, removes them from and/or damages their source of livelihood, and/or excludes them from the decisionmaking process as to how mine profits should be spent. Guatemala is a signatory to the Indigenous and Tribal Peoples Convention, 1989, also known as the International Labour Organization's (ILO's) Convention 169. The treaty calls on governments to consult indigenous peoples before permitting exploitation of natural resources on their land. According to a recent report by the ILO, the Guatemalan government granted 367 mining licenses between its ratification of the convention in 1996 and 2014, and held only 60 community consultations, all of which had expressed opposition to the projects. The report found that Guatemala's Constitutional Court had found such consultations nonbinding. Guatemala has not developed regulations to govern prior consultations. Ongoing conflicts around land use are likely to continue to delay such projects. Other types of land conflicts and evictions are related to biofuels, dams, ranching, and drug trafficking; these are also frequently violent. Coffee is one of Guatemala's key exports. Yet several obstacles are driving coffee farmers from the market: coffee leaf rust (a deadly fungus), extremely low coffee prices, and a drought, which has triggered increases in food prices. Smallholder farmers, with less than 7.5 acres of land, produce 80% of Central America's coffee. According to a recent NPR report, "Some 70 percent of the farms have been affected [by the rust], and over 1.7 million coffee workers have lost their jobs. Many are leaving the coffee lands to find work elsewhere." Remittances from Guatemalans abroad boost the Guatemalan economy as they constitute over 10% of the GDP, and this percentage is forecast to grow to an average of 13.8% through 2023. Private consumption accounts for 85% of GDP. U.S.-Guatemalan Relations Traditionally, the United States and Guatemala have had close relations, with friction at times over human rights and civil/military issues. According to the State Department, current U.S. policy objectives in Guatemala include addressing the underlying drivers of illegal migration; supporting the institutionalization of democracy; encouraging respect for human rights and rule of law, and the efficient functioning of CICIG; supporting broad-based economic growth and sustainable development and maintaining mutually beneficial trade and commercial relations, including ensuring that benefits of CAFTA-DR reach all sectors of Guatemalan society; cooperating to fight money laundering, corruption, narcotics trafficking, alien smuggling, trafficking in persons, and other transnational crimes; supporting Central American integration through support for resolution of border and territorial disputes; reinforcing the government's economic development and political reform plan in the Alliance for Prosperity to be self-reliant in addressing drivers of migration and illicit trafficking of goods and people; and improving Guatemala's business climate. In 2017, the Trump Administration expressed support for CICIG and for Commissioner Velásquez. In February, then-Homeland Security Secretary John Kelly met with President Morales and Commissioner Velásquez in Guatemala, and reiterated U.S. support for the Public Ministry's and CICIG's fight against corruption. On the same day, a U.S. court indicted former Guatemalan Vice President Roxana Baldetti and former Interior Minister Mauricio Lopez Bonilla on criminal drug trafficking charges. A Guatemalan court approved a U.S. request for Baldetti's extradition in June 2017, but first she will face prosecution on four charges of corruption in Guatemalan courts. She was convicted and is serving time for one case of embezzlement there. Lopez Bonilla must first face three counts of corruption in Guatemalan courts. The United States arrested former Guatemalan presidential candidate Manuél Baldizón as he entered the country in January 2018. The U.S. Embassy in Guatemala said the United States would "return Mr. Baldizón to Guatemala to face justice"; he faces charges of bribery, conspiracy and money-laundering related to helping the Odebrecht company win construction contracts in Guatemala. The Odebrecht scandal is enveloping politicians across Latin America. Baldizón requested asylum in the United States. U.S. Vice President Mike Pence, then-Secretary of State Rex Tillerson, Secretary of Commerce Wilbur Ross, then-Secretary of Homeland Security Kelly, and Secretary of the Treasury Steven Mnuchin attended meetings with President Morales, as well as his Honduran counterpart and the Salvadoran vice president, in June 2017 at the Conference on Prosperity and Security in Central America in Florida. Pence said that addressing migration to the United States requires strengthening the sending countries' economies, including through foreign assistance. Nonetheless, the Trump Administration has proposed significantly cutting aid to the region and emphasizing security over development in its budget requests. The President has sometimes threatened to cut off aid to Guatemala and the other northern triangle counties. Congress has rejected most of the Administration's proposed cuts. President Morales followed President Trump's lead in December 2017 in announcing his country would move its embassy in Israel to Jerusalem from Tel Aviv. The change has been widely criticized internationally. A nonbinding U.N. General Assembly resolution called for the United States to shelve its recognition of Jerusalem. Trump threatened to cut off aid to countries that supported the resolution. In February 2018, Trump met with Morales in Washington, thanking him for his support on Israel. According to the White House, Trump "also underscored the importance of stopping illegal immigration to the United States from Guatemala and addressing Guatemala's underlying challenges to security and prosperity." In 2018, the Trump Administration did not join other commission donor countries in stating support of CICIG and the Commissioner. Secretary Pompeo spoke with President Morales on September 6, 2018, expressing continued support for "a reformed CICIG," but did not report mentioning either the termination of CICIG's mandate or the barring of Velásquez. In March 2019 the Administration joined other donor countries in speaking out against Guatemala's proposed amnesty bill, and suspended military aid to Guatemala over the misuse of jeeps that had been provided by the Department of Defense. U.S. Foreign Assistance The United States has been providing assistance to Guatemala through regional initiatives: the Central American Regional Security Initiative (CARSI), for combating narcotics trafficking and preventing transnational crime; the President's Emergency Plan for AIDS Relief (PEPFAR); and Food for Peace. Currently, U.S. assistance to Guatemala is guided by the U.S. Strategy for Engagement in Central America. The various programs are integrated for a greater impact in the Western Highlands region of the country, which has the highest rates of poverty, chronic malnutrition, and out-migration in Guatemala, and in high-crime areas. According to the State Department, "The overall objective of U.S. assistance efforts is to create effective structures and organizations sustainable by the Guatemalan government." While some structures, such as the attorney general's office, have greatly improved their effectiveness with U.S. and other support, other institutions remain weak. U.S. bilateral assistance to Guatemala complements CARSI programs and the regional Alliance for Prosperity Plan (see " The Alliance for Prosperity and Other Regional Initiatives " below). Economic Support and Development assistance aims to expand economic opportunities; improve governance, accountability, and transparency; strengthen the juvenile justice system; and improve living conditions in Guatemala. In 2014, the Obama Administration launched the U.S. Strategy for Engagement in Central America (the Strategy), a whole-of-government approach aimed at addressing the root causes of illegal immigration from the region by improving prosperity, regional economic integration, security, and governance. The Strategy complements the Plan of the Alliance for Prosperity (AFP) in the northern triangle proposed by the presidents of El Salvador, Guatemala, and Honduras (see " The Alliance for Prosperity and Other Regional Initiatives " below). Congress has appropriated $2.1 billion for the Strategy for FY2016-FY2018. Congress placed numerous conditions on aid for Guatemala (and El Salvador and Honduras) in each of the foreign aid appropriations measures enacted since FY2016. Through the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), Congress withheld 25% of aid to the three central governments until the Secretary of State certified that conditions relating to limiting irregular migration were met. Congress conditioned another 50% of aid until the governments addressed another 12 concerns, including combating corruption; countering gangs and organized crime; increasing government revenues; supporting programs to reduce poverty and promote equitable growth; and protecting the rights of journalists, political opposition parties, and human rights defenders to operate without interference. The State Department certified that the three northern triangle governments met Congress's conditions in FY2016 and FY2017. The department certified that the three countries had met the first set of conditions in FY2018, but not the second set. The 2019 Consolidated Appropriations Act ( P.L. 116-6 ) maintained the legislative conditions enacted in prior years but combined them into a single certification requirement for 50% of assistance to the central government. The Trump Administration has proposed cutting aid to Guatemala by 36% for FY2020 compared to FY2018 and emphasizing security over development. The budget request for Central America would also reduce aid, and tip the balance toward security and away from traditional development goals—such as good governance, economic growth, and social welfare. The Administration's proposed budget would also eliminate traditional food aid (P.L. 480, Title II), and food aid would be provided only through the International Disaster Assistance account. Some critics are concerned that reducing nonemergency food aid could increase the already high levels of malnutrition and stunting in Guatemala. In addition, a recent study by several major international organizations found that "there is clearly a link between food insecurity and emigration from [Guatemala, El Salvador and Honduras]." The Trump Administration proposes closing down the Inter-American Foundation (IAF), an independent U.S. agency that supports grassroots development throughout Latin America, including in all three northern triangle countries, and merging it into USAID. Many IAF programs in Guatemala are in areas that have high levels of emigration to the United States; these programs aim to improve agricultural and food production; improve the livelihoods of youth, women, and indigenous people, and increase their participation in civil society and community development; and ease the transition of migrants who return to Guatemala. Congress rejected most of the cuts for aid to Central America proposed by the Trump Administration in its previous budgets. The FY2017 Consolidated Appropriations Act ( H.R. 244 , P.L. 115-31 ) provided just under $126 million for Guatemala as part of the $655 million for the continued implementation of the Strategy. The FY2018 Consolidated Appropriations Act ( H.R. 1625 , P.L. 115-141 ) provided less than $120 million for Guatemala as part of the $615 million for the Strategy. The 116 th Congress remains invested in the U.S. Strategy for Engagement in Central America. In February 2019, it passed the FY2019 Consolidated Appropriations Act ( H.J.Res. 31 , P.L. 116-6 ), including $528 million for Central America. The act did not provide specific funding amounts for individual countries, but instead gave the Department of State the authority to allocate funding among the Central American nations. The act's conference report, however, did specify $13 million in Global Health Program aid for Guatemala and $6 million for CICIG. The 116 th Congress has introduced other bills that touch on perennial concerns involving Guatemala, such as immigration, border security, and governance issues. For example, H.Res. 18 , introduced in January, would express the sense of the House that the President should redirect and target foreign assistance provided to Guatemala, El Salvador, and Honduras in a manner that addresses the driving causes of illegal immigration into the United States. S. 716 and H.R. 1630 , introduced in March 2019, would impose targeted sanctions under the Global Magnitsky Human Rights Accountability Act against Guatemalan nationals found responsible for, or complicit in, acts of corruption, laundering money, or violating human rights. In March 2019 the Department of Defense announced it was suspending military aid to Guatemala's Ministry of the Interior, which it said had repeatedly used armored jeeps provided by the United States "in an incorrect way" since August 2018, when they were deployed outside CICIG and donor embassies when Morales announced he was not renewing CICIG's mandate. The Alliance for Prosperity and Other Regional Initiatives In response to increased Central American immigration in 2014, the Obama Administration and some Members pressed the northern triangle governments (Guatemala, Honduras, and El Salvador) to invest more heavily in their own development and security. Later that year, the Guatemalan, Salvadoran, and Honduran governments proposed the Plan of the Alliance for Prosperity in the northern triangle with the help of the Inter-American Development Bank. The five-year, $22 billion initiative seeks to (1) stimulate the productive sector to create economic opportunities; (2) develop human capital through improved education, job training, and social protections (health care, nutrition); (3) improve public safety and access to the legal system; and (4) strengthen institutions and improve transparency to increase public trust in the state. Some observers, including some U.S. officials, criticized the initial plan for not focusing on development and poverty-reduction efforts in the poorest regions, from which the highest numbers of people emigrate. The Guatemalan Embassy says that the government has since shifted some of its programs toward those regions. Guatemala, Honduras, and El Salvador launched a trinational task force to address the region's security issues in November 2016. The task force focuses on greater border protection, undertaking operations to dismantle gangs and criminal structures, taking action against human trafficking, cracking down on terrestrial drug trafficking across borders, and stopping the flow of contraband products through the northern triangle. The initiative includes increased information sharing and cooperation among the three countries' governments, as well as law enforcement and investigative agencies. The governments of El Salvador, Guatemala, Honduras, and Mexico agreed on a Comprehensive Development Plan in December 2018, and met in January 2019 to begin its design. They say they intend to be the first region in the world to implement the Global Compact for Migration, which seeks to improve cooperation between countries and regions to facilitate safe, orderly, and regular international migration. Honduran Foreign Minister Maria Dolores Agüero stated that "[r]especting the dignity of migrant persons will be prioritized in line with international law and with special emphasis on a child's best interest and the protection of human rights, regardless of migratory status." Mexican Secretary of Foreign Affairs Marcelo Ebrard said the group wished to demonstrate that addressing the causes of migration is more effective than exclusion and containment measures. Trade and CAFTA-DR Guatemala and the United States have significant trade relations, and are part of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), implemented in 2006. Supporters of CAFTA-DR point to reforms it spurred in transparency, customs administration, intellectual property rights, and government regulation. Critics note that the commercial balance between the two countries previously favored Guatemala, and that Guatemala already had duty-free access under the Caribbean Basin Initiative. Since CAFTA-DR, the balance has shifted in favor of the United States. The U.S. goods trade surplus with Guatemala reached $2.9 billion in 2017, a 16% increase from 2016. From 2005 (pre-CAFTA-DR) to 2017, U.S. exports to Guatemala increased by 143%, whereas Guatemalan exports to the United States increased by only 28% during the same period. President Trump has ordered reviews of U.S. trade agreements. Total U.S.-Guatemala trade in goods and services for 2017 reached $13.5 billion, and U.S. exports to Guatemala amounted to $8.5 billion. Mineral fuels, articles donated for relief, machinery, electrical machinery, and cereals accounted for the majority of U.S. exports. U.S. agricultural exports include corn, soybean meal, wheat, poultry, and cotton. U.S. imports from Guatemala amounted to about $4 billion, with bananas, plantains, knit apparel, woven apparel, coffee, silver, and gold accounting for the majority. Guatemala was the United States' 43 rd -largest trading partner in 2017. The U.S. Labor Department initiated a dispute settlement process alleging that the Guatemalan government violated its CAFTA-DR labor commitments, the first labor rights complaint lodged under a U.S. free trade agreement. In 2011, the U.S. Trade Representative officially requested an arbitral panel. In 2017, the panel concluded that although it agreed that Guatemala had failed to enforce its labor laws effectively in certain cases, the United States had failed to prove that the lack of enforcement negatively affected trade, as required under CAFTA-DR. Some observers say the finding brings into question the effectiveness of labor regulations in U.S. free trade agreements. The Trump Administration may consider renegotiating CAFTA-DR. Counternarcotics Cooperation Guatemala remains a major transit country for illicit drugs, particularly cocaine, trafficked from South America to the United States. Guatemala's porous borders and lack of law enforcement presence in many areas enables minor poppy and opium production, as well as smuggling of precursor chemicals, narcotrafficking, and trafficking of weapons, people, and other contraband. Unlike former President Pérez Molina, current President Morales opposes legalization of illicit drugs. According to the State Department, in 2017 Guatemala recorded record drug seizures and arrested 106 high-profile drug traffickers. In response to increased drug consumption, Guatemala doubled its budget for domestic reduction activities. The United States provides assistance in the areas of vetted units, and a range of training, with the goal of improving the professional capabilities and integrity of Guatemala's police forces and judicial institutions. The 2018 International Narcotics Control Strategy Report (INCSR) highlighted the above improvements in Guatemala's drug control and border security, but noted the following: Corruption levels remain high and public confidence in government institutions is low. Limited budget resources hinder the government's effectiveness. Despite Guatemala's many successes in 2017, the government needs to take additional steps to further build sustainable drug control mechanisms, including support for anti-corruption efforts, accelerated judicial processes, improved interagency cooperation, and adequate financial resources for relevant agencies and government ministries. Corruption within the Guatemalan government has enabled illicit drug trafficking. The U.S. Department of Justice requested the extradition of former Interior Minister Lopez Bonilla, who oversaw the Guatemalan police and prisons under the Perez Molina administration. The Justice Department reportedly said that Lopez Bonilla received money from various drug cartels, including the notorious Los Zetas, in exchange for allowing them to operate freely across Guatemala. A U.S. court also indicted former Guatemalan Vice President Roxana Baldetti on criminal drug trafficking charges. In 2017 a Guatemalan court approved their extradition to the United States, but first they must face prosecution on multiple charges of corruption in Guatemalan courts. Baldetti was convicted and is serving time for one case in Guatemala. The Trump Administration suspended military aid to Guatemala intended for police counternarcotics and border security operations task forces In March 2019. The Department of Defense announced it was ending the "transfer of equipment and training to the task forces" because the Interior Ministry, which oversees the police, had repeatedly misused armored jeeps provided by the United States since August 2018. (See " Tensions over President Morales's Dispute with CICIG " above.) Migration Issues98 Approximately 1.5 million U.S. residents claim Guatemalan ethnicity, and there were over 950,000 foreign-born persons from Guatemala living in the U.S. in 2017. The Pew Research Center estimates that in 2016, 575,000 of the Guatemalan foreign-born population were unauthorized (about 60%). From the 1970s to 1990s, the civil war fueled some migration. During the 2000s, migration became motivated by socioeconomic opportunities, natural disasters, social violence, and family reunification. Unlike their neighbors in the region, Honduras and El Salvador, Guatemalans have not received Temporary Protected Status (TPS), which offers immigration relief from removal under specific circumstances. Some Guatemalans benefit from the Deferred Action for Child Arrivals (DACA) program, which allows people without lawful immigration status who came to the United States as children and meet certain requirements to request protection from removal for two years, subject to renewal. On September 5, 2017, the Trump Administration announced plans to phase out the DACA program. President Trump later tweeted that if Congress did not pass DACA-like legislation by early 2018, he would "revisit" the issue. As of the date of this report, no such legislation has been passed. Due to federal court orders, DACA renewals are once again being accepted; new applications for DACA, however, are not. From FY2009 to FY2014, the number of unaccompanied migrant children (sometimes referred to as Unaccompanied Alien Children, or UAC) from Guatemala apprehended at the U.S. border rose from 1,115 to 17,057, causing concern among Congress and the executive branch. In the years since, the trend has fluctuated, as the number of unaccompanied Guatemalan minors apprehended at the border decreased to 13,589 in 2015; rose to 18,913 in FY2016; fell to 14,827 in FY2017; and rose to 22,327 in FY2018. To offer a safer alternative to travelling to the United States to request asylum, the U.S. government launched the Central American Minors (CAM) Refugee/Parole program in December 2014. The program allowed children living in El Salvador, Guatemala, and Honduras, whose parents reside legally in the United States, to apply for legal entry to the United States. In July 2016, the U.S. government expanded the CAM program to include additional family members. According to State Department data, 45 Guatemalans left for the United States under refugee status and 31 as parolees between the program's start in December 2014 and September 2017. The Trump Administration ended the CAM program in November 2017. According to the U.N. High Commissioner for Refugees, 62% of unaccompanied migrant children interviewed in 2013 did not mention serious harm as a reason for leaving Guatemala, and 84% cited hopes for family reunification, increased work or study opportunities, or helping their families as motivation for coming to the United States. Two Guatemalan children, 7 and 8 years old, died while in U.S. Customs and Border Protection (CBP) custody in December 2018. CBP Commissioner Kevin McAleenan subsequently issued guidelines for the agency to conduct health inspections on all children in custody, and said he was looking for ways to reduce congestion in government holding facilities, including having nongovernment organizations provide short-term housing for immigrants seeking asylum. McAleenan also said that holding facilities had been built for single adult males, not for family groups with children, and that a different approach was needed. "We need help from Congress. We need to budget for medical care and mental health care for children in our facilities," he said. The U.S. Strategy for Engagement in Central America and the Central American Plan of the Alliance for Prosperity in the northern triangle were developed in large part as a response to the surge in immigration in 2014. They represent efforts to spur development and reduce illegal emigration to the United States. The Trump administration's proposed budgets have emphasized security over development, and substantial cuts in assistance to the region. Intercountry Adoption U.S. laws and policies concerning intercountry adoption are designed to ensure that all children put up for adoption are truly orphans, and have not been bought, kidnapped, or subjected to human trafficking, smuggling, or other illegal activities. Similarly, the goals of the Hague Convention on Protection of Children and Cooperation in Respect of Intercountry Adoption are to ensure transparency in adoptions to prevent human trafficking, child stealing, or child selling, and to eliminate confusion and delays caused by differences among the laws and practices of different countries. Both the United States and Guatemala are party to the convention. Because Guatemala has not yet established regulations and procedures that meet convention standards, the convention has not entered into force there. In FY2007, U.S. citizens adopted 4,726 children from Guatemala, more than from any other country except China (5,453 adoptions). When the convention went into effect in the United States in 2008, adoptions from Guatemala were suspended because Guatemala was not in compliance with the convention's standards. Since then, the only cases of adoptions by U.S. citizens of Guatemalan children that have been permitted are those that were already in-process on December 31, 2007. There were about 3,000 such adoption cases pending at the time. As of 2016, all but 3 cases had been resolved. According to the U.S. State Department, the Guatemalan government's priority is to continue developing its domestic adoption processes, but it is receptive to ongoing discussions. The State Department says it continues efforts to work with Guatemala to establish intercountry adoption procedures.

Guatemala, the most populous Central American country, with a population of 16.3 million, has been consolidating its transition to democracy since the 1980s. Guatemala has a long history of internal conflict, including a 36-year civil war (1960-1996) during which the Guatemalan military held power and over 200,000 people were killed or disappeared. A democratic constitution was adopted in 1985, and a democratically elected government was inaugurated in 1986. President Jimmy Morales is being investigated for corruption and has survived three efforts to remove his immunity from prosecution. Morales took office in January 2016, having campaigned on an anticorruption platform. The previous president and vice president had resigned and been arrested after being implicated in a large-scale corruption scandal. In what many observers see as a step forward in Guatemala's democratic development, the Public Ministry's corruption and human rights abuse investigations in recent years have led to the arrest and trial of high-level government, judicial, and military officials. The Public Ministry is responsible for public prosecution and law enforcement, and works in conjunction with the United Nations-backed International Commission against Impunity in Guatemala (CICIG) to strengthen rule of law in Guatemala. As their anticorruption efforts prove effective, the circle of those feeling threatened by investigations broadens, and attacks against CICIG and the judicial system it supports broaden and intensify as well. Since Morales and some of his inner circle became the targets of investigations, he has ended CICIG's mandate, tried to terminate it early, and fired some of his more reformist officials. The Guatemalan Congress is moving legislation forward that would give amnesty to perpetrators of crimes against humanity, free some high-profile prisoners held for corruption, and limit the work of nongovernment organizations. Observers within Guatemala and abroad worry that Morales and the Congress are trying to protect themselves and others from corruption and other charges, and threatening the rule of law in doing so. Guatemala continues to face many other challenges, including insecurity, high rates of violence, and increasing rates of poverty and malnourishment. Guatemala remains a major transit country for cocaine and heroin trafficked from South America to the United States. Although Guatemala recorded record drug seizures in 2017, the lack of law enforcement and the collusion between corrupt officials and organized crime in many areas enable trafficking of illicit drugs, precursor chemicals, weapons, people, and other contraband. During Morales's first year, his administration improved tax collection, and the interior ministry reported a 5% drop in homicide rates. Morales has since fired many of the officials responsible for those advances and other reforms. Guatemala has the largest economy in Central America and in recent decades has had relatively stable economic growth. Despite that economic growth, Guatemala's economic inequality and poverty have increased, especially among the rural indigenous population. The Economist Intelligence Unit projects that the country's economic growth rate will likely peak in 2018-2019 at 3.2%, followed by a decrease until 2022. The World Bank calls for rapid economic growth coupled with increased public investment and pro-poor policies to improve social conditions. Traditionally, the United States and Guatemala have had close relations, with friction at times over human rights and civil/military issues. Guatemala and the United States have significant trade and are part of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). Top priorities for U.S. bilateral assistance to Guatemala include improving security, governance, and justice for citizens; improving economic growth and food security; providing access to health services; promoting better educational outcomes; and providing opportunities for out-of-school youth to reduce their desire to migrate. The U.S. Strategy for Engagement in Central America is meant to spur development and reduce illegal emigration to the United States. The Trump Administration has proposed substantially cutting funds for Guatemala, and eliminating traditional food aid and the Inter-American Foundation in its FY2018-FY2020 budget requests. Congress rejected much of those cuts in the reports to and language in the Consolidated Appropriations Acts of 2018 (P.L. 115-141), and 2019 (P.L. 116-6). Tensions between Guatemala and much of the international community have arisen over Guatemalan efforts to oust CICIG and to grant amnesty for human rights violations. The Trump Administration suspended military aid to Guatemala in March 2019 over its misuse of armored vehicles provided by the Department of Defense to combat drug trafficking. Bills introduced in the 116th Congress regarding Guatemala address immigration, order security, corruption and other governance issues, and include H.Res. 18, H.R. 1630, and S. 716.

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Background The routine activities of most federal agencies are funded annually by one or more of the regular appropriations acts. When action on the regular appropriations acts is delayed, a continuing appropriations act, also sometimes referred to as a continuing resolution or CR, may be used to provide interim budget authority. Since the federal fiscal year was shifted to October 1-September 30 beginning with FY1977, all of the regular appropriations acts have been enacted by the beginning of the fiscal year in only four instances (FY1977, FY1989, FY1995, and FY1997), although CRs were not needed for interim funding in one of these fiscal years. CRs were enacted for FY1977 but only to fund certain unauthorized programs whose funding had been excluded from the regular appropriations acts. The Antideficiency Act (31 U.S.C. 1341-1342, 1511-1519) generally bars the obligation or expenditure of federal funds in the absence of appropriations. The interval during a fiscal year when appropriations for a particular project or activity are not enacted into law, either in the form of a regular appropriations act or a CR, is referred to as a funding gap or funding lapse . Although funding gaps may occur at the start of the fiscal year, they may also occur any time a CR expires and another CR (or the relevant regular appropriations bill) is not enacted immediately thereafter. Multiple funding gaps may occur within a fiscal year. In 1980 and early 1981, then-Attorney General Benjamin Civiletti issued opinions in two letters to the President that have been put into effect through guidance provided to federal agencies under various Office of Management and Budget (OMB) circulars clarifying the limits of federal government activities upon the occurrence of a funding gap. The Civiletti letters state that, in general, the Antideficiency Act requires that if Congress has enacted no appropriation beyond a specified period, the agency may make no contracts and obligate no further funds except as "authorized by law." In addition, because no statute generally permits federal agencies to incur obligations without appropriations for the pay of employees, the Antideficiency Act does not, in general, authorize agencies to employ the services of their employees upon a lapse in appropriations, but it does permit agencies to fulfill certain legal obligations connected with the orderly termination of agency operations. The second letter, from January 1981, discusses the more complex problem of interpretation presented with respect to obligational authorities that are "authorized by law" but not manifested in appropriations acts. In a few cases, Congress has expressly authorized agencies to incur obligations without regard to available appropriations. More often, it is necessary to inquire under what circumstances statutes that vest particular functions in government agencies imply authority to create obligations for the accomplishment of those functions despite a lack of current appropriations. It is under this guidance that exceptions may be made for activities involving "the safety of human life or the protection of property." As a consequence of these guidelines, when a funding gap occurs, executive agencies begin a shutdown of the affected projects and activities, including the furlough of non-excepted personnel. The general practice of the federal government after the shutdown has ended has been to retroactively pay furloughed employees for the time they missed, as well as employees who were required to come to work. Under current practice, although a shutdown may be the result of a funding gap, the two events should be distinguished. This is because a funding gap may result in a shutdown of all affected projects or activities in some instances but not in others. For example, when a funding gap is of a short duration, agencies may not have enough time to complete a shutdown of affected projects and activities before funding is restored. In addition, the Office of Management and Budget has previously indicated that a shutdown of agency operations within the first day of a funding gap may be postponed if it appears that an additional CR or regular appropriations act is likely to be enacted that same day. To avoid funding gaps, proposals have previously been offered to establish an "automatic continuing resolution" (ACR) that would provide a fallback source of funding authority for activities, at a specified formula or level, in the event that timely enactment of appropriations is disrupted. Funding would become available automatically and remain available as long as needed so that a funding gap would not occur. Although the House and Senate have considered ACR proposals in the past, none has been enacted into law on a permanent basis. Funding Gaps Since FY1977 As illustrated in Table 1 , there have been 20 funding gaps since FY1977. The enactment of a CR on the day after the budget authority in the previous CR expired, which has occurred in several instances, is not counted in this report as involving a funding gap because there was no full day for which there was no available budget authority. For example, between FY2000 and FY2018, "next-day" CRs were enacted on 21 occasions. A majority of the funding gaps occurred between FY1977 and FY1995. During this period of 19 fiscal years, 15 funding gaps occurred. Multiple funding gaps have occurred during a single fiscal year in four instances: (1) three gaps covering a total of 28 days in FY1978, (2) two gaps covering a total of four days in FY1983, (3) two gaps covering a total of three days in FY1985, and (4) two gaps covering a total of 26 days in FY1996. Seven of the funding gaps commenced with the beginning of the fiscal year on October 1. The remaining 13 funding gaps occurred at least more than one day after the fiscal year had begun. Ten of the funding gaps ended in October, four ended in November, three ended in December, and three ended in January. Funding gaps have ranged in duration from 1 to 34 full days. Six of the 8 lengthiest funding gaps, lasting between 8 days and 17 days, occurred between FY1977 and FY1980—before the Civiletti opinions were issued and for which there was no government shutdown. Between 1980 and 1990, the duration of funding gaps was generally shorter, typically ranging from one day to three days. In most cases these occurred over a weekend with only limited impact in the form of government shutdown activities. Notably, many of the funding gaps that have occurred since FY1977 do not appear to have resulted in a "shutdown." Prior to the issuance of the Civiletti opinions, the expectation was that agencies would not shut down during a funding gap. Continuing resolutions typically included language ratifying obligations incurred prior to the resolution's enactment. For example, the first CR for FY1980 provided All obligations incurred in anticipation of the appropriations and authority provided in this joint resolution are hereby ratified and confirmed if otherwise in accordance with the provisions of the joint resolution. Thus, while agencies tended to curtail some operations in response to a funding gap, they often "continued to operate during periods of expired funding." In addition, some of the funding gaps after the Civiletti opinions did not result in a completion of shutdown operations due to both a funding gap's short duration and an expectation that appropriations would soon be enacted. For example, during the three-day FY1984 funding gap, "no disruption to government services" reportedly occurred, due to both the three-day holiday weekend and the expectation that the President would soon sign into law appropriations passed by the House and Senate during that weekend. Some of the funding gaps during this period, however, did have a broader impact on affected government operations, even if only for a matter of hours. For example, in response to the one-day funding gap that occurred on October 4, 1984, a furlough of non-excepted personnel for part of that day was reportedly implemented. It should be noted that when most of these funding gaps occurred, one or more regular appropriations measures had been enacted, so any effects were not felt government-wide. For example, the three funding gaps in FY1978 were limited to activities funded in the Departments of Labor and Health, Education, and Welfare Appropriations Act. Similarly, 8 of 13 regular appropriations acts had been enacted prior to the three-day funding gap in FY1984. The most recent funding gaps—two in FY1996, one in FY2014, one in FY2018, and one in FY2019—all resulted in widespread cessation of non-excepted activities and furlough of associated personnel. The legislative history of these funding gaps are summarized below. FY1996 The two FY1996 funding gaps occurred between November 13 and 19, 1995, and December 15, 1995, through January 6, 1996. The chronology of regular and continuing appropriations enacted during that fiscal year is illustrated in Figure 1 . In the lead-up to the first funding gap, only 3 out of the 13 regular appropriations acts had been signed into law, and budget authority, which had been provided by a CR since the start of the fiscal year, expired at the end of the day on November 13. On this same day, President Clinton vetoed a CR that would have extended budget authority through December 1, 1995, because of the Medicare premium increases contained within the measure. The ensuing funding gap reportedly resulted in the furlough of an estimated 800,000 federal workers. After five days, a deal was reached to end the shutdown and extend funding through December 15. Agencies that had been zeroed out in pending appropriations bills were funded at a rate of 75% of FY1995 budget authority. All other agencies were funded at the lower of the House- or Senate-passed level of funding contained in the FY1996 full-year appropriations bills. The CR also included an agreement between President Clinton and Congress regarding future negotiations to lower the budget deficit within seven years. During the first FY1996 funding gap and prior to the second one, an additional four regular appropriations measures were enacted, and three others were vetoed. The negotiations on the six remaining bills were unsuccessful before the budget authority provided in the CR expired at the end of the day on December 15, 1995. Reportedly, about 280,000 executive branch employees were furloughed during the funding gap between December 15, 1995, and January 6, 1996. A CR to provide benefits for veterans and welfare recipients and to keep the District of Columbia government operating was passed and signed into law on December 22, 1995. The shutdown officially ended on January 6, 1996, when the first of a series of CRs to reopen affected agencies and provide budget authority through January 26, 1996, was enacted. FY2014 This funding gap commenced at the beginning of FY2014 on October 1, 2013. None of the 12 regular appropriations bills for FY2014 was enacted prior to the beginning of the funding gap. Nor had a CR to provide budget authority for the projects and activities covered by those 12 bills been enacted. On September 30, however, an ACR was enacted to cover FY2014 pay and allowances for (1) certain members of the Armed Forces, (2) certain Department of Defense (DOD) civilian personnel, and (3) other specified DOD and Department of Homeland Security contractors ( H.R. 3210 ; P.L. 113-39 , 113 th Congress). At the beginning of this 16-day funding gap, more than 800,000 executive branch employees were reportedly furloughed. This number was reduced during the course of the funding gap due to the implementation of P.L. 113-39 and other redeterminations of whether certain employees were excepted from furlough. Prior to the resolution of the funding gap, congressional action on appropriations was generally limited to a number of narrow CRs to provide funding for certain programs or classes of individuals. Of these, only the Department of Defense Survivor Benefits Continuing Appropriations Resolution of 2014 ( H.J.Res. 91 ; P.L. 113-44 ) was enacted into law. On October 16, 2013, the Senate passed H.R. 2775 , which had been previously passed by the House on September 12, with an amendment. This amendment, in part, provided interim continuing appropriations for the previous year's programs and activities through January 15, 2014. Later that same day, the House agreed to the Senate amendment to H.R. 2775 . The CR was signed into law on October 17, 2013 ( P.L. 113-46 ), thus ending the funding gap. FY2018 At the beginning of FY2018, none of the 12 regular appropriations bills had been enacted, so the federal government operated under a series of CRs. The first, P.L. 115-56 , provided government-wide funding through December 8, 2017. The second, P.L. 115-90 , extended funding through December 22, and the third, P.L. 115-96 , extended it through January 19, 2018. In the absence of agreement on legislation that would further extend the period of these CRs, however, a funding gap began with the expiration of P.L. 115-96 at midnight on January 19. A furlough of federal personnel began over the weekend and continued through Monday of the next week, ending with enactment of a fourth CR, P.L. 115-120 , on January 22. FY2019 At the beginning of FY2019, 5 of the 12 regular appropriations bills had been enacted in two consolidated appropriations bills. The remaining seven regular appropriations bills were funded under two CRs. The first CR, P.L. 115-245 , provided funding through December 7, 2018. The second CR, P.L. 115-298 , extended funding through December 21, 2018. When no agreement was reached on legislation to further extend the period of these CRs, a funding gap began with the expiration of P.L. 115-298 at midnight on December 21, 2018. Because of this funding gap, federal agencies and activities funded in these seven regular appropriations bills were required to shut down. The funding gap ended when a CR, P.L. 116-5 , was signed into law on January 25, 2019, which ended the partial government shutdown and allowed government departments and agencies to reopen. The funding gap lasted 34 full days.

The Antideficiency Act (31 U.S.C. 1341-1342, 1511-1519) generally bars the obligation of funds in the absence of appropriations. Exceptions are made under the act, including for activities involving "the safety of human life or the protection of property." The interval during the fiscal year when appropriations for a particular project or activity are not enacted into law, either in the form of a regular appropriations act or a continuing resolution (CR), is referred to as a funding gap or funding lapse. Although funding gaps may occur at the start of the fiscal year, they may also occur any time a CR expires and another CR (or the regular appropriations bill) is not enacted immediately thereafter. Multiple funding gaps may occur within a fiscal year. When a funding gap occurs, federal agencies are generally required to begin a shutdown of the affected projects and activities, which includes the prompt furlough of non-excepted personnel. The general practice of the federal government after the shutdown has ended has been to retroactively pay furloughed employees for the time they missed, as well as employees who were required to come to work. Although a shutdown may be the result of a funding gap, the two events should be distinguished. This is because a funding gap may result in a total shutdown of all affected projects or activities in some instances but not others. For example, when funding gaps are of a short duration, agencies may not have enough time to complete a shutdown of affected projects and activities before funding is restored. In addition, the Office of Management and Budget has previously indicated that a shutdown of agency operations within the first day of the funding gap may be postponed if a resolution appears to be imminent. Since FY1977, 20 funding gaps occurred, ranging in duration from 1 day to 34 full days. These funding gaps are listed in Table 1. About half of these funding gaps were brief (i.e., three days or less in duration). Notably, many of the funding gaps do not appear to have resulted in a "shutdown." Prior to the issuance of the opinions in 1980 and early 1981 by then-Attorney General Benjamin Civiletti, while agencies tended to curtail some operations in response to a funding gap, they often "continued to operate during periods of expired funding." In addition, some of the funding gaps after the Civiletti opinions did not result in a completion of shutdown operations due to both the funding gap's short duration and an expectation that appropriations would soon be enacted. Some of the funding gaps during this period, however, did have a broader impact on affected government operations, even if only for a matter of hours. Two funding gaps occurred in FY1996, amounting to 5 days and 21 days. The chronology of regular and continuing appropriations enacted during FY1996 is illustrated in Figure 1. At the beginning of FY2014 (October 1, 2013), none of the regular appropriations bills had been enacted, so a government-wide funding gap occurred. It concluded on October 17, 2013, after lasting 16 full days. During FY2018, there was a funding gap when a CR covering all of the regular appropriations bills expired on January 19, 2018. It concluded on January 22, 2018, after lasting two full days. The most recent funding gap occurred during FY2019, when a CR covering federal agencies and activities funded in 7 of the 12 regular appropriations bills expired on December 21, 2018. It concluded on January 25, 2019, after lasting 34 full days. For a general discussion of federal government shutdowns, see CRS Report RL34680, Shutdown of the Federal Government: Causes, Processes, and Effects, coordinated by Clinton T. Brass.

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Cybersecurity Legislation and Hearings in the 116th and 115th Congresses This report provides links to cybersecurity-related bills with some type of committee, floor, or chamber action (i.e., action subsequent to introduction). It also provides links to cybersecurity-related hearings. Table 1 lists House bills in the 116th Congress. Table 2 lists Senate bills in the 116th Congress. Table 3 lists House bills in the 115th Congress. Table 4 lists Senate bills in the 115th Congress. 116th Congress: Legislative Action In the 116 th Congress, the House has passed four cybersecurity-related bills and the Senate has given varying levels of consideration to four others, passing one. See Table 1 for a list of House bills and Table 2 for a list of Senate bills in the 116 th Congress . 115th Congress: Legislative Action Thirty-one bills received committee consideration or passed one or both chambers in the 115 th Congress. Five bills became public laws: On September 28, 2018, the Department of Energy Research and Innovation Act was signed into law ( P.L. 115-246 ). The law establishes a Department of Energy policy for science and energy research and development programs; reforms National Laboratory management and technology transfer programs; and directs DOE to report to Congress on integrated research programs in cybersecurity and national security, among other issues. On August 13, 2018, the John S. McCain National Defense Authorization Act for Fiscal Year 2019 was signed into law ( P.L. 115-232 ). The bill authorizes appropriations and sets forth policies regarding Department of Defense's military activities, including cybersecurity matters. On December 12, 2017, the President signed the National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ), which establishes several cybersecurity efforts and new rules and programs related to information security. These include an official ban on Kaspersky Lab software (Section 1634); definition by the President of "cyberwar" (Section 1633); the Pentagon's reexamination of the Defense Department's internal organizational structure surrounding its cybersecurity-related missions (Section 1641, Section 1644, and others); and the National Science Foundation and Office of Personnel Management's launch of a joint pilot scholarship program aimed at educating and recruiting talent directly out of universities (Section 1649). On November 21, 2017, the FITARA Enhancement Act of 2017 became law ( P.L. 115-88 ). Among other things, it requires the chief information officer of each covered agency for information technology to conduct a risk management review of those investments that have received a high-risk rating for four consecutive quarters. On November 2, 2017, Congress passed the Strengthening State and Local Cyber Crime Fighting Act of 2017 ( P.L. 115-76 ), which authorizes a National Computer Forensics Institute within the U.S. Secret Service. The institute is to disseminate information related to the investigation and prevention of cyber and electronic crime and related threats. CRS Products: Legislation CRS Report R43831, Cybersecurity Issues and Challenges: In Brief , by Eric A. Fischer CRS In Focus IF10610, Cybersecurity Legislation in the 113th and 114th Congresses , by Eric A. Fischer CRS Report R44069, Cybersecurity and Information Sharing: Comparison of H.R. 1560 (PCNA and NCPAA) and S. 754 (CISA) , by Eric A. Fischer CRS Report R43996, Cybersecurity and Information Sharing: Comparison of H.R. 1560 and H.R. 1731 as Passed by the House , by Eric A. Fischer and Stephanie M. Logan CRS Report R42114, Federal Laws Relating to Cybersecurity: Overview of Major Issues, Current Laws, and Proposed Legislation , by Eric A. Fischer CRS Report R43821, Legislation to Facilitate Cybersecurity Information Sharing: Economic Analysis , by N. Eric Weiss Hearings in the 116th Congress The following tables list c ybersecurity hearings in the 116 th Congress . Table 5 lists House hearings arranged by date in reverse chronological order. Table 6 lists House hearings arranged by committee. Table 7 lists Senate hearings arranged by date in reverse chronological order , and Table 8 lists Senate hearings arranged by committee. CRS identified these hearings as being primarily about cybersecurity or related issues. However, no single, objective selection criterion was available for CRS to use in identifying which hearings to include. The list of hearings should therefore not be considered definitive. Table document titles are active links to the committee's website for that particular hearing . Hearings in the 115th Congress Table 9 lists House hearings arranged by date in reverse chronological order , and Table 10 lists House hearings arranged by committee. Table 11 lists Senate hearings by date. Table 12 lists Senate hearings arranged by committee. CRS identified these hearings as being primarily about cybersecurity or related issues. However, no single, objective selection criterion was available for CRS to use in identifying which hearings to include. The list of hearings should therefore not be considered definitive. In the tables , the document titles are active links to the committee's website for that particular hearing .

Most major cybersecurity legislative provisions were enacted prior to 2002, despite many recommendations having been made over the past decade. More recently, in the 115th and 116th Congresses, cybersecurity legislation has received either committee or floor action or final passage, and both chambers have held multiple hearings. In the 116th Congress, a number of House and Senate bills have received consideration, and hearings have been held by committees in each chamber. In the 115th Congress, 31 bills received some type of action (committee consideration or passage by one or both chambers). Five bills became public law. The House held 54 hearings on cybersecurity issues and the Senate held 40 hearings.

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Introduction Federal agencies provide a range of assistance to individual survivors; state, territorial, and local governments; and nongovernmental entities after major disasters, including natural disasters and terrorist attacks. Types of aid can include, but are not limited to, operational, logistical, and technical support; financial assistance through grants, loans, and loan guarantees; and the provision of federally owned equipment and facilities. Many, but not all, programs are available after the President issues a major disaster declaration pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) authority. More limited aid is available under a Stafford Act emergency declaration, a declaration issued by a department or agency head, or on an as needed basis. This report only identifies programs frequently used to provide financial assistance in the disaster response and recovery process. It provides brief descriptive information to help congressional offices determine which programs merit further consideration in the planning, organization, or execution of the disaster response and recovery process. Most of the programs listed here are authorized as assistance programs and are listed at the General Services Administration (GSA) website beta.SAM.gov. The list does not include operational or technical assistance that some agencies provide in emergency or disaster situations. It is also not inclusive of all forms of financial disaster assistance that may be available to every jurisdiction in every circumstance, as unique factors often trigger unique forms of assistance. Congress may, and frequently has, authorized specific forms of financial assistance on a limited basis following particular disasters. Program Selection Criteria Programs discussed in this report satisfy one or more of the following criteria: Congress expressly designated the program to provide financial assistance for disaster relief or recovery. The program is applicable to most disaster situations, even if not specifically authorized for that purpose. The Federal Emergency Management Agency (FEMA) and other federal agencies have frequently used the program to provide financial assistance. The program is potentially useful for addressing short-term and long-term recovery needs (e.g., assistance with processing survivor benefits or repair of public facilities). Most of the programs listed in this report are specifically authorized for use during situations occurring because of a disaster. General assistance programs that may apply to disaster situations are described at the end of the report (see " General Assistance Programs "). As Congress and the Administration respond to domestic needs arising from major disasters, some conditions of these programs may be changed. For the most up-to-date information on a particular program, please contact the CRS analyst or department or agency program officers listed in the report. Federal Disaster Recovery Programs Assistance for Individuals and Families Individuals and Households Program The Individuals and Households Program (IHP) is the primary vehicle for FEMA assistance to individuals and households after the President issues an emergency or major disaster declaration, when authorized. It is intended to meet basic needs and support recovery efforts, but it cannot compensate disaster survivors for all losses. Congress appropriates money for the IHP (and most other aid authorized by the Stafford Act) to the Disaster Relief Fund. IHP assistance is available in the form of financial and direct assistance 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. Program funds have a wide range of eligible uses, including different forms of temporary housing assistance; housing repairs; housing replacement; and permanent housing construction. IHP funds may also be used for other needs assistance (ONA), including funeral, medical, dental, childcare, personal property, transportation, and other expenses. FEMA provides 100% of the housing assistance costs, but ONA is subject to a 75% federal and 25% state cost share. In addition, there is a limitation on the amount of financial assistance an individual or household may receive, with financial assistance including assistance to reimburse temporary lodging expenses; rent for alternate housing accommodations; home repairs and replacement; as well as ONA. Financial assistance for repairs and replacement may not exceed $34,900 (FY2019). Separately, financial assistance for ONA may not exceed $34,900 (FY2019). Financial assistance to rent alternate housing accommodations under Section 408 (c)(1)(A)(i) of the Stafford Act, however, is excluded from the cap. The maximum amount of financial assistance is adjusted annually to reflect changes in the Consumer Price Index. IHP assistance is intended to be temporary and is generally limited to a period of 18 months from the date of the declaration, but may be extended by FEMA. (Also see " Physical Disaster Loans—Residential SBA Disaster Loans Available to Homeowners and Renters " below for additional assistance for homeowners and renters.) Agency : Federal Emergency Management Agency Authority : 42 U.S.C. §5174 Regulation : 44 C.F.R. §§206.110–206.120 Phone : Office of Congressional Affairs, 202-646-4500 Website : https://www.fema.gov/media-library/assets/documents/24945 CFDA Program Numbers : 97.048 and 97.050 CRS Contact : Elizabeth Webster, 202-707-9197 Disaster Unemployment Assistance Disaster Unemployment Assistance (DUA) provides benefits to previously employed or self-employed individuals rendered jobless as a direct result of a major disaster and who are not eligible for regular federal or state unemployment compensation (UC). In certain cases, individuals who have no work history or are unable to work may also be eligible for DUA benefits. DUA is federally funded through FEMA, but is administered by the Department of Labor and state UC agencies. In general, individuals must apply for benefits within 30 days after the date the state announces availability of DUA benefits. When applicants have good cause, they may file claims after the 30-day deadline. This deadline may be extended; however, initial applications filed after the 26 th week following the declaration date will not be considered. When a reasonable comparative earnings history can be constructed, DUA benefits are determined in a similar manner to regular state UC benefit rules. The minimum weekly DUA benefit is required to be half of the average weekly UC benefit for the state where the disaster occurred. DUA assistance is available to eligible individuals as long as the major disaster continues, but no longer than 26 weeks after the disaster declaration. For more information, see CRS Report RS22022, Disaster Unemployment Assistance (DUA) , by Julie M. Whittaker. Agency: Department of Labor, Employment and Training Administration Authority: 42 U.S.C. §5177 Regulation: 20 C.F.R. §625; 44 C.F.R. §206.141 Contact: See listings of resources by state , https://www.careeronestop.org/localhelp/unemploymentbenefits/unemployment-benefits.aspx Website: http://ows.doleta.gov/unemploy/disaster.asp CFDA Program Number : 97.034 CRS Contact: Julie Whittaker, 202-707-2587 Dislocated Worker Activities The dislocated worker program helps fund training and related assistance to persons who have lost their jobs and are unlikely to return to their current jobs or industries. Of the funds appropriated, 80% are allotted by formula grants to states and local entities and 20% are reserved by the Secretary of Labor to fund a national reserve that supports national dislocated worker grants to states or local ent ities. One type of national emergency grant is Disaster Relief Employment Assistance, under which funds can be made available to states to employ dislocated workers in temporary jobs involving recovery after a national emergency. An individual may be employed for up to 12 months. There are no matching requirements for Workforce Innovation and Opportunity Act (WIOA) programs. Agency: Department of Labor, Employment and Training Administration Authority: 29 U.S.C. §3225 Regulation: 20 C.F.R. §671 Contact: See listings of state Dislocated Worker/Rapid Response Coordinators at http://www.doleta.gov/layoff/rapid_coord.cfm Website: https://www.doleta.gov/DWGs/eta_default.cfm CFDA Program Number : 17.278 CRS Contact: David H. Bradley, 202-707-7352 Physical Disaster Loans—Residential SBA Disaster Loans Available to Homeowners and Renters The majority of disaster loans provided by the Small Business Administration (SBA), approximately 80%, are made available to individuals and households. SBA disaster assistance is provided in the form of loans, not grants, and therefore must be repaid to the federal government. Homeowners, renters, and personal property owners located in a declared disaster area (and in contiguous counties) may apply to the SBA for loans to help recover losses from the disaster. SBA's Home Disaster Loan Program falls into two categories: personal property loans and real property loans. These loans cover only uninsured or underinsured property and primary residences. Loan maturities may be up to 30 years. Personal Property Loans A personal property loan provides a creditworthy homeowner or renter with up to $40,000 to repair or replace personal property items, such as furniture, clothing, or automobiles, damaged or lost in a disaster. These loans cover only uninsured or underinsured property and primary residences and cannot be used to replace extraordinarily expensive or irreplaceable items, such as antiques, recreational vehicles, or furs. Real Property Loans A creditworthy homeowner may apply for a "real property loan" of up to $200,000 to repair or restore the homeowner's primary residence to its predisaster condition. The loans may not be used to upgrade homes or build additions, unless upgrades or changes are required by city or county building codes. A real property loan may be increased by 20% for repairs to protect the damaged property from a similar disaster in the future. Agency: Small Business Administration Authority: 15 U.S.C. §636(b) Regulation: 13 C.F.R. §§123.200–123.204 Contact : Office of Congressional and Legislative Affairs, 202-205-6700 Website : https://disasterloan.sba.gov/ela/Information/TypesOfLoans CFDA Program Number : 59.008 CRS Contact : Bruce R. Lindsay, 202-707-3752 Cora Brown Fund This unique fund directs payments to individuals and groups for disaster-related needs that have not been or will not be met by government agencies or other organizations. A disaster survivor will normally receive no more than $2,000 from this fund in any one declared disaster unless the Assistant Administrator for the Disaster Assistance Directorate determines that a larger amount is in the best interest of the disaster victim and the federal government. There is no matching requirement for this program and no limitation on the time period in which assistance is available. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §5121 et seq. Regulation: 44 C.F.R. §206.181 Contact : Office of Congressional Affairs, 202-646-4500 Website : http://www.fema.gov/library/viewRecord.do?id=5037 CRS Contact: Bruce R. Lindsay, 202-707-3752 Crisis Counseling This program provides grants that enable states to offer crisis counseling services, when required, to victims of a federally declared major disaster for the purpose of relieving mental health problems caused or aggravated by the disaster or its aftermath. Assistance is short-term and community-oriented. Cost-share requirements are not imposed on this assistance. The regulations specify that program funding generally ends after nine months, but time extensions may be approved if requested by the state and approved by federal officials. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §5183 Regulation: 44 C.F.R. §206.171 Contact : Office of Congressional Affairs, 202-646-4500 Website: https://www.fema.gov/recovery-directorate/crisis-counseling-assistance-training-program CFDA Pr ogram Number : 97.032 CRS Contact: Sarah A. Lister, 202-707-7320 Disaster Legal Services Disaster Legal Services (DLS) are provided for free to low-income individuals who require them as a result of a major disaster, and the provision of services is "confined to the securing of benefits under the [Stafford] Act and claims arising out of a major disaster." Assistance may include help with insurance claims, drawing up new wills and other legal documents lost in the disaster, help with home repair contracts and contractors, and appeals of FEMA decisions. Neither the statute nor the regulations establish cost-share requirements or time limitations for DLS. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §5182 Regulation: 44 C.F.R. §206.164 Contact : Office of Congressional Affairs, 202-646-4500 Website: https://www.fema.gov/media-library/assets/documents/24413 CFDA Program Number : 97.033 CRS Contact: Elizabeth Webster, 202-707-9197 Disaster Case Management The Disaster Case Management (DCM) program partners case managers and disaster survivors to develop and implement Disaster Recovery Plans to address unmet needs. The DCM program is authorized under the Stafford Act. Following a presidentially declared major disaster that includes Individual Assistance (IA), the governor or tribal executive may request a grant to use DCM providers to supply services to survivors with long-term, disaster-caused unmet needs. The program is time-limited, and it shall not exceed 24 months from the date of the presidential major disaster declaration. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §5189d Contact: Office of Congressional Affairs, 202-646-4500 Website: https://www.fema.gov/media-library/assets/documents/101292 CFDA Program Number : 97.088 CRS Contact: Elizabeth Webster, 202-707-9197 Tax Relief The Internal Revenue Code (IRC) includes tax relief provisions that apply to individuals and businesses affected by federally declared disasters, and the following are some examples. Individuals located in affected areas are allowed extra time (four years instead of the general two) to replace homes due to involuntary conversion (e.g., destruction from wind or floods, theft, or property ordered to be demolished) and still defer any gain. Taxpayers may also be able to deduct personal casualty losses attributable to federally declared disasters, subject to certain limitations. Qualifying disaster relief payments received by affected individuals are not subject to tax. The Internal Revenue Service also has the authority to provide some relief, including the extension of tax filing deadlines. In addition to these and other permanent tax relief provisions, special temporary provisions have been enacted for certain disasters. The 2017 tax revision ( P.L. 115-97 ) provided tax relief related to 2016 and 2017 disasters. These measures were expanded to cover the California wildfires in the Bipartisan Budget Act of 2018 ( P.L. 115-123 ). Agency : Internal Revenue Service Authority : Various provisions throughout the Internal Revenue Code, Title 26 U.S.C., including §§123, 139, 165, 402, 408, 1033, 6654, 7508A Regulation : No specific regulation Contact : Congressional Liaison, 202-317-6985 Website : http://www.irs.gov/uac/Tax-Relief-in-Disaster-Situations CRS Contact s : Molly Sherlock, 202-707-7797 Assistance for State, Territorial, and Local Governments Public Assistance Grants Authorized by multiple sections of the Stafford Act, the Public Assistance (PA) Grant Program is FEMA's primary form of financial assistance for state and local governments. The PA Program provides grant assistance for many eligible purposes, including the following: Emergency work, as authorized by Sections 403, 407, and 502 of the Stafford Act, which provide for the removal of debris and emergency protective measures, such as the establishment of temporary shelters and emergency power generation. Permanent work, as authorized by Section 406, which provides for the repair, replacement, or restoration of disaster-damaged, publicly owned facilities and the facilities of certain private nonprofit organizations (PNPs). At its discretion, FEMA may provide assistance for hazard mitigation measures that are not required by applicable codes and standards. As a condition of PA assistance, applicants must obtain and maintain insurance on their facilities for similar future disasters. Management costs, as authorized by Section 324, which reimburses some of the applicant's administrative expenses incurred managing the totality of the PA Program's projects and grants. PNPs are generally eligible for permanent work assistance if they provide a governmental type of service, though PNPs not providing a "critical" service must first apply to the SBA for loan assistance for facility projects. The federal government provides a minimum of 75% of the cost of eligible assistance, and this cost share can rise if certain criteria are met. Funding for the PA Program comes through discretionary appropriations to the Disaster Relief Fund. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §§5170b, 5172, 5173, 5189f, 5192 Regulation: 44 C.F.R. §206, subparts G, H, I Contact : Office of Congressional Affairs, 202-646-4500 Website: http://www.fema.gov/public-assistance-local-state-tribal-and-non-profit CFDA Program Number : 97.036 CRS Contact: Natalie Keegan, 202-707-9569 Hazard Mitigation Grant Program The Hazard Mitigation Grant Program (HMGP) provides grants to states for implementing mitigation measures after a disaster and to provide funding for previously identified mitigation measures to lessen future damage and loss of life. The federal government provides up to 75% of the cost share of eligible projects. Historically, the amount available for HMGP awards is established by a scale that authorizes three tiers of awards: 15% of the total of other Stafford Act assistance in a state for a major disaster in which no more than $2 billion is provided; 10% for assistance that ranges from more than $2 billion to $10 billion; and 7.5% for a major disaster that involves Stafford Act assistance from more than $10 billion to $35.3 billion. Funding for HMGP comes through discretionary appropriations to the Disaster Relief Fund. The amount of funding provided can be increased if the state has an approved enhanced mitigation plan. HMGP funding is only awarded with a major disaster declaration, not an emergency declaration. However, during FY2015, FY2017, and FY2018, Congress directed that HMGP grants be made available with fire management assistance grants. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §5170c Regulation: 44 C.F.R. §§206.430–206.440 Contact : Office of Congressional Affairs , 202-646-4500 Website : http://www.fema.gov/hazard-mitigation-grant-program CFDA Program Number : 97.039 CRS Contact: Diane P. Horn, 202-707-3472 Pre-Disaster Mitigation Grants The Pre-Disaster Mitigation (PDM) Grant Program provides grants and technical assistance to states, territories, and local communities for cost-effective hazard mitigation activities that complement a comprehensive hazard mitigation program and reduce injuries, loss of life, and damage and destruction of property. Through FY2018, a minimum of the lesser of $575,000 or 1.0% of appropriated funds was provided to a state or local government, with assistance capped at 15% of appropriated funds. Federal funds generally comprise 75% of the cost of approved mitigation projects, except for small impoverished communities that may receive up to 90% of the cost. Funding for the PDM Program changed significantly with the passage of the Disaster Recovery Reform Act of 2018 (DRRA). DRRA authorizes the National Public Infrastructure Pre-Disaster Mitigation Fund, 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: 403 (essential assistance), 406 (repair, restoration, and replacement of damaged facilities), 407 (debris removal), 408 (federal assistance to individuals and households), 410 (unemployment assistance), 416 (crisis counseling assistance and training), and 428 (public assistance program alternative program procedures). These changes may increase the focus on funding public infrastructure projects that improve community resilience before a disaster occurs, although 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. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §5133 Regulation: 44 C.F.R. §201 Contact : Office of Congressional Affairs, 202-646-4500 Website: http://www.fema.gov/pre-disaster-mitigation-grant-program CFDA Program Number : 97.047 CRS Contact: Diane P. Horn, 202-707-3472 Community Disaster Loans The Community Disaster Loan (CDL) program provides loans to local governments that have suffered substantial loss of tax and other revenue in areas included in a major disaster declaration. Typically, the loan may not exceed 25% of the local government's annual operating budget for the fiscal year of the disaster. The limit is 50% if the local government lost 75% or more of its annual operating budget. A loan may not exceed $5 million, and there is no matching requirement. The statute does not impose time limitations on the assistance, but the normal term of a loan is five years. The statute provides that the repayment requirement is cancelled if local government revenues are not sufficient to meet operations expenses during a three-fiscal-year period after a disaster. The governor's authorized representative must officially approve the application and funds must be available in the Disaster Assistance Direct Loan Program (DADLP) account. In P.L. 115-72 , Congress provided up to $4.9 billion for the CDL program to assist local governments in providing essential services as a result of Hurricanes Harvey, Irma, or Maria. However, this legislation departed from the traditional CDL program framework by giving the Secretary of Homeland Security (in consultation with the Secretary of the Treasury) broad authority over lending terms, eligible uses, and criteria for loan cancelation, among other program elements. As a result, this CDL-type program operates differently from the traditional program. For more information, see CRS Insight IN11106, Community Disaster Loans: Homeland Security Issues in the 116th Congress , by Michael H. Cecire. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §5184 Regulation: 44 C.F.R. §§206.360–206.378 Contact : Office of Congressional Affairs, 202-646-4500 CFDA Program Number : 97.030 CRS Contact: Michael H. Cecire, 202-707-7109 Fire Management Assistance Grant Program This program provides grants to state and local governments to aid states and their communities with the mitigation, management, and control of fires burning on publicly or privately owned forests or grasslands. The federal government provides 75% of the costs associated with fire management projects, but funding is limited to calculations of the "fire cost threshold" for each state. No time limitation is applied to the program. For more information, see CRS Report R43738, Fire Management Assistance Grants: Frequently Asked Questions , by Bruce R. Lindsay and Katie Hoover. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §5187 Regulation: 44 C.F.R. §§204.1–204.64 Contact : Office of Congressional Affairs, 202-646-4500 Website: https://www.fema.gov/fire-management-assistance-grant-program CFDA Program Number : 97.046 CRS Contact: Bruce R. Lindsay, 202-707-3752 Oil Spill Liability Trust Fund Congress created the Oil Spill Liability Trust Fund (OSLTF) in 1986. Subsequent laws authorized the OSLTF taxing authority, appropriations from the fund, and eligible uses for the fund. The OSLTF complements the Oil Pollution Act of 1990 (OPA; P.L. 101-380 ), which established a new federal oil spill liability framework, replaced existing federal liability frameworks, and amended the existing Clean Water Act oil spill response authorities. In addition, OPA transferred monies into the OSLTF from existing liability funds. The OSLTF may be used, among other purposes, to fund oil spill response activities and to compensate individuals, businesses, and governments for applicable economic damages resulting from an oil spill. Potential damages include injury or loss of property and loss of profits or earning capacity. OPA established a claims process for compensating parties affected by an oil spill. In general, claims must be presented first to the party responsible for the spill, but specific circumstances (e.g., the responsible party is unknown) allow persons to present a claim directly to the OSLTF. Agency : National Pollution Funds Center (part of the U.S. Coast Guard) Authority : 26 U.S.C. §9509 and 33 U.S.C. §2712 Regulation : 33 C.F.R. §136 Contact : Office of Legislative Affairs, 202-245-0520 Website : http://www.uscg.mil/npfc/ CRS Contact : Jonathan L. Ramseur, 202-707-7919 Assistance for Small Businesses and Nonprofit Organizations Economic Injury Disaster Loans This program assists small businesses and nonprofits suffering economic injury as a result of disasters by offering loans and loan guarantees. Businesses must be located in disaster areas declared by the President, the Small Business Administration, or the Secretary of Agriculture. There is no matching requirement in this program. The maximum loan amount is $2 million. Loan terms may extend for up to 30 years. The application period is announced at the time of the disaster declaration. For more information, see CRS Report R41309, The SBA Disaster Loan Program: Overview and Possible Issues for Congress , by Bruce R. Lindsay. Agency: Small Business Administration Authority: 15 U.S.C. §636(b) Regulation: 13 C.F.R. §§123.300–123.303 Contact : Office of Congressional Affairs, 202-205-6700 Website : https://disasterloan.sba.gov/ela/Information/EIDLLoans CFDA Program Number : 59.008 CRS Contact: Bruce R. Lindsay, 202-707-3752 Physical Disaster Loans This program provides loans to businesses and nonprofits in declared disaster areas for uninsured physical damage and losses. The maximum loan amount is $2 million. Loan terms may extend for up to 30 years. There is no matching requirement in this program. For more information, see CRS Report R41309, The SBA Disaster Loan Program: Overview and Possible Issues for Congress , by Bruce R. Lindsay. Agency: Small Business Administration Authority: 15 U.S.C. §636(b) Regulation: 13 C.F.R. §§123.200–123.204 Contact : Office of Congressional Affairs, 202-205-6700 Website: https://disasterloan.sba.gov/ela/Information/BusinessPhysicalLoans CFDA Program Number : 59.008 CRS Contact: Bruce R. Lindsay, 202-707-3752 Emergency Loans for Farms When a county has been declared a disaster area by either the President or the Secretary of Agriculture, agricultural producers in that county may become eligible for low-interest emergency disaster (EM) loans available through the U.S. Department of Agriculture's Farm Service Agency. Producers in counties that are contiguous to a county with a disaster designation also become eligible for an EM loan. EM loan funds may be used to help eligible farmers, ranchers, and aquaculture producers recover from production losses (e.g., when the producer suffers a significant loss of an annual crop) or from physical losses (e.g., repairing or replacing damaged or destroyed structures or equipment, or replanting permanent crops, such as orchards). A qualified applicant can then borrow up to 100% of actual production or physical losses (not to exceed $500,000) at a below-market interest rate. For more information see CRS Report RS21212, Agricultural Disaster Assistance , by Megan Stubbs. Agency: Department of Agriculture, Farm Service Agency Authority: 7 U.S.C. §1961 Regulation: 7 C.F.R. §764 Contact : Legislative Liaison Staff, 202-720-7095 Website: https://www.fsa.usda.gov/programs-and-services/farm-loan-programs/emergency-farm-loans/index CFDA Program Number : 10.404 CRS Contact: Megan Stubbs, 202-707-8707 National Flood Insurance Program Since 1968, the federal government has pursued a comprehensive flood risk management strategy designed to (1) identify and map flood-prone communities across the country (flood hazard mapping); (2) encourage property owners in NFIP participating communities to purchase insurance as a protection against flood losses (flood insurance); and (3) require communities in designated flood risk zones to adopt and enforce approved floodplain management ordinances to reduce future flood risk to new construction in regulated floodplains (floodplain management). The Federal Insurance and Mitigation Administration (FIMA), a part of FEMA, manages the NFIP. For more information, see CRS Report R44593, Introduction to the National Flood Insurance Program (NFIP) , by Diane P. Horn and Baird Webel, and CRS In Focus IF11023, Selected Issues for National Flood Insurance Program (NFIP) Reauthorization and Reform , by Diane P. Horn. Agency: Federal Emergency Management Agency Authority: 42 U.S.C. §4001 et seq. Regulation: 44 C.F.R. §59.1–§82.21 Contact : Office of Congressional Affairs, 202-646-4500 Website: http://www.fema.gov/national-flood-insurance-program CFDA Program Number : 97.022 CRS Contact : Diane Horn, 202-707-3472 General Assistance Programs In addition to programs described above that provide targeted assistance to individuals, states, territories, local governments, and businesses specifically affected by disasters, other general assistance programs may be useful to communities in disaster situations. For example, individuals who lose income, employment, or health insurance may become eligible for programs that are not specifically intended as disaster relief, such as cash assistance under the Temporary Assistance for Needy Families (TANF) program, job training under the Workforce Investment Act, Medicaid, or the State Children's Health Insurance Program (S-CHIP). Likewise, state or local officials have the discretion to use funds under programs such as the Social Services Block Grant or Community Development Block Grant to meet disaster-related needs, even though these programs were not established specifically for such purposes. Other agencies may offer assistance to state and local governments, including the Economic Development Administration and the Army Corps of Engineers. For businesses, however, only the disaster programs administered by the Small Business Administration are generally applicable. Numerous other federal programs could offer disaster relief, but specific eligibility criteria or other program rules might make it less likely that they would actually be used. Moreover, available funds might already be obligated for ongoing program activities. To the extent that federal agencies have discretion in the administration of programs, some agencies may choose to adapt these non-targeted programs for use in disaster situations. Also, Congress may choose to provide additional funds through emergency supplemental appropriations for certain general assistance programs, specifically for use after a disaster. CRS analysts and program specialists can help provide information regarding general assistance programs that might be relevant to a given disaster situation. CRS appropriations reports may have information on disaster assistance within particular federal agencies. These reports also list CRS's key policy staff by their program area and agency expertise. Other Sources of Information Selected CRS Reports Disaster Assistance CRS Report R41981, Congressional Primer on Responding to Major Disasters and Emergencies , by Bruce R. Lindsay and Elizabeth M. Webster CRS Report R41101, FEMA Disaster Cost-Shares: Evolution and Analysis , by Natalie Keegan and Elizabeth M. Webster CRS Report RL33330, Community Development Block Grant Funds in Disaster Relief and Recovery , by Eugene Boyd CRS Report RL33579, The Public Health and Medical Response to Disasters: Federal Authority and Funding , by Sarah A. Lister CRS Report R44593, Introduction to the National Flood Insurance Program (NFIP) , by Diane P. Horn and Baird Webel CRS Insight IN10450, Private Flood Insurance and the National Flood Insurance Program (NFIP) , by Baird Webel and Diane P. Horn CRS Report R45099, National Flood Insurance Program: Selected Issues and Legislation in the 115th Congress , by Diane P. Horn CRS In Focus IF10730, Tax Policy and Disaster Recovery , by Molly F. Sherlock CRS Report R41884, Considerations for a Catastrophic Declaration: Issues and Analysis , by Bruce R. Lindsay CRS Report R43784, FEMA's Disaster Declaration Process: A Primer , by Bruce R. Lindsay CRS Report R43738, Fire Management Assistance Grants: Frequently Asked Questions , by Bruce R. Lindsay and Katie Hoover CRS Report R45085, FEMA Individual Assistance Programs: In Brief , by Shawn Reese CRS Report R45238, FEMA and SBA Disaster Assistance for Individuals and Households: Application Process, Determinations, and Appeals , by Bruce R. Lindsay and Shawn Reese Disaster Assistance to Individuals, Families, and Businesses CRS Report RS22022, Disaster Unemployment Assistance (DUA) , by Julie M. Whittaker CRS Report R41309, The SBA Disaster Loan Program: Overview and Possible Issues for Congress , by Bruce R. Lindsay CRS Report RS21212, Agricultural Disaster Assistance , by Megan Stubbs CRS Report R42854, Emergency Assistance for Agricultural Land Rehabilitation , by Megan Stubbs CRS In Focus IF10565, Federal Disaster Assistance for Agriculture , by Megan Stubbs CRS In Focus IF10730, Tax Policy and Disaster Recovery , by Molly F. Sherlock CRS Report R44808, Federal Disaster Assistance: The National Flood Insurance Program and Other Federal Disaster Assistance Programs Available to Individuals and Households After a Flood , by Diane P. Horn CRS Insight IN11094, The Evolving Use of Disaster Housing Assistance and the Roles of the Disaster Housing Assistance Program (DHAP) and the Individuals and Households Program (IHP) , by Elizabeth M. Webster CRS Insight IN11054, Disaster Housing Assistance: Homeland Security Issues in the 116th Congress , by Elizabeth M. Webster CRS Insight IN11106, Community Disaster Loans: Homeland Security Issues in the 116th Congress , by Michael H. Cecire Federal Agency Websites Note: Because not all agencies have complete, up-to-date information available on the internet, in particular during and immediately after a disaster, congressional users are encouraged to contact the appropriate CRS program analysts or department or agency program officers for more complete, timely information. USA.gov http://www.USA.gov/ Many federal agencies have established websites specifically for responding to disasters. Some agencies maintain websites with comprehensive information about their disaster assistance programs, whereas others supply only limited information; most list contact phone numbers. An A-Z index of U.S. government departments and agencies is available at the website above. FEMA Website http://www.fema.gov From its website, FEMA offers regular updates on recovery efforts in areas under a major disaster declaration. Information on a specific disaster may include a listing of declared counties and contact information for local residents. Disaster Assistance.gov http://www.disasterassistance.gov/ DisasterAssitance.gov provides information on how help might be obtained from the U.S. government before, during, and after a disaster. The website includes tools to find, apply for, and check the status of assistance by category or agency. The website also includes disaster-related news feeds and information on community resources. Assistance Listings at beta.SAM.gov https://beta.SAM.gov/ Official descriptions of more than 2,200 federal assistance programs, including disaster and recovery grants and loans, can be found on beta.SAM.gov. The website is currently in beta, and it houses federal assistance listings previously found on the now-retired Catalog of Federal Domestic Assistance (CFDA). For programs summarized in this report, CFDA program numbers are given (which are searchable at the "Assistance Listings" domain at beta.SAM.gov). Full assistance listing descriptions, updated by departments and agencies, cover authorizing legislation, objectives, and eligibility and compliance requirements. For current appropriations and additional information, users can contact CRS analysts, or departments and agencies.

This report is designed to assist Members of Congress and their staff as they address the needs of their states, communities, and constituents after a disaster. It includes a summary of federal programs that provide federal disaster assistance to individual survivors, states, territories, local governments, and nongovernmental entities following a natural or man-made disaster. A number of federal agencies provide financial assistance through grants, loans, and loan guarantees to assist in the provision of critical services, such as temporary housing, counseling, and infrastructure repair. The programs summarized in this report fall into two broad categories. First, there are programs specifically authorized for use during situations occurring because of a disaster. Most of these programs are administered by the Federal Emergency Management Agency (FEMA). Second are general assistance programs that in some instances may be used either in disaster situations or to meet other needs unrelated to a disaster. Many federal agencies, including the Departments of Health and Human Services (HHS) and Housing and Urban Development (HUD), administer programs that may be included in the second category. The programs in the report are primarily organized by recipient: individuals, state and local governments, nongovernmental entities, or businesses. These programs address a variety of short-term needs, such as food and shelter, and long-term needs, such as the repair of public utilities and public infrastructure. The report also includes a list of Congressional Research Service (CRS) reports on disaster assistance as well as relevant federal agency websites that provide information on disaster responses, updates on recovery efforts, and resources on federal assistance programs. This report will be updated as significant legislative or administrative changes occur.

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Introduction The World Trade Organization (WTO) is an international organization that administers the trade rules and agreements negotiated by its 164 members to eliminate trade barriers and create nondiscriminatory rules to govern trade. It also serves as an important forum for resolving trade disputes. The United States was a major force behind the establishment of the WTO in 1995 and the rules and agreements that resulted from the Uruguay Round of multilateral trade negotiations (1986-1994). The WTO encompassed and expanded on the commitments and institutional functions of the General Agreement on Tariffs and Trade (GATT), which was established in 1947 by the United States and 22 other nations. Through the GATT and WTO, the United States and other countries sought to establish a more open, rules-based trading system in the postwar era, with the goal of fostering international economic cooperation, stability, and prosperity worldwide. Today, the vast majority of world trade, approximately 98%, takes place among WTO members. The evolution of U.S. leadership in the WTO and the institution's future agenda have been of interest to Congress. The terms set by the WTO agreements govern the majority of U.S. trading relationships. Some 65% of U.S. global trade is with countries that do not have free trade agreements (FTAs) with the United States, including China, the European Union (EU), India, and Japan, and thus rely on the terms of WTO agreements. Congress has recognized the WTO as the "foundation of the global trading system" within U.S. trade legislation and plays a direct legislative and oversight role over WTO agreements. U.S. FTAs also build on core WTO agreements. While the U.S. Trade Representative (USTR) represents the United States at the WTO, Congress holds constitutional authority over foreign commerce and establishes U.S. trade negotiating objectives and principles and implements U.S. trade agreements through legislation. U.S. priorities and objectives for the GATT/WTO are reflected in trade promotion authority (TPA) legislation since 1974. Congress also has oversight of the USTR and other executive branch agencies that participate in WTO meetings and enforce WTO commitments. The WTO's effectiveness as a negotiating body for broad-based trade liberalization has come under intensified scrutiny, as has its role in resolving trade disputes. The WTO has often struggled to reach consensus over issues that can place developed against developing country members (such as agricultural subsidies, industrial goods tariffs, and intellectual property rights protection). It has also struggled to address newer trade barriers, such as digital trade restrictions and the role of state-owned enterprises (SOEs) in international commerce, which have become more prominent in the years since the WTO was established. Global supply chains and advances in technology have transformed global commerce, but trade rules have failed to keep up with the pace of change; since 1995 WTO members have been unable to reach consensus for a new comprehensive multilateral agreement. As a result, many countries have turned to negotiating FTAs with one another outside the WTO to build on core WTO agreements and advance trade liberalization and new rules. Plurilateral negotiations, involving subsets of WTO members rather than all members, are also becoming a more popular forum for tackling newer issues on the global trade agenda. The most recent round of WTO negotiations, the Doha Round, began in November 2001, but concluded with no clear path forward, leaving multiple unresolved issues after the 10 th Ministerial conference in 2015. Efforts to build on current WTO agreements outside of the Doha agenda continue. While WTO members have made some progress toward determining future work plans, no major deliverables or negotiated outcomes were announced at the 11 th Ministerial conference in December 2017 and no consensus Ministerial Declaration was released. Many have concerns that the growing use of protectionist trade policies by developed and developing countries, recent U.S. tariff actions and counterretaliation, and escalating trade disputes between major economies may further strain the multilateral trading system. The WTO is faced with resolving several significant pending disputes, which involve the United States, and resolving debates about the role and procedures of its Appellate Body, which reviews appeals of dispute cases. In a break from past Administrations' approaches, U.S. officials have recently expressed doubt over the value of the WTO institution to the U.S. economy and questioned whether leadership in the organization is a benefit or cost to the United States. While USTR Robert Lighthizer acknowledged at the most recent Ministerial that the WTO is an "important institution" that does an "enormous amount of good," the Trump Administration has expressed deep skepticism toward multilateral trade deals, including those negotiated within the WTO. In remarks to the Asia-Pacific Economic Cooperation (APEC) forum in November 2017, President Trump stated the following: "Simply put, we have not been treated fairly by the World Trade Organization.... What we will no longer do is enter into large agreements that tie our hands, surrender our sovereignty, and make meaningful enforcement practically impossible." President Trump has also at times threatened to withdraw the United States from the WTO. In addition, amid concerns about "judicial overreach" in WTO dispute findings, the Administration is currently withholding approval for judge appointments to the WTO Appellate Body—a practice that began under the Obama Administration. While many of the U.S. concerns are not new and are shared by other trading partners, questions remain about U.S. priorities for improving the system. With growing debate over the role and future direction of the WTO, a number of issues may be of interest to Congress, including the value of U.S. membership and leadership in the WTO, whether new U.S. negotiating objectives or oversight hearings are needed to address prospects for new WTO reforms and rulemaking, and the relevant authorities and the impact of potential WTO withdrawal on U.S. economic and foreign policy interests. This report provides background history of the WTO, its organization, and current status of negotiations. The report also explores concerns some have regarding the WTO's future direction and key policy issues for Congress. Background Following World War II, nations throughout the world, led by the United States and several other developed countries, sought to establish a more open and nondiscriminatory trading system with the goal of raising the economic well-being of all countries. Aware of the role of tit-for-tat trade barriers resulting from the U.S. Smoot-Hawley tariffs in exacerbating the economic depression in the 1930s, including severe drops in world trade, global production, and employment, the countries that met to discuss the new trading system considered open trade as essential for peace and economic stability. The intent of these negotiators was to establish an International Trade Organization (ITO) to address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. Unable to secure approval for such a comprehensive agreement, however, they reached a provisional agreement on tariffs and trade rules, known as the GATT, which went into effect in 1948. This provisional agreement became the principal set of rules governing international trade for the next 47 years, until the establishment of the WTO. General Agreement on Tariffs and Trade (GATT) The GATT was neither a formal treaty nor an international organization, but an agreement between governments, to which they were contracting parties. The GATT parties established a secretariat based in Geneva, but it remained relatively small, especially compared to the staffs of international economic institutions created by the postwar Bretton Woods conference—the International Monetary Fund and World Bank. Based on a mission to promote trade liberalization, the GATT became the principal set of rules and disciplines governing international trade. The core principles and articles of the GATT (which were carried over to the WTO) committed the original 23 members, including the United States, to lower tariffs on a range of industrial goods and to apply tariffs in a nondiscriminatory manner—the so-called most-favored nation or MFN principle (see text box ). By having to extend the same benefits and concessions to members, the economic gains from trade liberalization were magnified. Exceptions to the MFN principle are allowed, however, including for preferential trade agreements outside the GATT/WTO covering "substantially" all trade among members and for nonreciprocal preferences for developing countries. GATT members also agreed to provide "national treatment" for imports from other members. For example, countries could not establish one set of health and safety regulations on domestic products while imposing more stringent regulations on imports. Although the GATT mechanism for the enforcement of these rules or principles was generally viewed as largely ineffective, the agreement nonetheless brought about a substantial reduction of tariffs and other trade barriers. The eight "negotiating rounds" of the GATT succeeded in reducing average tariffs on industrial products from between 20%-30% to just below 4%, facilitating a 14-fold increase in world trade over its 47-year history (see Table 1 ). When the first round concluded in 1947, 23 nations had participated, which accounted for a majority of global trade at the time. When the Uruguay Round establishing the WTO concluded in 1994, 123 countries had participated and the amount of trade affected was nearly $3.7 trillion. As of the end of 2018, there are 164 WTO members, and trade flows totaled $22.6 trillion in 2017. During the first trade round held in Geneva in 1947, members negotiated a 20% reciprocal tariff reduction on industrial products, and made further cuts in subsequent rounds. The Tokyo Round represented the first attempt to reform the trade rules that had existed unchanged since 1947 by including issues and policies that could distort international trade. As a result, Tokyo Round negotiators established several plurilateral codes dealing with nontariff issues such as antidumping, subsidies, technical barriers to trade, import licensing, customs valuation, and government procurement. Countries could choose which, if any, of these codes they wished to adopt. While the United States agreed to all of the codes, the majority of GATT signatories, including most developing countries, chose not to sign the codes. The Uruguay Round, which took eight years to negotiate (1986-1994), proved to be the most comprehensive GATT trade round. This round further lowered tariffs in industrial goods and liberalized trade in areas that had eluded previous negotiators, notably agriculture and textiles and apparel. It also extended rules to new areas such as services, trade-related investment measures, and intellectual property rights. It created a trade policy review mechanism, which periodically examines each member's trade policies and practices. Significantly, the Uruguay Round created the WTO as a legal international organization charged with administering a revised and stronger dispute settlement mechanism—a principal U.S. negotiating objective (see text box )—as well as many new trade agreements adopted during the long negotiation. For the most part, the Uruguay Round agreements were accepted as a single package or single undertaking , meaning that all participants and future WTO members were required to subscribe to all of the agreements. World Trade Organization The WTO succeeded the GATT in 1995. In contrast to the GATT, the WTO was created as a permanent organization. But as with the GATT, the WTO secretariat and support staff is small by international standards and lacks independent power. The power to write rules and negotiate future trade liberalization resides specifically with the member countries, and not the WTO director-general (DG) or staff. Thus, the WTO is referred to as a member-driven organization. Decisions within the WTO are made by consensus, although majority voting can be used in limited circumstances. The highest-level body in the WTO is the Ministerial Conference, which is the body of political representatives (trade ministers) from each member country ( Figure 1 ). The body that oversees the day-to-day operations of the WTO is the General Council, which consists of a representative from each member country. Many other councils and committees deal with particular issues, and members of these bodies are also national representatives. In general, the WTO has three broad functions: administering the rules of the trading system; establishing new rules through negotiations; and resolving disputes between member states. Administering Trade Rules The WTO administers the global rules and principles negotiated and signed by its members. The main purpose of the rules is "to ensure that trade flows as smoothly, predictably, and freely as possible." WTO rules and agreements are essentially contracts that bind governments to keep their trade policies within agreed limits. A number of fundamental principles guide WTO rules. In general, as with the GATT, these key principles are nondiscrimination and the notion that freer trade through the gradual reduction of trade barriers strengthens the world economy and increases prosperity. The WTO agreements apply the GATT principles of nondiscrimination as discussed above: MFN treatment and national treatment. The trade barriers concerned include tariffs, quotas, and a growing range of nontariff measures, such as product standards, food safety measures, subsidies, and discriminatory domestic regulations. The fundamental principle of reciprocity is also behind members' aim of "entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations." Transparency is another key principle of the WTO, which aims to reduce information asymmetry in markets, ensure trust, and, therefore, foster greater stability in the global trading system. Transparency commitments are incorporated into individual WTO agreements. Active participation in various WTO committees also aims to ensure that agreements are monitored and that members are held accountable for their actions. For example, members are required to publish their trade practices and policies and notify new or amended regulations to WTO committees. Regular trade policy reviews of each member's trade policies and practices provide a deeper dive into an economy's implementation of its commitments—see " Trade Policy Review Mechanism (Annex 3) ." In addition, the WTO's annual trade monitoring report takes stock of trade-restrictive and trade-facilitating measures of the collective body of WTO members. While opening markets can encourage competition, innovation, and growth, it can also entail adjustments for workers and firms. Trade liberalization can also be more difficult for the least-developed countries (LDCs) and countries transitioning to market economies. WTO agreements thus allow countries to lower trade barriers gradually. Developing countries and sensitive sectors in particular are usually given longer transition periods to fulfill their obligations; developing countries make up about two-thirds of the WTO membership—WTO members self-designate developing country status. The WTO also supplements this so-called "special and differential" treatment (SDT) for developing countries with trade capacity-building measures to provide technical assistance and help implement WTO obligations, and with permissions for countries to extend nonreciprocal, trade preference programs. In WTO parlance, when countries agree to open their markets further to foreign goods and services, they "bind" their commitments or agree not to raise them. For goods, these bindings amount to ceilings on tariff rates. A country can change its bindings, but only after negotiating with its trading partners, which could entail compensating them for loss of trade. As shown in Figure 2 , one of the achievements of the Uruguay Round was to increase the amount of trade under binding commitments. Bound tariff rates are not necessarily the rates WTO members apply in practice to imports from trading partners; so-called applied MFN rates can be lower than bound rates, as reflected in tariff reductions under the GATT. Figure 3 shows average applied MFN tariffs worldwide. In 2017, the United States simple average MFN tariff was 3.4%. A key issue in the Doha Round for the United States was lowering major developing countries' relatively high bound tariffs to below their applied rates in practice to achieve commercially meaningful new market access. Promising not to raise a trade barrier can have a significant economic effect because the promise provides traders and investors certainty and predictability in the commercial environment. A growing body of economic literature suggests certainty in the stability of tariff rates may be just as important for increasing global trade as reduction in trade barriers. This proved particularly important during the 2009 global economic downturn. Unlike in the 1930s, when countries reacted to slumping world demand by raising tariffs and other trade barriers, the WTO reported that its 153 members (at the time), accounting for 90% of world trade, by and large did not resort to protectionist measures in response to the crisis. The promotion of fair and undistorted competition is another important principle of the WTO. While the WTO is often described as a "free trade" organization, numerous rules are concerned with ensuring transparent and nondistorted competition. In addition to nondiscrimination, MFN treatment and national treatment concepts aim to promote "fair" conditions of trade. WTO rules on subsidies and antidumping in particular aim to promote fair competition in trade through recourse to trade remedies, or temporary restriction of imports, in response to alleged unfair trade practices—see " Trade Remedies ." For example, when a foreign company receives a prohibited subsidy for exporting as defined in WTO agreements, WTO rules allow governments to impose duties to offset any unfair advantage found to cause injury to their domestic industries. The scope of the WTO is broader than the GATT because, in addition to goods, it administers multilateral agreements on agriculture, services, intellectual property, and certain trade-related investment measures. These newer rules in particular are forcing the WTO and its dispute settlement system to deal with complex issues that go beyond tariff border measures. Establishing New Rules and Trade Liberalization through Negotiations As the GATT did for 47 years, the WTO provides a negotiating forum where members reduce barriers and try to sort out their trade problems. Negotiations can involve a few countries, many countries, or all members. As part of the post-Uruguay Round agenda, negotiations covering basic telecommunications and financial services were completed under the auspices of the WTO in 1997. Selected WTO members also negotiated deals to eliminate tariffs on certain information technology products and improve rules and procedures for government procurement. A recent significant accomplishment was the WTO Trade Facilitation Agreement in 2017, addressing customs and logistics barriers. The latest round of multilateral negotiations, the Doha Development Agenda (DDA), or Doha Round, launched in 2001, has achieved limited progress to date, as the agenda proved difficult and contentious. Despite a lack of consensus on its future, many view the round as effectively over. The negotiations stalled over issues such as reducing domestic subsidies and opening markets further in agriculture, industrial tariffs, nontariff barriers, services, intellectual property rights, and SDT for developing countries. The negotiations exposed fissures between developed countries, led by the United States and the EU, on the one hand, and developing countries, led by China, Brazil, and India, on the other hand, who have come to play a more prominent role in global trade. The inability of countries to achieve the objectives of the Doha Round prompted many to question the utility of the WTO as a negotiating forum, as well as the practicality of conducting a large-scale negotiation involving 164 participants with consensus and the single undertaking as guiding principles. At the same time, many proposals have been advanced for moving forward from Doha and making the WTO a stronger forum for negotiations in the future. (See " Policy Issues and Future Direction .") The WTO arguably has been more successful in the negotiation of discrete items to which not all parties must agree or be bound (see " Plurilateral Agreements (Annex 4) "). Some view these plurilaterals as a more promising negotiating approach for the WTO moving forward given their flexibility, as they can involve subsets of more "like-minded" partners and advance parts of the global trade agenda. Some experts have raised concerns, however, that this approach could lead to "free riders"—those who benefit from the agreement but do not make commitments—for agreements on an MFN basis, or otherwise, could isolate some countries who do not participate and may face new trade restrictions or disadvantages as a result. Others argue that only though the single undertaking approach to negotiations can there be trade-offs that are sufficient to bring all members on board. Resolving Disputes The third function of the WTO is to provide a mechanism to enforce its rules and settle trade disputes. A central goal of the United States during the Uruguay Round negotiations was to strengthen the dispute settlement mechanism that existed under the GATT. While the GATT's process for settling disputes between member countries was informal, ad hoc, and voluntary, the WTO dispute settlement process is more formalized and enforceable. Under the GATT, panel proceedings could take years to complete; any defending party could block an unfavorable ruling; failure to implement a ruling carried no consequence; and the process did not cover all the agreements. Under the WTO, there are strict timetables—though not always followed—for panel proceedings; the defending party cannot block rulings; there is one comprehensive dispute settlement process covering all the agreements; and the rulings are enforceable. WTO adjudicative bodies can authorize retaliation if a member fails to implement a ruling or provide compensation. Yet, under both systems, considerable emphasis is placed on having the member countries attempt to resolve disputes through consultations and negotiations, rather than relying on formal panel rulings. See " Dispute Settlement Understanding (DSU) " for more detail on WTO procedures and dispute trends. The United States and the WTO The statutory basis for U.S. membership in the WTO is the Uruguay Round Agreements Act (URAA, P.L. 103-465 ), which approved the trade agreements resulting from the Uruguay Round. The legislation contained general provisions on approval and entry into force of the Uruguay Round Agreements, and the relationship of the agreements to U.S. laws (Section 101 of the act); authorities to implement the results of current and future tariff negotiations (Section 111 of the act); oversight of activities of the WTO (Sections 121-130 of the act); procedures regarding implementation of dispute settlement proceedings affecting the United States (Section 123 of the act); objectives regarding extended Uruguay Round negotiations; statutory modifications to implement specific agreements, including the following: Antidumping Agreement; Agreement on Subsidies and Countervailing Measures (ASCM); Safeguards Agreement; Agreement on Government Procurement (GPA); Technical Barriers to Trade (TBT) (product standards); Agreement on Agriculture; and Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). U.S. priorities and objectives for the GATT/WTO have been reflected in various trade promotion authority (TPA) legislation since 1974. For example, the Omnibus Trade and Competitiveness Act of 1988 specifically contained provisions directing U.S. negotiators to negotiate disciplines on agriculture, dispute settlement, intellectual property, trade in services, and safeguards, among others, that resulted in WTO agreements in the Uruguay Round (see text box above). The Trade Act of 2002 provided U.S. objectives for the Doha Round, including seeking to expand commitments on e-commerce and clarifications to the WTO dispute settlement system. The 2015 TPA, perhaps reflecting the impasse of the Doha Round, was more muted, seeking full implementation of existing agreements, enhanced compliance by members with their WTO obligations, and new negotiations to extend commitments to new areas. Section 125(b) of the URAA sets procedures for congressional disapproval of WTO participation. It specifies that Congress's approval of the WTO agreement shall cease to be effective "if and only if" Congress enacts a joint resolution calling for withdrawal. Congress may vote every five years on withdrawal; resolutions were introduced in 2000 and 2005, however neither passed. WTO Agreements The WTO member-led body negotiates, administers, and settles disputes for agreements that cover goods, agriculture, services, certain trade-related investment measures, and intellectual property rights, among other issues. The WTO core principles are enshrined in a series of trade agreements that include rules and commitments specific to each agreement, subject to various exceptions. The GATT/WTO system of agreements has expanded rulemaking to several areas of international trade, but does not extensively cover some key areas, including multilateral investment rules, trade-related labor or environment issues, and emerging issues like digital trade or the commercial role of state-owned enterprises. Marrakesh Agreement Establishing the World Trade Organization The Marrakesh Agreement is the umbrella agreement under which the various agreements, annexes, commitment schedules, and understandings reside. The Marrakesh Agreement itself created the WTO as a legal international organization and sets forth its functions, structure, secretariat, budget procedures, decisionmaking, accession, entry-into-force, withdrawal, and other provisions. The Agreement contains four annexes. The three major substantive areas of commitments undertaken by the members are contained in Annex 1. Multilateral Agreement on Trade in Goods (Annex 1A) The Multilateral Agreement on Trade in Goods establishes the rules for trade in goods through a series of sectoral or issue-specific agreements (see Table 2 ). Its core is the GATT 1994, which includes GATT 1947, the amendments, understanding, protocols, and decisions of the GATT from 1947 to 1994, cumulatively known as the GATT- acquis , as well as six Understandings on Articles of the GATT 1947 negotiated in the Uruguay Round. In addition to clarifying the core WTO principles, each agreement contains sector- or issue-specific rules and principles. The schedule of commitments identifies each member's specific binding commitments on tariffs for goods in general, and combinations of tariffs and quotas for some agricultural goods. Through a series of negotiating rounds, members agreed to the current level of trade liberalization (see Figure 2 above). In the last four rounds of negotiations, WTO members aimed to expand international trade rules beyond tariff reductions to tackle barriers in other areas. For example, agreements on technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures aim to protect a country's rights to implement domestic regulations and standards, while ensuring they do not discriminate against trading partners or unnecessarily restrict trade. Agreement on Agriculture (AoA) The Agreement on Agriculture (AoA) includes rules and commitments on market access and disciplines on certain domestic agricultural support programs and export subsidies. Its objective was to provide a framework for WTO members to reform certain aspects of agricultural trade and domestic farm policies to facilitate more market-oriented and open trade. Regarding market access, members agreed not to restrict agricultural imports by quotas or other nontariff measures, converting them to tariff-equivalent levels of protection, such as tariff-rate quotas—a process called "tariffication." Developed countries committed to cut tariffs (or out-of-quota tariffs, those tariffs applied to any imports above the agreed quota threshold) by an average of 36% in equal increments over six years; developed countries committed to 24% tariff cuts over 10 years. Special safeguards to temporarily restrict imports were permitted in certain events, such as falling prices or surges of imports. The AoA also categorizes and restricts agricultural domestic support programs according to their potential to distort trade. Members agreed to limit and reduce the most distortive forms of domestic subsidies over 6 to 10 years, referred to as "amber box" subsidies and measured by the Aggregate Measure of Support (AMS) index. Subsidies considered to cause minimal distortion on production and trade were not subject to spending limits and exempted from obligations as "green box" and "blue box" subsidies or under de minimis (below a certain threshold) or SDT provisions. In addition, export subsidies were to be capped and subject to incremental reductions, both by value and quantity of exports covered. A so-called "peace" clause protected members using subsidies that comply with the agreement from being challenged under other WTO agreements, such as through use of countervailing duties; the clause expired after nine years in 2003. Members are required to regularly submit notifications on the implementation of AoA commitments—though some countries, including the United States, have raised concerns that these requirements are not abided by in a consistent fashion. Further agricultural trade reform was a major priority under the Doha Round, but negotiations have seen limited progress to date (see " Ongoing WTO Negotiations "). However, in 2015, members reached an agreement to fully eliminate export subsidies for agriculture. Trade-Related Investment Measures (TRIMS) The framework of the GATT did not address the growing linkages between trade and investment. During the Uruguay Round, the Agreement on Trade-Related Investment Measures (TRIMS) was drafted to address certain investment measures that may restrict and distort trade. The agreement did not address the regulation or protection of foreign investment, but focused on investment measures that may violate basic GATT disciplines on trade in goods, such as nondiscrimination. Specifically, members committed not to apply any TRIM that is inconsistent with provisions on national treatment or a prohibition of quantitative restrictions on imports or exports. TRIMS includes an annex with an illustrative list of prohibited measures, such as local content requirements—requirements to purchase or use products of domestic origin. The agreement also includes a safeguard measure for balance of payment difficulties, which permits developing countries to temporarily suspend TRIMS obligations. While TRIMS and other WTO agreements, such as the GATS (see below), include some provisions pertaining to investment, the lack of comprehensive multilateral rules on investment led to several efforts under the Doha Round to consider proposals, which to date have been unfruitful (see " Future Negotiations "). In December 2017, 70 WTO members announced plans to begin new discussions on developing a multilateral framework on investment facilitation, in part to complement the successful negotiation of rules on trade facilitation. General Agreement on Trade in Services (GATS) (Annex 1B) The GATT agreements focused solely on trade in goods, excluding services. Services were eventually covered in the GATS as a result of the Uruguay Round agreements. The GATS provides the first and only multilateral framework of principles and rules for government policies and regulations affecting trade in services. It has served as the foundation on which rules in other trade agreements on services are based. The services trade agenda is complex due to the characteristics of the sector. "Services" refers to a growing range of economic activities, such as audiovisual, construction, computer and related services, express delivery, e-commerce, financial, professional (e.g., accounting and legal services), retail and wholesaling, transportation, tourism, and telecommunications. Advances in information technology and the growth of global supply chains have reduced barriers to trade in services, expanding the services tradable across national borders. But liberalizing trade in services can be more complex than for goods, since the impediments faced by service providers occur largely within the importing country, as so-called "behind the border" barriers, some in the form of government regulations. While the right of governments to regulate service industries is widely recognized as prudent and necessary to protect consumers from harmful or unqualified providers, a main focus of WTO members is whether these regulations are applied to foreign service providers in a discriminatory and unnecessarily trade restrictive manner that limits market access. The GATS contains multiple parts, including definition of scope (excluding government-provided services); principles and obligations, including MFN treatment and transparency; market access and national treatment obligations; annexes listing exceptions that members take to MFN treatment; as well as various technical elements. Members negotiated GATS on a positive list basis, which means that the commitments only apply to those services and modes of delivery listed in each member's schedule of commitments. WTO members adopted a system of classifying four modes of delivery for services to measure trade in services and classify government measures that affect trade in services, including cross-border supply, consumption abroad, commercial presence, and temporary presence of natural persons ( Figure 4 ). Under GATS, unless a member country has specifically committed to open its market to suppliers in a particular service, the national treatment and market access obligations do not apply. In addition to the GATS, some members made specific sectoral commitments in financial services and telecommunications. Negotiations to expand these commitments were later folded into the broader services negotiations. WTO members aimed to update GATS provisions and market access commitments as part of the Doha Round. Several WTO members have since submitted revised offers of services liberalization, but in the view of the United States and others the talks have not yielded adequate offers of improved market access (see " Future Negotiations "). Given the lack of progress, in 2013, 23 WTO members, including the United States, representing approximately 70% of global services trade, launched negotiations of a services-specific plurilateral agreement. Although outside of the WTO structure, participants designed the Trade in Services Agreement (TiSA) negotiations in a way that would not preclude a concluded agreement from someday being brought into the WTO. TiSA talks were initially led by Australia and the United States, but have since stalled; the Trump Administration has not stated a formal position on TiSA. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Annex 1C) The TRIPS Agreement marked the first time multilateral trade rules incorporated intellectual property rights (IPR)—legal, private, enforceable rights that governments grant to inventors and artists to encourage innovation and creative output. Like the GATS, TRIPS was negotiated as part of the Uruguay Round and was a major U.S. objective for the round. The TRIPS Agreement sets minimum standards of protection and enforcement for IPR. Much of the agreement sets out the extent of coverage of the various types of intellectual property, including patents, copyrights, trademarks, trade secrets, and geographical indications. TRIPS includes provisions on nondiscrimination and on enforcement measures, such as civil and administrative procedures and remedies. IPR disputes under the agreement are also subject to the WTO dispute settlement mechanism. The TRIPS Agreement's newly placed requirements on many developing countries elevated the debate over the relationship between IPR and development. At issue is the balance of rights and obligations between protecting private right holders and securing broader public benefits, such as access to medicines and the free flow of data, especially in developing countries. TRIPS includes flexibilities for developing countries allowing longer phase-in periods for implementing obligations and, separately, for pharmaceutical patent obligations—these were subsequently extended for LDCs until January 2033 or until they no longer qualify as LDCs, whichever is earlier. The 2001 WTO "Doha Declaration" committed members to interpret and implement TRIPS obligations in a way that supports public health and access to medicines. In 2005, members agreed to amend TRIPS to allow developing and LDC members that lack production capacity to import generic medicines from third country producers under "compulsory licensing" arrangements. The amendment entered into force in January 2017. Trade Remedies While WTO agreements uphold MFN principles, they also allow exceptions to binding tariffs in certain circumstances. The WTO Agreement on Subsidies and Countervailing Measures (ASCM), Agreement on Safeguards, and articles in the GATT, commonly known as the Antidumping Agreement, allow for trade remedies in the form of temporary measures (e.g., primarily duties or quotas) to mitigate the adverse impact of various trade practices on domestic industries and workers. These include actions taken against dumping (selling at an unfairly low price) or to counter certain government subsidies, and emergency measures to limit "fairly"-traded imports temporarily, designed to "safeguard" domestic industries. Supporters of trade remedies view them as necessary to shield domestic industries and workers from unfair competition and to level the playing field. Other domestic constituents, including some importers and downstream consuming industries, voice concern that antidumping (AD) and countervailing duty (CVD) actions can serve as disguised protectionism and create inefficiencies in the world trading system by raising prices on imported goods. How trade remedies are applied to imports has become a major source of disputes under the WTO (see below). The United States has enacted trade remedy laws that conform to the WTO rules: U.S. antidumping laws (19 U.S.C. §1673 et seq.) provide relief to domestic industries that have been, or are threatened with, the adverse impact of imports sold in the U.S. market at prices that are shown to be less than fair market value. The relief provided is an additional import duty placed on the dumped imports. U.S. countervailing duty laws (19 U.S.C. §1671 et seq.) give similar relief to domestic industries that have been, or are threatened with, the adverse impact of imported goods that have been subsidized by a foreign government or public entity, and can therefore be sold at lower prices than U.S.-produced goods. The relief provided is a duty placed on the subsidized imports. U.S. safeguard laws give domestic industries relief from import surges of goods; no allegation of "unfair" practices is needed to launch a safeguard investigation. Although used less frequently than AD/CVD laws, Section 201 of the Trade Act of 1974 (19 U.S.C. §2251 et seq.), is designed to give domestic industry the opportunity to adjust to import competition and remain competitive. The relief provided is generally a temporary import duty and/or quota. Unlike AD/CVD, safeguard laws require presidential action for relief to be put into effect. Dispute Settlement Understanding (DSU) (Annex 2) The dispute settlement system, often called the "crown jewel" of the WTO, has been considered by some observers to be one of the most important successes of the multilateral trading system. WTO agreements contain provisions that are either binding or nonbinding. The WTO Understanding on Rules and Procedures Governing the Settlement of Disputes—Dispute Settlement Understanding or DSU—provides an enforceable means for WTO members to resolve disputes arising under the binding provisions. The DSU commits members not to determine violations of WTO obligations or impose penalties unilaterally, but to settle complaints about alleged violations under DSU rules and procedures. The Dispute Settlement Body (DSB) is a plenary committee of the WTO, which oversees the panels and adopts the recommendation of a dispute settlement panel or Appellate Body (AB) panel. Panels are composed of three (or five in complex cases) panelists—not citizens of the members involved—chosen through a roster of "well qualified governmental and/or non-governmental individuals" maintained by the Secretariat. WTO members must first attempt to settle a dispute through consultations, but if these fail, a member seeking to initiate a dispute may request that a panel examine and report on its complaint. A respondent party is able to block the establishment of a panel at the DSB once, but if the complainant requests its establishment again at a subsequent meeting of the DSB, a panel is established. At its conclusion, the panel recommends a decision to the DSB that it will adopt unless all parties agree to block the recommendation. The DSU sets out a timeline of one year for the initial resolution of disputes (see Figure 5 ); however, cases are rarely resolved in this timeframe. The DSU also provides for AB review of panel reports in the event a panel decision is appealed. The AB is composed of seven rotating panelists serving four-year terms, with the possibility of a one-term reappointment. According to the DSU, appeals are to be limited to questions of law or legal interpretation developed by the panel in the case (Article 17.6). The AB is to make a recommendation and the DSB is to ratify that recommendation within 120 days of the ratification of the initial panel report, but again, such timely resolution rarely occurs. The United States has raised several issues regarding the practices of the AB and has blocked the appointments of several judges—for more on the current debate, see " Proposed Institutional Reforms ." Following the adoption of a panel or appellate report, the DSB oversees the implementation of the findings. The losing party is then to propose how it is to bring itself into compliance "within a reasonable period of time" with the DSB-adopted findings. A reasonable period of time is determined by mutual agreement with the DSB, among the parties, or through arbitration. If a dispute arises over the manner of implementation, the DSB may form a panel to judge compliance. If a party declines to comply, the parties negotiate over compensation pending full implementation. If there is still no agreement, the DSB may authorize retaliation in the amount of the determined cost of the offending party's measure to the aggrieved party's economy. There have been some calls for reform of the dispute settlement system to deal with the procedural delays and new strains on the system, including the growing volume and complexity of cases. Filing a dispute settlement case provides a way for countries to resolve disputes through a legal process and to do so publicly, signaling to domestic and international constituents the need to address outstanding issues. Dispute settlement procedures can serve as a deterrent for countries considering not abiding by WTO agreements, and rulings can help build a body of case law to inform countries when they implement new regulatory regimes or interpret WTO agreements. That said, WTO agreements and decisions of panels are not self-executing and cannot directly modify U.S. law. If a case is brought against the United States and the panel renders an adverse decision, the United States would be expected to remove the offending measure within a reasonable period of time or face the possibility of either paying compensation to the complaining member or becoming subject to sanctions, often in the form of higher tariffs on imports of certain U.S. products. As of the beginning of 2019, the WTO has initiated nearly 580 disputes on behalf of its members and issued more than 350 rulings, with 2018 marking its most active year to date. Nearly two-thirds of WTO members have participated in the dispute settlement system. Not all complaints result in formal panel proceedings; about half were resolved during consultations. The complainants usually win their cases, in large part because they initiate disputes that they have a high chance of winning. In the words of WTO Director-General (DG) Roberto Azevêdo, the widespread use of the DS system is evidence it "enjoys tremendous confidence among the membership, who value it as a fair, effective, efficient mechanism to solve trade problems." The United States is an active user of the DS system. Among WTO members, the United States has been a complainant in the most dispute cases since the system was established in 1995, initiating 123 disputes, followed by the EU with 100 disputes. The two largest targets of complaints initiated by the United States are China and the EU, which, combined, account for more than one-third ( Figure 6 ). The latest summary by USTR reports that among WTO disputes through 2015 the United States largely prevailed on "core issues" in 46 of its complaints and lost in 4. Since the report was released, additional cases have been ruled in favor of the United States, including disputes over India's solar energy policies and Indonesia's import licensing requirements. The majority of disputes initiated by the United States between 2016 and early 2019 remain in the consultation or panel stages and have not been decided. As a respondent in 153 dispute cases since 1995, the United States has also had the most disputes filed against it by other WTO members, followed by the EU (85 disputes) and China (43 disputes). The EU is the largest source of disputes filed against the United States, followed by Canada, China, South Korea, Brazil, and India. A large number of complaints concern U.S. trade remedies, in particular the methodologies used for calculating and imposing antidumping duties on U.S. imports. The latest summary by USTR reports that as a respondent, the United States won on "core issues" in 17 cases and lost in 57 cases through 2015. Since then, the WTO has ruled against the United States on certain aspects of complaints related to U.S. trade remedies, including in cases initiated by South Korea, China, Canada, and Turkey. The United States has prevailed in other cases, for example in December 2017, a panel ruled in U.S. favor in a case brought by Indonesia over U.S. duties on coated paper imports. The DSB has authorized retaliation against the United States for maintaining a measure in violation of WTO rules in just a handful of cases. Most recently, in February 2019, a panel authorized South Korea to retaliate in a complaint over U.S. methodology for calculating antidumping duties on South Korean imports of large residential washers. Several pending WTO disputes are of significance to the United States. One involves China's complaints over U.S. and EU failure to grant China market economy status (see " China's Accession and Membership " ) . Other cases involve challenges to the tariff measures imposed by the Trump Administration under U.S. trade laws, including Section 201 (safeguards), Section 232 (national security), and Section 301 ("unfair" trading practices) ( Table 3 ). Nine WTO members, including China, the EU, Canada, and Mexico, initiated separate complaints at the WTO, based on allegations that U.S. Section 232 tariffs on steel and aluminum imports are inconsistent with WTO rules. Consultations were unsuccessful in resolving the disputes, and panels have been established in all nine cases. Most countries notified their consultation requests pursuant to the Agreement on Safeguards, though some countries also allege that U.S. tariff measures and related exemptions are contrary to U.S. obligations under several provisions of the GATT. Several other WTO members have requested to join the disputes as third parties. On July 16, 2018, the United States filed its own WTO complaints over retaliatory tariffs imposed by five countries (Canada, China, EU, Mexico, and Turkey) in response to U.S. actions, and in late August, it filed a similar case against Russia. The United States has invoked the so-called national security exception (GATT Article XXI) in defense of the tariffs (see " Key Exceptions under GATT/WTO "), and states that the tariffs are not safeguards as claimed by other countries. By the end of January 2019, all of the disputes had entered the panel phase. Trade Policy Review Mechanism (Annex 3) Annex 3 sets out the procedures for the regular trade policy reviews that are conducted by the Secretariat to report on the trade policies of the membership. These reviews are carried out by the Trade Policy Review Body (TPRB) and are conducted periodically with the largest economies (United States, EU, Japan, and China) evaluated every three years, the next 16 largest economies every five years, and remaining economies every seven years. These reviews are meant to increase transparency of a country's trade policy and enable a multilateral assessment of the effect of policies on the trading system. These reviews also allow each member country to question specific practices of other members, and may serve as a forum to flag, and possibly avoid, future disputes. The most recent trade policy review of China occurred in July 2018. During the review members noted and commended some recent initiatives of China to open market access and liberalize its foreign investment regime. Several concerns were also raised, including "the preponderant role of the State in general, and of state-owned enterprises in particular," and "China's support and subsidy policies and local content requirements, including those that may be part of the 2025 [Made in China] plan." Plurilateral Agreements (Annex 4) Most WTO agreements in force have been negotiated on a multilateral basis, meaning the entire body of WTO members subscribes to them. By contrast, plurilateral agreements are negotiated by a subset of WTO members and often focus on a specific sector. A handful of such agreements supplement the main WTO agreements discussed previously. Within the WTO, members have two ways to negotiate on a plurilateral basis, also known as "variable geometry." A group of countries can negotiate with one another provided that the group extends the benefits to all other WTO members on an MFN basis—the foundational nondiscrimination principle of the GATT/WTO. Because the benefits of the agreement are to be shared among all WTO members and not just the participants, the negotiating group likely would include those members forming a critical mass of world trade in the product or sector covered by the negotiation in order to avoid the problem of free riders—those countries that receive trade benefits without committing to liberalization. An example of this type of plurilateral agreement granting unconditional MFN is the Information Technology Agreement (ITA), in which tariffs on selected information technology goods were lowered to zero, as negotiated by WTO members comprising more than 90% of world trade in these goods (see below). A second type of WTO plurilateral is the non-MFN agreement, often referred to as "conditional-MFN." In this type, participants undertake additional obligations among themselves, but do not extend the benefits to other WTO members, unless they directly participate in the agreement. Also known as the "club" approach, non-MFN plurilaterals allow for willing members to address policy issues not covered by WTO disciplines. However, these types of agreements require a waiver from the entire WTO membership to commence negotiations. Some countries are reluctant even to allow other countries to negotiate for fear of being left out, even while not being ready to commit themselves to new disciplines. Yet, according to one commentator, these members are "simply outsmarting themselves" by encouraging more ambitious members to take negotiations out of the WTO altogether, such as the proposed expansion of the GATS through the plurilateral (and outside the WTO) TiSA. Government Procurement Agreement The Government Procurement Agreement (GPA) is an early example of a plurilateral agreement with limited WTO membership—first developed as a code in the 1979 Tokyo Round. As of the end of 2018, 47 WTO members (including the 28 EU member countries and United States) participate in the GPA; non-GPA signatories do not enjoy rights under the GPA. The GPA provides market access for various nondefense government projects to contractors of its signatories. Each member specifies government entities and goods and services (with thresholds and limitations) that are open to procurement bids by foreign firms of the other GPA members. For example, the U.S. GPA market access schedules of commitments cover 85 federal-level entities and voluntary commitments by 37 states. Negotiations to expand the GPA were concluded in March 2012, and a revised GPA entered into force on April 6, 2014. Several countries, including China—which committed to pursuing GPA participation in its 2001 WTO accession process—are in long-pending negotiations to accede to the GPA. South Korea, Moldova, and Ukraine were the latest WTO members to join the GPA in 2016. According to estimates by the U.S. Government Accountability Office (GAO), from 2008 to 2012, 8% of total global government expenditures, and approximately one-third of U.S. federal government procurement, was covered by the GPA or similar commitments in U.S. FTAs. Information Technology Agreement Unlike the GPA, the Information Technology Agreement (ITA) is a plurilateral agreement that is applied on an unconditional MFN basis. In other words, all WTO members benefit from the tariff reductions enacted by parties to the ITA regardless of their own participation. Originally concluded in 1996 by a subset of WTO members, the ITA provides tariff-free treatment for covered IT products; however, the agreement does not cover services or digital products like software. In December 2015, a group of 51 WTO members, including the United States, negotiated an expanded agreement to cover an additional 201 products and technologies, valued at over $1 trillion in annual global exports. Members committed to reduce the majority of tariffs by 2019. In June 2016, the United States initiated the ITA tariff cuts. China began its cuts in mid-September 2016 with plans to reduce tariffs over five to seven years. ITA members are expected to review the agreement's scope in 2018 to determine if additional product coverage is needed. Trade Facilitation Agreement (TFA) The Trade Facilitation Agreement (TFA) is the newest WTO multilateral trade agreement, entering into force on February 22, 2017, and perhaps the lasting legacy of the Doha Round, since it is the only major concluded component of the negotiations. The TFA aims to address multiple trade barriers confronted by exporters and importers and reduce trade costs by streamlining, modernizing, and speeding up the customs processes for cross-border trade, as well as making it more transparent. Some analysts view the TFA as evidence that achieving new multilateral agreements is possible and that the design, including special and differential treatment provisions, could serve as a template for future agreements. The TFA has three sections. The first is the heart of the agreement, containing the main provisions, of which many, but not all, are binding and enforceable. Mandatory articles include requiring members to publish information, including publishing certain items online; issue advance rulings in a reasonable amount of time; and provide for appeals or reviews, if requested. The second section provides for SDT for developing country and LDC members, allowing them more time and assistance to implement the agreement. The TFA is the first WTO agreement in which members determine their own implementation schedules and in which progress in implementation is explicitly linked to technical and financial capacity. The TFA requires that "donor members," including the United States, provide the needed capacity building and support. Finally, the third section sets institutional arrangements for administering the TFA. Key Exceptions under GATT/WTO Under WTO agreements, members generally cannot discriminate among trading partners, though specific market access commitments can vary significantly by agreement and by member. WTO rules permit some broad exceptions, which allow members to adopt trade policies and practices that may be inconsistent with WTO disciplines and principles such as MFN treatment, granting special preferences to certain countries, and restricting trade in certain sectors, provided certain conditions are met. Some of the key exceptions follow. General e xceptions . GATT Article XX grants WTO members the right to take certain measures necessary to protect human, animal, or plant life or health, or to conserve exhaustible natural resources, among other aims. The measures, however, must not entail "arbitrary" or "unjustifiable" discrimination between countries where the same conditions prevail, or serve as "disguised restriction on international trade." GATS Article XIV provides for similar exceptions for trade in services. National security exception. GATT Article XXI protects the right of members to take any action they consider "necessary for the protection of essential national security interests" as related to (i) fissionable materials; (ii) traffic in arms, ammunition, and implements of war, and such traffic in other goods and materials carried out to supply a military establishment; and (iii) taken in time of war or other emergency in international relations. Similar exceptions relate to trade in services (GATS Article XIV bis) and intellectual property rights (TRIPS Article 73). More f avorable t reatment to d eveloping c ountries . The so-called "enabling clause" of the GATT—called the "Decision on Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries" of 1979—enables developed country members to grant differential and more favorable treatment to developing countries that is not extended to other members. For example, this permits granting unilateral and nonreciprocal trade preferences to developing countries under special programs, such as the U.S. Generalized System of Preferences (GSP), and also relates to regional trade agreements outside the WTO (see below). Exceptions for r egi onal tr ade agreements (RTAs ) . WTO countries are permitted to depart from the MFN principle and grant each other more favorable treatment in trade agreements outside the WTO, provided certain conditions are met. Three sets of rules generally apply. GATT Article XXIV applies to goods trade, and allows the formation of free trade areas and customs unions (areas with common external tariffs). These provisions require that RTAs be notified to the other WTO members, cover "substantially all trade," and do not effectively raise barriers on imports from third parties. GATS Article V allows for economic integration agreements related to services trade, provided they entail "substantial sectoral coverage," eliminate "substantially all discrimination," and do not "raise the overall level of barriers to trade in services" on members outside the agreement. Paragraph 2(c) of the "enabling clause," which deals with special and differential treatment, allows for RTAs among developing countries in goods trade, based on the "mutual reduction or elimination of tariffs." RTA provisions in the GATS also allow greater flexibility in sectoral coverage within services agreements that include developing countries. Joining the WTO: The Accession Process There are currently 164 members of the WTO. Another 22 countries are seeking to become members. Joining the WTO means taking on the commitments and obligations of all the multilateral agreements. Governments are motivated to join not just to expand access to foreign markets but also to spur domestic economic reforms, help transition to market economies, and promote the rule of law. While any state or customs territory fully in control of its trade policy may become a WTO member, a lengthy process of accession involves a series of documentation of a country's trade regime and market access negotiation requirements (see Figure 7 ). For example, Kazakhstan joined the WTO on November 30, 2015, after a 20-year process. Afghanistan became the 164th WTO member on July 29, 2016, after nearly 12 years of negotiating its accession terms. Other countries have initiated the process but face delays. Iran first applied for membership in 1996 and, while it submitted its Memorandum on the Foreign Trade Regime in 2009 (a prerequisite for negotiating an accession package), Iran has not begun the bilateral negotiation process, and the United States is unlikely to support its accession. As the WTO generally operates by member consensus, any single member could block the accession of a prospective new member. As part of the process, a prospective member must satisfy specific market access conditions of other WTO members by negotiating on a bilateral basis. The United States has been a central arbiter of the accession process for countries like China (joined in 2001, see below), Vietnam (2007), and Russia (2012), with which permanent normal trade relations had to be established concurrently under U.S. law for the United States to receive the full benefits of their membership. China's Accession and Membership China formally joined the WTO in December 2001. China has emerged as a major player in the global economy, as the fastest-growing economy, largest merchandise exporter, and second-largest merchandise importer worldwide. China's accession into the WTO on commercially meaningful terms was a major U.S. trade objective during the late 1990s. Entry into the WTO was viewed as an important catalyst for spurring additional economic and trade reforms and the opening of China's economy in a market, rules-based direction. These reforms have made China an increasingly significant market for U.S. exporters , a central factor in global supply chains, and a major source of low -cost goods for U.S. consumers. At the same time, China has yet to fully transit ion to a market economy and the government continue s to intervene in many parts of the econom y, which has created a growing debate over the role of the WTO in both respects . Negotiations for China's accession to the GATT and then the WTO began in 1986 and took more than 15 years to complete. During WTO negotiations, China sought to enter the WTO as a developing country, while U.S. trade officials insisted that China's entry into the WTO had to be based on "commercially meaningful terms" that would require China to significantly reduce trade and investment barriers within a relatively short time. In the end, a compromise was reached that required China to make immediate and extensive reductions in various trade and investment barriers, while allowing it to maintain some level of protection (or a transitional period of protection) for certain sensitive sectors (see text box ). According to USTR, after joining the WTO, China began to implement economic reforms that facilitated its transition toward a market economy and increased its openness to trade and foreign direct investment (FDI). China also generally implemented its tariff cuts on schedule. However, by 2006, U.S. officials and companies noted evidence of some trends toward a more restrictive trade regime and more state intervention in the economy. In particular, observers voiced concern about various Chinese industrial policies, such as those that foster indigenous innovation based on forced technology transfer, domestic subsidies, and IP theft. Some stakeholders have expressed concerns over China's mixed record of implementing certain WTO obligations and asserted that, in some cases, China appeared to be abiding by the letter but not the "spirit" of the WTO. The United States and other WTO members have used dispute settlement procedures on a number of occasions to address China's alleged noncompliance with certain WTO commitments. As a respondent, China accounts for about 12% of total WTO disputes since 2001. The United States has brought 23 dispute cases against China at the WTO on issues, including IPR protection, subsidies, and discriminatory industrial policies, and has largely prevailed in most cases. Though some issues remain contested, China has largely complied with most WTO rulings. China has also increasingly used dispute settlement to confront what it views as discriminatory measures; to date, it has brought 15 cases against the United States (as of February 2019). More broadly, the Trump Administration has questioned whether WTO rules are sufficient to address the challenges that China's economy presents. USTR Robert Lighthizer expressed this view in remarks in September 2017: "The sheer scale of their coordinated efforts to develop their economy, to subsidize, to create national champions, to force technology transfer, and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented. Unfortunately, the World Trade Organization is not equipped to deal with this problem." USTR views efforts to resolve concerns over Chinese trade practices to date as limited in effectiveness, including through WTO dispute settlement, as well as recent proposals by WTO members to craft new rules and WTO reforms. In its latest report to Congress on China's WTO compliance, USTR stated the following: [The WTO dispute settlement] mechanism is not designed to address a trade regime that broadly conflicts with the fundamental underpinnings of the WTO system. No amount of WTO dispute settlement by other WTO members would be sufficient to remedy this systemic problem. Indeed, many of the most harmful policies and practices being pursued by China are not even directly disciplined by WTO rules. Another related concern some have is whether China claims it is a "developing country" under the WTO. Through developing country status, which countries self-designate, countries are entitled to certain rights under special and differential treatment (SDT), among other provisions in WTO agreements (see " Treatment of Developing Countries " and text box ). USTR has claimed that "China persists in claiming to be a 'developing Member'" in future negotiations at the WTO. While it is unclear what SDT provisions China has sought in ongoing negotiations, China is a part of the coalition group of Asian developing members at the WTO and has claimed to be a developing country in various fora. Chinese officials have asserted that despite being the world's second-largest economy, China remains a developing country, due to its relatively low GDP per capita and other economic challenges. Concerns over China's trade actions have led the Trump Administration to increase the use of unilateral mechanisms outside the WTO that in its view more effectively address Chinese "unfair trade practices;" the recent Section 301 investigation of Chinese IPR and technology transfer practices and resulting imposition of tariffs is evidence of this strategy. Prior to the establishment of the WTO, the United States resorted to Section 301 relatively frequently, in particular due to concerns that the GATT lacked an effective dispute settlement system. When the United States joined the WTO in 1995, it agreed to use the dispute settlement mechanism rather than act unilaterally; many analysts contend that the United States has violated its WTO obligations by imposing tariffs against China under Section 301. The United States also initiated a WTO dispute settlement case against China's "discriminatory technology licensing" in March 2018. Subsequently, China filed its own complaints at the WTO over U.S. tariff actions. The United States has pursued cooperation to some extent with other countries with similar concerns over certain Chinese trade practices and the need to clarify and improve WTO rules on industrial subsidies and SOEs in particular. At the WTO Ministerial meeting in December 2017, USTR Lighthizer, the European Commissioner for Trade Cecelia Malmström, and Japan's Minister of the Economy, Trade and Industry Hiroshige Seko announced new trilateral efforts to cooperate on issues related to government-supported excess capacity, unfair competition caused by market-distorting subsidies and SOEs, forced technology transfer, and local content requirements. Observers believe that China, while not specifically named, is the intended target of the coordinated action. The three officials continued talks in 2018 and 2019, issuing a scoping paper on stronger rules on industrial subsidies, as well as joint statements on technology transfer and "market-oriented conditions." They indicated plans to propose a draft text on subsidies rules by spring 2019. Some experts have questioned whether recent U.S. tariff actions might undermine efforts to coordinate further action to address these challenges (see " Selected Challenges and Issues for Congress "). Another pending dispute involving China could have significant implications for the treatment of China's economy under WTO rules, in particular debate over the terms of China's "nonmarket economy" (NME) status under its WTO accession protocol. Under its accession, China agreed to allow other WTO members to continue to use alternative methodologies, such as surrogate countries, for assessing prices and costs on products subject to antidumping measures. This concession was a result of WTO members' concerns that distortions in the Chinese economy caused by government intervention result in Chinese prices that do not reflect market forces, making them poorly suited to determining dumping margins. China contends that language in its WTO accession protocol requires all WTO members to terminate their use of the alternative methodology by December 11, 2016, including the United States, which has classified China as a NME for trade remedy cases since 1981. The NME distinction is important to China because it has often resulted in higher antidumping margins on Chinese exports; moreover, a significant share of Chinese exports is subject to trade remedies, namely AD duties. The United States and the EU have argued that the WTO language is vague and did not automatically obligate them to extend market economy status (MES) to China because it is still not a market economy. On December 12, 2016, China requested consultations under WTO dispute settlement with the United States and EU over the failure to grant China MES, and the cases are now pending. In April 2017, a panel was established in the EU case, and in November 2017, the United States formally submitted arguments as a third party in support of the EU. The panel said it expected to issue its final report during the second quarter of 2019. Current Status and Ongoing Negotiations Buenos Aires Ministerial 2017 The 11 th WTO Ministerial Conference took place December 10-13, 2017, in Buenos Aires, Argentina. The Ministerial generally convenes every two years to make decisions and announce progress on multilateral trade agreements. After countries were unable to complete the Doha Round (see text box ), many questioned what could effectively be achieved in 2017. Members have made some progress in recent years, reaching the Trade Facilitation Agreement in 2013, followed by a small package of deals in 2015 concerning agriculture and rules for LDCs. Still, they remain sharply divided over how to prioritize both unresolved and new issues on the agenda, and, more fundamentally, how to conduct negotiations to better facilitate successful outcomes. WTO Director-General Azevêdo had tempered expectations for major negotiated outcomes or announcements at the 11 th Ministerial, acknowledging that "members' positions continue to diverge significantly on the substantial issues." These differences were perhaps most apparent by the inability of WTO members to reach consensus over a draft Ministerial Declaration, largely due to staunch disagreements over including references to the mandate of the Doha Round (see text box ). Instead the Ministerial became primarily an opportunity for members to take stock of ongoing talks and further define priority work areas. WTO members had worked intensively to build consensus over proposals in several areas, including reducing fisheries subsidies, a permanent solution to public stockholding for food security, domestic services regulations, and e-commerce. Some members pushed for new initiatives in areas such as investment facilitation; others like India advocated for a greater focus on trade facilitation in services. The U.S. proposal to improve overall transparency at the WTO, with penalties for countries that fail to comply with notification requirements, did not garner enough support to be discussed extensively at the Ministerial. The 11 th Ministerial did not result in major breakthroughs. WTO members committed to intensify fisheries subsidies negotiations, "with a view to adopting" an agreement by the next Ministerial; the United States has supported these efforts. A joint statement was issued by 60 members in support of advancing multilateral negotiations on domestic regulations in services. Subsets of WTO members also issued statements committing to new work programs or open-ended talks for interested parties to potentially conclude plurilateral agreements in areas, including the following: E-commerce : among 71 WTO members (covering 77% of global trade); Investment facilitation : among 70 WTO members (covering 73% of global trade and 66% of inward FDI); and Micro, small and medium-sized enterprises (MSMEs) : among 87 WTO members (covering 78% of global trade). Of these, the United States signed on to the declaration in support of e-commerce. The lack of concrete multilateral outcomes at the 11 th Ministerial was a reminder of the continued resistance of some countries to a new agenda outside of the original 2001 Doha mandate. In the view of EU Trade Commissioner Malmström, the Ministerial "laid bare the deficiencies of the negotiating function at the WTO" and that "members are systematically being blocked from addressing the pressing realities of global trade." Malmström blamed the lack of progress on "procedural excuses and vetoes" and "cynical hostage taking." Some developing country members, including India, attempted to block progress in a range of areas—including the renewal of the decades-old moratorium on e-commerce customs duties—absent more progress on Doha issues such as agricultural stockholding for food security. Such "hostage-taking" tactics, widely acknowledged to have hindered progress in the Doha Round, further highlight the difficulty of achieving future consensus among all 164 members. While the United States provided input and signaled support for select proposals, the overall perception of many was a lack of U.S. leadership in the Ministerial discussions. Consistent with the Trump Administration's "America First" trade policy, the U.S. stated objective for the Ministerial was broadly to "advocate for U.S. economic and trade interests, including WTO institutional reform and market-based, fair trade policies." Several observers were relieved when USTR Lighthizer acknowledged in Ministerial remarks that the WTO plays an important role, even as he outlined key criticisms. The United States viewed the Ministerial outcome positively—that it signaled "the impasse at the WTO was broken," paving the way for like-minded countries to pursue new work in other areas. USTR expressed U.S. support in particular for forthcoming work on e-commerce, scientific standards for agriculture, and disciplines on fisheries subsidies. Ongoing WTO Negotiations While WTO members did not announce any negotiated outcomes at the 11 th Ministerial meeting, several countries committed to make progress on ongoing talks, including fisheries subsidies and e-commerce. In other areas, such as agriculture and environmental goods, talks remain stalled with no clear path forward. Agriculture For some issues multilateral solutions arguably remain ideal, for example, disciplines on agricultural subsidies, which are widely used by developed and advanced developing countries alike. One concern is that such important, unresolved issues may founder for want of a negotiating venue. While the Doha Round largely did not achieve its comprehensive negotiating mandate to lower agricultural tariffs and subsidies, negotiations more limited in scope have continued. The 2015 Nairobi Ministerial agreed to eliminate export subsidies for agriculture, but the issue of public stockholding remains seemingly intractable. Public stockholding, also known as food security programs, is used by governments, especially in developing countries, to purchase and stockpile food to release to the public during periods of market volatility or shortage. These programs become problematic when governments purchase food at a price and quantity that effectively become trade-distorting domestic support. While no agreement was reached at Buenos Aires, some developing countries, such as India, have demanded that the issue be resolved before new issues are considered in the WTO work program. The United States has also flagged the broader issue of notification and transparency. Under WTO agreements, members are required to notify subsidies and trade-distorting support to ensure transparency and consistency with a member's obligation. Compliance with notifications has been notoriously lax, with some countries years behind on their reporting. According to U.S. Department of Agriculture trade counsel Jason Hafemeister, these practices have consequences: In the absence of transparency, how are we to determine whether Members are complying with existing obligations? Moreover, only with comprehensive and current information can negotiators understand, discuss, and address the problems that face farmers today: high tariffs, trade distorting support, and non-tariff barriers. The United States with other countries recently issued new proposals to address these concerns—see " Transparency/Notification ." Fisheries Subsidies As noted above, WTO members committed to negotiate disciplines related to fisheries subsidies at the 11 th Ministerial with a view toward reaching an agreement by 2020. The proposals aim to meet the goals outlined in United Nations Sustainable Development Goal 14 targeting illegal, unregulated, and unreported (IUU) fishing. Though multiple areas of disagreement remain, members have been negotiating on the scope of exemptions, such as for fuel subsidies. The United States reportedly seeks to minimize the level and scope of such exclusions. Members are expected to move from discussions of proposals into negotiations on a consolidated draft text by early 2019. The Trump Administration has voiced support for the talks, stating that it continues "to support stronger disciplines and greater transparency in the WTO with respect to fisheries subsidies." Electronic Commerce/Digital Trade Digital trade has emerged as a major force in world trade since the Uruguay Round, creating end products (e.g., email or social media), enabling trade in services (e.g., consulting), and facilitating goods trade through services, such as logistics and supply chain management that depend on digital data flows. While the GATS contains explicit commitments for telecommunications and financial services that underlie e-commerce, trade barriers related to digital trade, information flows, and other related issues are not specifically included. The WTO Work Program on Electronic Commerce was established in 1998 to examine trade-related issues for e-commerce under existing agreements. Under the work program, members agreed to continue a temporary moratorium on e-commerce customs duties, and have renewed the moratorium at each ministerial meeting. Some developing countries, however, have begun to question the moratorium, seeing it as blocking a potential government revenue stream. Progress under the work program has largely stalled as multiple members have put forward competing views on possible paths forward. In advance of the 2017 Ministerial, various members had submitted proposals for specific work agendas in e-commerce. The U.S. submission, dated July 4, 2016, reflected many of the ideas included in the proposed Trans-Pacific Partnership (TPP), an FTA with 11 other countries in the Asia-Pacific from which the United States withdrew in January 2017. The proposal may gain the support of other TPP members as several have already ratified a slightly modified agreement—the Comprehensive and Progressive Agreement for TPP (CPTPP or TPP-11)—which maintained the digital trade provisions as negotiated by the United States. The Chinese WTO submission, on the other hand, more narrowly focuses on facilitating e-commerce. India has said it would not agree to any new obligations in the WTO related to e-commerce or digital trade, preferring to focus on issues identified under the original Doha mandate, including agriculture. As a result, the 2017 Ministerial ended with an agreement to "endeavor to reinvigorate our work." The plurilateral effort announced at the ministerial agreeing to "initiate exploratory work on negotiations on electronic commerce issues in the WTO" may provide the best avenue to pursue an agreement within the WTO framework. A U.S. discussion paper on the initiative outlined potential provisions, including protecting cross-border data flows, source code, and encryption technology; prohibiting discrimination, customs duties, technology transfer or localization requirements; and promoting cybersecurity and open government data. The United States also included the WTO Telecommunications Reference Paper, seeking all WTO members to adopt its principles on telecommunications competition. Notably, the U.S. submission did not list privacy or consumer protection among its provisions. The group of 49 WTO members formally launched the e-commerce initiative in January 2019, on the sidelines of the World Economic Forum annual meetings. Their joint statement lists not only the United States and EU as participants, but also several developing countries, including China and Brazil. In the statement, the group agreed to seek a "high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO Members as possible," but did not specify which trade barriers and issues are to be addressed. USTR's statement after the meeting emphasized the need for an enforceable agreement with the "same obligations for all participants." The negotiation process is expected to begin in March 2019. It is unclear how, or if, the plurilateral effort will overlap or be incorporated into the existing multilateral work program. Environmental Goods Agreement (EGA) Some countries viewed the 11 th Ministerial meeting as a missed opportunity to reinvigorate the stalled EGA plurilateral negotiations. The EGA negotiations, initiated in mid-2014 by 14 WTO members including the United States and China, seek to liberalize trade in environmental goods through tariff liberalization. Current EGA members represent 86% of global trade in covered environmental goods. Like the ITA, the EGA would be an open plurilateral agreement so that the benefits achieved through negotiations would be extended on an MFN basis to all WTO members. Despite 18 rounds of negotiations, members were unable to conclude the agreement at the December 2016 General Council   meeting, and talks have since stalled. Most parties blamed China for the lack of progress, as it rejected the list of products to be included and requested several lengthy tariff phaseout periods which other countries refused to accept. The EGA's future now remains uncertain—while several countries have expressed support for resuming the talks, the Trump Administration has not put forward a public position on the agreement. Policy Issues and Future Direction The inability of WTO members to conclude a comprehensive agreement during the Doha Round raised new questions about the WTO's future direction. Many intractable issues from Doha remain unresolved, and members have yet to reach consensus on a way forward. Persistent differences about the extent and balance of trade liberalization continue to stymie progress, as evidenced by the outcomes of recent ministerial meetings. Further, members remain divided over adopting new issues on the agenda, amid concerns that the WTO could lose relevance if its rules are not updated to reflect the modern global economy. Some WTO members seek to incorporate new issues that pose challenges to the trading system, such as digital trade, competition with SOEs, global supply chains, and the relationship between trade and environment issues. These divisions have called into question the viability of the "single undertaking," or one-package approach in future multilateral negotiations and suggest broader need for institutional reform if the WTO is to remain a relevant negotiating body. Moreover, the consistent practice of some countries like India to block discussion of new issues serves as a reminder of the power of a single member to halt progress in the WTO's consensus-based system. As a result of slow progress at the WTO, countries have increasingly turned to other venues to advance trade liberalization and rules, namely plurilateral agreements and preferential FTAs outside the WTO. Plurilaterals have been seen as having the potential to resurrect the WTO's relevance as a negotiating body, but have also been seen as possibly undermining multilateralism if the agreements are not extended to all WTO members on an MFN basis. Regional trade agreements have also been seen as potential laboratories for new rules. How these negotiations and agreements will ultimately affect the WTO's status as the preeminent global trade institution is widely debated. In addition, an open question is whether U.S. leadership within these initiatives will continue under the Trump Administration. More recently, concerns for some have been mounting about further strains on the multilateral system, due to the growing use of trade protectionist policies by both developed and developing countries, the recent U.S. tariff actions and counterretaliation by other countries, and the escalating trade disputes between major economies. Many countries are questioning whether the WTO is equipped to effectively handle the challenges of emerging markets, as well as the deepening trade tensions. Some experts view the system as facing a potential crisis, while o thers remain optimistic that the current state of affairs could spur renewed focus on reforms of the system. Certain WTO members, like the EU and Canada, have begun to explore some areas for reform (see below). Negotiating Approaches Plurilateral Agreements In contrast to the consensus-based agreements of the WTO, some members, including the United States, point to the progress made in sectoral or plurilateral settings as the way forward for the institution. By assembling coalitions of interested parties, negotiators may more easily and quickly achieve trade liberalizing objectives, as shown by the ITA. Sectoral agreements are viewed as one way to pursue new agreements and extend WTO disciplines and commitments in new areas, including, for example, U.S. trade priorities in digital trade and SOEs. The commitments by some WTO members to pursue talks in e-commerce, investment facilitation, and SMEs could plant the seeds for future plurilaterals. Plurilateral negotiations, however, still involve resolving divisions among developed and advanced developing countries. Members were able ultimately to overcome their differences in the ITA negotiation, but thus far have been unable to reach consensus in the EGA. At the same time, the participation of developing and emerging market economies, such as China and India, is critical to achieving agreements that cover a meaningful share of global trade. There is also a concern that plurilateral agreements not applied on an MFN basis could lead nonparticipating countries to become marginalized from the trading system and face new trade restrictions. To attract a critical mass of participants and lower barriers for developing countries and LDCs who may be hesitant to agree to ambitious commitments, agreements could allow flexibility in implementation timeframes and provide additional assistance, as in the TFA. Some experts question whether potential waning U.S. leadership in plurilateral and multilateral trade negotiations might slow momentum toward concluding new agreements (see " Value of the Multilateral System and U.S. Leadership and Membership "). The Trump Administration has yet to clarify its position on plurilaterals pursued under the Obama Administration, such as EGA and TiSA, which have stalled, but is supporting new efforts on e-commerce/digital trade. Preferential Free Trade Agreements Given that the WTO allows its members to establish preferential FTAs outside the WTO that are consistent with WTO rules, many countries have formed bilateral or regional FTAs and customs areas; since 1990, the number of RTAs in force has increased seven-fold, with 290 trade agreements notified to the WTO and in force, as of the end of 2018. FTAs have often provided more negotiating flexibility for countries to advance new trade liberalization and rulemaking that builds on WTO agreements; however, the agreements vary widely in terms of scope and depth. Like plurilaterals, many view comprehensive FTAs as having potential for advancing the global trade agenda. Also like plurilaterals, however FTAs can also have downsides compared to multilateral deals. The United States currently has 14 FTAs in force with 20 countries. The Trump Administration has stated a preference for negotiating bilateral FTAs, rather than multiparty agreements. In September 2018, the United States, Mexico, and Canada completed negotiations of the proposed USMCA, which revamps the North American Free Trade Agreement (NAFTA). The United States and South Korea also agreed to some modifications of their bilateral FTA. In addition, USTR notified Congress of its intent to begin trade negotiations with the EU, Japan, and the UK. In general, U.S. FTAs are considered to be "WTO-plus" in that they reaffirm the WTO agreements, but also eliminate most tariff and nontariff barriers and contain rules and obligations in areas not covered by the WTO. For example, most U.S. FTAs include access to services markets beyond what is contained in the GATS or, more recently, digital trade obligations. While U.S. FTAs cover some major trading partners, the majority of U.S. trade, including with significant trade partners such as China, the EU, and Japan, continues to rely solely on the terms of market access and rulemaking in WTO agreements. In 2017, the United States traded $3.4 trillion with non-FTA partners, compared to $1.8 trillion with its FTA partners ( Figure 8 ). More recently, groups of countries have also been pursuing so-called "mega-regional" trade agreements that cover significant shares of global trade. These include the CPTPP signed in March 2018 between 11 countries in the Asia-Pacific to replace the TPP, ongoing negotiations over the Regional Comprehensive Economic Partnership (RCEP) between the Association of Southeast Asian Nations (ASEAN) and six of its FTA partners including China, and the Pacific Alliance signed in June 2012 among Chile, Colombia, Mexico, and Peru. Negotiations on the proposed Transatlantic Trade and Investment Partnership (T-TIP) between the United States and EU stalled, and though new U.S.-EU trade talks are to resume, their scope remains unclear. Such agreements could potentially consolidate trade rules across regions and to a varying extent address new issues not covered by the WTO. There has been wide debate regarding the relationship of preferential FTAs to the WTO and multilateral trading system. Some argue that crafting new rules through mega-regionals could undermine the trading system, create competing regional trade blocs, lead to trade diversion, and marginalize countries not participating in the initiatives. On the other hand, some view such agreements as potentially spurring new momentum at the global level. WTO DG Azevêdo has supported the latter sentiment, expressing that "RTAs [regional trade agreements] are blocks which can help build the edifice of global rules and liberalization." Many analysts have viewed the CPTPP specifically through this lens. Some experts view plurilateral agreements in particular as potential vehicles for bringing new rulemaking from RTAs into the multilateral trading system. While RTAs may propagate precisely what the multilateral system—with MFN and national treatment at its underpinnings—was designed to prevent, namely trade diversion and fragmented trading blocs, some observers believe it may be the only way trade may be liberalized in the future as additional interested parties could join the agreements over time. Future Negotiations on Selected Issues Since the founding of the WTO, the landscape of global trade has changed dramatically. The commercial internet, the growth of supply chains, and increasing trade in services have all contributed to the tremendous expansion of trade. However, WTO disciplines have not been modernized or expanded since 1995, aside from the TFA and the renegotiation of the ITA and the GPA. In addition to ongoing WTO efforts to negotiate new trade liberalization and rules in areas like e-commerce and digital trade, the following are selected areas of trade policy that could be subjects for future negotiations multilaterally within the WTO, or as plurilaterals. Meaningful progress in areas such as services, competition with SOEs, investment, and labor and environment issues could help increase the relevance of the WTO as a negotiating body. Services Since the GATS, the scope of global trade in services has increased tremendously, spurred by advances in IT and the growth of global supply chains. Yet, these advances are largely not reflected in the GATS. WTO members committed to further services negotiations (GATS Article XIX), which began in 2000 and were incorporated into the Doha Round. Further talks were spurred by the recognition among many observers that the GATS, while it extended the principles of nondiscrimination and transparency to services trade, was not thought to provide much actual liberalization, as many countries simply bound existing practices. However, services negotiations during Doha also succumbed to the resistance of developing countries to open their markets in response to developed country demands, as well as dissatisfaction with other aspects of the single undertaking. Whether the stalled plurilateral TiSA talks will ultimately lead to services reform in the WTO is an open question. Aside from increased market access, several issues are ripe for future negotiations at the WTO, such as transition from the current positive list schedule of commitments to a negative list. Instead of a member declaring which services are open for competition, it would need to declare which sectors are exempted. This exercise in itself could force members to reexamine their approximately 25-year-old commitments and decide whether current market access barriers will be maintained. New services sectors, such as online education and telemedicine, that were not envisioned at the founding of GATS could also be the subject of future negotiations, at least on a plurilateral basis. The issue of "servicification" of traditional goods industries—for example, services that are sold with a good, such as insurance or maintenance services, or enabling services, such as distribution, transportation, marketing, or retail—has also attracted attention as the subject of possible WTO negotiations. Other issues of interest to members include services facilitation (transparency, streamlining administrative procedures, simplifying domestic regulations), and emergency safeguards, envisioned in the GATS (Article X) as an issue for future negotiation. Competition with SOEs The United States and other members of the WTO see an increased need to discipline state-owned or state-dominated enterprises engaged in international commerce, and designated monopolies, whether through the WTO or through regional or bilateral FTAs. However, WTO rules on competition with state-owned or state-dominated enterprises are limited to state trading enterprises (STE)—enterprises, such as agricultural marketing boards, that influence the import or export of a good. GATT Article XVII requires them to act consistently with GATT commitments on nondiscrimination, to operate in accordance with commercial considerations, and to abide by other GATT disciplines, such as disciplines on import and export restrictions. The transparency obligations consist of reporting requirements describing the reason and purpose of the STE, the products covered by STE, a description of its functions, and pertinent statistical information. Meanwhile, countries desiring disciplines on SOEs have turned to FTAs. The TPP and the proposed USMCA have dedicated chapters on SOEs. The USMCA includes commitments that SOEs of a party act in accordance with commercial considerations; requires parties to provide nondiscriminatory treatment to like goods or services to those provided by SOEs; and prohibits most noncommercial assistance to its SOE, among other issues. The SOE chapter in USMCA likely is aimed at countries other than the three USMCA parties, such as China, to signal their negotiating intentions going forward. While there could be a desire to multilateralize these disciplines, they likely would face objections from those members engaged in such practices. State support provided to SOEs, including subsidies, is a closely related issue, as it can play a major role in market-distorting behavior under current rules. The WTO ASCM covers the provision of specified subsidies granted to SOEs, including by the government or any "public body." Some members, including the United States and EU, have contested past interpretations by the WTO Appellate Body of what qualifies as a public body as too narrow, and remain concerned that a large share of Chinese and other SOEs in effect have avoided being subject to disciplines. As discussed, the United States, EU, and Japan are engaged in ongoing discussions on strengthening rules on industrial subsidies and SOEs, including "how to develop effective rules to address market-distorting behavior of state enterprises and confront particularly harmful subsidy practices."  They commit to both "maintain effectiveness of existing WTO disciplines" and also initiate negotiations on "more effective subsidy rules" in the near future. At the latest meetings in January 2019, the three partners indicated plans to finalize a proposed text on industrial subsidies by spring 2019. Investment With limited provisions under TRIMS and GATS, rules and disciplines covering international investment are not part of WTO. More extensive protection for investors was one of the "Singapore issues" proposed at the 1996 WTO Ministerial as a topic for future negotiations, but then dropped under opposition from developing countries at the 2003 Cancun Ministerial. The OECD also attempted to liberalize investment practices and provide investor protections through a Multilateral Agreement on Investment, however, that effort was abandoned in 1998 in the face of widespread campaigns by nongovernment organizations in developed countries. While multilateral attempts to negotiate investment disciplines have not borne fruit, countries have agreed to investment protections within bilateral investment treaties (BITs) and chapters in bilateral and regional FTAs. The U.S. "model BIT" serves as the basis for most recent U.S. FTAs. These provisions are often negotiated between developed countries and developing countries—often viewed as having less robust legal systems—that want to provide assurance that incoming FDI will be protected in the country. Developed countries themselves have begun to diverge on the use and inclusion of provisions on investor-state dispute settlement (ISDS). Incorporating investment issues more fully in the WTO would recognize that trade and investment issues are increasingly interlinked. Moreover, bringing coherence to the nearly 3,000 BITs or trade agreements with investment provisions could be a role for the WTO. In addition, agreement on investment disciplines could help to resolve the thorny issue of investment adjudication between the competing models of ISDS and an investment court, as proposed by the EU in its recent FTAs, given that disputes likely would remit to WTO dispute settlement. While it remains unclear whether developing countries would be more amenable to negotiating investment disciplines multilaterally than they were in 2003, this area could be ripe for plurilateral activity. In the meantime, since the Ministerial some WTO members are pursuing the development of a multilateral framework on investment facilitation. The group is comprised of a mix of developed and developing economies, including the EU, Canada, China, Japan, Mexico, Singapore, and Russia, but not the United States. Labor and Environment Labor and environmental provisions were not included in the Uruguay Round agreements, largely at the insistence of developing countries. Some observers maintain that this has created major gaps in global trade rules and call for the WTO to address these issues. Related provisions have developed and evolved within U.S. FTAs outside the WTO. Recent U.S. FTAs require partner countries to adhere to internationally recognized labor principles of the International Labor Organization (ILO) and applicable multilateral environmental agreements, and to enforce their labor or environmental laws and not to derogate from these laws to attract trade and investment. The CPTPP and proposed USMCA also contain provisions, though not identical, prohibiting the most harmful fisheries subsidies, and relating to illegal trafficking, marine species, air quality, marine litter, and sustainable forestry. More broadly, while inclusion of labor and environmental provisions within FTAs has expanded in the past decade, in general the commitments can vary widely in their scope and depth, with only some subject to dispute settlement mechanisms. While general provisions on labor and environment may be a heavy lift at this time given these differences, the WTO has undertaken an effort to discipline fisheries subsidies, which could have a beneficial environmental effect (see above). However, fisheries subsidies may be a special case, as it directly pertains to an existing trade-related agreement, the ASCM. Proposed Institutional Reforms Many observers believe the WTO needs to adopt reforms to continue its role as the foundation of the world trading system. In particular, its negotiating function has atrophied following the collapse of the Doha Round. Its dispute settlement mechanism, while functioning, is viewed by some as cumbersome and time consuming. And some observers, including U.S. officials, contend it has exceeded its mandate when deciding cases. Potential changes described below address institutional and negotiation reform, as well as reforms to the dispute settlement system. Reforms concern the administration of the organization, including its procedures and practices, and attempts to address the inability of WTO members to conclude new agreements. Dispute settlement reforms attempt to improve the working of the dispute settlement system, particularly the Appellate Body (AB). Addressing concerns related to the dispute settlement system may take priority in the near term, as the WTO faces a pending crisis should the AB fall below its three-member quorum in late 2019. Certain WTO members have begun to explore some aspects of reform. In July 2018, the European Commission produced a discussion paper on WTO reform proposals, and in September published a revised paper on its comprehensive approach "to modernise the WTO and to make international trade rules fit for the challenges of the global economy." As noted, the United States, EU, and Japan have issued scoping papers and joint statements on strengthening WTO disciplines on industrial subsidies and SOEs and cooperating on forced technology transfer. In addition, Canada organized a ministerial among a small group of "like-minded" countries interested in WTO reform, including Australia, Brazil, Chile, the EU, Japan, Kenya, Mexico, New Zealand, Norway, Singapore, South Korea, and Switzerland, held in Ottawa on October 24-25, based on a discussion draft of its proposals. Canadian trade officials have said that "starting small has allowed us to address problems head-on and quickly develop proposals," while acknowledging that a larger effort must include the United States and China. In a joint communiqué, the group of 13 countries emphasized that "the current situation at the WTO is no longer sustainable," and identified three areas requiring "urgent consideration": safeguarding and strengthening the dispute settlement system; reinvigorating the WTO's negotiating function; including how the development dimension can be best pursued in rulemaking; and strengthening the monitoring and transparency of WTO members' trade policies. The group met again in January 2019 on the sidelines of the annual World Economic Forum meetings, committing to make "significant progress" toward WTO reform before the G20 meetings convene in June 2019. Some Members of Congress have expressed support for these new efforts to address long-standing concerns of the United States. Institutional Issues Consensus in Decisionmaking While consensus in decisionmaking is a long-standing core practice at the GATT/WTO, voting on a nonconsensus basis is authorized for certain activities on a one member-one vote basis. For example, interpretations of the WTO agreements and country waivers from certain provisions require a three-fourths affirmative vote for some matters, while a two-thirds affirmative vote is required for an amendment to an agreement. However, even when voting is possible, the practice of consensus decisionmaking remains the norm. As an organization of sovereign entities, some observers believe the practice of consensus decisionmaking gives legitimacy to WTO actions. Consensus assures that actions taken are in the self-interest of all its members. Consensus also reassures small countries that their concerns must be addressed. However, the practice of consensus has often led to deadlock, especially in the Doha Round negotiations. The ability to block consensus also has perpetuated so-called "hostage taking," in which a country can block consensus over an unrelated matter. In order to attempt to expedite institutional decisionmaking, some expert observers have proposed alternatives to the current system, such as the following: Use the voting procedures currently prescribed in the WTO agreements. Adopt a weighted voting system based on a formula that includes criteria relating to a member's gross domestic product, trade flows, population, or a combination thereof. Establish an executive committee composed of a combination of permanent and rotating members, or composed based on a formula as above or representatives of differing groups of countries. Maintain current consensus voting but require a member stating an objection to explain why it is doing so, or why it is a matter of vital national interest. The Single Undertaking Approach The "single undertaking" method by which WTO members negotiate agreements means that during a negotiating round, all issues are up for negotiation until everything is agreed. On one hand, this method, in which nothing is agreed until everything is agreed, is suited for large, complex rounds in which rules and disciplines in many areas of trade (goods, services, agriculture, IPR, etc.) are discussed. It permits negotiation on a cross-sectoral basis, so countries can make a concession in one area of negotiation and receive a concession elsewhere. The method is intended to prevent smaller countries from being "steamrolled" by the demands of larger economies, and helps ensure that each country sees a net benefit in the resulting agreement. On the other hand, arguably, the single undertaking has contributed to the breakdown of the negotiating function under the WTO, exemplified by the never-completed Doha Round, as issues of importance to one country or another served to block consensus at numerous points during the round. Some members, including the EU, have called for "flexible multilateralism," based on continued support for full multilateral negotiations where possible, but pursuit of plurilateral agreements on an MFN basis where multilateral consensus is not possible. Transparency/Notification An important task of the WTO is to monitor each member's compliance with various agreements. A WTO member is required to notify the Secretariat of certain relevant domestic laws or practices so that other members can assess the consistency of WTO members' domestic laws, regulations, and actions with WTO agreements. Required notifications include measures concerning subsidies, agricultural support, quantitative restrictions, technical barriers to trade, and sanitary and phytosanitary standards. Compliance with the WTO agreement's notification requirements, especially regarding government subsidy programs, has become a serious concern among certain members, including the United States. Many WTO members are late in submitting their required notifications or do not submit them at all. This effectively prevents other members from fully examining the policies of their trading partners. In response, some members—notably the United States and the EU—have proposed incentives for compliance or sanctions for noncompliance with notification reporting requirements. These include the following: A U.S. proposal to impose a series of sanctions including steps to "name and shame" an offending member, limiting the member from using certain WTO resources, and designating a member "inactive." An EU proposal to create a rebuttable presumption that a non-notified subsidy measure is an actionable subsidy or a subsidy causing serious prejudice, thereby allowing a member to challenge the subsidy under WTO dispute settlement. An EU proposal to encourage counternotifications—a challenge to the accuracy or existence of another member's notification—against members that do not voluntarily notify on their own. In May and November 2018, for example, the United States launched counternotifications of India's farm subsidy notifications regarding wheat, rice, and cotton. In November 2018, the United States, EU, Japan, Argentina, and Costa Rica put forward a joint proposal that reflects several of these elements, including penalties for noncompliance. It also specifies exemptions for developing countries that lack capacity and have requested assistance to help fulfill notification obligations. Treatment of Developing Countries A country's development status can affect the pace at which a country undertakes its WTO obligations. Given that WTO members self-designate their status, some members hold on to developing-country status even after their economies begin more to resemble their developed-country peers. In addition, some of the world's largest economies, including China, India, and Brazil, may justify developing country status because their per capita incomes more closely resemble those of a developing country than those of developed countries. Developing country status enables a country to claim special and differential treatment (SDT) both in the context of existing obligations and in negotiations for new disciplines (see text box ). The WTO specifies, however, that while the designated status is on the basis of self-selection, it is "not necessarily automatically accepted in all WTO bodies." Developed countries, including the EU and United States, have expressed frustration at this state of affairs. In January 2019, the United States circulated a paper warning that the WTO is at risk of becoming irrelevant due to the practice of allowing members to self-designate their development status to obtain special and differential treatment. The paper noted that some of the world's richest nations, including Singapore, South Korea, and the United Arab Emirates, as well as some of the world's major trading economies, such as China and India, consider themselves developing countries at the WTO. The paper maintained that self-designation has damaged the negotiating function of the WTO, and contributed to the failure of the Doha Round and possibly ongoing negotiations, if countries can avoid making meaningful offers by claiming exemptions from the rules. Several suggestions have been made to address the situation, including encouraging countries to graduate from developing country status; setting quantifiable criteria for development status; targeting SDT in future agreements on a needs-driven, differential basis; and requiring full eventual implementation of all new agreements. Some of these steps were implemented in the WTO Trade Facilitation Agreement. Dispute Settlement Supporters of the multilateral trading system consider the dispute settlement mechanism (DSM) not only a success of the system, but essential to maintain the relevance of the institution, especially while the WTO has struggled as a negotiating body. However, the DSM is facing increased pressure for reform, in part due to long-standing U.S. objections over certain rules and procedures. USTR Lighthizer contends that the WTO has become a "litigation-centered organization," which has lost its focus on negotiations. While WTO members have actively used the DSM since its creation, some have also voiced concerns about various aspects, including procedural delays and compliance, and believe the current system could be reformed to be fairer and more efficient. The Doha Round included negotiations to reform the dispute settlement system through "improvements and clarifications" to DSU rules. A framework of 50 proposals was circulated in 2003 but countries were unable to reach consensus. Discussions have continued beyond Doha with a primary focus on 12 issues, including third-party rights, panel composition, and remand authority of the Appellate Body. Under prior Administrations, the United States proposed greater control for WTO members over the process, guidelines for the adjudicative bodies, and greater transparency, such as public access to proceedings. However, these negotiations have yet to achieve results. Some experts suggest that enhancing the capabilities and legitimacy of the dispute settlement system will likely require several changes, including improving mechanisms for oversight, narrowing the scope of and diverting sensitive issues from adjudication, improving institutional support, and providing WTO members more input over certain procedures. Appellate Body (AB) Vacancies The immediate flashpoint to the system is the refusal of the United States to consent to the appointment of new AB jurists. The United States has long-standing objections to decisions involving the AB's interpretation of certain U.S. trade remedy laws in particular—the subject of the majority of complaints brought by other WTO members against the United States. The AB consists of seven jurists appointed to four-year terms on a rolling basis, with the possibility of a one-term reappointment. Each dispute case is heard by three jurists. Like the previous Administration, the Trump Administration blocked the process to appoint new jurists in 2017 and 2018, leaving only three AB jurists remaining to hear all cases. Concerns are rising that the AB, already facing a backlog of cases, could come to a halt in 2019 if additional appointments are not made. Deputy DG of the WTO Alan Wolff summarized the stakes in recent remarks, noting that if the Appellate Body were to cease to function, member countries would be unable to appeal an adverse panel decision against one of their policies, and without that option, "there is a risk of every trade dispute devolving into small and not so small trade wars, consisting of retaliation and counter-retaliation." Proposed DS Reforms The United States expounded on some of the perceived shortcomings of the dispute settlement system in its most recent trade policy agenda. Arguably the main U.S. complaint is that the system, particularly the AB, is "adding to or diminishing U.S. rights by not applying the WTO agreements as written" in the areas of subsidies, antidumping and countervailing duties, standards, and safeguards. At its crux, the current controversy is over the autonomy of the AB, its deference to the DSB, and its obligations to implement the provisions of the DSU. The United States has been the most vocal in its criticisms, yet other WTO members have expressed similar concerns. While the United States has not tabled specific reforms for these complaints to the WTO membership, other members have. Two groups (G-12, G-3) submitted specific proposals for the December 2018 General Council meeting to attempt to break the impasse. The G-12 submission reflects proposals of all 12 members; the G-3 submission contains supplementary proposals put forward by a subset of the 12. The United States criticized the proposals as seeking to change WTO DS rules to fit the practices objectionable to the United States, rather than adhering to the rules as originally negotiated. Instead of seeking to accommodate current practices, U.S. Ambassador to the WTO Dennis Shea proposed that WTO members "engage in a deeper discussion of the concerns raised, to consider why the Appellate Body has felt free to depart from what WTO Members agreed to, and to discuss how best to ensure that the system adheres to WTO rules as written." Ambassador Shea also criticized the G-3 proposals as lessening the accountability of the Appellate Body, rather than increasing it. Under each of the following issues, these proposals are raised along with other reform proposals that members or observers have put forward to address current concerns. Disregard for the 90-day, DSU-mandated deadline for AB appeals. USTR claims that the AB does not have the authority to fail to meet the deadline without consulting the DSB, maintaining that the deadline "helps ensure that the AB focuses its report on the issue on appeal." The G-12 submission proposes to amend the DSU to allow parties, based on a proposal by the AB, to extend the length of time to conclude an appeal. If the parties do not agree on an extension, the AB would propose work procedures or arrangements to allow it to conclude the appeal within 90 days. In addition, the G-3 submission proposes to amend the DSU to increase the number of AB jurists from seven to nine to allow for greater efficiency and geographical diversity. Extension of service by former AB jurists on cases continuing after their four-year terms have expired. The United States maintains that the AB does not have the authority unilaterally to extend the terms of jurists, rather that authority lies with the DSB and that it is a matter of adherence to the DSU. In actual practice, however, it may be the case that having former jurists stay on to finish an appeal may be more efficient than having a new jurist join the case. The G-12 submission proposes to amend the DSU to allow outgoing AB jurists to complete the disposition of a pending appeal, provided that the hearing stage has taken place. In addition, the G-3 submission proposes that outgoing AB members continue to serve until replaced, but not more than two years following expiration of their term. Alternatively, some trade experts have suggested that the AB could refrain from assigning cases to jurists less than 90 days before their exits. During the Obama Administration, the United States blocked the reappointment of a South Korean jurist to the AB in May 2016. The United States cited what it considered "abstract discussions" in prior decisions by the jurist that went beyond the legal scope of the WTO. This action has led to the concern that the prospect of non-reappointment could affect the independence of the AB system. However, one former AB jurist opines that, "reappointment is an option, not a right," and calls for the WTO members to determine if a more formal process similar to initial appointment of AB jurists is needed for reappointment. The G-3 submission proposes to amend the DSU to permit AB members to serve one term of longer length (6-8 years) and not allow for reappointment. Other criticisms of the AB involve the extent to which it can interpret WTO agreements. The United States, in arguing for a more restrictive view of the power of the DSB, points to Article 3.2 that "recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements" (see text box above). However, those supporting a more expansive view of the DSU's role can point to the same article, which highlights the role "to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law." The scope and reach of the AB's activities is an enduring controversy for the organization, not limited to the Trump Administration. USTR has flagged several specific practices relating to these issues, such as the following: Issuing advisory opinions on issues not relevant to the issue on appeal. This point is related to the U.S. concern that the AB is engaged in "judicial overreach" by going beyond deciding the case at hand. USTR contends that the ability to issue advisory opinions or interpretations of text rests with the Ministerial Conference or General Council. The G-12 proposes to amend the DSU to stipulate that the AB address each issue raised in a dispute "to the extent necessary for the resolution of the dispute." Rather than issue advisory opinions, some observers have suggested that the AB also could "remand" issues of uncertainty to the standing committees of the WTO for further negotiation. In addition, members could also use a provision of the WTO Agreement (Article IX.2) to seek an "authoritative interpretation" of a WTO text at the General Council or Ministerial Conference, which could be adopted by a three-fourths vote. De novo review of facts or domestic law in cases on appeal. The United States alleges that the AB is not giving the initial panel due deference on matters of fact, including regarding the panel's interpretation of domestic law. This point derives from USTR's view that a country's domestic law should be considered as fact, and that the panel's interpretation of the domestic law is thus not reviewable by the AB. The G-12 submission proposes to amend the DSU to clarify that the meaning of a party's domestic laws is a matter of fact, and not reviewable by the AB. Treatment of AB decisions as precedent. Like the previous two concerns, this complaint speaks to the alleged overreach of the AB. USTR asserts that while AB reports can provide "valuable clarification" of covered agreements, they cannot be considered or substituted for the WTO agreements and obligations negotiated by members. However, according to a former DG of the WTO, "the precedent concept used in the WTO jurisprudence is ... centrally important to the effectiveness of the WTO dispute settlement procedure goals of security and predictability." A related concern some WTO members have is "gap-filling" by the DS system, where the legal precedent is unclear or ambiguous or there are no or incomplete WTO rules regarding a contested issue. Here there are diametrically opposite beliefs: a U.S. trade practitioner asks, "Is filling gaps and construing silences really not the creation of rights and obligations through disputes vs. leaving such function to negotiations by the members?" The former DG, however, contends that "every juridical institution has at least some measure of gap-filling responsibility as part of its efforts to resolve ambiguity." The issue of the legitimacy of precedence or gap-filling may be one of the thorniest issues of all with few solutions proposed that would potentially satisfy differences among members. The G-12 submission proposes to amend the DSU to establish a yearly meeting between the AB and the DSB. This session would allow for WTO members to comment on rulings made during the year. According to the submission, it could be a venue "where concerns with regard to some Appellate Body approaches, systemic issues or trends in the jurisprudence could be voiced." It is likely that many of the issues that could arise from proposed reforms to the WTO system would require clarification of or amendment to the language of the Marrakesh Agreement or the DSU. Clarification could take the form of interpretation of the agreements. As noted above, interpretation can be undertaken by the Ministerial Conference (held every two years), General Council, or Dispute Settlement Body, with a three-fourths vote of the WTO membership. Amending the decisionmaking provisions of the Marrakesh Agreement (Article IX) or the DSU would require consensus of the membership at the Ministerial Conference (Marrakesh Agreement, Article X.8). Amendments to the Marrakesh Agreement would require a two-thirds vote of the membership. As noted above, negotiations related to reforms of the DSM occurred during the Doha Round, and despite the criticism of the DSM by the United States and others, the General Council or the DSB has not undertaken serious consideration of these reforms. Selected Challenges and Issues for Congress Value of the Multilateral System and U.S. Leadership and Membership The United States has served as a leader in the WTO and the GATT since their creation. The United States played a major role in shaping GATT/WTO negotiations and rulemaking, many of which reflect U.S. laws and norms. It was a leading advocate in the Uruguay Round for expanding negotiations to include services and IPR, key sources of U.S. competitiveness, as well as binding dispute settlement to ensure new rules were enforceable. Today, many stakeholders across the United States rely on WTO rules to open markets for importing and exporting goods and services, and to defend and advance U.S. economic interests. The Trump Administration has expressed doubt over the value of the WTO and multilateral trade negotiations to the U.S. economy. As a candidate, President Trump asserted that WTO trade deals are a "disaster" and that the United States should "renegotiate" or "pull out."  In late June 2018, media reports suggested that President Trump was considering withdrawing the United States from the WTO. While U.S. officials have downplayed talks of withdrawal as "premature" and an "exaggeration," the President has since reportedly repeated these threats in July and August 2018. The Administration has continued to express skepticism toward the value of multilateral agreements, preferring bilateral negotiations to address "unfair trading practices." In addition, "reform of the multilateral trading system" is a stated Administration trade policy objective. While some U.S. frustrations with the WTO are not new and are shared by other trading partners, the Administration's overall approach has spurred new questions regarding the future of U.S. leadership of and participation in the WTO. Most observers would maintain that the possibility of U.S. withdrawal from the WTO remains unlikely for procedural and substantive reasons. Procedurally, a withdrawal resolution would have to pass the House and Senate; it has also been debated what legal effect the resolution would have if adopted. Moreover, if the United States were to consider such a step, withdrawal would have a number of practical consequences. The United States could face economic costs, since absent WTO membership, remaining members would no longer be obligated to grant the United States MFN status under WTO agreements. WTO rules also restrict members' ability to use quotas, regulations, trade-related investment measures, or subsidies in ways that discriminate or disadvantage U.S. goods and services. They also require members to respect U.S. IPR. Consequently, U.S. businesses could face significant disadvantages in other markets, as members without FTAs with the United States could raise tariffs or other trade barriers at will. Nondiscrimination, a key bedrock principle of the multilateral trading system, could be eroded, particularly given the added impetus U.S. withdrawal could give to the proliferation of FTAs. Withdrawal could also lead to a U.S. loss of influence over how important international trade matters are decided and who writes global trade rules. In the process, economic inefficiencies and political tensions could increase. Exiting the WTO and the international trading relationships it creates and governs could have broader policy implications, including for cooperation between the United States and allies on foreign policy issues. Another question is whether the WTO would flounder without U.S. leadership, or whether other WTO members like the EU and China would increase their roles. As some in the United States question the value of WTO participation and leadership, other countries have begun to assert themselves as leaders and advocates for the global trading system. As noted, cooperation on WTO reform has become elevated as a major topic of discussion at recent high-level meetings, including the latest EU-China Summit held in July 2018 and at the October summit held in Canada among trade ministers from 13 WTO members. Congressional oversight could examine the value, both economic and political, of U.S. membership and leadership in the WTO. As part of its oversight, Congress could consider, or could ask the U.S. International Trade Commission to investigate, the value of the WTO or potential impact of withdrawal from the WTO on U.S. businesses, consumers, federal agencies, laws and regulations, and foreign policy. Congress could vote on a resolution expressing support of the WTO, instructing USTR to prioritize WTO engagement, or, conversely, a resolution for disapproval of U.S. membership under the URAA in 2020. Respect for the Rule and Credibility of the WTO The founding of the GATT and creation of the WTO were premised on the notion that an open and rules-based multilateral trading system was necessary to avoid a return to the nationalistic interwar trade policies of the 1930s. There are real costs and benefits to the United States and other countries to uphold the rules and enforce their commitments and those of other WTO members. A liberalized, rules-based global trading system increases international competition for companies domestically, but also helps to ensure that companies and their workers have access and opportunity to compete in foreign markets with the certainty of a stable, rules-based system. A framework for resolving disputes that inevitably arise from repeated commercial interactions may also help ensure such trade frictions do not spill over into broader international relations. However, certain actions by the Trump Administration and other countries have raised questions about respect for the rules-based trading system, and could weaken the credibility of the WTO. In particular, recent U.S. actions to raise tariffs against major trading partners under Section 232 and Section 301, and to potentially obstruct the functioning of the dispute settlement system by withholding approval for appointments to the AB, have prompted concerns that the United States and other countries who have retaliated to the U.S. actions may undermine the effectiveness and credibility of the institution that it helped to create. Moreover, the outcomes of controversial ongoing dispute cases at the WTO, initiated by several countries over U.S. tariffs, could set precedents and have serious implications for the future credibility of the global trading system. In particular, several U.S. trading partners view U.S. action as blatant protection of domestic industry and not a legitimate use of the national security exception. Some are concerned that U.S. actions may embolden other countries to protect their own industries under claims of protecting their own national security interests. Furthermore, U.S. tariff actions outside of the multilateral system's dispute settlement process may open the United States to criticism and could impede U.S. efforts to use the WTO for its own enforcement purposes. Respect for the rules is also weakened when any country imposes new trade restrictions and takes actions that are not in line with WTO agreements. In particular, China's industrial state policies, including IPR violations and forced technology transfer practices, arguably damage the credibility of the multilateral trading system that is based on respect for the consensus-based rules. In part, the WTO's perceived inability to address certain Chinese policies led to the United States resorting to Section 301 actions. Other countries' pursuit of industrial policy or imposition of discriminatory measures broadly in the name of national or economic security further call into question the viability of the WTO rules-based system. U.S. Sovereignty and the WTO Under the Trump Administration, USTR has put new emphasis on "preserving national sovereignty" within the U.S. trade policy agenda, emphasizing that any multinational system to resolve trade disputes "must not force Americans to live under new obligations to which the United States and its elected officials never agreed." The question of sovereignty is not a new one. The withdrawal procedures in the URAA responded to concerns that the WTO would infringe on U.S. sovereignty. During the congressional debate over the Uruguay Round agreements, there were some proposals to create extra review mechanisms of WTO dispute settlement, and many Members stressed that only Congress can change U.S. laws as a result of dispute findings. While U.S. concerns regarding alleged "judicial overreach" in WTO dispute findings are long-standing, the Trump Administration has also emphasized unilateral action outside the WTO as a means of defending U.S. interests, including national security. Some observers fear that disagreements at the WTO on issues related to national security (e.g., Section 232 tariffs) may be difficult to resolve through the existing dispute settlement procedures, given current disagreements related to the WTO AB and concerns over national sovereignty that would likely be raised if a dispute settlement panel issued a ruling relating to national security. As noted previously, Article XXI of the GATT allows WTO members to take measures to protect "essential security interests." WTO members and parties to the GATT have invoked Article XXI in other trade disputes. These parties, including the United States, have often argued that each country is the sole judge of questions relating to its own security interests. However, neither the WTO members nor a WTO panel have formally interpreted the Article XXI exception to define its scope. Accordingly, there is little guidance as to (1) whether a WTO panel would decide, as a threshold matter, that it had the authority to evaluate whether U.S. invocation of the exception was proper; and (2) how a panel might apply the national security exception, if invoked, in any dispute before the WTO involving the steel and aluminum tariffs. Role of Emerging Markets The broadened membership of the WTO over the past two decades has promoted greater integration of emerging markets such as Brazil, Russia, India, and China in the global economy, and helped ensure that developing country interests are represented on the global trade agenda. At the same time, many observers have attributed the inability of WTO members to collectively reach compromise over new rules and trade liberalization to differing priorities for reforms and market opening among developed countries and emerging markets. One question is to what extent emerging countries like China, with significant economic clout, will take on greater leadership; will such countries play a constructive role, advance the global trade agenda, and facilitate compromise among competing interests? China has voiced support for globalization and the multilateral trading system under which it has thrived. The Chinese government's recent white paper on the WTO stated the following: "The multilateral trading system, with the WTO at its core, is the cornerstone of international trade and underpins the sound and orderly development of global trade. China firmly observes and upholds the WTO rules, and supports the multilateral trading system that is open, transparent, inclusive and nondiscriminatory." At the same time, China has blocked further progress in certain initiatives, including the WTO plurilateral Environmental Goods Agreement, and has not put forward a sufficiently robust offer on government procurement to join that WTO agreement, a long-standing promise. With its industrial policies that advantage domestic industries, some analysts contend that China often abides by the letter but not the "spirit" of WTO rules, raising questions about the country's willingness in practice to take on more leadership responsibility in the WTO context. Another related concern voiced by the United States and other WTO members is the role of large emerging markets and the use of developing country status by those and other countries to ensure flexibility in implementing future liberalization commitments. The United States could work with other WTO members to set specific criteria to clarify the "developing" country qualification, such as using a combination of metrics including GDP, per capita income, and trade volume. Members could be given incentives to graduate from developing status; different WTO agreements could offer different incentives. Priorities for WTO Reforms and Future Negotiations The Administration included "reform of the multilateral trading system" in its 2018 trade policy objectives. Congress may also hold oversight hearings to ask the USTR about specific plans or objectives regarding WTO reforms for the institution, dispute settlement, or in regards to updating or amending existing agreements to address trade barriers and market-distorting behaviors not sufficiently covered by current rules. Congress could also consider directing the executive branch to increase U.S. engagement in reform negotiations, by, for example, endorsing the current trilateral negotiations announced by USTR, the EU, and Japan to address nonmarket practices, mostly aimed at China. Congress may also want to review the recent report by economists from the WTO, the IMF, and the World Bank that identifies potential areas for greater trade integration, and determine which are in the U.S. national economic interest. Congress could further consider establishing specific or enhanced new negotiating objectives for multilateral trade agreement negotiations, possibly through amendment to TPA. Congress may request that USTR provide an update of ongoing plurilateral negotiations to address new issues, including digital trade—specified by Congress as a principal trade negotiating objective of TPA. Some experts argue however, that recent U.S. unilateral tariff actions may limit other countries' interest in engaging in future WTO or other negotiations to reduce international trade barriers and craft new rules. Such concerns are amplified given the proliferation of preferential FTAs outside the context of the WTO, which have the potential for discriminatory effects on countries not participating, including the United States. Congress may consider the long-term implications of the U.S. actions on current and future trade negotiations. Outlook The future outlook of the multilateral trading system is the subject of growing debate, as it faces serious challenges, some long-standing and some emerging more recently. Some experts view the system as long stagnant and facing a potential crisis; others remain optimistic that the current state of affairs could spur new momentum toward reforms and alternative negotiating approaches moving forward. Despite differing views, there is a growing consensus that the status quo is no longer sustainable, and that there is urgent need to improve the system and find ground for new compromises if the WTO is to remain the cornerstone of the trading system. Debate about the path forward continues. Recent proposals for WTO reforms and for new rules have provided the seeds for new ideas, though concrete solutions and next steps have yet to be agreed among countries involved in discussions. In the near term, several events on the horizon could provide added impetus for resolving differences and assessing progress. The dispute settlement system could cease to function by late 2019 if the terms of the three remaining AB members continue to expire without the approval of new appointments. WTO members will also face their biennial Ministerial Conference in June 2020, which could provide an opportunity for countries to announce completion of ongoing negotiations, such as on fisheries subsidies, and concrete progress in other areas of long-standing priority, including the plurilateral efforts launched during the 2017 Ministerial. Meanwhile, other ambitious trade initiatives outside the WTO are proceeding, including the CPTPP, which entered into force in December 2018 for several members and which many analysts view as providing a possible template for future trade liberalization and rulemaking in several areas.

Historically, the United States' leadership of the global trading system has ensured the United States a seat at the table to shape the international trade agenda in ways that both advance and defend U.S. interests. The evolution of U.S. leadership and the global trade agenda remain of interest to Congress, which holds constitutional authority over foreign commerce and establishes trade negotiating objectives and principles through legislation. Congress has recognized the World Trade Organization (WTO) as the "foundation of the global trading system" within trade promotion authority (TPA) and plays a direct legislative and oversight role over WTO agreements. The statutory basis for U.S. WTO membership is the Uruguay Round Agreements Act (P.L. 103-465), and U.S. priorities and objectives for the General Agreement on Tariffs and Trade (GATT)/WTO have been reflected in various TPA legislation since 1974. Congress also has oversight of the U.S. Trade Representative and other agencies that participate in WTO meetings and enforce WTO commitments. The WTO is a 164-member international organization that was created to oversee and administer multilateral trade rules, serve as a forum for trade liberalization negotiations, and resolve trade disputes. The United States was a major force behind the establishment of the WTO in 1995, and the rules and agreements resulting from multilateral trade negotiations. The WTO encompassed and succeeded the GATT, established in 1947 among the United States and 22 other countries. Through the GATT and WTO, the United States, with other countries, sought to establish a more open, rules-based trading system in the postwar era, with the goal of fostering international economic cooperation and raising economic prosperity worldwide. Today, 98% of global trade is among WTO members. The WTO is a consensus and member-driven organization. Its core principles include nondiscrimination (most favored nation treatment and national treatment), freer trade, fair competition, transparency, and encouraging development. These are enshrined in a series of WTO trade agreements covering goods, agriculture, services, intellectual property rights, and trade facilitation, among other issues. Some countries, including China, have been motivated to join the WTO not just to expand access to foreign markets but to spur domestic economic reforms, help transition to market economies, and promote the rule of law. The WTO Dispute Settlement Understanding (DSU) provides an enforceable means for members to resolve disputes over WTO commitments and obligations. The WTO has processed more than 500 disputes, and the United States has been an active user of the dispute settlement system. Supporters of the multilateral trading system consider the dispute settlement mechanism an important success of the system. At the same time, some members, including the United States, contend it has procedural shortcomings and has exceeded its mandate in deciding cases. Many observers are concerned that the effectiveness of the WTO has diminished since the collapse of the Doha Round of multilateral trade negotiations, which began in 2001, and believe the WTO needs to adopt reforms to continue its role as the foundation of the global trading system. To date, WTO members have been unable to reach consensus for a new comprehensive multilateral agreement on trade liberalization and rules. While global supply chains and technology have transformed international trade and investment, global trade rules have not kept up with the pace of change. Many countries have turned to negotiating free trade agreements (FTAs) outside the WTO as well as plurilateral agreements involving subsets of WTO members rather than all members. At the latest WTO Ministerial conference in December 2017, no major deliverables were announced. Several members committed to make progress on ongoing talks, such as fisheries subsidies and e-commerce, while other areas remain stalled. While many were disappointed by the limited progress, in the U.S. view, the outcome signaled that "the impasse at the WTO was broken," paving the way for groups of like-minded countries to pursue new work in other key areas. Certain WTO members have begun to explore aspects of reform and future negotiations. Potential reforms concern the administration of the organization, its procedures and practices, and attempts to address the inability of WTO members to conclude new agreements. Proposed DS reforms also attempt to improve the working of the dispute settlement system, particularly the Appellate Body—the seven-member body that reviews appeals by WTO members of a panel's findings in a dispute case. Some U.S. frustrations with the WTO are not new and many are shared by other trading partners, such as the European Union. At the same time, the Administration's overall approach has spurred new questions regarding the future of U.S. leadership and U.S. priorities for improving the multilateral trading system. Concerns have emphasized that the Administration's recent actions to unilaterally raise tariffs under U.S. trade laws and to possibly impede the functioning of the dispute settlement system might undermine the credibility of the WTO system. A growing question of some observers is whether the WTO would flounder for lack of U.S. leadership, or whether other WTO members like the EU and China taking on larger roles would continue to make it a meaningful actor in the global trade environment. The growing debate over the role and future direction of the WTO may be of interest to Congress. Important issues it may address include how current and future WTO agreements affect the U.S. economy, the value of U.S. membership and leadership in the WTO, whether new U.S. negotiating objectives or oversight hearings are needed to address prospects for new WTO reforms and rulemaking, and the relevant authorities and impact of potential U.S. withdrawal from the WTO on U.S. economic and foreign policy interests.

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Introduction A complicated body of rules, precedents, and practices governs the legislative process on the floor of the House of Representatives. The official manual of House rules is more than 1,000 pages long and is supplemented by 30 volumes of precedents, with more volumes to be published in coming years. Yet there are two reasons why gaining a fundamental understanding of the House's legislative procedures is not as difficult as the sheer number and size of these documents might suggest. First, the ways in which the House applies its rules are largely predictable, at least in comparison with the Senate. Some rules are certainly more complex and more difficult to interpret than others, but the House tends to follow similar procedures under similar circumstances. Even the ways in which the House frequently waives, supplants, or supplements its standing rules with special, temporary procedures generally fall into a limited number of recognizable patterns. Second, underlying most of the rules that Representatives may invoke and the procedures the House may follow is a fundamentally important premise—that a majority of Members should ultimately be able to work their will on the floor. Although House rules generally recognize the importance of permitting any minority—partisan or bipartisan—to present its views and sometimes propose its alternatives, the rules do not enable that minority to filibuster or use other parliamentary devices to prevent the majority from prevailing without undue delay. This principle provides an underlying coherence to the various specific procedures discussed in this report. The Nature of the Rules Article I of the Constitution imposes a few restrictions on House (and Senate) procedures—for example, requirements affecting quorums and roll-call votes—but otherwise the Constitution authorizes each house of Congress to determine for itself the "Rules of its Proceedings" (Article 1, Section 5). This liberal grant of authority has several important implications. First, the House can amend its rules unilaterally; it need not consult with either the Senate or the President. Second, the House is free to suspend, waive, or ignore its rules whenever it chooses to do so. By and large, the Speaker or whatever Representative is presiding usually does not enforce the rules at his or her own initiative. Instead, Members must protect their own rights by affirmatively making points of order whenever they believe the rules are about to be violated. In addition, House rules include several formal procedures for waiving or suspending certain other rules, and almost any rule can be waived by unanimous consent. Thus, the requirements and restrictions discussed in this report generally apply only if the House chooses to enforce them. Limits on Debate If for no other reason than the size of its membership, the House has found it necessary to limit the opportunities for each Representative to participate in floor deliberations. Whenever a Member is recognized to speak on the floor, there is always a time limit on his or her right to debate. The rules of the House never permit a Representative to hold the floor for more than one hour. Under some parliamentary circumstances, there are more stringent limits, with Members being allowed to speak for no more than 5 minutes, 20 minutes, or 30 minutes. Furthermore, House rules sometimes impose a limit on how long the entire membership of the House may debate a motion or measure. Most bills and resolutions, for instance, are considered under a set of procedures called "suspension of the rules" (discussed later in this report) that limits all debate on a measure to a maximum of 40 minutes. Under other conditions, when there is no such time limit imposed by the rules, the House (and to some extent, the Committee of the Whole as well) can impose one by simple majority vote. These debate limitations and debate-limiting devices generally prevent a minority of the House from thwarting the will of the majority. House rules also limit debate in other important respects. First, all debate on the floor must be germane to whatever legislative business the House is conducting. Representatives may speak on other subjects only in one-minute speeches most often made at the beginning of each day's session, special order speeches occurring after the House has completed its legislative business for the day, and during morning hour debates that are scheduled on certain days of the week. Second, all debate on the floor must be consistent with certain rules of courtesy and decorum. For example, a Member should not question or criticize the motives of a colleague. The Calendars and the Order of Business When a House committee reports a public bill or resolution that had been referred to it, the measure is placed on the House Calendar or the Union Calendar. In general, tax, authorization, and appropriations bills are placed on the Union Calendar; all others go to the House Calendar. In effect, the calendars are catalogues of measures that have been approved, with or without proposed amendments, by one or more House committees and are now available for consideration on the floor. Placement on a calendar does not guarantee that a measure will receive floor consideration at a specified time or at all. Because it would be impractical or undesirable for the House to take up measures in the chronological order in which they are reported and placed on one of the calendars, there must be some procedures for deciding the order in which measures are to be brought from the calendars to the House floor—in other words, procedures for determining the order of business. Clause 1 of Rule XIV lists the daily order of business on the floor, beginning with the opening prayer, the approval of the Journal (the official record of House proceedings required by the Constitution), and the Pledge of Allegiance. Apart from these routine matters, however, the House never follows the order of business laid out in this rule. Instead, certain measures and actions are privileged, meaning they may interrupt the regular order of business. In practice, all the legislative business that the House conducts comes to the floor by interrupting the order of business under Rule XIV, either by unanimous consent or under the provisions of another House rule. Every bill and resolution that cannot be considered by unanimous consent must become privileged business if it is going to reach the floor at all. Modes of Floor Consideration There is no one single set of procedures that the House always follows when it considers a public bill or resolution on the floor. Instead, there are several modes of consideration, or different sets of procedural rules, that the House uses. In some cases, House rules require that certain kinds of bills be considered in certain ways. By various means, however, the House chooses to use whichever mode of consideration is most appropriate for a given bill. Which of these modes the House uses depends on such factors as the importance and potential cost of the bill and the amount of controversy the bill has generated among Members. The differences among these sets of procedures rest largely on the balance that each strikes between the opportunities for Members to debate and propose amendments, on the one hand, and the ability of the House to act promptly, on the other. Regardless of which procedure the House uses to consider legislation, the House majority party leadership generally tries to post the text of measures coming to the chamber floor in advance on an internet website created for that purpose. Under Suspension of the Rules The House most frequently resorts to a set of procedures that enables it to act quickly on bills that enjoy overwhelming but not unanimous support. Although this set is called "suspension of the rules," clause 1 of Rule XV provides for these procedures as an alternative to the other modes of consideration. The essential components of suspension of the rules are (1) a 40-minute limit on debate, (2) a prohibition against floor amendments, and (3) a two-thirds vote of those present and voting for passage. On every Monday, Tuesday, and Wednesday—and at other times by special arrangement—the Speaker may recognize Members to move to suspend the rules and pass a particular bill (or take some other action, such as agreeing to the Senate's amendments to a House bill). Once such a motion is made, the motion and the bill itself together are debatable for a maximum of 40 minutes. Half of the time is controlled by the Representative making the motion, often the chair of the committee with jurisdiction over the bill; the other half is usually controlled by the ranking minority member of the committee (or sometimes the subcommittee) of jurisdiction, especially when he or she opposes the motion. The suspension motion itself may propose to pass the bill with certain amendments, but no Member may propose an amendment from the floor. During the debate, the two Members who control the time yield parts of it to other Members who wish to speak. Once the 40 minutes is either used or yielded back, a single vote occurs on suspending the rules and simultaneously passing the bill. If two-thirds of the Members present vote "Aye," the motion is agreed to and the bill is passed. If the motion fails, the House may debate the bill again at another time, perhaps under another mode of consideration that permits floor amendments and more debate and requires only a simple majority vote for passage. The House frequently considers several suspension motions on the same day, which could result in a series of electronically recorded votes taking place at 40-minute intervals if such votes are requested. For the convenience of the House, therefore, clause 8 of Rule XX permits the Speaker to postpone electronic votes that Members have demanded on motions to suspend the rules until a later time on the same day or the following day. When the votes do take place, they are clustered together, occurring one after the other without intervening debate. In the House Under the Hour Rule One of the ironies of the legislative process on the House floor is that the House does relatively little business under the basic rules of the House. Instead, most of the debate and votes on amendments to major bills occur in Committee of the Whole (discussed below). This is largely because of the rule that generally governs debate in the House itself. The rule controlling debate during meetings of the House (as opposed to meetings of the Committee of the Whole) is clause 2 of Rule XVII, which states in part that a "Member, Delegate, or Resident Commissioner may not occupy more than one hour in debate on a question in the House." In theory, this rule permits each Representative to speak for as much as an hour on each bill, on each amendment to each bill, and on each of the countless debatable motions that Members could offer. Thus, there could be more than four hundred hours of debate on each such question, a situation that would make it virtually impossible for the House to function effectively. In practice, however, this "hour rule" usually means that each measure considered "in the House" is debated by all Members for no more than a total of only one hour before the House votes on passing it. The reason for this dramatic difference between the rule in theory and the rule in practice lies in the consequences of a parliamentary motion to order what is called the "previous question." When a bill or resolution is called up for consideration in the House—and, therefore, under the hour rule—the Speaker recognizes the majority floor manager to control the first hour of debate. The majority floor manager is usually the chair of the committee or subcommittee with jurisdiction over the measure and most often supports its passage without amendment. This Member will yield part of his or her time to other Members and may allocate control of half of the hour to the minority floor manager (usually the ranking minority member of the committee or subcommittee). However, the majority floor manager almost always yields to other Representatives "for purposes of debate only." Thus, no other Member may propose an amendment or make any motion during that hour. During the first hour of debate, or at its conclusion, the majority floor manager invariably "moves the previous question." This nondebatable motion asks the House if it is ready to vote on passing the bill. If a majority votes for the motion, no more debate on the bill is in order, nor can any amendments to it be offered; after disposing of the motion, the House usually votes immediately on whether to pass the bill. If the House defeats the previous question, however, opponents of the bill would then be recognized to control the second hour of debate, and might use that time to try to amend the measure. Because of this, it is unusual for the House not to vote for the previous question—the House disposes of most measures considered in the House, under the hour rule, after no more than one hour of debate and with no opportunity for amendment from the floor. These are not very flexible and accommodating procedural ground rules for the House to follow in considering most legislation. Debate on a bill is usually limited to one hour, and only one or two Members control this time. Before an amendment to the bill can even be considered, the House must first vote against a motion to order the previous question. For these reasons, most major bills are not considered in the House under the hour rule. In current practice, the most common type of legislation considered under the hour rule in the House are procedural resolutions reported by the House Committee on Rules that are commonly referred to as "special rules" (discussed below). In Committee of the Whole and the House Much of the legislative process on the floor occurs not "in the House" but in a committee of the House known as the Committee of the Whole (formally, the Committee of the Whole House on the State of the Union). Every Representative is a member of the Committee of the Whole, and it is in this committee, meeting in the House chamber, that many major bills are debated and amended before being passed or defeated by the House itself. Most bills are first referred to, considered in, and reported by a standing legislative committee of the House before coming to the floor. In much the same way, once bills do reach the floor, many of them then are referred to a second committee, the Committee of the Whole, for further debate and for the consideration of amendments. The Speaker presides over meetings of the House but not over meetings of the Committee of the Whole. Instead, the Speaker appoints another Member of the majority party to serve as the chair of the Committee of the Whole during the time the committee is considering a particular bill or resolution. In addition, the rules that apply in Committee of the Whole are somewhat different from those that govern meetings of the House itself. The major differences are discussed in the following sections of this report. In general, the combined effect of these differences is to make the procedures in Committee of the Whole—especially the procedures for offering and debating amendments—considerably more flexible than those of the House. Clause 3 of Rule XVIII requires that most bills affecting federal taxes and spending be considered in Committee of the Whole before the House votes on passing them. Most other major bills are also considered in this way. Most commonly, the House adopts a resolution, reported by the Rules Committee, that authorizes the Speaker to declare the House "resolved" into Committee of the Whole to consider a particular bill. General Debate There are two distinct stages to consideration in Committee of the Whole. First, there is a period for general debate, which is routinely limited to an hour. Each of the floor managers usually controls half the time, yielding parts of it to other Members who want to participate in the debate. During general debate, the two floor managers and other Members discuss the bill, the conditions prompting the committee to recommend it, and the merits of its provisions. Members may describe and explain the reasons for the amendments that they intend to offer, but no amendments can actually be proposed at this time. During or after general debate, the majority floor manager may move that the committee "rise"—in other words, that the committee transform itself back into the House. When the House agrees to this motion, it may resolve into Committee of the Whole again at another time to resume consideration of the bill. Alternatively, the Committee of the Whole may proceed immediately from general debate to the next stage of consideration: the amending process. Amending Process The Committee of the Whole may consider a bill for amendment section by section or, in the case of appropriations measures, paragraph by paragraph. Amendments to each section or of the bill are in order after the part they would amend has been read or designated and before the next section is read or designated. Alternatively, the bill may be open to amendment at any point, usually by unanimous consent. The first amendments considered to each part of the bill are those (if any) recommended by the committee that reported it. Thereafter, members of the committee are usually recognized before other Representatives to offer their own amendments. All amendments must be germane to the text they would amend. Germaneness is a subject matter standard more stringent than one of relevancy and reflects a complex set of criteria that have developed by precedent over the years. The Committee of the Whole votes only on amendments; it does not vote directly on the bill as a whole. And like the standing committees of the House, the Committee of the Whole does not actually amend the bill; it only votes to recommend amendments to the House. The motion to order the previous question may not be made in Committee of the Whole, so, under a purely open amendment process, Members may offer whatever germane amendments they wish. After voting on the last amendment to the last portion of the bill, the committee rises and reports the bill back to the House with whatever amendments it has agreed to. Purely open amendment processes have been rare in recent Congresses; the amendment process is far more frequently structured by the terms of a special rule reported by the Rules Committee and adopted by the House. This process is discussed in the next section of this report. An amendment to a bill is a first-degree amendment. After such an amendment is offered, but before the committee votes on it, another Member may offer a perfecting amendment to make some change in the first degree amendment. In current floor practice, this is rare. A perfecting amendment to a first-degree amendment is a second-degree amendment. After debate, the committee first votes on the second-degree perfecting amendment and then on the first-degree amendment as it may have been amended. Clause 6 of Rule XVI also provides that a Member may offer a substitute for the first-degree amendment before or after a perfecting amendment is offered, and this substitute may also be amended. Although a full discussion of these possibilities is beyond the scope of this report, it is important to note that the amending process can become complicated, with Members proposing several competing policy choices before the Committee of the Whole votes on any of them. Debate on amendments in Committee of the Whole is governed by the five-minute rule, not the hour rule that regulates debate in the House. The Member offering each amendment (or the majority floor manager, in the case of a committee amendment) is first recognized to speak for five minutes. Then a Member opposed to the amendment may claim five minutes for debate. Other Members may also speak for five minutes each by offering a motion "to strike the last word." Technically, this motion is an amendment that proposes to strike out the last word of the amendment being debated. But it is a "pro forma amendment" that is offered merely to secure time for debate and so is not voted on when the five minutes expire. In this way, each Representative may speak for five minutes on each amendment. However, a majority of the Members can vote (or agree by unanimous consent) to end the debate on an amendment immediately or at some specified time. Also, as mentioned, if the amendment process is governed by a special rule reported by the Rules Committee and adopted by the House, that resolution will limit the number, order, and form of amendments that can be considered. Final Passage When the committee finally rises and reports the bill back to the House, the House proceeds to vote on the amendments the committee has adopted. It usually approves all these amendments by one voice vote, though Members can demand separate votes on any or all of them as a matter of right. After a formal and routine stage called "third reading and engrossment" (when only the title of the bill is read), there is then an opportunity for a Member, virtually always from the minority party, to offer a motion to recommit the bill to committee. If the House agrees to a "simple" or "straight" motion to recommit, which only proposes to return the bill to committee, the bill is taken from the floor and returned to committee. Although the committee technically has the power to re-report the bill, in practice, the adoption of a straight motion to recommit is often characterized as effectively "killing" the measure. "Straight" motions to recommit are rare. Alternatively, motions to recommit far more frequently include instructions that the committee report the bill back to the House "forthwith" with an amendment that is stated in the motion. If the House agrees to such a motion, which is debatable for 10 minutes, evenly divided, it then immediately votes on the amendment itself, so a motion to recommit with instructions is really a final opportunity for the minority party to amend the bill before the House votes on whether to pass it. Thus, this complicated mode of consideration, which the House uses to consider most major bills, begins in the House with a decision to resolve into Committee of the Whole to consider a particular bill. General debate and the amending process take place in Committee of the Whole, but ultimately it is the House that formally amends and then passes or rejects the bill. Under a Special Rule Reported by the Committee on Rules Clause 1(m) of Rule X authorizes the Rules Committee to report resolutions affecting the order of business. Such a resolution—called a "rule" or "special rule"—usually proposes to make a bill in order for floor consideration so that it can be debated, amended, and passed or defeated by a simple majority vote. In effect, each special rule recommends to the House that it take from the Union or House Calendar a measure that is not otherwise privileged business and bring it to the floor out of its order on that calendar. Typically, such a resolution begins by providing that, at any time after its adoption, the Speaker may declare the House resolved into Committee of the Whole for the consideration of that bill. Because the special rule is itself privileged, under clause 5(a) of Rule XIII, the House can debate and vote on it promptly. If the House accepts the Rules Committee's recommendation, it proceeds to consider the bill itself. One fundamental purpose of most special rules, therefore, is to make another bill or resolution privileged so that it may interrupt the regular order of business. Their other fundamental purpose is to set special procedural ground rules for considering that measure; these ground rules may either supplement or supplant the standing rules of the House. For example, the special rule typically sets the length of time for general debate in Committee of the Whole and specifies which Members are to control that time. In addition, the special rule normally includes provisions that expedite final House action on the bill after the amending process in Committee of the Whole has been completed. Special rules may also waive points of order that Members could otherwise make against consideration of the bill, against one of its provisions, or against an amendment to be offered to it. The most controversial provisions of special rules affect the amendments that Members can offer to the bill that the resolution makes in order. As noted above, an "open rule" permits Representatives to propose any amendment that meets the normal requirements of House rules and precedents—for example, the requirement that each amendment must be germane. A "modified open rule" permits amendments to be offered that otherwise comply with House rules but imposes a time limit on the consideration of amendments or requires them to be preprinted in the Congressional Record . At the other extreme, a "closed rule" prohibits all amendments except perhaps for committee amendments and pro forma amendments ("to strike the last word") offered only for purposes of debate. A "structured" rule, which is the most common type of rule, permits only certain specific amendments to be considered on the floor. These provisions are very important because they can prevent Representatives from offering amendments as alternatives to provisions of the bill, thereby limiting the policy choices that the House can make. Open rules have been rare in recent Congresses. However, like other committees, the Rules Committee only makes recommendations to the House. As noted above, Members debate each of its procedural resolutions in the House under the hour rule and then vote to adopt or reject it. If the House votes against ordering the previous question on a special rule, a Member could offer an amendment to it, proposing to change the conditions under which the bill itself is to be considered. Because the adoption of a special rule is often viewed as a "party loyalty" vote, however, such a development is exceedingly rare. All the same, it is important to remember that while the Rules Committee is instrumental in helping the majority party leadership formulate its order of business and in setting appropriate ground rules for considering each bill, the House retains ultimate control over what it does, when, and how. Unanimous Consent Legislation is sometimes brought before the House of Representatives for consideration by the unanimous consent of its Members. Long-standing policies announced by the Speaker regulate unanimous consent requests for this purpose. Among other things, the Speaker will recognize a Member to propound a unanimous consent request to call up an unreported bill or resolution only if that request has been cleared in advance with both party floor leaders and with the bipartisan leadership of the committee of jurisdiction. Senate Amendments and Conference Reports Before any bill can become law, both the House and the Senate must pass it, and the two houses must agree on each and every one of its provisions. This basic constitutional requirement means that the House must have procedures to respond when the House and Senate pass different versions of the same bill. For example, the House may pass a Senate bill with House amendments, or the Senate may pass a House bill with Senate amendments and then send its amendments to the House. In either case, the two houses must resolve their differences over these amendments before the legislative process is completed. There are essentially two ways to approach this stage of the process: (1) by dealing with the amendments individually through a process of exchanging amendments between the chambers, with the bill being sent back and forth between the House and Senate, or (2) by dealing with the amendments collectively through a conference committee of Representatives and Senators who negotiate a series of compromises and concessions that are compiled in a conference report that the two houses can vote to accept. Because the process of resolving differences between the houses can be quite complicated, only some of its basic elements are summarized here. The House normally considers Senate amendments to a House bill by unanimous consent or by suspension of the rules; the House may accept the amendments (concur in them) or amend them (concur in them with House amendments). Alternatively, the committee with jurisdiction over the bill may authorize its chair to move that the House disagree to the Senate's amendments and send them to a conference committee. When the House amends and passes a Senate bill, it may request a conference with the Senate immediately, or it may simply send its amendments to the Senate in the hope that the Senate will accept them. If the Senate refuses to do so, it may request a conference with the House instead. On the other hand, if the House and Senate can reach agreement by proposing amendments to each other's positions, the bill can be sent to the President for his signature or veto without the need to create a conference committee. This method of resolving differences is sometimes colloquially called "ping-pong," because each chamber acts in turn, shuttling the legislation back and forth as each proposes amendments to the position of the other. If the House and Senate agree to send their versions of the bill to a conference committee, the Speaker appoints the House conferees. These conferees are usually drawn from the standing committee (or committees) with jurisdiction over the bill, although the Speaker may appoint some other Representatives as well. When the House and Senate conferees meet, they are to deal only with provisions of the bill on which the two houses disagree. They should not insert new provisions or change provisions that both houses have already approved. Furthermore, as the conferees resolve each provision or amendment in disagreement, they accept the House position, the Senate position, or a compromise between them. Like almost all other House rules, the rules limiting the authority of conferees are enforced only if Members make points of order at the appropriate time. The House may also adopt a special rule, reported by the Rules Committee, waiving points of order against a conference report. To complete their work successfully, a majority of the House conferees and a majority of the Senate conferees must sign a report that recommends all the agreements they have reached. The conferees also sign a "joint explanatory statement" that describes the original House and Senate positions and the conferees' recommendations and is the functional equivalent of a legislative committee report. After Representatives have had three days to examine a conference report, it is privileged for floor consideration; it may be called up at any time that the House is not already considering something else. The report may be debated in the House under the hour rule, so the vote almost always occurs after no more than one hour of debate. No amendments to the report are in order. In practice, however, the House almost always considers conference reports under the terms of a special rule from the Rules Committee that waives all points of order against the report and its consideration. The conference report is a proposed package settlement of a number of disagreements, so the House and Senate may accept it or reject it, but they may not change it. If the two houses agree to the report by simple majority vote, all their differences have been resolved and the bill is then "enrolled," or reprinted, for formal presentation to the President. In rare instances, conferees cannot reach agreement on one or more of the amendments in conference, or they may reach an agreement that they cannot include in their conference report because their proposal exceeds the scope of the differences between the House and Senate positions (and thus violates the rules governing the content of conference reports). In either case, the conferees may report back to the two houses with an amendment (or amendments) in disagreement. After acting on the conference report and dealing collectively with all the other amendments that were sent to conference, the House acts on each of the amendments in disagreement by considering motions such as a motion to accept the Senate's amendment or a motion to amend it with a new House amendment. The Senate takes similar action until the disagreements on these amendments are resolved or until the two houses agree to create a new conference committee only to address the remaining amendments that are still in disagreement. The bill cannot become law until the two houses resolve all the differences between their positions. Voting and Quorum Procedures Whenever Representatives vote on the floor, there is almost always first a "voice vote," in which the Members in favor of the bill, amendment, or motion vote "Aye" in unison, followed by those voting "No." Before the Speaker (or the chair of the Committee of the Whole) announces the result, any Representative can demand a "division vote," in which the Members in favor stand up to be counted, again followed by those opposed. But before the result of either a voice vote or a division vote is announced, a Member may try to require another vote in which everyone's position is recorded publicly. This recorded vote is taken by using the House's electronic voting system. In Committee of the Whole, an electronic vote is ordered when 25 Members request it. In the House, such a vote occurs when demanded by at least one-fifth of the Members present. Alternatively, any Member can demand an electronically recorded vote in the House if a quorum of the membership is not present on the floor when the voice or division vote takes place. The Constitution requires that a quorum must be present on the floor when the House is conducting business. In the House, a quorum is a majority of the Representatives; in Committee of the Whole, it is only 100 Members. However, the House has traditionally assumed that a quorum is always present unless a Member makes a point of order that it is not. The rules restrict when Members can make such points of order, and they occur most often when the House or the Committee of the Whole is voting. In the House, for example, a Representative can object to a voice or division vote on the grounds that a quorum is not present and make that point of order. If a quorum is not present, the Speaker automatically orders an electronically recorded vote during which Members record their presence on the floor by casting their votes. The issue is decided and a quorum is established at the same time. A voice or division vote is valid even if less than a quorum participates in the vote so long as no one makes a point of order that a quorum is not present. For this reason, Members can continue to meet in their committees or fulfill their other responsibilities off the floor when the House is doing business that does not involve publicly recorded votes. Bringing It All Together: A Typical Day on the House Floor On most days, the House will meet two hours prior to scheduled legislative business for Morning Hour Debate, a period in which Members can make speeches of up to five minutes on subjects of their choosing. Later, the House will meet for legislative session. After the opening prayer on each day by the House chaplain (or perhaps by a guest chaplain), the Speaker announces approval of the Journal of the previous day's proceedings. A Member may require a recorded vote on agreeing to the Speaker's approval of the Journal. Following the Pledge of Allegiance, some Members may then ask unanimous consent to address the House for one minute each on whatever subjects they wish, including subjects unrelated to the scheduled legislative business of the day. The ability to set the House's floor schedule is one of the primary powers and responsibilities of the majority party leaders, and in doing so they often consult with minority party leaders. Generally speaking, to the extent possible, majority party leaders and the committee chairmen arrange the legislative schedule for each week in advance. During the last floor session of the week, the majority leader normally announces the expected schedule for the coming week in a traditional "wrap-up" colloquy with a minority party leader. Changes in the schedule may be announced as they are made. On a Monday, Tuesday, or Wednesday, the House will commonly consider multiple measures under the "suspension of the rules" procedure. Typically, recorded votes on such measures, if requested, are clustered together and taken at the end of the day. On other days of the week, the House will usually consider a major bill pursuant to a special rule reported by the House Committee on Rules. Such a special rule would be debated in the House under the hour rule, at the end of which the majority manager of the special rule would "move the previous question," which, when adopted, brings the resolution to a vote. Once adopted, the House would ordinarily consider a measure in Committee of the Whole pursuant to the terms for general debate and amendment established by the special rule. Following consideration in the Committee of the Whole, the House would take the final votes on the measure after voting on the amendments recommended by the committee and on a minority motion to recommit, which would likely be made with amendatory instructions. As each item of business is completed, the Speaker anticipates which Member should be seeking recognition to call up the next bill or resolution. If another Representative requests to be recognized instead, t he Speaker may ask, "For what purpose does the gentleman seek recognition?" The Speaker may decline to recognize that Member if the Speaker wants the House to consider another privileged measure, motion, or report. At the end of legislative business on most days, some Members address the House for as much as an hour each on subjects of their choice. These "special order" speeches are arranged in advance and organized by the party leadership. In this way, Representatives can comment at length on current national and international issues and discuss bills that have not yet reached the House floor. The House often adjourns by early evening, although it may remain in session later when the need arises or when the end of the annual session or some other deadline approaches. Sources of Additional Information The House rules for each Congress are published in a volume often called the House manual but officially entitled Constitution, Jefferson's Manual and Rules of the House of Representatives . A new edition of this collection is published each Congress. The precedents of the House established through 1935 have been compiled in the 11-volume set of Hinds' and Cannon's Precedents of the House of Representatives . More recent precedents are published as Deschler's or Deschler-Brown -Johnson Precedents of the U.S. House of Representatives ; 18 volumes of this set now are available. Volume 1 of a fourth series of House precedents, Precedents of the United States House of Representatives , was initiated in 2017, and additional volumes are expected in the future. The House's procedures are summarized in House Practice: A Guide to the Rules, Precedents and Procedures of the House , by Charles W. Johnson, John V. Sullivan, and Thomas J. Wickham Jr., Parliamentarians of the House. The most recent version of House Practice was published in 2017. The Parliamentarian and his assistants welcome inquiries about House procedures and offer expert assistance compatible with their other responsibilities. CRS Reports CRS Report 98-995, The Amending Process in the House of Representatives , by Christopher M. Davis. CRS Report RL32200, Debate, Motions, and Other Actions in the Committee of the Whole , by Bill Heniff Jr. and Elizabeth Rybicki. CRS Report 97-552, The Discharge Rule in the House: Principal Features and Uses , by Richard S. Beth. CRS Report RL30787, Parliamentary Reference Sources: House of Representatives , by Richard S. Beth and Megan S. Lynch. CRS Report 98-696, Resolving Legislative Differences in Congress: Conference Committees and Amendments Between the Houses , by Elizabeth Rybicki. CRS Report 97-780, The Speaker of the House: House Officer, Party Leader, and Representative , by Valerie Heitshusen. CRS Report 98-314, Suspension of the Rules in the House: Principal Features , by Elizabeth Rybicki. CRS Report 98-870, Quorum Requirements in the House: Committee and Chamber , by Christopher M. Davis.

The daily order of business on the floor of the House of Representatives is governed by standing rules that make certain matters and actions privileged for consideration. On a day-to-day basis, however, the House can also decide to grant individual bills privileged access to the floor, using one of several parliamentary mechanisms. The standing rules of the House include several different parliamentary mechanisms that the body may use to act on bills and resolutions. Which of these will be employed in a given instance usually depends on the extent to which Members want to debate and amend the legislation. In general, all of the procedures of the House permit a majority of Members to work their will without excessive delay. The House considers most legislation by motions to suspend the rules, with limited debate and no floor amendments, with the support of at least two-thirds of the Members voting. Occasionally, the House will choose to consider a measure on the floor by the unanimous consent of Members. The Rules Committee is instrumental in recommending procedures for considering major bills and may propose restrictions on the floor amendments that Members can offer or bar them altogether. Many major bills are first considered in Committee of the Whole before being passed by a simple majority vote of the House. The Committee of the Whole is governed by more flexible procedures than the basic rules of the House, under which a majority can vote to pass a bill after only one hour of debate and with no floor amendments. Although a quorum is supposed to be present on the floor when the House is conducting business, the House assumes a quorum is present unless a quorum call or electronically recorded vote demonstrates that it is not. However, the standing rules preclude quorum calls at most times other than when the House is voting. Questions are first decided by voice vote, although any Member may then demand a division vote. Before the final result of a voice or division vote is announced, Members can secure an electronically recorded vote instead if enough Members desire it or if a quorum is not present in the House. The constitutional requirements for making law mean that each chamber must pass the same measure with the identical text before transmitting it to the President for his consideration. When the second chamber of Congress amends a measure sent to it by the first chamber, the two chambers must resolve legislative differences to meet this requirement. This can be accomplished by shuttling the bill back and forth between the House and Senate, with each chamber proposing amendments to the position of the other, or by establishing a conference committee to try to negotiate a compromise version of the legislation.

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Introduction There are about 150 ombudsman offices located throughout the federal government. About a third of them are statutorily authorized. The others were created through executive action. Although there are differences among them in terms of their origin, staffing, funding, and organizational structure, they are all tasked with receiving and helping to resolve disputes in an impartial manner. Some ombudsman offices are limited to helping to resolve disputes that arise within the federal agency in which they are housed. Others are limited to helping to resolve disputes received from the agency's clients. Still others may help to resolve disputes that arise both within the federal agency and from the agency's clients. The Office of the National Ombudsman, housed within the U.S. Small Business Administration (SBA), is fairly unique in that it is authorized to help resolve disputes received from the public across federal agencies. It was created in 1996 as part of P.L. 104-121 , the Contract with America Advancement Act of 1996 (Title II, the Small Business Regulatory Enforcement Fairness Act of 1996 [SBREFA]). It is a relatively small office, with authorization for up to seven employees. It currently has five employees: a Deputy National Ombudsman (Mina Wales), an administrative officer, an external outreach manager, and two case management specialists. The National Ombudsman position, which is currently vacant, is appointed by the SBA Administrator. The Office of the National Ombudsman's primary purpose is to provide small businesses, small government entities (those serving populations of less than 50,000), and small nonprofit organizations that believe they have experienced unfair or excessive regulatory compliance or enforcement actions (such as repetitive audits or investigations, excessive fines, and retaliation by federal agencies) a means to comment about such actions. As an impartial liaison, the Office of the National Ombudsman "directs reported regulatory fairness matters to the appropriate agency for high-level fairness review, and works across government to address those concerns, reduce regulatory burdens, and help small businesses succeed." SBREFA also created a five-person Small Business Regulatory Fairness Board in each of the SBA's 10 regions to advise the National Ombudsman on matters related to federal regulatory enforcement activities affecting small businesses. Specifically, SBREFA directs the SBA Administrator to designate an ombudsman to work with each federal agency with regulatory authority over small businesses to ensure that small businesses that receive or are subject to an audit, on-site inspection, compliance assistance effort, or other enforcement-related communication or contact by federal agency personnel are provided a means to comment on those regulatory compliance and enforcement activities; receive comments from small businesses regarding actions by federal agency employees conducting small business regulatory compliance or enforcement activities; refer comments to the affected federal agency's inspector general in appropriate circumstances and maintain the confidentiality of the person or small business making these comments; based on substantiated comments received from small businesses and Small Business Regulatory Fairness Boards, annually report to Congress and affected federal agencies an evaluation of the federal agency's regulatory compliance and enforcement activities, including a rating of the agency's responsiveness to small businesses; provide the affected federal agency with an opportunity to comment on the National Ombudsman's annual report to Congress prior to publication and include in the final report a section in which the affected federal agency may comment on issues that are not addressed by the National Ombudsman in revisions to the draft; and coordinate and report annually on the Small Business Regulatory Fairness Boards' activities, findings, and recommendations to the SBA Administrator and the heads of affected federal agencies. This report examines the Office of the National Ombudsman's origin and history; describes its organizational structure, funding, functions, and current activities; and discusses a recent legislative effort to enhance its authority. During the 115 th Congress, S. 1146 , the Small Business Regulatory Relief Act of 2017, would have, among other provisions, expanded the National Ombudsman's authority to work with federal agencies on the development of best practices for educating, training, and assisting small entities in understanding and complying with federal regulations; authorized the National Ombudsman to evaluate federal agency regulatory compliance guides, ensure that those guides are available to small business development centers and other SBA management and training resource partners, conduct small business customer service surveys on an ongoing basis to assess the timeliness and quality of federal agency regulatory activities, and develop an outreach program to promote awareness of the National Ombudsman's activities; and authorized to be appropriated such sums as are necessary to carry out these additional responsibilities. Origin On March 19, 1996, the Senate passed, 100-0, S. 942 , the Small Business Regulatory Enforcement Fairness Act of 1996. The bill, which included provisions creating the Office of the National Ombudsman and 10 regional Small Business Regulatory Fairness Boards, was later incorporated into P.L. 104-121 , the Contract with America Advancement Act of 1996. The bill was based on recommendations of the 1995 White House Conference on Small Business. The 1995 White House Conference on Small Business, like its 1980 and 1986 predecessors, was preceded by state conferences and regional meetings. The 1,904 delegates to the 1995 White House Conference on Small Business considered more than 150 policy recommendations forwarded from the regional meetings and six petitions. Through a series of votes, the delegates narrowed the list of policy recommendations to 60, which were sent to the President and Congress for consideration. Improving the Regulatory Flexibility Act was the 3 rd highest vote-getter (1,398 votes) at the conference and paperwork and regulatory reform was the 25 th highest vote-getter (1,046 votes). SBREFA addressed both recommendations. The Office of the National Ombudsman and the Small Business Regulatory Fairness Boards were created to address the recommendation concerning federal regulatory reform. During Senate floor debate, the bill's proponents argued that the Office of the National Ombudsman was part of the bill's overall effort to create a "more cooperative and less punitive regulatory environment between agencies and small business that is less threatening and more solution-oriented than we have achieved in the past." They argued that it would "help small businesses get fair and legal treatment from the government if they have been treated unfairly" and "also assist small businesses in recovering legal fees as a result of unfair Government actions." During floor debate, Senator John Glenn indicated that he supported the legislation but was concerned that the Office of the National Ombudsman and the Small Business Regulatory Fairness Boards could "end up creating a one-sided record of complaints that will distort the broad public mission of our agencies." He also indicated that federal agencies are not "the enemy when they carry out the laws passed by the people's representatives in Congress" and was "happy, at least, that in the final version of the bill before us, the Ombudsman will focus on general agency enforcement activity and not attempt to evaluate or rate the performance of individual agency personnel." Senator Carl Levin also supported the legislation but argued that "the committee [on Small Business] should have taken more time to look at the pros and cons of placing an ombudsman in each regulatory agency, rather than relying on a lone ombudsman in the Small Business Administration to cover all agencies." History Initially, the Office of the National Ombudsman was located in Chicago and had a three-person staff. The first National Ombudsman (Peter Barca) was appointed in November 1996, and 50 small business owners were appointed to the 10 Small Business Regulatory Fairness Boards in that same month. The Small Business Regulatory Fairness Boards were all chartered by February 1997, and became operational in June 1997. During its first year, the Office of the National Ombudsman also created its first small business appraisal form to receive small business comments, developed a structure to evaluate federal agency regulatory compliance and enforcement activities, instructed Small Business Fairness Board members about SBREFA, published a brochure, established its toll-free 1-888-REGFAIR telephone number, created a website, and held 10 public hearings across the nation "to enable small businesses to publicly bring forth their concerns of the regulatory enforcement structure." The Office of the National Ombudsman also received 735 telephone calls, had more than 56,000 hits on its website, and had 110 small businesses initiate an appraisal form. Fifty filed a completed appraisal form, and 33 of these forms were forwarded to federal agencies for responses. To the dismay of some Members, the Office of the National Ombudsman did not issue a report card on federal agency compliance and enforcement practices in its first annual report to Congress, dated December 31, 1997, primarily because the National Ombudsman felt that the office had not had sufficient small business participation to grade the agencies' performance. Instead, the National Ombudsman provided synopses of 12 small business appraisal forms that illustrated what the National Ombudsman identified as "four common themes in the regulatory environment" that are faced by small businesses: "(1) agencies change their rules in the middle of the game; (2) agencies disregard the economic and other consequences of their actions on small businesses; (3) small businesses often get ensnarled in conflicting regulatory requirements when two federal agencies' jurisdiction overlap; and (4) small businesses fear federal agency retaliation." In FY1998, the SBA provided the Office of the National Ombudsman its first annual budget (see Table 1 ). The SBA provided $500,000 ($351,000 was actually spent that year), sufficient to hire seven staff members (a writer, clerk or receptionist, agency investigator, attorney, public information officer, special assistant, and policy coordinator), and pay for travel, printing, and overhead expenses (photocopying, telephone line, postage, supplies, etc.). Actual staffing levels have varied somewhat over the years. Including the National Ombudsman, there were 3 staff members in FY1997, 11 in FY1999, 9 in FY2000, 8 in FY2002, 7 from FY2007 to FY2014, 4 from FY2015 to FY2017, 6 in FY2018, and 5 in FY2019. As mentioned previously, the Office of the National Ombudsman has authorization for up to seven employees (including the National Ombudsman position, which is currently vacant). The Office of the National Ombudsman's annual report to Congress subsequently included its mandated report card on federal agency regulatory performance, and that section of the report became the focus of congressional hearings, primarily because several federal agencies received relatively low grades, especially in the timeliness of their responses to small business comments. The National Ombudsman added a "best practices" section to the annual report to Congress "so one agency would know what the other agencies are doing and have that dialogue going on, and to encourage them" to do better. Peter Barca left the National Ombudsman position in July 1999, leaving the position vacant until January 2000 when Gail A. McDonald was appointed the second National Ombudsman. Shortly after her appointment, the SBA's Administrator at that time, Aida Alvarez, decided to relocate the Office of the National Ombudsman from Chicago to SBA's headquarters in Washington, DC, reportedly in an effort to increase the office's "visibility" within the administration. The physical relocation was completed in August 2001. In 2002, the Office of the National Ombudsman entered into a memorandum of understanding with the SBA Office of Advocacy in which both parties "pledged the highest degree of cooperation" and the Office of Advocacy (which focuses on issues related to the development of federal regulations and their impact on small businesses) agreed "to offer the services of its Regional Advocates in planning the Ombudsman's regional fairness board hearings." In 2003, the third National Ombudsman, Michael L. Barrera, testified during a congressional hearing that "as public awareness of ONO [Office of the National Ombudsman] grows, cooperation among the small business community and Federal regulatory agencies is [also] growing." He noted that federal agency attendance at Small Business Regulatory Fairness Board hearings "has improved dramatically" and pointed out that the Internal Revenue Service, through its Taxpayer Advocate system, "now attends every RegFair Hearing and Roundtable conducted by ONO." In 2006, the Office of the National Ombudsman renewed its previous memorandum of understanding with the SBA Office of Advocacy "to foster increased cooperation between the offices as they both work to provide a more small business friendly regulatory environment." Specifically, the Office of the National Ombudsman agreed to receive comments and concerns regarding the impact of regulations on small business and the burden of regulatory compliance and federal regulatory enforcement; where appropriate, forward such comments to the Office of Advocacy; provide information and materials generated through the Office of the National Ombudsman's activities that are more appropriately within the Office of Advocacy's jurisdiction; and promote the SBA's programs and services, including the Office of Advocacy's regulatory and research role, through its various hearings and roundtables and "include the Office of Advocacy Regional Advocates in the planning and implementation of those activities as appropriate." The SBA Office of Advocacy, which has a larger budget and more staff than the Office of the National Ombudsman, agreed to provide material that may be distributed to participants in the Office of the National Ombudsman's Regulatory Fairness Program; and provide the National Ombudsman with regulatory complaints and other information generated by small business interests that are more appropriately within the Office of the National Ombudsman's jurisdiction. The Office of Advocacy's FY2019 appropriation is $9.120 million and it has authorization for 52 full-time equivalent employees. In recent years, Congress has focused increased attention on the Office of the National Ombudsman's efficacy in helping small businesses resolve their regulatory disputes with federal agencies, as opposed to focusing on how many small businesses contacted the office, submitted a formal comment, or participated in one of the office's hearings and roundtable discussions. For example, in 2016, the House Committee on Small Business noted that the National Ombudsman "has no investigative capacity nor authority to overrule, stop or delay a federal action" and asked the National Ombudsman to report back to the committee the percentage of cases that were referred to federal agencies for resolution in FY2014 (420) that resulted in a favorable outcome for the small businesses, "such as reduction of a penalty." The National Ombudsman reported that 41 of the 420 small businesses (about 10%) that had a regulatory compliance or enforcement dispute forwarded to a federal agency in FY2014 for resolution received a favorable outcome. Current Organizational Structure and Funding As noted previously, the Office of the National Ombudsman has authorization for seven employees (including the National Ombudsman position, which is vacant) and currently has five employees: a Deputy National Ombudsman, an administrative officer, an external outreach manager, and two case management specialists. The 10 Small Business Regulatory Fairness Boards are required to meet at least annually to advise the National Ombudsman on matters related to federal agency small business regulatory activities, report substantiated instances of excessive federal enforcement actions against small businesses, and prior to publication, comment on the National Ombudsman's annual report to Congress. The boards are composed of five volunteers who are an owner, operator, or officer of a small business. Board members are appointed by the SBA Administrator, after receiving the recommendations of the chair and ranking minority member of the House Committee on Small Business and the Senate Committee on Small Business and Entrepreneurship. No more than three board members may be of the same political party, they cannot be a federal officer or employee, in either the executive branch or Congress, and they serve at the pleasure of the SBA Administrator for terms of three years or less. The boards are based in the SBA's 10 regions Region 1 (serving Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont); Region 2 (serving New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands); Region 3 (serving Delaware, Maryland, Pennsylvania, Virginia, West Virginia, and the District of Columbia); Region 4 (serving Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee); Region 5 (serving Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin); Region 6 (serving Arkansas, Louisiana, New Mexico, Oklahoma, and Texas); Region 7 (serving Iowa, Kansas, Missouri, and Nebraska); Region 8 (serving Colorado, Montana, North Dakota, South Dakota, Utah, and Wyoming); Region 9 (serving Arizona, California, Hawaii, Nevada, and the territories of Guam and American Samoa); and Region 10 (serving Alaska, Idaho, Oregon, and Washington). As shown in Table 1 , the SBA provided the Office of the National Ombudsman $1.313 million in FY2018, and an estimated $1.143 million in FY2019. The SBA has requested $1.438 million for FY2020. Unlike the SBA's Office of Advocacy, which is also tasked with serving as an independent advocate for small businesses in the regulatory process (but primarily at the developmental stage), the Office of the National Ombudsman does not have its own funding account. The SBA funds the Office of the National Ombudsman through its salaries and expenses' executive direction subaccount. That account includes funding for the SBA's Office of the Administrator, Office of General Counsel, Office of Government Relations, Office of Hearings and Appeals, Office of Marketing and Communications, Office of Performance Management and Chief Financial Officer, and the National Ombudsman. The Office of Advocacy was also funded through that account, but Congress directed the SBA to provide the Office of Advocacy its own budgetary account in P.L. 111-240 , the Small Business Jobs Act of 2010, as a means to enhance the Office of Advocacy's independence from the SBA Administrator. To date, similar legislation has not been introduced to provide the Office of the National Ombudsman its own funding account within the SBA. Instead, ombudsman advocates have argued that ombudsman offices "should not have duties within the agency that might create a conflict with their responsibilities as a neutral, and their budgets should be publicly disclosed." The Ombudsman's Regulatory Activities and Outreach Efforts Small businesses that believe they have experienced excessive or unfair federal regulatory compliance or enforcement actions may file a formal comment with the Office of the National Ombudsman. The formal comment typically includes the following basic information and a signed consent form (SBA Form 1993) authorizing the Office of the National Ombudsman to pursue the matter with the federal agency: a description of the specific action taken by the federal agency and the results of this action; the specific resolution sought; and any relevant documentation. These comments may be filed online or in paper form, and commenters can receive information regarding the comment form or information about the Office of the National Ombudsman by calling the National Ombudsman's Regulatory Fairness Helpline at 888-REG-FAIR. In addition, small businesses may file comments "on-the-spot" at any of the Office of the National Ombudsman's regional hearings and roundtables. Once a comment is submitted, a case management specialist reviews the case and any supporting documentation to ensure that the necessary authorization and other information are present. The case management specialist then determines how the Office of the National Ombudsman can best assist the small business, advises the small business of expected next steps, and, if the comment is to be forwarded to a federal agency, explains the parameters of the SBREFA review. Comments forwarded to a federal agency include a request for "a prompt, high-level, responsive review of the matter reported." The federal agency is asked to consider the fairness of the case from a small business perspective and "to provide a practical, timely response that balances the spirit of the regulation with the specific circumstances of the small business." All comments are handled on a confidential, protected basis, and can be raised anonymously, if preferred by the small business. The case management specialist then follows up with the federal agency and the small business as appropriate and communicates with the small business owners the actions taken to assist them. In FY2018, the Office of the National Ombudsman assisted 354 small businesses, responded to numerous general inquiries, conducted 10 regional regulatory fairness roundtables across 5 of its regions, completed 118 outreach events, and initiated contact with 100 trade associations representing more than 2 million small business owners and SBA resource partners. The National Ombudsman also met with senior officials representing 27 federal agencies. In addition, the National Ombudsman's annual report includes a report card providing letter grades (which can range from A to F) for each federal agency (and in several instances, for individual offices within the federal agency) two grades rating the agency's responsiveness to small business concerns (the timeliness of the agency's response and the quality of the response); three grades rating the agency's compliance with SBREFA (the agency's nonretaliation policies against small business commenters, the provision of regulatory compliance assistance to small businesses, and the provision of notice to small businesses of their rights under SBREFA); and an overall grade. In FY2017, 39 federal agencies and offices received an overall grade of A, 1 received an overall grade of B, 1 received an overall grade of C, and the Department of Veterans Affairs received an overall grade of D. No agencies received an overall grade of F. Current Congressional Issues Some Members and small business advocates have argued that the Office of the National Ombudsman should be provided additional resources. For example, on March 29, 2017, a small business advocate argued the following at a Senate Committee on Small Business and Entrepreneurship hearing: Where the Office of Advocacy works on the front end of a development of a significant regulation, the Office of the National Ombudsman is charged with helping small businesses on the back end, with all regulation compliance. It serves as the conduit for small businesses to have their grievances about compliance problems, or other issues, with Federal agencies, heard directly by the agencies, in an effort for successful resolution. In this way, the Office of the National Ombudsman, and the agencies, can detect patterns of compliance problems so that the agencies can revisit rules for modification. This important component of the rulemaking process is woefully underfunded. The Office of the National Ombudsman actually relies on volunteers to help get the message out about its vital small business services. It is, for the most part, unknown and underutilized. If Congress really wants to help small businesses with Federal regulations, invest more in the small business outreach, support, and feedback loop. As mentioned previously, many small businesses that submit formal comments to the Office of the National Ombudsman do not receive a favorable outcome from the federal agency. Some Members and small business advocates have argued that the Office of the National Ombudsman should be provided additional authority to assist small businesses in their efforts to resolve their regulatory disputes with federal agencies. For example, during the 115 th Congress, S. 1146 , the Small Business Regulatory Relief Act of 2017, would have, among other provisions, expanded the National Ombudsman's authority to work with federal agencies on the development of best practices for educating, training, and assisting small entities in understanding and complying with federal regulations; authorized the National Ombudsman to evaluate federal agency regulatory compliance guides, ensure that those guides are available to small business development centers and other SBA management and training resource partners, conduct small business customer service surveys on an ongoing basis to assess the timeliness and quality of federal agency regulatory activities, and develop an outreach program to promote awareness of the National Ombudsman's activities; and authorized to be appropriated such sums as are necessary to carry out these additional responsibilities. Others Members appear unconvinced that providing the Office of the National Ombudsman additional resources and/or authority is necessary. They have argued, for example, that the best way to reduce small business regulatory burden is not more government but less regulation. Concluding Observations The Office of the National Ombudsman is a small office with a relatively large mandate—to serve as an impartial liaison across federal agencies for small businesses that believe they have not been treated fairly in the enforcement of federal regulations. It faces several challenges. First, the Office of the National Ombudsman is generally recognized as being an independent, impartial office, but it is housed within the SBA and remains subject to its influence through (1) its proximity to the agency and its organizational culture; (2) the budgetary process, which provides the SBA Administrator the authority to determine the Office of the National Ombudsman's budget; and (3) the appointment and removal process, which provides the SBA Administrator the authority to hire and fire the ombudsman. In addition, the sheer size of the SBA (more than 3,200 full-time employees and an annual budget of about $700 million) relative to the Office of the National Ombudsman, and the existence of the SBA's Office of Advocacy, which has a similar mission (but focused primarily on regulatory development as opposed to regulatory compliance and enforcement), makes it more difficult than would otherwise be the case for the Office of the National Ombudsman to be recognized by stakeholders as the definitive voice for small businesses in the regulatory process. Second, the National Ombudsman has often had a relatively short tenure. The last two National Ombudsmans (Earl L. Gay and Nathan J. Miller) each served for about a year. The National Ombudsman has left office for various reasons, such as a change in Administration or for opportunities in the private sector. Frequent turnover can lead to continuity problems for the office. Third, the Office of the National Ombudsman does not have the authority to compel federal agencies to undertake specific actions to resolve disputes. As a result, although its annual rating of federal agency responsiveness to small business concerns does provide it a means to exert some influence on federal agency actions, its role in resolving disputes is somewhat constrained. Finally, the Office of the National Ombudsman's relatively limited budget and staffing level restricts its ability to engage in outreach activities that could increase small business awareness of its existence and services.

The Office of the National Ombudsman was created in 1996 as part of P.L. 104-121, the Contract with America Advancement Act of 1996 (Title II, the Small Business Regulatory Enforcement Fairness Act of 1996 [SBREFA]). Housed within the U.S. Small Business Administration (SBA), the office's primary purpose is to provide small businesses, small government entities (those serving populations of less than 50,000), and small nonprofit organizations that believe they have experienced unfair or excessive regulatory compliance or enforcement actions (such as repetitive audits or investigations, excessive fines, and retaliation by federal agencies) a means to comment about such actions. The Office of the National Ombudsman is an impartial liaison that reports small business regulatory fairness matters to the appropriate federal agency for review and works across government to address those concerns and reduce regulatory burdens on small businesses. SBREFA also created 10 Small Business Regulatory Fairness Boards, one in each of the SBA's 10 regions, to advise the National Ombudsman on matters related to federal regulatory enforcement activities affecting small businesses. Specifically, the National Ombudsman works with each federal agency with regulatory authority over small businesses to ensure that small businesses are provided a means to comment on the federal agency's regulatory compliance and enforcement activities; receives comments from small businesses regarding actions by federal agency employees conducting small business regulatory compliance or enforcement activities; refers comments to the affected federal agency's inspector general in appropriate circumstances while maintaining the confidentiality of the person or small business making these comments; issues an annual report to Congress and affected federal agencies evaluating the agency's compliance and enforcement activities, including a rating of their responsiveness to small businesses; provides the affected federal agency with an opportunity to comment on the annual report prior to publication and includes in the report a section in which the affected federal agency may comment on issues that are not addressed by the National Ombudsman in revisions to the draft; and coordinates and reports annually on the Small Business Regulatory Fairness Boards' activities, findings, and recommendations to the SBA Administrator and the heads of affected federal agencies. This report examines the Office of the National Ombudsman's origin and history; describes its organizational structure, funding, functions, and current activities; and discusses a recent legislative effort to enhance its authority. During the 115th Congress, S. 1146, the Small Business Regulatory Relief Act of 2017, would have, among other provisions, expanded the National Ombudsman's authority to work with federal agencies on the development of best practices for educating, training, and assisting small entities in understanding and complying with federal regulations; and authorized the National Ombudsman to evaluate federal agency regulatory compliance guides, ensure that those guides are available to small business development centers and other SBA management and training resource partners, conduct small business customer service surveys on an ongoing basis to assess the timeliness and quality of federal agency regulatory activities, and develop an outreach program to promote awareness of the National Ombudsman's activities. This report also discusses some challenges facing the Office of the National Ombudsman although it is generally recognized as an independent, impartial office, it is housed within the much larger SBA and remains subject to its influence; the National Ombudsman has often stayed in the position for a relatively short time. Frequent turnover can lead to continuity problems for the office; it does not have the authority to compel federal agencies to undertake specific actions to resolve disputes. As a result, although its annual rating of federal agency responsiveness to small business concerns does provide it a means to exert some influence on federal agency actions, its role in resolving disputes is somewhat constrained; and its relatively limited budget and staffing level restrict its ability to engage in outreach activities that could increase small business awareness of its existence and services.

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1. What is an intern? How is an intern different from a volunteer, fellow, or a page? A number of opportunities exist for individuals who are not regular congressional employees to provide assistance to congressional offices. The titles used to describe these positions are sometimes used interchangeably, but there can also be some key differences. An intern is an individual who provides assistance, paid or unpaid, to a congressional office on a temporary basis. The internship experience is typically considered to provide an educational benefit for that individual. An intern's role does not substitute for or replace the duties of regular employees. If an intern is paid, then some of the rules applicable to congressional employees may apply. This report focuses on congressional interns, as described above, although their role can sometimes seem similar to individuals in the following positions: A volunteer also provides assistance to a congressional office, and the experience is generally considered to be of educational value for the volunteer. In many cases, a volunteer's role in a congressional office can be similar to that of an unpaid intern. A volunteer cannot receive financial compensation for his or her service. The volunteer's assignments are not to replace the regular duties of paid employees. A fellow is an individual who also performs services in a congressional office on a temporary basis, but typically through participation in an established, graduate-level or mid-career education program. Fellows often receive compensation from a sponsoring employer, professional association, or other organization while working in Congress during the course of the fellowships. Congressional offices may try to recruit fellows and work with existing programs, but a fellowship is usually not a position a congressional office creates on its own. A page is a high-school junior, at least 16 years old, who participates in a more structured program for a semester or summer. Pages continue to serve in the Senate, but the House program was discontinued in 2010. Although they are appointed by individual Senators, the pages provide assistance as a group in the Senate chamber, and receive housing, education, and a stipend from the Senate. 2. What congressional rules specifically apply to interns? Few statutes or standing rules of the House or Senate make specific references to congressional interns. In many cases, the distinction between a paid internship and an unpaid internship affects which formal rules apply to interns. Guidance and policies for House interns can be found in the House Ethics Manual , in the Members' Congressional Handboo k , Congressional C ommittee Handbook , from the House Committee on Ethics, and from the Committee on House Administration. For Senate interns, guidance and policies are mainly found in the Senate Ethics Manual , from the Senate Select Committee on Ethics, and from the Senate Committee on Rules and Administration. Congressional offices can choose to set additional rules for their interns to follow. House or Senate rules that apply to paid congressional employees generally extend to paid interns as well. These might include, but are not limited to, the Code of Official Conduct for the appropriate chamber, gift restrictions, ban on solicitations, and prohibition on payment for a speech, appearance, or publication. Financial disclosure rules may also apply in the Senate if the intern is receiving compensation from a source other than the U.S. government. Paid interns are exempt from some provisions of the Fair Labor Standards Act (FLSA) that otherwise apply to congressional staff, like minimum wage and overtime pay requirements, as well as employee benefits, like insurance and retirement. Fewer House or Senate rules may apply to unpaid interns than to paid interns. To enhance accountability for unpaid interns, the House or Senate ethics committees or individual congressional offices can set standards for unpaid interns to abide by that mirror some of the same rules that paid interns or congressional employees follow. A congressional office can enforce the rules it sets as internal office policies for unpaid interns, whereas the House and Senate institutionally may have fewer enforcement mechanisms affecting unpaid interns. The House Committee on Ethics, for example, advises that offices obtain an agreement in writing from unpaid interns at the outset of an internship. This agreement would acknowledge that the intern agrees "to serve without compensation and to not make any future claim for payment, and acknowledge that the voluntary service does not constitute House employment." The committee also suggests that unpaid interns refrain from actions that present themselves as congressional officers or employees. The Senate Select Committee on Ethics requires that unpaid interns file a disclaimer with the Financial Clerk of the Senate acknowledging that their service is voluntary, or gratuitous, in nature. The committee also notes that the conflict-of-interest provisions in the Standing Rules of the Senate "apply to any intern, fellow, or volunteer providing Senate services," even if the individual is only working for a single day. Interns performing full-time services in the Senate for over 90 days during a calendar year are also required to abide by the Senate Code of Conduct. Use of Official Email, Social Media, and Technology Resources It may be useful for House and Senate interns to familiarize themselves with the broader technology-use policies that apply to congressional offices. Computers, email accounts, internet access, and other technology resources provided to interns by the congressional office primarily should be used for official congressional business with any personal use limited and incidental. Because information sent and received from a congressional computer or network may be traced back to a particular office, an office may choose to implement additional standards for interns' incidental computer and internet usage. Offices may also develop guidelines for what is or is not permissible for interns to post on social media or public websites about their work. Giving and Receiving Gifts Paid interns are required to follow the House or Senate gift rules that apply to regular employees, and the House and Senate ethics committees advise that unpaid interns should also abide by the gift rules. Generally, these rules prohibit (1) receiving gifts from lobbyists or foreign agents, (2) receiving any individual gift valued at over $50, and (3) receiving $100 or more in gifts (each valued at $10 or more) from a single source. In most cases, it is typically permissible for a Member, staffer, or office to give an intern a small gift in recognition of his or her service. Federal law, however, prohibits supervisors from accepting gifts from interns. 3. What other information might an office provide to interns? Offices often provide additional information or guidance to interns about congressional operations or resources. Offices, for example, might provide an overview of the House or Senate rules that apply to interns, or clarify their own office policies regarding attendance, technology use, phone etiquette, and other expectations. Information about emergency procedures and contact information for the appropriate police or medical services is commonly provided. Some offices may provide interns with a basic overview of the legislative process or how to perform legislative research. Locations of buildings or offices within the Capitol Complex and information on dining facilities and other on-site services may be useful for interns on Capitol Hill, and similar information about the area surrounding a state or district office could be provided to interns in those offices. 4. What is the selection process for interns? House and Senate offices are able to set many of their own requirements for intern selection, just as they are with general personnel decisions. Some offices, for example, may require that interns are currently enrolled students, have reached a certain level of education, or that interns live in a Member's district or state. Many congressional offices post internship opportunities and application procedures on their websites. House offices can use the House Vacancy Announcement and Placement Service to post an internship announcement and may also request resumes from its resume bank. Similarly, the Senate Placement Office can publish opportunities for internships, collect applications, or provide resumes from its resume bank if a Senate office chooses to use the service. 5. Do interns have to be U.S. citizens? In many instances, Members of Congress have broad discretion to determine who works in their offices, but different laws, rules, and considerations may apply to a noncitizen's potential service, based on the individual's status, particularly if the individual receives pay. House offices may wish to contact the Office of the General Counsel, Committee on Ethics, or the Committee on House Administration before employing a noncitizen as an intern. In the Senate, offices may wish to contact the Senate Disbursing Office, Office of Legal Counsel, Select Committee on Ethics, or the Committee on Rules and Administration for guidance on employing noncitizen interns. The House and Senate ethics manuals provide some general guidance for congressional offices on working with foreign-national interns. Conflict-of-interest considerations may affect the responsibilities an office chooses to assign to a foreign-national intern. Interns who are foreign-nationals should not be assigned duties that might influence U.S. policy in a way that benefits the intern's home country. As with interns who are U.S. citizens or nationals, a foreign-national intern who receives outside funding for an internship should not be assigned work responsibilities that might affect the intern's employer or other sponsoring organization. 6. Can interns participate in campaign activities? Member offices are to be careful not to mix official congressional resources with campaign resources. Interns working in a congressional office may also work for a political campaign, but the two responsibilities are to be carefully delineated and kept separate so that congressional time, property, facilities, equipment, or other resources are not used for electoral campaigns. The prohibitions against using congressional resources for political purposes extend broadly and include any campaign activities within House or Senate offices, rooms, and buildings, even if such activities are conducted online using a staffer's personal account or device. 7. Can interns be related to Members or regular employees? If an intern is paid, then the standard prohibitions regarding nepotism or employment of relatives established in law and House or Senate rules apply. Because each congressional office is its own hiring authority, an intern may be related to another Member or staff in a different office without violating these rules. The House Ethics Committee also notes that a Member in the House can accept volunteer services from immediate family. 8. Is there a minimum or maximum age for interns? Often, interns in congressional offices are college-age individuals or recent college graduates between 18 and 24 years old. Historically, individuals under 18 generally serve Congress as pages. There is no minimum age for congressional interns. If working with interns who are under 18, an office may want to consider the potential concerns related to working with minors and carefully evaluate the job-related skills and maturity of the prospective intern. There is also no maximum age for interns. Older individuals returning to higher education, considering a career change, or seeking a congressional internship for other reasons could also receive an educational benefit from such service and may have useful experience to share with a congressional office. In 1978, the Senate initiated a Senior Citizen Internship Program for individuals over 60 years old; the program operated for a number of years, but is currently inactive. 9. How long does an internship last? Internship lengths often reflect time periods designated by the academic calendar, occurring, for example, over the course of the fall or spring semester, or during the summer. On their websites, some congressional offices advertise three-week internships, whereas others expect interns to serve for multiple months. Internship lengths within the same office can vary too, depending on the intern's availability and the office's resource constraints. There are no minimum lengths for House or Senate internships in statute, but certain considerations may affect the parameters offices choose for how long an internship should last. Congressional documents generally state that internships serve primarily as an educational experience. To meet this expectation, a congressional office may determine a minimum length for internships based on the amount of time it believes necessary to provide a sufficient learning opportunity. More detailed guidance is available for the maximum length of internships. Paid interns in the House can serve no longer than 120 days during a 12-month period. For unpaid interns, House guidance for Member offices suggests that "limitations should be imposed on ... the duration of services any one volunteer may provide," to ensure "that such voluntary assistance does not supplant the normal and regular duties of paid employees." The Senate Handbook notes that an internship should be for a total period not exceeding 12 months, and the Office of Workplace Rights (formerly Office of Compliance) has previously suggested the same maximum length for internships. 10. Can interns receive congressional pay? Interns may receive pay from the congressional office they work in, if the office decides to provide it. FY2019 appropriations for the House and Senate provide some designated funding for internships in Members' personal offices in each chamber. Members may also use their own office resources, such as from the Members' Representational Allowance (MRA) in the House and the Senators' Official Personnel and Office Expense Account (SOPOEA) in the Senate, to provide compensation for interns. Committees or other congressional offices may provide compensation for interns through their appropriate accounts designated for staff salaries. In the House, the Committee on House Administration has set a gross annual rate of pay for interns for Member and committee offices to follow. Paid interns working in Washington, DC, may also be eligible for transit subsidies. Paid congressional interns are exempt from many of the provisions of the Fair Labor Standards Act of 1938 (FLSA) that otherwise apply to congressional staff following the passage of the Congressional Accountability Act (CAA) in 1995, including minimum wage requirements and overtime compensation. Previously, the Lyndon Baines Johnson Congressional Intern Program operated in the House from 1973 to 1994 and made two-month paid internships available for each Member office. Funds for this program have not been appropriated since the 103 rd Congress (1993-1994). 11. Can an intern be paid by another organization? Many educational institutions or other organizations sponsor congressional internships, and interns may receive stipends from these groups for their internships. Some of these internship opportunities are listed in CRS Report 98-654, Internships, Fellowships, and Other Work Experience Opportunities in the Federal Government . Some of these organizations operate internship programs in conjunction with congressional caucuses or other congressional entities to place paid interns in congressional offices. This is permissible, as long as there is no conflict of interest presented during the course of the internship. Additionally, the House and Senate ethics committees note that Members or staff cannot raise funds for programs that place interns or fellows in their own offices. When an intern is sponsored by an outside entity, ethics guidance says the intern should not be given responsibilities that could result in a direct or indirect benefit to the sponsor. If an intern is paid by an outside organization, congressional offices might take steps to ensure that the intern's duties do not supplant the regular duties of official staff, as this could be considered a violation of rules that prohibit House Members from using outside resources to conduct their official duties. 12. Can an intern receive school credit? The House and Senate expect that a congressional internship provides an educational experience but, institutionally, make no requirements that an intern receive school credit or be a currently enrolled student. Some congressional offices may choose to select interns on the basis of whether they will receive, or will not receive, academic credit for the experience. Each educational institution sets its own requirements for granting academic credit, and while some schools or academic departments encourage internships and grant academic credit for them, others do not allow students to receive academic credit for internships. School requirements may prevent a student from receiving academic credit for an internship experience that the intern may have personally found to be highly educational. A short internship, for example, may not meet a school's requirement for the number of hours served to receive credit. 13. How many interns can an office have? There is no minimum required number of interns for each congressional office; offices are not obligated to hire any interns unless they choose to. If interns are unpaid, there is no cap on the maximum number of interns for either the House or Senate. Offices, however, may want to ensure there is enough office space for interns to work in, and that there is enough work available to provide interns with a sufficient educational experience. If interns are paid, there may be a maximum number of interns an office can employ, based on applicable staff ceiling rules for the office. Under 2 U.S.C. Section 5321, interns in House Member offices paid by the Members' MRA count against the applicable staff ceiling for House personal offices. Interns in House Member offices paid under the intern allowance provided by the FY2019 legislative branch appropriations act ( P.L. 115-244 , §120) do not count against the staff ceiling for House personal offices. The number of interns in offices can fluctuate from year to year and within seasons during the year. During the summer, for example, offices commonly have more interns than during other parts of the year. For Member offices, the location of an internship in Washington, DC, or in a state or district office may also affect the number of interested and available interns. 14. Are there differences between district/state and DC internships? The substance of the work performed in an internship may vary greatly between district/state offices and Washington, DC, offices if the roles assumed by those different Member offices vary. For example, an intern's tasks may involve more constituent service activities in a district or state office than they would in a Washington, DC, office where the emphasis may be more on legislative activities. The same House and Senate rules and policies generally apply to district or state office interns and to Washington, DC, office interns. Due to the high concentration of congressional interns on Capitol Hill, some training opportunities and congressional programs may be available to Washington, DC, interns, but not to interns serving in district or state offices further away. House interns who are paid from the internship program funded in the FY2019 House appropriations bill ( P.L. 115-244 , §120) must be based in a Member's Washington, DC, office. For security purposes, interns in Washington, DC, offices can obtain a congressional ID badge, available from the Office of the Sergeant at Arms for the appropriate chamber. District or state office interns are also eligible to receive ID badges at the request of the employing Member office. ID badges are to be returned to the Office of the Sergeant at Arms upon completion of an internship. 15. Are there mandatory trainings for interns? If interns are paid by Congress, then they are to take many of the mandatory trainings discussed below that new House or Senate employees are required to take. If interns are unpaid, however, fewer House or Senate trainings are mandatory for them. Because interns may be working with Congress or in a professional environment for the first time, congressional offices may want to have their interns attend additional trainings to better ensure they are prepared for their work and can represent the office appropriately. All interns in the House of Representatives are required to complete a training session on workplace rights and responsibilities. Also in the House, any individual who has access to the House network needs to complete an information security training online. A paid intern who is employed for 60 days or more is to take a House ethics training, which is mandatory for new House employees. Unpaid interns or paid interns with a shorter internship are not required to take this ethics training. Other programs or courses offered by the House may be available to interns and helpful for their work duties. The Senate Office of Education and Training provides a number of courses specifically designed for interns. A few, including harassment prevention and an overview of the Senate Code of Conduct, are listed as required courses, whereas others, like information security training, are listed as recommended or optional. Many of these courses are online and can be accessed via the Senate intranet in a state or Capitol Hill office. Other courses offered by the Senate Office of Education and Training or the Senate Library may be open to interns if space permits. Interns who are expected by their offices to use Congressional Research Service (CRS) resources or place requests must attend the "Orientation Program for Interns and Volunteers" offered by CRS. Interns who might need to use the Library of Congress resources more broadly can sign up for a research orientation covering the Library's collections, resources, and policies. If interns are responsible for hosting tours of the U.S. Capitol, they may be advised to sign up for a tour-leader training course offered by the Architect of the Capitol. 16. What congressional programs are available for interns? Each summer, the Committee on House Administration and the Senate Committee on Rules and Administration cosponsor the Congressional Summer Intern Lecture Series, providing congressional interns with insights about politics and policymaking from Members of Congress, other government officials, and journalists. The lectures are scheduled from June through August, and the days and times vary based on speaker availability. Some programs and courses offered by CRS are open to congressional interns, provided that they have completed the CRS intern orientation. Current offerings are posted at http://www.crs.gov/events , and can help enrich the educational component of an intern's experience. Some video versions of past CRS events are also available at http://www.crs.gov/events/recordedevents , which may be helpful for district or state office interns.

Many interns serve Congress, assisting individual Members, committees, and other offices or support services. Interns serve the House or Senate in a temporary capacity, primarily for an educational benefit, although some interns may receive pay for their service. Like many aspects of congressional operations, individual House or Senate offices can make many of their own rules and guidelines for interns, if they choose to operate an internship program. Additional institutional rules, however, may also apply. In the House, policies set by the Committee on Ethics or the Committee on House Administration may also affect congressional offices and interns, and in the Senate, additional relevant policies may be set by the Senate Select Committee on Ethics or the Committee on Rules and Administration. This report addresses frequently asked questions (FAQs) about congressional interns and internships. It is intended to provide information to congressional offices about the role of interns and to provide a summary of some of the policies and guidance provided by the House and the Senate related to internships. It addresses the House and Senate rules that apply to congressional internships, factors that may affect an office's selection process and an individual's eligibility to serve in an internship, and some of the congressional resources and training opportunities available for interns. For additional information about internship opportunities, refer to CRS Report 98-654, Internships, Fellowships, and Other Work Experience Opportunities in the Federal Government .

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Small Business Microloans and Training Assistance The Small Business Administration (SBA) administers programs that support small businesses, including loan guarantees to lenders to encourage them to provide loans to small businesses "that might not otherwise obtain financing on reasonable terms and conditions" and grants to nonprofit organizations to provide marketing, management, and technical training assistance to small business owners. Historically, one of the justifications presented for funding the SBA's loan guarantee programs has been that small businesses can be at a disadvantage, compared with other businesses, when trying to obtain access to sufficient capital and credit. It has been argued that this disadvantage is particularly acute for startups and microbusinesses (firms with fewer than five employees): Traditional lending institutions, such as banks and investors, are unlikely to offer loans and investment capital to microfirms due to a variety of reasons. One barrier to microlending is a concern that startups and smaller enterprises are risky investments since growing businesses typically exhibit erratic bursts of growth and downturn. The perceived risk of these types of companies reduces the chances of a microbusiness to obtain financing. Another issue is that microbusinesses by and large require smaller amounts of capital, and thus banks or investment companies often believe that it is not efficient use of their time or resources, nor will they receive a substantive return on investment from such a small loan amount. An Urban Institute survey of SBA 7(a), 504/Certified Development Company (504/CDC), Small Business Investment Company (SBIC), and Microloan borrowers conducted in 2007 found that Microloan borrowers reported having the most difficulty in finding acceptable financing elsewhere. Less than one-third (31%) of Microloan borrowers reported that they would have been able to find acceptable financing elsewhere, compared with 35% of SBIC borrowers, 40% of 7(a) borrowers, and 48% of 504/CDC borrowers. Since its inception in 1953, the SBA has provided loan guarantees to encourage lenders to issue small businesses loans. Interest in creating a separate loan program to address the specific needs of startups and microbusinesses increased during the 1980s, primarily due to the growth and experience of microlending institutions abroad and evidence concerning private lending practices that led Congress to conclude that a new loan program was necessary "to reach very small businesses that were not being served by traditional lenders of SBA's credit programs." To address the perceived disadvantages faced by very small businesses in gaining access to capital, Congress authorized the SBA's Microloan lending program in 1991 ( P.L. 102-140 , the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1992). The program became operational in 1992. Its stated purpose is to assist women, low-income, veteran ... and minority entrepreneurs and business owners and other individuals possessing the capability to operate successful business concerns; to assist small business concerns in those areas suffering from a lack of credit due to economic downturns; ... to make loans to eligible intermediaries to enable such intermediaries to provide small-scale loans, particularly loans in amounts averaging not more than $10,000, to start-up, newly established, or growing small business concerns for working capital or the acquisition of materials, supplies, or equipment; [and] to make grants to eligible intermediaries that, together with non-Federal matching funds, will enable such intermediaries to provide intensive marketing, management, and technical assistance to microloan borrowers. The SBA's Microloan lending program was authorized initially as a five-year demonstration project. It was made permanent, subject to reauthorization, in 1997 ( P.L. 105-135 , the Small Business Reauthorization Act of 1997). Congressional interest in the Microloan program has increased in recent years, primarily because microloans are viewed as a means to assist very small businesses, especially women- and minority-owned startups, obtain loans that enable them to create jobs. Job creation and preservation, always a congressional interest, has taken on increased importance given continuing concerns about job growth. This report describes the Microloan program's eligibility standards and operating requirements for lenders and borrowers and examines the arguments presented by the program's critics and advocates. It also examines changes to the program authorized by P.L. 111-240 , the Small Business Jobs Act of 2010, P.L. 115-141 , the Consolidated Appropriations Act, 2018, and P.L. 115-232 , the John S. McCain National Defense Authorization Act for Fiscal Year 2019. P.L. 111-240 authorized the Secretary of the Treasury to establish a $30 billion Small Business Lending Fund (SBLF) to encourage community banks to provide small business loans ($4.0 billion was issued), a $1.5 billion State Small Business Credit Initiative to provide funding to participating states with small business capital access programs, and about $12 billion in tax relief for small businesses. It also authorized changes to the SBA's loan guaranty programs, including increasing the Microloan program's loan limit for borrowers from $35,000 to $50,000, and the aggregate loan limit for intermediaries after their first year of participation in the program from $3.5 million to $5 million. It also authorized the SBA to waive, in whole or in part through FY2012, the nonfederal share requirement for loans to the Microloan program's intermediaries and for grants made to Microloan intermediaries for small business marketing, management, and technical assistance for up to a fiscal year. P.L. 115-141 , among other provisions, relaxed requirements on Microloan intermediaries that prohibited them from spending more than 25% of their technical assistance grant funds on prospective borrowers and more than 25% of those grant funds on contracts with third parties to provide that technical assistance. The act increased those percentages to 50% (originally in H.R. 2056 , the Microloan Modernization Act of 2017, and S. 526 , its companion bill in the Senate). Also, P.L. 115-232 , among other provisions, increased the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million (originally in H.R. 2056 , the Microloan Modernization Act of 2017, and S. 526 , its companion bill in the Senate). This report also discusses several bills introduced during the 114 th and 115 th Congresses. For example, during the 114 th Congress, S. 1445 , the Microloan Act of 2015, would have removed the requirements that no more than 25% of Microloan technical assistance grant funds may be used to provide information and technical assistance to prospective borrowers or on third-party contracts to provide that assistance. It would have also eliminated the Microloan program's minimum state allocation formula. H.R. 2670 , the Microloan Modernization Act of 2015, and S. 1857 , the Senate companion bill, would have increased the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million, increased the program's repayment terms from not more than 6 years to not more than 10 years for loans greater than $10,000, and required the SBA Administrator to establish a rule enabling intermediaries to apply for a waiver of the requirement that no more than 25% of Microloan technical assistance grant funds may be used to provide information and technical assistance to prospective borrowers. The House passed H.R. 2670 on July 13, 2015. S. 2850 , the Microloan Program Modernization Act of 2016, would have increased the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million and, among other provisions, eliminated the requirements that intermediaries spend no more than 25% of Microloan technical assistance grant funds on technical assistance to prospective borrowers and no more than 25% of those funds on third party contracts for technical assistance. During the 115 th Congress, H.R. 2056 , the Microloan Modernization Act of 2017, and S. 526 , its companion bill in the Senate would, as introduced, increase the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million and, among other provisions, eliminate the requirement that intermediaries spend no more than 25% of Microloan technical assistance grant funds on technical assistance to prospective borrowers and no more than 25% of those funds on third-party contracts for technical assistance. H.R. 2056 and S. 526 were amended in committee to require intermediaries to spend no more than 50% of Microloan technical assistance grant funds on technical assistance to prospective borrowers and no more than 50% of those funds on third-party contracts for technical assistance. The House bill, as amended, was favorably reported by the House Committee on Small Business on July 12, 2017, and agreed to by the House on July 24, 2017, by voice vote. The Senate bill was favorably reported by the Senate Committee on Small Business and Entrepreneurship on March 19, 2018. As mentioned previously, the 50% thresholds were included in P.L. 115-141 and the increase from $5 million to $6 million for the Microloan program's aggregate loan limit for intermediaries after their first year of participation was included in P.L. 115-232 . The SBA Microloan Program: Funding, Eligibility Standards, Program Requirements, and Statistics Unlike the SBA's 7(a) and 504/CDC loan guarantee programs, the SBA Microloan program does not guarantee loans. Instead, it provides direct loans to qualified nonprofit intermediary Microloan lenders who, in turn, provide "microloans" of up to $50,000 to small business owners, entrepreneurs, and nonprofit child care centers. There are currently 144 active Microloan intermediaries serving 49 states, the District of Columbia, and Puerto Rico. Funding The Microloan program's administrative costs (anticipated to be $47.66 million in FY2018) are funded through the SBA's salaries and expenses and business loan administration accounts. In addition, each year the SBA receives an appropriation for credit subsidies for its direct lending (Microloan) program. Business loan credit subsidies represent the net present value of cash flows to and from the SBA over the life of the loan portfolio. For guaranteed loans, the net present value of cash flows is primarily affected by the difference between the cost of purchasing loans that have defaulted and the revenue generated from fees and collateral liquidation. For direct (Microloan) lending, the net present value of cash flows is primarily affected by the cost of offering below market interest rates to intermediaries because the cost of purchasing loans that have defaulted is typically relatively small because intermediaries are required to maintain a loan loss reserve. In addition, the SBA does not charge intermediaries fees. In FY2019, the SBA was provided $4.0 million, to remain available until expended, for direct (Microloan) business loan credit subsidies. This appropriation was expected to support about $42.0 million in lending to intermediaries. The SBA received an appropriation of $31.0 million in FY2019 for grants to selected Microloan intermediaries and qualified "non-lending technical assistance providers" to provide Microloan borrowers and prospective borrowers marketing, management, and technical training assistance. As shown in Table 1 , Microloan intermediaries provided counseling services to 19,600 small businesses in FY2017. The data indicate that the number of small businesses served by the Microloan technical assistance program has generally increased in recent years. Intermediary Microloan Lender Eligibility Standards To become a qualified intermediary Microloan lender, an applicant must be organized as a nonprofit community development corporation or other entity, a consortium of nonprofit community development corporations or other entities, a quasigovernmental economic development corporation, or an agency established by a Native American Tribal Government; be located in the United States, including the Commonwealth of Puerto Rico, the U.S. Virginia Islands, Guam, and American Samoa; have made and serviced short-term, fixed rate loans of not more than $50,000 to newly established or growing small businesses for at least one year; and have at least one year of experience providing technical assistance to its borrowers. If accepted into the program by the SBA, an intermediary may borrow no more than $750,000 from the SBA during its first year of participation. After the first year, the maximum loan amount is $2.5 million. By law, an intermediary's total outstanding Microloan program debt must not exceed $6 million. The SBA approves and lends funds, subject to the availability of appropriations, to intermediaries based on the order in which applications are received. The amount provided is subject to two statutory limitations. No more than 300 intermediaries may participate in the Microloan program at any given time. During the first six months of each fiscal year, subject to the availability of appropriations, at least $800,000 or 1/55 th of available loan funds (whichever is less) is required to be made available for loans to intermediaries in each state (including the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa). Any applications that cannot be funded during the first six months "due to geographic limitations will be kept on file in the order they were received" and, subject to the availability of funds, "will be funded during the seventh month of the fiscal year [April]." If the amount of requested loan funds exceeds the amount of available funds, the SBA "may hold back up to 20% of available loan funds to ensure that due consideration is given to new intermediaries and those having the greatest impact to underserved markets." Also, if the amount of requested loan funds from new intermediaries exceeds the amount of available funds, the SBA "may choose to select a new intermediary in an underserved location (a location that is currently unserved by an SBA Microloan Program Intermediary Lender), as determined by the Agency, over a new applicant in an area that is already served by one or more existing Intermediaries." Intermediary Microloan Lender Program Requirements Intermediaries are not required to make any interest payments on the Microloan during the first year, but interest accrues from the date that the SBA disburses the loan proceeds to the intermediary. After that, the SBA determines the schedule for periodic payments. Loans must be repaid within 10 years. The SBA charges intermediaries an interest rate that is based on the five-year Treasury rate, adjusted to the nearest one-eighth percent (called the Base Rate), less 1.25% if the intermediary maintains an historic portfolio of Microloans averaging more than $10,000, and less 2.0% if the intermediary maintains an historic portfolio of Microloans averaging $10,000 or less. The Base Rate, after adjustment, is called the Intermediary's Cost of Funds. The Intermediary's Cost of Funds is initially calculated one year from the date of the note and is reviewed annually and adjusted as necessary (called recasting). The interest rate cannot be less than zero. Intermediaries are required to contribute not less than 15% of the loan amount in cash from nonfederal sources and, as security for repayment of the loan, must provide the SBA first lien position on all notes receivable from any microloans issued under the program. Unlike the SBA's 7(a) and 504/CDC loan guarantee programs, the SBA does not charge intermediaries upfront or ongoing service fees under the Microloan program. As mentioned previously, P.L. 111-240 temporarily allowed the SBA to waive, in whole or in part through FY2012, the intermediary's 15% nonfederal share requirement under specified circumstances (e.g., the economic conditions affecting the intermediary and the intermediary's performance) for up to a fiscal year. Intermediaries are required to deposit the proceeds from the SBA's loans, their 15% contribution, and payments from their Microloan borrowers into a Microloan Revolving Fund. Intermediaries may only withdraw from this account funds necessary to make microloans to borrowers, repay the SBA, and establish and maintain a Loan Loss Reserve Fund to pay any shortage in the Microloan Revolving Fund caused by delinquencies or losses on its microloans. They are required, until they have been in the program for at least five years, to maintain a balance in the Loan Loss Reserve Fund equal to 15% of the outstanding balance of the notes receivable from their Microloan borrowers. After five years, if the intermediary's average annual loss rate during the preceding five years is less than 15% and no other factors exist that may impair the intermediary's ability to repay its obligations to the SBA, the SBA Administrator may reduce the required balance in the intermediary's Loan Loss Reserve Fund to the intermediary's average annual loss rate during the preceding five years, but not less than 10% of the portfolio. Intermediaries are required to maintain their Loan Loss Reserve Fund until they have repaid all obligations owed to the SBA. The SBA does not maintain detailed data necessary to determine an aggregate default rate for Microloan borrowers. However, in 2007, the SBA estimated that the borrower default rate for the Microloan program was about 12%. Because the Loan Loss Reserve Fund is used to contribute toward the cost of borrower defaults, and is often sufficient to cover the entire cost of such defaults, the SBA's loss rate for intermediary repayment is typically less than 3% each year. An intermediary may be suspended or removed from the Microloan program if it fails to comply with a specified list of program performance standards. For example, intermediaries are required to close and fund at least 10 microloans per year, cover the service territory assigned by the SBA, honor the SBA determined boundaries of neighboring intermediaries and non-lender technical assistance providers, fulfill reporting requirements, maintain a loan currency rate of 85% or more (where loans are no more than 30 days late in scheduled payments), maintain a default rate of 15% or less, and "satisfactorily provide" in-house technical assistance to microloan clients and prospective microloan clients. Intermediary Marketing, Management, and Technical Training Assistance As mentioned previously, in FY2019, the SBA received $31.0 million for grants to Microloan intermediaries and qualified "non-lending technical assistance providers" to provide Microloan borrowers and prospective borrowers marketing, management, and technical training assistance (see Appendix for previous funding levels). Intermediaries are eligible to receive a Microloan technical assistance grant "of not more than 25% of the total outstanding balance of loans made to it under this subsection." Grant funds may be used only to provide marketing, management, and technical assistance to Microloan borrowers, except that no more than 50% of the funds may be used to provide such assistance to prospective Microloan borrowers. Grant funds may also be used to attend training required by the SBA. Also, intermediaries must contribute, solely from nonfederal sources, an amount equal to 25% of the grant amount. In addition to cash or other direct funding, the contribution may include indirect costs or in-kind contributions paid for under nonfederal programs. Intermediaries may expend no more than 50% of the grant funds on third-party contracts for the provision of technical assistance. In addition, as mentioned earlier, P.L. 111-240 temporarily allowed the SBA to waive, in whole or in part through FY2012, the 25% nonfederal share requirement for grants made to Microloan intermediaries for small business marketing, management, and technical assistance under specified circumstances (e.g., the economic conditions affecting the intermediary and the intermediary's performance) for up to a fiscal year. The SBA does not require Microloan borrowers to participate in the marketing, management, and technical assistance program. However, intermediaries typically require Microloan borrowers to participate in the training program as a condition of the receipt of a microloan. Combining loan and intensive training assistance is one of the Microloan program's distinguishing features. Intermediaries that have a portfolio of loans made under the program "that averages not more than $10,000 during the period of the intermediary's participation in the program" are eligible to receive an additional training grant equal to 5% of "the total outstanding balance of loans made to the intermediary." Intermediaries are not required to make a matching contribution as a condition of receiving these additional grant funds. Non-lending Technical Assistance Providers Each year, the SBA is authorized to select qualified nonprofit, non-lending technical assistance providers to receive grant funds to provide marketing, management, and technical assistance to Microloan borrowers. Any nonprofit entity that is not an intermediary may apply for these funds. The SBA may award up to 55 grants each year to qualified non-lending technical assistance providers to deliver marketing, management, and technical assistance to Microloan borrowers. The grants may be for terms of up to five years and may not exceed $200,000. The nonprofit entity must contribute, solely from nonfederal sources, an amount equal to 20% of the grant. In addition to cash or other direct funding, the contribution may include indirect costs or in-kind contributions paid for under nonfederal programs. The SBA stopped awarding these grants at the beginning of FY2005. The SBA determined at that time that the non-lending technical assistance providers duplicated much of what was already being provided by Microloan intermediaries and other SBA entrepreneurial development programs. Microloan Borrower Eligibility Standards With one exception, Microloan borrowers must be an eligible, for-profit small business as defined by the Small Business Act. P.L. 105-135 , the Small Business Reauthorization Act of 1997, expanded the Microloan program's eligibility to include borrowers establishing a nonprofit childcare business. Microloan Borrower Program Requirements Intermediaries are directed by legislative language to provide borrowers "small-scale loans, particularly loans in amounts averaging not more than $10,000." They are also directed, "to the extent practicable ... to maintain a microloan portfolio with an average loan size of not more than $15,000." Microloans for more than $20,000 are allowed "only if such small business concern demonstrates that it is unable to obtain credit elsewhere at comparable interest rates and that it has good prospects for success." The maximum loan amount is $50,000 and no borrower may owe an intermediary more than $50,000 at any one time. Microloan proceeds may be used only for working capital and acquisition of materials, supplies, furniture, fixtures, and equipment. Loans cannot be made to acquire land or property, and must be repaid within six years. Within these parameters, loan terms vary depending on the loan's size, the planned use of funds, the requirements of the intermediary lender, and the needs of the small business borrower. During the 114 th Congress, H.R. 2670 would have increased the program's repayment terms from not more than 6 years to not more than 10 years for loans greater than $10,000. On loans of more than $10,000, the maximum interest rate that can be charged to the borrower is the interest rate charged by the SBA on the loan to the intermediary, plus 7.75 percentage points. On loans of $10,000 or less, the maximum interest rate that can be charged to the borrower is the interest charged by the SBA on the loan to the intermediary, plus 8.5 percentage points. Rates are negotiated between the borrower and the intermediary, and typically range from 6.5% to 9%. In FY2018, the average interest rate charged was 7.6%. Each intermediary establishes its own lending and credit requirements. However, borrowers are generally required to provide some type of collateral (consistent with prudent lending practices), and a personal guarantee to repay the loan. The SBA does not review the loan for creditworthiness. Intermediaries are allowed to charge borrowers reasonable packaging fees limited to 3% of the loan amount for loans with terms of one year or more, and 2% for loans with terms of less than one year. Intermediaries are also allowed to charge borrowers "actual, paid and documented out-of-pocket closing costs … such as filing or recording fees, collateral appraisals, credit reports, and other such direct charges related to loan closing." These fees may be added to the loan amount and financed over the life of the loan "provided the total loan amount, including the fee, does not exceed $50,000." Microloan Program Statistics Table 2 provides the number and amount of loans that the SBA provided Microloan intermediaries from FY2010 through FY2017, the number and amount of loans to Microloan intermediaries that the SBA approved in FY2018 (before loan cancelations, etc.), and the number and amount of Microloans that intermediaries provided small businesses from FY2010 through FY2018. As shown in Table 2 , in FY2018, the SBA approved 58 loans to intermediaries totaling $37.3 million. The average approved intermediary loan amount was $643,724. Microloan intermediaries provided 5,459 loans to small businesses totaling $76.8 million. The average Microloan amount was $14,071. As of the end of FY2018, the SBA had disbursed 1,230 loans to Microloan intermediaries totaling $562.5 million. At that time, there were 485 active Microloan intermediary loans with an unpaid principal balance of $165.3 million. As shown in Table 2 , the number and amount of Microloans provided to small businesses have generally increased in recent years. The Microloan program is open to all small business entrepreneurs, but targets new and early-stage businesses in "underserved markets, including borrowers with little to no credit history, low-income borrowers, and women and minority entrepreneurs in both rural and urban areas who generally do not qualify for conventional loans or other, larger SBA guaranteed loans." An analysis conducted by the Urban Institute found that about 9.9% of conventional small business loans are issued to minority-owned small businesses and about 16% of conventional small business loans are issued to women-owned businesses. In FY2018, of those reporting their race, minority-owned or -controlled firms received 47.4% of the number of microloans issued and 33.8% of the amount issued. Women-owned or -controlled firms received 48.7% of the number of microloans issued and 38.9% of the amount issued. More than three-quarters of all Microloan borrowers (81.0%) in FY2018 were located in an urban area. Also, in FY2018, startup companies received 38.0% of the number of microloans issued and 36.4% of the total amount of microloans issued. As mentioned previously, the Microloan program's estimated borrower default rate is about 12%. Because the Loan Loss Reserve Fund is used to contribute toward the cost of borrower defaults, and is often sufficient to cover the entire cost of such defaults, the SBA's loss rate for intermediary repayment is typically less than 3% annually. For example, the Microloan program's intermediary default rate was 2.36% in FY2015, 1.60% in FY2016, 2.26% in FY2017, and 2.29% in FY2018. Microloans are often used for more than one purpose. In FY2018, they were most commonly used for working capital (70.4%), equipment (25.8%), inventory (21.5%), and supplies (7.6%). Congressional Issues Critics of the SBA's Microloan program argue that it is duplicative of other available programs, expensive relative to alternative programs, and subject to administrative shortfalls. The program's advocates argue that it provides assistance that "reaches many who otherwise would not be served by the private sector or even the SBA's 7(a) loan program" and "has provided an important source of capital for low-income women business owners and minority borrowers." Program Duplication Critics of the SBA's Microloan program argue that its direct lending program is duplicative of the SBA's 7(a) loan guarantee program and its marketing, management, and technical training assistance grant program is duplicative of the SBA's training assistance provided through Small Business Development Centers, SCORE (Service Corps of Retired Executives), and Women Business Centers. For example, President George W. Bush proposed to eliminate all funding for the Microloan program in his FY2005, FY2006, and FY2007 budget requests to Congress, arguing that "the 7(a) program is capable of serving the same clientele through the Community Express programs for much lower cost to the Government." President Bush also proposed to terminate the Microloan program's marketing, management, and technical assistance grant program in his FY2008 and FY2009 budget requests to Congress. Critics argued in 2007 that about 44% of the SBA's 7(a) program's loan guarantees at that time were for loans under $35,000 (the Microloan program's former loan limit for borrowers), representing more than 17 times the number of loans issued through the SBA's Microloan program. In their view, the 7(a) program had demonstrated that it can service the needs of small businesses targeted by the SBA's Microloan program. They also argued that the SBA's Microloan program's marketing, management, and technical assistance grants program was not necessary because the SBA "already supports a nationwide network of resource partners who provide counseling and training to entrepreneurs, including Small Business Development Centers, Women's Business Centers, and SCORE." They argued that about 94% of Microloan intermediaries are located within 20 miles of a Small Business Development Center, a Women's Business Center, or a SCORE partner. Advocates argue that the SBA's Microloan program is complementary, not duplicative, of the SBA's 7(a) loan guarantee program. They assert that Microloan borrowers are particularly disadvantaged when seeking access to capital, often having no credit history or lower credit scores than most applicants for the SBA's 7(a) loan guarantee program. In their view, it is important that the SBA has a program whose sole focus is to assist Microloan borrowers in starting microbusinesses and have in place intermediaries that "have essential expertise on the needs of this key demographic." Advocates also argue that the SBA's Microloan marketing, management, and technical assistance grants program is "a crucial element which enables intermediaries to assist microbusiness owners step by step through their development and growth" and "not only increases the likelihood of full repayment of the loan, but augments business survival and success." As mentioned previously, intermediaries typically require Microloan borrowers to participate in the training program as a condition of the receipt of the microloan. Program Cost Critics of the SBA's Microloan program argue that it is expensive relative to other SBA programs, costing about $7,506 per small business assisted in FY2017, compared to $1,316 per small business assisted in the SBA's 7(a) loan guarantee program. President George W. Bush cited the program's higher expense when he recommended in his FY2005, FY2006, and FY2007 budget requests to Congress that the program be terminated and when he recommended in his FY2008 and FY2009 budget requests to Congress that the interest rate charged to Microloan intermediaries be increased to make the program "self-financing." Advocates argue that the program's higher cost per small business assisted is unavoidable given the relatively unique nature of the program and the special needs of its borrowers. They assert that intermediaries often have to spend a significant amount of time with Microloan borrowers because those borrowers tend to have less experience with the credit application process and a more difficult time documenting their qualifications for assistance than borrowers in the SBA's loan guaranty programs. Also, in their view, raising the interest rate charged to intermediaries to make the program self-financing would reduce the program's cost, but could also defeat the program's purpose. They assert that because microloans are small, it is difficult for intermediaries to generate enough interest income to cover their costs. As a result, if the interest rate charged to intermediaries is increased, they contend that intermediaries would have to pass the increase on to Microloan borrowers. In their view, increasing the program's cost to Microloan borrowers "will create an economic hardship for them and make it more difficult for them to grow their businesses" and "lead to fewer jobs created and fewer tax dollars paid." Program Administration On September 28, 2017, the SBA's Office of Inspector General (OIG) released an audit of the SBA's administration of the Microloan program, following up on an earlier audit released on December 28, 2009. The OIG reported a number of deficiencies that it argued needed to be addressed "to ensure effective operation of the Microloan program." In 2009, the OIG found that the SBA's oversight of the Microloan program was focused on the intermediaries' ability to repay their SBA loans and was limited to a cursory review of quarterly financial reports supported by only one monthly bank statement. The bank statements were used to simply verify the outstanding balances reported on the intermediaries' quarterly reports. This review process did not allow the SBA to analyze the sources and uses of funds "which is necessary to detect inappropriate fund transfers between the intermediaries' [Microloan Revolving Funds and Loan Loss Reserve Funds] accounts." onsite reviews were conducted only when an intermediary defaulted on its SBA loan. the program was inadequately staffed, operating at that time "with 6 analysts who oversee more than 160 intermediaries, 460 intermediary loans, and approximately 2,500 microloans per year." the reported Microloan borrower default rate of 12% "appeared low given the high-risk nature of the program." the audit identified duplicate loan reporting and 92 Microloan borrowers with outstanding microloan balances exceeding the then-$35,000 limit. the SBA's output performance metrics "do not ensure the ultimate program beneficiaries, the microloan borrowers, are truly assisted by the program" and "without appropriate [outcome performance] metrics, SBA cannot ensure the Microloan program is meeting policy goals." The OIG recommended that the SBA "develop additional performance metrics to measure the program's achievement in assisting microloan borrowers in establishing and maintaining successful small businesses." In its 2017 audit, the OIG found that the SBA had taken several actions (see footnote below) to improve its oversight of the Microloan program since the 2009 audit but that the agency still had "internal control weaknesses" that prevented it from conducting "adequate program oversight to measure program performance and ensure program integrity." Specifically, the OIG audited 14 intermediary lenders and 52 microloan files and found documentation deficiencies, or differences between the information contained in the lender's loan file versus that in the SBA Microloan Program Electronic Reporting System (MPERS) in 44 of the 52 files. The OIG also argued that the audit revealed that inadequate documentation exists to show that the "no credit elsewhere" test had been properly administered; that, in some cases, inadequate supporting documentation existed to show how the microloan funds were used by the borrower; and that, in some cases, interest rates and fees were charged that exceeded the limits allowed under the program rules and regulations. The identified internal control weaknesses were due to the SBA not having an overall site visit plan, an adequate information system, available funding for system improvements, or clear Standard Operating Procedures (SOPs). Additionally, SBA management focused on output-based performance measures instead of outcome measures. The OIG recommended that the SBA (1) continue efforts to improve the information system to include outcome-based performance measurements and ensure the data captured can be used to effectively monitor the Microloan Program compliance, performance, and integrity; (2) develop and implement a site visit plan to comprehensively monitor microloan portfolio performance and ensure program results can be evaluated program-wide; (3) update the Microloan program's SOP 52 00 A to clarify requirements regarding evidence for use of proceeds and credit elsewhere; and (4) update the microloan reporting system manual to reflect current technology capabilities. The SBA concurred with the four recommendations and targeted September 30, 2019, for full implementation. For example, the Microloan program's SOP 52 00 B, effective July 1, 2018, clarified requirements regarding evidence for use of proceeds and credit elsewhere. Legislation As mentioned previously, during the 111 th Congress, P.L. 111-240 , the Small Business Jobs Act of 2010, increased the Microloan program's loan limit for borrowers from $35,000 to $50,000, and increased the loan limit for Microloan intermediaries after their first year of participation in the program from $3.5 million to $5 million. It also temporarily allowed the SBA to waive, in whole or in part through FY2012, the nonfederal share requirement for loans to the Microloan program's intermediaries and for grants made to Microloan intermediaries for small business marketing, management, and technical assistance under specified circumstances (e.g., the economic conditions affecting the intermediary and the intermediary's performance) for up to a fiscal year. No bills were introduced during the 112 th Congress concerning the Microloan program. During the 113 th Congress, H.R. 3191 , the Expanding Opportunities to Underserved Businesses Act, would have increased the Microloan program's loan limit for borrowers from $50,000 to $75,000. S. 2487 , the Access to Capital, Access to Opportunity Act, would have increased that limit to $100,000. S. 2693 , the Women's Small Business Ownership Act of 2014, and its House companion bill, H.R. 5584 , would have increased the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $7 million. These bills would have also removed the requirements that no more than 25% of Microloan technical assistance grant funds may be used to provi de information and technical assistance to prospective borrowers or on third-party contracts to provide the assistance. During the 114 th Congress, as mentioned earlier, S. 1445 , the Microloan Act of 2015, would have removed the requirements that no more than 25% of Microloan technical assistance grant funds may be used to provide information and technical assistance to prospective borrowers or on third-party contracts to provide the assistance. It would have also eliminated the Microloan program's minimum state allocation formula. H.R. 2670 , the Microloan Modernization Act of 2015, and its companion bill in the Senate ( S. 1857 ) would have increased the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million, increased the program's repayment terms from not more than 6 years to not more than 10 years for loans greater than $10,000, and require the SBA Administrator to establish a rule enabling intermediaries to apply for a waiver of the requirement that no more than 25% of Microloan technical assistance grant funds may be used to provide information and technical assistance to prospective borrowers. The House passed H.R. 2670 on July 13, 2015. S. 1857 was reported by the Senate Committee on Small Business and Entrepreneurship on July 29, 2015. S. 2850 , the Microloan Program Modernization Act of 2016, would have increased the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million; eliminated the requirements that intermediaries spend no more than 25% of Microloan technical assistance grant funds on technical assistance to prospective borrowers and no more than 25% of those funds on third-party contracts for technical assistance; required the SBA to study and report on the operations of a representative sample of Microloan intermediaries and other intermediaries and make recommendations on how to reduce costs associated with intermediaries' participation in the program and to increase intermediary participation in the program; and required the Government Accountability Office to study and report on the SBA's oversight of the program, SBA's processes to ensure intermediary compliance with program rules and regulations, and the program's overall performance. During the 115 th Congress, P.L. 115-141 , the Consolidated Appropriations Act, 2018, relaxed the requirements that intermediaries spend no more than 25% of Microloan technical assistance grant funds on technical assistance to prospective borrowers and no more than 25% of those funds on third-party contracts for technical assistance by increasing those percentages to 50%. These provisions were originally in H.R. 2056 , the Microloan Modernization Act of 2017, and S. 526 , its companion bill in the Senate (as amended in committee). P.L. 115-232 , the John S. McCain National Defense Authorization Act for Fiscal Year 2019, among other provisions, increased the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million. These provisions were originally in H.R. 2056 , the Microloan Modernization Act of 2017, and S. 526 , its companion bill in the Senate. Concluding Observations During the 111 th Congress, congressional debate concerning proposed changes to the SBA's loan guaranty programs, including the Microloan program, centered on the likely impact the changes would have on small business access to capital, job retention, and job creation. As a general proposition, some, including President Obama, argued that economic conditions made it imperative that the SBA be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worried about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocated business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small business economic growth and job creation. In terms of specific program changes, the provisions enacted in P.L. 111-240 (allowing the SBA to temporarily waive the Microloan program's nonfederal share matching requirements, increasing the loan limit for borrowers from $35,000 to $50,000, and increasing the loan limit for intermediaries after their first year of participation in the program from $3.5 million to $5 million), P.L. 115-141 (relaxing restraints on the use of technical assistance grants), and P.L. 115-232 (increasing the loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million) are all designed to achieve the same goal: create jobs by enhancing micro borrowers' access to capital and technical training assistance. Determining how specific changes in federal policy are most likely to lead to job creation is a challenging question. For example, a 2008 Urban Institute study concluded that differences in the term, interest rate, and amount of SBA financing "was not significantly associated with increasing sales or employment among firms receiving SBA financing." However, they also reported that their analysis accounted for less than 10% of the variation in firm performance. The Urban Institute suggested that local economic conditions, local zoning regulations, state and local tax rates, state and local business assistance programs, and the business owner's charisma or business acumen also "may play a role in determining how well a business performs after receipt of SBA financing." As the Urban Institute study suggests, given the many factors that influence business success, measuring the SBA's Microloan program's effect on job retention and creation is complicated. That task is made even more challenging by the absence of performance-oriented measures that could serve as a guide. The SBA's Office of Inspector General has recommended that the SBA adopt performance-oriented measures, specifically recommending that the SBA track the number of Microloan borrowers who remain in business after receiving a microloan to measure the extent to which the Microloan program contributed to their ability to stay in business. It has also recommended that the SBA require intermediaries to report the technical assistance provided to each Microloan borrower and "use this data to analyze the effect technical assistance may have on the success of Microloan borrowers and their ability to repay microloans." Other performance-oriented measures that Congress might also consider include requiring the SBA to survey Microloan borrowers to measure the difficulty they experienced in obtaining a loan from the private sector; the ease or difficulty of finding, applying, and obtaining a microloan from an intermediary; and the extent to which the microloan or technical assistance received contributed to their ability to create jobs or expand their scope of operations. Appendix. Microloan Technical Assistance Program Funding

The Small Business Administration's (SBA's) Microloan program provides direct loans to qualified nonprofit intermediary lenders who, in turn, provide "microloans" of up to $50,000 to small businesses and nonprofit child care centers. It also provides marketing, management, and technical assistance to microloan borrowers and potential borrowers. Authorized in 1991 as a five-year demonstration project, it became operational in 1992, and was made permanent, subject to reauthorization, in 1997. The Microloan program is designed to assist women, low-income, veteran, and minority entrepreneurs and small business owners by providing them small-scale loans for working capital or the acquisition of materials, supplies, or equipment. In FY2018, Microloan intermediaries provided 5,459 microloans totaling $76.8 million. The average Microloan was $14,071 and had a 7.6% interest rate. Critics of the SBA's Microloan program argue that it is expensive relative to alternative programs, duplicative of the SBA's 7(a) loan guaranty program, and subject to administrative shortfalls. The program's advocates argue that it assists many who otherwise would not be served by the private sector and is an important source of capital and training assistance for low-income, women, and minority business owners. Congressional interest in the Microloan program has increased in recent years, primarily because microloans are viewed as a means to assist very small businesses, especially women- and minority-owned startups, to get loans that enable them to create and retain jobs. Job creation, always a congressional interest, has taken on increased importance given continuing concerns about job growth during the current economic recovery. This report opens with a discussion of the rationale provided for having a Microloan program, describes the program's eligibility standards and operating requirements for lenders and borrowers, and examines the arguments presented by the program's critics and advocates. It then discusses P.L. 111-240, the Small Business Jobs Act of 2010, which increased the Microloan program's loan limit for borrowers from $35,000 to $50,000, and the aggregate loan limit for intermediaries after their first year of participation in the program from $3.5 million to $5 million. It also discusses P.L. 115-141, the Consolidated Appropriations Act, 2018, which, among other provisions, relaxed requirements on Microloan intermediaries that prohibited them from spending more than 25% of their technical assistance grant funds on prospective borrowers and more than 25% of those grant funds on contracts with third parties to provide that technical assistance. The act increased those percentages to 50% (originally in H.R. 2056, the Microloan Modernization Act of 2017, and S. 526, its companion bill in the Senate). In addition, P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year 2019, among other provisions, increased the Microloan program's aggregate loan limit for intermediaries after their first year of participation in the program from $5 million to $6 million.

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Introduction The U.S. government administers multiple international food assistance programs that aim to alleviate hunger and improve food security in other countries. Some of these programs provide emergency assistance to people affected by conflict or natural disaster. Other programs provide nonemergency assistance to address chronic poverty and hunger, such as providing food to people during a seasonal food shortage or training parents and community health workers in nutrition. Current international food assistance programs originated in 1954 with the passage of the Food for Peace Act (P.L. 83-480), also referred to as P.L. 480 . Historically, the United States has provided international food assistance primarily through in-kind a id , which ships U.S. commodities to countries in need. Congress funds in-kind food aid programs through the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—known as the Agriculture appropriations bill. In 2010, Congress established the Emergency Food Security Program (EFSP), which provides primarily cash-based food assistance. Cash-based assistance provides recipients with the means to acquire food, including through cash transfers, vouchers, or locally and regionally procured food —food purchased in the country or region where it is to be distributed rather than from the United States. Congress funds EFSP through the International Disaster Assistance (IDA) account in the State, Foreign Operations, and Related Programs (SFOPS) appropriations bill. The IDA account also funds nonfood emergency humanitarian assistance, such as provision of shelter and health services. This report provides a brief overview of the international food aid-related provisions in the FY2018 and FY2019 enacted Agriculture Appropriations Acts—Division A of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) and Division B of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ). It does not cover programs funded through the SFOPS appropriations bill. International Food Aid Programs Congress funds most U.S. international food aid programs with discretionary funding provided through annual appropriations bills. Some international food aid programs receive mandatory funding financed through USDA's Commodity Credit Corporation (CCC) and do not require a separate appropriation. Congress authorizes discretionary and mandatory funding levels for international food aid programs in periodic farm bills, most recently the Agriculture Improvement Act of 2018 ( P.L. 115-334 ). Table 1 lists each international food aid program that receives funding through agriculture appropriations. Programs Reliant on Discretionary Funding The Food for Peace Act of 1954 (P.L. 83-480), as amended, authorizes four international food assistance programs. The Agriculture appropriations bill provides discretionary funding for three Food for Peace (FFP) programs—FFP Title I, FFP Title II, and FFP Title V—which are discussed below. 1. FFP Title I provides concessional sales —sales on credit terms below market rates—of U.S. commodities to governments of developing countries and private entities. USDA administers FFP Title I. Congress has not appropriated funds for new FFP Title I sales since FY2006 but continues to appropriate funds to administer the FFP Title I loans provided before FY2006. The appropriation for FFP Title I administrative expenses also funds administrative expenses for the Food for Progress Program, which supports economic development projects. 2. FFP Title II is a donation program under which U.S. agricultural commodities are distributed to recipients in foreign countries. The U.S. Agency for International Development (USAID) administers FFP Title II. Since the mid-1980s, FFP Title II has received the majority of funds appropriated to international food aid in the Agriculture appropriations bill. 3. FFP Title V, also known as the Farmer-to-Farmer Program, finances short-term placements for U.S. volunteers to provide technical assistance to farmers in developing countries. USAID administers the Farmer-to-Farmer Program. The program does not receive direct appropriations, but receives a portion of the total funds appropriated for FFP programs. Statute requires that the program receive the greater of $15 million or 0.6% of the funds annually appropriated for FFP programs. The Agriculture appropriations bill also provides funding for the McGovern-Dole International Food for Education and Child Nutrition Program. This program donates U.S. agricultural commodities to school feeding programs and pregnant or nursing mothers in qualifying countries. Programs with Mandatory Funding Congress has authorized certain U.S. international food aid programs to receive mandatory funding. The Food for Progress Program donates U.S. agricultural commodities to governments or organizations to be monetized —sold on local markets in recipient countries to generate proceeds for economic development projects. Congress has authorized Food for Progress to receive both mandatory and discretionary funding. The program receives discretionary funding for administrative expenses through the appropriation for FFP Title I administrative expenses. The Bill Emerson Humanitarian Trust (BEHT) is a reserve of funds or commodities held by the CCC. USDA can use BEHT funds or commodities to supplement FFP Title II activities, especially when FFP Title II funds alone cannot meet international emergency food needs. If USDA provides aid through BEHT, Congress may appropriate funds to the CCC in a subsequent fiscal year to reimburse the CCC for the value of the released funds or commodities. USDA did not release funds or commodities from BEHT in FY2017 or FY2018, and Congress did not appropriate any BEHT reimbursement funds to the CCC in FY2018 or FY2019. Administration's Recent Budget Requests The Trump Administration's FY2018 budget request proposed eliminating McGovern-Dole and FFP Title II and moving funding for international food aid to the IDA account within the SFOPS appropriations bill. The FY2019 budget request repeated the proposed eliminations and reorganization from the FY2018 request. It also contained a new proposal to eliminate Food for Progress. Congress did not adopt the Administration's FY2018 or FY2019 proposals to eliminate FFP Title II, McGovern-Dole, or Food for Progress. This section summarizes the FY2018 and FY2019 Administration's budget requests for U.S. international food aid programs. Funding Request for FY2018 For FY2018, the Trump Administration requested discretionary funding for one international food aid program account. The Administration requested $149,000 for administrative expenses to carry out Food for Progress projects and existing FFP Title I loans. This amount would have been equal to the FY2017 enacted amount for administrative expenses. The FY2018 request proposed eliminating McGovern-Dole "as part of the Administration's effort to reprioritize Federal spending." The Administration stated that "in the most recent report in 2011, the [Government Accountability Office (GAO)] found weaknesses in performance monitoring, program evaluations, and prompt closeout of agreements." According to the GAO's Recommendations Database, USDA has taken actions to satisfy the three recommendations made in the 2011 audit, and these recommendations have been closed as of July 2015. The Administration also proposed eliminating FFP Title II. The Administration stated: "There is no funding request for [FFP] Title II, as part of an Administration effort to streamline foreign assistance funding, prioritize funding, and use funding as effectively and efficiently as possible. The 2018 request includes funding for emergency food needs within the International Disaster Assistance account." Eliminating FFP Title II would fund the majority of U.S. international food assistance through the IDA account in the SFOPS appropriations rather than shared between IDA and the FFP Title II account in the Agriculture appropriations bill. The IDA account provides funding for EFSP. FFP Title II and EFSP account for the majority of U.S. international food assistance funding, representing 87% of total international food assistance outlays in FY2016. Combined FY2016 outlays for FFP Title II and EFSP totaled $2.730 billion. The Administration's FY2018 SFOPS budget request proposed that $1.511 billion of IDA funds be directed to international food assistance. This amount would have been 45% less than combined FY2016 outlays for FFP Title II and EFSP. Funding Request for FY2019 In its FY2019 request, the Trump Administration repeated many of its proposals from FY2018, including eliminating McGovern-Dole and FFP Title II. The Administration's FY2019 SFOPS budget request proposed $1.554 billion of IDA funds be used for emergency food assistance. This amount would be 43% less than the combined FY2016 outlays for FFP Title II and EFSP, which totaled $2.730 billion. The Administration also proposed eliminating Food for Progress, a change from its FY2018 budget request. The Administration requested $142,000 for administrative expenses to carry out existing Food for Progress projects and existing FFP Title I loans. This amount is 4.7% less than the $149,000 that Congress enacted for administrative expenses in FY2018. Potential Implications of the FY2018 and FY2019 Funding Requests Moving funding from FFP Title II to IDA could potentially change how the United States delivers food aid to recipient countries. Statute requires that nearly all aid distributed under FFP Title II be in-kind aid. EFSP, which Congress funds through the IDA account, does not have a statutory requirement to provide a portion of assistance as in-kind aid. EFSP can provide in-kind aid or cash-based assistance, such as direct cash transfers, vouchers, or locally and regionally procured food. Shifting international food aid funding from FFP Title II to IDA could increase the portion of food assistance provided as cash-based assistance rather than in-kind aid. Proposals to shift U.S. international food assistance funding from in-kind food aid to cash-based food assistance are not new. Both the Obama and George W. Bush Administrations proposed increasing the portion of U.S. international food aid delivered as cash-based assistance. Some proponents of increasing the use of cash-based assistance argue that it could improve program efficiency. However, some interested parties assert that the Trump Administration's proposed decrease in overall funding for international food assistance could result in fewer people receiving assistance and therefore counteract potential efficiency gains. Some opponents of increasing the share of food assistance that is cash-based rather than in-kind maintain that in-kind aid ensures that the United States provides high-quality food to recipients. Some opponents also assert that increasing the use of cash-based assistance could diminish support for international food aid programs among certain stakeholders, such as selected agricultural commodity groups, and potentially some lawmakers. Congressional Appropriations Both the FY2018 and FY2019 Agriculture Appropriations Acts provided funding for U.S. international food aid programs in the Foreign Assistance and Related Programs (Title V) and General Provisions (Title VII) titles. This included funding for FFP Title II and McGovern-Dole. The acts also provided funding for administrative expenses to manage existing FFP Title I loans that originated while the FFP Title I program was active. The FY2019 act also provided funding for the Food for Progress program, which typically receives only mandatory funding. Figure 1 shows funding trends for international food aid programs funded through Agriculture appropriations bills for FY2013-FY2019. Appropriations for FY2018 The FY2018 Agriculture Appropriations Act (Division A of P.L. 115-141 ) provided $1.924 billion for international food aid programs, a 7% increase from the FY2017 enacted total of $1.802 billion ( Table 2 ). The FY2018 total was also an increase from the FY2018 Senate-passed ($1.807 billion) and House-passed ($1.602 billion) Agriculture appropriations bills. Congress did not adopt the Administration's FY2018 proposals to eliminate FFP Title II or McGovern-Dole. The FY2018 act provided $1.716 billion for FFP Title II, a 7% increase from the $1.6 billion provided in FY2017 Agriculture appropriations. In FY2017, Congress directed $300 million of IDA funds in SFOPS appropriations be transferred to the FFP Title II account in Agriculture appropriations ( P.L. 115-31 , Division J, §8005(a)(1)(A)). When including this transfer of funds, FFP Title II received a total of $1.9 billion in funding in FY2017. Total FFP Title II funding of $1.716 in FY2018 would represent a 10% decrease from the FY2017 total of $1.9 billion. FY2018 enacted funding of $1.716 billion for FFP Title II includes $1.6 billion provided in the Foreign Assistance title and $116 million provided in the General Provisions title of the Agriculture Appropriations Act. The funding Congress provides in the Foreign Assistance title is a base amount that is often compared across fiscal years to determine whether program funding has increased or decreased. Providing additional FFP Title II funding in the General Provisions title effectively increases funding available for FFP Title II in a given fiscal year without increasing base funding in the Foreign Assistance title. The FY2018 act also provided $207.6 million for McGovern-Dole, a 3% increase from the $201.6 million that Congress provided in FY2017. Congress directed that $10 million of McGovern-Dole funding be made available for local and regional procurement (LRP), a $5 million increase from the $5 million set-aside for LRP in FY2017. The FY2018 act also provided $149,000 for FFP Title I and Food for Progress administrative expenses, which was unchanged from the amount enacted for FY2017. Appropriations for FY2019 The FY2019 Agriculture Appropriations Act (Division B of P.L. 116-6 ) provides $1.942 billion in total funding for international food aid programs, a 1% increase from the FY2018 enacted amount of $1.924 billion. The enacted total for FY2019 is also an increase from the FY2019 Senate-passed ($1.926 billion) and House-reported ($1.743 billion) Agriculture appropriations bills. Congress did not adopt the Administration's FY2019 proposals to eliminate FFP Title II, McGovern-Dole, or Food for Progress. The FY2019 act provides $1.716 billion for FFP Title II, equal to the FY2018 enacted amount. This includes $1.5 billion in the Foreign Assistance title and an additional $216 million in the General Provisions title. The act also provides $210.3 million for McGovern-Dole, a 1% increase from the $207.6 million provided in FY2018. The FY2019 act also directs $15 million of McGovern-Dole funding be made available for LRP, a $5 million increase from the $10 million set-aside for LRP in FY2018. The FY2019 act provides $142,000 for FFP Title I and Food for Progress administrative expenses, a 5% decrease from the FY2018 enacted amount of $149,000. The act also provides $16 million for Food for Progress in the General Provisions title, including $6 million in discretionary appropriations and a $10 million Change in Mandatory Program Spending (CHIMP) increase. The FY2019 conference report states that "this increase is a restoration of funding from reductions occurring in prior years and does not indicate support for expanding or continuing the practice of monetization in food aid programs." The FY2019 House-reported bill would have provided $35 million for Food for Progress. Neither the FY2018 act, the FY2019 Administration's budget request, nor the FY2019 Senate-passed bill included discretionary funding for Food for Progress. Food for Progress has not typically received discretionary appropriations; rather it has relied entirely on mandatory funding delivered through the CCC. Table 2 details appropriations for international food aid programs for FY2017-FY2019, including proposed funding levels in the Administration's FY2018 and FY2019 budget requests and in the House and Senate Agriculture appropriations bills for FY2018 and FY2019. Policy-Related Provisions In addition to providing funding, the agriculture appropriations bill may contain policy-related provisions that direct how the executive branch should spend certain funds. Provisions included in appropriations bill text have the force of law but generally only for the duration of the fiscal year for which the bill provides appropriations. Policy-related provisions generally do not amend the U.S. Code . Table 3 compares select policy-related provisions pertaining to U.S. international food aid programs from the Foreign Assistance and Related Programs (Title V) and General Provisions (Title VII) titles of the FY2018 and FY2019 Agriculture Appropriations Acts. The explanatory statement that accompanies the appropriations act, as well as the committee reports that accompany the House and Senate committee-reported bills, can provide statements of support for certain programs or directions to federal agencies on how to spend certain funding provided in the appropriations bill. While these documents do not have the force of law, they can express congressional intent. The committee reports and explanatory statement may need to be read together to capture all of the congressional intent for a given fiscal year. Table 4 compares selected policy-related provisions pertaining to U.S. international food aid programs from the FY2018 and FY2019 House and Senate committee reports and explanatory statement for the FY2019 Agriculture Appropriations Act. The FY2018 column includes references to the House (H) and Senate (S) committee reports to allow for consideration of congressional intent. The explanatory statement for the FY2018 Agriculture Appropriations Act did not contain policy-related provisions pertaining to U.S. international food aid programs.

The Agriculture appropriations bill—formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—funds the U.S. Department of Agriculture (USDA) except for the Forest Service. This includes funding for certain U.S. international food aid programs. In March 2018, President Trump signed the Consolidated Appropriations Act, 2018 (P.L. 115-141), an omnibus appropriations act for FY2018, into law. In February 2019, President Trump signed the Consolidated Appropriations Act, 2019 (P.L. 116-6), an omnibus appropriations act for FY2019, into law. The FY2018 and FY2019 Agriculture Appropriations Acts—Division A of P.L. 115-141 and Division B of P.L. 116-6, respectively—include funding for certain U.S. international food aid programs, such as the Food for Peace (FFP) Title II Program and the McGovern-Dole International Food for Education and Child Nutrition Program. Other international food aid programs receive mandatory funding and do not rely on discretionary funding provided through annual appropriations. Congress authorizes discretionary and mandatory funding levels for international food aid programs in periodic farm bills, most recently the Agriculture Improvement Act of 2018 (P.L. 115-334). This analysis covers appropriations for U.S. international food aid programs that Congress funds through agriculture appropriations bills. It does not cover appropriations for international food assistance or agricultural development programs that Congress funds in State, Foreign Operations, and Related Programs (SFOPS) appropriations bills, such as the Emergency Food Security Program (EFSP) or the Feed the Future Program. In FY2018, Congress provided a total of $1.924 billion in funding for U.S. international food aid programs, a 7% increase from the $1.802 billion provided in FY2017. In FY2019, Congress provided $1.942 billion in funding for U.S. international food aid programs, a 1% increase from FY2018 enacted levels. In addition to providing funding for U.S. international food aid programs, agriculture appropriations bills may also include policy-related provisions that direct how the executive branch should carry out certain appropriations. The FY2018 and FY2019 Agriculture Appropriations Acts, as well as House and Senate Agriculture appropriations bills for those fiscal years, include policy provisions related to international food aid programs. For example, one provision directs that a certain amount of the funds appropriated for the McGovern-Dole Program be used to provide locally and regionally procured food assistance—food assistance purchased in the country or region where it is to be distributed rather than in the United States.

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Introduction This report focuses on FY2019 discretionary appropriations for Interior, Environment, and Related Agencies. At issue for Congress were determining the amount of funding for agencies and programs in the bill, and the terms and conditions of such funding. This report first presents a short overview of the agencies and other entities funded in the bill. It then describes the appropriations requested by President Trump for FY2019 for Interior, Environment, and Related Agencies. Next, it briefly compares the appropriations enacted for FY2018 with the FY2019 appropriations requested by the President; passed by the House in H.R. 6147 (115 th Congress) on July 19, 2018; passed by the Senate, also in H.R. 6147 (115 th Congress) on August 1, 2018; and enacted in Division E of P.L. 116-6 on February 15, 2019. Finally, this report compares FY2018 and FY2019 funding for several agencies and issues that have been among those of interest to Congress. They include the Bureau of Land Management, Environmental Protection Agency (EPA), U.S. Fish and Wildlife Service, Forest Service, Indian Affairs, Indian Health Service, Land and Water Conservation Fund, National Park Service, Payments in Lieu of Taxes Program, Smithsonian Institution, U.S. Geological Survey, and Wildland Fire Management. For FY2019, the enacted appropriation for Interior, Environment, and Related Agencies was $35.61 billion. This total was composed of $13.02 billion for DOI agencies in Title I, $8.06 billion for EPA in Title II, $13.74 billion for "Related Agencies" in Title III, and $791.0 million in Title IV for certain activities of EPA. The FY2019 appropriation was $300.0 million (0.8%) more than the FY2018 regular appropriation of $35.31 billion, but $975.4 million (2.7%) less than the FY2018 total appropriation of $36.59 billion, including $1.28 billion in emergency supplemental appropriations for disaster relief. The FY2019 appropriation was $7.28 billion (25.7%) more than the President's request ($28.34 billion), $305.5 million (0.9%) more than the level passed by the House ($35.31 billion), and $301.0 million (0.8%) less than the level passed by the Senate ($35.91 billion). Because the FY2019 appropriation was not enacted until February 15, 2019, Interior, Environment, and Related Agencies received continuing appropriations for certain periods before that date. Specifically, from the start of the fiscal year on October 1, 2018, through December 21, 2018, continuing appropriations were provided at the FY2018 level (in Division G of P.L. 115-141 ). The continuing resolution (CR) generally provided funds for continuing projects and activities under the same authority and conditions and to the same extent and manner as for FY2018. However, the CR included certain exceptions ("anomalies") that changed the purposes or amounts of funds, extended expiring provisions of law, or made other changes to existing law. The CR expired after December 21, 2018, before being extended on January 25, 2019, through February 15, 2019. As a result of the lapse in funds, a partial government shutdown went into effect between December 22, 2018, and January 25, 2019. During that time, agencies in the Interior bill generally operated under "contingency" plans that summarize activities that would cease and activities that would continue during a lapse in appropriations. In the 116 th Congress, the House and Senate considered a variety of measures to provide FY2019 funding to Interior, Environment, and Related Agencies. Other than H.J.Res. 31 , enacted as P.L. 116-6 and containing regular FY2019 appropriations, these measures are not discussed in this report. They included proposals for relatively short-term as well as full-year funding, and are identified on the CRS Appropriations Status Table at http://www.crs.gov/AppropriationsStatusTable/Index . Appropriations are complex. Budget justifications for some agencies are large, often several hundred pages long and containing numerous funding, programmatic, and legislative changes for congressional consideration. Further, appropriations laws provide funds for numerous accounts, activities, and subactivities, and the accompanying explanatory statements provide additional directives and other important information. This report generally does not provide in-depth information at the account and subaccount levels, nor does it detail budgetary reorganizations or legislative changes enacted in law or proposed for FY2019. For information on a particular agency or on individual accounts, programs, or activities administered by a particular agency, contact the key policy staff listed at the end of this report. In addition, for selected reports related to appropriations for Interior, Environment, and Related Agencies, such as individual agencies (e.g., National Park Service) or cross-cutting programs (e.g., Wildland Fire Management), see the "Interior & Environment Appropriations" subissue under the "Appropriations" Issue Area page on the Congressional Research Service (CRS) website. Overview of Interior, Environment, and Related Agencies The annual Interior, Environment, and Related Agencies appropriations bill includes funding and other provisions for agencies and programs in three separate federal departments and for numerous related agencies. The Interior bill typically contains three primary appropriations titles and a fourth title with general provisions. Title I provides funding for most Department of the Interior (DOI) agencies, many of which manage land and other natural resource or regulatory programs. Title I also typically includes general provisions related to DOI agencies. Title II contains appropriations and administrative provisions for EPA. Title III, Related Agencies, currently funds 23 agencies in other departments, such as the Forest Service in the Department of Agriculture and the Indian Health Service in the Department of Health and Human Services; arts and cultural agencies, including the Smithsonian Institution; and various other organizations and entities. Title III also contains administrative provisions for some agencies funded therein. A fourth title of the bill, General Provisions, typically contains additional guidance and direction for agencies in the bill. In addition, in the FY2018 appropriations law and the House-passed, Senate-passed, and enacted measures for FY2019, Title IV also included appropriations, primarily for EPA. Selected major agencies in the Interior bill are briefly described below. Title I. Department of the Interior11 DOI's mission is to protect and manage the nation's natural resources and cultural heritage; provide scientific and other information about those resources and natural hazards; and exercise trust responsibilities and other commitments to American Indians, Alaska Natives, and affiliated island communities. There are eight DOI agencies and two other broad accounts funded in the Interior bill that carry out this mission. Hereinafter, these agencies and broad accounts are referred to collectively as the 10 DOI "agencies." Not including the two broad accounts, the DOI agencies funded in the Interior bill include the following: The Bureau of Land Management administers about 246 million acres of public land, mostly in the West, for diverse uses such as energy and mineral development, livestock grazing, recreation, and preservation. The agency also is responsible for about 700 million acres of federal onshore subsurface mineral estate throughout the nation and supervises the mineral operations on about 56 million acres of Indian trust lands. The U.S. F ish and Wildlife Service administers 89 million acres of federal land within the National Wildlife Refuge System and other areas, including 77 million acres in Alaska. It also manages several large marine refuges and marine national monuments, sometimes jointly with other federal agencies. In addition, the U.S. Fish and Wildlife Service is the primary agency responsible for implementing the Endangered Species Act (16 U.S.C. §§1531 et seq.) through listing of species; consulting with other federal agencies; collaborating with private entities and state, tribal, and local governments; and other measures. It is also the primary agency responsible for promoting wildlife habitat; enforcing federal wildlife laws; supporting wildlife and ecosystem science; conserving migratory birds; administering grants to aid state fish and wildlife programs; and coordinating with state, international, and other federal agencies on fish and wildlife issues. The National Park Service administers 80 million acres of federal land within the National Park System, including 419 separate units in the 50 states, District of Columbia, and U.S. territories. Roughly two-thirds of the system's lands are in Alaska. The National Park Service has a dual mission—to preserve unique resources and to provide for their enjoyment by the public. The agency also supports and promotes some resource conservation activities outside the National Park System through grant and technical assistance programs and cooperation with partners. The U.S. Geological Survey is a science agency that provides physical and biological information related to geological resources; climate and land use change; natural hazards; and energy, mineral, water, and biological sciences and resources. In addition, it is the federal government's principal civilian mapping agency and a primary source of data on the quality of the nation's water resources. The Bureau of Ocean Energy Management manages development of the nation's offshore conventional and renewable energy resources in the Atlantic, the Pacific, the Gulf of Mexico, and the Arctic. These resources are located in areas covering approximately 1.7 billion acres located beyond state waters, mostly in the Alaska region (more than 1 billion acres) but also off all coastal states. The Bureau of Safety and Environmental Enforcement provides regulatory and safety oversight for resource development in the outer continental shelf. Among its responsibilities are oil and gas permitting, facility inspections, environmental compliance, and oil spill response planning. The Office of Surface Mining Reclamation and Enforcement works with states and tribes to reclaim abandoned coal mining sites. The agency also regulates active coal mining sites to minimize environmental impacts during mining and to reclaim affected lands and waters after mining. Indian Affairs agencies provide and fund a variety of services to federally recognized American Indian and Alaska Native tribes and their members. Historically, these agencies have taken the lead in federal dealings with tribes. The Bureau of Indian Affairs is responsible for programs that include government operations, courts, law enforcement, fire protection, social programs, roads, economic development, employment assistance, housing repair, irrigation, dams, Indian rights protection, implementation of land and water settlements, and management of trust assets (real estate and natural resources). The Bureau of Indian Education funds an elementary and secondary school system, institutions of higher education, and other educational programs. Title II. Environmental Protection Agency EPA has no organic statute establishing an overall mission; rather, the agency administers various environmental statutes, which have an express or general objective to protect human health and the environment. Primary responsibilities include the implementation of federal statutes regulating air quality, water quality, drinking water safety, pesticides, toxic substances, management and disposal of solid and hazardous wastes, and cleanup of environmental contamination. EPA also awards grants to assist states and local governments in implementing federal law and complying with federal requirements to control pollution. The agency also administers programs that provide financial assistance for public wastewater and drinking water infrastructure projects. Title III. Related Agencies Title III of the Interior bill currently funds 23 agencies, organizations, and other entities, which are collectively referred to hereinafter as the "Related Agencies." Among the Related Agencies funded in the Interior bill, roughly 95% of the funding is typically provided to the following: The Forest Service in the Department of Agriculture manages 193 million acres of federal land within the National Forest System—consisting of national forests, national grasslands, and other areas—in 43 states, the Commonwealth of Puerto Rico, and the Virgin Islands. It also provides technical and financial assistance to states, tribes, and private forest landowners and conducts research on sustaining forest resources for future generations. The Indian Health Service in the Department of Health and Human Services provides medical and environmental health services for more than 2 million American Indians and Alaska Natives. Health care is provided through a system of facilities and programs operated by the agency, tribes and tribal organizations, and urban Indian organizations. The agency operates 26 hospitals, 57 health centers, and 21 health stations. Tribes and tribal organizations, through Indian Health Service contracts and compacts, operate another 22 hospitals, 286 health centers, 62 health stations, and 134 Alaska Native village clinics. The Smithsonian Institution is a museum and research complex consisting of 19 museums and galleries, the National Zoo, and 9 research facilities throughout the United States and around the world. Established by federal legislation in 1846 with the acceptance of a trust donation by the institution's namesake benefactor, the Smithsonian is funded by both federal appropriations and a private trust. The National Endowment for the Arts and the National Endowment for the Humanities make up the National Foundation on the Arts and the Humanities. The National Endowment for the Arts is a major federal source of support for all arts disciplines. Since 1965, it has awarded more than 145,000 grants, which have been distributed to all states. The National Endowment for the Humanities generally supports grants for humanities education, research, preservation, and public humanities programs; creation of regional humanities centers; and development of humanities programs under the jurisdiction of state humanities councils. Since 1965, it has awarded approximately 63,000 grants. It also supports a Challenge Grant program to stimulate and match private donations in support of humanities institutions. FY2019 Appropriations Components of President Trump's Request For FY2019, President Trump requested $28.34 billion for the more than 30 agencies and entities in the Interior, Environment, and Related Agencies appropriations bill. The President also requested the establishment of a new adjustment to the discretionary spending limits for certain wildland fire suppression activities, and he requested $1.52 billion to be made available through the cap adjustment for FY2019. Budget authority designated for those activities would cause the spending limits to be adjusted, making it effectively not subject to the limits. For the 10 major DOI agencies in Title I of the bill, the request was $10.59 billion, or 37.4% of the $28.34 billion total requested. For EPA, funded in Title II of the bill, the request was $6.19 billion, or 21.8% of the total. For the 23 agencies and other entities funded in Title III of the bill, the request was $11.56 billion, or 40.8% of the total. Appropriations for agencies vary widely for reasons relating to the number, breadth, and complexity of agency responsibilities; alternative sources of funding (e.g., mandatory appropriations); and Administration and congressional priorities, among other factors. Thus, although the President's FY2019 request covered more than 30 agencies, funding for a small subset of these agencies accounted for most of the total. For example, the requested appropriations for three agencies—EPA, Forest Service, and Indian Health Service—were more than half (57.4%) of the total request. Further, three-quarters (75.5%) of the request was for these three agencies and two others, National Park Service and Indian Affairs. For DOI agencies, the FY2019 requests ranged from $121.7 million for the Office of Surface Mining Reclamation and Enforcement to $2.70 billion for the National Park Service. The requests for 5 of the 10 agencies exceeded $1 billion. Nearly half (48.3%) of the $10.59 billion requested for DOI agencies was for two agencies—the National Park Service ($2.70 billion) and Indian Affairs ($2.41 billion). For Related Agencies in Title III, the requested funding levels exhibited even more variation. The President sought amounts ranging from no funding for two entities—grants under National Capital Arts and Cultural Affairs and the Women's Suffrage Centennial Commission—to $5.42 billion for the Indian Health Service. The Forest Service was the only other agency for which more than $4 billion was requested. The next-largest request was for the Smithsonian Institution, at $957.4 million. By contrast, 19 entities each had requests of $62 million or less, including 12 with requests of less than $10 million each. Figure 1 identifies the share of the President's FY2019 request for particular agencies in the Interior bill. Overview of FY2019 Appropriations Compared with FY2018 Enacted Appropriations For FY2018, the total enacted appropriation for Interior, Environment, and Related Agencies was $36.59 billion. This total included $35.31 billion in regular appropriations and $1.28 billion in emergency supplemental appropriations for disaster relief. As noted, for FY2019, the President sought $28.34 billion for agencies in the Interior bill and a discretionary cap adjustment of $1.52 billion for wildland fire suppression. Neither the House nor the Senate version of H.R. 6147 , as passed during the 115 th Congress, nor the FY2019 enacted legislation, contained the cap adjustment. H.R. 6147 , as passed by the House on July 19, 2018, would have provided $35.31 billion for FY2019. H.R. 6147 , as passed by the Senate on August 1, 2018, would have provided $35.91 billion for FY2019. For FY2019, the enacted appropriation for Interior, Environment, and Related Agencies in P.L. 116-6 was $35.61 billion. Thus, when including the supplemental disaster funding for FY2018, the President's request, House-passed bill, Senate-passed bill, and FY2019 enacted appropriation contained less overall funding for FY2019 as compared to the FY2018 total of $36.59 billion, as follows: $8.25 billion (22.5%) less under the President's request, $1.28 billion (3.5%) less under the House-passed bill, $674.4 million (1.8%) less under the Senate-passed bill, and $975.4 million (2.7%) less under the FY2019 enacted appropriation. However, relative to the regular FY2018 appropriation of $35.31 billion (excluding the supplemental disaster funding), for FY2019: the President's request would have reduced funding by $6.98 billion (19.8%), the House-passed bill would have provided nearly level appropriations, with a decrease of $5.5 million (<0.1%), the Senate-passed bill would have increased funding by $601.0 million (1.7%), and the FY2019 enacted appropriation provided an increase of $300.0 million (0.8%). Figure 2 depicts the regular appropriations enacted for FY2018, requested by the President for FY2019, in H.R. 6147 (115 th Congress) as passed by the House for FY2019, in H.R. 6147 (115 th Congress) as passed by the Senate for FY2019, and enacted for FY2019 in Division E of P.L. 116-6 . It shows the appropriations contained in each of the three main appropriations titles of the Interior bill—Title I (DOI), Title II (EPA), and Title III (Related Agencies)—and in the general provisions in Title IV. For FY2018 enacted appropriations, it also depicts the emergency supplemental appropriations for disaster relief. Table 1 , at the end of this report, lists the appropriations for each agency that were enacted for FY2018, requested by the President for FY2019, passed by the House in H.R. 6147 (115 th Congress) for FY2019, passed by the Senate in H.R. 6147 (115 th Congress) for FY2019, and enacted for FY2019 in Division E of P.L. 116-6 . It also contains the percentage changes between FY2018 enacted appropriations and FY2019 enacted appropriations. Selected Agencies and Programs25 There are many differences among the FY2018 enacted appropriations and the FY2019 funding requested by the President, passed by the House, passed by the Senate, and enacted. Selected agencies and programs are highlighted below, among the many of interest to Members of Congress, stakeholders, and the public. For the selected agencies and programs, the discussions below briefly compare FY2018 regular annual funding with FY2019 levels requested by the Administration, approved by the House in H.R. 6147 (115 th Congress), approved by the Senate in H.R. 6147 (115 th Congress), and enacted for FY2019 in Division E of P.L. 116-6 . Including FY2018 emergency supplemental appropriations would result in different comparisons for some of the agencies and programs covered below. Bureau of Land Management The Administration sought a decrease of 23.2% from the FY2018 appropriation ($1.33 billion) for the Bureau of Land Management (BLM). The request contained lower funding for many BLM accounts and programs, including those for overall Management of Lands and Resources, and Land Acquisition by the agency. The House and Senate versions of the bill included increased appropriations for BLM for FY2019, of 4.1% and 0.9% respectively, with additional funds for the Management of Lands and Resources. The Senate also would have provided an increase for Land Acquisition, but the House would have reduced funds for that purpose. Further, the Administration proposed a budget restructuring within the Management of Lands and Resources account, to increase flexibility, cost savings, and program integration. The Senate, but not the House, would have adopted this restructuring. The FY2019 enacted appropriation of $1.35 billion was a $14.3 million (1.1%) increase over the FY2018 appropriation. It reflected the President's proposed restructuring in the Management of Lands and Resources account, and increased funds for that account and for Land Acquisition, with level funding for other accounts. Environmental Protection Agency For FY2018, EPA received $8.06 billion in Title II of the regular appropriations law, and another $766.0 million in Title IV of that law, for an FY2018 regular appropriation of $8.82 billion. This discussion generally reflects funding in Title II only. Relative to the FY2018 appropriations in Title II only ($8.06 billion), the EPA would have received a decrease under the Administration's request (23.2%) and under the House-passed bill (1.6%), but it would have received level funding under the Senate-passed bill. The request contained lower funding for several accounts, among them Science and Technology, Environmental Programs and Management (including geographic programs), and State and Tribal Assistance Grants (STAG, including categorical grants). However, the Administration sought level funding in the STAG account for capitalization grants to states for wastewater infrastructure projects through the Clean Water State Revolving Fund (SRF) and for drinking water infrastructure grants to states through the Drinking Water SRF. Moreover, the Administration asked for increased appropriations for two accounts, Buildings and Facilities and the Water Infrastructure Finance and Innovation Program. The House and Senate versions of the bill both supported level (or nearly level) funding for some accounts and programs (e.g., the Clean Water SRF and the Drinking Water SRF). However, whereas the Senate would have provided level funding for many accounts, the House more often supported decreases (e.g., Science and Technology, and Environmental Programs and Management) or increases (e.g., Water Infrastructure Finance and Innovation Program, and Hazardous Substance Superfund). For FY2019, EPA received $8.06 billion in Title II of the regular appropriations law, and another $791.0 million in Title IV of that law, for an FY2019 regular appropriation of $8.85 billion. This was a $25.0 million (0.3%) increase over the FY2018 total appropriation. The $8.06 billion enacted for FY2019 in Title II was equal to the FY2018 appropriation for Title II (and the Senate-passed level for FY2019). The FY2019 enacted appropriation included funding at the FY2018 level for each EPA account except for STAG, which increased by $42.9 million (1.2%) over FY2018. There was a corresponding change in rescissions, with $42.9 million more in (account-specific) rescissions enacted in FY2019 than in FY2018. U.S. Fish and Wildlife Service For the U.S. Fish and Wildlife Service (FWS), differing amounts of reductions from the FY2018 level ($1.59 billion) were proposed for FY2019 by the Administration (23.1%), House (0.9%), and Senate (1.2%). The Administration sought to reduce funding for the Resource Management account overall, with cuts in programs such as ecological services, habitat conservation, and fish and aquatic conservation, and to eliminate funding for programs including cooperative landscape conservation and science support. The House and Senate versions of the bill would have increased funding for Resource Management, with little change for many programs relative to FY2018, and would have retained funding for cooperative landscape conservation and science support. Citing "higher priorities," the Administration also proposed eliminating discretionary appropriations for two other FWS accounts—the Cooperative Endangered Species Conservation Fund and the National Wildlife Refuge Fund. The House- and Senate-passed bills retained discretionary funding for these accounts. Further, the Administration proposed relatively large reductions from the FY2018 level for the Land Acquisition (89.1%) and Construction (79.3%) accounts. The House and Senate supported smaller reductions for both accounts. The FY2019 enacted appropriation of $1.58 billion was $17.0 million (1.1%) less than the FY2018 appropriation. Like the House-passed and Senate-passed bills, the FY2019 appropriation increased funding for Resource Management, and retained funding for the cooperative landscape conservation and science support programs funded by this account. Similarly, the enacted appropriation included funding for the Cooperative Endangered Species Conservation Fund and the National Wildlife Refuge Fund. It also increased Land Acquisition, reduced Construction, and rescinded $15.0 million from Coastal Impact Assistance Program Grants. Forest Service For FY2019, the Administration requested 21.5% less for the Forest Service (FS) than was enacted for FY2018 ($5.93 billion). Within the overall reduction, the President proposed decreases for each FS account, including 81.6% less for Capital Improvement and Maintenance, 47.7% less for State and Private Forestry, and 10.6% less for the National Forest System. The Administration also sought to eliminate funding for some programs, including Land Acquisition (from the Land and Water Conservation Fund), Collaborative Forest Landscape Restoration, and certain cooperative forestry programs such as Forest Legacy. For FY2019, the House and Senate bills would have provided overall increases for the FS of 3.3% and 6.1% respectively, with increases for some FS accounts and retention of programs the Administration sought to eliminate. The House and Senate supported differing levels of appropriations for major FS accounts, with the House approving higher amounts than the Senate for the National Forest System and Capital Improvement and Maintenance and the Senate approving higher amounts than the House for Land Acquisition and Wildland Fire Management, among other differences. For FY2019, the FS enacted appropriation of $6.09 billion was $152.5 million (2.6%) higher than the FY2018 appropriation. It included higher funding than enacted for FY2018 for all major accounts except Capital Improvement and Maintenance (which decreased by 0.7%). For Wildland Fire Management, the FY2019 appropriation of $3.00 billion was 4.3% higher than the FY2018 appropriation, nearly the same as the House-passed level, and 7.0% less than the Senate-passed amount. The FS total FY2019 appropriation also included funding for programs the Administration had sought to eliminate, as noted above. Indian Affairs The Administration's FY2019 requested appropriation for Indian Affairs (IA) was 21.2% less than the FY2018 enacted amount ($3.06 billion). Most Indian programs would have been funded at lower levels, including human services, natural resources management, and public safety and justice. Education and construction (including construction of educational facilities) were among the largest dollar decreases in the budget request. The House- and Senate-passed measures contained overall increases of 1.3% and 0.4% respectively for IA, with relatively stable funding for many programs and activities as compared with FY2018 enacted amounts. Enacted appropriations of $3.08 billion for FY2019 were a $17.5 million (0.6%) increase over FY2018 appropriations. For FY2019, most programs received relatively small dollar increases or stable funding as compared with FY2018. Changes relative to FY2018 included an increase of 1.5% for public safety and justice and of 2.3% for contract support costs, and a decrease of 9.7% for Indian Land and Water Claim Settlements and Miscellaneous Payments to Indians. The appropriation for education programs declined 1.1% from FY2018 to FY2019. This was primarily due to the inclusion of a one-time increase of $16.9 million for FY2018 for the Haskell Indian Nations University and the Southwestern Indian Polytechnic Institute, to convert these postsecondary institutions to forward funding to align with the school year funding cycle. Indian Health Service Under the Administration's FY2019 request, the Indian Health Service (IHS) would have received 2.1% less than the FY2018 appropriation ($5.54 billion). The overall decrease was composed of a variety of program reductions and increases. For example, the Administration proposed cutting the Indian Health Facilities account (41.7%), including for maintenance and improvement of facilities and construction of both health care and sanitation facilities, and proposed no funding for programs including the Indian Health Care Improvement Fund, health education, and community health representatives. However, the Administration requested additional monies for clinical services including hospital and health clinics, mental health, and alcohol and substance abuse, and for contract support costs (to help tribes pay the costs of administering IHS-funded programs). The Administration also sought to fund the Special Diabetes Program for Indians through discretionary appropriations; currently the program has a direct appropriation. The House and Senate bills would have approved increases of 6.7% and 4.2% respectively over FY2018 appropriations for IHS. Both chambers included higher funding for clinical services than enacted for FY2018 and requested by the Administration for FY2019, and both agreed with the Administration's proposed level for contract support costs. The House, but not the Senate, included appropriations for the Indian Health Care Improvement Fund and would have provided more than the FY2018 appropriation for the fund. Both chambers sought to retain funding for health education and community health representatives. Both chambers also supported level funding for most Indian Health Facilities programs but provided additional funds for facilities and environmental health support. Neither chamber sought to fund the Special Diabetes Program for Indians through discretionary appropriations. The FY2019 enacted appropriation of $5.80 billion was an increase of $266.5 million (4.8%) for IHS over FY2018 appropriations. The total included level or increased funds for most programs and activities, for instance, with increases for clinical services and contract support costs. The enacted total included funding for programs the President sought to eliminate, including the Indian Health Care Improvement Fund, health education, and community health representatives. Similar to the House-passed and Senate-passed bills, the FY2019 enacted appropriation did not fund the Special Diabetes Program for Indians through discretionary appropriations, and provided level funding for most Indian Health Facilities programs except for facilities and environmental health support, which received an increase. Land and Water Conservation Fund The Land and Water Conservation Fund (LWCF) has funded land acquisition for the four main federal land management agencies, a matching grant program to states to support outdoor recreation, and other purposes. For FY2019, the Administration did not seek discretionary appropriations for most programs that received appropriations from the LWCF in FY2018, and proposed an overall reduction of $12.9 million due to rescisssions of prior-year funds for some program components. In contrast, the House and Senate would have provided LWCF funding for the same programs as in FY2018, including land acquisition by the federal land management agencies. However, both the House and the Senate versions of the bill contained reductions from the FY2018 level ($425.0 million), of 15.2% and 3.8% respectively. In contrast, the FY2019 enacted appropriation of $435.0 million was a $10.0 million (2.4%) increase over FY2018. National Park Service For FY2019, the Administration requested 15.6% less for the National Park Service (NPS) than was enacted for FY2018 ($3.20 billion). Within the overall reduction, the President proposed cuts for each NPS account and many programs, including Construction, the Historic Preservation Fund, facility operations and maintenance, and heritage partnership programs. The President proposed the elimination of discretionary funding for other programs, including grants to states for outdoor recreation, line item acquisitions by the NPS, and the Centennial Challenge Program (a matching grant program to encourage donations). The House and Senate would have approved overall increases of 1.9% and 0.5% respectively for the NPS for FY2019. Their bills sought to fund many accounts and programs at levels similar to those enacted for FY2018. However, both chambers included increases for some programs (e.g., facility operations and maintenance) and reductions for other programs (e.g., line-item acquisitions). In still other cases, the chambers differed as to the direction of the change, for instance, with the House supporting an increase for the Historic Preservation Fund and the Senate approving a decrease. For FY2019, the enacted appropriation was $3.22 billion, which was $20.5 million (0.6%) more than the FY2018 appropriation. The total reflected various increases for several accounts, namely the Operation of the National Park System, National Recreation and Preservation, Historic Preservation Fund, and Construction. However, FY2019 funds were lower than FY2018 appropriations for two other accounts: the Centennial Challenge, and Land Acquisition and State Assistance account, due to a decrease for land acquisition by the NPS. Payments in Lieu of Taxes The Payments in Lieu of Taxes Program (PILT) would have been reduced from the FY2018 level ($553.2 million) under the President's request ($465.0 million, a 15.9% reduction). For FY2019, the House-passed bill and the Senate-passed bill both contained $500.0 million, a reduction of 9.6% from the FY2018 amount. In earlier action, the Senate Appropriations Committee had reported that $500.0 million was the estimate of full funding for PILT for FY2019. PILT compensates counties and local governments for nontaxable lands within their jurisdictions. The authorized level for the program is calculated under a formula that considers various factors and varies from year to year. The authorized payment is currently subject to annual appropriations. The FY2019 appropriation for PILT was $500.0 million, a decrease of $53.2 million (9.6%) from the FY2018 level. As noted, this was the level that had been approved in the House-passed and Senate-passed bills. Smithsonian Institution For FY2019, the Smithsonian Institution (SI) would have received a decrease (8.2%) under the Administration's request, an increase (1.2%) under the House-passed bill, and essentially level funding under the Senate-passed bill as compared with the FY2018 appropriation ($1.04 billion). However, the Administration, House, and Senate all supported funding at or near the FY2018 level for most SI museums, research institutes, and other programs. A key difference was in funding for the Facilities Capital account, which includes revitalization, planning and design, and construction of facilities. The Administration requested a 29.6% decrease for this account, the Senate approved a smaller decrease of 2.7%, and the House approved an increase of 1.8%. In addition, the Administration, House, and Senate all supported an increase of 2.2% over the FY2018 level for Facilities Services, which encompasses maintenance, operation, security, and support of facilities. For FY2019, the enacted appropriation of $1.04 billion was essentially level with the FY2018 appropriation. The FY2019 total included funding at or near the FY2018 level for most SI museums, research institutes, and other programs. An exception was an increase of 2.2% over the FY2018 level for Facilities Services, as had been recommended by the President and approved by the House and Senate. Another exception was the Facilities Capital account, which received a 2.7% overall decrease; this comprised reduced funding for planning and design, the elimination of construction monies, and additional funds for revitalization. U.S. Geological Survey Relative to FY2018 appropriations ($1.15 billion), the U.S. Geological Survey (USGS) would have received a decrease (25.1%) under the Administration's request, an increase (2.1%) under the House-passed bill, and level funding under the Senate-passed bill. The request proposed reduced funding for all eight major USGS program areas, including ecosystems, land resources, natural hazards, and water resources. The request also would have cut most subprograms, although in a few cases it contained additional funds (e.g., for mineral and energy resources). In contrast, both chambers would have maintained level funding or would have increased appropriations for all USGS program areas except natural hazards, which would have declined by 4.8% in the House-passed bill and by 12.0% in the Senate-passed bill. For FY2019, USGS received an appropriation of $1.16 billion, an increase of $12.1 million (1.1%) over FY2018. Of the eight major USGS program areas, five received increases, two received decreases, and one received level funding. The largest dollar and percentage increase was for energy, minerals, and environmental health, which gained $8.9 million (8.7%), primarily for mineral resources. The largest dollar and percentage decrease was for natural hazards, which was cut by $12.4 million (6.9%) for the volcano hazards subprogram. Wildland Fire Management55 For FY2019, the Administration proposed $3.79 billion in discretionary appropriations for Wildland Fire Management (WFM) of DOI and the FS, a 12.9% decrease from the FY2018 enacted level ($4.35 billion). However, the President also sought a $1.52 billion cap adjustment to the discretionary spending limits in law, so that funding for certain wildland fire suppression activities would not be subject to the limits. Including those funds, the total FY2019 request was $5.31 billion. This would be an increase of 22.0% over the FY2018 appropriation. The House and Senate bills contained increases of 3.1% and 12.0% respectively over the FY2018 appropriation. Neither chamber's FY2019 bill included a discretionary cap adjustment for wildland fire suppression for FY2019. However, a cap adjustment was enacted as part of the Consolidated Appropriations Act, 2018, and is scheduled to go into effect in FY2020. Further, the Administration, House, and Senate did not support appropriations for FY2019 for the FS or DOI FLAME accounts. The FLAME account received $342.0 million in emergency supplemental appropriations in FY2018. For FY2019, the total appropriation for Wildland Fire Management for DOI and FS was $4.48 billion; this was $124.8 million (2.9%) more than the FY2018 appropriation. The increase over FY2018 was primarily for the FS, for suppression operations. The total appropriation consisted of $941.2 million for DOI and $3.54 for FS. The FY2019 appropriations law did not include a discretionary cap adjustment for wildland fire suppression for FY2019, as sought by the President, or funding for the DOI or FS FLAME accounts.

The Interior, Environment, and Related Agencies appropriations bill contains funding for more than 30 agencies and entities. They include most of the Department of the Interior (DOI) as well as agencies within other departments, such as the Forest Service within the Department of Agriculture and the Indian Health Service within the Department of Health and Human Services. The bill also provides funding for the Environmental Protection Agency (EPA), arts and cultural agencies, and other organizations and entities. Issues for Congress included determining the amount, terms, and conditions of funding for agencies and programs. For FY2019, the enacted appropriation for Interior, Environment, and Related Agencies was $35.61 billion. This total was composed of $13.02 billion for DOI agencies in Title I, $8.06 billion for EPA in Title II, $13.74 billion for the 23 "related agencies" in Title III, and $791.0 million in Title IV for certain EPA activities. The FY2019 appropriation was $300.0 million (0.8%) more than the FY2018 regular appropriation of $35.31 billion (in P.L. 115-141), but $975.4 million (2.7%) less than the FY2018 total appropriation of $36.59 billion, including $1.28 billion in emergency supplemental appropriations for disaster relief (in P.L. 115-72 and P.L. 115-123). The FY2019 appropriation was $7.28 billion (25.7%) more than the President's request ($28.34 billion), $305.5 million (0.9%) more than the House-passed level ($35.31 billion), and $301.0 million (0.8%) less than the Senate-passed amount ($35.91 billion). Because the FY2019 appropriation was not enacted until February 15, 2019, agencies received continuing appropriations for certain periods before that date. Specifically, from October 1, 2018, through December 21, 2018, and again from January 25, 2019, through February 15, 2019, appropriations were provided under a continuing resolution (CR) at the FY2018 level (in Division G of P.L. 115-141). Due to a lapse in funds after December 21, 2018, until January 25, 2019, a partial government shutdown went into effect. Agencies in the Interior bill generally operated under "contingency" plans that summarize activities that would cease and activities that would continue during a lapse in appropriations. In earlier action, President Trump's request of $28.34 billion for FY2019 for Interior, Environment, and Related Agencies included $10.59 billion for DOI agencies, $6.19 billion for EPA, and $11.56 billion for related agencies. The versions of H.R. 6147 (115th Congress) passed by the House on July 19, 2018, and by the Senate on August 1, 2018, contained higher FY2019 appropriations overall, and for each title of the bill, than requested. The President's request also contained a legislative proposal for a $1.52 billion cap adjustment to the discretionary spending limits in law for certain wildland fire suppression activities. This cap adjustment was not approved by the chambers or enacted for FY2019. However, Congress enacted a similar proposal (in P.L. 115-141), under which the adjustment becomes available in FY2020. The President, House, and Senate each proposed less funding for FY2019 relative to the FY2018 total of $36.59 billion (including emergency supplemental appropriations), proposing 22.5%, 3.5%, and 1.8% less, respectively. In contrast, relative to the regular FY2018 appropriation of $35.31 billion, the President would have reduced funding (19.8%), the House would have provided nearly level appropriations (<0.1% decrease), and the Senate would have increased funding (1.7%) for FY2019. For individual agencies and programs in the bill, there are many differences among the funding levels enacted for FY2019 and those supported by the President, House, and Senate for FY2019 and enacted for FY2018. This report highlights funding for selected agencies and programs that have been among the many of interest to Congress, stakeholders, and the public.

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Status of FY2019 Agriculture Appropriations Congress passed and the President signed the FY2019 Consolidated Appropriations Act on February 15, 2019 ( P.L. 116-6 , H.Rept. 116-9 ). This action, more than four months into the fiscal year, followed three continuing resolutions (CRs) and a 34-day partial government shutdown ( Table 1 ). In 2018, both the House and Senate Appropriations Committees reported FY2019 Agriculture appropriations bills ( H.R. 5961 on May 16, 2018, and S. 2976 on May 24, 2018). The Senate amended and passed its version as Division C of a four-bill minibus ( H.R. 6147 on August 1, 2018). In January 2019, during the partial government shutdown, the House passed various combinations of agriculture appropriations bills in an attempt to reopen the government ( H.R. 21 , H.R. 265 , H.R. 648 ). The Senate did not consider the measures until the Consolidated Appropriations Act moved in February 2019. See Figure 1 and Appendix B for more timeline context. The higher discretionary budget caps in the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) facilitated development of the appropriation amounts. The official discretionary total of the enacted FY2019 Agriculture appropriation is $23.03 billion, $35 million more than was enacted in FY2018 (+0.2%; Table 2 ) on a comparable basis that excludes the Commodity Futures Trading Commission (CFTC). The enacted total is more than was proposed in the House-reported bill but less than in the Senate-passed bill. The appropriation also carries mandatory spending—though that is largely determined in separate authorizing laws—that totals nearly $129 billion. Thus, the overall total of the FY2019 Agriculture appropriation is about $152 billion. Scope of Agriculture Appropriations The Agriculture appropriations bill—formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—funds all of USDA, excluding the U.S. Forest Service. It also funds the Food and Drug Administration (FDA) in the Department of Health and Human Services (HHS) and, in even-numbered fiscal years, CFTC. Jurisdiction is with the House and Senate Committees on Appropriations and their respective Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. The bill includes mandatory and discretionary spending, but the discretionary amounts are the primary focus during the bill's development. The scope of the bill is shown in Figure 2 . 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 and usually advanced unchanged—is controlled by budget rules during the authorization process. Spending for so-called entitlement programs is set in laws such as the 2018 farm bill and 2010 child nutrition reauthorizations. In the FY2019 Agriculture appropriations act, discretionary appropriations are 15% ($23 billion) of the $152 billion total. Mandatory spending carried in the act comprised $129 billion, about 85% of the total. About $106 billion of the $129 billion mandatory amount is attributable to programs in the 2018 farm bill. Some programs are not in the authorizing jurisdiction of the House or Senate Agriculture Committees, such as FDA, WIC, or child nutrition ( Figure 2 ). Within the discretionary total, the largest discretionary spending items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); agricultural research; rural development; FDA; foreign food aid and trade; farm assistance program salaries and loans; food safety inspection; animal and plant health programs; and salaries and expenses for the conservation programs ( Figure 2 ). The main mandatory spending items are the Supplemental Nutrition Assistance Program (SNAP, and other food and nutrition act programs), child nutrition (school lunch and related programs), crop insurance, and farm commodity and conservation programs that are funded through USDA's Commodity Credit Corporation (CCC). SNAP is referred to as an "appropriated entitlement" and requires an annual appropriation. Amounts for the nutrition program are based on projected spending needs. In contrast, the CCC operates on a line of credit. The annual appropriation provides funding to reimburse the Treasury for the use of this line of credit. Recent Trends in Agriculture Appropriations Over time, changes by title of the Agriculture appropriations bill have generally been proportionate to changes in the bill's total discretionary limit, though some activities have sustained relative increases and decreases. Agriculture appropriations peaked in FY2010, declined through FY2013, and have been higher since then ( Figure 3 ). Comparisons to historical benchmarks, though, may be tempered by inflation adjustments ( Figure 4 ). In FY2018, USDA reorganization affected the placement of some programs between Titles I and II of the bill. The stacked bars in Figure 3 represent the discretionary authorization for each appropriations title. The total of the positive stacked bars is the budget authority in Titles I-VI. Prior to FY2018, it was higher than the official discretionary spending allocation (the blue line) because of the budgetary offset from negative amounts in Title VII (general provisions) and other scorekeeping adjustments that were negative, mostly due to limits on mandatory programs and rescissions. Action on FY2019 Appropriations Administration's Budget Request The Trump Administration released its FY2019 budget request on February 12, 2018. USDA concurrently released its more detailed budget summary and justification, as did the FDA, and the independent agencies of the CFTC and the Farm Credit Administration (FCA). The Administration also highlighted some of the proposed reductions and eliminations separately. From these documents, the congressional appropriations committees evaluated the request and began to consider their own bills in the spring of 2018. For accounts in the jurisdiction of the Agriculture appropriations bill, the Administration's budget proposed $17 billion, a 25% reduction from FY2018 ( Table 2 , Figure 3 ). The timing of the Administration's budget request for FY2019 preceded Congress enacting the final, omnibus FY2018 appropriation in March 2018. Therefore, amounts in the FY2018 column of the Administration's budget documents are based on FY2017 and the CR and are different from the enacted FY2018 levels that came later and as shown in this report. Discretionary Budget Caps and Subcommittee Allocations Budget enforcement for appropriations has both procedural and statutory elements. The procedural elements are associated with the budget resolution and are enforced through points of order. Typically, each chamber's full Appropriations Committee receives a top-line procedural limit on discretionary budget authority, referred to as a "302(a)" allocation, from the Budget Committee via an annual budget resolution. The Appropriations Committees then in turn subdivide the allocation among their subcommittees, referred to as the "302(b)" allocations. The statutory elements impose limits on discretionary spending in FY2012-FY2021 and are enforced through discretionary budget caps and sequestration (2 U.S.C. 901(c)). The Budget Control Act of 2011 (BCA, P.L. 112-25 ) set discretionary budget caps through FY2021 as a way of reducing federal spending. Bipartisan Budget Acts (BBAs) in 2013, 2015, and 2018 ( P.L. 113-67 , P.L. 114-74 , and P.L. 115-123 , respectively) have avoided sequestration on discretionary spending—with the exception of FY2013—by raising those caps. In February 2018, the BBA raised the FY2019 cap on nondefense discretionary spending by $68 billion and the cap on defense spending by $85 billion. It also provided language to execute (or "deem") those higher caps for the appropriations process without following the usual procedures for an FY2019 budget resolution. Under these higher caps and authorities, the House and Senate Appropriations Committees proceeded to mark up the FY2019 appropriations bills. The Agriculture appropriations bills are receiving roughly the same subcommittee allocation ("302(b)" allocation) in each chamber that was used to complete the FY2018 appropriation under the BBA. For FY2019, the subcommittee allocations for agriculture appropriations are House: $23.273 billion ( H.Rept. 115-710 , May 23, 2018), including the CFTC. Senate: $23.235 billion ( S.Rept. 115-260 , May 24, 2018), excluding the CFTC. Appendix A discusses budget sequestration and its effects on agriculture accounts. Sequestration of discretionary accounts occurred in FY2013. Sequestration on mandatory accounts began in FY2013, continues to the present, and has been extended by the Bipartisan Budget Acts. House Action The House Agriculture Appropriations Subcommittee marked up its FY2019 bill on May 9, 2018, by voice vote. On May 16, 2018, the full Appropriations Committee passed and reported an amended bill ( H.R. 5961 , H.Rept. 115-706 ) by a vote of 31-20 ( Table 1 , Figure 1 ). The $23.23 billion discretionary total in the House-reported FY2019 Agriculture appropriation would have been $14 million less than enacted in FY2018 (-0.1%; Table 2 , Figure 3 ). Generally speaking, the House-reported bill did not include most of the reductions proposed by the Administration and continued the trend of appropriations from prior years. Table 3 provides details at the agency level. The primary changes from FY2018 that comprised the relatively flat $14 million overall decrease in the House-reported bill—recognizing that some amounts for certain program areas were in the General Provisions—would have done the following: Increased base FDA appropriations by $308 million (+11%). However, it did not continue to separate FDA funding for the opioid crisis that was in the General Provisions title of the FY2018 appropriation (-$94 million). Increased agricultural research (+$79 million, +2.6%) by raising appropriations for the Agricultural Research Service (ARS) and National Institute of Agriculture (NIFA). Increased the Animal and Plant Health Inspection Service (APHIS) by $16 million (+1.7%). Increased the Rural Utility Service by $82 million (+13%), mostly due to higher base funding for rural water and waste disposal programs. However, the bill did not continue separate funding for rural water that was in the General Provisions title last year (-$500 million) or for telemedicine for the opioid crisis (-$20 million). It would have reduced separate funding for a broadband pilot program while continuing to fund some of it through the General Provisions title (-$50 million). Decreased discretionary appropriations for domestic nutrition assistance programs by reducing WIC by $175 million (-2.8%) and the commodity assistance programs by $15 million (-4.7%). However, the reduction scored in the General Provisions title by rescinding WIC carryover balances was smaller in FY2019, retaining more budget authority (+$500 million). Decreased the base funding in international food assistance Food for Peace grants by $100 million (-6.2%) and would not have continued the extra funding that was in the General Provisions title of the FY2018 appropriations (-$116 million). In addition to discretionary spending, the House-reported bill also carried funding for mandatory spending—largely determined in separate authorizing laws—that would have totaled $121.82 billion, about $936 million less than in FY2018 because of automatic changes in economic conditions and entitlement enrollment rather than any change from congressional action. Thus, the overall total of the House-reported bill was about $145 billion. As the 116 th Congress began in 2019 under a funding gap (see the heading " Government Shutdown "), the House passed various combinations of appropriations bills in an attempt to reopen the government. The Senate did not consider the measures and waited until a compromise for the Consolidated Appropriation Act moved in February 2019. On January 3, 2019, the House passed a six-bill full-year omnibus appropriation ( H.R. 21 ), with agriculture appropriations in Division C. With few exceptions, the bill for agriculture was essentially identical to the Senate-passed Agriculture appropriations bill from the 115 th Congress (Division C of H.R. 6147 ; see under the heading " Senate Action "). On January 10, 2019, the House passed H.R. 265 , a stand-alone Agriculture appropriations bill. On January 23—two days before agreement for a third CR reopened the government—the House passed H.R. 648 , another six-bill omnibus appropriation with Agriculture appropriations in Division A. Senate Action The Senate Agriculture Appropriations Subcommittee initially marked up a FY2019 bill on May 22, 2018, by voice vote. On May 24, the full committee passed and reported an amended bill ( S. 2976 , S.Rept. 115-259 ) by a vote of 31-0. On August 1, 2018, the Senate passed a four-bill minibus ( H.R. 6147 ) by a vote of 92-6, with agriculture as Division C ( Table 1 , Figure 1 ). The discretionary total of the Senate-passed bill was also $23.23 billion. However, the Senate bill's total would have been $229 million more than enacted in FY2018 (+1%) on a comparable basis that excludes the CFTC, since the latter was part of the enacted FY2018 appropriation. The Senate-passed bill would have provided about $250 million more than the House-reported bill on a comparable basis that subtracted CFTC from the House bill. Table 3 provides details at the agency level. The primary changes from FY2018 at the agency level that comprised the Senate-passed bill's overall $228 million increase were the following: Increased base FDA appropriations by $159 million (+6%). Like the House bill, it would not have continued separate FDA funding for the opioid crisis that was in the General Provisions title of the FY2018 appropriation (-$94 million). Increased APHIS by $19 million (+1.9%), slightly more than the House bill. Decreased discretionary appropriations for domestic nutrition assistance programs by reducing WIC by $25 million (-0.4%). This was a smaller reduction than in the House bill. In the rescissions in the General Provisions title, the reduction was smaller than was rescinded in FY2018 (+$400 million). Nonetheless, the Senate bill's rescission was greater than in the House bill. Increased international nutrition assistance by raising the base funding for Food for Peace grants by $116 million (+7.2%). The extra funding that was in the General Provisions title of the FY2018 appropriations was not continued (-$116 million). Decreased funding for the four agricultural research agencies by $44 million (-1.4%), mostly by providing no funding for ARS building and facilities (-$141 million), while increasing ARS salaries and expenses (+$98 million). Decreased the extra funding for rural development compared to the amount provided in the FY2018 General Provisions (-$100 million for rural water, -$175 million for broadband). Base funding for rural development was unchanged overall. The Senate-passed bill's mandatory spending was virtually identical to that of the House-reported bill ($121.82 billion). Its overall total of discretionary and mandatory appropriations was $145 billion. Continuing Resolutions In the absence of a final FY2019 agriculture appropriation at the end of FY2018, Congress enacted three CRs to continue government operations. The first CR was from October 1, 2018, through December 7, 2018 ( P.L. 115-245 , Division C). The second CR continued temporary funding through December 21, 2018 ( P.L. 115-298 ). A 34-day funding gap (partial government shutdown) occurred between the second and third CRs (see the heading " Government Shutdown " for more discussion of the funding lapse). To end the government shutdown, Congress passed and the President signed a third CR ( P.L. 116-5 ) that covered the period from January 26, 2019, through February 15, 2019. At the end of the third CR, an omnibus appropriation was enacted to cover the rest of the fiscal year (see the heading " FY2019 Consolidated Appropriations Act "). In general, a CR continues the funding rates and conditions that were in the previous year's appropriation. The Office of Management and Budget (OMB) may prorate funding to the agencies on an annualized basis for the duration of the CR through a process known as apportionment. For the 81 days (22%) of FY2019 through December 21, 2018, and the 21 days of the third CR that preceded February 15, 2019, the CRs continued the terms of the FY2018 Agriculture appropriations act (Section 101 of P.L. 115-245 ) and excluded the FY2018 change in mandatory program spending (CHIMP) on the Biomass Crop Assistance Program, which was not authorized for FY2019; and provided sufficient funding to maintain mandatory program levels, including for nutrition programs (Section 110)—this is the standard approach taken in recent years' CRs, but it was additionally important for SNAP, because some authorizations in the 2014 farm bill began expiring after FY2018. CRs may adjust prior-year amounts through anomalies or make specific administrative changes. Five anomalies specifically applied to the agriculture appropriation during the CRs: Child Nutrition Pro grams: apportionment for a summer foods program that allowed it to be operational by May 2019 (Section 114 of P.L. 115-245 ). R ural Utilities Service: allowed a loan authorization level for the Rural Water and Waste Disposal program of $4.141 billion (Section 115). Commodity Credit Corporation ( CCC ): allowed CCC to receive its appropriation to reimburse the Treasury for a line of credit about a month earlier than usual, prior to a customary final report and audit. Many farm bill payments to farmers were due in October 2018 in addition to USDA's plan to make supplemental payments under a trade assistance program. Without the anomaly, CCC might have exhausted its $30 billion line of credit (Section 116). Agricultural Research Service : provided an additional $42 million for operations and maintenance at the National Bio and Agro-Defense Facility (NBAF) being built in Manhattan, Kansas, and its transfer to USDA from the Department of Homeland Security (Section 117). Department of Homeland Security (DHS) : allowed DHS to transfer up to $15 million to USDA to support NBAF operations (Section 125). Government Shutdown When an appropriation (or CR) expires and no further budget authority has been provided, a funding gap exists, which may cause operations to cease at affected agencies. In general, the Antideficiency Act (31 U.S.C. 1341 et seq. ) prohibits federal agencies from obligating funds before an appropriations measure has been enacted. Exceptions may allow certain activities to continue, such as for law enforcement, protection of human life or property, and activities funded by other means such as carryover funds or user fees. Programs that are funded by other authorities—such as entitlements or the mandatory programs in the farm bill—may also be affected if the program is executed using personnel whose salaries are funded by discretionary appropriations that are affected by the funding gap. For FY2019, a 34-day funding gap lasted from December 22, 2018, through January 25, 2019. It affected agencies within the jurisdiction of seven of the 12 appropriations bills, including Agriculture appropriations. On December 19, 2018, the Senate had passed H.R. 695 , a CR that would have continued temporary funding through February 8, 2019, but the House-passed amendment to that bill on December 20 added homeland security funding for construction of physical barriers at borders and supplemental appropriations for natural disasters that the Senate did not accept. Prior to FY2019, the previous shutdown was a two-day, weekend shutdown in January 2018, and before that a 16-day shutdown in October 2013. Before that, the next previous multiday shutdown occurred in FY1996, though agriculture appropriations were not affected that year because a stand-alone full-year Agriculture appropriation had been enacted. In general, a shutdown results in the furlough of many personnel and curtailment of affected agency activities and services. Agencies make their own determinations about activities and personnel that are "excepted" from furlough and publish their intentions in "contingency plans" that are supervised by OMB. For agencies in the Agriculture appropriations jurisdiction, shutdown or contingency plans were published for USDA, FDA, and the CFTC. Generally, government employees of affected agencies do not receive pay during a shutdown. Excepted employees may be required to report to work but do not receive their current pay. Exempt employees may receive paychecks during the shutdown from a separately authorized funding source that remains available. On January 16, 2019, the President signed P.L. 116-1 to guarantee back pay to furloughed and excepted employees after the government shutdown ended. Agency Exceptions to Maintain Operations USDA initially estimated on December 23, 2018, that 61% of its employees were excepted from furlough in the agencies that are funded by Agriculture appropriations (all of USDA except the Forest Service), which numbered 37,860 staff being excepted out of 62,288. In general, the number of excepted and furloughed personnel varies by agency and may change as a shutdown continues as funding availability changes and as new circumstances arise. A summary of how the shutdown affected the operation of different agencies between December 22, 2018, and January 25, 2019, follows: Nearly 90% of staff in the Food Safety and Inspection Service and Agricultural Marketing Service were initially retained to continue food safety inspections of meat and poultry at processing plants and to continue commodity grading and inspection services (8,434 and 3,944 staff, respectively). About 69% of the Animal and Plant Health Inspection Service was excepted (5,456 staff) to continue preclearance inspection for transportation between Hawaii and Puerto Rico and the mainland and to carry out quarantine and certification for imports and exports. Resources in research laboratories and facilities that could be damaged by inattention were protected by excepting 18% (1,116 staff) of the Agricultural Research Service. The Farm Service Agency (FSA) initially excepted 7,589 staff (72% out of 10,479) through December 28 but then closed county offices, thereby lowering the number of excepted employees to 27 (0.3%). As the shutdown continued, FSA announced on January 16, 2019, that it would recall about 2,500 employees to reopen FSA county offices for three days (January 17-18 and January 22). On these days, FSA provided administrative services to farmers mostly related to past activities that were obligated, including issuing tax documents, but was not to process new program applications. On January 22, USDA further announced that as the shutdown continued, FSA offices would remain open on a full-time basis (with excepted staff) from January 24 to February 8 and three days per week thereafter. This latter plan was not implemented because the shutdown ended on January 25. All 9,342 staff of the Natural Resources Conservation Service (NRCS) was exempted by using carryover funding and mandatory funding authorized in the 2014 farm bill. Near the end of the shutdown, NRCS had begun preparations to furlough much of its agency beginning on February 3, 2019, after having retained 100% of the agency since the beginning of the shutdown. By beginning to furlough some employees, NRCS intended to conserve carryover balances and focus exempted staff on carrying out certain mandatory farm bill programs. This plan was not implemented because the shutdown ended on January 25. Most of USDA's Food and Nutrition Service (FNS) programs, whether mandatory or discretionary, rely on funding provided in appropriations acts. 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 current funding lapse. SNAP benefits for January were issued as scheduled, and on January 8 USDA announced that the expired CR allowed for an early distribution of February benefits so long as benefits were issued on or before January 20. Among the related agencies that are funded in Agriculture appropriations: FDA initially retained 59% of its employees in excepted status (10,344 staff out of 17,397) based on a combination of factors including carryover funding, the need to safeguard human life, and the protection of property. For food safety inspection specifically, FDA excepted 135 employees for inspection of food facilities deemed to have the highest risk to public health. Inspections of other facilities were postponed. CFTC excepted 9% of its employees (61 staff out of 673) to address risks that could pose a threat to the functioning of the stock market and commodity markets and that could affect the safety of human life or the protection of property. Suspended Activities While a number of selected USDA functions may have continued during the shutdown, many others ceased operations. Examples of USDA functions that were not performed by furloughed employees included data collection and analysis that informs the commodity markets; development of regulations to implement the new farm bill that was enacted in December 2018; completing the Administration's "trade aid" payments; approving loan guarantees for commercial banks; processing and funding direct farm loans, rural development loans, and grant programs (rural housing, community facilities, rural water, rural business, and broadband); agricultural research programs and grants; and many international assistance programs. FY2019 Consolidated Appropriations Act On February 15, 2019, Congress passed and the President signed the FY2019 Consolidated Appropriations Act ( P.L. 116-6 , H.Rept. 116-9 ). The agriculture portion is Division B of the act. The official discretionary total of the Agriculture appropriation is $23.03 billion, which is $35 million more (+0.2%) than was enacted for FY2018 on a comparable basis that excludes the CFTC from the FY2018 total ( Table 2 ). On that same comparable basis, the enacted total is $6.3 billion more than the Administration requested (+38%), $55 million more than was proposed in the House-reported bill (+0.2%) but $194 million less than in the Senate-passed bill (-0.8%). The appropriation also carries mandatory spending that totals nearly $129 billion, which is determined in other authorizing laws. Thus, the overall total of the FY2019 Agriculture appropriation is about $152 billion ( Figure 2 ). Table 3 summarizes appropriations amounts at the agency level. The primary changes that account for the overall $35 million discretionary increase in the FY2019 Consolidated Appropriations Act are the following: Increase in the four agricultural research agencies in Title I by $387 million (+13%) to $3.4 billion, mostly by increasing ARS building and facilities by $241 million, ARS salaries and expenses by $100 million, and NIFA by $64 million. Increase in base FDA appropriations in Title VI by $269 million (+10%) to $3.1 billion (excluding user fees) while not renewing extra funding in general provisions (Title VII) that was in the FY2018 appropriation for opioid enforcement and surveillance (-$94 million reduction to the budget score). Increase in WIC funding by a net $200 million, accounting for changes in rescissions of carryover balances and in the base appropriation. In FY2019 $500 million is rescinded from carryover balances, smaller than the rescission of $800 million in FY2018, for a comparative $300 million increase. The base WIC appropriation in Title IV is reduced by $100 million to $6.075 billion. Also, appropriations for nutrition program administration is increased by $11 million. Increase in APHIS by $29 million (+3%) to $1.014 billion. Maintain Food for Peace appropriations effectively at $1.716 billion by decreasing the base appropriation in Title V by $100 million and increasing extra funding in Title VII by $100 million. Also, salaries and expenses for the Foreign Agricultural Service are increased (+14 million). Maintain overall discretionary farm production and conservation funding in Title II (+0.5%, +$13 million) while shifting some administrative funding from program agencies into a new administrative business center. Decrease in the effective amount for rural development by essentially maintaining its base appropriation in Title III (+0.4%, +$11 million) and reducing extra appropriations that were made in the FY2018 general provisions (Title VII) for water and wastewater programs (-$425 million) and rural broadband (-$475 million). Decrease in the budgetary offset provided by other scorekeeping adjustments, mostly from smaller negative subsidies that are provided by farm and rural development loan programs. In FY2018, $481 million was offset. In FY2019, $404 million is offset (+$77 million increase in the budget score). Also, mandatory spending (+$16 million) is increased by further reducing the effect of appropriations act CHIMPS. Mandatory spending carried in the Consolidated Appropriations Act increased by $6 billion over FY2018 to $129 billion and was higher than estimated for the House and Senate bills. The annual change was mostly due to higher costs for crop insurance (+$6.5 billion), greater reimbursement for the CCC (+1.1 billion), and lower outlays for child nutrition (-$1.1 billion) and SNAP (-$0.5 billion). Policy-Related Provisions In addition to setting budgetary amounts, the Agriculture appropriations bill has also been a vehicle for policy-related provisions that direct how the executive branch should carry out the appropriation. These provisions may have the force of law if they are included in the text of the appropriation, usually in the General Provisions, but their effect is generally limited to the current fiscal year. In some instances, the provisions may amend the U.S. Code and have long-standing effects. The explanatory statement in the conference report that accompanies the final appropriation ( H.Rept. 116-9 ), and the House and Senate report language that accompanies the committee-reported bills ( H.Rept. 115-706 , S.Rept. 115-259 ), may also provide additional policy instructions. These documents do not have the force of law but often explain congressional intent, which the agencies are expected to follow. Indeed, the committee and conference reports may need to be read together to capture all of the congressional intent for the fiscal year: Congressional Directives. The explanatory statement is silent on provisions that were in both the House Report ( H.Rept. 115-706 ) and Senate Report ( S.Rept. 115-259 ) that remain unchanged by this conference agreement, except as noted in this explanatory statement. The conference agreement restates that executive branch wishes cannot substitute for Congress's own statements as to the best evidence of congressional intentions, which are the official reports of the Congress.... The House and Senate report language that is not changed by the explanatory statement is approved and indicates congressional intentions. The explanatory statement, while repeating some report language for emphasis, does not intend to negate the language referred to above unless expressly provided herein. Table 4 compares some of the major policy provisions that have been identified in the General Provisions (Title VII) of the FY2019 Agriculture appropriations bills and act. It excludes policies that may have been addressed in the report language or explanatory statement. Many of these provisions have been included in past years' appropriations laws. Appendix A. Budget Sequestration Sequestration is a process to reduce federal spending through automatic, largely across-the-board reductions that permanently cancel mandatory and/or discretionary budget authority. Sequestration is triggered as a budget enforcement mechanism when federal spending would exceed statutory budget goals. Sequestration is currently authorized by the Budget Control Act of 2011 (BCA; P.L. 112-25 ). Table A-1 shows the rates of sequestration that have been announced and the total amounts of budget authority that have been cancelled from accounts in Agriculture appropriations. Table A-2 provides additional detail at the account level for mandatory accounts. Discretionary Spending For discretionary spending, sequestration is authorized through FY2021 if discretionary defense and nondefense spending exceed caps that are specified in statute (2 U.S.C. 901(c)). In FY2013, the timing of the appropriations acts and the first year of sequestration resulted in triggering sequestration on discretionary spending. In FY2014-FY2018, Bipartisan Budget Acts in 2013, 2015, and 2018 (BBAs; P.L. 113-67 , P.L. 114-74 , and P.L. 115-123 , respectively) have avoided sequestration on discretionary spending. These BBAs raised the discretionary budget caps that were placed in statute by the BCA and allowed Congress to enact larger appropriations than would have been allowed. For FY2019, the BBA in 2018 similarly provides a higher discretionary cap that may avoid sequestration (see " Discretionary Budget Caps and Subcommittee Allocations "). Mandatory Spending Authorization of Sequestration For mandatory spending, sequestration is presently authorized through FY2027, having been amended and extended by acts that were subsequent to the BCA (2 U.S.C. 901a(6)). That is, sequestration continues to apply annually to certain accounts of mandatory spending and is not avoided by the BBAs ( Table A-1 ). The original FY2021 sunset on the sequestration of mandatory accounts has been extended four times as an offset to pay for avoiding sequestration on discretionary spending in the near term or as a general budgetary offset for other authorization acts: 1. Congress extended the duration of mandatory sequestration by two years (until FY2023) as an offset in BBA 2013. 2. Congress extended it by another year (until FY2024) to maintain retirement benefits for certain military personnel ( P.L. 113-82 ). 3. Congress extended sequestration on nonexempt mandatory accounts another year (until FY2025) as an offset in BBA 2015. 4. Congress extended sequestration on nonexempt mandatory accounts by another two years (until FY2027) as an offset in BBA 2018 ( P.L. 115-123 Division C, §30101(c)). Exemptions from Sequestration Some farm bill mandatory programs are exempt from sequestration. Those expressly exempt by statute are the nutrition programs (SNAP, the child nutrition programs, and the Commodity Supplemental Food Program) and the Conservation Reserve Program. Some prior legal obligations in the Federal Crop Insurance Corporation and the farm commodity programs may be exempt as determined by OMB. Generally speaking, the experience since FY2013 is that OMB has ruled that most of crop insurance is exempt from sequestration, while the farm commodity programs, disaster assistance, and most conservation programs have been subject to it. Implementation of Sequestration Sequestration on nonexempt mandatory accounts continues in FY2019. Nonexempt mandatory spending is to be reduced by a 6.2% sequestration rate and thus paid at 93.8% of what would otherwise have been provided. This results in a reduction of about $1.5 billion from mandatory agriculture accounts in FY2019. Appendix B. Action on Agriculture Appropriations, FY1996-FY2019

The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service. It also funds the Food and Drug Administration (FDA) and—in even-numbered fiscal years—the Commodity Futures Trading Commission (CFTC). Agriculture appropriations include both mandatory and discretionary spending. Discretionary amounts, though, are the primary focus during the bill's development. The largest discretionary spending items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); agricultural research; rural development; FDA; foreign food aid and trade; farm assistance program salaries and loans; food safety inspection; animal and plant health programs; and salaries and expenses for administering conservation programs. On February 15, 2019, Congress passed and the President signed the FY2019 Consolidated Appropriations Act (P.L. 116-6, H.Rept. 116-9). This action, more than four months into the fiscal year, followed three continuing resolutions and a 34-day partial government shutdown. The official discretionary total of the enacted FY2019 Agriculture appropriation is $23.03 billion, which is $35 million more than enacted in FY2018 (+0.2%) on a comparable basis that excludes the CFTC. The enacted total is $6.3 billion more than the Administration requested (+38%), $55 million more than was proposed in the House-reported bill (+0.2%), but $194 million less than in the Senate-passed bill (-0.8%). Among the primary differences that account for the overall $35 million discretionary increase for FY2019 over FY2018 are an increase in agricultural research (mostly for construction) by $387 million (+13%) to $3.4 billion, an increase in FDA appropriations by $269 million (+10%) to $3.1 billion, an increase in WIC funding by a net $200 million (accounting for changes in the amount of carryover balances rescinded and in the base appropriation), an increase in five other program areas by a combined $78 million, and a decrease in rural development by reducing extra appropriations that were made in FY2018 for water and wastewater programs (-$425 million) and rural broadband (-$475 million). The appropriation also carries $129 billion of mandatory spending that is largely determined in separate authorizing laws. The mandatory spending increased by $6 billion not because of congressional action this year but because of changing economic and program conditions. The annual change was mostly due to higher costs for crop insurance (+$6.5 billion), greater reimbursement for the Commodity Credit Corporation (+1.1 billion), and lower outlays for child nutrition (-$1.1 billion) and SNAP (-$0.5 billion). With mandatory and discretionary spending appropriations combined, the FY2019 agriculture total is nearly $152 billion. The Consolidated Appropriations Act and its underlying bills also contain policy provisions that affect how the appropriation is delivered. These provisions affect disaster programs, rural definitions, industrial hemp, animal regulations, nutrition programs, dietary guidelines, CFTC, and tobacco products. Sequestration on mandatory accounts—a process that reduces federal spending through automatic across-the-board reductions—also continues to affect agriculture spending.

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Overview1 Members of Congress may address numerous ongoing and new policy issues in the 116 th Congress. The changing dynamics and composition of international trade and finance can affect the overall health of the U.S. economy, the success of U.S. businesses and workers, and the U.S. standard of living. They also have implications for U.S. geopolitical interests. Conversely, geopolitical tensions, risks, and opportunities can have major impacts on international trade and finance. These issues are complex and at times controversial, and developments in the global economy often make policymaking more challenging. Congress is in a unique position to address these and other issues given its constitutional authority for legislating and overseeing international commerce. The major focus of the 115 th Congress was overseeing the Trump Administration's evolving trade policy. The Trump Administration's approach to international trade arguably represents a significant shift from the approaches of prior administrations, in that it questions the benefits of U.S. leadership in the rules-based global trading system and expresses concern over the potential limits that this system may place on U.S. sovereignty. As such, the Administration's withdrawal from the proposed Trans-Pacific Partnership (TPP), imposition of unilateral trade restrictions on various U.S. imports, renegotiation of the North American Free Trade Agreement (NAFTA), modification of certain provisions in the U.S.-South Korea (KORUS) free trade agreement (FTA), and launch of an extensive review of U.S. participation in the World Trade Organization (WTO) were among the most notable developments in U.S. trade policy in the past two years. Other issues before Congress included approving legislation to (1) strengthen the process used to review the national security implications of foreign direct investment transactions in the United States; (2) modernize U.S. development finance tools to help advance U.S. national security and economic interests and global influence; and (3) provide temporary tariff suspensions and reductions—through Miscellaneous Tariff Bills—on certain products not available domestically. Continued focus on economic sanctions against Russia, North Korea, Iran, Cuba, and other countries were also of interest to many in Congress. The Trump Administration has displayed a more critical view than past administrations of U.S. trade agreements, made greater use of various U.S. trade laws with the potential to restrict U.S. imports, and focused on bilateral trade balances as a key metric of the health of U.S. trading relationships. As part of this shift in focus, the Administration has placed a greater emphasis on "fair" and "reciprocal" trade. China has also been a center of attention as the Administration has sought to address longstanding concerns over its policies on intellectual property (IP), forced technology transfer, and innovation. Citing these concerns and others, the President has unilaterally imposed trade restrictions on a number of U.S. imports under U.S. laws and authorities—most of which have been used infrequently since the establishment of the WTO in 1995. During the 115 th Congress' second session, many Members weighed in on the President's actions. While some supported his use of unilateral trade measures, others raised concerns about potential negative economic implications of these actions and the risks they pose to the rules-based international trading system. Several Members introduced bills to amend some of the President's trade authorities—for example, to require congressional consultation or approval before imposing new trade barriers. The implications of changes in the U.S. trade landscape for the 116 th Congress will depend on a number of factors, including the impact of the Administration's trade actions—particularly increased tariffs—on U.S. industries, firms, workers, and supply chains; the reaction of U.S. trading partners; and the extent to which future actions are in line with core U.S. commitments and obligations under the WTO and other trade agreements. The U.S.-China trade and economic relationship is complex and wide-ranging, and it will likely entail continued close examination by Congress. In addition to specific trade practices of concern, Congress scrutinize the economic and geopolitical implications of China's Belt and Road Initiative, which finances and develops infrastructure projects across a number of countries and regions. Congress may also examine the economic implications of China's industrial policies in high technology sectors, which could potentially challenge U.S. firms and disrupt global markets. How these issues play out, combined with the evolving global economic landscape, raise potentially significant legislative and policy questions for Congress. The 116 th Congress may consider (1) legislation to implement the U.S.-Mexico-Canada Agreement; (2) measures to reassert its constitutional authority over tariffs and other trade restrictions or to narrow the scope of how the president can use delegated authorities to impose such restrictions; (3) the extent to which past U.S. FTAs should be modernized or revised and, if so, in what manner; (4) what priority should be given to negotiating new U.S. FTAs with the European Union, the United Kingdom, Japan, and other trading partners, as well as the scope of negotiations; and (5) the impact of FTAs excluding the United States on U.S. economic and broader interests, and the appropriate U.S. response to the proliferation of such agreements. Another major issue is the role of the United States in the multilateral, rules-based trading system underpinned by the WTO. Historically, U.S. leadership in the global trading system has enabled the United States to shape the international trade agenda in ways that both advance and defend U.S. interests. The growing debate over the role and future direction of the WTO may raise important issues for Congress, such as how current and future WTO agreements affect the U.S. economy, the value of U.S. membership and leadership in the WTO, and the need to update or adapt WTO rules to reflect 21 st century realities. Such updates might address the proliferation of global supply chains, advances in technology, new forms of trade barriers, and market-distorting government policies. This report provides a broad overview of select topics in international trade and finance. It is not an exhaustive look at all issues, nor is it a detailed examination of any one issue. Rather, it provides concise background information of certain prominent issues that have been the subject of recent discussion and debate, and that may come before the 116 th Congress. However, it does include references to more in-depth CRS products on the issues. The United States in the Global Economy2 In 2017, the global economy began to display signs of a synchronized recovery from the 2008-2009 global financial crisis and deep economic recession. The International Monetary Fund (IMF) estimates that real global gross domestic product (GDP) rose from 3.3% in 2016 to 3.7% in 2017 ( Figure 1 ). As a group, advanced economies grew 2.3% (up from 1.7% in 2016), while emerging market and developing economies grew 4.7% (up from 4.4% in 2016). The growth performance of major U.S. trading partners diverged widely in 2017, affecting both their bilateral trade and investment relations with the United States and their exchange rates against the U.S. dollar. Canada more than doubled its real GDP growth rate, from 1.4% in 2016 to 3.1% in 2017. China also continued to grow, albeit at a pace of 6.9% in 2017. Among the United States' top trading partners, India and Mexico experienced lower growth in 2017 than in 2016. The IMF forecasts improved performance in the short-term from both advanced economies—2.1% for 2019—and emerging market and developing economies—4.7% in 2019. This growth is projected to slow in the medium term, however, as output gaps close and advanced economies return to their potential output paths. Beyond the short term, growth rates are expected to fall below pre-recession levels, as the aging populations and shrinking labor forces in advanced economies are expected to act as a drag on expansion. Overall fiscal policy is expected to remain expansionary in 2019, but begin to turn contractionary by 2020. Monetary policy may remain supportive in the Eurozone and Japan, but may continue to tighten in the United States—although the speed of U.S. monetary tightening has been thrown into question by recent economic and financial market developments. More broadly, global financial conditions are expected to remain generally accommodative. Emerging markets (EMs) as a group face growing vulnerabilities to their economies due to uncertainties about global trade, depreciating currencies and risks of capital flight, volatile equity markets, large debts denominated in foreign currencies, and, in certain areas, the lack of deeper economic reform. Increased uncertainty over political and policy direction could constrain the rate of growth in Argentina, Brazil, Pakistan, Turkey, and South Africa. Additionally, China is expected to experience slower growth rates in the coming years, as the economy continues to rebalance away from investment toward private consumption, and from industry to services. The rise in China's nonfinancial debt as a share of GDP is likely to contribute to this downward trend. In Venezuela, the economy has collapsed, with the inflation rate forecast by the IMF to have exceeded 1,000,000% in 2018. In addition, declining commodity prices, particularly oil, could increase concerns in commodity-producing economies—many of them EMs—and destabilize national incomes. These and other developments could add to uncertainties in global financial markets, raise risks for U.S. banks of nonperforming loans, complicate the efforts of some banks to rebuild their capital bases, and potentially dampen prospects for long-term gains in productivity and higher rates of economic growth. The United States continues to experience strong economic fundamentals and remains a relatively bright spot within the global economy, which could help it sustain its position as a main driver of global economic growth. With close to 5% of the world's population, it accounted for almost 25% of the world's output in nominal U.S. dollars, more than 10% of its exports (goods and services), and 16% of its growth in 2017. The U.S. economy grew faster in 2017 than in 2016: U.S. real GDP increased 2.2% in 2017, up from 1.5% in 2016. The latest U.S. data show signs of continuing strong performance in 2018, with the IMF forecasting 2.9% growth and the U.S. Federal Reserve estimating growth between 2.9% and 3.2%. Some forecasts indicate that U.S. growth could stop accelerating by 2019 due to higher commodity prices, upward inflationary pressures, monetary policy tightening by the U.S. Federal Reserve, trade policy uncertainties, and global risks. Labor market data indicate that the United States is at—or close to—full employment, as the jobless rate reached 4.1% at the end of 2017 and is projected to have fallen below 4.0% in 2018. The decline in the price of oil is affecting not only the global economy, but also the U.S. economy. While the drop in energy prices may raise U.S. consumers' real incomes and improve the competitive position of some U.S. industries, these positive effects may be offset to some extent by a drop in employment and investment in the energy sector. With the improving global economic outlook, the IMF and the WTO had projected a rebound in trade growth for 2018 and 2019. However, amid several downside risks, including rising trade tensions between major economies like the United States and China, and heightened trade policy uncertainty, the IMF and WTO now expect global trade growth to slow. Restrictive trade policy measures imposed by the United States and some of its major trading partners may be affecting trade flows and prices in targeted sectors. Analysts claim that some recent policy announcements also have harmed business outlooks and investment plans, due to heightened concern over possible disruptions to supply chains and the risks of potential increases in the scope or intensity of trade restrictions. The Organization for Economic Cooperation and Development (OECD) projects that a further rise in trade tensions may have additional adverse effects on global investment and jobs. In addition, exchange rates continue to experience volatility, with a number of currencies depreciating against the U.S. dollar, including the Chinese renminbi, Argentine peso, Turkish lira, and South African rand. Volatile currency and equity markets—combined with uncertainties over global trade and rates of inflation that remain below the target levels of a number of central banks—could further complicate current efforts of the U.S. Federal Reserve to continue tightening monetary policy. Other major economies, such as Eurozone and Japan, may continue to pursue unconventional monetary policies. Uncertainties in global financial markets could put additional upward pressure on the U.S. dollar, as investors may seek "safe haven" currencies and dollar-denominated investments. For some economies, volatile currencies and continued low commodity prices could add to debt issues, raising the prospect of defaults and potential economic crises. The Role of Congress in International Trade and Finance12 The U.S. Constitution assigns authority over foreign trade to Congress. Article I, Section 8, of the Constitution gives Congress the power to "lay and collect Taxes, Duties, Imposts, and Excises" and to "regulate Commerce with foreign Nations." For the first 150 years of the United States, Congress exercised its power to regulate foreign trade by setting tariff rates on all imported products. Congressional trade debates in the 19 th century often pitted Members from northern manufacturing regions, who benefitted from high tariffs, against those from largely southern raw material exporting regions, who gained from and advocated for low tariffs. A major shift in U.S. trade policy occurred after Congress passed the highly protective "Smoot-Hawley" Tariff Act of 1930, which significantly raised U.S. tariff levels and led U.S. trading partners to respond in kind. As a result, world trade declined rapidly, exacerbating the impact of the Great Depression. Since the passage of the Tariff Act of 1930, Congress has delegated certain trade authority to the executive branch. First, Congress enacted the Reciprocal Trade Agreements Act of 1934, which authorized the President to enter into reciprocal agreements to reduce tariffs within congressionally pre-approved levels, and to implement the new tariffs by proclamation without additional legislation. Congress renewed this authority periodically until the 1960s. Subsequently, Congress enacted the Trade Act of 1974, aimed at opening markets and establishing nondiscriminatory international trade norms for nontariff barriers as well. Because changes in nontariff barriers in reciprocal bilateral, regional, and multilateral trade agreements may involve amending U.S. law, the agreements require congressional approval and implementing legislation. Congress has renewed or amended the 1974 Act five times, which includes granting "fast-track" trade negotiating authority. Since 2002, "fast track" has been known as trade promotion authority (TPA). In 2015, Congress authorized a new TPA through July 1, 2021 (see " Trade Promotion Authority (TPA) " below). Congress also exercises trade policy authority through the enactment of laws authorizing trade programs and measures to address unfair and other trade practices. It also conducts oversight of the implementation of trade policies, programs, and agreements. These include such areas as U.S. trade agreement negotiations, tariffs and nontariff barriers, trade remedy laws, import and export policies, economic sanctions, and the trade policy functions of the federal government. Over the years, Congress has authorized a number of trade laws that delegate a range of authorities to the President to investigate and take actions on imported goods for national security purposes (Section 232, Trade Expansion Act of 1962), trade remedies to counter dumping and subsidy practices by other countries, unfair trade practices (Section 301, Trade Act of 1974), or safeguard measures (Section 201, Trade Act of 1974). The Trump Administration is using these acts to impose steel and aluminum tariffs on major trading partners and for possible tariffs on vehicles and auto parts for national security purposes, and on a range of Chinese products for what the Administration deems as unfair trading practices including intellectual property theft and other practices. Some Members of Congress have opposed the use of these tariffs and in the 116 th Congress may seek to revisit or curtail these statutes. Additionally, Congress has an important role in international investment and finance policy. Under its treaty powers, the Senate considers bilateral investment treaties (BITs), and Congress sets the level of U.S. financial commitments to the multilateral development banks (MDBs), including the World Bank and the International Monetary Fund (IMF). It also funds the Office of the U.S. Trade Representative (USTR) and other trade agencies, and authorizes the activities of various agencies, such as the Export-Import Bank (Ex-Im Bank) and the Overseas Private Investment Corporation (OPIC). Congress also has oversight responsibilities over these institutions, as well as the Federal Reserve and the Department of the Treasury, whose activities can affect international capital flows and short-term movements in the international exchange value of the dollar. Congress also closely monitors developments in international financial markets that could affect the U.S. economy. Trade Promotion Authority (TPA)13 Trade Promotion Authority (TPA) is a primary means by which Congress asserts its constitutional authority over trade policy, particularly U.S. trade agreements. TPA—the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 )—which was signed by President Obama on June 29, 2015, is in place until July 1, 2021. Any agreement signed by that date, such as the United States-Mexico-Canada (USMCA), is eligible for consideration under TPA. TPA allows implementing bills submitted to Congress by the President for specific trade agreements to be considered under expedited legislative procedures—limited debate, no amendments, and an up or down vote—provided the President observes certain statutory obligations in negotiating trade agreements. These obligations include achieving progress in meeting congressionally defined U.S. trade policy negotiating objectives, as well as congressional notification and consultation requirements before, during, and after the completion of the negotiation process. The primary purpose of TPA is to preserve the constitutional role of Congress with respect to the consideration of implementing legislation for trade agreements that require changes in domestic law, which includes tariffs, while also bolstering the negotiating credibility of the executive branch by ensuring that trade agreements will not be changed once concluded. Since the authority was first enacted in the Trade Act of 1974 ( P.L. 93-618 ), Congress has renewed or amended TPA five times (1979, 1984, 1988, 2002, and 2015). In addition, TPA legislative procedures are considered rules of the House and Senate, and, as such, can be changed at any time. Precedent exists for implementing legislation to have its eligibility for expedited treatment under TPA removed by Congress. In 2019, Congress may use TPA to consider the USMCA or other agreements negotiated by the Administration. Key U.S. Trade Policy Debates14 The United States has been a driving force in breaking down trade and investment barriers across the globe and constructing an open and rules-based global trading system through a wide range of international institutions and agreements. Since 1934, U.S. policymakers across political parties have recognized the importance of pursuing trade policies that promote more open, rules-based, and reciprocal international commerce, while being cognizant of potential costs to specific segments of the population, particularly through greater competition. Although there is a general consensus that, in the aggregate, the overall economic benefits of reducing barriers to trade and investment outweigh the costs, the processes of trade and financial liberalization, and of globalization more broadly, have presented both opportunities and challenges for the United States. Many U.S. consumers, workers, firms, and industries have benefited from increased trade. On the consumption side, U.S. households have enjoyed lower product prices and a broader variety of goods and services—some of which the United States does not produce in large quantities. On the production side, stronger linkages to the global economy force U.S. industries and firms to focus on areas in which they have a comparative advantage, provide them with export and import opportunities, enable them to realize economies of scale, and encourage them to innovate. At the same time, some stakeholders argue that globalization is not inclusive, benefiting some more than others. They point to job losses, stagnant wages, and rising income inequality among some groups—as well as to environmental degradation—as indicators of the negative impact of globalization on the U.S. economy, although the causes of these trends are highly contested. Some policymakers also perceive growing bilateral U.S. trade deficits as evidence that U.S. trade with other nations is "uneven" or that foreign countries engage in "unfair" trade practices. Others view many of the existing global trade rules as outdated, since they do not reflect the realities of the 21 st century—particularly when it comes to technological advances, new forms of trade (such as digital trade), and threats that international trade may pose to U.S. national security. Finally, some experts argue that the 2008-2009 financial crisis caused painful adjustment and costs for some segments of the population, which have exacerbated concerns related to U.S. trade policy and have led to increased domestic nationalism. A longstanding objective of some Members of Congress and administrations has been to achieve a "level playing field" for U.S. industries, firms, and workers, and to preserve the United States' high standard of living—all while remaining innovative, productive, and internationally competitive, as well as safeguarding those stakeholders who otherwise may be left behind in a fast-changing global economy. Given Congress' constitutional authority over U.S. trade policy, Members are in a unique to position to influence, legislate, and oversee responses that support these goals and that reduce or soften the hardships and costs from international trade. Trade and U.S. Employment16 A key question in policy debates over international trade is its impact on U.S. jobs. Trade is one among a number of forces that drive changes in employment, wages, the distribution of income, and ultimately the U.S. standard of living. Most economists argue that macroeconomic forces within an economy, including technological and demographic changes, are the dominant factors that shape trade and foreign investment relationships and complicate efforts to disentangle the distinct impact that trade has on the economy. In a dynamic economy like that of the United States, jobs are constantly being created and replaced as some economic activities expand, while others contract. Various measures are used to estimate the role and impact of trade in the economy and of trade on employment. One measure developed by the U.S. Department of Commerce concludes that, as of 2016 (the most recent year for which data is available), exports support, directly and indirectly, 10.7 million jobs in the U.S. economy: 6.3 million in the goods-producing sectors and 4.4 million in the services sector ( Figure 2 ). According to these estimates, jobs associated with international trade, especially jobs in export-intensive manufacturing industries, earn 18% more on a weighted average basis than comparable jobs in other manufacturing industries. Trade and trade liberalization can have a differential effect on workers and firms in the same industry. Some estimates indicate that the short-run costs to workers who attempt to switch occupations or switch industries in search of new employment opportunities may experience substantial effects. One study concluded that workers who switched jobs as a result of trade liberalization generally experienced a reduction in their wages, particularly in occupations where workers performed routine tasks. These negative income effects were especially pronounced in occupations exposed to imports from low-income countries. In contrast, occupations associated with exports experienced a positive relationship between rising incomes and growth in export shares. As a result of the differing impact of trade liberalization on workers and firms, Congress created Trade Adjustment Assistance (TAA) programs to mitigate the potential adverse effects of trade liberalization on workers, firms, and farmers (see text box below). U.S. Trade Deficit20 The overall U.S. trade deficit, or more broadly the current account balance, represents an accounting principle that expresses the difference between the country's exports and imports of goods and services. The United States has experienced annual current account deficits since the mid-1970s. Congressional interest in the trade deficit has been heightened by the Trump Administration's approach to international trade. The Administration has used the U.S. trade deficit as a barometer for evaluating the success or failure of the global trading system, U.S. trade policy, and U.S. trade agreements. It has characterized the trade deficit as a major factor in a number of perceived ills afflicting the U.S. economy—including the rate of unemployment and slow gains in wages—and partially as the result of unfair trade practices by foreign competitors. Many economists, however, argue that this characterization misrepresents the nature of the trade deficit and the role of trade in the U.S. economy. In general, traditional economic theory holds that the overall U.S. trade deficit stems from U.S. macroeconomic policies and an imbalance between saving and investment in the U.S. economy. Currently, the demand for capital in the U.S. economy outstrips the amount of gross savings supplied by households, firms, and the government (a savings-investment imbalance). Therefore, many observers argue that attempting to alter the trade deficit without addressing the underlying macroeconomic issues would be counterproductive and create distortions in the economy. A concern expressed by some analysts and policymakers is the debt accumulation associated with sustained trade deficits. They argue that the long-term impact on the U.S. economy of borrowing to finance imports depends on whether those funds are used for greater investments in productive capital with high returns that raise future standards of living, or whether they are used for current consumption. These concerns and the various policy approaches that have been used to alter the savings-investment imbalance in the economy are beyond the scope of this report. Core Provisions in U.S. Trade Agreements21 U.S. free trade agreements (FTAs) generally are negotiated on the basis of U.S. trade negotiating objectives established by Congress under Trade Promotion Authority (TPA). U.S. FTAs have evolved in the scope and depth of their commitments since the 1980s. Since the first bilateral U.S. FTA with Israel, which is only 14 pages in length and focused primarily on the elimination of tariffs, the United States has pursued increasingly comprehensive and enforceable commitments. The North American Free Trade Agreement (NAFTA), which entered into force in 1994, was the first FTA that incorporated many of the rules in more recent U.S. FTAs. It initiated a new generation of U.S. trade agreements in the Western Hemisphere and other parts of the world, influencing negotiations in areas such as market access, rules of origin, intellectual property rights (IPR), foreign investment, and dispute resolution. It was the first trade agreement to include provisions on IPR protection, labor, and the environment. Although not all FTAs are exactly the same, core provisions incorporated into most U.S. FTAs include the following: Tariffs and Market Access. Elimination of most tariffs and nontariff barriers on goods, services, and agriculture over a period of time, and specific rules of origin requirements. Services. Commitments on national treatment, most-favored nation (MFN) treatment, and prohibition of local presence requirements. IPR Protection. Minimum standards of protection and enforcement for patents, copyrights, trademarks, and other forms of IPR. FTAs after NAFTA have new commitments reflecting standard protection similar to that found in U.S. law. Foreign Investment. Removal of investment barriers, basic protections for investors, with exceptions, and mechanisms for dispute settlement. Labor and Environmental Provisions. Commitments to enforce one's own laws in NAFTA evolved to commitments in later FTAs to adopt, maintain, and not derogate from laws incorporating specific standards, among other provisions. Government Procurement. Commitments to provide certain levels of access to and nondiscriminatory treatment in parties' government procurement markets. Dispute Settlement. Provisions for dispute settlement mechanism to resolve disputes regarding each party's adherence to agreement obligations. Other Provisions. Other core provisions have included those related to competition policy, monopolies, and state enterprises, sanitary and phytosanitary standards, safeguards, technical barriers to trade, transparency, and good governance. Before an FTA can enter into force, it must be ratified by the governments of parties involved. In the United States, Congress must approve an FTA before it can enter into force. Before voting on an agreement, Congress may review whether the objectives it set out in TPA legislation were followed in the negotiation of the agreement, evaluate the overall economic effect on the U.S. economy, including through a mandated report by the U.S. International Trade Commission (ITC), determine whether the agreement would promote U.S. standards such as IPR, labor, and the environment in other countries, or consider the enforceability of the agreement and its rules. Managed Trade23 During 2018, the Trump Administration turned to quotas and quota-like arrangements to achieve some of its trade objectives. It negotiated potential quotas on autos through side letters to the proposed United States-Mexico-Canada Agreement (USMCA), as well as quota arrangements that allowed South Korea, Brazil, and Argentina to avoid U.S. tariff increases on steel and aluminum imports. Some Members of Congress and analysts have questioned whether these actions represent an undesirable shift in U.S. trade policy—towards one that some analysts have labeled managed trade. Managed trade generally refers to government efforts to achieve measurable results by establishing—through quantitative restrictions on trade and other numerical targeted approaches—specific market shares or targets for certain products. These are met through mutual agreement or under threat of trade action (e.g., increased tariffs). The 116 th Congress may wish to examine the extent to which the Administration is adopting such an approach, including its effectiveness and impact on U.S. and international trade. Advocates of managed trade policies contend that, by negotiating results-oriented agreements and using the size of the U.S. economy as leverage, the United States can ensure that trade with certain trading partners is "fair," "balanced," and "reciprocal." In addition, they argue, it will force countries to change their distortive economic policies, decrease the size of the U.S. trade deficit and, by reducing U.S. imports, help strengthen certain U.S. industries and boost U.S. employment. Other policymakers view these measures as protectionist and harmful to the economy. Many economists question the efficacy of prodding U.S. trading partners into negotiating or accepting quotas or numerical targets, as well as the ability of the state, rather than market forces, to provide the most efficient allocation of scarce resources—even when attempting to respond to trade-distorting measures by trading partners. They also note that policies that restrict U.S. imports and boost U.S. exports may not decrease the overall size of the U.S. trade deficit, as it is primarily the result of macroeconomic forces—namely the low level of U.S. savings relative to total investment. According to some observers, a move away from a market-driven, multilateral rules-based system to one driven by numerical outcomes and targets could lead to increasing trade restrictions, retaliation or replication by other countries, higher prices, lower global economic growth, and the erosion of the international trading system. Trade and Technology24 The rapid growth of digital technologies has created new opportunities for U.S. consumers and businesses but also new challenges in international trade. For example, consumers today access e-commerce, social media, telemedicine, and other offerings not available thirty years ago. Businesses use advanced technology to reach new markets, track global supply chains, analyze big data, and create new products and services. New technologies facilitate economic activity but also create new trade policy questions and concerns. Recent international negotiations have sought to improve and remove barriers to market access for trade in digital goods and services and also address other concerns, such as cybersecurity and privacy protection. Internationally-traded information and communication technologies (ICT) products, whether physical goods (e.g., laptops) or emerging technologies, including algorithms and artificial intelligence, may be subject to traditional trade barriers such as tariffs or export controls. Nontariff barriers impede U.S. firms' market access by limiting what companies can offer or how they can operate in a foreign market, such as requiring local content or partners. Internet sovereignty is a challenge for firms who seek market access in countries where the government strictly controls what digital data is permitted within its borders, such as what information people can access online. Another often-cited digital trade barrier is data localization requirements or cross-border data flows restrictions that policymakers may enact to promote safety, security, privacy or favor domestic firms but that raise costs and risks for foreign firms. Technology transfer requirements and cybersecurity issues include the infringement of intellectual property and theft of trade secrets, economic espionage, and may touch on national security concerns. The 116 th Congress may consider a variety of issues related to technology and trade. These include provisions in the proposed United States-Mexico-Canada Agreement (USMCA), U.S. participation in e-commerce negotiations at the World Trade Organization (WTO), evolving online privacy policies in the United States and other countries, as well as concerns about trade with China, such as those outlined in the Trump Administration's investigation under Section 301 of the Trade Act of 1974 (see section on Tariff Actions by the Trump Administration). Economics and National Security26 U.S. officials have long recognized that U.S. economic interests are vital to national security concerns and have considered the concepts of "geoeconomics" and "economic statecraft" in relation to national security strategy. Broadly speaking, these terms refer to the political consequences of economic decisions or the economic consequences of political trends and the dynamics of national power. In recent years, a combination of domestic and international forces are challenging the U.S. leadership role in ways that are unprecedented in the post-World War II era. For some observers, these challenges are not just about economic growth and international economic engagement, but directly affect U.S. national security. In their view, China's growing economic competition for leading-edge technologies, in particular, challenges not only U.S. commercial interests, but potentially threatens U.S. national security interests. According to some observers, since taking office, the Trump Administration has promoted a form of national security that mixes trade and economic relationships with national security, defense, and foreign policy objectives in ways that seem more confrontational than cooperative, more unilateral than multilateral, and more central to its overall agenda than in previous administrations. For example, the Trump Administration has used the U.S. trade deficit and import tariffs to support the defense industrial base by placing tariffs on the imports of strategic security partners as a form of national economic security. Despite existing National Security Strategy (NSS) reports and previous executive branch efforts, there is a view that the United States lacks a holistic, whole-of-government approach for thinking about economic challenges and opportunities in relation to U.S. national security. To that end, on April 25, 2018, Senators Young, Merkley, Rubio and Coons introduced S. 2757 , the National Economic Security Strategy Act of 2018 to "ensure Federal policies, statutes, regulations, procedures, data gathering, and assessment practices are optimally designed and implemented to facilitate the competitiveness, prosperity, and security of the United States." This and similar legislation may be introduced in the 116 th Congress. Policy Issues for Congress Policy debates during the 116 th Congress may include the use and impact of unilateral tariffs imposed by the Trump Administration under various U.S. trade laws, as well as potential legislation that alters the authority granted by Congress to the President to do so; U.S.-China trade relations; legislation to implement the proposed United States-Mexico-Canada Trade Agreement (USMCA); and the Administration's launch of bilateral trade negotiations with the European Union, Japan, and the United Kingdom, among many others. The following section provides a broad overview of the potentially more prominent issues in international trade and finance that the 116 th Congress may consider. Tariff Actions by the Trump Administration30 Concerns over trading partner trade practices, the U.S. trade deficit, and potential negative effects of U.S. imports have been a focus of the Trump Administration. Citing these concerns and others, the President has imposed increased tariffs under (1) Section 201 of the Trade Act of 1974 on U.S. imports of washing machines and solar products; (2) Section 232 of the Trade Expansion Act of 1962 on U.S. imports of steel and aluminum, and potentially autos and uranium, and (3) Section 301 of the Trade Act of 1974 on U.S. imports from China. Congress delegated aspects of its constitutional authority to regulate foreign commerce to the President through these trade laws. They allow presidential action, based on agency investigations and other criteria, to impose import restrictions to address specific concerns ( Table 1 ). They have been used infrequently in the past two decades, in part due to the 1995 creation of the World Trade Organization (WTO) and its dispute settlement system. Annual U.S. imports of goods subject to the additional tariffs, which range from 10% to 50%, totaled $282 billion in 2017 ( Figure 3 ). All formally proposed tariffs are now in effect. The President has informally raised the prospect of tariffs on an additional $267 billion of U.S. annual imports from China, and, pending a Section 232 investigation expected to be finalized in early 2019, additional tariffs on approximately $361 billion of U.S. auto and parts imports. While the tariffs benefit import-competing U.S. producers, they also increase costs for downstream users of imported products (e.g., auto producers using steel in cars) and consumers. In response to the U.S. actions, several U.S. trading partners have initiated WTO dispute settlement proceedings and imposed retaliatory tariffs on goods accounting for $126 billion of annual U.S. exports in 2017, causing export declines in targeted industries. Congressional views on the tariffs differ, but many Members have raised concerns over their potential negative economic implications and the process for seeking exclusions to tariffs. Some also question whether the President's actions adhere to the intent of the trade laws used. The 115 th Congress held a number of hearings on the effects and implementation of the tariffs, and several Members introduced legislation that would have altered the President's current authorities. The issue may be the subject of further debate and possible legislative activity in the 116 th Congress. Tariffs on U.S. Imports from China (Section 301)33 Sections 301 of the Trade Act of 1974, as amended, is one of the principal statutory means by which the United States addresses "unfair" foreign barriers to U.S. exports. Concerns over China's policies on intellectual property (IP), technology, and innovation led the Trump Administration to launch a "Section 301" investigation in August 2017. In March 2018, President Trump signed a memorandum justifying U.S. action against China under Section 301. In its justification, the Administration focused on: 1) various Chinese policies that force or pressure technology transfers from U.S. companies to a Chinese entity; 2) China's unfair technology licensing practices that prevent U.S. firms from achieving market-based returns for their IP; 3) China's investments and acquisitions which generate large-scale technology and IP transfer to support China's industrial policy goals; and 4) China's cyber intrusions into U.S. computer networks to gain access to valuable business information. On June 15, the U.S. Trade Representative (USTR) announced a two-stage plan to impose 25% ad valorem tariffs on $50 billion worth of Chinese imports. On June 16, China issued its own two-stage retaliation plan against the United States. In response, on June 18, President Trump directed the USTR to propose a new list of products worth $200 billion that would be subject to increased 10% tariffs if China retaliated (stage 3). The first two stages of U.S. 25% tariff hike measures went into effect on July 6 and August 23. China implemented comparable countermeasures on U.S. products. On September 24, the Trump Administration imposed 10% increased tariffs on additional Chinese imports (stage 3), which were to increase to 25% on January 1, 2019 (now on hold). In response, China raised tariffs (by 5% and 10%) on $60 billion worth of imports from the United States ( Figure 4 ). The Trump Administration created a process to enable affected U.S. firms to petition for an exclusion from some of the tariff increases. A bilateral meeting between Presidents Trump and Xi at the conclusion of the December 2018 G-20 summit in Argentina may have laid groundwork for addressing the tariff escalation. The two leaders agreed to begin negotiations on "structural changes" on IP and technology issues, along with agriculture services, with the goal of achieving an agreement in 90 days. The White House reported that China agreed to make "very substantial" (though unspecified) purchases of U.S. agricultural, energy, and industrial products. President Trump agreed to suspend the tariff rate increases planned for January 1, 2019, unless no agreement is reached in 90 days. On December 13, the U.S. Department of Agriculture reported that China had agreed to purchase 1.13 million metric tons of U.S. soybeans. While some policymakers and many business representatives have expressed support for the Administration's goals of improving China's IP and technology policies, they question whether tariff hikes against China can achieve those goals. Several Members of Congress have raised concerns over the impact the current trade conflict is having on their constituents in terms of higher-priced imports from China and lost U.S. export sales. Tariffs on U.S. Imports of Aluminum and Steel Products (Section 232)36 Section 232 of the Trade Expansion Act of 1962 (as amended) is sometimes called the "national security clause," because it provides the President with the ability to impose restrictions on certain imports that the U.S. Department of Commerce determines threaten to impair the national security. If requested, or upon self-initiation, Commerce investigates the import of specific product(s) and, if it determines in the affirmative, and if the President concurs, he may adjust the subject imports using tariffs, quotas, or other measures to offset the adverse effect. Section 232 sets out timelines and procedures for the investigation and that the President must follow once a decision is made. The executive branch has broad discretion in Section 232 cases to define the scope of the investigation, and the World Trade Organization (WTO) allows members to take measures in order to protect "essential security interests." Based on concerns about ongoing global overcapacity and certain trade practices, in April 2017, the Trump Administration initiated Section 232 investigations on U.S. steel and aluminum imports. Effective March 23, 2018, President Trump applied 25% and 10% tariffs, respectively, on certain steel and aluminum imports. In order to limit potential negative domestic effects of the tariffs on U.S. businesses and consumers, Commerce established a process for product exclusions requests and has received over 49,000 requests (including resubmissions) as of October 28, 2018. While the President negotiated tariff exemptions and quota arrangements with Brazil, South Korea, Argentina, and Australia, the proposed United States-Mexico-Canada Agreement (USMCA) did not resolve or address the Section 232 tariffs on imported steel and aluminum from Canada and Mexico. Multiple U.S. trading partners are challenging the tariffs under WTO dispute settlement rules and have threatened or enacted retaliatory measures, risking potential escalation of retaliatory tariffs. In turn, the United States has argued that trading partners' counter tariffs in response to the U.S. Section 232 measures cannot be justified under WTO rules, and the United States filed its own WTO complaints over the retaliatory tariffs by at least six countries. As Congress continues to debate the Administration's Section 232 actions, it may consider multiple issues including potential amendments to the delegation of constitutional authority that Congress gave to the President through Section 232, examining the investigation and implementation processes, and exploring opportunities to address specific market-distorting practices that are the root causes of steel and aluminum overcapacity through international forums and trade negotiations. Tariffs on U.S. Imports of Washing Machines and Solar Products (Section 201)42 Section 201 of the Trade Act of 1974 grants authority to the President to provide temporary import relief (e.g., through additional tariffs or quotas on imports) in order to facilitate positive adjustment of a U.S. industry to import competition. The President may provide this relief if, as a result of an investigation based on industry petitions or self-initiated by the President, the U.S. International Trade Commission (ITC) makes a recommendation for relief based on a finding that increased U.S. imports of these products are a "substantial cause of serious injury"—or threat thereof—to U.S. manufacturers. Section 201 investigations are unlike other trade remedy tools, such as antidumping (AD) and countervailing duty (CVD) cases that investigate "material injury" (or threat thereof) based on sales of imported products at less than fair value (AD) or that are subsidized by a foreign government or other public entity (CVD). Rather, Section 201 cases investigate import surges of fairly-traded goods. On January 23, 2018, based on affirmative findings of serious injury by the ITC and recommended actions, President Trump announced that he would impose temporary new tariffs on imports of large residential washing machines and solar photovoltaic (PV) cells and modules , effective February 7, 2018. When initiating the actions on January 23, the President said , "My administration is committed to defending American companies, and they've been very badly hurt from harmful import surges that threaten the livelihood of their workers, of jobs, actually, all over this country." While such actions may benefit some U.S. domestic producers, they could also raise prices for U.S. consumers and domestic industries that use these imports to manufacture downstream products. The Section 201 measures could also increase tensions with various U.S. trading partners. Prior to the ITC affirmative findings, several Members wrote to the ITC commissioners to caution that imposing tariffs could have unintended consequences, including by raising prices and potentially costing jobs at foreign-run facilities in the United States. Trading Partner Retaliation and Countermeasures48 Increasing U.S. tariffs or imposing other import restrictions potentially opens the United States to complaints it is violating its World Trade Organization (WTO) and free trade agreement (FTA) commitments. In response to the recent U.S. tariff actions, several U.S. trading partners, including Canada, China, Mexico, and the European Union (EU), have initiated dispute settlement proceedings, which are now at various stages in the WTO dispute settlement process. Several countries have also imposed retaliatory tariffs and the United States has similarly responded by initiating additional disputes at the WTO, arguing that the retaliatory measures do not adhere to WTO commitments. Some analysts fear this escalating series of unilateral tariff actions, retaliations, and resulting WTO disputes may threaten the stability of the multilateral trading system, given the political sensitivity of a potential WTO panel ruling on issues related to national security (Section 232) and the possibility of countries potentially disregarding WTO rulings not in their favor. Economically, retaliation amplifies the potential negative effects of the U.S. tariff measures. It broadens the scope of U.S. industries potentially harmed by making targeted U.S. exports less competitive in foreign markets. To date, six trading partners have imposed retaliatory tariffs in response to Section 232 actions affecting approximately $25 billion of U.S. annual exports, and China has imposed retaliatory tariffs in response to Section 301 actions affecting approximately $101 billion of U.S. annual exports ( Figure 5 ). The products affected cover a range of industries, but the largest export categories include soybeans, motor vehicles, steel, and aluminum. Lost market access resulting from the retaliatory tariffs may compound concerns that U.S. exporters increasingly face higher tariffs than some competitors in foreign markets, as other countries proceed with trade liberalization agreements, such as the EU-Japan FTA, which do not include the United States. U.S.-China Trade and Key Issues52 Since China embarked upon economic and trade liberalization in 1979, U.S.-Chinese economic ties have grown extensively (see text box). Total bilateral trade rose from about $2 billion in 1979 to $636 billion in 2017. China was the United States' largest trading partner, largest source of imports ($506 billion), and third largest merchandise export market ($130 billion). From 2008 to 2017, U.S. merchandise exports to China grew faster (at 82.4%) than those to any other major U.S. trading partner. According to the U.S. Department of Commerce's Bureau of Economic Analysis (BEA), sales by U.S.-invested firms in China in 2016 totaled $464 billion. The U.S. merchandise trade deficit with China was $376 billion in 2017, by far the largest U.S. bilateral trade imbalance; projections estimate it may have reached $418 billion in 2018 ( Figure 6 ). Reducing the U.S. trade deficit with China has been a major objective of the Trump Administration and many in Congress. Industrial Policies and Made in China 202555 From the U.S. perspective, tensions over various economic and trade issues stem largely from China's incomplete transition to an open-market economy. While China has significantly liberalized its economic and trade regimes over the past three decades—especially since joining the World Trade Organization (WTO) in 2001—it continues to maintain or has recently imposed a number of policies to support and protect domestic firms, especially state-owned enterprises (SOEs). Major Chinese government practices of concern to U.S. stakeholders include subsidies, tax breaks, and low-cost loans given to Chinese firms, foreign trade and investment barriers, discriminatory intellectual property and technology policies, and the lack of the rule of law. An American Chamber of Commerce in China business climate survey in 2018 found that 75% said that foreign businesses in China were "less welcomed" there than before, compared to 44% who felt that way in 2014. Several recently issued economic plans, such as the "Made in China 2025" (MIC 2025) initiative, which seeks to make China a global leader in advanced manufacturing in 10 designated industries, appear to indicate a sharply expanded government role in the economy. U.S. business representatives have raised concerns over the potentially distortionary and discriminatory aspects of the MIC 2025 plan, and the Trump Administration's Section 301 actions against China appear to be largely aimed at curbing the initiative (see section on Tariffs on U.S. Imports from China). More recently, Presidents Trump and Xi agreed to negotiations to address issues of concern. The 116 th Congress may monitor ongoing 301 actions and any potential bilateral agreement to resolve U.S. trade concerns. China's Policies on Technology, Innovation, and Intellectual Property58 U.S. firms cite the lack of effective protection of intellectual property rights (IPR) as one of their biggest impediments in conducting business in China. A study by the Commission on the Theft of American Intellectual Property estimated that global IPR theft costs the U.S. economy $300 billion, of which China accounted for between 50% ($150 billion) and 80% ($240 billion) of those losses. In May 2014, the U.S. Department of Justice indicted five members of the Chinese People's Liberation Army for government-sponsored cyber-espionage against U.S. companies and theft of proprietary information to aid state-owned enterprises. During Chinese President Xi Jinping's state visit to the United States in September 2015, the two sides reached an agreement on cyber security, pledging that neither country's government would conduct or knowingly support cyber-enabled theft of intellectual property for commercial purposes and to establish a joint dialogue on cybercrime and related issues (which has continued under the Trump Administration). However, in October 2018, Crowdstrike, a U.S. cybersecurity technology company, identified China as "the most prolific nation-state threat actor during the first half of 2018." It found that Chinese entities had made targeted intrusion attempts against "multiple sectors of the economy, including biotech, defense, mining, pharmaceutical, professional services, transportation, and more." In November 2018, FBI Director Christopher Wray stated: "No country presents a broader, more severe threat to our ideas, our innovation, and our economic security than China." Then U.S. Attorney General Jeff Sessions proclaimed that "Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly." On December 1, 2018, U.S. Assistant Attorney General John C. Demers stated at a Senate hearing that from 2011 to 2018, China was linked to more than 90% of the Department of Justice's cases involving economic espionage and two-thirds of its trade secrets cases. The 116 th Congress may consider how to address the threats outlined by senior government officials, including through possible legislation. Belt and Road Initiative (BRI)64 China conceived its Belt and Road Initiative (BRI) in 2013 to promote greater economic connectivity and integration across several regions, through the development of "economic corridors" and revitalized land and sea routes for trade and investment. While infrastructure investment is a core component, objectives of policy coordination, trade facilitation, financial integration, and people-to-people ties also drive the initiative. To date, China has released little official aggregate information on BRI, raising questions for the United States and others about its scope. According to Chinese media, China has signed agreements on BRI cooperation with more than 100 countries and international institutions, and collectively, projects could entail capital requirements ranging $1 trillion to $4 trillion. Based on emerging trends, projects appear to largely involve Chinese SOEs, materials, and financing. If BRI achieves Chinese objectives to "complement the development strategies of countries involved" and build a "new model of win-win cooperation" it could help fill major deficits in infrastructure investment in Asia and other regions and reshape trade patterns. Some observers, including U.S. officials and Members of Congress, have growing concerns about the initiative's motives, perceived lack of transparency in projects, and potential debt sustainability problems for countries receiving Chinese loans (such as Sri Lanka and Pakistan), as well as the use of economic leverage to achieve geopolitical and strategic goals. The United States has commercial interests at stake, and more broadly, economic interests in shaping the rules governing global and regional trade and finance; BRI could potentially reshape these systems to reflect Chinese interests. In response, the Trump Administration has called for modernizing U.S. development finance tools and cooperating with allies on "high-quality infrastructure." Its "Free and Open Indo-Pacific" strategy involves $113 million in new U.S. initiatives and investments in the region. China's growing economic influence was cited as a motivation for Congress to pass the Better Utilization of Investments Leading to Development (BUILD) Act ( P.L. 115-254 ), signed into law in October 2018. The 116 th Congress may hold further hearings on Chinese economic practices and BRI, and it may consider new tools to counter Chinese influence and better support U.S. firms involved in economic activities abroad. As part of its oversight and approval of funding for U.S. participation in multilateral development banks and international financial institutions, Congress may also exercise oversight of institutions involved in BRI and implementation of the BUILD Act, as well as consider possible multilateral cooperation on debt transparency issues. U.S. Bilateral and Regional Trade Agreements and Negotiations71 In addition to multilateral efforts through the World Trade Organization (WTO), the United States has worked to reduce and eliminate barriers to trade and create nondiscriminatory rules and principles to govern trade through bilateral and regional trade agreements. Over the past two decades, these agreements, referred to as free trade agreements (FTAs) in the U.S. context, have proliferated globally in part due to difficulty in reaching consensus on new agreements at the WTO. In total, the United States has concluded 14 FTAs with 20 countries since 1985, when the first bilateral FTA was concluded with Israel ( Figure 7 ). The Trump Administration has taken a number of actions with regard to FTAs, and the issue may be a focus of the 116 th Congress. In January 2017, the President withdrew the United States from the 12-member Trans-Pacific Partnership (TPP), which had been signed but not ratified during the Obama Administration. The Trump Administration has also made changes to existing U.S. FTAs. Most significantly, the Administration renegotiated the North American Free Trade Agreement (NAFTA), the largest U.S. FTA. The modified agreement—renamed the United States-Mexico-Canada Agreement (USMCA)—requires congressional approval and implementing legislation in order to enter into force, suggesting a possible vote in the 116 th Congress. The President also negotiated changes to the U.S.-South Korea (KORUS) FTA, but the relatively minor adjustments were made by proclamation at the end of 2018 and require no further action by Congress. Looking forward, the Administration has notified Congress under Trade Promotion Authority (TPA) of its intent to negotiate trade agreements with the European Union (EU), Japan, and the United Kingdom (UK), which could begin in early 2019. Congress is expected to weigh in on the scope and objectives for these new agreements throughout the negotiating process, especially through the TPA requirement for the Executive Branch to conduct ongoing consultations before, during, and after the completion of the negotiations. U.S.-Mexico-Canada Agreement (USMCA)75 On November 30, 2018, President Trump and the leaders of Canada and Mexico signed the United States-Mexico-Canada Agreement (USMCA), a proposed trilateral free trade agreement (FTA) that, if approved by Congress and ratified by the governments of Canada and Mexico, would revise and modernize the North American Free Trade Agreement (NAFTA). Pursuant to trade promotion authority (TPA), the Administration notified Congress of its intention to sign the agreement on August 31, 2018, in part to allow for the signing of the agreement prior to Mexico's president-elect Andres Manuel Lopez Obrador taking office on December 1, 2018. Members may debate and potentially consider legislation to implement the agreement in the 116 th Congress. Issues for potential examination include whether the USMCA meets TPA's negotiating objectives, whether provisions on labor and environment would have stronger enforcement, and the economic impact of the agreement. Congress may also consider the economic and political ramifications if President Trump gives a six-month notification of an intention to withdraw from NAFTA. Many trade policy experts and economists give credit to FTAs such as NAFTA for expanding trade and economic linkages among countries, creating more efficient production processes, increasing the availability of lower-priced consumer goods, and improving living standards and working conditions. Other proponents contend that NAFTA has political dimensions that create positive ties within North America and improve democratic governance. At the same time, some policymakers, labor groups, and consumer advocacy groups argue that NAFTA has had a negative effect on the U.S. economy. They often refer to labor provisions as being weak and maintain that the proposed USMCA should have stronger, more enforceable labor provisions to address issues such as outsourcing, lower wages, and job dislocation. The proposed USMCA, comprised of 34 chapters and 12 side letters, retains most of NAFTA's chapters, including the elimination of tariff and nontariff trade barriers, while making notable changes to rules of origin (ROO) for motor vehicle and agriculture products and modernizing provisions on intellectual property rights (IPR), digital trade, and services trade. The agreement also allows some greater access to the Canadian dairy market to U.S. dairy producers and adds new obligations on currency misalignment, a new chapter on state-owned enterprises, and a new chapter on anti-corruption. Other provisions new to U.S. FTAs include a sunset clause provision, which would require a joint review and agreement on renewal issues after six years, revised provisions on government procurement and investment, and a provision that allows a party to withdraw from the agreement if another party enters into an FTA with a country it deems to be a nonmarket economy (e.g., China). The Trump Administration's proposals on ROO in motor vehicle products were one of the more controversial issues in the USMCA negotiations. Under NAFTA, the ROO requirement for autos, light trucks, engines, and transmissions is 62.5%; for all other vehicles and automotive parts it is 60%. USMCA would raise these requirements to 75% of a motor vehicle's content and to 70% of its steel and aluminum content. It would also add a wage requirement, for the first time in any FTA, stating that 40%-45% of auto content must be made by workers earning at least $16 per hour. Supporters of the proposed USMCA contend that the agreement would modernize NAFTA by including updated provisions in areas such as digital trade and financial services. Some analysts believe that the updated auto ROO requirements contained in the USMCA could raise compliance and production costs and lead to higher prices, which could possibly negatively affect U.S. vehicle sales. Overall, the full economic effects of the proposed USMCA would not be expected to be significant because nearly all U.S. trade with Canada and Mexico is now conducted duty and barrier free. Many economists and other observers believe that it is not expected to have a measurable effect on United States-Mexico trade and investment, jobs, wages, or overall economic growth, and that it would probably not have a measurable effect on the U.S. trade deficit with Mexico. U.S.-South Korea (KORUS) FTA Modifications77 The U.S.-South Korea (KORUS) free trade agreement (FTA), the second-largest U.S. FTA by trade flows, has been a centerpiece of U.S.-South Korea economic relations since its entry into force in March 2012. Formal negotiations to modify the pact began in January 2018, following months of public criticism of the agreement by President Trump, including threats of potential U.S. withdrawal. In September, the two countries signed a modified agreement. The relevant U.S. tariff changes became effective January 1, 2019, through Presidential proclamation. A major underlying factor in the renegotiation was President Trump's concern over the growth in the bilateral trade deficit since KORUS took effect ( Figure 8 ). Most economists, however, argue that other factors, including a slowdown in South Korea's economic growth during the period, were the key drivers of the deficit. In 2017, the U.S. trade deficit with South Korea shrank by more than $7 billion, in part due to increased U.S. energy (crude oil and natural gas) and services exports. The KORUS FTA is the most recent and arguably most extensive U.S. FTA in effect. The changes made through the modifications were relatively minor and focused mostly on U.S. tariff adjustments and South Korean implementation issues. Specifically, the modifications, among other things, extend the 25% U.S. light truck tariff for twenty years to 2041, double the number of U.S. vehicle exports to South Korea that can be imported with U.S. safety standards (25,000 to 50,000 per manufacturer per year), and confirm South Korea's adherence to KORUS commitments on origin verifications, and its intent to amend a domestic pharmaceutical pricing policy to ensure it is consistent with KORUS commitments. Although South Korea's National Assembly ratified the modifications, the government has expressed concern over potential U.S. Section 232 tariffs on auto and auto parts. Unlike the United States-Mexico-Canada Agreement (USMCA), the KORUS FTA modifications do not explicitly exempt any South Korean autos from future Section 232 actions. U.S.-European Union Trade Negotiations80 On October 16, 2018, the Trump Administration notified Congress, under Trade Promotion Authority (TPA), of its intent to enter trade agreement negotiations with the European Union (EU), its largest overall trade and investment partner. This followed a U.S.-EU announcement in July 2018 on plans to work to eliminate transatlantic tariffs, nontariff barriers, and subsidies on "non-auto industrial goods," as well as to boost trade specifically in services, chemicals, pharmaceuticals, medical products, and U.S. soybeans. Although the European Commission does not have a negotiating mandate from EU member states, U.S.-EU preparatory talks have been ongoing. The proposed negotiations represent a potential de-escalation of the conflict between the two sides over recent new tariff measures (see Tariff Actions by the Trump Administration). Each side agreed not to impose further tariffs on each other while negotiations are active, and to examine current U.S. steel and aluminum tariffs. At the same time, the proposed negotiations are likely to be complex. No agreement exists on their scope. The EU, so far, has rejected the U.S. assertion on including all agriculture in the negotiations. It is an open question if the scope will broaden to include other areas designated under TPA. Depending on which issues are addressed, the challenges that impeded the previous U.S.-EU trade negotiations could resurface. EU FTAs negotiated in recent years emphasize expanded protections for geographical indications, replace investor-state dispute settlement (ISDS) with an investment court system, and lack explicit commitments to remove trade restrictions on data flows; these approaches raised concerns for some Members of Congress in the past. The United Kingdom's expected withdrawal from the EU also could affect the negotiations, as it would remove a traditionally leading voice on trade liberalization from the EU. How the United States approaches some trade issues might evolve in the wake of the proposed United States-Mexico-Canada Agreement (USMCA). Congress has a direct interest in monitoring and shaping trade discussions on these issues. Implementing legislation for any final U.S.-EU trade agreement would be subject to congressional consideration. As negotiations proceed, Congress may debate and hold hearings on such issues as the potential impact of greater transatlantic trade liberalization on the U.S. economy and particular sectors, and the extent to which any U.S.-EU commitments could help develop globally relevant rules on trade. U.S.-Japan Trade Negotiations83 In September 2018, President Trump and Japanese Prime Minister Abe announced plans to launch formal bilateral trade negotiations. Under Trade Promotion Authority (TPA) procedures, on October 16, the Administration officially notified Congress of its intent to enter into the negotiations—which could begin after 90 days—and began consultations with Congress over the scope of such negotiations. As a top U.S. trade and investment partner, Japan is a longstanding U.S. priority for trade negotiations, in particular following U.S. withdrawal from the proposed Trans-Pacific Partnership (TPP) in 2017 ( Figure 10 ). Japan's recent free trade agreements (FTAs) with major markets in the Asia-Pacific and Europe could set new rules and lower tariffs for other countries trading with Japan, disadvantaging U.S. exporters and further incentivizing U.S. interest in new talks. Japan had preferred a regional approach to U.S. trade negotiations, and urged the United States to reconsider its TPP withdrawal. Some suggest Japan's willingness to enter bilateral talks relates to potential U.S. Section 232 tariffs on Japanese autos and auto parts—Japan's top export to the United States and a major source of the U.S. trade deficit with Japan. The initial joint announcement stated that the negotiations will focus on goods and services—specifically areas that "can produce early achievements"—and then turn to investment and other issues. Negotiations of commitments on agriculture and autos may be among the most contentious, and both sides have expressed priorities for the new talks. Japan plans to limit new agriculture market access to its offers in existing trade agreements, including TPP, while the United States seeks market access outcomes that will increase U.S. production and employment in the auto industry. An agreement limited in coverage or presented to Congress in stages would represent a shift in approach from recent U.S. FTAs, which typically contain more comprehensive provisions. The Administration provided more certainty in the scope of the new U.S.-Japan talks in releasing its specific negotiating objectives in December 2018, as required by TPA 30 days before talks can commence. It suggests that a broad range of issues may be covered, including trade in goods, services, agriculture, investment, intellectual property, state-owned enterprises, and digital trade. The Office of the U.S. Trade Representative (USTR) specified that it may pursue negotiations with Japan in stages, in consultation with Congress, but that the aim is to "address both tariff and nontariff barriers and to achieve fairer, more balanced trade in a manner consistent with the objectives that Congress has set out" in TPA. U.S.-United Kingdom Trade Negotiations87 In light of "Brexit"—the expected withdrawal of the United Kingdom (UK) from the European Union (EU)—some Members of Congress and the Trump Administration called for launching U.S.-UK free trade agreement (FTA) negotiations. The UK is a major U.S. trade and economic partner, and foreign direct investment (FDI) and affiliate activity are key aspects of bilateral ties ( Figure 11 ). In January 2017, President Trump and Prime Minister May discussed how the two sides could "lay the groundwork" for a future U.S.-UK FTA. The two sides subsequently established a bilateral working group that has met regularly to explore ways to strengthen trade and investment ties, including through a potential future FTA. On October 16, 2018, the Administration formally notified Congress, under Trade Promotion Authority (TPA), of its intent to enter into the negotiations. The 116 th Congress may hold ongoing consultations with the Trump Administration over the scope of the negotiations, and to engage in oversight as the negotiations progress. FTA prospects depend on the terms of the UK's withdrawal from the EU and the future UK-EU trade relationship, including whether the UK will have an independent trade policy. Tremendous uncertainty surrounds the UK-EU Brexit negotiations. Under a draft agreement and political declaration, a transition period could extend through at least 2020, during which time the UK may be able to negotiate, but not enter into, trade agreements with other countries. Aspirations for the future UK-EU relationship include negotiating a comprehensive UK-EU FTA, along with developing an independent UK trade policy. Yet, the "Irish border" issue presents challenges; a agreement reached by both sides in late 2018—in which the UK would have remained in a customs union with the EU as a "backstop" if they cannot reach an alternative arrangement that avoids a "hard border" (customs check, physical border infrastructure) between Northern Ireland and Ireland—was rejected by the UK Parliament in January 2019. How aligned the UK remains with the EU in such areas as regulations could affect dynamics in the U.S.-UK FTA negotiations. Some experts view a U.S. FTA with the UK as more feasible than one with the EU, given similarities in U.S. and UK trade policy approaches historically and the two countries' "special relationship"; others caution that domestic interests could complicate trade negotiations. Prospects of bilateral FTA negotiations have already generated concern among some stakeholders, particularly in the UK, about implications, such as for food safety regulations. Other key negotiating issues could include financial services, investment, and e-commerce, which are prominent in U.S.-UK trade. Proliferation of Non-U.S. Trade Agreements92 Since 1990, the number of free trade and regional agreements in force globally has grown six-fold from fewer than 20 to nearly 300 ( Figure 12 ). All 164 members of the World Trade Organization (WTO) are now party to at least one FTA and, as of 2014, each member had on average 11 FTA partners. With only 14 U.S. FTAs in effect, the vast majority of these agreements do not involve the United States. The multilateral trading system, meanwhile, has not produced a broad set of new trade liberalization agreements (excluding more limited scope agreements, such as the Trade Facilitation Agreement) since the Uruguay Round, which also established the WTO in 1995. The proliferation of FTAs, particularly in the absence of a major new multilateral agreement, presents certain challenges for the United States. These agreements are inherently discriminatory given their limited membership (i.e., they provide preferential treatment to some countries and not others). U.S. exporters benefit from the preferential aspects of FTAs when they gain better access to FTA partner markets than their foreign competitors, but may be similarly harmed when third parties negotiate agreements that do not involve the United States. During the 116 th Congress, this issue may grow more prominent as agreements among a number of the United States' top trading partners are concluded and take effect. Major recent agreements include the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11), involving among others Canada, Mexico, Japan, and Vietnam, which took effect at the end of 2018, and the European Union-Japan FTA which is expected to come into effect in early 2019. Both the United States and Japan exported more than $10 billion of autos to the European Union (EU) in 2017; the EU-Japan FTA would eventually eliminate the EU's 10% auto tariff, giving Japanese exporters a major competitive advantage in the EU market. As other countries move forward with new FTA negotiations that cover a significant share of world trade, a number of issues arise that may be of interest to Congress, including how these agreements will affect U.S. economic and strategic interests, their impact on U.S. leadership in trade liberalization efforts and establishing new trade rules, and the appropriate U.S. response. The World Trade Organization (WTO)94 The 164-member World Trade Organization (WTO), established in 1995, oversees and administers global trade rules and negotiations, and resolves trade disputes. The WTO succeeded the General Agreement on Tariffs and Trade (GATT) of 1947, which was established to advance a more open, rules-based trading system and to further economic stability, growth, and prosperity. The United States was a key architect of the GATT/WTO and the agreements resulting from multilateral trade negotiations. Successive rounds of trade liberalization, culminating in the Uruguay Round (1986-1994), supported the significant expansion of trade through reductions in trade barriers and the establishment of rules and principles, such as nondiscrimination and transparency. Since the establishment of the WTO, members have lowered their average most-favored nation (MFN) applied tariff on a unilateral basis from 25% in 1994 to less than 10% today ( Figure 13 ). The WTO's dispute settlement system has processed more than 500 disputes, with the aim of enforcing its rules, managing trade tensions, and ensuring a stable system. While the WTO is recognized as the foundation of the global trading system, including by Congress, it faces growing challenges. Many observers believe it must adopt reforms to remain a relevant and effective institution, both in terms of its negotiating and dispute settlement functions. Compared to past administrations, the Trump Administration has taken a more skeptical stance toward the WTO and the value of multilateral trade deals. President Trump has also raised the possibility of U.S. withdrawal from the WTO. As debates over the future of the WTO intensify, a number of issues arise that may be of interest to the 116 th Congress, including how current and future WTO agreements affect the U.S. economy and the value of U.S. membership and leadership in the WTO. Multilateral and Plurilateral Negotiations97 While the landscape of global trade and investment has changed dramatically since the World Trade Organization (WTO)'s founding, WTO rules have not been modernized or expanded since 1995, with some exceptions. The most recent round of multilateral negotiations, the Doha Round, began in 2001, but stalled in 2015, with no clear path forward. The deadlock in negotiations is largely due to entrenched differences in priorities among leading emerging market economies, developing countries, and advanced economies, as well as rigidities in the multilateral negotiating process. The most recent 11 th WTO Ministerial Conference in 2017 did not result in major breakthroughs in negotiations. Work to build on current agreements continues, including through plurilateral agreements among subsets of countries. WTO members committed to achieve a multilateral deal on fisheries subsidies by the next ministerial in 2020; the United States has supported these efforts. In other areas, such as agriculture, talks remain stalled. Separate groups of members committed to work programs or plurilateral talks on e-commerce (which the United States joined), investment facilitation, and micro, and small and medium-sized enterprises. The United States viewed the 11 th Ministerial outcome positively—that it signaled "the impasse at the WTO was broken," paving the way for like-minded countries to pursue new work in other areas. Some WTO members, including the United States, point to plurilateral or sectoral settings as the way forward for the institution. The Trump Administration has not specified its position on plurilaterals pursued under the Obama Administration, such as on services and environmental goods. More recently, the European Union (EU), Canada, China, and other countries have put forward WTO reform proposals. These and other issues may be of ongoing interest to Congress. Dispute Settlement99 The World Trade Organization (WTO) dispute settlement system is often called the "crown jewel" of the organization by its adherents because it provides a means to enforce commitments and resolve disputes peacefully without recourse to unilateral action. Under its procedures, countries first seek to settle their differences through consultation. If consultations prove unsuccessful, a dispute can be launched. The dispute is presented before a dispute settlement panel, and a decision is adopted by the Dispute Settlement Body. Cases can be appealed to the Appellate Body (AB). If a party is found to violate an agreement, it has time to bring its law into conformity with the decision. If the party refuses to bring itself into compliance, or if the compliance panel deems the steps taken to be insufficient, the aggrieved party can retaliate by withdrawing trade concessions (i.e., reimposing tariffs) to a level equivalent to the economic damage of the infringing measure. The U.S. Trade Representative (USTR) is authorized to launch cases on behalf of the United States, after input from other agencies and stakeholders in the private sector or nongovernmental organizations (NGOs). The United States is an active user of the dispute settlement system. Among WTO members, the United States has been a complainant in the most dispute cases since the system was established in 1995, initiating 123 disputes ( Figure 14 ). The two largest targets of complaints initiated by the United States are China and the EU, which, combined, account for more than one-third. Some stakeholders, including the Trump Administration and some Members of Congress, hold a more skeptical view of the WTO's dispute settlement system and have focused on reforming it. The Administration has withheld the appointment of AB panelists, imperiling the ability of the AB to hear cases past December 2019, when it would lack a quorum. USTR Robert Lighthizer has called for systemic changes in the body, but, thus far, the United States has not made specific proposals. U.S. concerns are known to include whether AB panelists have interpreted agreements too expansively and opine on issues not central to the case at hand, whether proceedings are completed in a timely manner, and whether AB jurists should be able to finish cases after their terms have expired. The European Union (EU) and others have proposed reforms to address U.S. concerns on a number of issues, but these were rejected by the United States. The U.S. Ambassador to the WTO claims that the proposals "instead appear to endorse changing the rules to accommodate and authorize the very approaches that have given rise to Members' concerns." Challenges and Future Direction101 The United States has historically served as a leader in the World Trade Organization (WTO) and many U.S. firms rely on WTO rules to open markets for imports and exports, eliminate discriminatory treatment, and defend and advance U.S. economic interests. There are costs and benefits to the United States and other countries to uphold the rules and enforce WTO commitments. As WTO members did not conclude the Doha Round, new questions emerged about the WTO's future direction. Many observers are concerned that recent U.S. tariff actions and counterretaliation by other countries, as well as escalating trade disputes are straining the system. Arguably, the WTO system is only as strong as the members' commitment to abide by its rules, and if those rules are not respected by one or more members engaging in tit-for-tat retaliation, the edifice of the system could be weakened. Another question is whether the WTO is equipped to handle effectively the challenges of emerging markets like China that many experts view as not full-fledged market economies. The Administration has expressed doubt over the value of the WTO and multilateral trade negotiations to the U.S. economy. While some U.S. frustrations with the WTO are not new and are shared by other trading partners, the Administration's overall approach has spurred new questions regarding future U.S. leadership and participation in the WTO. Many observers believe the WTO needs to adopt reforms to salvage its role as the foundation of the global trading system. In addition to ongoing WTO efforts to negotiate new trade liberalization and rules in areas like fisheries or e-commerce and digital trade, negotiations in other areas such as services, competition with state owned enterprises, and other issues could help increase the relevance of the WTO as a negotiating body. Partly in response to perceived protectionist actions by the Trump Administration, other countries have begun to assert themselves as leaders and advocates for the global trading system. Led by the European Union (EU) and Canada, some WTO members have begun to explore aspects of institutional reform that could promote the effectiveness of the WTO. The 116 th Congress may consider whether new U.S. negotiating objectives or oversight hearings are needed to address prospects for WTO reforms and rulemaking. Intellectual Property Rights102 Intellectual property is a creation of the mind that may be embodied in physical and nonphysical (including digital) objects. Intellectual property rights (IPR) are legal, private, enforceable rights that governments grant to inventors and artists that generally provide time-limited monopolies to right holders to use, commercialize, and market their creations and prevent others from doing the same without their permission. Examples of IPR include patents, copyrights, trademarks, trade secrets, and geographical indicators. Debate over IPR includes a number of policy concerns, including the role of intellectual property in the U.S. economy as a source of innovation and comparative advantage; the impact of IPR infringement on U.S. commercial, health, safety, and security interests; and the balance between protecting IPR to stimulate innovation and advancing other public policy goals, such as promoting access to medicines and ensuring the free flow of information. As the global economy changes, protection and enforcement of IPR in the digital environment, including cyber-theft, is of increasing concern. At the same time, lawful limitations to IPR, such as exceptions in copyright law for media, research, and teaching (known as "fair use"), also may have benefits. IPR is addressed in trade agreements and U.S. law. Since 1988, Congress has included IPR as a principal U.S. trade negotiating objective in trade promotion authority (TPA). In the TPA passed in 2015, Congress directs the Executive Branch to seek IP commitments that exceed the minimum standards of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). The United States also has other trade policy tools at its disposal under U.S. law to advance IPR goals. The "Special 301" provision of the Trade Act of 1974 allows the U.S. Trade Representative (USTR) to identify and report different levels of U.S. concern about foreign countries' IPR practices and policies. The U.S. International Trade Commission (ITC) conducts investigations into allegations that U.S. imports infringe U.S. intellectual property under the "Section 337" provision of the Tariff Act of 1930, as amended. Section 337 investigations, depending on their outcome, can lead to orders prohibiting counterfeit and pirated goods from entering U.S. borders. A central part of the IPR debate in the 116 th Congress may be the IPR provisions of the proposed United States-Mexico-Canada Trade Agreement (USMCA), which retain the North American Free Trade Agreement's (NAFTA's) core protections for IPR and specific enforcement requirements. At the same time, the USMCA also includes updated and new provisions, notably ten years of data protection for biologics; extension of copyright terms to 70 years; prohibitions on circumvention of technological protection measures; criminal and civil penalties for trade secret theft, including by state-owned enterprises and cyber-theft; and copyright safe-harbor provisions for Internet Service Provider (ISP) liability. In addition, Congress may continue to monitor closely negotiations with China to address the IPR issues raised by the Trump Administration's Section 301 investigation (see sections on Tariff Actions by the Trump Administration and U.S.-China Trade and Key Issues). These include forced technology transfer from U.S. companies, cyber-intrusion and cyber-theft of U.S. trade secrets, discriminatory licensing restrictions on U.S. firms, and efforts to acquire sensitive U.S. technology. Labor and Environment103 Some Members of Congress and others have sought to improve labor and environmental conditions in other countries through the inclusion of more enforceable provisions in U.S. free trade agreements (FTAs). They have been concerned that lax or lower standards in other countries may make U.S. products less competitive (resulting in lost jobs and production to overseas firms), or cause damage to the environment as trade and investment expand. Other policymakers have tried to limit the scope and enforceability of such provisions, or believe that the competence to address these issues lies elsewhere, such as the International Labor Organization (ILO). They also view trade agreements as enabling greater economic growth that can provide more resources for addressing labor and environmental issues. Congress may consider how the proposed United States-Mexico-Canada Agreement (USMCA) addresses worker rights protection, an issue that is prominent in the negotiation of U.S. FTAs. Since 1988, Congress has included worker rights protection as a principal negotiating objective in trade promotion authority (TPA) legislation, and the United States has been in the forefront of using FTAs to promote core internationally-recognized worker rights consistent with the ILO Declaration on Fundamental Principles and Rights at Work (1998). The North American Free Trade Agreement (NAFTA) was the first U.S. FTA that addressed worker rights by committing the parties to enforce their own labor laws and to resolve disputes. The proposed USMCA has language similar to more recent FTAs, requiring countries to adopt, maintain, and not derogate from laws that incorporate ILO principles, including freedom of association and the effective recognition of the right to collective bargaining, elimination of all forms of compulsory or forced labor, effective abolition of child labor, and elimination of discrimination in respect of employment and occupation. It also has an additional commitment for Mexico to adopt and maintain labor laws and practices for protection of worker representation in collective bargaining. On the environment, the United States has negotiated environmental provisions in FTAs, which have evolved over time. NAFTA was the first agreement to include environmental provisions, committing the parties to enforce their own laws and cooperatively resolve disputes in a special venue, among other goals. The Trade Act of 2002 was the first grant of TPA containing environmental negotiating objectives, calling for countries not to fail to enforce their own environmental laws in a manner affecting trade and investment. Environmental obligations were expanded in later U.S. FTAs and were largely reflected in the 2015 grant of TPA, which obligated parties to adopt and maintain laws consistent with multilateral environmental agreements (MEAs) to which they are a party. Parties also were obligated not to derogate from their laws in order to attract trade and investment. These provisions were subject to the same dispute settlement provisions as other parts of the agreement with the withdrawal of trade concessions as the ultimate penalty for noncompliance. The World Trade Organization (WTO) does not have provisions related to environmental protection, although negotiations are underway to eliminate tariffs for environmental goods, which the United States and other believe will support broader environmental goals. In the proposed USMCA, Congress may examine the extent to which environmental provisions are consistent with TPA and the strength of enforcement mechanisms for environmental commitments. Select U.S. Import Policies104 The United States often uses its import policy to accomplish broader foreign and domestic policy goals. For example, Congress created programs that provide duty-free access to the U.S. market to foster economic growth in less developed countries. In addition, to address unfair trade practices and thus provide relief to "materially injured" domestic producers and workers, Congress created an investigative process through which an additional duty is placed on imported merchandise to offset the amount at which the merchandise is found to be sold in the U.S. market at less than fair value, or to be subsidized by a foreign government or public entity. Congress also helped to provide a competitive edge to U.S. business by suspending or reducing tariffs on imports used by domestic manufacturers to make downstream goods. As the current Administration's actions shift the trade landscape, Congress may conduct oversight of these policies and their implementation, including Trump Administration decisions to self-initiate anti-dumping investigations, which until these actions, had not occurred since 1985. Trade Preferences105 Since 1974, Congress has created six trade preference programs to assist developing countries. The following trade preference programs are still in effect: Generalized System of Preferences (GSP—expires December 31, 2020), which applies to all designated developing countries; Caribbean Basin Economic Recovery Act (CBERA—permanent), which includes under its umbrella, the Haitian Hemispheric Opportunity through Partnership Encouragement Acts (HOPE I and II—expires September 30, 2025) and the Haitian Economic Lift Program (HELP—expires September 30, 2025); Caribbean Basin Trade Partnership Act (CBTPA—expires September 30, 2020); African Growth and Opportunity Act (AGOA—expires September 30, 2025); and Nepal Preference Program (expires December 31, 2025). These programs give preferential, temporary, nonreciprocal, duty-free access to the U.S. market for select products from developing countries designated by the Administration. The aim of the policy is to encourage eligible countries to develop viable domestic industries. The 115 th Congress extended GSP, one of the largest and oldest of the preferential trade programs. However, since the CBTPA and GSP expire in September and December of 2020, respectively, the 116 th Congress could consider further extending these programs. Given the Administration's discretion over product and country eligibility, Congress may seek to consult closely with the Administration over its enforcement of statutory eligibility criteria to ensure adherence to congressional objectives or examine possible reforms to the programs. In line with its increased focus on reciprocity in U.S. trade relations, the Trump Administration has also expressed increased interest in potentially negotiating reciprocal trade agreements with current preference program beneficiaries. U.S. Trade Representative Robert Lighthizer, for example, emphasized the possibility of new reciprocal free trade agreement (FTA) negotiations with African countries in his remarks at the annual United States-Sub-Saharan Africa Trade and Economic Cooperation Forum ("AGOA Forum"). Congress has directed the Administration to seek such agreements in the past. In the 116 th Congress, it may consider influencing the scope and prioritization of any new negotiations through consultations with the Administration, and it would ultimately have to pass implementing legislation to bring new FTAs into force. Trade Remedies107 Trade remedies are quasi-judicial administrative actions taken to mitigate injury (or the threat thereof) to domestic industries and workers caused by certain trade practices. Antidumping (AD) and countervailing duty (CVD) remedies provide relief from injurious imports that either are sold at less than fair value or subsidized by a foreign government. Safeguard (Section 201) actions provide temporary relief from import surges of fairly-traded goods. AD/CVD laws are administered primarily through the International Trade Administration (ITA) of the U.S. Department of Commerce, which addresses the existence and amount of dumping or subsidies, and the U.S. International Trade Commission (ITC), which determines injury to the U.S. industries petitioning for redress. In AD and CVD cases, the remedy is an AD or CVD "order" that places an additional duty assessed to offset the calculated amount of dumping or subsidy. World Trade Organization (WTO) rules permit the use of all three of these remedies. Since a series of legislative changes expanded access to AD/CVD remedies in the 1970s, they have increased in use. As of October 22, 2018, there are 462 AD/CVD orders affecting imports from 47 countries ( Figure 15 ). The majority of these orders (51.3%) apply to iron and steel imports. Critics of AD/CVD remedies argue that they are protectionist, opaque, overused by certain industries, based on poor economics, and give too much discretion to the ITA. Advocates argue that AD/CVD remedies are based on sound economics, provide a safety valve necessary for the continuation of trade liberalization, and ensure a fairer trading system. As part of its oversight function, Congress might consider how the current Administration's priorities might affect the U.S. trade remedy regime, including, as noted above, self-initiation of investigations as opposed to industry-led petitions. Additionally, while the quasi-judicial nature of AD/CVD investigations may indicate that Congress intended AD/CVD actions to be conducted apart from political influence, the involvement of constituents can lead to Members being asked to write letters or testify at hearings on either side of a trade remedy action to support a constituent's cause. Miscellaneous Tariff Bills (MTBs)112 Many Members of Congress introduce bills to support importer requests for the temporary suspension of tariffs on chemicals, raw materials, or other nondomestically made components used as inputs in the manufacturing process. A rationale for these requests is that such tariff suspensions help domestic producers of manufactured goods reduce costs, making their products more competitive. Due to the large number of bills typically introduced, they are often packaged together in a broader miscellaneous tariff bill (MTB). The American Manufacturing Competitiveness Act of 2016 ( P.L. 114-159 ) revised the process by directing the U.S. International Trade Commission (ITC) to receive importer petitions for reduced or suspended duties and report its findings directly to the U.S. House of Representatives Committee on Ways and Means and the U.S. Senate Committee on Finance. Using the new procedure, Congress passed P.L. 115-239 , the Miscellaneous Tariff Bill Act of 2018. P.L. 114-159 also provides for the initiation of a new MTB process in 2019, which could be considered by Members in the 116 th Congress. International Investment113 In 2017, the United States was the world's largest source of foreign direct investment (FDI) ($342 billion) and the largest recipient of FDI ($275 billion). The U.S. dual position as a leading source and destination for FDI means that the United States has important economic, political, and domestic interests at stake in the development of international policies regarding direct investment. Investment is a major driver of trade, and U.S. investment policy is a critical part of the U.S. trade policy debate—intersecting with questions about economic impact, trade restrictions, national security, and regulatory sovereignty. Traditionally, the United States has supported a rules-based open and liberalized investment environment, including by negotiating rules, disciplines, and market access commitments in trade agreements and administering investment promotion programs, while also reviewing certain proposed inbound foreign investment transactions for U.S. national security implications. The U.S. investment policy landscape may be evolving in the wake of the Trump Administration's approach to investment issues in the proposed United States-Mexico-Canada Agreement (USMCA), as well as legislation passed in the 115 th Congress to update and expand the scope of the Committee on Foreign Investment in the United States (CFIUS). Committee on Foreign Investment in the United States (CFIUS)115 Competition over technological leadership and changing dynamics in the global economy with the rise of emerging economies, such as China and state-led firms, has led to renewed debates in Congress over the impact of foreign investment on U.S. economic and national security interests. In general, U.S. policies treat foreign investors no less favorably than U.S. firms, with some exceptions for national security. In 2007, Congress asserted its role in formulating the scope and direction of U.S. foreign investment policy when the Foreign Investment and National Security Act of 2007 ( P.L. 110-49 ) was enacted, formally establishing the Committee on Foreign Investment in the United States (CFIUS), which serves the President in overseeing the national security implications of foreign direct investment. This law broadened Congress's oversight role, and explicitly includes homeland security and critical infrastructure as issues that the President must consider when evaluating the national security implications. The law also grants the President the authority to suspend or block foreign investments that are judged to "threaten to impair" U.S. national security and requires review of investments by foreign investors owned or controlled by foreign governments. The law has been used five times to block a foreign acquisition of a U.S. firm, although a number of investments have been withdrawn before reviews were completed. In 2017, growing concerns over the impact of Chinese investment in U.S. high-technology firms resulted in the introduction of bipartisan legislation to "strengthen and modernize" CFIUS. On August 13, 2018, President Trump signed into law the Foreign Investment Risk Re view Modernization Act (FIRRMA) of 2018 (Title XVII, P.L. 115-232 ), which amends the current process for CFIUS (under P.L. 110-49 ) to review, on behalf of the President, the effect of investment transactions on U.S. national security. The legislation represents the most comprehensive reform of the CFIUS review process since it was created, and notably expands the scope of transactions that fall under CFIUS' jurisdiction. Certain provisions take effect immediately, while others, including some related to the expanded scope of CFIUS, are subject to further regulations (the U.S. Department of the Treasury issued temporary regulations in October 2018). Some experts have suggested that the broad changes under FIRRMA could potentially lead CFIUS to take a more assertive role that emphasizes both U.S. economic and national security interests, particularly relative to the development of emerging or leading-edge technology. While specific countries are not singled out in the legislation, FIRRMA allows CFIUS to potentially discriminate among foreign investors by country of origin during the review of certain investment transactions. Greater scrutiny could be directed on transactions tied to certain countries, pending specific criteria defined by regulations. The debate over FIRRMA and its forthcoming implementation raises a number of questions for the 116 th Congress, including the extent to which the amended review process will be successful in protecting U.S. national security interests and whether it balances the objectives of maintaining the traditionally open U.S. investment climate while preserving the competitiveness of U.S. firms. International Investment Agreements (IIAs)118 The United States negotiates international investment agreements (IIAs), based on a "model" Bilateral Investment Treaty (BIT), to reduce restrictions on foreign investment, ensure nondiscriminatory treatment of investors and investment, and advance other U.S. interests. U.S. IIAs typically take two forms: (1) BITs, which require a two-thirds vote of approval in the Senate; or (2) BIT-like chapters in free trade agreements (FTAs), which require simple majority approval of implementing legislation by both houses of Congress. While U.S. IIAs are a small fraction of the more than 3,300 IIA agreements worldwide, they are often viewed as more comprehensive and of a higher standard than those of other countries ( Figure 16 ). A focal point for Congress on investment issues may be implementing legislation for the proposed United States-Mexico-Canada Agreement (USMCA). The investment provisions in USMCA differ significantly from those under the North American Free Trade Agreement (NAFTA) and previous FTAs and BITs entered into by the United States. Differences relate to investor-state dispute settlement (ISDS), the binding arbitration of private claims against host-country governments for violation of investment obligations under IIAs (e.g., obligations to provide nondiscriminatory treatment and a minimum standard of treatment to foreign investors). A longstanding cornerstone of U.S. trade agreements, ISDS has been favored widely in the U.S. business community as an important reciprocal form of protection for foreign investment that is modeled on U.S. law. At the same time, it is contested by some civil society groups based on concerns over its scope and fairness, among other issues. While ISDS is in the current NAFTA, the proposed USMCA would eliminate ISDS with respect to Canada and place specific limits with respect to Mexico. ISDS is available under the proposed USMCA for alleged violations by Mexico of national treatment, most-favored nation treatment, or direct expropriation. However, the proposed USMCA would limit other claims against Mexico, such as those of indirect expropriation, government contracts involving the oil, power generation, telecommunications, transportation, and infrastructure sectors. Claimants would also be required to first exhaust local remedies. Treatment of ISDS and other provisions common to IIAs could be a focus of proposed new U.S. trade agreement negotiations with Japan, the European Union (EU), and the United Kingdom (UK), especially considering the EU's push to include an Investment Court System in place of ISDS in its recent trade agreements and negotiations with other countries. U.S. Trade Finance and Promotion Agencies120 The federal government seeks to expand U.S. exports and investment through finance and insurance programs and other forms of assistance for U.S. businesses in order to support U.S. jobs and economic growth. Trade finance and promotion activities also may support U.S. foreign policy goals. Many of these activities are driven by demand from U.S. commercial interests. A number of U.S. government agencies have distinct roles in carrying out these functions. Two agencies that may be focal points for legislative activity and oversight in the 116 th Congress are the Export-Import Bank (Ex-Im Bank) and Overseas Private Investment Corporation (OPIC), discussed below. Collectively, trade promotion agencies raise issues for Congress in terms of their economic justifications, use of federal resources, and intersection with U.S. policy goals and priorities. They also raise questions about the federal trade organizational structure. Export-Import Bank of the United States (Ex-Im Bank)121 Ex-Im Bank, the official U.S. export credit agency (ECA), provides direct loans, loan guarantees, and export credit insurance to help finance U.S. exports of goods and services to contribute to U.S. employment. Driven by private sector demand, it aims to provide such support when alternative financing is not available or to counter government-backed export credit financing extended by other countries. Ex-Im charges interest, premiums, and other fees for its services, which it uses to fund its activities, and is subject to the annual appropriations process. Proponents of the agency contend that it supports U.S. exports and jobs, contributes financially to the U.S. Treasury, and manages its risks. Critics argue that it crowds out private sector activity, provides "corporate welfare," and poses a risk to taxpayers. Ex-Im Bank operates under a renewable general statutory charter, which Congress extended through September 30, 2019 ( P.L. 114-94 ). Despite its reauthorization, Ex-Im Bank is not fully operational. Since July 2015, the Board of Directors has lacked a quorum due to unfilled positions, constraining it from approving medium- and long-term export financing above $10 million. Ex-Im Bank reported a backlog of almost $40 billion in pending transactions at the end of FY2018. In recent years, Ex-Im Bank authorizations for finance and insurance transactions have declined ( Figure 17 ). In the 115 th Congress, four presidential nominees to the Board were approved by the Senate Banking Committee and were pending before the Senate. In the 116 th Congress, potential issues could be consideration of nominations to the Board, as well as whether to reauthorize Ex-Im Bank, and if so, for how long and under what terms. Ex-Im Bank abides by Organization for Economic Cooperation and Development (OECD) guidelines for ECA activity with repayment terms of two years or more, which aim to ensure that price and quality—not financing terms—guide decisions on purchasing exports. Foreign ECAs, of both OECD and non-OECD members, increasingly are providing financing outside of the scope of the OECD Arrangement. ECA financing by China, a non-OECD member, is of particular concern. Within and outside of the reauthorization debate, Congress may consider the effectiveness of current international ECA rules and ongoing international negotiations to enhance existing ECA rules or develop new arrangements, as well as other opportunities to address concerns about "unfair" competition from foreign ECAs. Overseas Private Investment Corporation (OPIC) and the BUILD Act123 Spun out of the U.S. Agency for International Development (USAID) in 1971, OPIC has been the primary U.S. development finance institution (DFI). It aims to promote economic growth in developing and emerging economies by providing project and investment fund financing and insuring against the political risks of investing abroad for U.S.-linked private investors. It operates based on private sector demand. In FY2018, OPIC made $3.3 billion in new commitments for investment projects in infrastructure and other sectors in sub-Saharan Africa, Latin America, the Indo-Pacific, and other regions. OPIC charges fees for its services, which it uses to fund its activities. It is also subject to the appropriations process. In recent years, Congress has renewed OPIC's authority through appropriations legislation. The 116 th Congress will have responsibility for overseeing the Administration's consolidation and expansion of OPIC under the Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act), which establishes a new U.S. International Development Finance Corporation (IDFC) as a successor to OPIC (see textbox). The BUILD Act is part of the U.S. policy response to China's growing economic influence in developing countries, exemplified by China's Belt and Road Initiative. Based on the BUILD Act timeline, the IDFC could become operational as early as summer 2019. During a transition period, OPIC is to continue to perform its existing functions. As the IDFC is operationalized, the 116 th Congress may examine implementation issues and whether the current statutory framework allows the IDFC to balance both its mandates to support U.S. businesses in competing for overseas investment opportunities and to support development, as well as whether it enables the IDFC to respond effectively to strategic concerns, especially vis-à-vis China. Congress also may consider whether to press the Administration to pursue international rules on development finance comparable to export credit financing. More broadly, the IDFC's establishment could renew legislative debate over the economic and policy benefits and costs of U.S. government activity to support private investment. Export Controls and Sanctions127 National security considerations shape U.S. trade and investment policies. In addition to the national security implications of foreign investment discussed above in the context of the Committee on Foreign Investment in the United States (CFIUS), key programs include controls on exports for foreign policy and other objectives and the use of economic sanctions to achieve specific foreign policy goals. The 116 th Congress may consider the balance of U.S. foreign policy and national security objectives against U.S. commercial and economic interests. Dual-Use Products and Export Controls128 Congress has authorized the President to control the export of various items for national security, foreign policy, and economic reasons. Separate programs and statutes for controlling different types of exports exist for nuclear materials and technology, defense articles and services, and dual-use goods and technology. Under each program, licenses of various types are required before export. The U.S. Departments of Commerce, State, Energy, and Defense administer these programs. In 2018, in conjunction with reform of the Committee on Foreign Investment in the United States (CFIUS), Congress passed the Export Control Reform Act (ECRA) (Subtitle B, P.L. 115-232 ), which authorized the dual-use export control system administered by the Department of Commerce and largely codifies current practices. The Obama Administration undertook a comprehensive reform of the U.S. export control system, which adopted a unified control list, created a single integrated information technology system, and established a single enforcement coordination agency. Responsibility for licensing exports is divided among the Departments of Commerce, State, and the Treasury, based on the nature of the product (munitions or dual-use goods) and basis for control. The Department of Defense has an important advisory role in examining license applications. Enforcement is shared among these agencies, as well as the U.S. Departments of Justice and Homeland Security. Exports controls lie between the nexus of trade and security. Congress is increasingly concerned with illicit attempts to obtain U.S. technology by foreign powers (particularly China), in both the dual-use and high technology spheres (such as artificial intelligence, robotics, etc.). In addition to enhanced investment scrutiny through CFIUS, the new export control act provides for the creation of an interagency process to identify foundational and emerging technologies and assess their national security implications, and recommend levels of control. Congress may be interested in the implementation of this process and its role in maintaining U.S. superiority in critical technologies. Economic Sanctions129 Economic sanctions may be defined as coercive economic measures taken against a target to bring about a change in policies. They can include such measures as trade embargoes; restrictions on particular exports or imports; denial of foreign assistance, loans, and investments; blocking of foreign assets under U.S. jurisdiction; and prohibition on economic transactions that involve U.S. citizens or businesses. Secondary sanctions, in addition, can impede trade, transactions, and access to U.S.-located assets of foreign persons and entities in third countries that engage with a primary target. The United States maintains an array of economic sanctions against foreign governments, entities, and individuals. Specifically, the United States maintains sanctions regimes against foreign governments it has identified as supporters of acts of international terrorism (Iran, North Korea, Sudan, Syria); nuclear arms proliferators (Iran, North Korea, Syria); egregious violators of international human rights norms, democratic governance, or corruption standards (Belarus, Burundi, Central African Republic, Cuba, Democratic Republic of the Congo, Iran, Libya, Nicaragua, North Korea, Russia, Somalia, South Sudan, Sudan, Syria, Venezuela, Western Balkans, Yemen, Zimbabwe, and the Hizbollah organization); and those threatening regional stability (Iran, North Korea, Russia, Syria); imposes economic restrictions on individuals and entities found to be active in egregious human rights abuses and corruption within the state system, international terrorism, narcotics trafficking, weapons proliferation, illicit cyber activities, conflict diamond trade, and transnational crime; and targets individuals and entities with economic and diplomatic restrictions to meet the requirements of the United Nations Security Council (Central African Republic, Democratic Republic of Congo, Eritrea, Guinea-Bissau, Iran, Iraq, Lebanon, Libya, North Korea, Somalia, South Sudan, Sudan, Yemen, and individuals affiliated with the Islamic State (Da'esh), al-Qaida, or the Taliban). The 116 th Congress may continue the deliberations of its predecessor to influence decision-making by President Trump's approach to foreign policy and national security. Sanctions are central to the debates over how to deter Iran's missile proliferation activities, normalize relations with North Korea while ensuring an end to its nuclear and missile programs, convince Russia to leave Ukraine, or end the conflict in Syria. The 115 th Congress, in its waning days, showed some interest in reviewing the President's long-standing national emergency authorities to use sanctions; given the frequent use of the authorities, the 116 th Congress may take a close look with an eye toward increasing its role in national security and foreign policy decisions. International Financial Institutions (IFIs) and Markets131 Since World War II, governments have created and used informal forums, as well as more formal international organizations, to discuss and coordinate economic policies. More informal forums include the Group of 7 (G-7) and the Group of 20 (G-20), and more formal international organizations include the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), the World Bank, and the World Trade Organization (WTO), among others. The United States has traditionally been a leader in these bodies, but the U.S. role is changing under President Trump. Congress plays a key role in shaping U.S. policy at international organizations and forums, including through authorizations and appropriations of U.S. funding, hearings, legislation that directs the Administration's policy and votes at the institutions, and Senate confirmation of high-level political appointees. More broadly, given longstanding economic and foreign policy interests in a stable, thriving global economy, the 116 th Congress may continue monitoring major economic developments overseas and their potential impact on U.S. economic and foreign policy interests. Key issues may include how other countries' exchange rate policies are impacting the U.S. economy, the role of the U.S. dollar in the global economy, trade developments, and ongoing and potential economic crises, particularly in indebted emerging markets and developing countries such as Argentina and Pakistan. International Economic Cooperation (G-7 and G-20)132 Between the 1970s and the 2000s, international economic discussions at the top leadership level took place among a small group of developed industrialized economies: the Group of 7 (G-7). The G-7 includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. In response to the global financial crisis, leaders decided that a broader group of developed and emerging-market economies, the Group of 20 (G-20), would become the premier forum for international economic cooperation and coordination ( Figure 18 ). The G-20 includes the G-7 members, as well as Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, and the European Union (EU). Although the G-20 is considered the "premier" forum, the G-7 continues to meet in parallel. G-7 and G-20 leader meetings ("summits") are held annually; meetings among lower and senior level officials occur throughout the year. Traditionally, the United States has played a strong leadership role at the G-7 and the G-20. For example, the United States was the leader in convening the G-20 to respond to the global financial crisis of 2008-2009. Under President Trump, however, the U.S. role in these forums has been shifting. The summits have become more contentious, with the United States increasingly isolated on key issues, particularly trade and climate change. At the G-7 summit in Canada in 2018, President Trump unprecedentedly withdrew his initial support for the G-7 joint leaders' statement (communiqué). Agreement was reached on a communiqué at the G-20 summit in Argentina in 2018, but many analysts question the significance of the communiqué's substance. In 2019, France and Japan are scheduled to host the G-7 and G-20 summits, respectively. Although U.S. participation in the G-7 and the G-20 is primarily driven by the Administration, Congress could exercise oversight through hearings and reporting requirements. Additionally, legislative action may be required to implement some commitments made by the Administration in the G-7 and G-20 process. International Monetary Fund (IMF)133 The International Monetary Fund (IMF) is an international organization focused on promoting international macroeconomic stability. Created in 1945, it has grown in membership over the past six decades to 189 countries. Although the IMF's functions have changed as the global economy has evolved, today it is focused on surveillance of member states and the global economy, lending to member states facing economic crises, and technical assistance to strengthen members' capacity to design and implement effective policies. The FY2016 Consolidated Appropriations Act ( P.L. 114-47 ) authorized U.S. participation in an IMF reform package, which doubled the size of IMF core resources ("quota") and gave emerging-markets a stronger voice in the governance of the institution. The legislation also sunsets U.S. contributions to a supplemental fund at the IMF, the New Arrangements to Borrow (NAB), in 2022, the first time the United States reduced its financial commitment to the institution since it was created. Members are evaluating IMF rules on providing large loans, which were used controversially during the 2010-2012 Eurozone debt crisis. Legislation introduced in the 115 th Congress, The IMF Reform and Integrity Ac t ( H.R. 1573 ), would have limited the ability of the U.S. Executive Director to the IMF to vote for large IMF programs, especially, where the Fund is co-financing with larger creditors. In 2019, the IMF is to continue work on its review of IMF quota resources. IMF Managing Director Christine Lagarde has been laying the groundwork to seek an increase in country contributions to the Fund. According to David Lipton, the IMF's first deputy managing director, "As our world becomes increasingly multipolar, but the scope for national policies to respond to crises becomes more constrained, the IMF will be the indispensable institution." The Trump Administration, however, does not appear to support a boost in Fund resources. At a December hearing before the House Financial Services Committee, Treasury Undersecretary David Malpass told Members that "[the Administration is] opposed to changes in quotas given that the IMF has ample resources to achieve its mission." Undersecretary Malpass added that the Administration believes that recent reforms have improved the stability of the global monetary system and that countries have alternative resources to the Fund on which they could draw in the event of a crisis. Multilateral Development Banks (MDBs)136 Multilateral development banks (MDBs) provide financing funded from private capital markets to developing countries in order to promote economic and social development. The United States is a member, and major donor, to five major multilateral development banks (MDBs): the World Bank, the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank. These institutions were established after World War II to provide financing for economic development at a time when private sector financing, especially for war-torn, post-conflict, or developing countries, was not available. While the MDBs have thrived and grown over the past decades, the international economy has changed dramatically. Many developing and low-income countries are able to borrow on the international capital markets to finance their development projects. At the same time, emerging-market countries are creating their own MDBs, including the China-led Asian Infrastructure Investment Bank. Congress authorizes and appropriates U.S. funding for the five major MDBs, which may shift under the Trump Administration. The Trump Administration has laid out a comprehensive reform agenda for the MDBs that includes, but is not limited to, creating lending limits to promote more robust financial discipline at the MDBs and graduate borrowers, especially China, and shift lending from higher income developing countries to lower income countries. The Administration is also seeking to better coordinate country programs and best-practices across. Meanwhile, in 2018 the United States and other World Bank members agreed to a $60.1 billion capital increase for the World Bank's main lending facility, the International Bank for Reconstruction and Development (IBRD), which would raise the IBRD's capital from $268.9 billion to $329 billion. World Bank members also endorsed a $5.5 billion capital increase for the International Finance Corporation (IFC), the World Bank's private-sector lending arm, which would more than triple the IFC's capital base from $2.57 billion to $8.2 billion. Congress would need to fully authorize and appropriate funds for any U.S. participation in the proposed capital increase. Exchange Rates and Currency Manipulation141 Exchange rates, the price of currencies relative to each other, are among the most important prices in the global economy. They affect the price of every country's imports and exports, as well as the value of every overseas investment. Some U.S. policymakers have expressed concerns that other governments purposefully undervalue their currency to gain an unfair advantage for their exports, or "manipulate" their currencies, hurting U.S. companies and jobs. Countries have committed to refraining from currency manipulation through the International Monetary Fund (IMF), the G-7, and the G-20. Under U.S. law, the U.S. Department of the Treasury is tasked with reporting on and responding to currency manipulation. However, the IMF, the G-7, and the G-20 have never publicly labeled a particular country as a currency manipulator, and Treasury has not done so in more than two decades. Some Members of Congress have called for stronger actions to combat currency manipulation over the past decade. It was also a key issue for then candidate Donald Trump during the 2016 presidential campaign. Other policymakers have preferred a more cautious approach, arguing that U.S. consumers benefit when other countries have weak currencies and actions against currency manipulation risk retaliation that could hurt U.S. interests. The 116 th Congress may grapple with debates about currency manipulation in at least two contexts. First, as Congress considers implementing legislation for the proposed United States-Mexico-Canada Agreement (USMCA), it may examine the treatment of exchange rates in the agreement. The USMCA would include, for the first time in a trade agreement, enforceable provisions to combat currency manipulation among the signatories. U.S. concerns about currency manipulation have not focused on Canada and Mexico per se, but addressing currency manipulation in the USMCA may serve as precedent for future trade agreements. Second, China's currency policies have been a particular source of concern for U.S. policymakers. After appreciating in 2017, China's currency depreciated by almost 10% between April and November 2018 ( Figure 19 ). Some analysts believe that the Chinese government is using currency policies to offset the effects of tariffs imposed on U.S. imports from China under Section 301. Currency policy could become a salient issue for Members in the trade disputes between the United States and China. Role of the U.S. Dollar142 For at least 70 years, the U.S. dollar has been the world's dominant currency. Central banks around the world hold a large portion of their reserves in U.S. dollars ( Figure 20 ), and private companies use U.S. dollars for international transactions. Dollars make up nearly two-thirds of central bank reserves, countries' dollar imports are on average worth five times what they buy from the United States, and more than half of all global cross-border debt is denominated in U.S. dollars. There are considerable benefits to having a reserve currency, including lower borrowing costs for the U.S. government. This cost advantage occurs because there is generally a willingness of foreign central banks to pay a liquidity premium to hold dollar assets. Questions have been raised about whether the U.S. dollar could lose its status as a reserve currency. Some countries are pursuing or considering policies that challenge the dollar's role. For example, oil market transactions have traditionally been denominated in dollars, but China has begun trading oil futures in renminbi. Some countries have also discussed the creation of alternative payments systems, not centered on the dollar, as a way to circumvent U.S. financial sanctions. Broader concerns about the direction of U.S. economic policy, including rising national debt, as well as the predictability of U.S. policies, including trade conflicts with other countries, are also driving debates about the dollar's supremacy. However, most economists agree that in the short run there are no good alternatives. The Eurozone is still recovering from its crisis, and China does not have a stable banking system or open capital account. However, the 116 th Congress may consider the benefits it derives from dollar as a reserve currency and the long-term impact of various economic policies, such as fiscal policies and financial sanctions, on the role of the dollar in the global economy. Ongoing and Potential Economic Crises145 Analysts are growing increasingly concerned about debt sustainability in many emerging markets and developing countries. Many emerging markets experienced an influx of capital following the global financial crisis of 2008-2009, as investors sought more profitable investment opportunities than in advanced economies, where interest rates were at historical lows. The influx of capital into emerging markets may have created investment bubbles, which could be vulnerable to changes in the availability or cost of financing, for example if and when the U.S. Federal Reserve raises interest rates. These dynamics started playing out in Argentina and Turkey in 2018, and there are concerns that other emerging markets similarly reliant on external financing may face similar pressures. Additionally, China has increasingly financed projects in developing countries, some of which, such as Pakistan, are starting to experience or exacerbating existing fiscal problems. Some analysts are concerned about whether such countries will be able to meet their financial obligations to China, and the implications if they are unable to do so. The 116 th Congress may monitor economic conditions in emerging markets and developing countries in terms of U.S. interests and implications for the role of the IMF. In terms of U.S. economic interests, U.S. economic exposure through trade, investment, and financial channels to emerging markets that faced the most significant pressures in 2018—Argentina and Turkey—is relatively limited. A broader crisis across emerging and developing markets could have more significant economic ramifications. Economic crises in emerging and developing countries could also have implications for U.S. foreign policy interests, depending on the specific countries in question. In terms of the IMF, Congress may monitor the IMF's role in responding to crises. With the United States as the IMF's largest shareholder, Congress may monitor in particular the size of and reforms attached to any IMF programs and the adequacy of IMF resources. Congress may also focus on the role of Chinese financing in countries approaching the IMF for assistance, including transparency on the size and terms of Chinese financing and burden sharing by China in any financial assistance package. Looking Forward Members of Congress exert significant influence over U.S. economic and trade policy and its implementation through their legislative, appropriations, and oversight roles. Given current debates, fundamental questions about the future direction of trade and international economic issues may be key areas of interest for the 116 th Congress. In engaging on these issues, Congress may evaluate the impact of Section 301, 232, and 201 tariffs on U.S. workers and firms, and consider legislation that alters the authority granted by Congress to the President to impose unilateral tariffs; consider implementing legislation for the USMCA, and conduct oversight of new bilateral trade negotiations with the EU, Japan, and UK; conduct oversight of the Trump Administration's policies at the WTO, including reform efforts; conduct oversight and take possible legislative action concerning a range of other trade issues, including U.S. trade relations with China and other major economies, as well as U.S. export and import policies and programs; consider legislation to reauthorize the U.S. Export-Import Bank, which expires on September 30, 2019; evaluate the implementation of major legislation passed during the 115 th Congress, including CFIUS and export control reforms, as well as the creation of a new U.S. International Development Finance Corporation as a successor to OPIC; examine U.S. leadership in discussions over international economic policy coordination at the G-7 and the G-20; consider legislation to adjust U.S. funding to the World Bank; and monitor major developments in financial markets, including the impact of other countries' exchange rate polices on the U.S. economy, high levels of debt in emerging markets, and the role of the U.S. dollar. U.S. trade and economic policy affects the interest of all Members of Congress and their constituents. Congressional actions on these issues can impact the health of the U.S. economy, the success of U.S. businesses and their workers, the standard of living of Americans, and U.S. geopolitical interests. Some of these issues may be highly contested, as Members of Congress and affected stakeholders have differing views on the benefits, costs, and role of U.S. trade policy. The dynamic nature of the global economy—including the increasingly interconnected nature of the global market, the growing influence of emerging markets, and the growing role of digital trade, among other factors—as well as the Trump Administration's reassessment of U.S. policies provide the backdrop for a potential robust and complex debate in the 116 th Congress over a range of trade and finance issues.

The U.S. Constitution grants authority to Congress to lay and collect duties and regulate foreign commerce. Congress exercises this authority in numerous ways, including through oversight of trade policy and consideration of legislation to implement trade agreements and authorize trade programs. Policy issues cover areas such as U.S. trade negotiations, U.S. trade and economic relations with specific regions and countries, international institutions focused on trade, tariff and nontariff barriers, worker dislocation due to trade liberalization, enforcement of trade laws and trade agreement commitments, import and export policies, international investment, economic sanctions, and other trade-related functions of the federal government. Congress also has authority over U.S. financial commitments to international financial institutions and oversight responsibilities for trade- and finance-related agencies of the U.S. government. Issues in the 116th Congress During his first two years in office, President Trump has focused on reevaluating many U.S. international trade and economic policies and relationships. The President's focus on these issues could continue over the next two years. Broad policy debates during the 116th Congress may include the impact of trade and trade agreements on the U.S. economy, including U.S. jobs; the causes and consequences of the U.S. trade deficit; the implications of technological developments for U.S. trade policy; and the intersection of economics and national security. Among many others, the potentially more prominent issues in this area that the 116th Congress may consider are the use and impact of unilateral tariffs imposed by the Trump Administration under various U.S. trade laws, as well as potential legislation that alters the authority granted by Congress to the President to do so; legislation to implement the proposed United States-Mexico-Canada Trade Agreement (USMCA), which would revise and modernize the North American Free Trade Agreement (NAFTA); the Administration's launch of bilateral trade negotiations with the European Union, Japan, and the United Kingdom, as well as key provisions in trade agreements, including on intellectual property rights, labor, the environment, and dispute settlement; U.S. engagement with the World Trade Organization (WTO), proposals for WTO reform, and the future direction of the multilateral trading system; U.S.-China trade relations, including investment issues, intellectual property rights protection, forced technology transfer, currency issues, and market access liberalization; the future of U.S.-Asia trade and economic relations, given President Trump's withdrawal of the United States from the proposed Trans-Pacific Partnership (TPP) and China's expanding Belt and Road Initiative; the Administration's use of quotas to achieve some of its trade objectives, and whether these actions represent a shift in U.S. policy towards "managed trade"; monitoring the implementation of legislation passed by the 115th Congress, including changes to the Committee on Foreign Investment in the United States (CIFUS) and export controls, as well as the creation of a new U.S. International Development Finance Corporation; re-authorization of the Export-Import Bank, the U.S. export credit agency that helps finance U.S. exports; oversight of international trade and finance policies to support foreign policy goals, including sanctions on Iran, North Korea, Russia, and other countries; shifts in U.S. leadership of international economic policy coordination at the Group of 7 (G-7) and the Group of 20 (G-20) under the Trump Administration; legislation to fund the Administration's commitment to increase U.S. contributions to the World Bank, as well as potential U.S.-led reforms to the institution; and major developments in financial markets, including the impact of other countries' exchange rate polices on the U.S. economy, high levels of debt in emerging markets, potential economic crises, and the role of the U.S. dollar in the global economy.

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B anks play a critical role in the United States economy, channeling money from savers to borrowers and facilitating productive investment. Among other things, banks provide loans to businesses, help individuals finance purchases of cars and homes, and offer services such as checking and savings accounts, debit cards, and ATMs. In addition to occupying a central role in the American economy, the banking industry is a perennial subject of political interest. While the nature of lawmakers' interest in bank regulation has shifted over time, most bank regulations fall into one of three general categories. First, banks must abide by a variety of safety-and-soundness requirements designed to minimize the risk of their failure and maintain macroeconomic stability. Second, banks must comply with consumer protection rules intended to deter abusive practices and provide consumers with complete information about financial products and services. Third, banks are subject to various reporting , recordkeeping , and anti-money laundering requirements designed to assist law enforcement in investigating criminal activity. The substantive content of these requirements remains the subject of intense debate. However, the division of regulatory authority over banks between the federal government and the states plays a key role in shaping that content. In some cases, federal law displaces (or "preempts") state bank regulations. In other cases, states are permitted to supplement federal regulations with different, sometimes stricter requirements. Because of its substantive implications, federal preemption has recently become a "flashpoint" in debates surrounding bank regulation, with one commentator observing that preemption is "[t]he issue at the center of most disputes between state and federal banking regulators." This report provides an overview of banking preemption. First, the report discusses general principles of federal preemption. Second, the report provides a brief history of the American "dual banking system." Third, the report discusses the Supreme Court's decision in Barnett Bank of Marion County, N.A. v. Nelson , where the Court held that federal law preempts state laws that "significantly interfere" with the powers of national banks. Fourth, the report reviews two Supreme Court decisions concerning the extent to which states may exercise "visitorial powers" over national banks. Fifth, the report discusses the Office of the Comptroller of the Currency's (OCC's) preemption rules and provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act concerning the preemption of state consumer protection laws. Finally, the report outlines a number of current issues in banking preemption, including (1) the extent to which non-banks can benefit from federal preemption of state usury laws, (2) the OCC's decision to grant special purpose national bank charters to financial technology (FinTech) companies, and (3) proposals to provide legal protections to banks serving marijuana businesses that comply with state law. Background Preemption Doctrine The doctrine of federal preemption is grounded in the Supremacy Clause of Article VI of the Constitution, which provides that "the Laws of the United States . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." The Supreme Court has explained that "under the Supremacy Clause . . . any state law, however clearly within a State's acknowledged power, which interferes with or is contrary to federal law, must yield." The Court has identified two general ways in which federal law can preempt state law. Federal law can expressly preempt state law when a federal statute or regulation contains explicit preemptive language—that is, where a clause in the relevant federal statute or regulation explicitly provides that federal law displaces certain categories of state law. The Employee Retirement Income Security Act, for example, contains a preemption clause providing that some of the Act's provisions "shall supersede any and all State laws insofar as they may now or hereafter relate to any [regulated] employee benefit plan." Federal law can also impliedly preempt state law "when Congress' command is . . . implicitly contained in" the relevant federal law's "structure and purpose." The Supreme Court has identified two subcategories of implied preemption. First, "field preemption" occurs "where [a] scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it." Second, "conflict preemption" occurs where "compliance with both federal and state regulations is a physical impossibility," or where state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." In Crosby v. National Foreign Trade Council , for example, the Court held that a federal law imposing sanctions on Burma impliedly preempted a Massachusetts law that prohibited state entities from doing business with Burma. The Court reached this conclusion after determining that the state statute posed an obstacle to the federal statute's purposes of (1) providing the President with "flexible" authority over sanctions policy, (2) limiting economic pressure against the Burmese government to the specific range reflected in the federal statute, and (3) granting the President the ability to speak for the country "with one voice." Some federal banking laws expressly preempt state law. Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980, for example, expressly grants federally insured state banks the right to charge the highest interest rate allowed by the states in which they are located, even when lending to borrowers in other states with stricter usury laws. Other federal banking laws impliedly preempt state law. Specifically, the Supreme Court has held that the National Bank Act impliedly preempts state laws that "significantly interfere" with the powers of national banks. However, all banking preemption issues are heavily influenced by the regulatory architecture surrounding the banking system. The following section of the report accordingly outlines the development of the American "dual banking system." The Origins and Evolution of the Dual Banking System The First and Second Banks of the United States Disputes over the federal government's role in regulating the financial system have been a feature of American politics since the country's inception. In 1791, Congress approved the creation of the First Bank of the United States over fierce opposition from many of the nation's leaders, including James Madison and Thomas Jefferson. In addition to accepting deposits and making loans to the public, the First Bank acted as the federal government's fiscal agent by collecting tax revenues, securing the government's funds, and paying the government's bills. The First Bank's proponents argued that the Bank would facilitate economic growth by extending credit to private businesses and establishing a uniform national currency in the form of the Bank's notes. By contrast, the First Bank's critics argued that the concentration of financial power in a single federal institution threatened state sovereignty and undermined the operations of state-chartered banks. This debate culminated in a victory for the First Bank's critics when Congress refused to renew the Bank's charter by a single vote in 1811. But disputes over the federal government's role in the banking system did not end with the demise of the First Bank. After the War of 1812 generated significant economic turmoil, Congress chartered the Second Bank of the United States for a twenty-year term in 1816. The Second Bank performed many of the same functions as the First Bank and attracted similar criticism, eventually becoming the target of populist fury led by President Andrew Jackson. In 1832, President Jackson vetoed legislation to extend the Second Bank's charter, leading to its demise in 1836. The Free Banking Era After the Second Bank's charter expired, bank regulation was wholly entrusted to the states. Inspired by the Jacksonian attack on concentrated economic power, a number of states dispensed with the requirement that banks obtain a charter via a special act of the state legislature. Instead, banks in these states could obtain charters from state banking authorities as long as they met certain general conditions. During this "Free Banking era," the country lacked a uniform national currency and relied instead on notes issued by state banks, which circulated at a discount from their face value that reflected the issuing bank's location and credit quality. In some states, so-called "wildcat banks" in remote areas issued notes back by minimal specie (gold or silver), assuming that noteholders would be unlikely to travel long distances to redeem them. These wildcat banks failed at a far higher rate than their urban rivals. Economic historians continue to debate the merits and drawbacks of the Free Banking era. According to the standard narrative, Free Banking was largely a failure, resulting in a large number of bank failures, financial instability, and inefficiencies that accompanied a heterogeneous currency. However, a number of revisionist scholars have questioned this assessment, arguing that despite the high rate of bank failures during the Free Banking Era, total losses to bank noteholders during the period were in fact relatively small. The Creation of the Dual Banking System Whatever its virtues and vices, the Free Banking Era came to an end during the Civil War. After the Treasury Department's efforts to finance the war by borrowing from Northern banks led to a shortage in specie, Congress enacted the National Currency Act in 1863 and the National Bank Act (NBA) in 1864. Under the Acts, banks were offered the opportunity to apply for a national charter from the newly created OCC, creating a "dual banking system" in which both the federal government and the states chartered and regulated banks. As a condition of obtaining a national charter, the Acts required banks to purchase United States government bonds, giving the federal government a new source of revenue to fight the war. Once national banks deposited those bonds with the federal government, they were allowed to issue national banknotes up to 90 percent of the market value of their bonds. These national banknotes functioned as a uniform national currency and gave the federal government significant control over the nation's money supply. The creation of a dual banking system was not intended by the proponents of the NBA, who assumed that all state-chartered banks would convert to national charters. In order to incentivize state-chartered banks to make this switch, Congress enacted a ten percent tax on state banknotes in 1865. But the tax did not accomplish its intended purpose. While the number of state-chartered banks fell significantly after the enactment of the NBA, state banks eventually skirted this tax by issuing paper checks in lieu of banknotes. And in the late 19th century, state banking authorities contributed to this regulatory arbitrage by offering their banks laxer regulations than the OCC. As a result, state-chartered banks have outnumbered national banks since 1895, and the dual banking system has survived to this day. Under the contemporary dual banking system, the OCC serves as the primary regulator of national banks and has broad powers to regulate their organization, examination, and operations. Section 24 of the NBA grants national banks a number of powers, including: (1) "discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt," (2) "receiving deposits," (3) "buying and selling exchange, coin, and bullion," (4) "loaning money on personal security," and (5) "obtaining, issuing, and circulating notes." Section 24 also grants national banks "all such incidental powers as shall be necessary to carry on the business of banking." Federal court and OCC decisions have identified roughly 80 activities that fall within the "incidental powers" of national banks, including the ability to broker annuities charge customers non-interest fees. By contrast, state banking authorities are the primary regulators of state-chartered banks. While state banking laws are by no means uniform, they typically provide state-chartered banks with the power to engage in activities similar to those listed in the NBA and activities that are "incidental to the business of banking." 20th Century Developments: The Federal Reserve, the Federal Deposit Insurance Corporation, and the Convergence of Federal and State Regulation While the OCC and state banking authorities figure prominently in the dual banking system, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) also play important roles in the bank regulatory regime. Congress created the Federal Reserve in 1913 in response to a 1907 banking panic that highlighted the need for a "lender of last resort" to replenish banks' reserves when they experience liquidity shortfalls. Today, the Federal Reserve also conducts the nation's monetary policy, manages certain elements of the country's payment systems, and regulates bank holding companies, financial market utilities, and banks that join the Federal Reserve System (FRS). The Federal Reserve Act requires all national banks to join the FRS and gives state banks the option of joining. The Federal Reserve accordingly serves as the principal federal regulator of state-chartered banks that become members of the FRS. The FDIC serves as the principal federal regulator of state-chartered banks that do not join the FRS. Congress created the FDIC in 1933 after a wave of bank failures generated a self-reinforcing cycle of "contagion," leading depositors to "run" from other banks and cause additional failures. In order to minimize the risk of these types of bank runs, the FDIC insures deposits at regulated institutions up to certain limits and regulates those institutions to ensure their safety and soundness. Because federal law requires national banks to obtain FDIC insurance and all states impose that same requirement on the banks they charter, the FDIC plays a key role in regulating the banking system. This complex regulatory architecture has resulted in "symbiotic system" with both state regulation of national banks and federal regulation of state banks. In the modern dual banking system, national banks are not wholly immune from generally applicable state laws, and state banks are not wholly immune from generally applicable federal laws. The Supreme Court has explained that "general state laws" concerning "the dealings and contracts of national banks" are valid as long as they do not "expressly conflict" with federal law, "frustrate the purpose for which national banks were created," or impair the ability of national banks to "discharge the duties imposed upon them" by federal law. National banks are accordingly "governed in their daily course of business far more by the laws of the State than of the nation" because their contracts, ability to acquire and transfer property, rights to collect debts, and liability to be sued for debts "are all based on State law." The OCC has attempted to synthesize the relevant case law as establishing a general principle that state regulations of national banks are valid as long as they "do not regulate the manner, content or extent of the activities authorized for national banks under federal law, but rather establish the legal infrastructure around the conduct of that business." Similarly, state-chartered banks are not wholly immune from federal law. Rather, state banks are subject to certain federal consumer protection, tax, and antidiscrimination laws, in addition to a range of Federal Reserve and FDIC regulations. A number of other legal developments have caused the regulatory treatment of national banks and state banks to converge. Beginning in the 1960s, many states passed so-called "wild card" statutes granting their banks the power to engage in any activities permitted for national banks. Statutes extending the powers of the Federal Reserve and the FDIC have also ensured competitive equality in the opposite direction. In 1980, Congress enacted legislation requiring all state-chartered banks—including those that do not join the FRS—to abide by reserve requirements set by the Federal Reserve, eliminating the competitive advantage conferred by lower state-law reserve requirements. Similarly, in 1991, Congress enacted legislation prohibiting FDIC-insured state banks from engaging as a principal in activities that are not permitted for national banks absent permission from the FDIC. Because all states require the banks they charter to obtain FDIC insurance, the legislation "had the ultimate effect of unifying the state and the federal banking systems." Finally, some federal statutes either explicitly or implicitly preempt state laws in ways that eliminate unequal regulatory treatment for national and state banks. In Marquette National Bank of Minneapolis v. First Omaha Services Corporation , the Supreme Court held that the NBA grants national banks the power to "export" the maximum interest rates allowed by their "home" states, even when lending to borrowers in other states with stricter usury laws. In that decision, the Court considered whether a national bank headquartered in Nebraska—which permitted banks to charge credit-card holders up to 18 percent interest per year on certain unpaid balances—could charge its Minnesota customers more than the 12 percent maximum interest allowable under Minnesota law. Specifically, the Court evaluated whether an NBA provision allowing national banks to charge interest rates allowed by the states "where the bank[s] [are] located" applies even when national banks extend credit to customers in other states with stricter usury laws. The Court held that the NBA provision indeed afforded national banks this power, concluding that the national bank was permitted to charge the maximum interest rate allowable under Nebraska law even when lending to Minnesota customers. Two years after the Marquette decision, Congress enacted legislation to extend the same power to federally insured state banks, preempting contrary state law and equalizing the regulatory treatment of national and state banks vis-à-vis "interest rate exportation." Barnett Bank and the Powers of National Banks While the regulatory treatment of national and state banks has accordingly converged, federal preemption nevertheless confers certain unique benefits on national banks. Under the Supreme Court's decision in Barnett Bank of Marion County, N.A. v. Nelson , federal laws that grant national banks the power to engage in specific activities impliedly preempt state laws that "significantly interfere" with the ability of national banks to engage in those activities. In Barnett Bank , the Court held that a federal law granting national banks the authority to sell insurance impliedly preempted a state law that prohibited banks from selling insurance, subject to certain exceptions. In reaching this conclusion, the Court explained that the state law posed an obstacle to the federal statute's purpose of granting national banks the authority to sell insurance "whether or not a State grants . . . similar approval." The Court inferred this purpose from the principle that "normally Congress would not want States to forbid, or to impair significantly, the exercise of a power that Congress explicitly granted." Lower courts have followed Barnett Bank 's rule that absent indications to the contrary, federal statutes and regulations that grant national banks the power to engage in specific activities preempt state laws that prohibit or "significantly interfere" with those activities. In Wells Fargo Bank of Texas N.A. v. James , for example, the Fifth Circuit held that an OCC rule granting national banks the power to "charge [their] customers non-interest charges and fees" preempted a state statute prohibiting banks from charging a fee for cashing checks in certain circumstances. Similarly, in Monroe Retail, Inc. v. RBS Citizens, N.A. , the Sixth Circuit held that this rule preempted state law conversion claims brought against a class of national banks based on fees they charged for processing garnishment orders. Specifically, the Sixth Circuit reasoned that under Barnett Bank , "the level of 'interference' that gives rise to preemption under the NBA is not very high," and that the relevant conversion claims "significantly interfere[d]" with national banks' ability to collect fees. Finally, the Ninth Circuit employed similar reasoning in Rose v. Chase Bank USA, N.A. , where it held that an NBA provision granting national banks the power to "loan money on personal security" preempted a state statute imposing various disclosure requirements on credit card issuers. In arriving at this conclusion, the Ninth Circuit reasoned that "[w]here . . . Congress has explicitly granted a power to a national bank without any indication that Congress intended for that power to be subject to local restriction, Congress is presumed to have intended to preempt state laws." Federal courts have also adopted broad interpretations of an NBA provision authorizing national banks to dismiss officers "at pleasure." In Schweikert v. Bank of America , N.A. , the Fourth Circuit held that this provision preempted a state law claim for wrongful discharge brought by a former officer of a national bank. Similarly, the Ninth Circuit has held that this provision preempted a claim brought by a former officer of a national bank for breach of an employment agreement, reasoning that "[a]n agreement which attempts to circumvent the complete discretion of a national bank's board of directors to terminate an officer at will is void as against [federal] public policy." Finally, in Wiersum v. U.S. Bank, N.A. , the Eleventh Circuit relied on Barnett Bank and the Fourth Circuit's reasoning in Schweikert to conclude that this "at pleasure" provision preempted a wrongful-termination claim brought by a former officer of a national bank under a state whistleblower statute. While federal courts have accordingly adopted expansive views of the circumstances in which state laws "significantly interfere" with national banks' powers, they have also recognized certain general limits on the preemptive scope of federal banking statutes and regulations. In Gutierrez v. Wells Fargo Bank, NA , for example, the Ninth Circuit held that federal banking regulations did not preempt a generally applicable state law prohibiting certain types of fraud. The Gutierrez litigation involved a national bank's use of a bookkeeping method known as "high-to-low" posting for debit-card transactions, whereby the bank posted large transactions to customers' accounts before small transactions. In Gutierrez , customers of the bank brought a variety of state law claims based on the theory that the bank adopted high-to-low posting for the sole purpose of maximizing the overdraft fees it could charge customers. In response, the bank argued that OCC regulations preempted the state law claims. The Ninth Circuit held that the OCC regulations preempted some, but not all, of the customers' claims. Specifically, the court held that an OCC regulation authorizing national banks to establish the method of calculating noninterest charges and fees "in [their] discretion" preempted claims premised on the theory that high-to-low posting was an unfair business practice. The court also held an OCC regulation providing that national banks may exercise their deposit-taking powers "without regard to state law limitations concerning . . . disclosure requirements" preempted the customers' claims that the bank failed to affirmatively disclose its use of high-to-low posting. However, the court held that federal law did not preempt claims that the bank defrauded its customers by making misleading statements about its posting method. Specifically, the court reasoned that these claims survived preemption because they were based on "a non-discriminating state law of general applicability that does not conflict with federal law, frustrate the purposes of the [NBA], or impair the efficiency of national banks to discharge their duties." In reaching this conclusion, the court rejected the argument that federal law preempted the customers' fraud claims because those claims "necessarily touche[d] on" national banks' authority to provide checking accounts. The court rejected this argument on the grounds that such an expansive preemption standard "would swallow all laws." The Ninth Circuit accordingly allowed the customers' fraud claims to proceed because they did not "significantly interfere" with national banks' ability to offer checking accounts. Watters, Cuomo, and Visitorial Powers over National Banks While the implications of Barnett Bank have been fleshed out most thoroughly in the lower federal courts, the Supreme Court has also applied that decision's reasoning in two cases concerning an NBA provision prohibiting states from exercising "visitorial powers" over national banks. In Watters v. Wachovia Bank, N.A. , the Court held that this provision—together with an OCC regulation providing that national banks may conduct authorized activities through operating subsidiaries—preempted state licensing, reporting, and visitation requirements for the operating subsidiaries of national banks. Specifically, the Court reasoned that the proper inquiry in analyzing whether state law interferes with federally permitted bank activities "focuse[s] on the exercise of a national bank's powers , not on its corporate structure." The Court accordingly concluded that the operating subsidiaries of national banks should be treated "as equivalent to national banks with respect to powers exercised under federal law." And because "duplicative state examination, supervision, and regulation would significantly burden" national banks' ability to engage in authorized activities, the Court held that those same regulatory burdens also unacceptably interfere with the ability of national bank subsidiaries to engage in those activities. However, as discussed later in this report, Congress has abrogated Watters 's holding that states may not examine or regulate the activities of national bank subsidiaries. While the Court adopted a broad view of preemption in Watters , it cabined the preemptive effect of the relevant NBA provision two years later in Cuomo v. C learing House Association, LLC. In that decision, the Court held that this NBA provision did not preempt an information request that the New York Attorney General (NYAG) sent to several national banks. Specifically, the NYAG had sent letters to several national banks requesting nonpublic information about their lending practices in order to determine whether the banks had violated state fair lending laws. In response, a banking trade group and the OCC argued that the relevant NBA provision—together with an OCC regulation interpreting that provision to mean that "[s]tate officials may not . . . prosecut[e] enforcement actions" against national banks, "except in limited circumstances authorized by federal law"—preempted the information request. The Supreme Court rejected this interpretation of the NBA's visitorial powers provision, drawing a distinction between (1) "supervision," or "the right to oversee corporate affairs," which qualify as "visitorial powers," and (2) "law enforcement." Because the Court concluded that the NYAG had issued the information requests in his "law enforcement" capacity—as opposed to "acting in the role of sovereign-as-supervisor"—it held that the NBA did not preempt the requests. The OCC's Preemption Rules As the above discussion makes clear, OCC regulations have figured prominently in litigation over the preemptive scope of federal banking law. While some commentators have contended that the NBA's text and legislature history implicitly provides the OCC with the authority to promulgate preemption rules, Congress formally recognized that the OCC has such authority in the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Riegle-Neal Act). Specifically, Section 114 of the Riegle-Neal Act provides that "[b]efore issuing any opinion letter or interpretive rule . . . that concludes that Federal law preempts the application to a national bank of any State law" concerning certain specified subjects, the OCC must give the public notice and an opportunity submit written comments. In the 1990s and early 2000s, the OCC exercised this authority in a number of interpretive letters and legal opinions. In these documents, the OCC took the position that federal law preempted state laws that limited the ability of national banks to: advertise; operate offices within a certain distance from state-chartered bank home offices; operate ATM machines; engage in fiduciary activities; finance automobile purchases; sell annuities; sell repossessed automobiles without an automobile dealer license; and conduct Internet auctions of certificates of deposit. The OCC's 2004 Preemption Rules In 2004, the OCC expanded upon these interpretive letters and legal opinions by issuing what one commentator has described as "sweeping" preemption rules. The OCC's 2004 preemption rules articulated a general preemption standard according to which "state laws that obstruct, impair, or condition a national bank's ability to fully exercise" its federally authorized powers "are not applicable to national banks" except "where made applicable by Federal law." This general standard accordingly expanded on Barnett Bank 's "significant interference" test in two ways. First, the OCC's 2004 standard omitted the intensifying phrase "significantly" from the Barnett Bank test. Second, the 2004 standard by its terms required that national banks be able to "fully" exercise their authorized powers—a phrase that does not appear in Barnett Bank . However, despite these facial differences with the Barnett Bank test, the OCC explained that it intended the phrase "obstruct, impair, or condition" to function "as the distillation of the various preemption constructs articulated by the Supreme Court, as recognized in Hines [ v. Davidowitz ] and Barnett Bank , and not as a replacement construct that is in any way inconsistent with those standards." Beyond this general preemption standard, the OCC's 2004 rules concluded that the NBA preempted certain categories of state laws. First, the rules provided that national banks "may make real estate loans . . . without regard to state law limitations concerning": licensing and registration (except for purposes of service of process); "[t]he ability of a creditor to require or obtain private mortgage insurance, insurance for other collateral, or other credit enhancements or risk mitigants, in furtherance of safe and sound banking practices"; loan-to-value ratios; terms of credit; "[t]he aggregate amount of funds that may be loaned upon the security of real estate"; escrow accounts; security property; access to and use of credit reports; disclosure and advertising; processing, origination, servicing, sale or purchase of, or investment or participation in, mortgages; disbursements and repayments; rates of interest on loans; due-on-sale clauses, with certain exceptions; and "[c]ovenants and restrictions that must be contained in a lease to qualify the leasehold as acceptable security for a real estate loan." Second, the rules provided that national banks "may make non-real estate loans without regard to state law limitations concerning" many of the same matters identified in the regulation concerning real estate lending. Finally, the rules provided that national banks "may exercise [their] deposit-taking powers without regard to state law limitations concerning": (1) abandoned and dormant accounts, (2) checking accounts, (3) disclosure requirements, (3) funds availability, (4) savings account orders of withdrawal, (5) state licensing or registration requirements (except for purposes of service of process), and (6) special purpose savings services. The OCC's 2004 rules also identified general categories of state law that the agency interpreted as surviving preemption. Specifically, the rules provided that the NBA does not preempt state laws that are consistent with federal law and involve (1) contracts, (2) torts, (3) criminal law, (4) rights to collect debts, (5) the acquisition and transfer of property, (5) taxation, (6) zoning, and, with respect to real estate lending, (7) certain homestead laws. According to the OCC's 2004 rules, such laws survive preemption so long as they "do not regulate the manner, content or extent of the activities authorized for national banks under federal law." Section 1044 of Dodd-Frank The OCC's 2004 preemption rules proved controversial. In 2008, the United States experienced a financial crisis caused in part by reckless subprime mortgage lending and a collapse in the real estate market. In the wake of the crisis, commentators debated the role that federal preemption of state predatory lending laws played in generating the pre-2008 housing bubble. Some commentators contended that national banks played a significant role in the predatory lending that preceded the crisis, and that federal preemption "effectively gut[ted] states' ability to legislate against predatory lending practices." By contrast, others rejected the contention that preemption played a significant role in causing the crisis, arguing that national banks and their subsidiaries accounted for only a small share of subprime mortgage lending. In 2010, Congress responded to concerns over federal preemption of state consumer protection laws in Section 1044 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Section 1044 provides that federal law preempts such laws only if: (A) application of a State consumer financial law would have a discriminatory effect on national banks, in comparison with the effect of the law on a bank chartered by that State; (B) in accordance with the legal standard for preemption in the decision of the Supreme Court of the United States in [ Barnett Bank ], the State consumer financial law prevents or significantly interferes with the exercise by the national bank of its powers; and any preemption determination under this subparagraph may be made by a court, or by regulation or order of the Comptroller of the Currency on a case-by-case basis, in accordance with applicable law; or (C) the State consumer financial law is preempted by a provision of Federal law other than title 62 of the Revised Statutes. Beyond this general preemption standard, Section 1044 contains a number of other provisions narrowing the OCC's preemption authority. First, Section 1044 provides that courts reviewing OCC preemption determinations should accord those determinations only Skidmore deference, under which courts assess an agency's interpretation of a statute "depending upon the thoroughness evident in the consideration of the agency, the validity of the reasoning of the agency, the consistency with other valid determinations made by the agency, and other factors which the court finds persuasive and relevant to its decision." Before the enactment of Dodd-Frank, certain courts had afforded OCC preemption determinations a more permissive form of deference known as Chevron deference, according to which courts defer to agency interpretations as long as they are reasonable. Section 1044 accordingly requires that courts take a less deferential posture toward OCC preemption determinations. Second, Section 1044 provides that no OCC preemption determination "shall be interpreted or applied so as to invalidate, or otherwise declare inapplicable to a national bank, the provision of the State consumer financial law, unless substantial evidence, made on the record of the proceeding, supports the specific finding regarding the preemption of such provision in accordance with the legal standard" established by Barnett Bank . This "substantial evidence" standard is often used in cases involving the Administrative Procedure Act, which provides that courts shall hold unlawful an agency's formal rules and other determinations made on the basis of a formal hearing when they are "unsupported by substantial evidence." The Supreme Court has explained that "substantial evidence" entails "more than a mere scintilla" of evidence, and requires "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Third, Section 1044 provides that the OCC shall (1) "periodically conduct a review, through public notice and comment, of each determination that a provision of Federal law preempts a State consumer financial law," (2) "conduct such review within the 5-year period after prescribing or otherwise issuing such determination, and at least once during each 5-year period thereafter," and (3) "[a]fter conducting the review of, and inspecting the comments made on, the determination, . . . publish a notice in the Federal Register announcing the decision to continue or rescind the determination or a proposal to amend the determination." Fourth, Section 1044 provides that the OCC must submit to Congress a report addressing its decision to continue, rescind, or propose an amendment to any preemption determination. Finally, Section 1044 abrogated the Supreme Court's decision in Watters , providing that "State consumer financial laws" apply to the subsidiaries and affiliates of national banks "to the same extent" that they apply "to any person, corporation, or other entity subject to such State law." The OCC's 2011 Preemption Rules After Dodd-Frank's enactment, commentators debated the meaning of Section 1044's general preemption standard. As discussed, Section 1044's preemption standard provides that federal law preempts "State consumer financial laws" that "prevent[] or significantly interfere[]" with the powers of national banks "in accordance with the legal standard for preemption in the decision of the Supreme Court of the United States in [ Barnett Bank ]." Some commentators have argued that this language simply codifies the Barnett Bank standard and was not intended to significantly modify pre-existing law. However, others have argued that Section 1044 was intended to pare back the OCC's 2004 preemption rules, which interpreted the NBA as preempting state laws that "obstruct, impair, or condition" the powers of national banks. According to this latter group of commentators, the OCC's "obstruct, impair, or condition" standard was more expansive than Barnett Bank 's "significant interference" test, meaning that a codification of that test would modify pre-existing law. In 2011, the OCC responded to the enactment of Section 1044 by issuing a notice of proposed rulemaking that reaffirmed its pre-Dodd-Frank preemption decisions while deleting the "obstruct, impair, or condition" language from its preemption rules. While the OCC acknowledged that this language "created ambiguities and misunderstandings regarding the preemption standard that it was intended to convey," it maintained that the specific preemption determinations reflected in its 2004 rules were nevertheless consistent with Barnett Bank . The OCC accordingly proposed reaffirming the specific preemption determinations in its 2004 rules while removing the "obstruct, impair, or condition" standard. The OCC's proposal quickly generated controversy. After the OCC issued the notice, the Treasury Department's General Counsel wrote a letter to the Comptroller of the Currency arguing that the OCC's proposed rule was "inconsistent with the plain language of [Dodd-Frank] and its legislative history." Specifically, the Treasury Department argued that interpreting Section 1044 as making no significant changes to existing preemption law conflicted with "basic canons of statutory construction" and legislative history indicating that the provision was intended to "revise[]" the OCC's preemption standard. Senator Carl Levin also expressed disagreement with the proposed rules in a letter to the Comptroller, arguing that "[i]f [Congress] had wanted to leave the OCC's purported federal preemptive powers unchanged, [it] could have engaged in a very simple exercise—do nothing." Other Senators expressed support for the OCC's proposed rules. Senators Tom Carper and Mark Warner criticized the Treasury Department's letter for "ignor[ing] the clear legislative history indicating that [Section 1044] is intended to codify the Barnett case." In responding to the Treasury Department's argument that Section 1044 was intended to "revise" the OCC's preemption standards, Senators Carper and Warner argued that the OCC's proposed rules would effectuate the contemplated revision by removing the potentially troublesome "obstruct, impair, or condition" language from the agency's 2004 rules. The OCC ultimately agreed with Senators Carper and Warner. In July 2011, the OCC published a final regulation revising its preemption rules. In the final rule, the OCC concluded that "the Dodd-Frank Act does not create a new, stand-alone 'prevents or significantly interferes' preemption standard, but, rather, incorporates the conflict preemption legal standard and the reasoning that supports it in the Supreme Court's Barnett decision." The OCC's 2011 rule also deleted the phrase "obstruct, impair, or condition" from the relevant preemption standard, noting that preemption determinations based "exclusively" on that language "would need to be reexamined to ascertain whether the determination is consistent with the Barnett conflict preemption analysis." However, the rule indicated that the OCC had not identified any preemption determinations that in fact relied "exclusively" on the relevant language. The final rule also noted that all future OCC preemption determinations would be subject to Section 1044's requirement concerning "case-by-case" determinations. Since the enactment of Dodd-Frank, a number of courts have interpreted Section 1044 as codifying the Barnett Bank standard. Some courts have accordingly concluded that Barnett Bank demarcates the boundaries of the OCC's 2011 preemption rules, reasoning that those rules do not preempt any state laws that would survive preemption under the Barnett Bank test. One court has also addressed the appropriate level of judicial deference towards the OCC's 2011 preemption determinations. As discussed, Section 1044 provides that courts "shall" assess OCC preemption determinations "depending upon the thoroughness evident in the consideration of the agency, the validity of the reasoning of the agency, the consistency with other valid determinations made by the agency, and other factors which the court finds persuasive and relevant to its decision"—a standard commonly known as " Skidmore deference." In 2018, the Ninth Circuit concluded that the OCC's 2011 preemption determinations are "entitled to little, if any, deference" under Skidmore . Specifically, the Ninth Circuit reasoned that because the OCC's 2011 preemption determinations represent the agency's "articulation of its legal analysis" under Barnett Bank (as opposed to being grounded in expert factual findings), those determinations would not warrant significant deference even in the absence of Section 1044. Whether other federal circuit courts will follow the Ninth Circuit in affording minimal deference to the OCC's 2011 preemption rules remains to be seen. Current Issues in Banking Preemption As the debates over Section 1044 of Dodd-Frank make clear, a number of banking preemption issues remain the subject of active debate. This final section of the report discusses three additional current issues involving banking preemption and related federalism questions. Interest Rate Exportation and Non-Banks A number of recent judicial decisions have generated debate over the circumstances in which non-bank financial companies can benefit from banks' ability to "export" the maximum interest rates of their "home" states. As discussed, the Supreme Court has held that national banks may charge any interest rate allowable under the laws of their home states even when lending to borrowers in other states with stricter usury laws. After this decision, Congress extended the power to export maximum interest rates to federally insured state banks. Recently, courts have grappled with whether this exportation power extends to non-bank financial companies and debt collectors that purchase loans originated by federally insured banks. That is, courts have addressed the circumstances in which loans originated by federally insured banks remain subject to the usury laws of the banks' home states even when the loans are (1) made to borrowers in other states with stricter usury laws, and (2) subsequently purchased by non-banks, which do not possess the exportation power when they originate loans themselves. Madden and the "Valid When Made" Doctrine A number of courts have concluded that in certain contexts, a loan that is non-usurious when originated remains non-usurious irrespective of the identity of its subsequent purchasers—a principle that some commentators have labeled the "valid when made" doctrine. However, in 2015, the Second Circuit rejected the application of this rule in Madden v. Midland Funding , holding that non-bank debt collectors that had purchased debt originated by a national bank could not benefit from the bank's exportation power. In Madden , a New York resident brought a putative class action under New York usury law against debt collectors that had purchased her credit card debt from a Delaware-based national bank. In response, the debt collectors argued that federal law preempted the New York usury claims because the credit card debt had been originated by a Delaware-based national bank and was not usurious under Delaware law. The Second Circuit rejected this argument, reasoning that the application of New York usury law to the debt collectors did not "significantly interfere" with the national bank's powers under Barnett Bank . Specifically, the court reasoned that because the debt collectors were not national banks and were not acting "on behalf of" a national bank, the New York usury claims did not interfere with the national bank's power to export the maximum interest rates of its home state. The Second Circuit's decision in Madden has generated significant debate. In an amicus brief supporting the debt collectors' petition for re-hearing before the Second Circuit, industry groups argued that the decision threatened to seriously disrupt lending markets. Specifically, these groups argued that the court's decision would "significantly impair" banks' ability to manage their risk by selling loans in secondary credit markets—a result that would ultimately inhibit their capacity to originate loans. Similarly, in an amicus brief submitted to the Supreme Court, the OCC and the Office of the Solicitor General (OSG) argued that the Second Circuit's decision was "incorrect," reasoning that "[a] national bank's federal right to charge interest up to the rate allowed by [the NBA] would be significantly impaired if [a] national bank's assignee could not continue to charge that rate." In response, the plaintiff in Madden argued that the Second Circuit's decision is unlikely to significantly affect credit markets. Specifically, the Madden plaintiff argued that the court's decision will not disrupt credit markets because non-banks that purchase loans originated by banks retain the right to collect the balances of those loans within applicable state law usury limits. While the Second Circuit ultimately denied the debt collectors' petition for re-hearing and the Supreme Court denied their petition for a writ of certiorari, the Madden decision has attracted congressional interest. The Financial CHOICE Act—comprehensive regulatory reform legislation that passed the House of Representatives in June 2017 but did not become law—would have codified the "valid when made" doctrine and abrogated Madden . A more limited bill directed solely at codifying the "valid when made" doctrine ( H.R. 3299 ) also passed the House in February 2018 but did not become law. Echoing the arguments made by industry groups, the bill's sponsor contended that the Second Circuit's decision will harm credit markets and impede financial innovation. By contrast, the bill's critics argued that it would facilitate predatory lending by allowing non-banks to evade state usury laws. These proposals have not been re-introduced in the 116th Congress. The "True Lender" Doctrine In a number of cases involving the scope of the exportation doctrine, non-bank financial companies have played a more active role in the origination process than the debt collectors in Madden . Specifically, a number of these cases have involved arrangements in which a non-bank financial company solicits borrowers, directs a partner bank to originate a high-interest loan, and purchases the loan from the bank shortly after origination in order to benefit from the bank's exportation power. Some courts have held that non-banks employing these so-called "rent-a-charter" schemes are not eligible for federal preemption, reasoning that preemption depends on a transaction's economic realities rather than its formal characteristics. Specifically, these courts have concluded that non-banks do not assume their partner banks' exportation power when the economic realities surrounding a transaction indicate that the non-banks are the "true lenders." According to this "true lender" doctrine, non-banks that have established these types of relationships qualify as the "true lenders" when they possess the "predominant economic interest" in the relevant loans when the loans are originated. In these circumstances, some courts have concluded that the non-banks are not entitled to the benefits of federal preemption. Like the Second Circuit's decision in Madden , these "true lender" decisions have attracted Congress's attention. In the 115th Congress, H.R. 4439 would have abrogated this line of decisions by making clear that a loan's originator is always the "true lender" for purposes of the exportation doctrine. The bill's supporters argued that the "true lender" decisions threaten to undermine partnerships between banks and FinTech companies —a broad category of businesses offering digital financial products that some commentators have hailed for their innovative potential. The bill's opponents, by contrast, contended that the legislation would allow non-banks to circumvent state usury laws and questioned the value of bank-FinTech partnerships designed with that purpose in mind. H.R. 4439 was referred to the House Committee on Financial Services during the 115th Congress but has not been re-introduced in the 116th Congress. Special Purpose National Bank Charters for FinTech Companies Congress is not alone in considering whether to extend the benefits of federal preemption to FinTech companies. In July 2018, the OCC issued a Policy Statement announcing that it will begin accepting applications for "special purpose national bank charters" (SPNB charters) from FinTech companies that are engaged in "the business of banking" but do not take deposits. In the Policy Statement, the OCC explained that the NBA provides it "broad authority" to grant national bank charters to institutions that engage in the "business of banking"—a category that includes paying checks and lending money. The OCC accordingly concluded that it has the statutory authority to grant national bank charters to FinTech companies that engage in these core banking activities. According to the OCC, SPNB charters will help foster responsible innovation and promote regulatory consistency between FinTech companies and traditional banks. The OCC further explained that it will use its existing chartering standards and procedures to evaluate applications for SPNB charters, and that FinTech companies that receive such charters "will be supervised like similarly situated national banks, including with respect to capital, liquidity, and risk management." While the OCC touted the ability of SPNB charters to "level the playing field with regulated institutions" without explicitly mentioning federal preemption, commentators have observed that preemption represents "the central benefit" offered by such charters. The OCC's decision to accept applications for national bank charters from FinTech companies has generated debate. Critics of the policy have contended that FinTech companies' interest in such charters "is virtually entirely about avoiding state consumer protection laws," and that "[f]ederal chartering should not be a move to eviscerate" such laws. State regulators have also filed lawsuits challenging the OCC's authority to charter non-depository FinTech companies. In the spring of 2017, the Conference of State Bank Supervisors (CSBS) and the New York Department of Financial Services (NYDFS) responded to an early OCC proposal to charter FinTech companies by filing suits in the U.S. District Court for the District of Columbia and the U.S. District Court for the Southern District of New York, respectively. The CSBS and NYDFS made substantially similar claims, arguing that (1) the NBA does not give the OCC the authority to charter non-depository institutions, (2) the Administrative Procedure Act requires the OCC to follow notice-and-comment rulemaking procedures before issuing SPNBs, (3) the OCC's decision was arbitrary and capricious, and (4) the OCC's decision violated the Tenth Amendment by invading states' sovereign powers. Both district courts dismissed the lawsuits on jurisdictional grounds, reasoning that the organizations failed to identify any imminent injuries to their members and that the case was not ripe for resolution because the OCC had not issued any SPNBs. However, after the OCC issued its Policy Statement in July 2018, both organizations filed new lawsuits that remain pending. Banking and the Marijuana Industry Policymakers have also turned their attention to how federal law affects traditional banks' responses to changes in state law—namely, state-level efforts to legalize marijuana. While a number of states have legalized marijuana for medical or recreational use, federal law criminalizes the drug's sale, distribution, and possession, in addition to the aiding and abetting of such activities. Federal law also criminalizes money laundering, making it unlawful to: conduct a financial transaction involving the proceeds of a specified unlawful activity —a category that includes the sale or distribution of marijuana—"knowing that the transaction is designed . . . to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds . . . or to avoid a transaction reporting requirement under State or Federal law"; or knowingly engage in a monetary transaction in criminally derived property of a value greater than $10,000 that is derived from specified unlawful activity . Finally, the Bank Secrecy Act (BSA) and associated regulations require that financial institutions report illegal and suspicious activities to the Financial Crimes Enforcement Network (FinCEN) and maintain programs designed to prevent money laundering. Federal banking regulators have broad powers to discipline banks for violations of these laws. The Federal Reserve regularly conducts examinations of member banks that include evaluations of BSA compliance, and the FDIC has the authority to terminate a bank's deposit insurance for violations of law. Because of marijuana's status under federal law, many banks have refused to serve marijuana businesses even when those businesses operate in compliance with state law. While some small banks have offered accounts to marijuana businesses, an estimated 70 percent of marijuana businesses remain unbanked. Because of this inability to access the banking system, many marijuana businesses reportedly operate entirely in cash, raising concerns about tax collection and public safety. These perceived problems have attracted congressional interest. In March 2019, the House Committee on Financial Services approved legislation intended to minimize the legal risks associated with banking the marijuana industry. The proposed bill— H.R. 1595 , the SAFE Banking Act of 2019—would create a "safe harbor" under which federal banking regulators could not take various adverse actions against depository institutions for serving marijuana businesses that comply with applicable state laws ("cannabis-related legitimate businesses"). The legislation would also provide that for purposes of federal anti-money laundering law, the proceeds from transactions conducted by cannabis-related legitimate businesses shall not qualify as the proceeds of unlawful activity "solely because the transaction[s] [were] conducted by a cannabis-related legitimate business." Finally, H.R. 1595 would require FinCEN to issue guidance concerning the preparation of suspicious activity reports for cannabis-related legitimate businesses that is "consistent with the purpose and intent" of the bill and "does not significantly inhibit the provision of financial services" to cannabis-related legitimate businesses. Variations on some of the SAFE Banking Act's provisions have been incorporated into broader marijuana-related legislation. The Responsibly Addressing Marijuana Policy Gap Act of 2019 ( S. 421 and H.R. 1119 ) would eliminate federal criminal penalties for persons who engage in various marijuana-related activities in compliance with state law and create a "safe harbor" from adverse regulatory action for depository institutions that serve marijuana businesses. Another Senate bill— S. 1028 , the STATES Act—would provide that the Controlled Substances Act's (CSA's) marijuana-related provisions do not apply to persons acting in compliance with state marijuana regulation s, subject to certain exceptions. While the bill does not have the type of "safe harbor" for depository institutions in H.R. 1595 , S. 421 , or H.R. 1119 , it contains a "Rule of Construction" clarifying that conduct in compliance with the legislation shall not serve as the basis for federal money laundering charges or criminal forfeiture under the CSA.

Banks play a critical role in the United States economy, channeling money from savers to borrowers and facilitating productive investment. While the nature of lawmakers' interest in bank regulation has shifted over time, most bank regulations fall into one of three general categories. First, banks must abide by a variety of safety-and-soundness requirements designed to minimize the risk of their failure and maintain macroeconomic stability. Second, banks must comply with consumer protection rules intended to deter abusive practices and provide consumers with complete information about financial products and services. Third, banks are subject to various reporting, recordkeeping, and anti-money laundering requirements designed to assist law enforcement in investigating criminal activity. The substantive content of these requirements remains the subject of intense debate. However, the division of regulatory authority over banks between the federal government and the states plays a key role in shaping that content. In some cases, federal law displaces (or "preempts") state bank regulations. In other cases, states are permitted to supplement federal regulations with different, sometimes stricter requirements. Because of its substantive implications, federal preemption has recently become a flashpoint in debates surrounding bank regulation. In the American "dual banking system," banks can apply for a national charter from the Office of the Comptroller of the Currency (OCC) or a state charter from a state's banking authority. A bank's choice of chartering authority is also a choice of primary regulator, as the OCC serves as the primary regulator of national banks and state regulatory agencies serve as the primary regulators of state-chartered banks. However, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) also play an important role in bank regulation. The Federal Reserve supervises all national banks and state-chartered banks that become members of the Federal Reserve System (FRS), while the FDIC supervises all state banks that do not become members of the FRS. This complex regulatory architecture has resulted in a "symbiotic system" with both federal regulation of state banks and state regulation of national banks. In the modern dual banking system, national banks are often subject to generally applicable state laws, and state banks are subject to both generally applicable federal laws and regulations imposed by their federal regulators. The evolution of this system during the 20th century caused the regulation of national banks and state banks to converge in a number of important ways. However, despite this convergence, federal preemption provides national banks with certain unique advantages. In Barnett Bank of Marion County, N.A. v. Nelson, the Supreme Court held that the National Bank Act (NBA) preempts state laws that "significantly interfere" with the powers of national banks. The Court has also issued two decisions on the preemptive scope of a provision of the NBA limiting states' "visitorial powers" over national banks. Finally, OCC rules have taken a broad view of the preemptive effects of the NBA, limiting the ways in which states can regulate national banks. Courts, regulators, and legislators have recently confronted a number of issues involving banking preemption and related federalism questions. Specifically, Congress has considered legislation that would overturn a line of judicial decisions concerning the circumstances in which non-banks can benefit from federal preemption of state usury laws. The OCC has also announced its intention to grant national bank charters to certain financial technology (FinTech) companies—a decision that is currently being litigated. Finally, Congress has recently turned its attention to the banking industry's response to state efforts to legalize and regulate marijuana.

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Introduction In the Federalist Papers , James Madison noted the importance of participation by upstanding citizens at all levels of government as a condition for legitimate governance. "The aim of every political constitution is, or ought to be, first to obtain for rulers men who possess most wisdom to discern, and most virtue to pursue, the common good of the society; and in the next place, to take the most effectual precautions for keeping them virtuous whilst they continue to hold their public trust." To ensure that Members uphold high standards, the Constitution provides each house of Congress sole authority to establish rules, judge membership requirements, and punish and expel its Members. Article I, Section 5, clause 1 provides that "Each House shall be the Judge of the Elections, Returns, and Qualifications of its own Members." In addition, clause 2 provides that "Each House may determine the Rules of its Proceedings, punish its Members for disorderly Behaviour, and, with the Concurrence of two thirds, expel a Member." Congress used their ability to establish ethics rules and to punish individual Members sparingly in the 18 th and 19 th centuries. As former Senate historian Richard Baker observed on the subject of congressional ethics, "[f]or nearly two centuries, a simple and informal code of behavior existed. Prevailing norms of general decency served as the chief determinants of proper legislative conduct. " During that time, Congress often dealt with potential ethics issues "on a case-by-case basis, only with the most obvious acts of wrongdoing, those clearly 'inconsistent with the trust and duty of a member. '" Events in the 1960s, including the investigation of Representative Adam Clayton Powell's alleged misuse of Education and Labor Committee funds, prompted a special subcommittee of the Committee on House Administration to investigate the allegations and the potential creation of an ethics committee to establish a code of conduct for the House of Representatives. This report examines the history and evolution of the House Committee on Ethics, including the committee's jurisdiction and investigative procedure. It does not deal with changes to federal or state criminal law or with criminal pros ecutions of Members of Congress or with the specifics of disciplinary cases in the House. Creating a Permanent Ethics Committee Prior to the creation of the House Committee on Standards of Official Conduct in the 90 th Congress (1967-1968), no uniform mechanism existed for self-discipline in the House of Representatives. Congress, however, had previously attempted to create an ethical framework for House Members and employees. In 1958, Congress established the first Code of Ethics for Government Service. Initially proposed in 1951 by Representative Charles Bennett, the Code of Ethics was adopted as a result of a House investigation of presidential chief of staff Sherman Adams, who was alleged to have received gifts from an industrialist being investigated by the Federal Trade Commission. The Code of Ethics for Government Service standards continue to be recognized as ethical guidance in the House and Senate. They are, however, not legally binding because the code was adopted by congressional resolution, not by law. In the period preceding the creation of the Committee on Standards of Official Conduct in 1967, investigations into alleged wrongdoing by Members and staff of the House were dealt with in an ad-hoc fashion. There were, however, attempts to create a more uniform system to investigate and discipline Members and staff. For example, during hearings before the Joint Committee on the Organization of Congress in 1965, considerable testimony was presented on the ethical conduct of Members, and the need for House and Senate codes of conduct, financial disclosure regulations, and a House Ethics Committee (the Senate had created one in 1964). In its final report, the joint committee called for the creation of a Committee on Standards and Conduct in the House. Select Committee on Standards and Conduct On September 2, 1966, following publicized allegations of misconduct by House Education and Labor Committee Chair Adam Clayton Powell, Representative Charles Bennett introduced H.Res. 1013 to create a Select Committee on Standards and Conduct, which was referred to the Committee on Rules. On September 7, the Committee on Rules reported the resolution "with the recommendation that the resolution do pass." On October 19, the House debated, amended, and agreed to H.Res. 1013, creating the select committee. As adopted, the resolution created a 12-member panel, with 6 majority and 6 minority Members appointed by the Speaker of the House. The Select Committee was charged with two duties. They were to (1) recommend to the House, by report or resolution such additional rules or regulations as the Select Committee shall determine to be necessary or desirable to insure proper standards of conduct by Members of the House and by officers or employees of the House, in the performance of their duties and the discharge of their responsibilities; and (2) report violations, by a majority vote of the Select Committee, of any law to the proper Federal and State authorities. Pursuant to H.Res. 1013, the report on the select committee's activities at the end of the 89 th Congress (1965-1966) included recommendations for House action on ethics-related matters. Because the select committee only existed between October and December 1966, the committee concluded that they could not "prudently recommend changes in existing provisions of law or recommend new ones at this time." Instead, they recommended that (1) the committee be continued as a select committee in the 90 th Congress; (2) legislation introduced in the 90 th Congress on standards and conduct should be referred to the select committee; and (3) Members of the House should be asked for suggested changes in existing statutes. In addition, the report included draft language for the continuation of the select committee. Committee on Standards of Official Conduct (Now Committee on Ethics) In the first session of the 90 th Congress (1967-1966), more than 100 resolutions were introduced to create a Committee on Standards of Official Conduct. One of these proposals, H.Res. 18, was introduced on January 10, 1967, by Representative Charles Bennett, chair of the Select Committee on Standards and Conduct in the 89 th Congress. H.Res. 18 was referred to the Committee on Rules, which held a series of hearings on this, and other similar resolutions, in February and March 1967. During the hearings, the Committee on Rules heard from numerous Members of the House and considered proposals to create both a select and a standing committee on standards and conduct. Representative Bennett, the sponsor of H.Res. 18, argued that a standards committee would be essential to aid the House in dealing with issues of perceived and actual impropriety by Members. He testified The public image of Congress demands that the House establish a full, working, thoughtful committee working solely in the field of standards and conduct. Sixty percent of those answering a recent Gallup poll said they believe the misuse of Government funds by Congressmen is fairly common. Of course, we know that such abuses are, in fact, not common, but we have seen a number of such damaging polls showing the people's lack of faith in the integrity of Congress. There is a need for a vehicle in the House to achieve and maintain the highest possible standards by statute and enforcement thereof. This can only be done after through study by a committee whose primary interests are in the field of ethics. On April 6, 1967, following its hearings on H.Res. 18 and other similar resolutions, the House Rules Committee reported H.Res. 418, "to establish a standing committee to be known as the Committee on Standards of Official Conduct." On April 13, the House debated and passed H.Res. 418 by a vote of 400 to zero. The resolution created a bipartisan 12-member standing committee with the initial mission to make "recommendations for its jurisdiction" and to "recommend as soon as practicable to the House of Representatives such changes in laws, rules, and regulations as the committee deems necessary to establish and enforce standards of official conduct for Members, officers and employees of the House." The first members of the committee were appointed on May 1 when H.Res. 457 (majority members) and H.Res. 458 (minority members) were agreed to by the House. The Committee on Standards of Official Conduct (Committee on Standards) held its first hearings in the summer and fall of 1967. The hearings were designed to help the committee meet the requirements of H.Res. 418 "to write, and recommend to the House, a set of standards for the official conduct of the Chambers' Members and employees." In March 1968, the committee issued a report summarizing their activities and recommending continuation of the committee as a select committee; changes in the committee's jurisdiction and powers; creation of a Code of Official Conduct and financial disclosure rules for Members, officers, and employees of the House; establishment of standardized controls by the Committee on House Administration over committees using counterpart funds (foreign currencies held by U.S. embassies that can only be spent in the country of origin); a prompt review of the Federal Corrupt Practices Act (reporting of campaign expenditures) by the House; and compliance by House candidates with applicable provisions of the proposed Code of Official Conduct. On March 14, 1968, Representative Melvin Price, chair of the Committee on Standards, introduced H.Res. 1099 "to continue the Committee on Standards of Official Conduct as a permanent standing committee of the House of Representatives." The resolution was referred to the Committee on Rules, and was reported with amendments on April 1. On April 3, the Committee on Rules reported a special rule (H.Res. 1119) for the consideration of H.Res. 1099. Following adoption of H.Res. 1119, debate on H.Res. 1099 proceeded. In his opening statement, Representative Price discussed the reasons for amending H.Res. 418 and making the committee a permanent, standing committee of the House. The reason for amending that original resolution, as opposed to offering a completely new resolution, is that the committee felt it would be advantageous—from the standpoints of continuity and orderliness—to extend the life of the existing committee rather than constitute a new committee. Following the adoption of several amendments, H.Res. 1099 was agreed to by a vote of 406 to 1. The resolution provided for (1) continuation of the Committee on Standards as a permanent standing House committee; (2) enumeration of the committee's jurisdiction and powers; (3) creation of the first House Code of Official Conduct (Rule XLIII); and (4) adoption of the first financial disclosure requirements for Members, officers, and designated employees (Rule XLIV). In the 112 th Congress, the House renamed the Committee on Standards of Official Conduct to the Committee on Ethics. The committee will be referred to as the Committee on Ethics for the remainder of this report. Jurisdiction In addition to establishing the Committee on Ethics as a permanent standing committee, H.Res. 1099 formalized the committee's jurisdiction. The History of the United States House of Representatives, 1789-1994 , published by the Committee on House Administration in the 103 rd Congress (1993-1994), summarized four major jurisdictional areas for the Committee on Ethics. Since 1968, the House has authorized and directed the Ethics Committee to: (1) recommend to the House legislative or administrative actions deemed necessary for establishing or enforcing standards of conduct; (2) investigate allegations of violations of the Code of Official Conduct or any law, rule, regulation, or other standard of conduct applicable to Members, officers, and employees in the performance of official duties; and after notice and a hearing, recommend to the House whatever action or sanctions it deems appropriate; (3) subject to House approval, report to appropriate state and federal authorities about evidence of violations of law by Members, officers, and employees in the performance of official duties; and (4) issue and publish advisory opinions for the guidance of Members, officers, and employees. The committee was also provided with jurisdiction over the Code of Official Conduct and financial disclosure. In addition to establishing the committee's jurisdiction, H.Res. 1099, and subsequent amendments, imposed several constraints on the Committee on Ethics. These limits, except where noted, are still in effect in House Rule XI, clause 3(a). They stipulate that there must be an affirmative vote of seven out of 12 committee members for the issuance of any report, resolution, recommendation, or advisory opinion relating to the official conduct of a Member, officer, or employee or the investigation of such conduct; investigations, other than those initiated by the committee, can be undertaken only upon receipt of a complaint, in writing and under oath, from a Member of the House, or an individual not a Member if the committee finds that such complaint has been submitted by the individual to no fewer than three Members who have refused in writing to transmit the complaint to the committee; investigations of alleged violations of any law or rule that was not in effect at the time of the alleged violation are prohibited; and members of the committee are not eligible to participate in any committee proceeding relating to their official conduct. H.Res. 1099 also empowered the committee to hold hearings, receive testimony, and issue subpoenas in the course of conducting an investigation. When discussing the jurisdiction of House committees, it is important to note that the House Parliamentarian is the sole definitive authority on questions relating to the jurisdiction of the chamber's committees and should be consulted for a formal opinion on any specific procedural question. Changes in Jurisdiction Since the establishment of the Committee on Ethics as a permanent standing committee, the committee's jurisdiction has been amended a number of times. Each of these changes "necessitated following experience under prior rules" and reflected the changing nature of ethics enforcement in the House. Lobbying and Campaign Finance On May 19, 1970, Representative William Colmer introduced H.Res. 1031 to amend then clause 19 of Rule XI of the House "with respect of lobbying practices and political campaign contributions affecting the House of Representatives." The Committee on Rules reported the resolution on June 11, and it was brought up for debate on July 8. Following debate, the resolution was adopted to give the Committee on Ethics formal jurisdiction over lobbying activities as well as those involving the raising, reporting, and use of campaign funds. Authority over campaign contributions, lobbying, and financial disclosure have subsequently been removed from the committee's jurisdiction. In the 94 th Congress (1975-1976), the House transferred jurisdiction over campaign contributions to the Committee on House Administration as part of the rules package. In the 95 th Congress (1977-1978), the House transferred jurisdiction over lobbying to the Committee on the Judiciary and jurisdiction over measures relating to financial disclosure was reassigned to the Committee on Rules. Rules of Conduct On March 2, 1977, the House adopted H.Res. 287 , which contained several amendments and additions to the House rules of conduct. Included were the first requirement that financial disclosure be made public; limits on outside earned income and unofficial office accounts; and further restrictions on the acceptance of gifts, the use of the franking privilege, and limits on foreign travel. Pursuant to H.Res. 287 , the Committee on Ethics assumed jurisdiction over these additional areas and was authorized to maintain the public financial disclosure reports filed by Members, officers, and designated employees. In addition, the House established a Select Committee on Ethics, chaired by Representative L. Richardson Preyer, to assist the Committee on Ethics with the implementation of the new rules. Additional Authorities On July 14, 1977, the House agreed to H.Res. 658 and established the Permanent Select Committee on Intelligence. The resolution also authorized the Committee on Ethics to "investigate an unauthorized disclosure of intelligence or intelligence-related information by a Member, officer, or employee of the House in violation of paragraph (c) and report to the House concerning any allegation which it finds to be substantiated." In August 1977, the Committee on Ethics was designated as the "employing agency" for the House. Pursuant to P.L. 95-105 , the Foreign Relations Authorization Act for FY 1978, the committee was authorized to issue regulations governing the acceptance by House Members, personnel, and employees of gifts, trips, and decorations from foreign governments. Financial Disclosure In 1978, the Ethics in Government Act began requiring government-wide public financial disclosure requirements. Subsequently, with the adoption of the House rules for the 96 th Congress (1979-1980), the provisions of the House financial disclosure rule were replaced by those of the Ethics Act and incorporated into House rules. This act delegated to the Committee on Ethics review, interpretation, and compliance responsibilities for the public financial disclosure reports that henceforth were to be filed with the Clerk of the House. On April 4, 2012, the STOCK Act (Stop Trading on Congressional Knowledge Act) was passed to affirm that no exemption exists from "insider trading" laws and regulations for Members of Congress and congressional employees. Pursuant to the act, the House Committee on Ethics (and the Senate Select Committee on Ethics) is required to issue interpretive guidance of the relevant rules of each chamber, including rules on conflicts of interest and gifts, clarifying that a Member of Congress and an employee of Congress may not use nonpublic information derived from such person's position as a Member of Congress or employee of Congress or gained from the performance of such person's official responsibilities as a means for making a private profit. On August 17, 2012, the committee issued a "pink sheet" on the implementation of the STOCK Act that clarified who is required to file, what transactions must be reported, the requirements for participating in a stock's initial public offering (IPO), waivers and exclusions to the act, when transactions must be reported, how and where transactions should be reported, late filing fees, penalties for failing to file and filing false information, and how to get assistance from the committee. Ethics Reform Act of 1989 The Ethics Reform Act of 1989 amended the Ethics in Government Act of 1978 and included a variety of ethics and pay reforms for the three branches of government. Enforcement of these changes further expanded the jurisdiction of the Committee on Ethics. Changes made pursuant to the Ethics Reform Act of 1989 included enforcement of the act's ban on honoraria, limits on outside earned income, and restrictions on the acceptance of gifts. The committee was also given the responsibility for consideration of any requests for a written waiver of the limits imposed by the House gift ban rule. Procedures Procedures for the Committee on Ethics are set through House Rule XI, clause 3 and are further specified in the committee's rules. Since its creation in 1967, several changes have been made to the Committee on Ethics' procedures. Change to the committee's procedures can be divided into eight broad time periods or categories: changes in the 1970s, the Ethics Reform Act of 1989, the Ethics Reform Task Force of 1997, 109 th Congress changes, 110 th Congress changes, 113 th Congress changes, 114 th Congress changes, and the creation of the Office of Congressional Ethics in 2008. No changes were made to House ethics procedures in the 111 th or 112 th Congresses. Changes in the 1970s During the first years of the Committee on Ethics many adjustments were made to the procedural operations of the committee. While some of the changes made during the 1970s have been repealed or replaced, three changes remain in effect. 1. In the 93 rd Congress (1973-1974), the House agreed to H.Res. 988 and amended the jurisdiction and procedures of nearly all standing committees. As part of those reforms, House Rules were amended to permit a majority vote to approve Committee on Standard's reports, recommendations, advisory opinions, and investigations; 2. In the 95 th Congress (1977-1978), the House included in its opening day rules package a provision permitting a member of the committee to disqualify himself/herself from participating in an investigation upon submission of an affidavit of disqualification in writing and under oath; and 3. In the 96 th Congress (1979-1980), House rules were amended to prohibit "information or testimony received, or the contents of a complaint or the fact of its filing" from being "publicly disclosed by any committee or staff member unless specifically authorized in each instance by a vote of the full committee." Ethics Reform Act of 1989 The Ethics Reform Act of 1989 ( P.L. 101-194 ) contained provisions affecting all three branches of government and mandated changes to the House Committee on Ethics. Specifically, it established the Office of Advice and Education in the Committee on Ethics. The Office of Advice and Education's primarily responsibilities include (A) Providing information and guidance to Members, officers and employees of the House regarding any laws, rules, regulations, and other standards of conduct applicable to such individuals in their official capacities, and any interpretations and advisory opinions of the committee. (B) Submitting to the chairman and ranking minority member of the committee any written request from any such Member, officer or employee for an interpretation of applicable laws, rules, regulations, or other standards of conduct, together with any recommendations thereon. (C) Recommending to the committee for its consideration formal advisory opinions of general applicability. (D) Developing and carrying out, subject to the approval of the chairman, periodic educational briefings for Members, officers and employees of the House on those laws, rules, regulations, or other standards of conduct applicable to them. The Office of Advice and Education offers training, guidance, and provides recommendations to Members, officers, and employees of the House on standards of conduct applicable to their official duties. Many other changes implemented by the 1989 act are still applicable. These include "bifurcation" (separation) within the committee of its investigative and adjudicative functions; a requirement that the committee report to the House on any case it has voted to investigate and that any "letter of reproval" or other committee administrative action may be issued only as part of a final report to the House; a statute of limitation prohibiting the committee from initiating or undertaking an investigation of alleged violations occurring prior to the third previous Congress unless they are related to a continuous course of conduct in recent years; a guarantee that any Member who is the respondent in any Ethics Committee investigation may be accompanied by one counsel on the House floor during consideration of his/her case; and a time limit of committee service of no more than three out of any five consecutive Congresses. The act also increased the size of the committee's membership from 12 to 14. That change, however, was superseded by the 1997 amendments that reduced the size of the committee from 14 to 10 members. Ethics Reform Task Force On February 12, 1997, the House created an Ethics Reform Task Force to "look into any and all aspects of the ethics process," including Who can file a complaint and upon what basis of information, what should be the standards for initiating an investigation, what evidentiary standard should apply throughout the process, how has the bifurcation process worked, does it take too long to conduct a review, should non-House Members play a part in a reformed ethics process, should we enlarge the pool of Members who might participate in different phases of the process? Chaired by Representatives Bob Livingston and Ben Cardin, the 10-member task force was directed to review the existing House ethics process and to recommend reforms. At the same time that the House approved the establishment of the task force, it also approved a 65-day moratorium on the filing of new ethics complaints to enable the Task Force to conduct its work "in a climate free from specific questions of ethical propriety." After seven months of study, the Task Force reported to the House in June 1997 with several recommendations. These included ensuring that the Committee on Standards operated in a non-partisan manner; that the committee's workings be kept confidential unless otherwise voted on by the committee; that an improved system be created for the filing of information offered as a complaint; that the committee should create an efficient administrative structure; that due process for Members, officers, and employees of the House be preserved; that Members play a greater role in the ethics process; and that matters before the committee be dealt with in a timely manner. On September 18, 1997, the House debated and agreed to H.Res. 230 , a rule to provide for the consideration of H.Res. 168 , the implementation of the Task Force's recommendations, and proceeded to debate and amend H.Res. 168 . The major ethics process changes adopted pursuant to H.Res. 168 included the following: altering the way individuals who are not Members of the House file complaints with the Committee on Ethics by requiring them to have a Member of the House certify in writing that the information is submitted in good faith and warrants consideration; decreasing the size of the committee from 14 members to 10; establishing a 20-person pool of Members (10 from each party) to supplement the work of the Ethics Committee as potential appointees to investigative subcommittees that the committee might establish; requiring the chair and ranking minority member of the committee to determine within 14 calendar days or 5 legislative days, whichever comes first, if the information offered as a complaint meets the committee's requirements; allowing an affirmative vote of two-thirds of the members of the committee or approval of the full House to refer evidence of violations of law disclosed in a committee investigation to the appropriate state or federal law enforcement authorities; providing for a nonpartisan, professional committee staff; allowing the ranking minority member on the committee to place matters on the committee's agenda; and decreasing the maximum service on the committee from six years to four years during any three successive Congresses and required at least four members to be rotated off the committee at the end of each Congress. 109th Congress Changes On January 4, 2005, the House included several provisions in its rules for the 109 th Congress (2005-2006) that affected the Committee on Ethics. These included the process for handling allegations against a House Member, officer, or employee; procedures for instances when the conduct of one Member, officer, or employee might be referenced in the course of an investigation against another Member, officer, or employee; the due process for respondents and witnesses; and the dismissal of complaints. Subsequently, on April 27, 2005, the House reversed earlier 109 th Congress changes when it agreed to H.Res. 240 and reinstated "certain provisions of the rules relating to procedures of the Committee on Standards of Official Conduct to the form in which those provisions existed at the close of the 108 th Congress." 110th Congress Changes On June 5, 2007, the House agreed to H.Res. 451 , directing the Committee on Ethics to "respond to the indictment of, or the filing of charges of criminal conduct in a court of the United States or any State against, any Member of the House of Representatives by empaneling an investigative subcommittee to review the allegations not later than 30 days after the date the Member is indicted or the charges are filed." The resolution was adopted following the grand jury indictment of a Member of the House in the United States District Court for the Eastern District of Virginia. The requirements of H.Res. 451 were continued in the rules packages for both the 111 th and the 112 th Congresses. 113th Congress Changes As part of the rules package ( H.Res. 5 ) for the 113 th Congress (2013-2014), the House amended the Code of Conduct (Rule XXIII, clause 8(c)) to remove references to "spouses" and replace those references with the term "relative." For the purpose of the Rule, relative is defined as an individual who is related to the Member, Delegate, or Resident Commissioner as father, mother, son, daughter, brother, sister, uncle, aunt, first cousin, nephew, niece, husband, wife, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, stepfather, stepmother, stepson, stepdaughter, stepbrother, stepsister, half brother, half sister, grandson, or granddaughter. Additionally, H.Res. 5 required that copies of executed oaths (or affirmations) made by an officer or employee of the House be retained by the Sergeant at Arms, while oaths (or affirmations) made by Members, Delegates, or the Resident Commissioner continue to be retained by the Clerk of the House. 114th Congress Changes First adopted as part of the rules package ( H.Res. 5 ) for the 114 th Congress (2015-2016), the House made two changes to Rule XI, clause 3, by adding a new paragraph at the end of the section on House Ethics Committee procedures that stated The committee may not take any action that would deny any person any right or protection provided under the Constitution of the United States. H.Res. 5 further amended Rule XI, clause 3(a)(6)(B)(i) to require that all new officers, employees, Members, Delegates, and the Resident Commissioner receive ethics training within 60 days of beginning their House service. Previously, only new officers or employees were required to complete ethics training within their first 60 days of service. 115th Congress Changes As part of the rules package ( H.Res. 5 ) for the 115 th Congress (2017-2018), the House amended Rule II, clause 3 to authorize the Sergeant at Arms to impose a fine—$500 for a first offense and $2,500 for any subsequent offense—against a Member, Delegate, or Resident Commissioner for using electronic devices to take photographs, or record floor proceedings in violation of Rule XVII, clause 5. Should a fine be imposed, the Member has 30 calendar days or 5 legislative days (whichever is later) to appeal the fine to the Committee on Ethics. The Committee then has 30 calendar days or 5 legislative days (whichever is later) to dismiss the fine or allow it to proceed, and report its action to the Speaker of the House, the Chief Administrative Officer (CAO), and the Member involved. 116th Congress Changes As part of the rules package ( H.Res. 6 ) for the 116 th Congress (2019-2020), the House amended Rule XI to require that all Members, Delegates, and the Resident Commissioner attend and certify completion of annual ethics training. Previously, only officers and employees were required to certify the completion of ethics training on an annual basis. Additionally, H.Res. 6 authorizes the Committee on Ethics to "consider as evidence the transcripts and exhibits from trial where a Member, Delegate, or the Resident Commissioner was convicted by a court of record for a crime related to the subject of the investigation by the Committee on Ethics." The 116 th Congress also directed the Committee on Ethics to empanel an investigative subcommittee to review allegations related to indictments of, or the filing of charges of criminal conduct against, any Member of the House. This provision was first agreed to in the 110 th Congress. Office of Congressional Ethics On March 11, 2008, the House adopted H.Res. 895 to create the Office of Congressional Ethics (OCE). The OCE was created to review information, and when appropriate, refer findings of fact to the House Committee on Ethics. Information of alleged wrongdoing by Members, officers, and employees of the House may be accepted by the OCE from the general public, but only the OCE board can initiate a review. The OCE was most recently reauthorized by the House as part of the rules package ( H.Res. 6 ) adopted by the 116 th Congress on January 3, 2019. Appendix. Membership on the Committee on Ethics, 1967-2019 Since its inception in the 90 th Congress (1967-1968), the Committee on Ethics has had a total of 303 members. Table A-1 provides a list of all Members to have served on the Committee on Ethics, their party affiliation, and their state and district.

The United States Constitution (Article 1, Section 5, clause 1) provides each House of Congress with the sole authority to establish rules, judge membership requirements, and punish and expel Members. From 1789 to 1967, the House of Representatives dealt with disciplinary action against Members on a case-by-case basis, often forming ad-hoc committees to investigate and make recommendations when acts of wrongdoing were brought to the chamber's attention. Events of the 1960s, including the investigation of Representative Adam Clayton Powell for alleged misuse of Education and Labor Committee funds, prompted the creation of a permanent ethics committee and the writing of a Code of Conduct for Members, officers, and staff of the House. Begun as a select committee in the 89th Congress (1965-1966), the House created a 12-member panel to "recommend to the House … such … rules or regulations … necessary or desirable to insure proper standards of conduct by Members of the House and by officers and employees of the House, in the performance of their duties and the discharge of their responsibilities." Acting on the select committee's recommendations, the House created a permanent Committee on Standards of Official Conduct in the 90th Congress (1967-1968). In the 112th Congress (2011-2012), the committee was renamed the Committee on Ethics. This report briefly outlines the background of ethics enforcement in the House of Representatives, including the creation of both the Select Committee on Ethics and the Committee on Ethics. The report also focuses on various jurisdictional and procedural changes that the committee has experienced since 1967 and discusses the committee's current jurisdiction and procedures. For additional information on ethics in the House of Representatives, please refer to CRS Report R40760, House Office of Congressional Ethics: History, Authority, and Procedures, by Jacob R. Straus; CRS Report RL30764, Enforcement of Congressional Rules of Conduct: A Historical Overview, by Jacob R. Straus; and CRS Report R44213, Altering House Ethics Committee Sanction Recommendations on the Floor: Past Precedent and Options for Action, by Jacob R. Straus and James V. Saturno.

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Introduction The diminishment of Arctic sea ice has led to increased human activities in the Arctic, and has heightened interest in, and concerns about, the region's future. Issues such as Arctic territorial disputes; commercial shipping through the Arctic; Arctic oil, gas, and mineral exploration; endangered Arctic species; and increased military operations in the Arctic could cause the region in coming years to become an arena of international cooperation or competition. The United States, by virtue of Alaska, is an Arctic country and has substantial political, economic, energy, environmental, and other interests in the region. Decisions that Congress makes on Arctic-related issues could significantly affect these interests. This report provides an overview of Arctic-related issues for Congress, and refers readers to more in-depth CRS reports on specific Arctic-related issues. Congressional readers with questions about an issue discussed in this report should contact the author or authors of the section discussing that issue. The authors are identified by footnote at the start of each section. This report does not track legislation on specific Arctic-related issues. For tracking of legislative activity, see the CRS reports relating to specific Arctic-related issues that are listed at the end of this report, just prior to Appendix A . Background1 Definitions of the Arctic There are multiple definitions of the Arctic that result in differing descriptions of the land and sea areas encompassed by the term. Policy discussions of the Arctic can employ varying definitions of the region, and readers should bear in mind that the definition used in one discussion may differ from that used in another. This CRS report does not rely on any one definition. Arctic Circle Definition and Resulting Arctic Countries The most common and basic definition of the Arctic defines the region as the land and sea area north of the Arctic Circle (a circle of latitude at about 66.34 o North). For surface locations within this zone, the sun is generally above the horizon for 24 continuous hours at least once per year (at the summer solstice) and below the horizon for 24 continuous hours at least once per year (at the winter solstice). The Arctic Circle definition includes the northernmost third or so of Alaska, as well as the Chukchi Sea, which separates that part of Alaska from Russia, and U.S. territorial and Exclusive Economic Zone (EEZ) waters north of Alaska. It does not include the lower two-thirds or so of Alaska or the Bering Sea, which separates that lower part of the state from Russia. The area within the Arctic Circle is about 14.5 million square kilometers, or about 5.6 million square miles. This equates to about 2.8%, or about 1/36 th , of the world's surface. About 4 million people, or about 0.05% of the world's population, live in the Arctic, of which roughly half (roughly 2 million) live in Russia's part of the Arctic. Eight countries have territory north of the Arctic Circle: the United States (Alaska), Canada, Russia, Norway, Denmark (by virtue of Greenland, a member country of the Kingdom of Denmark), Finland, Sweden, and Iceland. These eight countries are often referred to as the Arctic countries, and they are the member states of the Arctic Council, which is discussed further below. A subset of the eight Arctic countries are the five countries that are considered Arctic coastal states: the United States, Canada, Russia, Norway, and Denmark (by virtue of Greenland). Definition in Arctic Research and Policy Act (ARPA) of 1984 Section 112 of the Arctic Research and Policy Act (ARPA) of 1984 (Title I of P.L. 98-373 of July 31, 1984) defines the Arctic as follows: As used in this title, the term "Arctic" means all United States and foreign territory north of the Arctic Circle and all United States territory north and west of the boundary formed by the Porcupine, Yukon, and Kuskokwim Rivers [in Alaska]; all contiguous seas, including the Arctic Ocean and the Beaufort, Bering, and Chukchi Seas; and the Aleutian chain. This definition, which is codified at 15 U.S.C. 4111, includes certain parts of Alaska below the Arctic Circle, including the Aleutian Islands and portions of central and western mainland Alaska, such as the Seward Peninsula and the Yukon Delta. Figure 1 below shows the Arctic area of Alaska as defined by ARPA; Figure 2 shows the entire Arctic area as defined by ARPA. Other Definitions Other definitions of the Arctic are based on factors such as average temperature, the northern tree line, the extent of permafrost on land, the extent of sea ice on the ocean, or jurisdictional or administrative boundaries. A definition based on a climate-related factor could circumscribe differing areas over time as a result of climate change. The 10 o C isotherm definition of the Arctic defines the region as the land and sea area in the northern hemisphere where the average temperature for the warmest month (July) is below 10 o Celsius, or 50 o Fahrenheit. This definition results in an irregularly shaped Arctic region that excludes some land and sea areas north of the Arctic Circle but includes some land and sea areas south of the Arctic Circle. This definition currently excludes all of Finland and Sweden, as well as some of Alaska above the Arctic Circle, while including virtually all of the Bering Sea and Alaska's Aleutian Islands. The definition of the Arctic adopted by the Arctic Monitoring and Assessment Programme (AMAP)—a working group of the Arctic Council—"essentially includes the terrestrial and marine areas north of the Arctic Circle (66°32' N), and north of 62° N in Asia and 60° N in North America, modified to include the marine areas north of the Aleutian chain, Hudson Bay, and parts of the North Atlantic, including the Labrador Sea." The AMAP website includes a map showing the Arctic Circle, 10o C isotherm, tree line, and AMAP definitions of the Arctic. Some observers use the term "high north" as a way of referring to the Arctic. Some observers make a distinction between the "high Arctic"—meaning, in general, the colder portions of the Arctic that are closer to the North Pole—and other areas of the Arctic that are generally less cold and further away from the North Pole, which are sometimes described as the low Arctic or the subarctic. U.S. Identity as an Arctic Nation As mentioned earlier, the United States, by virtue of Alaska, is an Arctic country and has substantial political, economic, energy, environmental, and other interests in the region. Even so, Alaska is geographically separated and somewhat distant from the other 49 states, and relatively few Americans—fewer than 68,000 as of July 1, 2017—live in the Arctic part of Alaska as shown in Figure 2 . A November 8, 2018, research paper on the Arctic in U.S. national identity, based on data collected in online surveys conducted in October and December 2017, stated the following: We found that Americans on average continue mildly to disagree with the canonical assertion of U.S. Arctic identity and interests as articulated in government policy. On a scale from 1 to 7, with higher numbers indicating stronger agreement, Americans' average rating was 3.51, up slightly from 3.16 in 2015, but still below the scale midpoint [of 4.0]. A plurality of respondents (27%) answered with a score of one, indicating the strongest disagreement. Men and older individuals showed greater inclination to agree with the assertion of Arctic identity and interests than women or younger respondents, a pattern also observed in 2015. No region of the country showed particularly greater inclination to agree or disagree, except Alaskans[, who] showed substantially greater agreement. We also conducted a series of comparative surveys and found that Canadians, with an average rating of 4.87, had a much greater sense of being an Arctic nation than did Americans. American respondents, however, did register somewhat higher agreement than British and Australians in judging their country an Arctic nation with strong Arctic interests. In a separate comparative survey, Americans indicated a stronger sense of being a Pacific nation than an Arctic one. U.S. Arctic Research Arctic Research and Policy Act (ARPA) of 1984, As Amended The Arctic Research and Policy Act (ARPA) of 1984 (Title I of P.L. 98-373 of July 31, 1984) "provide[s] for a comprehensive national policy dealing with national research needs and objectives in the Arctic." The act, among other things made a series of findings concerning the importance of the Arctic and Arctic research; established the U.S. Arctic Research Commission (USARC) to promote Arctic research and recommend Arctic research policy; designated the National Science Foundation (NSF) as the lead federal agency for implementing Arctic research policy; established the Interagency Arctic Research Policy Committee (IARPC) to develop a national Arctic research policy and a five-year plan to implement that policy, and designated the NSF representative on the IARPC as its chairperson; and defined the term "Arctic" for purposes of the act. The Arctic Research and Policy Act of 1984 was amended by P.L. 101-609 of November 16, 1990. For the texts of the Arctic Research and Policy Act of 1984 and P.L. 101-609 , see Appendix A and Appendix B , respectively. FY2019 NSF Budget Request for Arctic Research NSF—the lead federal agency for implementing Arctic research policy—carries out Arctic research activities through its Office of Polar Programs (OPP), which operates as part of the Directorate for Geosciences (GEO). NSF is requesting a total of $534.5 million for OPP for FY2019, an increase of 30.6% over the $409.18 million requested for FY2018, and an increase of 14.3% over the $467.85 million actual for FY2017. Within the $534.54 million requested for OPP for FY2019 is $113.56 million for research in both the Arctic and Antarctic, an increase of 2.7% over the $110.58 million requested for FY2018, and a reduction of 4.6% from the $119.05 million actual for FY2017. Also within the $534.54 million requested for OPP for FY2019 is $39.33 million for Arctic research and support logistics, an increase of 8.9% over the $36.11 million requested for FY2018, and a reduction of 12.7% from the $45.06 actual for FY2017. NSF states in the overview of its FY2019 budget request that In 2019, NSF will support 10 Big Ideas, which are bold ideas that identify areas for future, long-term investment at the frontiers of science and engineering. With its broad portfolio of investments, NSF is uniquely suited to advance this set of cutting-edge research agendas and processes that will require collaborations with industry, private foundations, other agencies, science academies and societies, and universities and other education institutions. The Big Ideas represent unique opportunities to position our Nation at the frontiers—indeed to define the frontiers—of global science and engineering leadership and to invest in fundamental research that advances America's economic competitiveness and security. Among the 10 big ideas, NSF states in its overview that number 6 is Navigating the New Arctic (NNA) —Establishing an observing network of mobile and fixed platforms and tools across the Arctic to document and understand the Arctic's rapid biological, physical, chemical, and social changes. For FY2019, NSF is requesting $30.0 million for NNA under Integrative & Collaborative Education and Research (ICER) effort of GEO. NSF states that a number of GEO programs contribute directly to NSF's overarching theme of Navigating the New Arctic (NNA).... As part of NNA, and in partnership with the other research directorates and offices, GEO will invest funds in its ICER division to support convergent activities that transcend the traditional disciplinary boundaries of individual NSF directorates and offices. These activities will enable pursuit of fundamental research in Arctic regions. While budget management and reporting for this investment will be the responsibility of GEO, the convergent activities will be overseen and managed collaboratively by the multi-directorate/office NNA leadership team. Regarding its FY2019 budget request for OPP, NSF states that The Office of Polar Programs (OPP) is the primary U.S. supporter of fundamental research in the polar regions. In the Arctic, NSF helps coordinate research planning as directed by the Arctic Research Policy Act of 1984, and the NSF Director chairs the Interagency Arctic Research Policy Committee (IARPC) created for this purpose.... OPP supports investments in research and education and provides support for research infrastructure, such as permanent stations and temporary field camps in the Antarctic and the Arctic. OPP's FY 2019 Budget Request is influenced by three key priorities: (1) supporting critical facilities that enable frontier research in the Earth's polar regions; (2) maintaining strong disciplinary programs that provide a base for our investments in cross-disciplinary system science programs and; (3) maintaining U.S. research community activities in polar system science. As part of priority one, OPP will start the construction phase of the multi-year Antarctic Infrastructure Modernization for Science (AIMS) project. OPP will also prioritize investment in two of the Big Ideas: Navigating the New Arctic where OPP leads NSF efforts, and Windows on the Universe where OPP invests in underpinning activities. All of these priorities reflect opportunities for fundamental scientific discovery uniquely possible in polar regions, as well as studies to investigate the causes and future trajectory of environmental and ecosystem changes now being observed at the poles that could impact global systems. This work will implement the Foundation's lead-agency role in facilitating the Nation's investment in polar science. In addition to shared cross-directorate basic research objectives, OPP investments will be guided by recent sponsored studies to identify priority areas and ensure effective polar research programs: • For the Arctic, IARPC's Arctic Research Plan: FY 2017-20211 , and the World Meteorological Organization's Year of Polar Prediction Implementation Plan inform science investment priorities. Efforts to build an integrated research capacity to address the potential opportunities and challenges of Arctic change for the Nation's security and economics and well-being of Arctic residents will continue. Regarding the $39.33 million requested for FY2019 for Arctic Research Support and Logistics within OPP, NSF states the following: The Research Support and Logistics program in the Arctic Sciences section of OPP responds to science supported by the section. Funding is provided directly to grantees or to key organizations that provide or manage Arctic research support and logistics. A contractor provides research support and logistics services for NSF-sponsored activities in the Arctic. Additional major support components include: access to USCG and other icebreakers, University-National Oceanographic Laboratory (UNOLS) vessels and coastal boats; access to fixed- and rotary-wing airlift support; assets at Toolik Field Station, University of Alaska Fairbanks' field station for ecological research on Alaska's North Slope; safety training for field researchers and funding for field safety experts; global satellite telephones for emergency response and improved logistics coordination; and development of a network of strategically placed U.S. observatories linked to similar efforts in Europe and Canada.... Arctic Sciences personnel support merit-reviewed research proposals in social, earth systems, and a broad range of natural sciences; its Research Support & Logistics program responds to research by assisting researchers with access to the Arctic and sharing of plans and results with local Arctic communities. Major U.S. Policy Documents Relating to the Arctic January 2009 Arctic Policy Directive (NSPD 66/HSPD 25) On January 12, 2009, the George W. Bush Administration released a presidential directive establishing a new U.S. policy for the Arctic region. The directive, dated January 9, 2009, was issued as National Security Presidential Directive 66/Homeland Security Presidential Directive 25 (NSPD 66/HSPD 25). The directive was the result of an interagency review, and it superseded for the Arctic (but not the Antarctic) a 1994 presidential directive on Arctic and Antarctic policy. The directive, among other things, states that the United States is an Arctic nation, with varied and compelling interests in the region; sets forth a six-element overall U.S. policy for the region; describes U.S. national security and homeland security interests in the Arctic; and discusses a number of issues as they relate to the Arctic, including international governance; the extended continental shelf and boundary issues; promotion of international scientific cooperation; maritime transportation; economic issues, including energy; and environmental protection and conservation of natural resources. For the text of NSPD 66/HSPD 25, see Appendix C . May 2010 National Security Strategy In May 2010, the Obama Administration released a national security strategy document that states the following: The United States is an Arctic Nation with broad and fundamental interests in the Arctic region, where we seek to meet our national security needs, protect the environment, responsibly manage resources, account for indigenous communities, support scientific research, and strengthen international cooperation on a wide range of issues. May 2013 National Strategy for Arctic Region On May 10, 2013, the Obama Administration released a document entitled National Strategy for the Arctic Region . The document appears to supplement rather than supersede the January 2009 Arctic policy directive (NSPD 66/HSPD 25) discussed above. The executive summary of National Strategy for the Arctic Region begins by quoting the above statement from the May 2010 national security strategy document, and then states the following: The National Strategy for the Arctic Region sets forth the United States Government's strategic priorities for the Arctic region. This strategy is intended to position the United States to respond effectively to challenges and emerging opportunities arising from significant increases in Arctic activity due to the diminishment of sea ice and the emergence of a new Arctic environment. It defines U.S. national security interests in the Arctic region and identifies prioritized lines of effort, building upon existing initiatives by Federal, state, local, and tribal authorities, the private sector, and international partners, and aims to focus efforts where opportunities exist and action is needed. It is designed to meet the reality of a changing Arctic environment, while we simultaneously pursue our global objective of combating the climatic changes that are driving these environmental conditions. Our strategy is built on three lines of effort: 1. Advance United States Security Interests – We will enable our vessels and aircraft to operate, consistent with international law, through, under, and over the airspace and waters of the Arctic, support lawful commerce, achieve a greater awareness of activity in the region, and intelligently evolve our Arctic infrastructure and capabilities, including ice-capable platforms as needed. U.S. security in the Arctic encompasses a broad spectrum of activities, ranging from those supporting safe commercial and scientific operations to national defense. 2. Pursue Responsible Arctic Region Stewardship – We will continue to protect the Arctic environment and conserve its resources; establish and institutionalize an integrated Arctic management framework; chart the Arctic region; and employ scientific research and traditional knowledge to increase understanding of the Arctic. 3. Strengthen International Cooperation – Working through bilateral relationships and multilateral bodies, including the Arctic Council, we will pursue arrangements that advance collective interests, promote shared Arctic state prosperity, protect the Arctic environment, and enhance regional security, and we will work toward U.S. accession to the United Nations Convention on the Law of the Sea (Law of the Sea Convention). Our approach will be informed by the following guiding principles: • Safeguard Peace and Stability – Seek to maintain and preserve the Arctic region as an area free of conflict, acting in concert with allies, partners, and other interested parties. Support and preserve: international legal principles of freedom of navigation and overflight and other uses of the sea and airspace related to these freedoms, unimpeded lawful commerce, and the peaceful resolution of disputes for all nations. • Make Decisions Using the Best Available Information – Across all lines of effort, decisions need to be based on the most current science and traditional knowledge. • Pursue Innovative Arrangements – Foster partnerships with the state of Alaska, Arctic states, other international partners, and the private sector to more efficiently develop, resource, and manage capabilities, where appropriate and feasible, to better advance our strategic priorities in this austere fiscal environment. • Consult and Coordinate with Alaska Natives – Engage in a consultation process with Alaska Natives, recognizing tribal governments' unique legal relationship with the United States and providing for meaningful and timely opportunity to inform Federal policy affecting Alaskan Native communities. For the main text of the document, see Appendix D . January 2014 Implementation Plan for National Strategy for Arctic Region On January 30, 2014, the Obama Administration released an implementation plan for the May 2013 national strategy for the Arctic region. The plan states that it complements and builds upon existing initiatives by Federal, State, local, and tribal authorities, the private sector, and international partners, and focuses efforts where opportunities exist and action is most needed. The Implementation Plan reflects the reality of a changing Arctic environment and upholds national interests in safety, security, and environmental protection, and works with international partners to pursue global objectives of addressing climatic changes. This Implementation Plan follows the structure and objectives of the Strategy's three lines of effort and is consistent with the guiding principles. The lines of effort of the Strategy and the Implementation Plan are as follows: • Advance United States Security Interests • Pursue Responsible Arctic Region Stewardship • Strengthen International Cooperation These lines of effort and guiding principles are meant to be implemented as a coherent whole. The plan also states the following: Climate change is already affecting the entire global population, and Alaska residents are experiencing the impacts in the Arctic. To ensure a cohesive Federal approach, implementation activities must be aligned with the Executive Order on Preparing the United States for the Impacts of Climate Change while executing the Strategy. In addition to the guiding principles, the following approaches are important in implementing the activities across all of the lines of effort: • Foster Partnerships with Arctic Stakeholders. As outlined in the Strategy, all lines of effort must involve Arctic partners, particularly the State of Alaska and Alaska Natives in the Arctic region. Federal agencies, the State of Alaska, tribal communities, local governments, and academia will work with other nations, industry stakeholders, non-governmental organizations, and research partners to address emerging challenges and opportunities in the Arctic environment. The Federal Government should strive to maintain the free flow of communication and cooperation with the State of Alaska to support national priorities. • Coordinate and Integrate Activities across the Federal Government. Multiple Federal bodies currently have authority for Arctic policy (e.g., the National Ocean Council (NOC), Arctic Policy Group, and Interagency Arctic Research Policy Committee (IARPC)). The National Security Council Staff will develop an Executive Order through the interagency process to maximize efficiency, align interagency initiatives, and create unity of effort among all Federal entities conducting activities in the Arctic. The plan outlines about 36 specific initiatives. For each, it presents a brief statement of the objective, a list of next steps to be taken, a brief statement about measuring progress in achieving the objective, and the names of the lead and supporting federal agencies to be involved. On March 9, 2016, the Obama Administration released three documents discussing the implementation of the national strategy for the Arctic: (1) a report entitled 2015 Year in Review—Progress Report on the Implementation of the National Strategy for the Arctic Region ; (2) an appendix to that report entitled Appendix A, Implementation Framework for the National Strategy for the Arctic Region : and (3) another appendix to that report entitled Appendix B, Interagency Arctic Research Policy Committee 5-Year Plan Collaboration Teams: 2015 Summary of Accomplishments and 2016 Priorities . January 2015 Executive Order for Enhancing Coordination of Arctic Efforts On January 21, 2015, then-President Obama issued Executive Order 13689, entitled "Enhancing Coordination of National Efforts in the Arctic." The order states the following in part: As the United States assumes the Chairmanship of the Arctic Council, it is more important than ever that we have a coordinated national effort that takes advantage of our combined expertise and efforts in the Arctic region to promote our shared values and priorities. As the Arctic has changed, the number of Federal working groups created to address the growing strategic importance and accessibility of this critical region has increased. Although these groups have made significant progress and achieved important milestones, managing the broad range of interagency activity in the Arctic requires coordinated planning by the Federal Government, with input by partners and stakeholders, to facilitate Federal, State, local, and Alaska Native tribal government and similar Alaska Native organization, as well as private and nonprofit sector, efforts in the Arctic.... There is established an Arctic Executive Steering Committee (Steering Committee), which shall provide guidance to executive departments and agencies (agencies) and enhance coordination of Federal Arctic policies across agencies and offices, and, where applicable, with State, local, and Alaska Native tribal governments and similar Alaska Native organizations, academic and research institutions, and the private and nonprofit sectors.... ... the Steering Committee will meet quarterly, or as appropriate, to shape priorities, establish strategic direction, oversee implementation, and ensure coordination of Federal activities in the Arctic.... The Steering Committee, in coordination with the heads of relevant agencies and under the direction of the Chair, shall: (a) provide guidance and coordinate efforts to implement the priorities, objectives, activities, and responsibilities identified in National Security Presidential Directive 66/Homeland Security Presidential Directive 25, Arctic Region Policy, the National Strategy for the Arctic Region and its Implementation Plan, and related agency plans; (b) provide guidance on prioritizing Federal activities, consistent with agency authorities, while the United States is Chair of the Arctic Council, including, where appropriate, recommendations for resources to use in carrying out those activities; and (c) establish a working group to provide a report to the Steering Committee by May 1, 2015, that: (i) identifies potential areas of overlap between and within agencies with respect to implementation of Arctic policy and strategic priorities and provides recommendations to increase coordination and reduce any duplication of effort, which may include ways to increase the effectiveness of existing groups; and (ii) provides recommendations to address any potential gaps in implementation.... It is in the best interest of the Nation for the Federal Government to maximize transparency and promote collaboration where possible with the State of Alaska, Alaska Native tribal governments and similar Alaska Native organizations, and local, private-sector, and nonprofit-sector stakeholders. To facilitate consultation and partnerships with the State of Alaska and Alaska Native tribal governments and similar Alaska Native organizations, the Steering Committee shall: (a) develop a process to improve coordination and the sharing of information and knowledge among Federal, State, local, and Alaska Native tribal governments and similar Alaska Native organizations, and private-sector and nonprofit-sector groups on Arctic issues; (b) establish a process to ensure tribal consultation and collaboration, consistent with my memorandum of November 5, 2009 (Tribal Consultation). This process shall ensure meaningful consultation and collaboration with Alaska Native tribal governments and similar Alaska Native organizations in the development of Federal policies that have Alaska Native implications, as applicable, and provide feedback and recommendations to the Steering Committee; (c) identify an appropriate Federal entity to be the point of contact for Arctic matters with the State of Alaska and with Alaska Native tribal governments and similar Alaska Native organizations to support collaboration and communication; and (d) invite members of State, local, and Alaska Native tribal governments and similar Alaska Native organizations, and academic and research institutions to consult on issues or participate in discussions, as appropriate and consistent with applicable law. As stated in the above-quoted passage, Executive Order 13689, among other things, established an Arctic Executive Steering Committee (AESC) to "provide guidance to executive departments and agencies (agencies) and enhance coordination of Federal Arctic policies across agencies and offices, and, where applicable, with State, local, and Alaska Native tribal governments and similar Alaska Native organizations, academic and research institutions, and the private and nonprofit sectors." Regarding the AESC, a February 28, 2019, press report states the following: "Although the [executive] order has not been rescinded, the Trump administration has left the committee dormant for the past two years." U.S. Special Representative for the Arctic (Currently Vacant) On July 16, 2014, during the Obama Administration, then-Secretary of State John Kerry announced the appointment of retired Coast Guard Admiral Robert J. Papp Jr., who served as Commandant of the Coast Guard from May 2010 to May 2014, as the first U.S. Special Representative for the Arctic. Under the Obama Administration, the duties of this position involved, among other things, interacting with ambassadors to the Arctic region from other countries. Papp served as the U.S. Special Representative until January 20, 2017, the final day of the Obama Administration and the first day of the Trump Administration; the position has gone unfilled since then. Arctic Council37 Overview A series of meetings initiated by Finland in 1989 led in 1996 to the creation of the Arctic Council via the Ottawa Declaration of September 19, 1996. The council is "the leading intergovernmental forum promoting cooperation, coordination and interaction among the Arctic States, Arctic indigenous communities and other Arctic inhabitants on common Arctic issues, in particular on issues of sustainable development and environmental protection in the Arctic." Specific issues addressed by the council include regional development, the environment, emergency response, climate change, and natural resource extraction. The council states that its mandate, "as articulated in the Ottawa Declaration, explicitly excludes military security." The council's standing Secretariat formally became operational in 2013 in Tromsø, Norway. Organization and Operations Eight Member States The Arctic Council's membership consists of the eight countries that have sovereign territory within the Arctic Circle: the United States, Canada, Russia, Iceland, Norway, Sweden, Finland, and Denmark (by virtue of its territory Greenland). The council states that "decisions at all levels in the Arctic Council are the exclusive right and responsibility" of these eight states. Indigenous Permanent Participants In addition to the eight member states, "six organizations representing Arctic indigenous peoples have status as Permanent Participants. The category of Permanent Participant was created to provide for active participation and full consultation with the Arctic indigenous peoples within the council. They include: the Aleut International Association, the Arctic Athabaskan Council, Gwich'in Council International, the Inuit Circumpolar Council, Russian Association of Indigenous Peoples of the North and the Saami Council." Observers Thirteen states have been approved as observers to the Arctic Council: Germany, the Netherlands, Poland, and the United Kingdom (approved in 1998); France (2000); Spain (2006); China, India, Italy, Japan, Singapore, and South Korea (2013); and Switzerland (2017). In addition, 13 intergovernmental and interparliamentary organizations and 13 nongovernmental organizations have been approved as observers, making for a total of 39 observer states or organizations. Working Groups The Arctic Council's work is carried out primarily in six working groups that focus on Arctic contaminants; Arctic monitoring and assessment; conservation of Arctic flora and fauna; emergency prevention, preparedness and response; protection of the Arctic marine environment; and sustainable development. The council may also establish task forces or expert groups for specific projects. Chairmanships The council has a two-year chairmanship that rotates among the eight member states. The United States held the chairmanship from April 24, 2015, to May 11, 2017, a period which began during the Obama Administration and continued into the first 16 weeks of the Trump Administration. The United States had previously held the chairmanship from 1998 to 2000, and will next hold it in 2031-2033. During the Obama Administration's portion of the period of U.S. chairmanship, the U.S. chairmanship team was led by then-Secretary of State John Kerry. For a statement from the Obama Administration regarding U.S. goals for the Obama Administration's portion of the U.S. period of chairmanship, see Appendix E . On May 11, 2017, the chairmanship of the Arctic Council was transferred from the United States to Finland. A May 11, 2017, press report states the following: "Finland's chairmanship program emphasizes climate change and ways the Paris emissions targets can mitigate it, said Timo Soini, Finland's foreign minister. 'We recognize that global warming is the main driver of change in the Arctic,' Soini said." Senior Arctic Officials (SAOs) Each member state is represented by a Senior Arctic Official (SAO), who is usually drawn from that country's foreign ministry. The SAOs hold meetings every six months. The council convenes ministerial-level meetings every two years, at the end of each chairmanship, while the working groups meet more frequently. Limits of Arctic Council as a Governing Body Regarding the limits of the Arctic Council as a governing body, the council states that it "does not and cannot implement or enforce its guidelines, assessments or recommendations. That responsibility belongs to each individual Arctic State." In addition, as mentioned earlier, the council states that "the Arctic Council's mandate, as articulated in the [1996] Ottawa Declaration [establishing the Council], explicitly excludes military security." The Arctic and the U.N. Convention on Law of the Sea (UNCLOS)49 Background to UNCLOS In November 1994, the United Nations Convention on the Law of the Sea (UNCLOS) entered into force. UNCLOS establishes a treaty regime to govern activities on, over, and under the world's oceans. It builds on four 1958 law of the sea conventions to which the United States is a party, and sets forth a framework for future activities in parts of the oceans that are beyond national jurisdiction. As of December 13, 2018, 168 nations were party to the treaty. The 1982 Convention and its 1994 Agreement relating to Implementation of Part XI of the Convention were transmitted to the Senate on October 6, 1994. In the absence of Senate advice and consent to adherence, the United States is not a party to the convention and agreement. Part VI of UNCLOS and Commission on Limits of Continental Shelf Part VI of the convention, dealing with the Continental Shelf, and Annex II, which established a Commission on the Limits of the Continental Shelf, are most pertinent to the Arctic as it becomes more accessible ocean space, bordered by five coastal states. The convention gives a coastal state sovereign jurisdiction over the resources, including oil and gas, of its continental shelf. Under Article 76 of the convention, a coastal state with a broad continental margin may establish a shelf limit beyond 200 nautical miles. This jurisdiction is subject to the submission of the particulars of the intended limit and supporting scientific and technical data by the coastal state to the commission for review and recommendation. The commission reviews the documentation and, by a two-thirds majority, approves its recommendations to the submitting state. Coastal states agree to establish the outer limits of their continental shelf, in accordance with this process and with their national laws. In instances of disagreement with the commission's recommendations, the coastal state may make a revised or new submission. The actions of the commission "shall not prejudice matters relating to delimitation of boundaries between States with opposite or adjacent coasts." The "limits established by a coastal State on the basis of these recommendations shall be final and binding." Extended Continental Shelf and United States as a Nonparty to UNCLOS The U.S. government's State Department-led interagency Extended Continental Shelf Project makes the following points regarding the extended continental shelf and the United States as a nonparty to UNCLOS: As a nonparty to UNCLOS, U.S. nationals may not serve as members of the Commission on the Limits of the Continental Shelf. The question of whether nonparties may make a submission to the commission has not been resolved. Becoming a party to UNCLOS would help the United States maximize international recognition and legal certainty regarding the outer limits of the U.S. continental shelf. Even for nonparties to UNCLOS, however, customary international law, as reflected in UNCLOS, confers on coastal states rights and obligations relating to the continental shelf. This view is well supported in international law. The International Court of Justice, for example, has already declared Article 76(1) to have the status of customary international law (Nicaragua v. Colombia, 2012). Article 76(1) provides that the continental shelf extends to "the outer edge of the continental margin or to a distance of 200 nautical miles," whichever is further. Paragraphs 2 through 7 of Article 76 set forth the detailed rules for determining the precise outer limits of the continental shelf in those areas where the continental margin extends beyond 200 nautical miles from shore. The United States, like other countries, is using these provisions to determine its continental shelf limits. As a matter of customary international law, the United States also respects the continental shelf limits of other countries that abide by Article 76. The commission is not a claims process, and continental shelf entitlement does not depend on going through this procedure. The mandate of the commission is instead to make "recommendations" on the "outer limits" of the continental shelf. The word "claim" does not appear in Article 76, Annex II, or the commission's rules. Article 77(3) and the case law of the International Court of Justice indicate that continental shelf rights exist as a matter of fact and do not need to be expressly claimed. Delineating the continental shelf is a very complex and technical exercise, and the commission's process is important for obtaining international recognition and legal certainty of the outer limits of the continental shelf. The United States has potentially overlapping extended continental shelf areas with two countries in the Arctic—Russia and Canada. The United States and the Soviet Union (now Russia) agreed to a maritime boundary, including in the Arctic, in 1990. The treaty was approved by the U.S. Senate in 1991; it has not been approved by Russia's Duma. Pending the treaty's entry into force, the two countries continue to provisionally apply the terms of the treaty. In determining its extended continental shelf limits, Russia has respected this agreement. Russia has not asserted an extended continental shelf in any areas that might be considered part of the U.S. extended continental shelf. The Russian submission to the commission respects the U.S.-Russia maritime boundary. Canada and the United States have not yet established a maritime boundary in the Arctic. The United States and Canada have cooperated extensively to collect the data necessary to define the continental shelf in the Arctic Ocean. The areas where the continental shelf of the United States and Canada overlap will not be fully known until both countries determine the extent of their extended continental shelf in the Arctic Ocean. Once those areas are identified, the United States and Canada will address the maritime boundary on a bilateral basis at an appropriate time. Over the years, the United States has submitted observations on submissions to the commission made by other states, requesting that those observations be made available online and to the commission. In addition, since 2001, the United States has gathered and analyzed data to determine the outer limits of its extended continental shelf. Starting in 2007, this effort became the Extended Continental Shelf Project. Additional Points Some observers have suggested that a separate international legal regime be negotiated to address the changing circumstances in the Arctic. They maintain that these changing circumstances were not envisioned at the time UNCLOS was negotiated. Other observers suggest that the Arctic region above a certain parallel be designated a wilderness area. As precedent, they cite Article 4 of the Antarctic Treaty, under which any current claims to sovereign territory are frozen and No acts or activities taking place while the present Treaty is in force shall constitute a basis for asserting, supporting or denying a claim to territorial sovereignty in Antarctica or create any rights of sovereignty in Antarctica. No new claim, or enlargement of an existing claim, to territorial sovereignty in Antarctica shall be asserted while the present Treaty is in force. Supporters of UNCLOS maintain that changing circumstances in the Arctic strengthen their argument that the United States should become a party to the convention. In this way, they argue, the United States can be best situated to protect and serve its national interests, under both Article 76 and other parts of UNCLOS. The Obama Administration's January 2014 implementation plan for its national strategy for the Arctic region (see discussion above) includes, as one of its 36 or so initiatives, one entitled "Accede to the Law of the Sea Convention." Under this initiative, the State Department and other federal agencies are to "continue to seek the Senate's advice and consent to accede to the Law of the Sea Convention." The document states that "the [Obama] Administration is committed, like the last three Administrations, to pursuing accession to the Convention on the Law of the Sea and will continue to place a priority on attaining Senate advice and consent to accession." Senate Arctic Caucus On March 4 and 5, 2015, Senator Lisa Murkowski and Senator Angus King announced the formation of a Senate Arctic Caucus "to spotlight this region and open up a wider conversation about the nation's future in the region as America prepares to accede to the Chair of the Arctic Council." Issues for Congress Climate Change and Loss of Arctic Sea Ice64 Record low extents of Arctic sea ice in 2012 and 2007 have focused scientific and policy attention on climate changes in the high north, and on the implications of projected ice-free seasons in the Arctic within decades. The Arctic has been projected by several scientists to be ice-free in most late summers as soon as the 2030s. This opens opportunities for transport through the Northwest Passage and the Northern Sea Route, extraction of potential oil and gas resources, and expanded fishing and tourism ( Figure 3 ). More broadly, physical changes in the Arctic include warming ocean, soil, and air temperatures; melting permafrost; shifting vegetation and animal abundances; and altered characteristics of Arctic cyclones. All these changes are expected to affect traditional livelihoods and cultures in the region and survival of polar bear and other animal populations, and raise risks of pollution, food supply, safety, cultural losses, and national security. Moreover, linkages ("teleconnections") between warming Arctic conditions and extreme events in the mid-latitude continents are increasingly evident, identified in such extreme events as the heat waves and fires in Russia in 2010; severe winters in the eastern United States and Europe in 2009/2010 and in Europe in 2011/2012; and Indian summer monsoons and droughts. Hence, changing climate in the Arctic suggests important implications both locally and across the Hemisphere. Like the rest of the globe, temperatures in the Arctic have varied but show a significant warming trend since the 1970s, and particularly since 1995. The annual average temperature for the Arctic region (from 60 o to 90 o N) is now about 1.8 o F warmer than the "climate normal" (the average from 1961 to 1990). Temperatures in October-November are now about 9 o F above the seasonal normal. Scientists have concluded that most of the global warming of the last three decades is very likely caused by human-related emissions of greenhouse gases (GHG, mostly carbon dioxide); they expect the GHG-induced warming to continue for decades, even if, and after, GHG concentrations in the atmosphere have been stabilized. The extra heat in the Arctic is amplified by processes there (the "polar amplification") and may result in irreversible changes on human timescales. The observed warmer temperatures along with rising cyclone size and strength in the Arctic have reduced sea ice extent, thickness, and ice that persists year-round ("perennial ice"); natural climate variability has likely contributed to the record low ice extents of 2007 and 2012. The 2007 minimum sea ice extent was influenced by warm Arctic temperatures and warm, moist winds blowing from the North Pacific into the central Arctic, contributing to melting and pushing ice toward and into the Atlantic past Greenland. Warm winds did not account for the near-record sea ice minimum in 2008. In early August 2012, an unusually large storm with low pressure developed over the Arctic, helping to disperse the already weak ice into warmer waters and accelerating its melt rate. By August 24, 2012, sea ice extent had shrunk below the previous observed minimum of late September 2007. Modeling of GHG-induced climate change is particularly challenging for the Arctic, but it consistently projects warming through the 21 st century, with annual average Arctic temperature increases ranging from +1° to +9.0° C (+2° to +19.0° F), depending on the GHG scenario and model used. While such warming is projected by most models throughout the Arctic, some models project slight cooling localized in the North Atlantic Ocean just south of Greenland and Iceland. Most warming would occur in autumn and winter, "with very little temperature change projected over the Arctic Ocean" in summer months. Due to observed and projected climate change, scientists have concluded that the Arctic will have changed from an ice-covered environment to a recurrent ice-free ocean (in summers) as soon as the late 2030s. The character of ice cover is expected to change as well, with the ice being thinner, more fragile, and more regionally variable. The variability in recent years of both ice quantity and location could be expected to continue. Extended Continental Shelf Submissions, Territorial Disputes, and Sovereignty Issues74 Extended Continental Shelf Submissions Motivated in part by a desire to exercise sovereign control over the Arctic region's increasingly accessible oil and gas reserves (see " Oil, Gas, and Mineral Exploration "), the four Arctic coastal states other than the United States—Canada, Russia, Norway, and Denmark (of which Greenland is a territory)—have made or are in the process of preparing submissions to the Commission on the Limits of the Continental Shelf regarding the outer limits of their extended continental shelves. (For further discussion of the commission, see " Extended Continental Shelf and United States as a Nonparty to UNCLOS .") Russia has been attempting to chart the Arctic Ocean's enormous underwater Lomonosov Ridge in an attempt to show that it is an extension of Russia's continental margin. The ridge spans a considerable distance across the Arctic Ocean. A 2001 submission by Russia was rejected as insufficiently documented. Canada views a portion of the ridge as part of its own continental shelf. In August 2007, a Russian submersible on a research expedition deposited an encased Russian Federation flag on the seabed of the presumed site of the North Pole. The action captured worldwide attention, but analysts note that it did not constitute an official claim to the Arctic seabed or the waters above it, that it has no legal effect, and that it therefore was a purely symbolic act. At a May 2008 meeting in Ilulissat, Greenland, the five Arctic coastal states reaffirmed their commitment to the UNCLOS legal framework for the establishment of extended continental shelf limits in the Arctic. (For further discussion, see " Extent of the Continental Margin " in " Oil, Gas, and Mineral Exploration .") Territorial Disputes and Sovereignty Issues In addition to this process, there are four unresolved Arctic territorial disputes: Scientists have forecast that in coming decades, global warming will reduce the ice pack in Canada's northern archipelago sufficiently to permit ships to use the trans-Arctic shipping route known as the Northwest Passage during the summer months (see " Commercial Sea Transportation "). The prospect of such traffic raises a major jurisdictional question. Ottawa maintains that such a passage would be an inland waterway, and would therefore be sovereign Canadian territory subject to Ottawa's surveillance, regulation, and control. The United States, the European Union, and others assert that the passage would constitute an international strait between two high seas. The United States and Canada are negotiating over a binational boundary in the Beaufort Sea. The United States and Russia in 1990 signed an agreement regarding a disputed area of the Bering Sea; the U.S. Senate ratified the pact the following year, but the Russian Duma has yet to approve the accord. Denmark and Canada disagree over which country has the territorial right to Hans Island, a tiny, barren piece of rock between Greenland and Canada's Ellesmere Island. Some analysts believe the two countries are vying for control over a future sea lane that might be created if the Arctic ice were to melt sufficiently to create a Northwest Passage. Others claim that the governments are staking out territorial claims in the event that future natural resource discoveries make the region economically valuable. In addition to these disputes, Norway and Russia had been at odds for decades over the boundary between the two in the so-called "Grey Zone" in the Barents Sea, an area believed to hold rich undersea deposits of petroleum. On September 15, 2010, Norwegian Prime Minister Jens Stoltenberg and Russian President Dmitry Medvedev signed an agreement in Murmansk, a Russian city near the Norwegian border. The accord awards roughly half of the 175,000-square-kilometer area to each country; it spells out fishing rights, and provides for the joint development of future oil and gas finds that straddle the boundary line. Some observers believe it is noteworthy that Russia would concede sovereignty over such a large, resource-rich area to a small, neighboring country. But others have noted that Moscow may be hoping for Norwegian cooperation in developing offshore resources, and eventually in winning approval when Russia makes its Article 76 UNCLOS submission. In August 2010, Canadian Foreign Minister Lawrence Cannon announced a new "Statement of Canada's Arctic Policy," which reaffirmed the government's commitment to Canada's sovereignty in the region, to economic and social development, to environmental protection, and to empowerment of the peoples in the north. The statement also emphasized the government's intention to negotiate settlements to its disputes with the United States over the Beaufort Sea boundary, and with Denmark over Hans Island. Minister Cannon declared that "making progress on outstanding boundary issues will be a top priority." Also, despite their dispute over Hans Island, Canada and Denmark have been working together on Arctic issues. In May 2010, the two countries' military chiefs of staffs signed a memorandum of understanding on Arctic Defense, Security, and Operational Cooperation, committing the two countries to "enhanced consultation, information exchange, visits, and exercises." Commercial Sea Transportation81 Background The search for a shorter route from the Atlantic to Asia has been the quest of maritime powers since the Middle Ages. The melting of Arctic ice raises the possibility of saving several thousands of miles and several days of sailing between major trading blocs. If the Arctic were to become a viable shipping route, the ramifications could extend far beyond the Arctic. For example, lower shipping costs could be advantageous for China (at least its northeast region), Japan, and South Korea because their manufactured products exported to Europe or North America could become less expensive relative to other emerging manufacturing centers in Southeast Asia, such as India. Melting ice could potentially open up two trans-Arctic routes (see Figure 3 ): The Northern Sea Route (NSR, a.k.a. the "Northeast Passage"), along Russia's northern border from Murmansk to Provideniya, is about 2,600 nautical miles in length. It was opened by the Soviet Union to domestic shipping in 1931 and to transit by foreign vessels in 1991. This route would be applicable for trade between northeast Asia (north of Singapore) and northern Europe. In recent summers, less than a handful of large, non-Russian-flagged cargo ships have transited the NSR. Russia reportedly seeks to reserve carriage of oil and gas extracted along the NSR to Russian-flagged ships. The Northwest Passage (NWP) runs through the Canadian Arctic Islands. The NWP actually consists of several potential routes. The southern route is through Peel Sound in Nunavut, which has been open in recent summers and contains mostly one-year ice. However, this route is circuitous, contains some narrow channels, and is shallow enough to impose draft restrictions on ships. The more northern route, through McClure Strait from Baffin Bay to the Beaufort Sea north of Alaska, is much more direct and therefore more appealing to ocean carriers, but more prone to ice blockage. The NWP is potentially applicable for trade between northeast Asia (north of Shanghai) and the northeast of North America, but it is less commercially viable than the NSR. Cargo ship transits have been extremely rare but cruise vessel excursions and research vessels are more common. Destination Traffic, Not Trans-Arctic Traffic Most cargo ship activity currently taking place in the Arctic is to transport natural resources from the Arctic or to deliver general cargo and supplies to communities and natural resource extraction facilities. Thus, cargo ship traffic in the Arctic presently is mostly regional, not trans-Arctic. While there has been a recent uptick in Arctic shipping activity, this activity has more to do with a spike in commodity prices than it does with the melting of Arctic ice. Even so, fewer ships ply the Arctic seas now than in the past. The NSR continues to account for the bulk of Arctic shipping activity. Unpredictable Ice Conditions Hinder Trans-Arctic Shipping Arctic waters do not necessarily have to be ice free to be open to shipping. Multiyear ice can be over 10 feet thick and problematic even for icebreakers, but one-year ice is typically 3 feet thick or less. This thinner ice can be more readily broken up by icebreakers or ice-class ships (cargo ships with reinforced hulls and other features for navigating in ice-infested waters). However, more open water in the Arctic has resulted in another potential obstacle to shipping: unpredictable ice flows. In the NWP, melting ice and the opening of waters that were once covered with one-year ice has allowed blocks of multiyear ice from farther north and icebergs from Greenland to flow into potential sea lanes. The source of this multiyear ice is not predicted to dissipate in spite of climate change. Moreover, the flow patterns of these ice blocks are very difficult to forecast. Thus, the lack of ice in potential sea lanes during the summer months can add even greater unpredictability to Arctic shipping. This is in addition to the extent of ice versus open water, which is also highly variable from one year to the next and seasonally. The unpredictability of ice conditions is a major hindrance for trans-Arctic shipping in general, but can be more of a concern for some types of ships than it is for others. For instance, it would be less of a concern for cruise ships, which may have the objective of merely visiting the Arctic rather than passing through and could change their route and itinerary depending on ice conditions. On the other hand, unpredictability is of the utmost concern for container ships that carry thousands of containers from hundreds of different customers, all of whom expect to unload or load their cargo upon the ship's arrival at various ports as indicated on the ship's advertised schedule. The presence of even small blocks of ice or icebergs from a melting Greenland ice sheet requires slow sailing and could play havoc with schedules. Ships carrying a single commodity in bulk from one port to another for just one customer have more flexibility in terms of delivery windows, but would not likely risk an Arctic passage under prevailing conditions. Ice is not the sole impediment to Arctic shipping. The region frequently experiences adverse weather, including not only severe storms, but also intense cold, which can impair deck machinery. During the summer months when sea lanes are open, heavy fog is common in the Arctic. Commercial ships would face higher operating costs on Arctic routes than elsewhere. Ship size is an important factor in reducing freight costs. Many ships currently used in other waters would require two icebreakers to break a path wide enough for them to sail through; ship owners could reduce that cost by using smaller vessels in the Arctic, but this would raise the cost per container or per ton of freight. Also, icebreakers or ice-class cargo vessels burn more fuel than ships designed for more temperate waters and would have to sail at slower speeds. The shipping season in the Arctic only lasts for a few weeks, so icebreakers and other special required equipment would sit idle the remainder of the year. None of these impediments by themselves may be enough to discourage Arctic passage but they do raise costs, perhaps enough to negate the savings of a shorter route. Thus, from the perspective of a shipper or a ship owner, shorter via the Arctic does not necessarily mean cheaper and faster. Basic Navigation Infrastructure Is Lacking Considerable investment in navigation-related infrastructure would be required if trans-Arctic shipping were to become a reality. Channel marking buoys and other floating visual aids are not possible in Arctic waters because moving ice sheets will continuously shift their positions. Therefore, vessel captains would need to rely on marine surveys and ice charts. For some areas in the Arctic, however, these surveys and charts are out of date or not sufficiently accurate. To remedy this problem, aviation reconnaissance of ice conditions and satellite images would need to become readily available for ship operators. Ship-to-shore communication infrastructure would need to be installed where possible. Refueling stations may be needed, as well as, perhaps, transshipment ports where cargo could be transferred to and from ice-capable vessels at both ends of Arctic routes. Shipping lines would need to develop a larger pool of mariners with ice navigation experience. Marine insurers would need to calculate the proper level of risk premium for polar routes, which would require more detailed information about Arctic accidents and incidents in the past. The U.S. Army Corps of Engineers, along with the state of Alaska, has studied the feasibility of a "deep-draft" port in the Arctic (accommodating ships with a draft of up to 35 feet). The northern and northwestern coastlines of Alaska are exceptionally shallow, generally limiting harbor and near-shore traffic to shallow-draft barges. Coast Guard cutters and icebreakers have drafts of 35 to 40 feet while NOAA research vessels have drafts of 16 to 28 feet, so at present these vessels are based outside the Arctic and must sail considerable distances to reach Arctic duty stations. Supply vessels supporting offshore oil rigs typically have drafts over 20 feet. A deep-draft port could serve as a base of operations for larger vessels, facilitating commercial maritime traffic in the Arctic. The study concluded that the existing harbors of Nome or Port Clarence on Alaska's west coast may be the most suitable for deepening because of their proximity to the Bering Strait and deeper water. However, at a July 2016 hearing, the Coast Guard indicated its preferred strategy was to rely on mobile assets (vessels and aircraft) and seasonal bases of operation rather than pursue a permanent port in the Arctic. The U.S. Committee on the Marine Transportation System, a Cabinet-level committee of federal agencies with responsibilities for marine transportation, identified a list of infrastructure improvements for Arctic navigation in a 2013 report. The report prioritizes improvements to information infrastructure (weather forecasting, nautical charting, ship tracking) and emergency response capabilities for ships in distress. Regulation of Arctic Shipping Due to the international nature of the shipping industry, maritime trading nations have adopted international treaties that establish standards for ocean carriers in terms of safety, pollution prevention, and security. These standards are agreed upon by shipping nations through the International Maritime Organization (IMO), a United Nations agency that first met in 1959. Key conventions that the 168 IMO member nations have adopted include the Safety of Life at Sea Convention (SOLAS), which was originally adopted in response to the Titanic disaster in 1912 but has since been revised several times; the Prevention of Pollution from Ships (MARPOL), which was adopted in 1973 and modified in 1978; and the Standards for Training, Certification, and Watchkeeping for Seafarers (SCTW), which was adopted in 1978 and amended in 1995. It is up to ratifying nations to enforce these standards. The United States is a party to these conventions, and the U.S. Coast Guard enforces them when it boards and inspects ships and crews arriving at U.S. ports and the very few ships engaged in international trade that sail under the U.S. flag. Like the United States, most of the other major maritime trading nations lack the ability to enforce these regulations as a "flag state" because much of the world's merchant fleet is registered under so-called "flags of convenience." While most ship owners and operators are headquartered in major economies, they often register their ships in Panama, Liberia, the Bahamas, the Marshall Islands, Malta, and Cyprus, among other "open registries," because these nations offer more attractive tax and employment regulatory regimes. Because of this development, most maritime trading nations enforce shipping regulations under a "port state control" regime—that is, they require compliance with these regulations as a condition of calling at their ports. The fragmented nature of ship ownership and operation can be a further hurdle to regulatory enforcement. It is common for cargo ships to be owned by one company, operated by a second company (which markets the ship's space), and managed by a third (which may supply the crew and other services a ship requires to sail), each of which could be headquartered in different countries. New Arctic Polar Code While SOLAS and other IMO conventions include provisions regarding the operation of ships in ice-infested waters, they were not specific to the polar regions. To supplement these requirements, a new IMO polar code went into effect on January 1, 2017. The code applies to passenger and cargo ships of 500 gross tons or more engaged in international voyages. It does not apply to fishing vessels, military vessels, pleasure yachts, or smaller cargo ships. The polar requirements are intended to improve safety and prevent pollution in the Arctic, and they include provisions on ship construction, ship equipment related to navigation, and crew training and ship operation. The code requires ships to carry fully or partially enclosed lifeboats. The code requires that the crew have training in ice navigation. Nations can enforce additional requirements on ships arriving at their ports or sailing through their coastal waters. For instance, U.S. Coast Guard regulations largely follow IMO conventions but mandate additional requirements in some areas. U.S. coastal states can require ships calling at their ports to take additional safety and pollution prevention safeguards. Canada and Russia have additional pollution regulations for Arctic waters exceeding MARPOL. The U.S. Coast Guard has studied and has recommended a specific vessel traffic separation scheme for the Bering Strait between Alaska and Russia, which experiences over 400 transits per year. The U.S. Coast Guard is seeking IMO approval of this routing scheme. Oil, Gas, and Mineral Exploration102 Decreases in summer polar ice may alter options for oil, gas, and mineral exploration in Arctic offshore or onshore areas. Offshore of Alaska, the U.S. outer continental shelf (OCS) covers more than 1 billion acres, including some areas with high oil and gas potential. Even with warmer temperatures, exploration and development in the Arctic are still subject to harsh conditions, especially in winter. This makes it costly and challenging to develop the infrastructure necessary to produce, store, and transport oil, gas, and minerals from newly discovered deposits. Severe weather poses challenges to several ongoing offshore operations as well as to new exploration. Offshore oil and gas exploration is affected by efforts to map the margins of the U.S. OCS. Shrinking sea ice cover in the Arctic has intensified interest in surveying and mapping the continental margins of multiple countries with lands in the Arctic. Delineating the extent of the continental margins beyond the 200 nautical mile Exclusive Economic Zone (EEZ) could lead to consideration of development on substantial amounts of submerged lands. Mapping projects are underway, by individual countries and through cooperative government studies, to support submissions to the Commission on the Limits of the Continental Shelf, including for areas that may contain large amounts of oil, natural gas, methane hydrates, or minerals. With respect to onshore development, shrinking glaciers could expose land containing economic deposits of gold, iron ore, or other minerals previously covered by glacial ice. At the same time, warming that causes permafrost to melt could pose challenges to oil, gas, and mineral activities because ground structures, such as pipelines and other infrastructure that depend on footings sunk into the permafrost for support, could be compromised. In addition, warmer temperatures shorten the ice road transport seasons for oil, gas, and mineral development, creating transportation challenges. Offshore Oil and Gas Exploration The shrinking Arctic ice cap, or conversely, the growing amount of ice-free ocean in the summertime, has increased interest in exploring for offshore oil and gas in the Arctic. Reduced sea ice in the summer means that ships towing seismic arrays can explore regions of the Arctic Ocean, Chukchi Sea, Beaufort Sea, and other offshore regions for longer periods of time with less risk of colliding with floating sea ice. Less sea ice over longer periods compared to previous decades also means that the seasonal window for offshore Arctic drilling remains open longer in the summer, increasing the chances for making a discovery. In addition to the improved access to larger portions of the Arctic afforded by shrinking sea ice, interest in Arctic oil and gas was fueled by a 2008 U.S. Geological Survey (USGS) appraisal of undiscovered oil and gas north of the Arctic Circle. The USGS stated that the "extensive Arctic continental shelves may constitute the geographically largest unexplored prospective area for petroleum remaining on Earth." In the report, the USGS estimated that 90 billion barrels of oil, nearly 1,700 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids may remain to be discovered in the Arctic (including both U.S. and international resources north of the Arctic Circle). A 2009 article in Science magazine indicated that 30% of the world's undiscovered natural gas and 13% of the world's undiscovered oil may be found north of the Arctic Circle. In terms of U.S. resources specifically, DOI's Bureau of Ocean Energy Management (BOEM) estimated in 2016 that the Alaska portions of the U.S. OCS contain undiscovered, technically recoverable resources of approximately 27 billion barrels of oil and 131 trillion cubic feet of natural gas (although not all of these resources may be economically viable to recover). A 2015 report by the National Petroleum Council stated that U.S. offshore oil and gas exploration in the Arctic over the next 35 years "would help sustain domestic supplies as production of U.S. shale oil and tight oil may decline." Despite the warming trend in the Arctic, severe weather and sea ice continue to pose challenges to exploration. In addition, any discovery of new oil and gas deposits far from existing storage, pipelines, and shipping facilities could not be developed until infrastructure is built to extract and transport the petroleum. Some have expressed interest in expanding America's ocean energy portfolio in the region. Currently, among 15 federal planning areas in the region, the Beaufort Sea and Cook Inlet are the only two areas with active federal leases, and only the Beaufort Sea has any producing wells in federal waters (from a joint federal-state unit). The Trump Administration has stated its interest in promoting offshore development in the region. In January 2018, the Administration issued a draft five-year offshore oil and gas leasing program for 2019-2024 that would schedule lease sales in all 15 Alaska planning areas, including three sales in the Beaufort Sea and three in the Chukchi Sea. Current lease sales on the Alaska OCS are governed by the Obama Administration's leasing program for 2017-2022, which includes one lease sale in the Cook Inlet (scheduled for 2021) and none in other Alaska planning areas. Activities on existing federal leases in the region have fluctuated as industry weighs changing oil prices, development costs, and regulations. For example, in 2015, Shell Oil Company announced its decision to cease exploration in offshore Alaska for the foreseeable future. Shell cited several reasons for the decision, including insufficient indications of oil and gas at its Burger J well in the Chukchi Sea, the high costs associated with Arctic exploration, and the "challenging and unpredictable" federal regulatory environment for offshore Alaska. BOEM also reported that, between February and November 2016, companies relinquished more than 90% of leases they had held in the Beaufort and Chukchi Sea planning areas, in the midst of a slump in oil prices. While there were 450 active leases in the Chukchi Sea planning area at the end of 2015, at the end of 2018 there were none. More recently, some activities have indicated stronger industry interest in the region. For example, in November 2017, the Trump Administration approved an application for permit to drill (APD) on a lease in the Beaufort Sea held by the Eni U.S. Operating Company. In October 2018, BOEM issued conditional approval to Hilcorp Alaska LLC for an oil and gas development and production plan in the Beaufort Sea, which would be the region's first production facility entirely in federal waters. The evolving federal regulatory environment for Arctic offshore activities has been shaped by concerns about industry's ability to respond to potential oil spills, given the region's remoteness and harsh conditions. The section of this report on " Oil Pollution Implications of Arctic Change " discusses this issue in greater detail. In July 2016, BOEM and the Bureau of Safety and Environmental Enforcement (BSEE) released final safety regulations for Arctic exploratory drilling that include multiple requirements for companies to reduce the risks of potential oil spills—for example, the requirement that companies have a separate rig available at drill sites to drill a relief well in case of a loss of well control. Some Members of Congress and industry stakeholders opposed the regulations as overly prescriptive and unnecessarily burdensome, while other Members and environmental organizations asserted that the rules did not go far enough in protecting the region from potential environmental damage and addressing the potential contributions of Arctic oil and gas activities to climate change. In a 2017 executive order, President Trump directed the Secretary of the Interior to review the Arctic regulations, and in 2018 the Department of the Interior announced work on rule revisions. Legislation was introduced in the 115 th Congress both to repeal the Obama Administration's version of the Arctic rule and, conversely, to codify it in law. Concerns about the impacts of oil and gas activities have led in the past to bans by both Congress and the President on leasing in certain Arctic Ocean areas deemed especially sensitive. For example, congressional and presidential moratoria since the 1980s effectively banned federally regulated planning and permitting in the Bristol Bay area of the North Aleutian Basin. Congress allowed most statutory bans in the region to expire in 2004. President Obama reinstated the moratorium in the North Aleutian Basin, indefinitely withdrawing acreage located in Bristol Bay from eligibility for oil and gas leasing. Also, in December 2016, President Obama indefinitely withdrew from leasing disposition other large portions of the U.S. Arctic, including the entire Chukchi Sea planning area and almost all of the Beaufort Sea planning area. President Obama separately withdrew from leasing consideration planning areas in the North Bering Sea. In April 2017, President Trump issued Executive Order 13795, which modified President Obama's withdrawals so as to open all of these areas for leasing consideration except for the North Aleutian Basin. Extent of the Continental Margin Increased interest in developing offshore resources in the Arctic has sparked efforts by nations bordering the Arctic Ocean to map the extent of their continental margins beyond the 200-mile EEZ limit. As discussed earlier (see " Extended Continental Shelf and United States as a Nonparty to UNCLOS "), under Article 76 of UNCLOS, nations can make a submission to the Commission on the Limits of the Continental Shelf (hereinafter referred to as the Commission) concerning the extent of their continental shelves. Under Article 76, the extent of the continental margin beyond the 200-mile limit depends on the position of the foot of the continental slope, the thickness of sediments, and the depth of water. Also, the continental margin could include geologic features that extend from the continent out to sea, which may include undersea ridges continuing for hundreds of miles offshore. Arctic border countries have conducted complex investigations needed to support submissions to the Commission for an extended continental shelf in the Arctic. Submissions have been made by several countries, including the Russian Federation, which made its initial UNCLOS submission to a portion of the Arctic continental shelf in 2001. Russia's 2001 submission included the Lomonosov Ridge, an undersea feature spanning the Arctic from Russia to Canada, as an extension of its continental margin. The submission demonstrated Russia's bid to extend activities in Arctic regions. The Russian Federation presented a revised submission in 2015 to the Commission that included not only the Lomonosov Ridge but also the Mendeleev Rise—another subsea feature claimed by Russia to be a natural part of their continental margin—as components of the extended Russian continental shelf. The Commission has not rendered a decision on the revised Russian Federation submission as of early 2018. The United States has started to gather and analyze data for a potential submission through an initiative called the Extended Continental Shelf (ECS) Project. The U.S. ECS project has also assisted more than 30 countries with their efforts to delineate their extended continental shelves worldwide. Canada and the United States share overlapping regions of the seabed as part of the extended continental margin of both nations. Much of the data to delineate the ECS for both countries was collected in a two-ship operation involving the U.S. Coast Guard Cutter Healy and the Canadian Coast Guard ship Louis S. Saint Laurent . The two-ship operation collected more than 13,000 linear kilometers (about 8,078 miles) of seismic data over four field seasons in the Arctic beginning in 2007. The data collected will help each country delineate the extent of their own ECS, which should then enable the countries to determine the amount of overlap in the seabed and ultimately establish a maritime boundary in the Arctic. The United States also has potentially overlapping ECS areas with Russia. Russia (then the Soviet Union) and the United States agreed to a maritime boundary in 1990, and so far Russia has not asserted its ECS in any areas that might be considered part of the U.S. ECS. Onshore Mineral Development A warming Arctic means new opportunities and challenges for mineral exploration and development onshore. Receding glaciers expose previously ice-covered land that could host economic mineral deposits that were previously undetectable and unmineable below the ice. Longer summers would also extend exploration seasons for areas that are not currently ice-covered but are only accessible for ground surveys during the warmer months. In some parts of the Arctic, such as Baffin Island, Canada, less sea ice allows ships to transport heavy equipment to remote locations, and to convey ore from mines to the market further south. Some railway and mining operators are considering developing railroads and other infrastructure to transport ore year-round. As with onshore oil and gas development, however, mining infrastructure that depends on footings sunk into permafrost could become unstable if the permafrost melts in response to warmer temperatures. Also, as with oil and gas development, mineral deposits that may be technically recoverable with current technology may not be economically profitable. Some industry commentators suggest that mining might offer better long-term economic development opportunities compared to oil and gas development because of a larger permanent workforce and project lifetimes of several decades. Similar to oil and gas, however, industry observers note that uncertainties and knowledge gaps exist in the understanding of environmental change in the Arctic, and how to deal with the risks associated with significant Arctic industrial activity. One important part of the current infrastructure in the Arctic that supports oil, gas, and mineral development is the construction and use of ice roads—built and used during the winter, but not passable during the warmer months. Warmer temperatures are shortening the ice road transport seasons and creating transportation challenges. For example, the opening date for tundra roads in northern Alaska usually occurred in early November prior to 1991 and has shifted to January in recent years. Oil Pollution and Pollution Response142 Oil Pollution Implications of Arctic Change Climate change impacts in the Arctic, particularly the decline of sea ice and retreating glaciers, have stimulated human activities in the region, many of which have the potential to create oil pollution. A primary concern is the threat of a large oil spill in the area. Although a major oil spill has not occurred in the Arctic region, recent economic activity, such as oil and gas exploration and tourism (cruise ships), increases the risk of oil pollution (and other kinds of pollution) in the Arctic. Significant spills in high northern latitudes (e.g., the 1989 Exxon Valdez spill in Alaska and spills in the North Sea) suggest that the "potential impacts of an Arctic spill are likely to be severe for Arctic species and ecosystems." Risk of Oil Pollution in the Arctic A primary factor determining the risk of oil pollution in the Arctic is the level and type of human activity being conducted in the region. Although climate changes in the Arctic are expected to increase access to natural resources and shipping lanes, the region will continue to present logistical challenges that may hinder human activity in the region. For example (as discussed in another section of this report), the unpredictable ice conditions may discourage trans-Arctic shipping. If trans-Arctic shipping were to occur on a frequent basis, it would represent a considerable portion of the overall risk of oil pollution in the region. In recent decades, many of the world's largest oil spills have been from oil tankers, which can carry millions of gallons of oil. Although the level of trans-Arctic shipping is uncertain, many expect oil exploration and extraction activities to intensify in the region. Oil well blowouts from offshore oil extraction operations have been a source of major oil spills, eclipsing the largest tanker spills. The largest unintentional oil spill in recent history was from the 2010 Deepwater Horizon incident in the Gulf of Mexico. During that incident, the uncontrolled well released (over an 87-day period) approximately 200 million gallons of crude oil. The second-largest unintentional oil spill in recent history—the IXTOC I , estimated at 140 million gallons—was due to an oil well blowout in Mexican Gulf Coast waters in 1979. Until the 2010 Deepwater Horizon incident, the spill record for offshore platforms in U.S. federal waters had shown improvement from prior years. A 2003 National Research Council (NRC) study of oil and gas activities on Alaska's North Slope stated "blowouts that result in large spills are unlikely." Similar conclusions were made in federal agency documents regarding deepwater drilling in the Gulf of Mexico before the 2010 Deepwater Horizon event. Some would likely contend that the underlying analyses behind these conclusions should be adjusted to account for the 2010 Gulf oil spill. However, others may argue that the proposed activities in U.S. Arctic waters present less risk of an oil well blowout than was encountered by the Deepwater Horizon drill rig, because the proposed U.S. Arctic operations would be in shallower waters (150 feet) than the deepwater well (approximately 5,000 feet) that was involved in the 2010 Gulf oil spill. In addition, Shell Oil has stated that the pressures in the Chukchi Sea (the location of Shell's recent interest) would be two to three times less than they were in well involved in the 2010 Gulf oil spill. Regardless of these differences, even under the most stringent control systems, some oil spills and other accidents are likely to occur from equipment failure or human error. Potential Impacts No oil spill is entirely benign. Even a relatively minor spill, depending on the timing and location, can cause significant harm to individual organisms and entire populations. Regarding aquatic spills, marine mammals, birds, bottom-dwelling and intertidal species, and organisms in early developmental stages—eggs or larvae—are especially vulnerable. However, the effects of oil spills can vary greatly. Oil spills can cause impacts over a range of time scales, from only a few days to several years, or even decades in some cases. Conditions in the Arctic may have implications for toxicological effects that are not yet understood. For example, oil spills on permafrost may persist in an ecosystem for relatively long periods of time, potentially harming plant life through their root systems. Moreover, little is known about the effects of oil spills on species that are unique to the Arctic, particularly, species' abilities to thrive in a cold environment and the effect temperature has on toxicity. The effects of oil spills in high-latitude, cold-ocean environments may last longer and cause greater damage than expected. Some recent studies have found that oil spills in lower latitudes have persisted for longer than initially expected, thus raising the concern that the persistence of oil in the Arctic may be understated. In terms of wildlife, population recovery may take longer in the Arctic because many of the species have longer life spans and reproduce at a slower rate. Response and Cleanup Challenges in the Arctic Region Climate changes in the Arctic are expected to increase human activities in the region, many of which impose a risk of oil pollution, particularly from oil spills. Conditions in the Arctic region impose unique challenges for personnel charged with (1) oil spill response, the process of getting people and equipment to the incident, and (2) cleanup duties, either recovering the spilled oil or mitigating the contamination so that it poses less harm to the ecosystem. These challenges may play a role in the policy development for economic activities in the Arctic. Spill Response Challenges Response time is a critical factor for oil spill recovery. With each hour, spilled oil becomes more difficult to track, contain, and recover, particularly in icy conditions, where oil can migrate under or mix with surrounding ice. Most response techniques call for quick action, which may pose logistical challenges in areas without prior staging equipment or trained response professionals. Many stakeholders are concerned about a "response gap" for oil spills in the Arctic region. A response gap is a period of time in which oil spill response activities would be unsafe or infeasible. The response gap for the northern Arctic latitudes is likely to be extremely high compared to other regions. According to a 2014 National Research Council (NRC) report, "the lack of infrastructure in the Arctic would be a significant liability in the event of a large oil." The Coast Guard has no designated air stations north of Kodiak, AK, which is almost 1,000 miles from the northernmost point of land along the Alaskan coast in Point Barrow, AK. Although some of the communities have airstrips capable of landing cargo planes, no roads connect these communities. Vessel infrastructure is also limited. The nearest major port is in the Aleutian Islands, approximately 1,300 miles from Point Barrow. Two of the major nonmechanical recovery methods—in situ burning and dispersant application—may be limited (or "precluded") by the Arctic conditions and lack of logistical support: aircraft, vessels, and other infrastructure. A 2010 Government Accountability Office (GAO) report identified further logistical obstacles that would hinder an oil spill response in the region, including "inadequate" ocean and weather information for the Arctic and technological problems with communications. A 2014 GAO report highlighted steps taken by some groups (e.g., the National Oceanic and Atmospheric Administration) to improve some of these logistical elements. Oil Spill Cleanup Challenges The history of oil spill response in the Aleutian Islands highlights the challenges and concerns for potential spills in the Arctic region: The past 20 years of data on response to spills in the Aleutians has also shown that almost no oil has been recovered during events where attempts have been made by the responsible parties or government agencies, and that in many cases, weather and other conditions have prevented any response at all. The behavior of oil spills in cold and icy waters is not as well understood as oil spills in more temperate climates. The 2014 NRC report highlights some recent advancements in understanding oil spill behavior in arctic climates. At the same time, the report recommends further study in multiple areas. The 2014 NRC report states that in colder water temperatures or sea ice, "the processes that control oil weathering—such as spreading, evaporation, photo-oxidation, emulsification, and natural dispersion—are slowed down or eliminated for extended periods of time." In some respects, the slower weathering processes may provide more time for response strategies, such as in situ burning or skimming. On the other hand, the longer the oil remains in an ecosystem, the more opportunity there is for exposure. In addition, the 2014 report states the following: Arctic conditions impose many challenges for oil spill response—low temperatures and extended periods of darkness in the winter, oil that is encapsulated under ice or trapped in ridges and leads, oil spreading due to sea ice drift and surface currents, reduced effectiveness of conventional containment and recovery systems in measurable ice concentrations, and issues of life and safety of responders. Existing Policy Framework Considering both the recent increase in human activity in the region (and expectation of further interest) and the response and recovery challenges that an oil spill would impose in Arctic waters, many would assert that the region warrants particular attention in terms of governance. However, the existing framework for international governance of maritime operations in the Arctic region lacks legally binding requirements. While the Safety of Life at Sea Convention (SOLAS) and other International Maritime Organization (IMO) conventions include provisions regarding ships in icy waters, the provisions are not specific to the polar regions. Although the IMO has "Guidelines for Ships Operating in Arctic," a 2009 NOAA report described the nonbinding IMO provisions as "inconsistent with the hazards of Arctic navigation and the potential for environmental damage from such an incident." In 2013, the member states of the Arctic Council signed an Agreement on Cooperation on Marine Oil Pollution Preparedness and Response in the Arctic. The agreement's objective is to "strengthen cooperation, coordination, and mutual assistance ... on oil pollution preparedness and response in the Arctic." In addition, the United States has separate bilateral agreements with Canada and Russia that address oil spill response operations. The agreement with Canada was established in 1974 for the Great Lakes and has been amended several times to add more geographic areas, including Arctic waters. According to the 2014 NRC report: "Formal contingency planning and exercises with Canada have enabled both the United States and Canada to refine procedures and legal requirements for cross-border movement of technical experts and equipment in the event of an emergency." The U.S.-Russian agreement was made in 1989 and applies to oil spills in Arctic waters. However, the 2014 NRC report asserts that the agreement has not been tested to the same extent as the U.S.-Canada agreement. Fisheries171 The effects of climate change such as increasing sea surface temperatures and decreasing permanent sea ice are altering the composition of marine ecosystems in the Arctic. These changes are likely to affect the ranges and productivity of living marine resources including species that support marine fisheries. Furthermore, as a greater portion of the waters in the central Arctic Ocean become open for longer periods, the region's resources will become more accessible to commercial fishing. Large commercial fisheries already exist in the Arctic, including in the Barents and Norwegian Seas north of Europe, the Central North Atlantic off Greenland and Iceland, the Bering Sea off Russia and the United States (Alaska), and the Newfoundland and Labrador Seas off northeastern Canada. As environmental changes occur, fisheries managers will be challenged to adjust management measures for existing fisheries. Uncertainties related to these changes and potential new fisheries in the central Arctic Ocean have prompted many fishery managers to support precautionary approaches to fisheries management in the region. On June 1, 2008, Congress passed a joint resolution ( P.L. 110-243 ) that directed "the United States to initiate international discussions and take necessary steps with other nations to negotiate an agreement for managing migratory and transboundary fish stocks in the Arctic Ocean." The joint resolution also supported establishment of a new international fisheries management organization or organizations for the region. International cooperation is necessary to manage Arctic resources because fish stocks are shared to some degree among the five adjacent jurisdictional zones of the Arctic rim nations. Further, a large portion of the central Arctic Ocean lies outside the Exclusive Economic Zones (EEZ) of these nations. Ideally, regional management would recognize the need to coordinate management for those fish populations that move among these national jurisdictional zones and high seas. For waters under U.S. jurisdiction, in 2009, the National Marine Fisheries Service in the Department of Commerce's National Oceanic and Atmospheric Administration implemented the North Pacific Council's Fishery Management Plan for Fish Resources of the Arctic Management Area. The management area includes marine waters in the U.S. EEZ of the Chukchi and Beaufort Seas. The plan initially prohibits commercial fishing in the Arctic Management Area and moves the northern boundary of the Bering Sea/Aleutian Islands king and tanner crab fishery management plan out of the Arctic Management Area south to the Bering Strait. The plan takes a precautionary approach by requiring the collection of more information before developing commercial fisheries in the region. On July 16, 2015, the five nations that surround the Arctic Ocean signed a declaration to prevent unregulated commercial fishing in the high seas portion of the central Arctic Ocean. The five nations agree that a precautionary approach to fishing is needed because there is limited scientific knowledge of marine resources in the region. Currently, there is no commercial fishing in central Arctic Ocean and it is questionable whether existing fisheries resources could sustain a fishery. The declaration includes the following interim measures: to authorize our vessels to conduct commercial fishing in the high seas area only pursuant to one or more marine regional or subregional fisheries management organizations or arrangements that are or may be established to manage such fishing in accordance with recognized international standards; to establish a joint program of scientific research with the aim of improving understanding of the ecosystems of this area and promote cooperation with relevant scientific bodies; to promote compliance with these interim measures and with relevant international law, including by coordinating our monitoring, control, and surveillance activities in this area; and to ensure that any noncommercial fishing in this area does not undermine the purpose of the interim measures, is based on scientific advice and is monitored, and that data obtained through any such fishing is shared. The declaration also recognizes the interests of indigenous peoples and the need to encourage other countries to take actions that are consistent with the interim measures. It appears that future management arrangements may include China, the EU, Iceland, Japan, and South Korea. Iceland has stated it regrets that although it has repeatedly asked to participate in the collaboration, the five states decided to keep Iceland outside consultations on the declaration. It remains an open question as to whether an Arctic Ocean regional fishery management organization will be established, which countries would be included in such an arrangement, and if commercial fisheries will be developed in the central Arctic Ocean. Protected Species177 Concern over development of the Arctic relates to how such development might affect threatened and endangered species. Under the Endangered Species Act (ESA, 16 U.S.C. §§1531-1543), the polar bear was listed as threatened on May 15, 2008. The failure by the Fish and Wildlife Service (FWS) to make a 90-day finding on a 2008 petition to list Pacific walrus led to submission of 60-days' notice of a future citizen suit. However, eventually walruses were listed as candidate species under ESA; this status means that federal agencies carrying out actions that may affect the species must confer with FWS though they are not necessarily obliged to modify their actions. Both polar bears and walruses are heavily dependent during their life cycles on thick sea ice, making them especially susceptible to the shrinking Arctic ice cap. On December 30, 2008, the National Marine Fisheries Service (NMFS) determined that a listing of ribbon seal as threatened or endangered was not warranted. On October 22, 2010, NMFS listed the southern distinct population segment (DPS) of spotted seals as threatened. Listing of two other DPS (Okhotsk and Bering Sea) had earlier been determined to not be warranted. On December 10, 2010, NMFS proposed that (1) four subspecies of ringed seal be listed as threatened, and (2) that two DPS of one subspecies of bearded seal be listed as threatened. In either terrestrial or marine environments, the extreme pace of change makes a biological response many times more difficult. For species with adaptations for a specific optimum temperature for egg development, or production of young timed to match the availability of a favored prey species, or seed dispersal in predictable fire regimes, etc., evolutionary responses may well not keep pace with the rate of change. While species of plants and animals farther south might migrate, drift, or be transplanted from warming habitats to more northerly sites that may continue to be suitable, once a terrestrial species reaches the Arctic Ocean, it is very literally at the end of the line. No more northern or colder habitat is available. The Marine Mammal Protection Act (MMPA; 16 U.S.C. §§1361 et seq.) protects whales, seals, walruses, and polar bears. The MMPA established a moratorium on the "taking" of marine mammals in U.S. waters and by U.S. nationals on the high seas, including the Arctic. The MMPA protects marine mammals from "clubbing, mutilation, poisoning, capture in nets, and other human actions that lead to extinction." Under the MMPA, the Secretary of Commerce, acting through National Marine Fisheries Service, is responsible for the conservation and management of whales and seals. The Secretary of the Interior, acting through the Fish and Wildlife Service, is responsible for walruses and polar bears. Despite the MMPA's general moratorium on taking, the MMPA allows U.S. citizens to apply for and obtain authorization for taking small numbers of mammals incidental to activities other than commercial fishing (e.g., offshore oil and gas exploration and development) if the taking would have only a negligible impact on any marine mammal species or stock, provided that monitoring requirements and other conditions are met. Indigenous People Living in the Arctic187 People have been living in the Arctic for thousands of years, and indigenous peoples developed highly specialized cultures and economies based on the physical and biological conditions of the long-isolated region. However, with trade, the influx of additional populations especially since the 19 th century, and ongoing physical changes in the Arctic, indigenous populations have already experienced substantial change in their lifestyles and economies. Over the past two decades, greater political organization across indigenous populations has increased their demands for international recognition and broader rights, as well as attention to the economic, health, and safety implications of climate change in the North. Background Seven of the eight Arctic nations have indigenous peoples, whose predecessors were present in parts of the Arctic over 10,000 years ago, well before the arrival of peoples with European backgrounds. Current Arctic indigenous peoples comprise dozens of diverse cultures and speak dozens of languages from eight or more non-Indo-European language families. Before the arrival of Europeans, Arctic indigenous peoples lived in economies that were chiefly dependent, in varying proportions, on hunting land and marine mammals, catching salt- and fresh-water fish, herding reindeer (in Eurasia), and gathering, for their food, clothing, and other products. Indigenous peoples' interaction with and knowledge of Arctic wildlife and environments has developed over millennia and is the foundation of their cultures. The length of time that Arctic indigenous peoples were in contact with Europeans varied across the Arctic. As recorded by Europeans, contact began as early as the 9 th century CE, if not before, in Fennoscandia and northwestern Russia, chiefly for reasons of commerce (especially furs); it progressed mostly west-to-east across northern Asia, reaching northeastern Arctic Asia by the 17 th century. North American Arctic indigenous peoples' contact with Europeans started in Labrador in the 16 th century and in Alaska in the 18 th century, and was not completed until the early 20 th century. Greenland's indigenous peoples first saw European-origin peoples in the late 10 th century, but those Europeans died out during the 15 th or 16 th century and Europeans did not return permanently until the 18 th century. Contact led to significant changes in Arctic indigenous economies, political structures, foods, cultures, and populations, starting especially in the 20 th century. For example, life expectancy among Alaska Natives has increased from 47 years in 1950 to over 69 years in 2000 (though it still lags behind that of U.S. residents overall, at 77 years). Also, at present, most Arctic indigenous peoples have become minorities in their countries' Arctic areas, except in Greenland and Canada. (One source estimates that, around 2003, about 10% of an estimated 3.7 million people in the Arctic were indigenous.) While many Arctic indigenous communities remain heavily dependent on hunting, fishing, and herding and are more likely to depend on traditional foods than nonindigenous Arctic inhabitants, there is much variation. Most Arctic indigenous people may no longer consume traditional foods as their chief sources of energy and nutrition. Major economic change is also relatively recent but ongoing. Many Arctic indigenous communities have developed a mixture of traditional economic activities and wage employment. The economics of subsistence and globalization will be key factors in the effects of climate change on Arctic indigenous peoples, and on their reactions to Arctic climate change. Arctic indigenous peoples' current political structures vary, as do their relationships with their national governments. Some indigenous groups govern their own unique land areas within the national structure, as in the United States and Canada; others have special representative bodies, such as the Saami parliaments in Norway, Finland, and Sweden; a few areas have general governments with indigenous majorities, such as Greenland (a member country of Denmark), Nunavut territory in Canada, and the North Slope and Northwest Arctic boroughs in Alaska. Control of land, through claims and ownership, also varies among Arctic indigenous peoples, as do rights to fishing, hunting, and resources. Arctic indigenous peoples' political relationships to their national and local governments, and their ownership or claims regarding land, are also significant factors in the responses to Arctic climate change by the indigenous peoples and by Arctic nations' governments. Effects of Climate Change Arctic climate change is expected to affect the economies, population, subsistence, health, infrastructure, societies, and cultures of Arctic indigenous peoples. Changes in sea ice and sea level, permafrost, tundra, weather, and vegetation distributions, as well as increased commercial shipping, mineral extraction, and tourism, will affect the distribution of land and sea mammals, of freshwater and marine fish, and of forage for reindeer. These will in turn affect traditional subsistence activities and related indigenous lifestyles. Arctic indigenous peoples' harvesting of animals is likely to become riskier and less predictable, which may increase food insecurity, change diets, and increase dependency on outside, nontraditional foods. Food cellars in many locations have thawed during summers, threatening food safety. Related health risks of diabetes, obesity, and mental illness have been associated with these changes. Sea, shoreline ice, and permafrost changes have damaged infrastructure and increased coastal and inland erosion, especially in Alaska, where GAO found in 2003 that "coastal villages are becoming more susceptible to flooding and erosion caused in part by rising temperatures." In response, Congress funded the U.S. Army Corps of Engineers to conduct a Baseline Erosion Assessment that identified and prioritized among the 178 communities identified at risk from erosion. (Risks from flooding were not examined.) GAO concluded in 2009 that many Native villages must relocate, but even those facing imminent threats have been impeded by various barriers, including difficulties identifying appropriate new sites, piecemeal programs for state and federal assistance, and obstacles to eligibility for certain federal programs. The Alaska Federation of Natives placed among its 2010 federal priorities a request to Congress to mitigate flooding and erosion in Alaska Native villages and to fund relocation of villages where necessary. However, "the cost is extraordinary," acknowledges Senator Lisa Murkowski. Oil, gas, and mineral exploration and development are expected to increase, as are other economic activities, such as forestry and tourism, and these are expected to increase economic opportunities for all Arctic residents, including indigenous peoples. Pressures to increase participation in the wage economy, however, may speed up changes in indigenous cultures. Increased economic opportunities may also lead to a rise in the nonindigenous population, which may further change the circumstances of indigenous cultures. Some representatives of Arctic indigenous people have related a "conflicting desire between combating climate change and embracing the potential for economic growth through foreign investment." Although important advances in public health have occurred in indigenous communities over past decades, some health problems may increase with continued Arctic climate change. Economic development may exacerbate Arctic pollution problems, including higher exposure to mercury, air pollution, and food contamination. The influx and redistribution of contaminants in the air, oceans, and land may change in ways that are now poorly understood. Warmer temperatures and longer warm seasons may increase insect- and wildlife-borne diseases. Climate change may lead to damage to water and sanitation systems, reducing protection against waterborne diseases. Changes in Arctic indigenous cultures may increase mental stress and behavioral problems. The response to climate change by Arctic indigenous peoples has included international activities by Arctic indigenous organizations and advocacy before their national governments. As one report noted, "the rise of solidarity among indigenous peoples organizations in the region is surely a development to be reckoned with by all those interested in policy issues in the Arctic." Six national or international indigenous organizations are permanent participants of the Arctic Council, the regional intergovernmental forum. Due in part to advocacy by Arctic indigenous people, the United Nations General Assembly adopted in 2007 the Declaration on the Rights of Indigenous Peoples. In April 2009, the Inuit Circumpolar Council (an organization of Inuit in the Arctic regions of Alaska, Canada, Greenland, and Russia) hosted in Alaska the worldwide "Indigenous Peoples Global Summit on Climate Change." The conference report, forwarded to the Copenhagen Conference of the Parties of the U.N. Framework Convention on Climate Change (December 2009), noted "accelerating" climate change caused by "unsustainable development" and, among several recommendations, called for a greater indigenous role in national and international decisions on climate change, including a greater role for indigenous knowledge in climate change research, monitoring, and mitigation. Polar Icebreaking225 Polar Icebreaker Operations Within the U.S. government, the Coast Guard is the U.S. agency responsible for polar icebreaking. U.S. polar ice operations conducted in large part by the Coast Guard's polar icebreakers support nine of the Coast Guard's 11 statutory missions. The roles of U.S. polar icebreakers can be summarized as follows: conducting and supporting scientific research in the Arctic and Antarctic; defending U.S. sovereignty in the Arctic by helping to maintain a U.S. presence in U.S. territorial waters in the region; defending other U.S. interests in polar regions, including economic interests in waters that are within the U.S. exclusive economic zone (EEZ) north of Alaska; monitoring sea traffic in the Arctic, including ships bound for the United States; and conducting other typical Coast Guard missions (such as search and rescue, law enforcement, and protection of marine resources) in Arctic waters, including U.S. territorial waters north of Alaska. The Coast Guard's large icebreakers are called polar icebreakers rather than Arctic icebreakers because they perform missions in both the Arctic and Antarctic. Operations to support National Science Foundation (NSF) research activities in both polar regions account for a significant portion of U.S. polar icebreaker operations. Supporting NSF research in the Antarctic focuses on performing an annual mission, called Operation Deep Freeze (ODF), to break through Antarctic sea ice so as to reach and resupply McMurdo Station, the large U.S. Antarctic research station located on the shore of McMurdo Sound, near the Ross Ice Shelf. The Coast Guard states that Polar Star , the Coast Guard's only currently operational heavy polar icebreaker, "spends the [northern hemisphere] winter [i.e., the southern hemisphere summer] breaking ice near Antarctica in order to refuel and resupply McMurdo Station. When the mission is complete, the Polar Star returns to dry dock [in Seattle] in order to complete critical maintenance and prepare it for the next ODF mission. Once out of dry dock, it's back to Antarctica, and the cycle repeats itself." In terms of the maximum thickness of the ice to be broken, the annual McMurdo resupply mission generally poses the greatest icebreaking challenge for U.S. polar icebreakers, though Arctic ice can frequently pose its own significant icebreaking challenges for U.S. polar icebreakers. The Coast Guard's medium polar icebreaker, Healy , spends most of its operational time in the Arctic supporting NSF research activities and performing other operations. Although polar ice is diminishing due to climate change, observers generally expect that this development will not eliminate the need for U.S. polar icebreakers, and in some respects might increase mission demands for them. Even with the diminishment of polar ice, there are still significant ice-covered areas in the polar regions, and diminishment of polar ice could lead in coming years to increased commercial ship, cruise ship, and naval surface ship operations, as well as increased exploration for oil and other resources, in the Arctic—activities that could require increased levels of support from polar icebreakers, particularly since waters described as "ice free" can actually still have some amount of ice. Changing ice conditions in Antarctic waters have made the McMurdo resupply mission more challenging since 2000. Current Polar Icebreaker Fleet The operational U.S. polar icebreaking fleet currently consists of one heavy polar icebreaker, Polar Star , and one medium polar icebreaker, Healy . In addition to Polar Star , the Coast Guard has a second heavy polar icebreaker, Polar Sea . Polar Sea , however, suffered an engine casualty in June 2010 and has been nonoperational since then. Polar Star and Polar Sea entered service in 1976 and 1978, respectively, and are now well beyond their originally intended 30-year service lives. The Coast Guard has used Polar Sea as a source of spare parts for keeping Polar Star operational. Polar Security Cutter (PSC) Program A Department of Homeland Security (DHS) Mission Need Statement (MNS) approved in June 2013 states that "current requirements and future projections ... indicate the Coast Guard will need to expand its icebreaking capacity, potentially requiring a fleet of up to six icebreakers (3 heavy and 3 medium) to adequately meet mission demands in the high latitudes...." The Coast Guard initiated in its FY2013 budget a program to acquire three new heavy polar icebreakers, to be followed by the acquisition of up to three new medium polar icebreakers. The program was originally referred to as the polar icebreaker program but is now referred to as the Polar Security Cutter (PSC) program. The Coast Guard wants to begin construction of the first new heavy polar icebreaker in FY2019 and have it enter service in 2023. The acquisition cost of a new heavy polar icebreaker had earlier been estimated informally at roughly $1 billion, but the Coast Guard and Navy now believe that three heavy polar icebreakers could be acquired for a total cost of about $2.1 billion, or an average of about $700 million per ship. The first ship will cost more than the other two because it will incorporate design costs for the class and be at the start of the production learning curve for the class. The PSC program received about $359.6 million in procurement funding through FY2018, including $300 million provided through the Navy's shipbuilding account (which is part of the Department of Defense's budget) and $59.6 million provided through the Coast Guard's procurement account (which is part of the Department of Homeland Security's [DHS's] budget). The FY2019 DHS appropriations act (Division A of H.J.Res 31 / P.L. 116-6 of February 15, 2019) provides an additional $675 million for the PSC program through the Coast Guard's procurement account, including $20 million for the procurement of long leadtime materials (LLTM) for the second ship in the program. The PSC program has thus received a total of $1,034.6 million (i.e., about $1.0 billion) in procurement funding through FY2019. Excluding the $20 million provided for the procurement of LLTM for the second ship in the program, the remaining total of $1,014.6 million appears to be enough (or perhaps more than enough) to fully fund the design and construction of the first ship in the program while also funding FY2019 and prior-year program administrative expenses. The Coast Guard's FY2019 five-year (FY2019-FY2023) Capital Investment Plan (CIP) projected that the Coast Guard's FY2020 budget would request an additional $125 million in FY2020 procurement funding for the PSC program, most of which would presumably be used as a second increment of procurement funding for the second ship in the class. Issues for Congress for the PSC program include, inter alia, whether to approve, reject, or modify the Coast Guard's annual procurement funding requests for the program; whether to use a contract with options or a block buy contract to procure the ships; whether to continue providing at least some of the procurement funding for the PSC program through the Navy's shipbuilding account; technical, schedule, and cost risk in the PSC program; and whether to procure heavy and medium polar icebreakers to a common basic design. Search and Rescue (SAR)233 Overview Increasing sea and air traffic through Arctic waters has increased concerns regarding Arctic-area search and rescue (SAR) capabilities. Table 1 presents figures on ship casualties in Arctic Circle waters from 2005 to 2014, as shown in the 2015 edition of an annual report on shipping and safety by the insurance company Allianz Global Corporate & Specialty. Given the location of current U.S. Coast Guard operating bases, it could take Coast Guard aircraft several hours, and Coast Guard cutters days or even weeks, to reach a ship in distress or a downed aircraft in Arctic waters. In addition, the harsh climate complicates SAR operations in the region. Particular concern has been expressed about cruise ships carrying large numbers of civilian passengers that may experience problems and need assistance. There have already been incidents of this kind with cruise ships in recent years in waters off Antarctica, and a Russian-flagged passenger ship with 162 people on board ran aground on Canada's Northwest Passage on August 24, 2018. Coast Guard officials have noted the long times that would be needed to respond to potential emergency situations in certain parts the Arctic. The Coast Guard is participating in exercises focused on improving Arctic SAR capabilities. Increasing U.S. Coast Guard SAR capabilities for the Arctic could require one or more of the following: enhancing or creating new Coast Guard operating bases in the region; procuring additional Arctic-capable aircraft, cutters, and rescue boats for the Coast Guard; and adding systems to improve Arctic maritime communications, navigation, and domain awareness. It may also entail enhanced forms of cooperation with navies and coast guards of other Arctic countries. 2017 Arctic SAR Capabilities Survey A 2017 survey of Arctic SAR capabilities conducted as part of the Finnish Border Guard's Arctic Maritime Safety Cooperation project in cooperation with the Arctic Coast Guard Forum stated the following: The key challenges for Arctic search and rescue identified in this survey include long distances, severe weather, ice and cold conditions, a poor communications network, lack of infrastructure and lack of resource presence in the region. In addition, the capacity to host patients, achieving situational awareness, and unsuitable evacuation and survival equipment pose major challenges for maritime safety and SAR in the Arctic. The Arctic SAR authorities have recognized a need to further develop advanced information sharing between coast guards, emergency authorities, and other stakeholders involved in SAR operations. In addition, joint training and systematic sharing of lessons learned, as well as technological innovation in communications networks and connections, navigation, survival and rescue equipment, and healthcare services are being called for in order to improve SAR capabilities in the Arctic. The survey recommends enhancing practical cooperation between various stakeholders involved in Arctic SAR such as coast guards, rescue centers, other authorities, industry groups, private operators, academia and volunteer organizations. It encourages further information sharing on infrastructure projects and resource assets, Automatic Identification System and weather data, emergency plans and standard operating procedures, as well as exercises and lessons learned via a common database. Furthermore, developing joint courses specifically intended for Arctic SAR and establishing a working group that examines new innovations and technological developments, are recommended as potential initiatives for improving practical international cooperation. May 2011 Arctic Council Agreement on Arctic SAR On May 12, 2011, representatives from the member states of the Arctic Council, meeting in Nuuk, Greenland, signed an agreement on cooperation on aeronautical and maritime SAR in the Arctic. Key features of the agreement include the following: Article 3 and the associated Annex to the agreement essentially divide the Arctic into SAR areas within which each party has primary responsibility for conducting SAR operations, stating that "the delimitation of search and rescue regions is not related to and shall not prejudice the delimitation of any boundary between States or their sovereignty, sovereign rights or jurisdiction," and that "each Party shall promote the establishment, operation and maintenance of an adequate and effective search and rescue capability within its area." Article 4 and the associated Appendix I to the agreement identify the competent authority for each party. For the United States, the competent authority is the Coast Guard. Article 5 and the associated Appendix II to the agreement identify the agencies responsible for aeronautical and maritime SAR for each party. For the United States, those agencies are the Coast Guard and the Department of Defense. Article 6 and the associated Appendix III to the agreement identify the aeronautical and/or maritime rescue coordination centers (RCCs) for each party. For the United States, the RCCs are Joint Rescue Coordination Center Juneau (JRCC Juneau) and Aviation Rescue Coordination Center Elmendorf (ARCC Elmendorf). Article 12 states that "unless otherwise agreed, each Party shall bear its own costs deriving from its implementation of this Agreement," and that "implementation of this Agreement shall be subject to the availability of relevant resources." Figure 4 shows an illustrative map of the national areas of SAR responsibility based on the geographic coordinates listed in the Annex to the agreement. An October 12, 2015, press report states the following: More people are wishing to explore icy environments, says Peter Hellberg, manager responsible for the SAR process at the Swedish Maritime Administration. Hellberg is part of an IMO/International Civil Aviation Organization (ICAO) working group that is re-evaluating search and rescue (SAR) operations in Polar waters as a result of this push. The working group includes both a maritime and aeronautical perspective, and it has identified a need for more detailed guidance for SAR organizations which will be achieved through an update of the International Aeronautical and Maritime Search and Rescue Manual (IAMSAR) planned for 2019. While the IAMSAR manual is not mandatory, it is followed by most SAR organizations around the world. It provides the framework for setting up a multi-national SAR, giving different parties guidance on the necessary arrangements for Arctic areas. The guidance will be expanded on based on the Polar Code and other recent IMO regulatory updates, and from an aeronautical perspective, from lessons learned after the disappearance of Malaysian Airlines' MH370. John S. McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515/S. 2987) The Senate Armed Services Committee, in its report ( S.Rept. 115-262 of June 5, 2018) on S. 2987 , states the following: Arctic search and rescue The committee is aware that growing international interest and changing environmental conditions in the Arctic have led to increased commercial and governmental activity in the High North. With this steady surge, the committee remains concerned by the limited capabilities of the United States to conduct search-and-rescue operations throughout the Arctic region. The committee notes that the Department of Defense's Report to Congress on Strategy to Protect United States National Security Interests in the Arctic Region, a report required in section 1068 of the National Defense Authorization Act for Fiscal Year 2016 (Public-Law 114–92), identified the need for additional personnel recovery capability in this region. Specifically, the report calls for "forward-deployed/based assets in a sustainable location and/or rapidly deployable air drop response/sustainment packages suitable to remote land, cold water, or ice pack operating environments." (Pages 139-140) The committee understands that the 176th Wing of the Alaska National Guard is the closest dedicated response force with the only refueling capability to respond to a search-and-rescue incident in the Arctic. The unit currently possesses two air-dropped, palletized Arctic Sustainment Packages (ASPs) to enable the survival of 50 individuals for 3 or more days in extreme Arctic conditions. The ASP is rapidly deployable over varied terrain, and allows personnel to survive and operate in the High North. Each ASP requires considerable resources for sustainability, demanding 500 man-hours to re-pack ASPs after testing and to continually keep contents viable. In light of the increased activity in this region, the committee believes that this capability could benefit from additional sustainment funding to maintain the two existing ASPs, and encourages the Secretary of Defense to prioritize its resourcing. (Pages 139-140) Geopolitical Environment242 Shift to Era of Renewed Great Power Competition A principal factor affecting the geopolitical environment for the Arctic is the shift that has occurred in recent years from the post-Cold War era that began in the late 1980s and early 1990s, also sometimes known as the unipolar moment (with the United States as the unipolar power), to a new and different international security environment that features, among other things, renewed great power competition with China and Russia and challenges by these two countries and others to elements of the U.S.-led international order that has operated since World War II. This shift in the international security environment, combined with the diminishment of Arctic ice and the resulting increase in human activities in the Arctic, has several potential implications for the geopolitical environment for the Arctic, which are discussed in the following sections. Arctic Tradition of Cooperation and Low Tensions The shift in the international security environment has raised a basic question as to whether the Arctic in coming years will continue to be a region generally characterized by cooperation and low tensions, as it was during the post-Cold War era, or instead become a region characterized at least in part by competition and increased tensions, as it was during the Cold War. In this regard, the shift in the international security environment poses a potential challenge to the tradition of cooperation, low tensions, peaceful resolution of disputes, and respect for international law that has characterized the approach used by the Arctic states, particularly since the founding of the Arctic Council in 1996, for managing Arctic issues. Some observers argue that the Arctic states and other Arctic stakeholders should attempt to maintain the region's tradition of cooperation and low tensions, and work to prevent the competition and tensions that have emerged in Europe, Asia, and elsewhere in recent years from crossing over into the Arctic. These observers argue that the Arctic tradition of cooperation and low tensions has proven successful in promoting the interests of the Arctic states and other Arctic stakeholders on a range of issues, that it has served as a useful model for other parts of the world to follow, and that in light of tensions and competition elsewhere in the world, this model is needed more now than ever. Other observers could argue that, notwithstanding the efforts of Arctic states and other Arctic stakeholders to maintain the Arctic as a region of cooperation and low tensions, it is unreasonable to expect that the Arctic can be kept fully isolated from the competition and tensions that have arisen in other parts of the world. As a consequence, these observers could argue, the Arctic states and other Arctic stakeholders should begin taking steps to prepare for increased competition and higher tensions in the Arctic, precisely so that Arctic issues can continue to be resolved as successfully as conditions may permit, even in a situation of competition and increased tensions. Still other observers might argue that a policy of attempting to maintain the Arctic as a region of cooperation and low tensions, though well-intentioned, could actually help encourage aggressive behavior by Russia or China in other parts of the world by giving those two countries confidence that their aggressive behavior in other parts of the world would not result in punitive costs being imposed on them in the Arctic. These observers might argue that maintaining the Arctic as a region of cooperation and low tensions in spite of aggressive Russian or Chinese actions elsewhere could help legitimize those aggressive actions and provide little support to peaceful countries elsewhere that might be attempting to resist them. This, they could argue, could facilitate a divide-and-conquer strategy by Russia or China in their relations with other countries, which in the long run could leave Arctic states with fewer allies and partners in other parts of the world for resisting unwanted Russian or Chinese actions in the Arctic. Still others might argue that there is merit in some or all of the above perspectives, and that the challenge is to devise an approach that best mixes the potential strengths of each perspective. Arctic Governance Spotlight on Arctic Governance and Limits of Arctic Council The shift in the international security environment to a situation of renewed great power competition may put more of a spotlight on the issue of Arctic governance and the limits of the Arctic Council as a governing body. As noted earlier in this report, regarding the limits of the Arctic Council as a governing body, the council states that it "does not and cannot implement or enforce its guidelines, assessments or recommendations. That responsibility belongs to each individual Arctic State." In addition, the council states that "the Arctic Council's mandate, as articulated in the [1996] Ottawa Declaration [establishing the Council], explicitly excludes military security." During the post-Cold War era—the period when the Arctic Council was established and began operating—the limits of the Arctic Council as a governing body may have been less evident or problematic, due to the post-Cold War era's general situation of lower tensions and reduced overt competition between the great powers. In the new situation of renewed great power competition, however, it is possible that these limits could become more evident or problematic, particularly with regard to addressing Arctic-related security issues. If the limits of the Arctic Council as a governing body are judged as having become more evident or problematic, one option might be to amend the rules of the council to provide for some mechanism for enforcing its guidelines, assessments, or recommendations. Another option might be to expand the council's mandate to include an ability to address military security issues. Supporters of such options might argue that they could help the council adapt to the major change in the Arctic's geopolitical environment brought about the shift in the international security environment, and thereby help maintain the council's continued relevance in coming years. They might also argue that continuing to exclude military security from the council's mandate risks either leaving Arctic military security issues unaddressed, or shifting them to a different forum that might have traditions weaker than those of the Arctic Council for resolving disputes peacefully and with respect for international law. Opponents of such options might argue that they could put at risk council's ability to continue addressing successfully nonmilitary security issues pertaining to the Arctic. They might argue that there is little evidence to date that the council's limits as a governing body have become problematic, and that in light of the council's successes since its founding, the council should be viewed as an example of the admonition, "if it isn't broke, don't fix it." Some relatively little-publicized multilateral discussions of Arctic security issues have taken place. For example, in mid-2011, the U.S. European Command (EUCOM), in cooperation with the Norwegian Ministry of Defense, established the Arctic Security Forces Roundtable (ASFR), consisting of high-ranking military officers from the eight members of the Arctic Council, plus France, Germany, the Netherlands, and the UK. Another newly formed venue at which military leaders discuss Arctic issues is the Northern Chiefs of Defense conference, which held its first meeting in May 2012, with military representatives from the eight Arctic Council governments in attendance. A February 9, 2019, blog post stated The function of the Arctic Council has been largely defined by the form imposed upon it in the [1996] Ottawa Declaration on the Establishment of the Arctic Council. Arguably, among its most distinctive features are: • The inheritance of the Working Groups from the 1991 Arctic Environmental Protection Strategy; • A lack of legal personality as an international organisation; • A lack of defined financial contributions; • The inclusion of Indigenous representatives as Permanent Participants; • Its constitution as a consensus based forum; and • The exclusion of military security from its agenda. The Arctic and the global context have evolved substantially since regional cooperation was initiated over two decades ago. Therefore, it is worthwhile to ask what reforms of the Arctic Council are required given the governance needs of the contemporary political situation, yet still practicable given the constraints of path dependence. The Arctic Council itself has recognized the need to reassess its form to allow for improved function. Most recently, the 2017 Fairbanks Declaration saw the Arctic States Recognize that the Arctic Council continues to evolve, responding to new opportunities and challenges in the Arctic, and instruct the Senior Arctic Officials to develop a strategic plan based on the Arctic Council's foundational documents and subsidiary body strategies and guiding documents, for approval by Ministers in 2019. It is in this context that we submit for consideration an analysis of what works well in the Arctic Council, where there are inadequacies, and what role it can most effectively play in Arctic politics…. Although the Arctic Council has a good foundation, it is constrained in significant ways. The first of these is funding. While the Arctic Council Secretariat seems adequately funded (1.24 million USD in 2017, with Norway contributing half), it has very little discretionary funding. Similarly, the Working Groups rely on one or two states to fund a secretariat but have limited ongoing project funds. Almost all activities are funded on an ad hoc basis by the states who advocated for them and by individual experts who secure their own funding through national channels. Thus, all too often it is funding that drives projects, not projects that drive funding…. While the Arctic Council has made good progress on becoming more transparent in recent years through its open access archive, it still struggles to be accountable to stakeholders, northerners, and taxpayers.… There has been perennial confusion about the role and relationship of Observers, especially with regard to non-Arctic states…. Related to this is the rather muted role of northern regional governments such as Alaska, Greenland, the Canadian territories, northern Nordic municipalities, and Russian Arctic okrugs, republics, krais, and oblasts…. Respecting sustainable development, it would be difficult to argue that the Arctic Council has had a broad impact.… in practice environmental protection has received the lion's share of attention, resources and outcomes. Education, health services, and local infrastructure—the fundamentals of developmen—are expensive public services that the Arctic Council has neither the funding nor the mandate to address. Development in the Arctic has a local and subnational nature that any international-level organization is unsuited to address.… With regards to economic development, the very topic was relatively taboo in regional politics until recent years, as it was synonymous in the Arctic with resource exploitation. Efforts to promote economic development have been mostly relegated to the Arctic Economic Council (AEC), an independent organization of business representatives facilitated by the Arctic Council in 2014. The AEC has limited capacity and its relationship with the Arctic Council—participation, reporting, support, etc.—remains ambiguous…. The elephant in the room in regional Arctic politics is climate change.… the Arctic Council has no expert group, no task force, and no working group devoted exclusively to it. The frequent reluctance of American and Russian, and occasionally other, governments to openly accept and commit to mitigating climate change through reducing greenhouse gases, let alone discuss the challenges of adapting to a necessary post-petroleum future, has precluded the Council from addressing one of the major threats to sustainable development and environmental protection in the region…. The Working Group structure was inherited from the 1991 Arctic Environmental Protection Strategy (AEPS)… [it is] a product of the particular challenges and opportunities that were becoming apparent at the time of the fall of the Soviet Union, especially regarding pollution in the Barents region and long-range transport of persistent pollutants…. The Ottawa Declaration called on states to "oversee and coordinate the programs established under the AEPS"; nonetheless, as a forum, it proscribed no formal reporting structure or hierarchy. As it happened, the Working Groups have developed unique and divergent organizational designs, largely dependent on the incorporation laws of the states which host their secretariats and the amount of funding they receive. Working Groups conduct many projects and meetings, but it is difficult to measure their relative effectiveness. As mentioned, the category of Task Force was established in 2009 seemingly to provide the Arctic Council with a better means by which to advance time-sensitive, policy-oriented initiatives…. Much has been made about the Arctic Council's lack of legal personality as an international organization; as a condition of US involvement in the 1990s, the Arctic Council was established as a consensus-based forum, not a treaty organization. States have not committed to abide by its decisions nor have they granted the organization any independent law-making authority. Thus, there are no 'votes' because no state is obliged to go along with the will of the majority of the group. The three legally binding agreements to come out of the Arctic Council are described as falling 'under its auspices'. There is an argument to be made that a more formal legal structure would strengthen the Arctic Council, and allow it to be more vigorous in implementing and monitoring policies such as environmental regulations. However, the informal nature of the partnership has allowed it to be flexible, accommodate the interests of different states, and adapt to varying levels of readiness to adopt and enforce new national legislation (e.g. stricter environmental regulations). Importantly, it has also allowed for the full involvement of the Permanent Participants, whereas a legal international institution would by definition exclude them from decision-making, as they have no obligations under international law. It is also worth noting that the Arctic Council's lack of a legal personality as an international organization has not prevented it from being involved in discussions, primarily through its Working Groups, that have led the Arctic states to enter into legally binding agreements outside of the forum's parameters…. The Ottawa Declaration set in place the Arctic Council's two year rotating Chairmanship, which began with Canada in 1998 and ended with Sweden in 2013 before beginning the cycle anew. The short-term length has its detractors, as it has led to a lack of continuity in the Arctic Council's work…. At the same time, the rotating Chairmanship has ensured that every state, at least periodically, becomes heavily invested in the success of the Council, and develops familiarity with the forum and its inner workings. The establishment of the permanent Secretariat in Tromsø in 2013 removed many of the most glaring issues with the rotating Chairmanship…. Based on this assessment of the Arctic Council's strengths and weaknesses, we offer these recommendations to improve the Arctic Council's form and function as it undergoes a strategic planning process: 1. Evaluate, and if warranted overhaul, the Working Group structure…. 2. Ensure that the Arctic Council has the appropriate capacity and resources, through a Working Group, Task Force or some other dedicated mechanism, to take on the key challenge of climate change mitigation. 3. Address capacity issues with more stable core funding and the creation of a substantial project fund to enhance the timeliness, sustainability, and effectiveness of what are determined to be the Council's most vital activities.… 4. Limit the Arctic Council's role to functions which only it can perform, and be more comfortable devolving work and resources to more appropriate bodies as needed (as has been done with e.g. fisheries and shipping). 5. More formally engage with sub-national governments by encouraging states to support their participation in relevant Working Groups projects. 6. Expand the Amarok tracking tool to more comprehensively evaluate, rather than simply track, the performance and outcomes of Arctic Council projects. Avoid having reports as a project outcome in and of themselves. 7. Embrace a knowledge transfer role, as opposed to a policy development role, on relevant issues of sustainable development, such as sanitation, local energy infrastructure, internet connectivity, economic development, cold climate technologies, and adaptation to future changes in climate and the global energy system. 8. Continue to maintain good international relations and compartmentalize global geopolitical issues outside the Council. China and Arctic Governance The shift in the international security environment to a situation of renewed great power competition may put more of a spotlight on differing perspectives between China and the eight member states of the Arctic Council regarding Arctic governance. A July 6, 2018, press report states that Russia and China diverge on the fundamental question of who makes international law in the Arctic. For a long time, admittedly, China wasn't interested: Way back in 1925, the Nationalist government [of China] signed the critical Spitsbergen Treaty granting non-Arctic nations rights in the northern seas, [said Sun Yun, the Stimson's Center's China program director], but his Communist successors didn't actually realize they'd inherited those rights until 1991, [which was] "a pleasant surprise." In the '90s, however, the eight Arctic Council nations—the US, Canada, Iceland, Finland, Russia, Sweden, Norway, and Denmark, which owns Greenland—set up a system of governance that largely sidelined other states. 13 countries do rate observer status on the Council, including China as of 2013 (even stranger bedfellows include Italy, India, and Singapore). But the eight voting members are generally not keen on diluting their control. China, by contrast, sees itself as a rising global superpower with commensurate influence everywhere on earth. It declared itself a near-Arctic state in January [2018]—a term actually coined by Great Britain but not widely recognized. China wants non-Arctic nations, especially "near-Arctic" ones, to have greater influence and more rights in the Arctic, with binding international law based on the UN Convention on the Law of the Sea (UNCLOS) rather than the current patchwork of mostly voluntary regional arrangements. Indeed, said Sun, "what they would like to argue is the format and the content of the Arctic governance system currently is not effective." Naturally the Russians, US, Canada, and Nordics disagree. "The Arctic states would argue there is very little governance gap," said Norway-based expert Elana Wilson Rowe, as they did in 2008 when they rejected an Antarctica-style treaty regime. Though the key agreements up north are admittedly non-binding, she said, the Arctic has become "a fairly heavily governed landscape." An October 15, 2018, blog post states that China's interest in the Arctic extends beyond the purely economic: it is also pressing for a greater role in its governance. Compared to the Antarctic—where governance is heavily institutionalized, governance of the Arctic is much less developed, largely due to their distinctly different natures…. The legal framework [for the Arctic] is a patchwork affair, drawn from various treaties of global application (including the UN Charter and the UN Convention on the Law of the Sea), the Svalbard Treaty(recognizing Norway's sovereignty over the eponymous Arctic archipelago), as well as customary international law and general principles of law. So far, the Arctic Council has been the forum for the conclusion of only three legally binding agreements. China sees a gap for new ideas, rules and participants in this space. A white paper released by the government in January [2018] contains sophisticated and detailed analysis of the international legal framework applicable to the Arctic and demonstrates China's increasing knowledge and capability in this area, as reflected in the growing number of Chinese international lawyers specializing in Arctic matters. The white paper seeks to justify China's involvement in Arctic affairs as a 'near Arctic state', noting that the Arctic's climate, environment and ecology are of concern for all states. The white paper uses familiar phrases from China's vision for its foreign policy—such as the 'shared future of mankind' and 'mutual benefit'—to argue for a pluralist (i.e. global, regional and bilateral) approach to Arctic governance…. … As an observer state, China has very limited rights in the council, but has been creatively using other routes to influence Arctic governance, including active engagement within the International Maritime Organization (IMO) and the International Seabed Commission. China participated in the formation of the IMO's Polar Code of January 2017, which sets out rules for ships operating in polar waters. China was also one of ten states involved in the recent adoption of the Agreement to Prevent Unregulated High Seas Fisheries in the Central Arctic Ocean, which took place outside the umbrella of the Arctic Council. At a recent roundtable in Beijing co-hosted by Chatham House, Chinese experts noted China's aspirations to develop the international rule of law in the Arctic through playing an active role in developing new rules in areas currently under (or un-) regulated, for example, through a treaty to strengthen environmental protection in the region. It was also suggested that China may also seek to clarify the meaning of existing rules through its own practice. China also has ambitions to contribute to the research of the Arctic Council's Working Groups, which develop proposals for Arctic Council projects and rules. It remains to be seen to what extent Arctic states, protective of theirown national interests in an increasingly fertile area, will cede space for China to participate. China's push to be a rule shaper in the Arctic fits into a wider pattern of China seeking a more influential role in matters of global governance. This trend is particularly apparent in areas where the rules are still emerging and thus where China feels more confident than in areas traditionally dominated by Western powers. A similar assertiveness by China is increasingly visible in other emerging areas of international law, such as the international legal framework applicable to cyber operations and international dispute settlement mechanisms relating to trade and investment. China's approach to Arctic governance offers an interesting litmus test as to how far China intends to deploy international law to assert itself on governance issues with significant global economic, environmental, and security implications – along with the degree to which it will be perceived as acting in the common interest in doing so. A November 22, 2018, press report states China has become a "rule maker" in the global governance of the Arctic, a blue paper said Thursday, calling on the country to "stay calm" and respond with action in the face of the hyped-up "China threat" theory. Jointly released by Beijing-based Social Sciences Academic Press and Qingdao-based Ocean University of China on Thursday, the blue paper said China's role in promoting global governance in the region cannot be ignored. In terms of global governance of the Arctic, China's role has shifted from a "rule follower" to a "rule maker," said the blue paper. China has led the governance philosophy and is taking the initiative in shaping the global governance agenda in the Arctic, it stressed. China is a "near-Arctic country" geographically. The natural conditions and changes in the Arctic have a direct impact on China' s climate system and ecological environment, which in turn affects China's economic interests in the fields of agriculture, forestry, fisheries and oceans, the blue paper said. Arctic countries also have concerns, of which China is aware, said the blue paper, stressing that maintaining regional security and promoting world peace has been the basic rule of China's diplomatic policies. The associate editor of the blue paper, Dong Yue, who is the deputy head of the Law School of Ocean University of China, told the Global Times on Thursday that the paper's call for China to "stay calm" means China won't take any "radical" action. The paper said that China holds the principle of respecting the sovereignty of Arctic states, not hurting their basic rights and guaranteeing the decision-making powers of the Arctic Council. China has been an observer member at the council since 2013. The "China threat theory" may mean other countries will unfairly raise the threshold for Chinese enterprises to become involved in the development of the Arctic, Zhang Xia, director of the Shanghai-based Polar Strategy Center at the Polar Research Institute of China, told the Global Times on Thursday. A November 29, 2018, statement to a committee of the Canadian parliament states that China is not the only non-Arctic state to develop an Arctic policy and look for a deeper commitment to the region. Most other observer states to the Arctic Council have an Arctic strategy, a polar strategy, or at least some official guidelines regarding their Arctic policy.… It remains to be seen whether, like China, these non-Arctic nations see themselves as "near Arctic states" that cannot leave the leadership of a strategic region to eight nations only; and whether they might find it advantageous to coalesce as a group of like-minded countries to seek more political and decisional weight both within the Arctic Council and in other international fora. So far, the approach of Arctic states has been to coopt non-Arctic states rather than exclude them. Most have been eventually accepted as observer states in the Arctic Council, and they are participating in the development of new rules for the Arctic.… Yet Arctic nations have made clear that the broader legal background for such development should remain the United Nations Convention on the Law of the Sea and other existing principles of international law. As stated in the 2008 Ilulissat Declaration, they reject the development of new international rules specifically for the Arctic—an equivalent of the Antarctica Treaty—as such a treaty would require painful negotiations and would likely be less advantageous for them than the current system. Arctic and World Order Another potential implication for the Arctic of the shift in the international security environment concerns the new environment's challenges to elements of the U.S.-led international order that has operated since World War II. One element of the U.S.-led international order that has come under challenge is the principle that force or threat of force should not be used as a routine or first-resort measure for settling disputes between countries. Another is the principle of freedom of the seas (i.e., that the world's oceans are to be treated as an international commons). If either of these elements of the U.S.-led international order is weakened or overturned, it could have potentially major implications for the future of the Arctic, given the Arctic's tradition of peaceful resolution of disputes and respect for international law and the nature of the Arctic as a region with an ocean at its center that washes up against most of the Arctic states. More broadly, some observers assess that the U.S.-led international order in general may be eroding or collapsing, and that the nature of the successor international order that could emerge in its wake is uncertain. An erosion or collapse of the U.S.-led international order, and its replacement by a new international order of some kind, could have significant implications for the Arctic, since the Arctic's tradition of cooperation and low tensions, and the Arctic Council itself, can be viewed as outgrowths of the U.S.-led order. Relative Priority of Arctic in U.S. Policymaking The shift in the international security environment has raised a question concerning the priority that should be given to the Arctic in overall U.S. policymaking. During the post-Cold War era, when the Arctic was generally a region of cooperation and low tensions, there may have been less need to devote U.S. policymaker attention and resources to the Arctic. Given how renewed great power competition and challenges to elements of the U.S.-led international order might be expressed in the Arctic in terms of issues like resource exploration, disputes over sovereignty and navigation rights, and military forces and operations, it might be argued that there is now, other things held equal, more need for devoting U.S. policymaker attention and resources to the Arctic. On the other hand, renewed great power competition and challenges to elements of the U.S.-led international order are also being expressed in Europe, the Middle East, the Indo-Pacific, Africa, and Latin America. As a consequence, it might be argued, some or all these other regions might similarly be in need of increased U.S. policymaker attention and resources. In a situation of constraints on total U.S. policymaker attention and resources, the Arctic would need to compete against these other regions for U.S. policymaker attention and resources. U.S., Canadian, and Nordic Relations with Russia in Arctic The shift in the international security environment to a situation of renewed great power competition raises a question for U.S., Canadian, and Nordic policymakers regarding the mix of cooperation and competition to pursue (or expect to experience) with Russia in the Arctic. In considering this question, geographic points that can be noted include the following: Russia, according to one assessment, "has at least half of the Arctic in terms of area, coastline, population and probably mineral wealth." Russia has numerous cities and towns in its Arctic, uses its coastal Arctic waters as a maritime highway for supporting its Arctic communities, is promoting the Northern Sea Route that runs along Russia's Arctic coast for use by others, and is keen to capitalize on natural resource development in the region, both onshore and offshore. In this sense, of all the Arctic states, Russia might have the most at stake in the Arctic in absolute terms. Arctic ice is diminishing more rapidly or fully on the Russian side of the Arctic than it is on the Canadian side. Consequently, the Northern Sea Route along Russia's coast is opening up more quickly for trans-Arctic shipping than is the Northwest Passage through the Canadian archipelago. On the one hand, the United States, Canada, and the Nordic countries continue cooperate with Russia on a range of issues in the Arctic, including, to cite just one example, search and rescue (SAR) under the May 2011 Arctic Council agreement on Arctic SAR (see " Search and Rescue (SAR) "). More recently, the United States and Russia cooperated in creating a scheme for managing two-way shipping traffic through the Bering Strait and Bering Sea. A July 17, 2018, opinion piece states that It's likely that few, if any, of either [President Trump's or President Putin's] advisors, let alone commentators, are looking to the Arctic—yes, the Arctic—as a starting point for common ground and improving relations going forward…. Yet, other than the International Space Station, the Far North is perhaps the only setting in which the United States and the Russian Federation cooperate today on a wide variety of issues. These two practical examples of cooperation might provide a foundation upon which both sides can regain some trust and positive momentum in their bilateral relationship (that is, if there is will on both sides to do so). If such momentum could be sustained over any meaningful period of time, it may create a more functional context to address other pressing and multilateral issues of global importance…. Clearly the recent agreements on Central Arctic Ocean fishing and research provide pathways for cooperation. Perhaps a joint Arctic marine expedition in the remote Central Arctic Ocean in support of the new fisheries agreement could be proposed? The U.S. and Russia could take the lead in the Arctic Coast Guard Forum (now chaired by Finland) in exploring enforcement issues with the new IMO International Code for Ships Operating in Polar Waters. Renewed military-to-military cooperation could be feasible if the joint meetings were to focus on Arctic emergency operations, something more likely as shipping and development activities increase. Presidents Trump and Putin could support renewed friendship flights and cultural exchanges between the indigenous communities that border our shared Bering and Chukchi Seas. On the other hand, as discussed later in this report, a significant increase in Russian military capabilities and operations in the Arctic in recent years has prompted growing concerns among U.S., Canadian, and Nordic observers that the Arctic might once again become a region of military tension and competition, as well as concerns about whether the United States, Canada, and the Nordic countries are adequately prepared militarily to defend their interests in the region. In protest of Russia's forcible occupation and annexation of Crimea and its actions elsewhere in Ukraine, Canada announced that it would not participate in an April 2014 working-level-group Arctic Council meeting in Moscow. In addition, former Secretary of State Hillary Clinton, during whose tenure a "reset" in relations with Russia was sought, reportedly stated that Arctic cooperation may be jeopardized if Russia pursues expansionist policies in the high north. More recently, economic sanctions that the United States imposed on Russia in response to Russian actions in Ukraine could affect Russian Arctic offshore oil exploration. Another potential concern for U.S. policymakers in connection with Russia in the Arctic relates to the Northern Sea Route. Russia considers certain parts of the Northern Sea Route to be internal Russian waters—a position that creates a potential source of tension with the United States, which may consider at least some of those waters to be international waters. A dispute over this issue could have implications not only for the Arctic, but for other parts of the world as well, since international law is universal in its application, and a successful challenge to international waters in one part of the world can serve as a precedent for challenging it in other parts of the world. A November 30, 2018, press report states Russia plans to restrict the passage of foreign warships in the Arctic Ocean next year, a top defense official has said…. On Friday [November 30], Defense Ministry spokesman Mikhail Mizintsev said that Russia's ministries were working on amending legislation that would require foreign warships to notify Russia before being able to pass through the Arctic. The work will be completed by the time the waters are navigable in 2019, Mizintsev was cited by Interfax as saying at a conference on Friday. NATO, the EU, and the Arctic The shift in the international security environment has led to a renewal of NATO interest in NATO's more northerly areas. During the Cold War, NATO member Norway and its adjacent sea areas were considered to be the northern flank of NATO's defensive line against potential aggression by the Soviet-led Warsaw Pact alliance. With the end of the Cold War and the shift to the post-Cold War era, NATO planning efforts shifted away from defending against potential aggression by Russia, which was considered highly unlikely, and toward other concerns, such as the question of how NATO countries might be able to contribute to their own security and that of other countries by participating in out-of-area operations, meaning operations in areas outside Europe. With the ending of the post-Cold War era and the shift in the international security environment to a period of renewed great power competition, NATO is now once again focusing more on the question of how to deter potential Russian aggression against NATO countries. As one consequence of that, Norway and its adjacent sea areas are once again receiving more attention in NATO planning. For example, a NATO exercise called Trident Juncture 18 that was held from October 25 to November 7, 2018, in Norway and adjacent waters of the Baltic and the Norwegian Sea, with participation by all 29 NATO members plus Sweden and Finland, was described as NATO's largest exercise since the Cold War, and featured a strong Arctic element, including the first deployment of a U.S. Navy aircraft carrier above the Arctic Circle since 1991. The question of NATO's overall involvement in the Arctic, however, has been a matter of debate within NATO. A 2012 report stated that "[t]here is currently no consensus within the alliance that NATO has any role to play in the Arctic, as Canada strongly opposes any NATO involvement on sovereignty grounds and other NATO members are concerned with negative Russian reaction." A 2013 NATO Parliamentary Assembly report noted that "50% of the territory surrounding the Arctic Sea is a territory of a NATO member state," and suggested that "NATO could serve as a forum for dialogue on military issues.... " The report argued that the alliance is well-equipped to play a key role in addressing security challenges that will likely emerge, particularly those that involve surveillance, search-and-rescue, and environmental cleanup. However, observers stated that the lack of unanimity over a NATO presence in the Arctic was reflected by the fact that the high north was not mentioned in either in NATO's 2010 strategic concept, nor in the final declaration of NATO's 2012 Chicago summit. On May 8, 2013, following a visit to Norway, then-NATO Secretary General Rasmussen stated that "at the present time," the alliance had "no intention of raising its presence and activities in the High North." In May 2017, it was reported that NATO "may revive a Cold War naval command to counter Moscow's increased submarine activity in the Arctic and protect Atlantic sea lanes in the event of a conflict, according to allied diplomats and officials briefed on the planning work." An April 4, 2018, press report states the following: Despite rising tensions with Russia in Eastern Europe, the Baltics and more recently in the United Kingdom, NATO would like to keep the Arctic an area of low tensions, the chief of the North Atlantic Alliance said Wednesday [April 4]. "We used to say that in the High North we have low tensions," NATO Secretary General Jens Stoltenberg told reporters during a joint press conference with Prime Minister Justin Trudeau. "And I think we should continue to strive for avoiding an arms race and higher tensions in the High North." At the same time the alliance needs to respond to the increased Russian military presence in the North Atlantic and the Arctic regions with more of its own naval forces, said Stoltenberg who was in Ottawa for a two-day visit. "Therefore part of the adaptation of NATO is that we are also increasing our naval capabilities, including the High North," Stoltenberg said. Two observers state in a June 27, 2018, policy paper that The North Atlantic Treaty Organization (NATO) summit in Brussels on July 11 and 12 is an opportunity for the Alliance to finally focus on a region it has long ignored: the Arctic…. NATO has no agreed common position on its role in the Arctic region. The [July 2016 NATO] Warsaw Summit Declaration did not mention the word Arctic, and neither does the Alliance's most recent Strategic Concept published in 2010. NATO has been internally divided on the role that the Alliance should play in the High North. Norway is the leading voice inside the Alliance for promoting NATO's role in the Arctic. It is the only country in the world that has its permanent military headquarters above the Arctic Circle, and it has invested extensively in Arctic defense capabilities. Canada has likewise invested heavily in Arctic defense capabilities. However, unlike Norway, Canada has stymied past efforts by NATO to take a larger role in the region. Generally speaking, there is a concern inside Canada that an Alliance role in the Arctic would afford non-Arctic NATO countries influence in an area where they otherwise would have none. A July 2, 2018, opinion piece by another observer stated the following: Since 2014, the alliance has adapted to focus on Russia's actions in eastern Europe, notably in the Baltic region and in Poland…. But strengthening NATO's eastern flank is not enough. Little has been done to work out a coherent vision for how to protect NATO interests in the Arctic or in the Black Sea. This is worrying since Russia is emboldened in both regions, as seen through brinksmanship such as provocative air manoeuvring, an assertive force posture and constant military drilling…. The Kremlin defined its Arctic strategy back in 2008 and named the High North a region of strategic importance in its 2017 naval doctrine…. NATO by contrast lacks any comparable strategy for the High North: its 2010 Strategic Concept does not even mention the region and discussions on the North Atlantic do not automatically include the High North. The creation of a new NATO North Atlantic Joint Force Command this February, without a proper Arctic angle, proves this point. Furthermore, the 'GIUK gap' (Greenland, Iceland and the UK), connecting the North Atlantic to the Arctic region, is often overlooked. The European Union (EU) is also showing increased interest in the Arctic. A February 20, 2019, press report states that Just as it is in Russia and in China, the Arctic is rapidly rising to the top of the political agenda of the European Union. Increased geopolitical focus on the Arctic is creating renewed urgency in Brussels when it comes to securing a proper role for the EU in the Arctic and to increasing European access to Arctic oil, gas, minerals, fish stocks and shipping routes.… The EU has played for a number of years an increasing, if somewhat disjointed role in the Arctic. Sweden and Finland, both members of the EU, embrace large Arctic regions that are subject to EU legislation. The Kingdom of Denmark consists of Denmark, which is a EU member country, and the Faroe Islands and Greenland, both territories that are not part of the EU.… The Faroe Islands and Greenland are both influenced by economic ties to the EU and by a number of international agreements involving the EU. The two non-EU-countries Norway and Iceland, both members of the Arctic Council, are members of the European Economic Area and thus part of the inner market of the European Union and its customs regime. The EU is an important importer of Arctic fish, shrimp, minerals and gas and a central sponsor of Arctic science programs. The EU is a key signatory to the recent moratorium on fishing in the central parts of the Arctic Ocean, the Polar Code of the IMO and several other key international regimes (and European industry contributes significantly to emission of carbon dioxide and black carbon that accelerates climate change in the Arctic). But recently, the EU has taken a more urgent interest in the region, Vilen says. EU Commission President Jean Claude Juncker has personally positioned the Arctic in the very foreground of policy making in Brussels by commissioning a policy paper on the EU's Arctic priorities. The timing of this initiative is a point in itself. The forthcoming policy paper, due in the early part of May [2019], will have the potential to influence not only electoral campaigns prior to the elections to the European Parliament later that month, but also the next EU Commission, which is to be formed most likely late this year, and the next seven-year budget of the European Union, which is currently very much on the table…. "The Arctic policy importance comes with the change of the geopolitical setting of the Arctic," Vilen told me. "The position of the Arctic is different today due to China's increased interest, Russia's increased interest, increased American policy positions and because of the needs and demand for natural resources, gas, oils, minerals and fishing stocks. The Arctic has changed, but what has not changed is the European positions and assessments on how we should be engaged. I am trying to argue that the European Union should be ready to take a leadership role in the Arctic, because if we don't do it, someone else will try to."… After years of preparation, the European Commission and the EU's High Representative for Foreign Affairs and Security Policy adopted in 2016 the European Union's first comprehensive Arctic strategy, the "Integrated Arctic Policy," legally binding for all 28 member states. Such a policy would normally not be overhauled for another four or five years, but Juncker has obviously seen a need for a quicker update. The upcoming policy paper will not be legally binding for the member states, nor will it formally change the policy adopted in 2016, but as Vilen explained it will likely strengthen focus, priorities and overall attention to the Arctic in Brussels at a conspicuous moment in European affairs…. The wish to secure European access to oil, gas, minerals, fishing stocks, shipping routes and other Arctic resources is a main pillar of Vilen's approach…. Traditionally, the EU has not involved itself in Arctic security and Vilen has no intention to change this approach. The EU is engaged in a prolonged and deep sanctions standoff with Russia following Russia's military annexation of Crimea in 2014, but like the Arctic states and the Arctic Council, the EU still treasures its dialogue with Russia on Arctic affairs; this allows for the dialogue that is otherwise missing. Russia is still blocking the EU's admission as a formal observer to the Arctic Council, but Vilen downplays this aspect of the EU's Russia relations: "In practice, it has not affected the European Union's engagement in any way. We continue to work as a de facto observer in the working groups [of the Arctic Council], and a lot of the material information to the groups come from the European Commission services and also a lot of the financing for the projects. So we are in. The de jure position is not here, but our de facto position is in place," he said. China in the Arctic China's Growing Activities in Arctic China's activities in the Arctic have grown steadily in recent years. As noted earlier in this report, China was one of six non-Arctic states that were approved for observer status by the Arctic Council in 2013. China in recent years has engaged in growing diplomatic activities with the Nordic countries, and has increased the size of its diplomatic presences in some of them. In April 2013, China and Iceland signed a free trade agreement—China's first such pact with a European government—and has pursued the possibility of oil exploration in waters off Iceland. China has also engaged in growing economic discussions with Greenland, a territory of Denmark that might be moving toward eventual independence. China has an Arctic-capable icebreaker, Xue Long (Snow Dragon), that in recent years has made several transits of Arctic waters—operations that China describes as research expeditions. China is completing construction of its second Arctic-capable icebreaker (the first that China has built domestically), to be named Xue Long 2 , and has announced an intention to eventually build a 30,000-ton nuclear-powered icebreaker, which would make China only the second country (along with Russia) to operate a nuclear-powered icebreaker. Like several other nations, China has established a research station in the Svalbard archipelago. China in January 2018 released a white paper on China's Arctic policy that refers to China as a "near-Arctic state." (China's northernmost territory, northeast of Mongolia, is at about the same latitude as the Aleutian Islands in Alaska, which, as noted earlier in this report, the United States includes in its definition of the Arctic for purposes of U.S. law.) The white paper refers to trans-Arctic shipping routes as the Polar Silk Road, and identifies these routes as a third major transportation corridor for the Belt and Road Initiative (BRI), China's major geopolitical initiative, first announced by China in 2013, to knit Eurasia and parts of Africa together in a Chinese-anchored or Chinese-led infrastructure and economic network. China appears to be interested in using the Northern Sea Route (NSR) linking Europe and Asia via waters running along Russia's Arctic coast to shorten commercial shipping times between Europe and China and perhaps also to reduce China's dependence on southern sea routes (including those going to the Persian Gulf) that pass through the Strait of Malacca—a maritime choke point that China appears to regard as vulnerable to being closed off by other parties (such as the United States) in time of crisis or conflict. China reportedly reached an agreement with Russia on July 4, 2017, to create an "Ice Silk Road," and in June 2018, China and Russia agreed to a credit agreement between Russia's Vnesheconombank (VEB) and the China Development Bank that could provide up to $9.5 billion in Chinese funds for the construction of select infrastructure projects, including in particular projects along the NSR. In September 2013, the Yong Shen , a Chinese cargo ship, became the first commercial vessel to complete the voyage from Asia to Rotterdam via the NSR. China is interested in oil and gas exploration in the Arctic, and has made significant investments in Russia's Arctic oil and gas industry. In March 2013, it was announced that Russia and China had signed an agreement under which China would purchase oil from Russia in exchange for exploration licenses in the Arctic. China's investments in Russia's Arctic oil and gas industry include an ownership stake of at least 20% in the Yamal natural gas megaproject located on Russia's Yamal Peninsula in the Arctic. The facility includes onshore and offshore natural gas wells, a deepwater port, liquefied natural gas (LNG) storage and feeder lines, permafrost-resilient support buildings, and rail lines. In July 2018, an LNG shipment reportedly arrived in China from the Yamal LNG facility, via the NSR, for the first time. China is also interested in mining opportunities in the Arctic seabed and in Greenland. Given Greenland's very small population, China may view Greenland as an entity that China can seek to engage using an approach similar to ones that China has used for engaging with small Pacific and Indian Ocean island states. China may also be interested in Arctic fishing grounds. China's growing activities in the Arctic may also reflect a view that as a major world power, China should, like other major world powers, be active in the polar regions for conducting research and other purposes. (Along with its growing activities in the Arctic, China has recently increased the number of research stations in maintains in the Antarctic.) Particularly since China published its Arctic white paper in January 2018, observers have expressed curiosity or concern about China's exact mix of motivations for its growing activities in the Arctic, and about what China's ultimate goals for the Arctic might be. Arctic States' Response The shift in the international security environment to a situation of renewed great power competition underscores a question for the Arctic states regarding whether and how to respond to China's growing activities in the Arctic. China's growing activities in the Arctic could create new opportunities for cooperation between China and the Arctic states. They also, however, have the potential for posing challenges to the Arctic states in terms of defending their own interests in the Arctic. For U.S. policymakers, a general question is how to integrate China's activities in the Arctic into the overall equation of U.S.-China relations, and whether and how, in U.S. policymaking, to link China's activities in the Arctic to its activities in other parts of the world. One specific question concerns potential areas for U.S.-Chinese cooperation in the Arctic. Another specific question could be whether to impose punitive costs on China in the Arctic for unwanted actions that China takes elsewhere. As one hypothetical example of such a cost-imposing action, U.S. policymakers could consider moving to suspend China's observer status on the Arctic Council as a punitive cost-imposing measure for unwanted Chinese actions in the South China Sea. In February 2019, it was reported that the United States in 2018 had urged Denmark to finance airports that China had offered to build in Greenland, so as to counter China's attempts to increase its presence and influence there. For Russia, the question of whether and how to respond to China's activities in the Arctic may pose particular complexities. On the one hand, Russia is promoting the NSR for use by others, in part because Russia sees significant economic opportunities in offering icebreaker escorts, refueling posts, and supplies to the commercial ships that will ply the waterway. In that regard, Russia presumably would welcome increased use of the route by ships moving between Europe and China. More broadly, Russia and China have increased their cooperation on security and other issues in recent years, in no small part as a means of balancing or countering the United States in international affairs, and Russian-Chinese cooperation in the Arctic can both reflect and contribute to that cooperation. On the other hand, Russian officials are said to be wary of China's continued growth in wealth and power, and of how that might eventually lead to China becoming the dominant power in Eurasia, and to Russia being relegated to a secondary or subordinate status in Eurasian affairs relative to China. Increased use by China of the NSR could accelerate the realization of that scenario: As noted above, the NSR forms part of China's geopolitical Belt and Road Initiative (BRI). Some observers argue that actual levels of Sino-Russian cooperation in the Arctic are not as great as Chinese or Russian announcements about such cooperation might suggest. A July 6, 2018, press report states the following: China and Russia are working together ever more closely in the Arctic, exploiting a policy vacuum in the US, an international panel of experts said here. But Sino-Russian cooperation is almost entirely commercial, focused on trade routes, offshore oil, telecommunications (most satellites don't cover the Arctic), and tourism. A military alliance is unlikely given Russia's deep ambivalence about China's growing influence in general and their very different views on who should run the Arctic in particular: the eight circumpolar countries alone—including both Russia and the US [through the Arctic Council]—or a larger group that includes self-declared "near-Arctic" nations like China. A July 12, 2018, press report states the following: China's actions both before and especially since [it published its Arctic white paper in January 2018] suggest that it is actually seeking not equality with others in the global frozen North, but rather a dominant position. And this prospect has already prompted some Russian commentators to suggest China wants to reduce Russia to the status of "a younger brother" in the Arctic…. China's expansive moves in the region have, to date, taken three forms. First, it is increasing its share of orders for goods carried across Arctic waters by the ships of other countries—especially those of the Russian Federation—something that gives it clout in Moscow in particular…. Moreover, China is boosting its ownership stake in ships flying the Russian flag. Second, it has launched a program to build both ice breakers and ice-capable ships so that it will be able to carry more of the goods and raw materials it wants with its own vessels rather than having to rely on anyone else's. And third—and perhaps most dramatically in terms of Beijing's long-term goals—Chinese firms are establishing drilling platforms in areas of the Arctic Ocean that Moscow claims as part of its exclusive economic zone (EEZ). Similarly, it is building port facilities on Russian territory that are located far from China and that may soon eclipse Russian ones. All three of these developments merit close attention, both for what they say about China's intentions as well as Beijing's increasing upper hand regarding a region and waterway Moscow has long insisted are exclusively Russian. A November 7, 2018, press report states An article published on October 5 by the Russian International Affairs Council (RIAC) discusses Russia's strategy in the Arctic region and the evolving role of China therein…. It frames the United States and the European Union as Russia's main regional competitor. But China is notably presented as a "strategic partner" for whom "the Arctic region is not a top strategic priority" and whose efforts to build up its naval strength are related to a desire to challenge the US, not Russia. The sentiments expressed in the above-mentioned RIAC article appear to reflect how Moscow views the prior concrete steps the Russian Federation and People's Republic of China (PRC) have been taking to strengthen bilateral cooperation in the Arctic.… Nonetheless, Chinese ambitions in the Arctic seem to extend beyond the level of such joint initiatives…. … Russia's expectations in this matter are premised on three assumptions: – China will save Russia's stagnant north… – China has no alternatives but to work with Russia …. – China will be unable to "sideline" Russia (Topwar.ru, January 30, 2018), given Russia's dominant position in the Arctic and the nature of relations between Beijing and Moscow…. However, these assumptions appear questionable at best: First, the NEP [Northeast Passage, aka Northern Sea Route] still requires a staggering amount of infrastructure investment—realistic estimates run in the trillions of US dollars—before it can start yielding profits…. Moreover, the facts do not bear out the Russian conviction that Beijing can choose only between the NEP and the NWP, with no available alternative…. Second, Russia is not China's only potential partner in the Arctic. The PRC white paper clearly points to the fact that Chinese involvement there will be a multilateral, not a bilateral affair…. Third, China is likely to ultimately sideline Russia. As rightfully pointed out by Dr. Pavel Gudev, a senior research fellow at the Institute of World Economy and International Relations (IMEMO), China's strategy in the Arctic region is dictated by the desire to "downplay exclusivity in relations between Arctic nations" and "internationalize the Arctic as much as possible," which "runs counter to Russia's national interests in the region"…. And finally, international competition by other Arctic players may further outflank Russian efforts. A November 29, 2018, statement to a committee of the Canadian parliament states So far, Arctic nations have cautiously welcomed China's willingness to play a larger role in the Arctic.… Arctic nations are also setting limits. In 2011, Iceland blocked the sale of a large plot of land to a Chinese investor; in 2016, Denmark declined to sell a vacant naval base in Greenland to a Chinese mining company; and in that same year, a projected Chinese resort in Svalbard, under Norwegian sovereignty, was canceled. Each Arctic state—often under public pressure—is setting its own limits when it comes to welcoming Chinese presence. Russia's approach toward China shows a similar mix of interest and caution. China is a key investor in Russia's Yamal LNG project, and Chinese funds are particularly welcome, as Russia has been shunned by some of its more traditional investors since its annexation of Crimea. Russia also welcomes Chinese interest in developing port infrastructure along the NSR. Yet Russia is also very much intent on keeping the NSR under its control. This may eventually create tensions with China, as China sees the NSR as one element of the Belt and Road Initiative and will resent obstacles to its free use of the route (the alternative route, the Northwestern Passage along the northern shore of Canada, is not considered a viable replacement because of poor navigation conditions and a lack of infrastructure). While Russia and China are formally allies through the Shanghai Cooperation Organization, Russia remains wary of China's military power on its southern border and, as an Arctic nation, is irritated by the intrusion in Arctic affairs of non-Arctic states, as evidenced by its long-standing reluctance to grant observer status to these countries in the Arctic Council. A policy paper released in December 2018 states Since 2017, a series of events have raised optimism about the potential for Sino-Russian cooperation in the Arctic region, including unilateral and bilateral statements between Beijing and Moscow about their shared vision for and commitment to joint development of the Arctic energy resources and shipping lane. China's economic interests in natural resources extractions and alternative transportation routes largely align with Russia's stated goals to revitalize its Arctic territory…. Despite the rhetorical enthusiasm from the two governments, concrete, substantive joint projects on the Northern Sea Route are lacking, especially in key areas such as infrastructure development. A careful examination of Chinese views on joint development of the Northern Sea Route reveals divergent interests, conflicting calculations and vastly different cost-benefit analyses. From the Chinese perspective, the joint development of the Northern Sea Route is a Russian proposal to which China reacted primarily out of strategic and political considerations rather than practical economic ones. While China is in principle interested in the Northern Sea Route, the potential and practicality of this alternative transportation route remains tentative and yet to be realized. For China, their diverging interests, especially over what constitutes mutually beneficial compromises, will be the biggest obstacle to future progress. Moscow needs to demonstrate much more sincerity or flexibility in terms of improving China's cost-benefit spreadsheet. In this sense, expectations and assessments of the impact of Sino-Russian cooperation specifically on the Northern Sea Route should be focused on moderate, concrete plans rather than glorified rhetoric…. Although the Chinese are fond of optimistically discussing the potential for Sino-Russian cooperation on the Northern Sea Route, they have been unable to reach an optimistic conclusion for its viability, feasibility, and practicality. China and Russia have identified their converging interests in such cooperation. However, their diverging interests, especially over what constitutes mutually beneficial compromises, will be the biggest obstacle to future progress. China's view of the economic practicality of the Northern Sea Route remains a lofty future ambition that is steeped in hopes of the project's potential. In the best-case scenario, few Chinese experts see the Northern Sea Route as a viable substitute/alternative to traditional shipping routes. Instead, the Northern Sea Route is seen primarily as a potential supplement. The unfavorable assessment of the economic practicality of the Northern Sea Route underscores the fact that there has been more discussion about development than actual projects on the ground. China has demonstrated greater interest in other areas of infrastructure cooperation, such as on the Primorye International Transportation Corridor and energy development projects. However, interest regarding joint development of the Northern Sea Route has been markedly less impressive or present. China's apparent enthusiasm on Northern Sea Route cooperation with Russia is motivated primarily by political and strategic considerations. Cooperation helps to pave China's entry into the otherwise relatively exclusive Arctic region and affords China an advantaged and prioritized position in the projects for which Russia is accepting or seeking international cooperation. Russia's options for other international partners might expand after international sanctions are lifted and/or if the United States identifies China as the biggest threat and Russia as a partner in the Sino-U.S.-Russian strategic triangle. However, such hypotheticals do not appear to be coming to fruition anytime soon. A 2019 report on China's strategic ambitions stated the following: The Sino-Russian partnership has both supported China's Arctic ambitions and at times acted as a check on them. Broadly speaking, the region serves as a testing ground for key goals of [Chinese leader] Xi Jinping's foreign policy agenda…. Focusing on climate change, sustainable development, and global governance, [China's Arctic] white paper downplays China's security interests in the region, especially the link between the projection of power in the polar region and the development of naval capabilities needed for great-power status. The PLA [People's Liberation Army—China's military], however, has been integral to the development of China's Arctic capabilities, and the changing Arctic (and China's evolving role in it) are becoming a key part of the country's maritime strategy…. China faces several obstacles to fulfilling its Arctic ambitions. At present, the country has limited experience in cold-water navigation and polar research, though the Chinese government has been making substantial investments, particularly in the latter. In the short term, fears about Russia in Northern Europe may contribute to greater receptivity to China's activities in the Arctic, but this may no longer be the case if China seeks to play a more substantial role…. China's ambitions in the Arctic could also complicate its relations with Russia. China's entry into the region has been importantly facilitated by Russia's acceptance of Chinese investments and provision of Arctic navigation training (though… Russia was initially wary of China's quest for observer status in the Arctic Council). Yet China may not need a gatekeeper in the region for much longer if Arctic ice continues to recede. If the NSR [Northern Sea Route] is no longer frozen, then Russia may lose its legal rationale for administering the waterway, potentially leading to tensions with China and other users hoping to avoid Russian oversight and fees…. … China's relationship with Russia is central to its Arctic ambitions, though Russia's positions on Arctic shipping also set limits to the Chinese role…. Although Russia is China's key partner in the Arctic, Chinese officials have sought to improve relations with all the Arctic states. As an observer in the Arctic Council, China depends on members to put forward its proposals and will only be able to participate in Arctic resource development in cooperation with these states…. China's Arctic ambitions have elicited concern among regional states for two sets of reasons. First, countries like Russia that view Arctic coastal waterways as subject to their own jurisdiction are apprehensive about China's position. Second, most of the Arctic states have significant resource deposits or coastal access to such stores and are concerned about the consequences of China's investments and economic power in the region. This is particularly acute for smaller Arctic states such as Iceland, where a large infusion of Chinese funds might have an outsized political and economic impact…. While Canada, which views the Northwest Passage as internal waters, and Russia, with its assertion of administrative rights over the still ice-covered NSR, have had some reservations about China playing a greater role in the Arctic, Nordic countries have largely welcomed its growing interest in the region. Chinese policy toward these states has involved multilateralism, as well as bilateral diplomacy and investments under BRI [the Belt and Road Initiative]…. Chinese investments in Greenland have been especially controversial due to its strategic location and domestic pressures for political independence from Denmark…. While Chinese officials and analysts have been cautiously avoiding discussion of Greenland's political future, China's approach to the Nordic states is in keeping with its general approach to Europe…. China is playing a long game in the Arctic, slowly building up its presence, scientific capacity, and naval capabilities in anticipation of future economic bounties as the ice recedes. China has had to tread carefully as an outsider, however "near-Arctic" it claims to be, because even small steps by Chinese investors could have a big impact on small Arctic states. While somewhat wary of China's intentions and protective of its own status as an Arctic littoral state, Russia has provided an important entry point, via transit through the NSR and investment opportunities in the Russian Arctic. Nonetheless, China has to balance its aspirations with the need to be mindful of Russian sensitivities on Arctic issues…. For China, the Arctic is a promised land of untapped resources and an opportunity to exert its influence in global governance, yet these benefits are largely promised to insiders. However loudly China proclaims itself to be a near-Arctic state, it nonetheless has to demonstrate its presence through economic, scientific, and political activities. These same activities raise concerns among Arctic states about China's intentions and willingness to accept the status quo, which for Russia means the authority to administer currently ice-covered waterways. The Arctic is not a static environment, however, and its melting ice will have profound political consequences as well as environmental ones. For Xi, the Arctic and polar regions more broadly are the testing grounds for his global ambitions, both as a maritime power and as a participant in the development of new forms of global governance. Linkages Between Arctic and South China Sea Another potential implication of the shift in the international security environment to a situation of great power competition is a linkage that is sometimes made between the Arctic and the South China Sea relating to international law of the sea or the general issue of international cooperation and competition. One aspect of this linkage relates to whether China's degree of compliance with international law of the sea in the South China Sea has any implications for understanding potential Chinese behavior regarding its compliance with international law of the sea (and international law generally) in the Arctic. A second aspect of this linkage, mentioned earlier, is whether the United States should consider the option of moving to suspend China's observer status on the Arctic Council as a punitive cost-imposing measure for unwanted Chinese actions in the South China Sea. A third aspect of this linkage concerns the question of whether the United States should become a party to UNCLOS: Discussions of that issue sometimes mention both the situation in the South China Sea and the extended continental shelf issue in the Arctic (see " Extended Continental Shelf and United States as a Nonparty to UNCLOS "). U.S. Military Forces and Operations307 Overview During the Cold War, the Arctic was an arena of military competition between the United States and the Soviet Union, with both countries, for example, operating nuclear-powered submarines, long-range bombers, and tactical aircraft in the region. The end of the Cold War and the collapse of most elements of the Russian military establishment following the dissolution of the Soviet Union in December 1991 greatly reduced this competition and led to a reduced emphasis on the Arctic in U.S. military planning. Renewed tensions with Russia following its seizure and annexation of Crimea in March 2014, combined with a significant increase in Russian military capabilities and operations in the Arctic in recent years, have led to growing concerns among observers that the Arctic is once again becoming a region of military tension and competition, and to concerns about whether the United States is adequately prepared militarily to defend its interests in the region. U.S. military officials, military officials from other Arctic states, and other observers have stressed the cooperative aspects of how the Arctic states have addressed Arctic issues, and have sometimes suggested that the competitive aspects of the situation have been exaggerated in some press accounts. Some observers argue that that Russia's recent military investment in the Arctic is being exaggerated, or reflects normal modernization of aging capabilities, or is intended partly for domestic Russian consumption. Even so, U.S. military forces (and U.S. intelligence agencies) are paying renewed attention to the Arctic. This is particularly true in the case of the Navy and Coast Guard, for whom diminishment of Arctic sea ice is opening up potential new operating areas for their surface ships. The U.S. Air Force, Army, and Marine Corps, too, are now focusing more on Arctic operations. Canada, the UK, and the Nordic countries are taking or contemplating steps to increase their own military presence and operations in the region. DOD in General 2010 QDR (Submitted February 2010) DOD's report on the 2010 QDR, submitted to Congress in February 2010, states the following: The effect of changing climate on the Department's operating environment is evident in the maritime commons of the Arctic. The opening of the Arctic waters in the decades ahead[,] which will permit seasonal commerce and transit[,] presents a unique opportunity to work collaboratively in multilateral forums to promote a balanced approach to improving human and environmental security in the region. In that effort, DoD must work with the Coast Guard and the Department of Homeland Security to address gaps in Arctic communications, domain awareness, search and rescue, and environmental observation and forecasting capabilities to support both current and future planning and operations. To support cooperative engagement in the Arctic, DoD strongly supports accession to the United Nations Convention on the Law of the Sea. April 2011 Change to DOD Unified Command Plan In April 2011, President Obama assigned responsibility for the Arctic to U.S. Northern Command. Previously, U.S. Northern Command, U.S. European Command, and U.S. Pacific Command had shared responsibility for the Arctic. The April 2011 change in DOD's Unified Command Plan also assigned Alaska to U.S. Northern Command. Previously, U.S. Northern Command and U.S. Pacific Command had shared responsibility for Alaska and adjacent waters. May 2011 DOD Report to Congress In May 2011, DOD submitted a report to Congress on Arctic operations and the Northwest Passage that was prepared at congressional direction. A January 2012 GAO report reviewed the May 2011 DOD report. November 2013 DOD Arctic Strategy On November 22, 2013, DOD released a DOD strategy for the Arctic that was subsequently updated by the December 2016 report to Congress on Arctic strategy discussed below. January 2014 Implementation Plan for National Strategy for Arctic Region The Obama Administration's January 2014 implementation plan for its national strategy for the Arctic region (see " Background ") makes DOD the lead federal agency for one of the plan's 36 or so specific initiatives, and a supporting agency for 18 others. The initiative for which DOD is designated the lead federal agency is entitled "Develop a framework of observations and modeling to support forecasting and prediction of sea ice." 2014 Quadrennial Defense Review (QDR) (Submitted March 2014) The Department of Defense's (DOD's) report on the 2014 Quadrennial Defense Review (QDR), submitted to Congress in March 2014, states the following: Climate change also creates both a need and an opportunity for nations to work together, which the Department will seize through a range of initiatives. We are developing new policies, strategies, and plans, including the Department's Arctic Strategy and our work in building humanitarian assistance and disaster response capabilities, both within the Department and with our allies and partners. 2015 National Security Strategy The February 2015 National Security Strategy mentions the Arctic three times, stating that "the present day effects of climate change are being felt from the Arctic to the Midwest. Increased sea levels and storm surges threaten coastal regions, infrastructure, and property." It also states that "we seek to build on the unprecedented international cooperation of the last few years, especially in the Arctic as well as in combatting piracy off the Horn of Africa and drug-smuggling in the Caribbean Sea and across Southeast Asia," and that "we will also stay engaged with global suppliers and our partners to reduce the potential for energy-related conflict in places like the Arctic and Asia." June 2015 GAO Report A June 2015 Government Accountability Office (GAO) report states the following: Recent strategic guidance on the Arctic issued by the [Obama] administration and the Department of Defense (DOD) establish a supporting role for the department relative to other federal agencies, based on a low level of military threat expected in the region. In January 2014 the [Obama] administration issued the Implementation Plan to the National Strategy for the Arctic Region that designated DOD as having a largely supporting role for the activities outlined in the plan. Additionally, DOD's Arctic Strategy issued in November 2013 and the Navy's Arctic Roadmap 2014-2030 issued in February 2014 emphasize that, as sea ice diminishes and the Arctic Ocean opens to more activity, the department may be called upon more frequently to support other federal agencies and work with partners to ensure a secure and stable region. To further its role, DOD participates in a number of forums focused on military security cooperation in the Arctic, including the Arctic Security Forces Roundtable, a senior-level event aimed at encouraging discussion among the security forces of Arctic and non-Arctic nations. In addition, DOD leads training exercises focused on building partner capacity in the region, including Arctic Zephyr, a multilateral scenario-based exercise. DOD continues to monitor the security environment in the region and is tracking indicators that could change its threat assessment and affect DOD's future role. DOD has taken actions, along with interagency partners, to address some near-term capabilities needed in the Arctic, such as maritime domain awareness and communications. In recent years, DOD has conducted a number of studies to identify near-term capabilities the department needs to operate in the Arctic. The Implementation Plan to the National Strategy for the Arctic Region created an interagency framework and identified activities to address many of these needed capabilities. For example, as the lead agency for Arctic sea ice forecasting, DOD has established an interagency team to focus on improved sea ice modeling. DOD has also begun other efforts within the department to address capability needs. For example, the Navy's Arctic Roadmap prioritizes near-term actions to enhance its ability to operate in the Arctic and includes an implementation plan and timeline for operations and training, facilities, equipment, and maritime domain awareness, among other capabilities. U.S. Northern Command—the DOD advocate for Arctic capabilities—stated that it is in the process of updating its regional plans for the Arctic and is conducting analysis to determine future capability needs. For example, Northern Command is updating the Commander's Estimate for the Arctic, which establishes the commander's intent and missions in the Arctic and identifies near-, mid-, and long-term goals. Additionally, the command is conducting studies of various Arctic mission areas, such as maritime homeland defense and undersea surveillance, to identify future capability needs. However, according to DOD's Arctic Strategy, uncertainty remains around the pace of change and commercial activity in the region that may affect its planning timelines. Difficulty in developing accurate sea ice models, variability in the Arctic's climate, and the uncertain rate of activity in the region create challenges for DOD to balance the risk of having inadequate capabilities or insufficient capacity when required to operate in the region with the cost of making premature or unnecessary investments. According to its Arctic Strategy, DOD plans to mitigate this risk by monitoring the changing Arctic conditions to determine the appropriate timing for capability investments. June 2016 DOD Report on Funding for 2013 Arctic Strategy A June 2016 DOD report to Congress on resourcing the Arctic Strategy states that DOD is making investments in research, military infrastructure, and capabilities to execute the 2013 Arctic Strategy and support the development of the Arctic as a secure and stable region where U.S. national interests are safeguarded, the U.S. homeland is protected, and nations work cooperatively to address challenges. Fiscal year (FY) 2017 investments focus mainly on capabilities, followed by long-term investments in research and development of next-generation capabilities. The Department's challenge is balancing the risk of being late-to-need with the opportunity cost of making Arctic investments for potential future contingencies at the expense of resourcing other urgent military requirements.... Data provided by the Combatant Commands and Military Departments from the FY 2017 budget identifies about $6 billion of FY 2017 investments.... The report includes a summary table showing that of $6.032 billion requested by DOD for FY2017 for implementing the Arctic strategy, about $461.3 million is for Army, Navy, and Air Force research and development work, $362.2 million is for Air Force military construction (MILCON) work, and about $5.209 billion is for Army, Navy, Air Force, defense-wide, and classified capabilities. Within the $5.209 billion figure, about 85% is accounted for by Air Force operations and maintenance (O&M), with about $2.281 billion, Air Force procurement, with about $1.109 billion, and Army military personnel (MILPERS) costs, with about $1.036 billion. December 2016 Report to Congress on Arctic Strategy A December 2016 report to Congress on strategy to protect U.S. national security interests in the Arctic region that was required by Section 1068 of FY2016 National Defense Authorization Act ( S. 1356 / P.L. 114-92 of November 25, 2015) states the following (italics and bold as in original): The Department of Defense (DoD) remains committed to working collaboratively with allies and partners to promote a balanced approach to improving security in the Arctic region. DoD's strategy in the Arctic builds upon the 2009 National Security Presidential Directive 66/Homeland Security Presidential Directive 25, Arctic Region Policy , and the 2013 National Strategy for the Arctic Region (NSAR). DoD's 2013 Arctic Strategy nested under those two overarching national-level guidance documents. DoD's 2016 Arctic Strategy updates DoD's 2013 Arctic Strategy as required by Section 1068 of the National Defense Authorization Act for FY 2016 ( P.L. 114-92 ) in light of significant changes in the international security environment. It refines DoD's desired end-state for the Arctic: a secure and stable region where U.S. national interests are safeguarded, the U.S. homeland is defended, and nations work cooperatively to address challenges. The two main supporting objectives remain unchanged: 1) Ensure security, support safety, promote defense cooperation; and 2) prepare to respond to a wide range of challenges and contingencies—operating in conjunction with like-minded nations when possible and independently if necessary—in order to maintain stability in the region. This update also adds a classified annex. In this strategy, near-term refers to the timeframe from the present to 2023, during which DoD will operate with current forces and execute resources programmed across the Future Years Defense Program (FYDP). The mid-term (2023-2030) and far-term (beyond 2030) are also addressed where relevant to global posture and force development. Timeframes are approximate due to uncertainty about future environmental, economic, and geopolitical conditions and the pace at which human activity in the Arctic region will increase. The 2016 Arctic Strategy also updates the ways and means DoD intends to use to achieve its objectives as it implements the NSAR. These include --Enhance the capability of U.S. forces to defend the homeland and exercise sovereignty; --Strengthen deterrence at home and abroad; --Strengthen alliances and partnerships; --Preserve freedom of the seas in the Arctic; --Engage public, private, and international partners to improve domain awareness in the Arctic; --Evolve DoD Arctic infrastructure and capabilities consistent with changing conditions and needs; --Provide support to civil authorities, as directed; --Partner with other departments, agencies, and nations to support human and environmental security; and --Support international institutions that promote regional cooperation and the rule of law. DoD's strategic approach is guided by its main objectives of ensuring security, supporting safety, and promoting defense cooperation as it prepares to respond to a wide range of challenges and contingencies in the Arctic in the years to come. Alliances and strategic partnerships remain the center of gravity in achieving DoD's desired end-state and ensuring that the Arctic remains a secure and stable region. Wherever possible, DoD will continue to seek innovative, cost-effective, small-footprint ways to achieve its objectives. DoD will also continue to apply the four overarching principles articulated in the NSAR: working with allies and partners to safeguard peace and stability; making decisions using the best available scientific information; pursuing innovative partnerships to develop needed capabilities and capacity over time; and following established Federal and DoD tribal consultation policy as applicable. FY2018 National Defense Authorization Act (H.R. 2810/P.L. 115-91) Section 1054 of the conference version ( H.Rept. 115-404 of November 9, 2017) of H.R. 2810 / P.L. 115-91 of December 12, 2017, requires DOD to submit a report on steps DOD is taking to resolve Arctic security capability and resource gaps, and the requirements and investment plans for military infrastructure required to protect U.S. national security interests in the Arctic region. 2017 National Security Strategy The December 2017 National Security Strategy mentions the Arctic once, stating that "a range of international institutions establishes the rules for how states, businesses, and individuals interact with each other, across land and sea, the Arctic, outer space, and the digital realm. It is vital to U.S. prosperity and security that these institutions uphold the rules that help keep these common domains open and free." 2018 National Defense Strategy The January 2018 unclassified summary of the 2018 National Defense Strategy does not specifically mention the Arctic. John S. McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515/S. 2987) In the conference report ( H.Rept. 115-874 of July 25, 2018) on H.R. 5515 , Section 1071 states the following: SEC. 1071. REPORT ON AN UPDATED ARCTIC STRATEGY. (a) REPORT ON AN UPDATED STRATEGY.—Not later than June 1, 2019, the Secretary of Defense shall submit to the congressional defense committees a report on an updated Arctic strategy to improve and enhance joint operations. (b) ELEMENTS.—The report required by subsection (a) shall include the following: (1) A description of United States national security interests in the Arctic region. (2) An assessment of the threats and security challenges posed by adversaries operating in the Arctic region, including descriptions of such adversaries' intents and investments in Arctic capabilities. (3) A description of the roles and missions of each military service in the Arctic region in the context of joint operations to support the Arctic strategy, including— (A) a description of a joint Arctic strategy for sea operations, including all military and Coast Guard vessels available for Arctic operations; (B) a description of a joint Arctic strategy for air operations, including all rotor and fixed wing military aircraft platforms available for Arctic operations; and (C) a description of a joint Arctic strategy for ground operations, including all military ground forces available for Arctic operations. (4) A description of near-term and long-term training, capability, and resource gaps that must be addressed to fully execute each mission described in the Arctic strategy against an increasing threat environment. (5) A description of the level of cooperation between the Department of Defense, any other departments and agencies of the United States Government, State and local governments, and tribal entities related to the defense of the Arctic region. (c) FORM OF REPORT.—The report required by subsection (a) shall be submitted in unclassified form, but may include a classified annex. H.Rept. 115-874 also states the following: The conferees direct the Secretary of Defense to submit a report to the congressional defense committees not later than 180 days after the date of enactment of this Act on current cold weather capabilities and readiness of the United States Armed Forces. The report shall contain the following elements: (1) A description of current cold weather capabilities and training to support United States military operations in cold climates across the joint force; (2) A description of anticipated requirements for United States military operations in cold and extreme cold weather in the Arctic, Northeast Asia, and Northern and Eastern Europe; (3) A description of the current cold weather readiness of the joint force, the ability to increase cold weather training across the joint force, and any equipment, infrastructure, personnel, or resource limitations or gaps that may exist; (4) An analysis of potential opportunities to expand cold weather training for the Army, the Navy, the Air Force, and the Marine Corps and the resources or infrastructure required for such expansion; and (5) An analysis of potential partnerships with State, local, Tribal, and private entities to maximize training potential and to utilize local expertise, including traditional indigenous knowledge. (Pages 835-836) FY2019 DOD Appropriations Act (S. 3159) The Senate Appropriations Committee, in its report ( S.Rept. 115-290 of June 28, 2018) on S. 3159 , states the following: Arctic Broadband Infrastructure .—The Committee is concerned that broadband infrastructure in the Arctic, particularly in northern Alaska and the Aleutian Islands, is not capable of supporting current military operations. Therefore, the Committee directs the Secretary of Defense to conduct an evaluation of broadband infrastructure in the United States Arctic and provide a report to the congressional defense committees not later than 180 days after enactment of this act. The report shall list an inventory of all existing broadband and communications infrastructure in the Aleutian Is land chain and Alaska's northwest and northern slope communities, as well as present limitations and needs for the future. (Pages 35-36) DOD Cooperation with Canada and Other Countries DOD has been taking a number of steps in recent years to strengthen U.S.-Canadian cooperation and coordination regarding military operations in the Arctic. Navy and Coast Guard in General The Navy and Coast Guard are exploring the potential implications that increased human activities in the Arctic may have for Navy and Coast Guard required numbers of ships and aircraft, ship and aircraft characteristics, new or enlarged Arctic bases, and supporting systems, such as navigation and communication systems. The Navy and Coast Guard have sponsored or participated in studies and conferences to explore these implications, the Coast Guard annually deploys cutters and aircraft into the region to perform missions and better understand the implications of operating such units there, and the Navy has deployed ships to the region. Points or themes that have emerged in studies, conferences, and deployments regarding the potential implications for the U.S. Navy and Coast Guard of diminished Arctic sea ice include but are not limited to the following: The diminishment of Arctic ice is creating potential new operating areas in the Arctic for Navy surface ships and Coast Guard cutters. U.S. national security interests in the Arctic include "such matters as missile defense and early warning; deployment of sea and air systems for strategic sealift, strategic deterrence, maritime presence, and maritime security operations; and ensuring freedom of navigation and overflight." SAR in the Arctic is a mission of increasing importance, particularly for the Coast Guard, and one that poses potentially significant operational challenges (see " Search and Rescue (SAR) " above). More complete and detailed information on the Arctic is needed to more properly support expanded Navy and Coast Guard ship and aircraft operations in the Arctic. The Navy and the Coast Guard currently have limited infrastructure in place in the Arctic to support expanded ship and aircraft operations in the Arctic. Expanded ship and aircraft operations in the Arctic may require altering ship and aircraft designs and operating methods. Cooperation with other Arctic countries will be valuable in achieving defense and homeland security goals. Navy November 2009 Navy Arctic Roadmap The Navy issued its first Arctic roadmap on November 10, 2009. The document, dated October 2009, was intended to guide the service's activities regarding the Arctic for the period FY2010-FY2014. The document has now been succeeded by the 2014-2030 Navy Arctic roadmap (see discussion below). August 2011 Navy Arctic Environmental Assessment and Outlook Report In August 2011, the Navy released an Arctic environment assessment and outlook report. The report states the following: As the Arctic environment continues to change and human activity increases, the U.S. Navy must be prepared to operate in this region. It is important to note that even though the Arctic is opening up, it will continue to be a harsh and challenging environment for the foreseeable future due to hazardous sea ice, freezing temperatures and extreme weather. Although the Navy submarine fleet has decades of experience operating in the Arctic, the surface fleet, air assets, and U.S. Marine Corps ground troops have limited experience there. The Navy must now consider the Arctic in terms of future policy, strategy, force structure, and investments. November 2013 DOD Arctic Strategy The November 2013 DOD Arctic strategy (see discussion above in the section on DOD) states that "The Department of the Navy, in its role as DoD Executive Agent for Maritime Domain Awareness, will lead DoD coordination on maritime detection and tracking," and that "DoD will take steps to work with other Federal departments and agencies to improve nautical charts, enhance relevant atmospheric and oceanic models, improve accuracy of estimates of ice extent and thickness, and detect and monitor climate change indicators. In particular, the Department of the Navy will work in partnership with other Federal departments and agencies (e.g., DHS, the Department of Commerce) and international partners to improve hydrographic charting and oceanographic surveys in the Arctic." January 2014 Implementation Plan for National Strategy for Arctic Region The Obama Administration's January 2014 implementation plan for its national strategy for the Arctic region (see " Background ") mentions the Navy by name only once, as one of several agencies that will "collaborate to improve marine charting in the Arctic (Integrated Ocean and Coastal Mapping) and topographic mapping (Alaska Mapping Executive Committee)." As noted above in the discussion of DOD in general, however, the January 2014 implementation plan makes DOD the lead federal agency for one of the plan's 36 or so specific initiatives and a supporting agency for 18 others. The Navy will likely be a prominent participant in DOD's activities for a number of these 19 initiatives. February 2014 Updated Navy Arctic Roadmap for 2014-2030 On February 24, 2014, the Navy released an updated Arctic roadmap intended to guide Navy activities regarding the Arctic for the period 2014-2030. The document is the successor to the November 2009 Navy Arctic roadmap (see discussion above). The executive summary of the 2014-2030 Navy Arctic roadmap states the following: The United States Navy, as the maritime component of the Department of Defense, has global leadership responsibilities to provide ready forces for current operations and contingency response that include the Arctic Ocean. The Arctic Region remains a challenging operating environment, with a harsh climate, vast distances, and little infrastructure. These issues, coupled with limited operational experience, are just a few substantial challenges the Navy will have to overcome in the Arctic Region. While the Region is expected to remain a low threat security environment where nations resolve differences peacefully, the Navy will be prepared to prevent conflict and ensure national interests are protected.... Navy functions in the Arctic Region are no different from those in other maritime regions; however, the Arctic Region environment makes the execution of many of these functions much more challenging.... In support of National and Department of Defense aims, the Navy will pursue the following strategic objectives: • Ensure United States Arctic sovereignty and provide homeland defense ; • Provide ready naval forces to respond to crisis and contingencies; • Preserve freedom of the seas ; and • Promote partnerships within the United States Government and with international allies and partners.... Resource constraints and competing near-term mission demands require that naval investments be informed, focused, and deliberate. Proactive planning today allows the Navy to prepare its forces for Arctic Region operations. This Roadmap emphasizes low-cost, long-lead activities that position the Navy to meet future demands. In the near to mid-term, the Navy will concentrate on improving operational capabilities, expertise, and capacity, extending reach, and will leverage interagency and international partners to achieve its strategic objectives. The Roadmap recognizes the need to guide investments by prudently balancing regional requirements with national goals.... This Roadmap provides direction to the Navy for the near-term (present-2020), mid-term (2020-2030), and far-term (beyond 2030), placing particular emphasis on near-term actions necessary to enhance Navy's ability to operate in the Arctic Region in the future. In the near-term, there will be low demand for additional naval involvement in the Region. Current Navy capabilities are sufficient to meet near-term operational needs. Navy will refine doctrine, operating procedures, and tactics, techniques, and procedures to guide future potential operations in the Arctic Region. In the mid-term, the Navy will provide support to the Combatant Commanders, United States Coast Guard, and other United States Government agencies. In the far-term, increased periods of ice-free conditions could require the Navy to expand this support on a more routine basis. Regarding "United States Navy Ways and Means for Near-Term, Mid-Term, and Far-Term Operations," the roadmap states the following: Near-term: Present to 2020. The Navy will continue to provide capability and presence primarily through undersea and air assets. Surface ship operations will be limited to open water operations in the near-term. Even in open water conditions, weather factors, including sea ice, must be considered in operational risk assessments. During shoulder seasons, the Navy may employ ice strengthened Military Sealift Command (MSC) ships to conduct Navy missions. By 2020, the Navy will increase the number of personnel trained in Arctic operations. The Navy will grow expertise in all domains by continuing to participate in exercises, scientific missions, and personnel exchanges in Arctic-like conditions. Personnel exchanges will provide Sailors with opportunities to learn best practices from other United States' military services, interagency partners, and international allies and partners. The Navy will refine or develop the necessary strategy, policy, plans, and requirements for the Arctic Region. Additionally, the Navy will continue to study and make informed decisions on pursuing investments to better facilitate Arctic operations. The Navy will emphasize low cost, long-lead time activities to match capability and capacity to future demands. The Navy will update operating requirements and procedures for personnel, ships, and aircraft to operate in the Region with interagency partners and allies. Through ongoing exercises, such as Ice Exercise (ICEX) and Scientific Ice Expeditions (SCICEX) research, and transits through the region by Navy submarines, aircraft and surface vessels, the Navy will continue to learn more about the evolving operating environment. The Navy will focus on areas where it provides unique capabilities and will leverage joint and coalition partners to fill identified gaps and seams. Mid-term: 2020 to 2030. By 2030, the Navy will have the necessary training and personnel to respond to contingencies and emergencies affecting national security. As the Arctic Ocean becomes increasingly ice-free, surface vessels will operate in the expanding open water areas. The Navy will improve its capabilities by participating in increasingly complex exercises and training with regional partners. While primary risks in the mid-term will likely be meeting search and rescue or disaster response mission demands, the Navy may also be called upon to ensure freedom of navigation in Arctic Ocean waters. The Navy will work to mitigate the gaps and seams and transition its Arctic Ocean operations from a capability to provide periodic presence to a capability to operate deliberately for sustained periods when needed. Far-term: Beyond 2030. In the far-term, Navy will be capable of supporting sustained operations in the Arctic Region as needed to meet national policy guidance. The Navy will provide trained and equipped personnel, along with surface, subsurface, and air capabilities, to achieve Combatant Commander's objectives. The high confidence of diminished ice coverage and navigable waterways for much of the year will enable naval forces to operate forward, ready to respond to any potential threat to national security, or to provide contingency response. Far-term risks include increased potential for search and rescue and DSCA [Defense Support of Civil Authorities], but may also require naval forces to have a greater focus on maritime security and freedom of navigation in the Region. 2018 Reestablishment of 2nd Fleet for North Atlantic and Arctic In May 2018, the Navy announced that it would reestablish the 2 nd Fleet, which was the Navy's fleet during the Cold War for countering Soviet naval forces in the North Atlantic. The fleet's formal reestablishment occurred in August 2018. The 2 nd Fleet was created in 1950 and disestablished in September 2011. In its newly reestablished form, it is described as focusing on countering Russian naval forces not only in the North Atlantic but in the Arctic as well. Upcoming Freedom of Navigation (FON) Operation in Arctic In January 2019, the Navy announced that "in coming months" it will send a Navy warship through Arctic waters on a freedom of navigation (FON) operation to assert U.S. navigational rights under international law in Arctic waters. The U.S. government's FON program was established in 1979 and annually includes multiple U.S. Navy FON operations conducted in various parts of the world. The upcoming FON operation in the Arctic, however, will reportedly be the Navy's first ever FON operation in the Arctic. Coast Guard Overview—November 2015 Coast Guard Testimony At a November 17, 2015, hearing on Arctic operations before two subcommittees of the House Foreign Affairs Committee, the Coast Guard testified that The Coast Guard has been operating in the Arctic Ocean since 1867, when Alaska was purchased from Russia. Then, as now, our mission is to enforce U.S. laws and regulations, conduct search and rescue, assist scientific exploration, and foster navigation safety and environmental stewardship. The Coast Guard uses mobile command and control platforms including large cutters and ocean-going ice-strengthened buoy tenders, as well as seasonal air and communications capabilities to execute these missions within more than 950,000 square miles of ocean off the Alaskan coast. Since 2008, the Coast Guard has conducted operations in the Arctic Region to assess our capabilities and mission requirements as maritime activity and environmental conditions warrant. These operations have included establishing small, temporary Forward Operating Locations along the North Slope to test our capabilities with boats, helicopters, and personnel. Each year from April to November we also fly aerial sorties to evaluate activities in the region. We will continue to deploy a suite of Coast Guard cutters to test our equipment, train our crews, and increase our awareness of Arctic activity. Coast Guard High Latitude Study Provided to Congress in July 2011 In July 2011, the Coast Guard provided to Congress a study on the Coast Guard's missions and capabilities for operations in high-latitude (i.e., polar) areas. The study, commonly known as the High Latitude Study, is dated July 2010 on its cover. The High Latitude Study concluded the following: [The study] concludes that future [Coast Guard] capability and capacity gaps will significantly impact four [Coast Guard] mission areas in the Arctic: Defense Readiness, Ice Operations, Marine Environmental Protection, and Ports, Waterways, and Coastal Security. These mission areas address the protection of important national interests in a geographic area where other nations are actively pursuing their own national goals. U.S. national policy and laws define the requirements to assert the nation's jurisdiction over its territory and interests; to ensure the security of its people and critical infrastructure; to participate fully in the collection of scientific knowledge; to support commercial enterprises with public utility; and to ensure that the Arctic environment is not degraded by increased human activity. The Coast Guard's ability to support Defense Readiness mission requirements in the Arctic is closely linked to DoD responsibilities. The Coast Guard presently possesses the only surface vessels capable of operating in ice-covered and ice-diminished waters. The Coast Guard supports (1) DoD missions such as the resupply of Thule Air Base in Greenland and logistics support (backup) for McMurdo Station in Antarctica and (2) Department of State (DoS) directed Freedom of Navigation Operations. These unique Coast Guard capabilities have been noted by the Joint Chiefs of Staff, the Navy's Task Force Climate Change, and the recently issued Naval Operations Concept 2010. The common and dominant contributor to these significant mission impacts is the gap in polar icebreaking capability.... Other capability gaps contributing to the impact on Coast Guard ability to carry out its missions in the Arctic include • Communications System Capability – Continuous coverage along Alaska's West Coast, the Bering Strait, and throughout the North Slope is required for exchanging voice and data communications with Coast Guard units and other government and commercial platforms offshore. • Forward Operating Locations - No suitable facilities currently exist on the North Slope or near the Bering Strait with facilities sufficient to support extended aircraft servicing and maintenance. Aircraft must travel long distances and expend significant time transiting to and from adequate facilities. This gap reduces on-scene presence and capability to support sustained operations in the region. • Environmental response in ice-covered waters - The technology and procedures for assessment and mitigation measures for oil spills in ice-covered waters are not fully developed or tested. Capability gaps in the Arctic region have moderate impacts on [the Coast Guard's] Aids to Navigation (AtoN), Search and Rescue (SAR), and Other Law Enforcement (OLE) missions. Both AtoN and SAR involve the safety of mariners and will gain more importance not only as commerce and tourism cause an increase in maritime traffic, but as U.S. citizens in northern Alaska face more unpredictable conditions. Performance of OLE will be increasingly necessary to ensure the integrity of U.S. living marine resources from outside pressures.... In addition to the assessment of polar icebreaking needs, the Arctic mission analysis examined a set of theoretical mixes (force packages) of Coast Guard assets consisting of icebreakers, their embarked helicopters, and deployment alternatives using aviation forward operating locations in Arctic Alaska.... All [six] of the force mixes [considered in the study] add assets to the existing Coast Guard Alaska Patrol consisting of (1) a high-endurance cutter (not an icebreaker) deployed in the Bering Sea carrying a short range recovery helicopter, and (2) medium range recovery helicopters located at Kodiak in the Gulf of Alaska, and seasonally deployed to locations in Cold Bay and St. Paul Island.... These force packages and associated risk assessment provide a framework for acquisition planning as the Coast Guard implements a strategy for closing the capability gaps. By first recapitalizing the aging icebreakers, the Coast Guard provides a foundation for buildout of these force mixes. In addition to the cost of the icebreakers, the force packages require investment in forward operating locations and in medium range helicopters. The mission analysis reports developed rough order-of-magnitude cost estimates for forward operating locations at approximately $36M [million] each and for helicopters at $9M each.... The analysis shows that the current Coast Guard deployment posture is not capable of effective response in northern Alaska and that response may be improved through a mix of deployed cutters, aircraft, and supporting infrastructure including forward operating locations and communications/navigation systems. May 2013 Coast Guard Arctic Strategy On May 21, 2013, the Coast Guard released a strategy document for the Arctic. The executive summary of the document states the following in part: The U.S. Coast Guard, as the maritime component of the U.S. Department of Homeland Security (DHS), has specific statutory responsibilities in U.S. Arctic waters. This strategy outlines the ends, ways, and means for achieving strategic objectives in the Arctic over the next 10 years. The Coast Guard is responsible for ensuring safe, secure, and environmentally responsible maritime activity in U.S. Arctic waters. Our efforts must be accomplished in close coordination with DHS components, and involve facilitating commerce, managing borders, and improving resilience to disasters. The Coast Guard's current suite of cutters, boats, aircraft, and shore infrastructure must meet a number of near-term mission demands. The Coast Guard employs mobile command and control platforms such as large cutters and ocean-going ice-strengthened buoy tenders, as well as seasonal air and communications capabilities through leased or deployable assets and facilities. These mobile and seasonal assets and facilities have proven to be important enablers for front-line priorities in the region, including search and rescue operations, securing the maritime border, collecting critical intelligence, responding to potential disasters, and protecting the marine environment.... Although winter sea travel is still severely limited due to extensive ice coverage across the region, recent summer and early autumn sea ice extent record lows have made seasonal maritime navigation more feasible. Economic development, in the forms of resource extraction, adventure tourism, and trans-Arctic shipping drives much of the current maritime activity in the region. [Oil and gas exploration] activities [in the region] bring risk, which can be mitigated through appropriate maritime governance. Additionally, tourism is increasing rapidly in the Arctic. Due to undeveloped shore-based infrastructure, much of the increased tourism is expected to involve transportation via passenger vessel, further increasing near- and offshore activities in Arctic waters. This document outlines three strategic objectives in the Arctic for the U.S. Coast Guard over the next 10 years: • Improving Awareness • Modernizing Governance • Broadening Partnerships Improving Awareness: Coast Guard operations require precise and ongoing awareness of activities in the maritime domain. Maritime awareness in the Arctic is currently restricted due to limited surveillance, monitoring, and information system capabilities. Persistent awareness enables identification of threats, information-sharing with front-line partners, and improved risk management. Improving awareness requires close collaboration within DHS, as well as with the Departments of State, Defense, Interior, the National Science Foundation and other stakeholders to enhance integration, innovation, and fielding of emerging technologies. The Intelligence Community and non-federal partners are also vital stakeholders. Modernizing Governance: The concept of governance involves institutions, structures of authority, and capabilities necessary to oversee maritime activities while safeguarding national interests. Limited awareness and oversight challenge maritime sovereignty, including the protection of natural resources and control of maritime borders. The Coast Guard will work within its authorities to foster collective efforts, both domestically and internationally, to improve Arctic governance. In so doing, the Coast Guard will review its own institutions and regimes of governance to prepare for future missions throughout the Arctic. Broadening Partnerships: Success in the Arctic requires a collective effort across both the public and private sectors. Such a collective effort must be inclusive of domestic regulatory regimes; international collaborative forums such as the Arctic Council, International Maritime Organization (IMO), and Inuit Circumpolar Council; domestic and international partnerships; and local engagements in Arctic communities focusing on training and volunteer service. Success in the Arctic also depends upon close intergovernmental cooperation to support national interests, including working closely within DHS, as well as with the Department of State, Department of Interior and other Federal partners as the U.S. prepares to assume Chairmanship of the Arctic Council in 2015. Beyond these three strategic objectives, there are a number of additional factors that will position the Coast Guard for long-term success. These factors include building national awareness of the Arctic and its opportunities, strengthening maritime regimes, improving public-private relationships through a national concept of operations, seeking necessary authorities, and identifying future requirements and resources to shape trends favorably. This strategy outlines a number of priorities, ranging from capabilities and requirements to advances in science and technology that will facilitate our Nation's success in the region. Specifically, the strategy advocates to leverage the entire DHS enterprise and component capabilities to secure our borders, prevent terrorism, adapt to changing environmental conditions, enable community resilience and inform future policy. Operating in the Arctic is not a new venture for the Coast Guard. However, adapting to changing conditions will require foresight, focus, and clear priorities. This strategy will ensure we attain the aim of safe, secure, and environmentally responsible maritime activity in the Arctic by improving awareness, modernizing governance, and broadening partnerships to ensure long-term success. January 2014 Implementation Plan for National Strategy for Arctic Region The Obama Administration's January 2014 implementation plan for its national strategy for the Arctic region (see " Background ") makes "Department of Homeland Security (United States Coast Guard)" the lead federal agency for 6 of the plan's 36 or so specific initiatives, and a supporting agency for 13 others. The six initiatives where the Coast Guard is designated the lead federal agency include enhance Arctic domain awareness; improve hazardous material spill prevention, containment, and response; promote Arctic oil pollution preparedness, prevention, and response internationally; enhance Arctic SAR; expedite International Maritime Organization (IMO) Polar Code development and adoption; and promote Arctic waterways management. For the second initiative above—"Improve Hazardous Material Spill Prevention, Containment, and Response"—the Coast Guard shares lead-agency status with the Environmental Protection Agency (EPA), with the Coast Guard being the lead federal agency for open ocean and coastal spills, and EPA being the lead federal agency for inland spills. October 2015 Agreement on Arctic Coast Guard Forum (ACGF) The Coast Guard, working with coast guards of other Arctic nations, in October 2015 established an Arctic Coast Guard Forum (ACGF). The Coast Guard states that The Arctic Coast Guard Forum (ACGF), modeled after the successful North Pacific Coast Guard Forum, is a unique maritime governance group where Principals of all eight Arctic countries discuss coordination of exercises, strengthen relationships, and share best practices. Complimentary to the Arctic Council, the chairmanship of the ACGF will reside with the country holding the rotating chair of the Arctic Council. The first "experts-level" meetings of the ACGF in 2014 garnered enthusiastic approval of the concept. Representatives of the eight Arctic nations finalized and agreed on a Terms of Reference document, determined working groups (Secretariat and Combined Operations), and drafted a Joint Statement. The first ever "Heads of Arctic Coast Guards" meeting took place on October 28-30, 2015 at the U.S. Coast Guard Academy, and the participating nations approved the Terms of Reference and released the Joint Statement. June 2016 GAO Report on Coast Guard Arctic Capabilities A June 2016 GAO report on Coast Guard Arctic capabilities states the following: The U.S. Coast Guard, within the Department of Homeland Security, reported making progress implementing its Arctic strategy. For example, the Coast Guard reported conducting exercises related to Arctic oil spill response and search and rescue, and facilitating the formation of a safety committee in the Arctic, among other tasks in its strategy. To track the status of these efforts, the Coast Guard is developing a web-based tool and anticipates finalizing the tool in mid-2016. The Coast Guard assessed its capability to perform its Arctic missions and identified various capability gaps—including communications, infrastructure, and icebreaking, and has worked to mitigate these gaps with its Arctic partners, such as other federal agencies. Specifically, Coast Guard officials stated that the agency's actions to implement the various Arctic strategies and carry out annual Arctic operations have helped to mitigate Arctic capability gaps. However, the Coast Guard has not systematically assessed the extent to which its actions agency-wide have helped to mitigate these gaps. Coast Guard officials attributed this, in part, to not being able to unilaterally close the gaps. While mitigating these gaps requires joint efforts among Arctic partners, the Coast Guard has taken actions in the Arctic that are specific to its missions and therefore has responsibility for assessing the extent to which these actions have helped to mitigate capability gaps. By systematically assessing and measuring its progress, the Coast Guard will better understand the status of these gaps and be better positioned to effectively plan its Arctic operations. The Coast Guard has been unable to fulfill some of its polar icebreaking responsibilities with its aging icebreaker fleet, which currently includes two active polar icebreakers. In 2011 and 2012, the Coast Guard was unable to maintain assured, year-round access to the Arctic and did not meet 4 of 11 requests for polar icebreaking services. With its one active heavy icebreaker—which has greater icebreaking capability—nearing the end of its service life, the Coast Guard initiated a program in 2013 to acquire a new one and is working to determine the optimal acquisition strategy. However, the Coast Guard's efforts to acquire an icebreaker, whether by lease or purchase, will be limited by legal and operational requirements. In addition, current projections show that the Coast Guard is likely to have a 3- to 6-year gap in its heavy icebreaking capability before a new icebreaker becomes operational.... The Coast Guard is developing a strategy to determine how to best address this expected gap. March 2017 Arctic Coast Guard Forum Joint Statement A March 24, 2017, press report states the following: Coast guard leaders from the world's eight Arctic nations met in Boston Friday [March 24] to sign a joint statement for cooperation on emergency maritime response and combined operations in the high northern seas. U.S. Coast Guard Commandant Adm. Paul Zukunft joined leaders representing Canada, Denmark, Finland, Iceland, Norway, Sweden and the Russian Federation in the signing, and a ceremony handing off chairmanship of the group from the U.S. to the Finnish Border Guard. Maritime and environmental groups alike have stressed the need for closer international cooperation, as more Arctic shipping routes became navigable with retreating ice, opening access for shipping, energy and mineral exploration and commercial tourism. The statement adopts doctrine, tactics, procedures and information-sharing protocols for emergency maritime response and combined operations in the Arctic. It culminated two years of international collaboration, as working groups established strategies, objectives and tactics aimed towards achieving common operational goals in the region. So far, nation representatives have participated in table top exercises in Reykjavik, Iceland, and the District of Columbia. A live exercise in the Arctic is planned for later this year. Coast Guard officials describe the forum as "an operationally-focused, consensus-based organization with the purpose of leveraging collective resources to foster safe, secure and environmentally responsible maritime activity in the Arctic." "This forum — one of many ways in which the Coast Guard uses our unique roles to enhance our Nation's diplomacy — has quickly established itself as a premier platform for fostering safe, secure and environmentally responsible maritime activity in the Arctic," said Zukunft. In testimony to U.S. senators earlier this week, Zukunft spoke of the need to engage with other Arctic nations, characterizing it as a clear preference for cooperation over competition. Nevertheless, he stressed the need for the U.S. to press forward with building a new fleet of three heavy and three medium icebreakers. FY2019 DHS Appropriations Act (S. 3109) The Senate Appropriations Committee, in its report ( S.Rept. 115-283 of June 21, 2108) on S. 3109 , states the following: Arctic Program Office .—Recognizing the growing national security imperatives for an enhanced U.S. presence in the Arctic, the Committee is pleased that the Coast Guard has established an Arctic Strategy, an Arctic Strategy Implementation Plan, and an Arctic Program Office. This office has furthered the Nation's national defense and security interests in the Arctic through its extensive participation, coordination, and collaboration with other international, Federal, and SLTT partners to improve awareness, broaden partnerships, and modernize governance in the Arctic. Most recently, the office supported the completion of the Bering Strait Port Access Route Study, a study that resulted in a joint recommendation by the United States and the Russian Federation to the International Maritime Organization [IMO] to establish a common vessel traffic measure. Recently approved by the IMO, the traffic measure is the first IMO-approved measure for navigation safety in polar waters. The Coast Guard is to report to the Committee if additional resources are needed for the Arctic Program Office to further its important mission. (Pages 61-62) CRS Reports on Specific Arctic-Related Issues CRS Report RL34266, Climate Change: Science Highlights , by Jane A. Leggett CRS Report RS21890, The U.N. Law of the Sea Convention and the United States: Developments Since October 2003 , by Marjorie Ann Browne CRS Report RL33872, Arctic National Wildlife Refuge (ANWR): An Overview , by M. Lynne Corn, Michael Ratner, and Laura B. Comay CRS Report RL32838, Arctic National Wildlife Refuge (ANWR): Votes and Legislative Actions Since the 95th Congress , by M. Lynne Corn and Beth Cook CRS Report RL34547, Possible Federal Revenue from Oil Development of ANWR and Nearby Areas , by Salvatore Lazzari CRS Report RL33705, Oil Spills: Background and Governance , by Jonathan L. Ramseur CRS Report RL33941, Polar Bears: Listing Under the Endangered Species Act , by Eugene H. Buck, M. Lynne Corn, and Kristina Alexander CRS Report RL34391, Coast Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report RL34342, Homeland Security: Roles and Missions for United States Northern Command , by William Knight Appendix A. Arctic Research and Policy Act (ARPA) of 1984 (Title I of P.L. 98-373 ) The text of the Arctic Research and Policy Act (ARPA) of 1984 (Title I of P.L. 98-373 of July 31, 1984) is as follows: TITLE I – ARCTIC RESEARCH AND POLICY SHORT TITLE SEC. 101. This title may be cited as the "Arctic Research and Policy Act of 1984". FINDINGS AND PURPOSES SEC. 102. (a) The Congress finds and declares that- (1) the Arctic, onshore and offshore, contains vital energy resources that can reduce the Nation's dependence on foreign oil and improve the national balance of payments; (2) as the Nation's only common border with the Soviet Union, the Arctic is critical to national defense; (3) the renewable resources of the Arctic, specifically fish and other seafood, represent one of the Nation's greatest commercial assets; (4) Arctic conditions directly affect global weather patterns and must be understood in order to promote better agricultural management throughout the United States; (5) industrial pollution not originating in the Arctic region collects in the polar air mass, has the potential to disrupt global weather patterns, and must be controlled through international cooperation and consultation; (6) the Arctic is a natural laboratory for research into human health and adaptation, physical and psychological, to climates of extreme cold and isolation and may provide information crucial for future defense needs; (7) atmospheric conditions peculiar to the Arctic make the Arctic a unique testing ground for research into high latitude communications, which is likely to be crucial for future defense needs; (8) Arctic marine technology is critical to cost-effective recovery and transportation of energy resources and to the national defense; (9) the United States has important security, economic, and environmental interests in developing and maintaining a fleet of icebreaking vessels capable of operating effectively in the heavy ice regions of the Arctic; (10) most Arctic-rim countries, particularly the Soviet Union, possess Arctic technologies far more advanced than those currently available in the United States; (11) Federal Arctic research is fragmented and uncoordinated at the present time, leading to the neglect of certain areas of research and to unnecessary duplication of effort in other areas of research; (12) improved logistical coordination and support for Arctic research and better dissemination of research data and information is necessary to increase the efficiency and utility of national Arctic research efforts; (13) a comprehensive national policy and program plan to organize and fund currently neglected scientific research with respect to the Arctic is necessary to fulfill national objectives in Arctic research; (14) the Federal Government, in cooperation with State and local governments, should focus its efforts on the collection and characterization of basic data related to biological, materials, geophysical, social, and behavioral phenomena in the Arctic; (15) research into the long-range health, environmental, and social effects of development in the Arctic is necessary to mitigate the adverse consequences of that development to the land and its residents; (16) Arctic research expands knowledge of the Arctic, which can enhance the lives of Arctic residents, increase opportunities for international cooperation among Arctic-rim countries, and facilitate the formulation of national policy for the Arctic; and (17) the Alaskan Arctic provides an essential habitat for marine mammals, migratory waterfowl, and other forms of wildlife which are important to the Nation and which are essential to Arctic residents. (b) The purposes of this title are- (1) to establish national policy, priorities, and goals and to provide a Federal program plan for basic and applied scientific research with respect to the Arctic, including natural resources and materials, physical, biological and health sciences, and social and behavioral sciences; (2) to establish an Arctic Research Commission to promote Arctic research and to recommend Arctic research policy; (3) to designate the National Science Foundation as the lead agency responsible for implementing Arctic research policy; and (4) to establish an Interagency Arctic Research Policy Committee to develop a national Arctic research policy and a five year plan to implement that policy. ARCTIC RESEARCH COMMISSION SEC. 103. (a) The President shall establish an Arctic Research Commission (hereafter referred to as the "Commission"). (b)(1) The Commission shall be composed of five members appointed by the President, with the Director of the National Science Foundation serving as a nonvoting, ex officio member. The members appointed by the President shall include- (A) three members appointed from among individuals from academic or other research institutions with expertise in areas of research relating to the Arctic, including the physical, biological, health, environmental, social, and behavioral sciences; (B) one member appointed from among indigenous residents of the Arctic who are representative of the needs and interests of Arctic residents and who live in areas directly affected by Arctic resource development; and (C) one member appointed from among individuals familiar with the Arctic and representative of the needs and interests of private industry undertaking resource development in the Arctic. (2) The President shall designate one of the appointed members of the Commission to be chairperson of the Commission. (c)(1) Except as provided in paragraph (2) of this subsection, the term of office of each member of the Commission appointed under subsection (b)(1) shall be four years. (2) Of the members of the Commission originally appointed under subsection (b)(1)- (A) one shall be appointed for a term of two years; (B) two shall be appointed for a term of three years; and (C) two shall be appointed for a term of four years. (3) Any vacancy occurring in the membership of the Commission shall be filled, after notice of the vacancy is published in the Federal Register, in the manner provided by the preceding provisions of this section, for the remainder of the unexpired term. (4) A member may serve after the expiration of the member's term of office until the President appoints a successor. (5) A member may serve consecutive terms beyond the member's original appointment. (d)(1) Members of the Commission may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code. A member of the Commission not presently employed for compensation shall be compensated at a rate equal to the daily equivalent of the rate for GS-16 of the General Schedule under section 5332 of title 5, United States Code, for each day the member is engaged in the actual performance of his duties as a member of the Commission, not to exceed 90 days of service each year. Except for the purposes of chapter 81 of title 5 (relating to compensation for work injuries) and chapter 171 of title 28 (relating to tort claims), a member of the Commission shall not be considered an employee of the United States for any purpose. (2) The Commission shall meet at the call of its Chairman or a majority of its members. (3) Each Federal agency referred to in section 107(b) may designate a representative to participate as an observer with the Commission. These representatives shall report to and advise the Commission on the activities relating to Arctic research of their agencies. (4) The Commission shall conduct at least one public meeting in the State of Alaska annually. DUTIES OF COMMISSION SEC. 104. (a) The Commission shall- (1) develop and recommend an integrated national Arctic research policy; (2) in cooperation with the Interagency Arctic Research Policy Committee established under section 107, assist in establishing a national Arctic research program plan to implement the Arctic research policy; (3) facilitate cooperation between the Federal Government and State and local governments with respect to Arctic research; (4) review Federal research programs in the Arctic and suggest improvements in coordination among programs; (5) recommend methods to improve logistical planning and support for Arctic research as may be appropriate and in accordance with the findings and purposes of this title; (6) suggest methods for improving efficient sharing and dissemination of data and information on the Arctic among interested public and private institutions; (7) offer other recommendations and advice to the Interagency Committee established under section 107 as it may find appropriate; and (8) cooperate with the Governor of the State of Alaska and with agencies and organizations of that State which the Governor may designate with respect to the formulation of Arctic research policy. (b) Not later than January 31 of each year, the Commission shall- (1) publish a statement of goals and objectives with respect to Arctic research to guide the Interagency Committee established under section 107 in the performance of its duties; and (2) submit to the President and to the Congress a report describing the activities and accomplishments of the Commission during the immediately preceding fiscal year. COOPERATION WITH THE COMMISSION SEC. 105. (a)(1) The Commission may acquire from the head of any Federal agency unclassified data, reports, and other nonproprietary information with respect to Arctic research in the possession of the agency which the Commission considers useful in the discharge of its duties. (2) Each agency shall cooperate with the Commission and furnish all data, reports, and other information requested by the Commission to the extent permitted by law; except that no agency need furnish any information which it is permitted to withhold under section 552 of title 5, United States Code. (b) With the consent of the appropriate agency head, the Commission may utilize the facilities and services of any Federal agency to the extent that the facilities and services are needed for the establishment and development of an Arctic research policy, upon reimbursement to be agreed upon by the Commission and the agency head and taking every feasible step to avoid duplication of effort. (c) All Federal agencies shall consult with the Commission before undertaking major Federal actions relating to Arctic research. ADMINISTRATION OF THE COMMISSION SEC. 106. The Commission may- (1) in accordance with the civil service laws and subchapter III of chapter 53 of title 5, United States Code, appoint and fix the compensation of an Executive Director and necessary additional staff personnel, but not to exceed a total of seven compensated personnel; (2) procure temporary and intermittent services as authorized by section 3109 of title 5, United States Code; (3) enter into contracts and procure supplies, services, and personal property; and (4) enter into agreements with the General Services Administration for the procurement of necessary financial and administrative services, for which payment shall be made by reimbursement from funds of the Commission in amounts to be agreed upon by the Commission and the Administrator of the General Services Administration. LEAD AGENCY AND INTERAGENCY ARCTIC RESEARCH POLICY COMMITTEE SEC. 107. (a) The National Science Foundation is designated as the lead agency responsible for implementing Arctic research policy, and the Director of the National Science Foundation shall insure that the requirements of section 108 are fulfilled. (b)(1) The President shall establish an Interagency Arctic Research Policy Committee (hereinafter referred to as the "Interagency Committee"). (2) The Interagency Committee shall be composed of representatives of the following Federal agencies or offices: (A) the National Science Foundation; (B) the Department of Commerce; (C) the Department of Defense; (D) the Department of Energy; (E) the Department of the Interior; (F) the Department of State; (G) the Department of Transportation; (H) the Department of Health and Human Services; (I) the National Aeronautics and Space Administration; (J) the Environmental Protection Agency; and (K) any other agency or office deemed appropriate. (3) The representative of the National Science Foundation shall serve as the Chairperson of the Interagency Committee. DUTIES OF THE INTERAGENCY COMMITTEE SEC. 108. (a) The Interagency Committee shall- (1) survey Arctic research conducted by Federal, State, and local agencies, universities, and other public and private institutions to help determine priorities for future Arctic research, including natural resources and materials, physical and biological sciences, and social and behavioral sciences; (2) work with the Commission to develop and establish an integrated national Arctic research policy that will guide Federal agencies in developing and implementing their research programs in the Arctic; (3) consult with the Commission on- (A) the development of the national Arctic research policy and the 5-year plan implementing the policy; (B) Arctic research programs of Federal agencies; (C) recommendations of the Commission on future Arctic research; and (D) guidelines for Federal agencies for awarding and administering Arctic research grants; (4) develop a 5-year plan to implement the national policy, as provided for in section 109; (5) provide the necessary coordination, data, and assistance for the preparation of a single integrated, coherent, and multiagency budget request for Arctic research as provided for in section 110; (6) facilitate cooperation between the Federal Government and State and local governments in Arctic research, and recommend the undertaking of neglected areas of research in accordance with the findings and purposes of this title; (7) coordinate and promote cooperative Arctic scientific research programs with other nations, subject to the foreign policy guidance of the Secretary of State; (8) cooperate with the Governor of the State of Alaska in fulfilling its responsibilities under this title; (9) promote Federal interagency coordination of all Arctic research activities, including- (A) logistical planning and coordination; and (B) the sharing of data and information associated with Arctic research, subject to section 552 of title 5, United States Code; and (10) provide public notice of its meetings and an opportunity for the public to participate in the development and implementation of national Arctic research policy. (b) Not later than January 31, 1986, and biennially thereafter, the Interagency Committee shall submit to the Congress through the President, a brief, concise report containing- (1) a statement of the activities and accomplishments of the Interagency Committee since its last report; and (2) a description of the activities of the Commission, detailing with particularity the recommendations of the Commission with respect to Federal activities in Arctic research. 5-YEAR ARCTIC RESEARCH PLAN SEC. 109. (a) The Interagency Committee, in consultation with the Commission, the Governor of the State of Alaska, the residents of the Arctic, the private sector, and public interest groups, shall prepare a comprehensive 5-year program plan (hereinafter referred to as the "Plan") for the overall Federal effort in Arctic research. The Plan shall be prepared and submitted to the President for transmittal to the Congress within one year after the enactment of this Act and shall be revised biennially thereafter. (b) The Plan shall contain but need not be limited to the following elements: (1) an assessment of national needs and problems regarding the Arctic and the research necessary to address those needs or problems; (2) a statement of the goals and objectives of the Interagency Committee for national Arctic research; (3) a detailed listing of all existing Federal programs relating to Arctic research, including the existing goals, funding levels for each of the 5 following fiscal years, and the funds currently being expended to conduct the programs; (4) recommendations for necessary program changes and other proposals to meet the requirements of the policy and goals as set forth by the Commission and in the Plan as currently in effect; and (5) a description of the actions taken by the Interagency Committee to coordinate the budget review process in order to ensure interagency coordination and cooperation in (A) carrying out Federal Arctic research programs, and (B) eliminating unnecessary duplication of effort among these programs. COORDINATION AND REVIEW OF BUDGET REQUESTS SEC. 110. (a) The Office of Science and Technology Policy shall- (1) review all agency and department budget requests related to the Arctic transmitted pursuant to section 108(a)(5), in accordance with the national Arctic research policy and the 5-year program under section 108(a)(2) and section 109, respectively; and (2) consult closely with the Interagency Committee and the Commission to guide the Office of Science and Technology Policy's efforts. (b)(1) The Office of Management and Budget shall consider all Federal agency requests for research related to the Arctic as one integrated, coherent, and multiagency request which shall be reviewed by the Office of Management and Budget prior to submission of the President's annual budget request for its adherence to the Plan. The Commission shall, after submission of the President's annual budget request, review the request and report to Congress on adherence to the Plan. (2) The Office of Management and Budget shall seek to facilitate planning for the design, procurement, maintenance, deployment, and operations of icebreakers needed to provide a platform for Arctic research by allocating all funds necessary to support icebreaking operations, except for recurring incremental costs associated with specific projects, to the Coast Guard. AUTHORIZATION OF APPROPRIATIONS; NEW SPENDING AUTHORITY SEC. 111. (a) There are authorized to be appropriated such sums as may be necessary for carrying out this title. (b) Any new spending authority (within the meaning of section 401 of the Congressional Budget Act of 1974) which is provided under this title shall be effective for any fiscal year only to such extent or in such amounts as may be provided in appropriation Acts. DEFINITION SEC. 112. As used in this title, the term "Arctic" means all United States and foreign territory north of the Arctic Circle and all United States territory north and west of the boundary formed by the Porcupine, Yukon, and Kuskokwim Rivers; all contiguous seas, including the Arctic Ocean and the Beaufort, Bering, and Chukchi Seas; and the Aleutian chain. Appendix B. P.L. 101-609 of 1990, Amending Arctic Research and Policy Act (ARPA) of 1984 The Arctic Research and Policy Act (ARPA) of 1984 (see Appendix A ) was amended by P.L. 101-609 of November 16, 1990. The text of P.L. 101-609 is as follows: SECTION 1. Except as specifically provided in this Act, whenever in this Act an amendment or repeal is expressed as an amendment to, or repeal of a provision, the reference shall be deemed to be made to the Arctic Research and Policy Act of 1984. SEC. 2. Section 103(b)(1) (15 U.S.C. 4102(b)(1)) is amended— (1) in the text above clause (A), by striking out `five' and inserting in lieu thereof `seven'; (2) in clause (A), by striking out `three' and inserting in lieu thereof `four'; and (3) in clause (C), by striking out `one member' and inserting in lieu thereof `two members'. SEC. 3. Section 103(d)(1) (15 U.S.C. 4102(d)(1)) is amended by striking out `GS-16' and inserting in lieu thereof `GS-18'. SEC. 4. (a) Section 104(a) (15 U.S.C. 4102(a)) is amended— (1) in paragraph (4), by striking out `suggest' and inserting in lieu thereof `recommend'; (2) in paragraph (6), by striking out `suggest' and inserting in lieu thereof `recommend'; (3) in paragraph (7), by striking out `and' at the end thereof; (4) in paragraph (8), by striking out the period and inserting in lieu thereof a semicolon; and (5) by adding at the end thereof the following new paragraphs: '(9) recommend to the Interagency Committee the means for developing international scientific cooperation in the Arctic; and '(10) not later than January 31, 1991, and every 2 years thereafter, publish a statement of goals and objectives with respect to Arctic research to guide the Interagency Committee established under section 107 in the performance of its duties.'. (b) Section 104(b) is amended to read as follows: '(b) Not later than January 31 of each year, the Commission shall submit to the President and to the Congress a report describing the activities and accomplishments of the Commission during the immediately preceding fiscal year.'. SEC. 5. Section 106 (15 U.S.C. 4105) is amended— (1) in paragraph (3), by striking out 'and' at the end thereof; (2) in paragraph (4), by striking out the period at the end thereof and inserting in lieu thereof; and'; and (3) by adding at the end thereof the following new paragraph: '(5) appoint, and accept without compensation the services of, scientists and engineering specialists to be advisors to the Commission. Each advisor may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code. Except for the purposes of chapter 81 of title 5 (relating to compensation for work injuries) and chapter 171 of title 28 (relating to tort claims) of the United States Code, an advisor appointed under this paragraph shall not be considered an employee of the United States for any purpose.' SEC. 6. Subsection (b)(2) of section 108 (15 U.S.C. 4107(b)(2)) is amended to read as follows: '(2) a statement detailing with particularity the recommendations of the Commission with respect to Federal interagency activities in Arctic research and the disposition and responses to those recommendations.' Appendix C. January 2009 Arctic Policy Directive (NSPD 66/HSPD 25) On January 12, 2009, the George W. Bush Administration released a presidential directive establishing a new U.S. policy for the Arctic region. The directive, dated January 9, 2009, was issued as National Security Presidential Directive 66/Homeland Security Presidential Directive 25 (NSPD 66/HSPD 25). The text of NSPD 66/HSPD 25 is as follows: SUBJECT: Arctic Region Policy I. PURPOSE A. This directive establishes the policy of the United States with respect to the Arctic region and directs related implementation actions. This directive supersedes Presidential Decision Directive/NSC-26 (PDD-26; issued 1994) with respect to Arctic policy but not Antarctic policy; PDD-26 remains in effect for Antarctic policy only. B. This directive shall be implemented in a manner consistent with the Constitution and laws of the United States, with the obligations of the United States under the treaties and other international agreements to which the United States is a party, and with customary international law as recognized by the United States, including with respect to the law of the sea. II. BACKGROUND A. The United States is an Arctic nation, with varied and compelling interests in that region. This directive takes into account several developments, including, among others: 1. Altered national policies on homeland security and defense; 2. The effects of climate change and increasing human activity in the Arctic region; 3. The establishment and ongoing work of the Arctic Council; and 4. A growing awareness that the Arctic region is both fragile and rich in resources. III. POLICY A. It is the policy of the United States to: 1. Meet national security and homeland security needs relevant to the Arctic region; 2. Protect the Arctic environment and conserve its biological resources; 3. Ensure that natural resource management and economic development in the region are environmentally sustainable; 4. Strengthen institutions for cooperation among the eight Arctic nations (the United States, Canada, Denmark, Finland, Iceland, Norway, the Russian Federation, and Sweden); 5. Involve the Arctic's indigenous communities in decisions that affect them; and 6. Enhance scientific monitoring and research into local, regional, and global environmental issues. B. National Security and Homeland Security Interests in the Arctic 1. The United States has broad and fundamental national security interests in the Arctic region and is prepared to operate either independently or in conjunction with other states to safeguard these interests. These interests include such matters as missile defense and early warning; deployment of sea and air systems for strategic sealift, strategic deterrence, maritime presence, and maritime security operations; and ensuring freedom of navigation and overflight. 2. The United States also has fundamental homeland security interests in preventing terrorist attacks and mitigating those criminal or hostile acts that could increase the United States vulnerability to terrorism in the Arctic region. 3. The Arctic region is primarily a maritime domain; as such, existing policies and authorities relating to maritime areas continue to apply, including those relating to law enforcement.[1] Human activity in the Arctic region is increasing and is projected to increase further in coming years. This requires the United States to assert a more active and influential national presence to protect its Arctic interests and to project sea power throughout the region. 4. The United States exercises authority in accordance with lawful claims of United States sovereignty, sovereign rights, and jurisdiction in the Arctic region, including sovereignty within the territorial sea, sovereign rights and jurisdiction within the United States exclusive economic zone and on the continental shelf, and appropriate control in the United States contiguous zone. 5. Freedom of the seas is a top national priority. The Northwest Passage is a strait used for international navigation, and the Northern Sea Route includes straits used for international navigation; the regime of transit passage applies to passage through those straits. Preserving the rights and duties relating to navigation and overflight in the Arctic region supports our ability to exercise these rights throughout the world, including through strategic straits. 6. Implementation: In carrying out this policy as it relates to national security and homeland security interests in the Arctic, the Secretaries of State, Defense, and Homeland Security, in coordination with heads of other relevant executive departments and agencies, shall: a. Develop greater capabilities and capacity, as necessary, to protect United States air, land, and sea borders in the Arctic region; b. Increase Arctic maritime domain awareness in order to protect maritime commerce, critical infrastructure, and key resources; c. Preserve the global mobility of United States military and civilian vessels and aircraft throughout the Arctic region; d. Project a sovereign United States maritime presence in the Arctic in support of essential United States interests; and e. Encourage the peaceful resolution of disputes in the Arctic region. C. International Governance 1. The United States participates in a variety of fora, international organizations, and bilateral contacts that promote United States interests in the Arctic. These include the Arctic Council, the International Maritime Organization (IMO), wildlife conservation and management agreements, and many other mechanisms. As the Arctic changes and human activity in the region increases, the United States and other governments should consider, as appropriate, new international arrangements or enhancements to existing arrangements. 2. The Arctic Council has produced positive results for the United States by working within its limited mandate of environmental protection and sustainable development. Its subsidiary bodies, with help from many United States agencies, have developed and undertaken projects on a wide range of topics. The Council also provides a beneficial venue for interaction with indigenous groups. It is the position of the United States that the Arctic Council should remain a high-level forum devoted to issues within its current mandate and not be transformed into a formal international organization, particularly one with assessed contributions. The United States is nevertheless open to updating the structure of the Council, including consolidation of, or making operational changes to, its subsidiary bodies, to the extent such changes can clearly improve the Council's work and are consistent with the general mandate of the Council. 3. The geopolitical circumstances of the Arctic region differ sufficiently from those of the Antarctic region such that an "Arctic Treaty" of broad scope—along the lines of the Antarctic Treaty—is not appropriate or necessary. 4. The Senate should act favorably on U.S. accession to the U.N. Convention on the Law of the Sea promptly, to protect and advance U.S. interests, including with respect to the Arctic. Joining will serve the national security interests of the United States, including the maritime mobility of our Armed Forces worldwide. It will secure U.S. sovereign rights over extensive marine areas, including the valuable natural resources they contain. Accession will promote U.S. interests in the environmental health of the oceans. And it will give the United States a seat at the table when the rights that are vital to our interests are debated and interpreted. 5. Implementation: In carrying out this policy as it relates to international governance, the Secretary of State, in coordination with heads of other relevant executive departments and agencies, shall: a. Continue to cooperate with other countries on Arctic issues through the United Nations (U.N.) and its specialized agencies, as well as through treaties such as the U.N. Framework Convention on Climate Change, the Convention on International Trade in Endangered Species of Wild Fauna and Flora, the Convention on Long Range Transboundary Air Pollution and its protocols, and the Montreal Protocol on Substances that Deplete the Ozone Layer; b. Consider, as appropriate, new or enhanced international arrangements for the Arctic to address issues likely to arise from expected increases in human activity in that region, including shipping, local development and subsistence, exploitation of living marine resources, development of energy and other resources, and tourism; c. Review Arctic Council policy recommendations developed within the ambit of the Council's scientific reviews and ensure the policy recommendations are subject to review by Arctic governments; and d. Continue to seek advice and consent of the United States Senate to accede to the 1982 Law of the Sea Convention. D. Extended Continental Shelf and Boundary Issues 1. Defining with certainty the area of the Arctic seabed and subsoil in which the United States may exercise its sovereign rights over natural resources such as oil, natural gas, methane hydrates, minerals, and living marine species is critical to our national interests in energy security, resource management, and environmental protection. The most effective way to achieve international recognition and legal certainty for our extended continental shelf is through the procedure available to States Parties to the U.N. Convention on the Law of the Sea. 2. The United States and Canada have an unresolved boundary in the Beaufort Sea. United States policy recognizes a boundary in this area based on equidistance. The United States recognizes that the boundary area may contain oil, natural gas, and other resources. 3. The United States and Russia are abiding by the terms of a maritime boundary treaty concluded in 1990, pending its entry into force. The United States is prepared to enter the agreement into force once ratified by the Russian Federation. 4. Implementation: In carrying out this policy as it relates to extended continental shelf and boundary issues, the Secretary of State, in coordination with heads of other relevant executive departments and agencies, shall: a. Take all actions necessary to establish the outer limit of the continental shelf appertaining to the United States, in the Arctic and in other regions, to the fullest extent permitted under international law; b. Consider the conservation and management of natural resources during the process of delimiting the extended continental shelf; and c. Continue to urge the Russian Federation to ratify the 1990 United States-Russia maritime boundary agreement. E. Promoting International Scientific Cooperation 1. Scientific research is vital for the promotion of United States interests in the Arctic region. Successful conduct of U.S. research in the Arctic region requires access throughout the Arctic Ocean and to terrestrial sites, as well as viable international mechanisms for sharing access to research platforms and timely exchange of samples, data, and analyses. Better coordination with the Russian Federation, facilitating access to its domain, is particularly important. 2. The United States promotes the sharing of Arctic research platforms with other countries in support of collaborative research that advances fundamental understanding of the Arctic region in general and potential Arctic change in particular. This could include collaboration with bodies such as the Nordic Council and the European Polar Consortium, as well as with individual nations. 3. Accurate prediction of future environmental and climate change on a regional basis, and the delivery of near real-time information to end-users, requires obtaining, analyzing, and disseminating accurate data from the entire Arctic region, including both paleoclimatic data and observational data. The United States has made significant investments in the infrastructure needed to collect environmental data in the Arctic region, including the establishment of portions of an Arctic circumpolar observing network through a partnership among United States agencies, academic collaborators, and Arctic residents. The United States promotes active involvement of all Arctic nations in these efforts in order to advance scientific understanding that could provide the basis for assessing future impacts and proposed response strategies. 4. United States platforms capable of supporting forefront research in the Arctic Ocean, including portions expected to be ice-covered for the foreseeable future, as well as seasonally ice-free regions, should work with those of other nations through the establishment of an Arctic circumpolar observing network. All Arctic nations are members of the Group on Earth Observations partnership, which provides a framework for organizing an international approach to environmental observations in the region. In addition, the United States recognizes that academic and research institutions are vital partners in promoting and conducting Arctic research. 5. Implementation: In carrying out this policy as it relates to promoting scientific international cooperation, the Secretaries of State, the Interior, and Commerce and the Director of the National Science Foundation, in coordination with heads of other relevant executive departments and agencies, shall: a. Continue to play a leadership role in research throughout the Arctic region; b. Actively promote full and appropriate access by scientists to Arctic research sites through bilateral and multilateral measures and by other means; c. Lead the effort to establish an effective Arctic circumpolar observing network with broad partnership from other relevant nations; d. Promote regular meetings of Arctic science ministers or research council heads to share information concerning scientific research opportunities and to improve coordination of international Arctic research programs; e. Work with the Interagency Arctic Research Policy Committee (IARPC) to promote research that is strategically linked to U.S. policies articulated in this directive, with input from the Arctic Research Commission; and f. Strengthen partnerships with academic and research institutions and build upon the relationships these institutions have with their counterparts in other nations. F. Maritime Transportation in the Arctic Region 1. The United States priorities for maritime transportation in the Arctic region are: a. To facilitate safe, secure, and reliable navigation; b. To protect maritime commerce; and c. To protect the environment. 2. Safe, secure, and environmentally sound maritime commerce in the Arctic region depends on infrastructure to support shipping activity, search and rescue capabilities, short- and long-range aids to navigation, high-risk area vessel-traffic management, iceberg warnings and other sea ice information, effective shipping standards, and measures to protect the marine environment. In addition, effective search and rescue in the Arctic will require local, State, Federal, tribal, commercial, volunteer, scientific, and multinational cooperation. 3. Working through the International Maritime Organization (IMO), the United States promotes strengthening existing measures and, as necessary, developing new measures to improve the safety and security of maritime transportation, as well as to protect the marine environment in the Arctic region. These measures may include ship routing and reporting systems, such as traffic separation and vessel traffic management schemes in Arctic chokepoints; updating and strengthening of the Guidelines for Ships Operating in Arctic Ice-Covered Waters; underwater noise standards for commercial shipping; a review of shipping insurance issues; oil and other hazardous material pollution response agreements; and environmental standards. 4. Implementation: In carrying out this policy as it relates to maritime transportation in the Arctic region, the Secretaries of State, Defense, Transportation, Commerce, and Homeland Security, in coordination with heads of other relevant executive departments and agencies, shall: a. Develop additional measures, in cooperation with other nations, to address issues that are likely to arise from expected increases in shipping into, out of, and through the Arctic region; b. Commensurate with the level of human activity in the region, establish a risk-based capability to address hazards in the Arctic environment. Such efforts shall advance work on pollution prevention and response standards; determine basing and logistics support requirements, including necessary airlift and icebreaking capabilities; and improve plans and cooperative agreements for search and rescue; c. Develop Arctic waterways management regimes in accordance with accepted international standards, including vessel traffic-monitoring and routing; safe navigation standards; accurate and standardized charts; and accurate and timely environmental and navigational information; and d. Evaluate the feasibility of using access through the Arctic for strategic sealift and humanitarian aid and disaster relief. G. Economic Issues, Including Energy 1. Sustainable development in the Arctic region poses particular challenges. Stakeholder input will inform key decisions as the United States seeks to promote economic and energy security. Climate change and other factors are significantly affecting the lives of Arctic inhabitants, particularly indigenous communities. The United States affirms the importance to Arctic communities of adapting to climate change, given their particular vulnerabilities. 2. Energy development in the Arctic region will play an important role in meeting growing global energy demand as the area is thought to contain a substantial portion of the world's undiscovered energy resources. The United States seeks to ensure that energy development throughout the Arctic occurs in an environmentally sound manner, taking into account the interests of indigenous and local communities, as well as open and transparent market principles. The United States seeks to balance access to, and development of, energy and other natural resources with the protection of the Arctic environment by ensuring that continental shelf resources are managed in a responsible manner and by continuing to work closely with other Arctic nations. 3. The United States recognizes the value and effectiveness of existing fora, such as the Arctic Council, the International Regulators Forum, and the International Standards Organization. 4. Implementation: In carrying out this policy as it relates to economic issues, including energy, the Secretaries of State, the Interior, Commerce, and Energy, in coordination with heads of other relevant executive departments and agencies, shall: a. Seek to increase efforts, including those in the Arctic Council, to study changing climate conditions, with a view to preserving and enhancing economic opportunity in the Arctic region. Such efforts shall include inventories and assessments of villages, indigenous communities, subsistence opportunities, public facilities, infrastructure, oil and gas development projects, alternative energy development opportunities, forestry, cultural and other sites, living marine resources, and other elements of the Arctic's socioeconomic composition; b. Work with other Arctic nations to ensure that hydrocarbon and other development in the Arctic region is carried out in accordance with accepted best practices and internationally recognized standards and the 2006 Group of Eight (G-8) Global Energy Security Principles; c. Consult with other Arctic nations to discuss issues related to exploration, production, environmental and socioeconomic impacts, including drilling conduct, facility sharing, the sharing of environmental data, impact assessments, compatible monitoring programs, and reservoir management in areas with potentially shared resources; d. Protect United States interests with respect to hydrocarbon reservoirs that may overlap boundaries to mitigate adverse environmental and economic consequences related to their development; e. Identify opportunities for international cooperation on methane hydrate issues, North Slope hydrology, and other matters; f. Explore whether there is a need for additional fora for informing decisions on hydrocarbon leasing, exploration, development, production, and transportation, as well as shared support activities, including infrastructure projects; and g. Continue to emphasize cooperative mechanisms with nations operating in the region to address shared concerns, recognizing that most known Arctic oil and gas resources are located outside of United States jurisdiction. H. Environmental Protection and Conservation of Natural Resources 1. The Arctic environment is unique and changing. Increased human activity is expected to bring additional stressors to the Arctic environment, with potentially serious consequences for Arctic communities and ecosystems. 2. Despite a growing body of research, the Arctic environment remains poorly understood. Sea ice and glaciers are in retreat. Permafrost is thawing and coasts are eroding. Pollutants from within and outside the Arctic are contaminating the region. Basic data are lacking in many fields. High levels of uncertainty remain concerning the effects of climate change and increased human activity in the Arctic. Given the need for decisions to be based on sound scientific and socioeconomic information, Arctic environmental research, monitoring, and vulnerability assessments are top priorities. For example, an understanding of the probable consequences of global climate variability and change on Arctic ecosystems is essential to guide the effective long-term management of Arctic natural resources and to address socioeconomic impacts of changing patterns in the use of natural resources. 3. Taking into account the limitations in existing data, United States efforts to protect the Arctic environment and to conserve its natural resources must be risk-based and proceed on the basis of the best available information. 4. The United States supports the application in the Arctic region of the general principles of international fisheries management outlined in the 1995 Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of December 10, 1982, relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks and similar instruments. The United States endorses the protection of vulnerable marine ecosystems in the Arctic from destructive fishing practices and seeks to ensure an adequate enforcement presence to safeguard Arctic living marine resources. 5. With temperature increases in the Arctic region, contaminants currently locked in the ice and soils will be released into the air, water, and land. This trend, along with increased human activity within and below the Arctic, will result in increased introduction of contaminants into the Arctic, including both persistent pollutants (e.g., persistent organic pollutants and mercury) and airborne pollutants (e.g., soot). 6. Implementation: In carrying out this policy as it relates to environmental protection and conservation of natural resources, the Secretaries of State, the Interior, Commerce, and Homeland Security and the Administrator of the Environmental Protection Agency, in coordination with heads of other relevant executive departments and agencies, shall: a. In cooperation with other nations, respond effectively to increased pollutants and other environmental challenges; b. Continue to identify ways to conserve, protect, and sustainably manage Arctic species and ensure adequate enforcement presence to safeguard living marine resources, taking account of the changing ranges or distribution of some species in the Arctic. For species whose range includes areas both within and beyond United States jurisdiction, the United States shall continue to collaborate with other governments to ensure effective conservation and management; c. Seek to develop ways to address changing and expanding commercial fisheries in the Arctic, including through consideration of international agreements or organizations to govern future Arctic fisheries; d. Pursue marine ecosystem-based management in the Arctic; and e. Intensify efforts to develop scientific information on the adverse effects of pollutants on human health and the environment and work with other nations to reduce the introduction of key pollutants into the Arctic. IV. Resources and Assets A. Implementing a number of the policy elements directed above will require appropriate resources and assets. These elements shall be implemented consistent with applicable law and authorities of agencies, or heads of agencies, vested by law, and subject to the availability of appropriations. The heads of executive departments and agencies with responsibilities relating to the Arctic region shall work to identify future budget, administrative, personnel, or legislative proposal requirements to implement the elements of this directive. ——————————————————————————— [1] These policies and authorities include Freedom of Navigation (PDD/NSC-32), the U.S. Policy on Protecting the Ocean Environment (PDD/NSC-36), Maritime Security Policy (NSPD-41/HSPD-13), and the National Strategy for Maritime Security (NSMS). Appendix D. May 2013 National Strategy for Arctic Region On May 10, 2013, the Obama Administration released a document entitled National Strategy for the Arctic Region . The executive summary of the document is reprinted earlier in this report (see " May 2013 National Strategy for Arctic Region " in " Background "). This appendix reprints the main text of the document. The main text states the following: Introduction We seek an Arctic region that is stable and free of conflict, where nations act responsibly in a spirit of trust and cooperation, and where economic and energy resources are developed in a sustainable manner that also respects the fragile environment and the interests and cultures of indigenous peoples. As the United States addresses these opportunities and challenges, we will be guided by our central interests in the Arctic region, which include providing for the security of the United States; protecting the free flow of resources and commerce; protecting the environment; addressing the needs of indigenous communities; and enabling scientific research. In protecting these interests, we draw from our long-standing policy and approach to the global maritime spaces in the 20 th century, including freedom of navigation and overflight and other internationally lawful uses of the sea and airspace related to these freedoms; security on the oceans; maintaining strong relationships with allies and partners; and peaceful resolution of disputes without coercion. To achieve this vision, the United States is establishing an overarching national approach to advance national security interests, pursue responsible stewardship of this precious and unique region, and serve as a basis for cooperation with other Arctic states and the international community as a whole to advance common interests. Even as we work domestically and internationally to minimize the effects of climate change, the effects are already apparent in the Arctic. Ocean resources are more readily accessible as sea ice diminishes, but thawing ground is threatening communities as well as hindering land-based activities, including access to resources. Diminishing land and sea ice is altering ecosystems and the services they provide. As an Arctic nation, the United States must be proactive and disciplined in addressing changing regional conditions and in developing adaptive strategies to protect its interests. An undisciplined approach to exploring new opportunities in this frontier could result in significant harm to the region, to our national security interests, and to the global good. When implementing this strategy, the United States will proceed in a thoughtful, responsible manner that leverages expertise, resources, and cooperation from the State of Alaska, Alaska Natives, and stakeholders across the entire nation and throughout the international community. We will encourage and use science-informed decisionmaking to aid this effort. We will endeavor to do no harm to the sensitive environment or to Alaska native communities and other indigenous populations that rely on Arctic resources. Just as a common spirit and shared vision of peaceful partnership led to the development of an international space station, we believe much can be achieved in the Arctic region through collaborative international efforts, coordinated investments, and public-private partnerships. Structure of the Strategy Through this National Strategy for the Arctic Region, we seek to guide, prioritize, and synchronize efforts to protect U.S. national and homeland security interests, promote responsible stewardship, and foster international cooperation. This strategy articulates three priority lines of effort. It also identifies guiding principles as a foundation for Arctic region activities. Through a deliberate emphasis on the priority lines of effort and objectives, it aims to achieve a national unity of effort that is consistent with our domestic and international legal rights, obligations, and commitments and that is well coordinated with our Arctic neighbors and the international community. These lines of effort identify common themes where specific emphasis and activities will be focused to ensure that strategic priorities are met. The three lines of effort, as well as the guiding principles are meant to be acted upon as a coherent whole. Changing Conditions While the Arctic region has experienced warming and cooling cycles over millennia, the current warming trend is unlike anything previously recorded. The reduction in sea ice has been dramatic, abrupt, and unrelenting. The dense, multi-year ice is giving way to thin layers of seasonal ice, making more of the region navigable year-round. Scientific estimates of technically recoverable conventional oil and gas resources north of the Arctic Circle total approximately 13 percent of the world's undiscovered oil and 30 percent of the world's undiscovered gas deposits, as well as vast quantities of mineral resources, including rare earth elements, iron ore, and nickel. These estimates have inspired fresh ideas for commercial initiatives and infrastructure development in the region. As portions of the Arctic Ocean become more navigable, there is increasing interest in the viability of the Northern Sea Route and other potential routes, including the Northwest Passage, as well as in development of Arctic resources. For all of the opportunities emerging with the increasing accessibility and economic and strategic interests in the Arctic, the opening and rapid development of the Arctic region presents very real challenges. On the environmental front, reduced sea ice is having an immediate impact on indigenous populations as well as on fish and wildlife. Moreover, there may be potentially profound environmental consequences of continued ocean warming and Arctic ice melt. These consequences include altering the climate of lower latitudes, risking the stability of Greenland's ice sheet, and accelerating the thawing of the Arctic permafrost in which large quantities of methane – a potent driver of climate change – as well as pollutants such as mercury are stored. Uncoordinated development – and the consequent increase in pollution such as emissions of black carbon or other substances from fossil fuel combustion – could have unintended consequences on climate trends, fragile ecosystems, and Arctic communities. It is imperative that the United States proactively establish national priorities and objectives for the Arctic region. Lines of Effort To meet the challenges and opportunities in the Arctic region, and in furtherance of established Arctic Region Policy, we will pursue the following lines of effort and supporting objectives in a mutually reinforcing manner that incorporates the broad range of U.S. current activities and interests in the Arctic region. 1. Advance United States Security Interests Our highest priority is to protect the American people, our sovereign territory and rights, natural resources, and interests of the United States. To this end, the United States will identify, develop, and maintain the capacity and capabilities necessary to promote safety, security, and stability in the region through a combination of independent action, bilateral initiatives, and multilateral cooperation. We acknowledge that the protection of our national security interests in the Arctic region must be undertaken with attention to environmental, cultural, and international considerations outlined throughout this strategy. As many nations across the world aspire to expand their role in the Arctic, we encourage Arctic and non-Arctic states to work collaboratively through appropriate fora to address the emerging challenges and opportunities in the Arctic region, while we remain vigilant to protect the security interests of the United States and our allies. To accomplish this line of effort, the United States Government will seek to: • Evolve Arctic Infrastructure and Strategic Capabilities – Working cooperatively with the State of Alaska, local, and tribal authorities, as well as public and private sector partners, we will develop, maintain, and exercise the capacity to execute Federal responsibilities in our Arctic waters, airspace, and coastal regions, including the capacity to respond to natural or man-made disasters. We will carefully tailor this regional infrastructure, as well as our response capacity, to the evolving human and commercial activity in the Arctic region. • Enhance Arctic Domain Awareness – We seek to improve our awareness of activities, conditions, and trends in the Arctic region that may affect our safety, security, environmental, or commercial interests. The United States will endeavor to appropriately enhance sea, air, and space capabilities as Arctic conditions change, and to promote maritime-related information sharing with international, public, and private sector partners, to support implementation of activities such as the search-and-rescue agreement signed by Arctic states. • Preserve Arctic Region Freedom of the Seas – The United States has a national interest in preserving all of the rights, freedoms, and uses of the sea and airspace recognized under international law. We will enable prosperity and safe transit by developing and maintaining sea, under-sea, and air assets and necessary infrastructure. In addition, the United States will support the enhancement of national defense, law enforcement, navigation safety, marine environment response, and search-and-rescue capabilities. Existing international law provides a comprehensive set of rules governing the rights, freedoms, and uses of the world's oceans and airspace, including the Arctic. The law recognizes these rights, freedoms, and uses for commercial and military vessels and aircraft. Within this framework, we shall further develop Arctic waterways management regimes, including traffic separation schemes, vessel tracking, and ship routing, in collaboration with partners. We will also encourage other nations to adhere to internationally accepted principles. This cooperation will facilitate strategic partnerships that promote innovative, low-cost solutions that enhance the Arctic marine transportation system and the safe, secure, efficient and free flow of trade. • Provide for Future United States Energy Security – The Arctic region's energy resources factor into a core component of our national security strategy: energy security. The region holds sizable proved and potential oil and natural gas resources that will likely continue to provide valuable supplies to meet U.S. energy needs. Continuing to responsibly develop Arctic oil and gas resources aligns with the United States "all of the above" approach to developing new domestic energy sources, including renewables, expanding oil and gas production, and increasing efficiency and conservation efforts to reduce our reliance on imported oil and strengthen our nation's energy security. Within the context of this broader energy security strategy, including our economic, environmental and climate policy objectives, we are committed to working with stakeholders, industry, and other Arctic states to explore the energy resource base, develop and implement best practices, and share experiences to enable the environmentally responsible production of oil and natural gas as well as renewable energy. 2. Pursue Responsible Arctic Region Stewardship Responsible stewardship requires active conservation of resources, balanced management, and the application of scientific and traditional knowledge of physical and living environments. As Arctic environments change, increased human activity demands precaution, as well as greater knowledge to inform responsible decisions. Together, Arctic nations can responsibly meet new demands – including maintaining open sea lanes for global commerce and scientific research, charting and mapping, providing search-and-rescue services, and developing capabilities to prevent, contain, and respond to oil spills and accidents – by increasing knowledge and integrating Arctic management. We must improve our ability to forecast future conditions in the Arctic while being mindful of the potential for unexpected developments. To realize this line of effort, we will pursue the specific objectives outlined below: • Protect the Arctic Environment and Conserve Arctic Natural Resources – Protecting the unique and changing environment of the Arctic is a central goal of U.S. policy. Supporting actions will promote healthy, sustainable, and resilient ecosystems over the long term, supporting a full range of ecosystem services. This effort will be risk-based and proceed on the basis of best available information. The United States in the Arctic will assess and monitor the status of ecosystems and the risks of climate change and other stressors to prepare for and respond effectively to environmental challenges. • Use Integrated Arctic Management to Balance Economic Development, Environmental Protection, and Cultural Values – Natural resource management will be based on a comprehensive understanding of environmental and cultural sensitivities in the region, and address expectations for future infrastructure needs and other development-related trends. This endeavor can promote unity of effort and provide the basis for sensible infrastructure and other resource management decisions in the Arctic. We will emphasize science-informed decisionmaking and integration of economic, environmental, and cultural values. We will also advance coordination among Federal departments and agencies and collaboration with partners engaged in Arctic stewardship activities. • Increase Understanding of the Arctic through Scientific Research and Traditional Knowledge – Proper stewardship of the Arctic requires understanding of how the environment is changing, and such understanding will be based on a holistic earth system approach. Vast areas of the Arctic Ocean are unexplored, and we lack much of the basic knowledge necessary to understand and address Arctic issues. The changes in the Arctic cannot be understood in isolation and must be viewed in a global context. As we learn more about the region, we have identified several key subcomponents of the Arctic that require urgent attention: land ice and its role in changing sea level; sea-ice and its role in global climate, fostering biodiversity, and supporting Arctic peoples; and, the warming permafrost and its effects on infrastructure and climate. Better earth system-level knowledge will also help us meet operational needs such as weather and ice forecasting. We can make faster progress through a well-coordinated and transparent national and international exploration and research agenda that reduces the potential for duplication of effort and leads to better leveraging of resources. • Chart the Arctic region – We will continue to make progress in charting and mapping the Arctic region's ocean and waterways, so long obscured by perennial ice, and mapping its coastal and interior lands according to reliable, modern standards. Given the vast expanse of territory and water to be charted and mapped, we will need to prioritize and synchronize charting efforts to make more effective use of resources and attain faster progress. In so doing, we will make navigation safer and contribute to the identification of ecologically sensitive areas and reserves of natural resources. 3. Strengthen International Cooperation What happens in one part of the Arctic region can have significant implications for the interests of other Arctic states and the international community as a whole. The remote and complex operating conditions in the Arctic environment make the region well-suited for collaborative efforts by nations seeking to explore emerging opportunities while emphasizing ecological awareness and preservation. We will seek to strengthen partnerships through existing multilateral fora and legal frameworks dedicated to common Arctic issues. We will also pursue new arrangements for cooperating on issues of mutual interest or concern and addressing unique and unprecedented challenges, as appropriate. U.S. efforts to strengthen international cooperation and partnerships will be pursued through four objectives: • Pursue Arrangements that Promote Shared Arctic State Prosperity, Protect the Arctic Environment, and Enhance Security – We will seek opportunities to pursue efficient and effective joint ventures, based on shared values that leverage each Arctic state's strengths. This collaboration will assist in guiding investments and regional activities, addressing dynamic trends, and promoting sustainable development in the Arctic region. Arctic nations have varied commercial, cultural, environmental, safety, and security concerns in the Arctic region. Nevertheless, our common interests make these nations ideal partners in the region. We seek new opportunities to advance our interests by proactive engagement with other Arctic nations through bilateral and multilateral efforts using of a wide array of existing multilateral mechanisms that have responsibilities relating to the Arctic region. As appropriate, we will work with other Arctic nations to develop new coordination mechanisms to keep the Arctic region prosperous, environmentally sustainable, operationally safe, secure, and free of conflict, and will protect U.S., allied, and regional security and economic interests. • Work through the Arctic Council to Advance U.S. Interests in the Arctic Region – In recent years, the Arctic Council has facilitated notable achievements in the promotion of cooperation, coordination, and interaction among Arctic states and Arctic indigenous peoples. Recent successes of the Council include its advancement of public safety and environmental protection issues, as evidenced by the 2011 Arctic Search-and-Rescue Agreement and by the 2013 Arctic Marine Oil Pollution Preparedness and Response Agreement. The United States will continue to emphasize the Arctic Council as a forum for facilitating Arctic states' cooperation on myriad issues of mutual interest within its current mandate. • Accede to the Law of the Sea Convention – Accession to the Convention would protect U.S. rights, freedoms, and uses of the sea and airspace throughout the Arctic region, and strengthen our arguments for freedom of navigation and overflight through the Northwest Passage and the Northern Sea Route. The United States is the only Arctic state that is not party to the Convention. Only by joining the Convention can we maximize legal certainty and best secure international recognition of our sovereign rights with respect to the U.S. extended continental shelf in the Arctic and elsewhere, which may hold vast oil, gas, and other resources. Our extended continental shelf claim in the Arctic region could extend more than 600 nautical miles from the north coast of Alaska. In instances where the maritime zones of coastal nations overlap, Arctic states have already begun the process of negotiating and concluding maritime boundary agreements, consistent with the Law of the Sea Convention and other relevant international law. The United States supports peaceful management and resolution of disputes, in a manner free from coercion. While the United States is not currently a party to the Convention, we will continue to support and observe principles of established customary international law reflected in the Convention. • Cooperate with other Interested Parties – A growing number of non-Arctic states and numerous non-state actors have expressed increased interest in the Arctic region. The United States and other Arctic nations should seek to work with other states and entities to advance common objectives in the Arctic region in a manner that protects Arctic states' national interests and resources. One key example relates to the promotion of safe, secure, and reliable Arctic shipping, a goal that is best pursued through the International Maritime Organization in coordination with other Arctic states, major shipping states, the shipping industry and other relevant interests. Guiding Principles The U.S. approach to the Arctic region must reflect our values as a nation and as a member of the global community. We will approach holistically our interests in promoting safety and security, advancing economic and energy development, protecting the environment, addressing climate change and respecting the needs of indigenous communities and Arctic state interests. To guide our efforts, we have identified the following principles to serve as the foundation for U.S. Arctic engagement and activities. • Safeguard Peace and Stability by working to maintain and preserve the Arctic region as an area free of conflict, acting in concert with allies, partners, and other interested parties. This principle will include United States action, and the actions of other interested countries, in supporting and preserving international legal principles of freedom of navigation and overflight and other uses of the sea related to these freedoms, unimpeded lawful commerce, and the peaceful resolution of disputes. The United States will rely on existing international law, which provides a comprehensive set of rules governing the rights, freedoms, and uses of the world's oceans and airspace, including the Arctic. • Make Decisions Using the Best Available Information by promptly sharing – nationally and internationally – the most current understanding and forecasts based on up-to-date science and traditional knowledge. • Pursue Innovative Arrangements to support the investments in scientific research, marine transportation infrastructure requirements, and other support capability and capacity needs in this region. The harshness of the Arctic climate and the complexity associated with developing, maintaining, and operating infrastructure and capabilities in the region necessitate new thinking on public-private and multinational partnerships. • Consult and Coordinate with Alaska Natives consistent with tribal consultation policy established by Executive Order. This policy emphasizes trust, respect, and shared responsibility. It articulates that tribal governments have a unique legal relationship with the United States and requires Federal departments and agencies to provide for meaningful and timely input by tribal officials in development of regulatory policies that have tribal implications. This guiding principle is also consistent with the Alaska Federation of Natives Guidelines for Research. Conclusion We seek a collaborative and innovative approach to manage a rapidly changing region. We must advance U.S. national security interests, pursue responsible stewardship, and strengthen international collaboration and cooperation, as we work to meet the challenges of rapid climate-driven environmental change. The melting of Arctic ice has the potential to transform global climate and ecosystems as well as global shipping, energy markets, and other commercial interests. To address these challenges and opportunities, we will align Federal activities in accordance with this strategy; partner with the State of Alaska, local, and tribal entities; and work with other Arctic nations to develop complementary approaches to shared challenges. We will proactively coordinate regional development. Our economic development and environmental stewardship must go hand-in-hand. The unique Arctic environment will require a commitment by the United States to make judicious, coordinated infrastructure investment decisions, informed by science. To meet this challenge, we will need bold, innovative thinking that embraces and generates new and creative public-private and multinational cooperative models. Appendix E. Obama Administration Statement Regarding U.S. Chairmanship of Arctic Council This appendix presents the text of a statement from the Obama Administration regarding the two-year period of U.S. chairmanship of the Arctic Council that began in April 2015. The text of the statement is as follows: Given the increased strategic importance of the region, the next two years offers the United States an unprecedented opportunity to make significant progress on our Arctic policy objectives, which were first laid out in the National Strategy for the Arctic Region released by the White House in May 2013 and followed by an Implementation Plan in January 2014. The U.S. will be chairing the Arctic Council at a crucial moment when the effects of climate change are bringing a myriad of new environmental, human and economic opportunities and challenges to the Arctic. During the U.S. Chairmanship, the State Department will focus the Arctic work it carries out through the Arctic Council, various international scientific cooperation mechanisms and, in some cases, domestic initiatives led by U.S. states or other U.S. government agencies. The three thematic areas of the U.S. Chairmanship are: improving economic and living conditions in Arctic communities; Arctic Ocean safety, security and stewardship; and addressing the impacts of climate change. The theme of the U.S. Chairmanship of the Arctic Council is "One Arctic: Shared Opportunities, Challenges and Responsibilities," which recognizes the peaceful and stable nature of the Arctic. The U.S. chairmanship will conclude in spring 2017 with a Ministerial meeting in Alaska, at which point the United States will hand the chairmanship to Finland. To guide U.S. engagement on the Arctic during this crucial period, U.S. Secretary of State John Kerry appointed the former Commandant of the U.S. Coast Guard, Admiral Robert J. Papp, Jr., as the first-ever U.S. Special Representative for the Arctic in July 2014. The U.S. has developed an ambitious and balanced program for its Arctic Council Chairmanship that focuses on three crucial areas: improving economic and living conditions; Arctic Ocean safety, security and stewardship; and addressing the impacts of climate change. 1. Improving Economic and Living Conditions in Arctic Communities Remote Arctic communities face a number of threats to the health and well-being of their citizens, including food and water security, safe water, sewer and sanitation, affordable and renewable energy, adequate mental health services, and the need to ensure the continued economic viability of their communities. Our work in this area will aim to: —Promote the development of renewable energy technology, such as modular micro-grid systems, to spur public-private partnerships and improve energy affordability; —Provide a better understanding of freshwater security in the Arctic, including through the creation of a Water Resources Vulnerability Index; —Coordinate an Arctic-wide telecommunications infrastructure assessment to promote the build-out of commercial infrastructure in the region; —Support mental wellness , including suicide prevention and resilience; —Harness the expertise and resources of the Arctic Economic Council to inform the Arctic Council's work on economic and living conditions; —Mitigate public health risks and reduce black carbon output in Arctic communities; —Promote better community sanitation and public health by facilitation collaboration between industry, researchers and public policy experts to increase access to and reduce the operating costs of in-home running water and sewer in remote communities. 2. Arctic Ocean Safety, Security and Stewardship The acceleration of maritime activity in the Arctic increases risk in an already harsh and challenging environment. U.S. Chairmanship priorities include building upon existing preparedness and response programs; enhancing the ability of Arctic states to execute their search and rescue responsibilities; and emphasizing safe, secure, and environmentally sound shipping as a matter of high priority. To ensure that future maritime development avoids negative impacts, particularly in areas of ecological and cultural significance, the Arctic Council is also continuing its work towards a network of marine protected areas and enhanced international cooperation in the Arctic Ocean. Ocean acidification is one of the most urgent issues facing the world's ocean today and the Arctic Council is responding by supporting research to improve the capability to monitor and track acidification in the Arctic Ocean. Our work in this area will aim to: —Better prepare those responsible to better address search and rescue challenges in the Arctic; —Ensure marine environmental protection, including working toward the establishment of a network of marine protected areas ; —Explore the creation of a Regional Seas Program of the Arctic Ocean; —Create a better understanding of Arctic Ocean acidification and its effects on Arctic organisms and the economies that rely on them; —Encourage all parties take the steps necessary to allow for the proper implementation of the Agreement on Cooperation on Marine Oil Pollution, Preparedness and response in the Arctic . 3. Addressing the Impacts of Climate Change The impacts of climate change affect the Arctic and the many people, wildlife, and plants that depend on the region for survival. The United States recognizes that we need to reduce black carbon (soot) and methane emissions, which disproportionally impact the Arctic. The Arctic Council is addressing the impacts of climate change by facilitating cooperation on action to reduce black carbon and methane emissions. Arctic Council activities to enhance access to adaptation and resilience tools, and promote the development of climate change indicators and high-resolution mapping are also priorities of the U.S. chairmanship that will increase scientists', communities', policymakers' and the public's understanding of the impacts of climate change. Our work in this area will aim to: —Target short-lived climate pollutants through reductions in black carbon and methane emissions; —Support Arctic climate adaptation and resilience efforts including the creation of an Early Warning Indicator System; —Create a Pan-Arctic Digital Elevation Map that will increase our understanding of the impacts of climate change on shorelines and surface areas in the Arctic.

The diminishment of Arctic sea ice has led to increased human activities in the Arctic, and has heightened interest in, and concerns about, the region's future. The United States, by virtue of Alaska, is an Arctic country and has substantial interests in the region. Record low extents of Arctic sea ice over the past decade have focused scientific and policy attention on links to global climate change and projected ice-free seasons in the Arctic within decades. These changes have potential consequences for weather in the United States, access to mineral and biological resources in the Arctic, the economies and cultures of peoples in the region, and national security. The five Arctic coastal states—the United States, Canada, Russia, Norway, and Denmark (of which Greenland is a territory)—have made or are in the process of preparing submissions to the Commission on the Limits of the Continental Shelf regarding the outer limits of their extended continental shelves. The Russian submission includes the underwater Lomonosov Ridge, a feature that spans a considerable distance across the center of the Arctic Ocean. The diminishment of Arctic ice could lead in coming years to increased commercial shipping on two trans-Arctic sea routes—the Northern Sea Route close to Russia, and the Northwest Passage—though the rate of increase in the use of these routes might not be as great as sometimes anticipated in press accounts. International guidelines for ships operating in Arctic waters have been recently updated. Changes to the Arctic brought about by warming temperatures will likely allow more exploration for oil, gas, and minerals. Warming that causes permafrost to melt could pose challenges to onshore exploration activities. Increased oil and gas exploration and tourism (cruise ships) in the Arctic increase the risk of pollution in the region. Cleaning up oil spills in ice-covered waters will be more difficult than in other areas, primarily because effective strategies for cleaning up oil spills in ice-covered waters have yet to be developed. Large commercial fisheries exist in the Arctic. The United States is currently meeting with other countries regarding the management of Arctic fish stocks. Changes in the Arctic could affect threatened and endangered species, and could result in migration of fish stocks to new waters. Under the Endangered Species Act, the polar bear was listed as threatened on May 15, 2008. Arctic climate change is also expected to affect the economies, health, and cultures of Arctic indigenous peoples. Two of the Coast Guard's three polar icebreakers—Polar Star and Polar Sea—have exceeded their intended 30-year service lives, and Polar Sea is not operational. The Coast Guard has initiated a project to build up to three new heavy polar icebreakers. On May 12, 2011, representatives from the member states of the Arctic Council signed an agreement on cooperation on search and rescue in the Arctic. Although there is significant international cooperation on Arctic issues, the Arctic is increasingly being viewed by some observers as a potential emerging security issue. Some of the Arctic coastal states, particularly Russia, have announced an intention or taken actions to enhance their military presences in the high north. U.S. military forces, particularly the Navy and Coast Guard, have begun to pay more attention to the region in their planning and operations.

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Background on Trade Promotion Authority (TPA) What is Trade Promotion Authority? Trade promotion authority (TPA), sometimes called "fast track," refers to the process Congress has made available to the President for limited periods to enable legislation to approve and implement certain international trade agreements to be considered under expedited legislative procedures. Certain trade agreements negotiated by the President, such as agreements that reduce barriers to trade in ways that require changes in U.S. law, must be approved and implemented by Congress through legislation. If the content of the implementing bill and the process of negotiating and concluding it meet certain requirements, TPA ensures time-limited congressional consideration and an up-or-down vote with no amendments. In order to be eligible for this expedited consideration, a trade agreement must be negotiated during the limited time period for which TPA is in effect, and must advance a series of U.S. trade negotiating objectives specified in the TPA statute. In addition, the negotiations must be conducted in conjunction with an extensive array of required notifications to and consultations with Congress and other public and private sector stakeholders. Finally, the President must submit to Congress a draft implementing bill, which must meet specific content requirements, and a range of supporting information. If, in any given case, Congress judges that these requirements have not been met, TPA provides mechanisms through which the implementing bill may be made ineligible for expedited consideration. More generally, TPA defines how Congress has chosen to exercise its constitutional authority over a particular aspect of trade policy, while affording the President added leverage and credibility to negotiate trade agreements by giving trading partners assurance that final agreements can receive consideration by Congress in a timely manner and without amendments. TPA may apply both when the President is seeking a new agreement as well as when he is seeking changes to an existing agreement. What is the Current Status of TPA? TPA can be used for legislation to implement trade agreements reached before July 1, 2021. Under TPA, it originally was effective until July 1, 2018, but it could be extended through July 1, 2021 provided the President asked for an extension—as he did on March 20, 2018—and Congress did not enact an extension disapproval resolution within 60 days of July 1, 2018. (See What is the effect of an "Extension Disapproval Resolution"? ) What was the legislative history of the current TPA? The Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015) ( H.R. 1890 ; S. 995 ) was introduced on April 16, 2015. Similar, though not identical, bills were ordered to be reported by the Senate Finance Committee on April 22, 2015, and by the House Ways and Means Committee the next day. The legislation, as reported by the Senate Finance Committee, was joined with legislation extending Trade Adjustment Assistance (TAA) into a substitute amendment to H.R. 1314 (an unrelated revenue measure), and that legislation was passed by the Senate on May 22 by a vote of 62-37. In the House of Representatives, the measure was voted on under a procedure known as "division of the question," which requires separate votes on each component, but approval of both to pass. Voting on June 12, TPA (Title I) passed by a vote of 219-211, but TAA (Title II) was defeated 126-302. A motion to reconsider that vote was entered by then-Speaker Boehner shortly after that vote. On June 18, the House again voted on TPA, in an amendment identical to the Senate version attached to H.R. 2146 , an unrelated House bill. This amendment did not include TAA. This legislation passed the House by a vote of 218-206 and by the Senate on June 24 by a vote of 60-38. It was signed by the President on June 29, 2015 ( P.L. 114-26 ). What is Congress's responsibility for trade under the Constitution? The U.S. Constitution assigns express authority over the regulation of foreign trade to Congress. Article I, Section 8, gives Congress the power to "regulate Commerce with foreign Nations" and to "lay and collect Taxes, Duties, Imposts, and Excises." In contrast, the Constitution assigns no specific responsibility for trade to the President. Under Article II, however, the President has exclusive authority to negotiate treaties (though his authority to enter into treaties is subject to the advice and consent of the Senate) and exercises broad authority over the conduct of the nation's foreign affairs. What authority does Congress grant to the President by enacting TPA legislation? In a sense, TPA grants no new authority to the President. The President possesses inherent authority to negotiate with other countries to arrive at trade agreements. However, some agreements require congressional approval in order to take effect. For example, if a trade agreement requires changes in U.S. law, it could be implemented only through legislation enacted by Congress. (In some cases, as well, Congress has enacted legislation authorizing the President in advance to implement certain kinds of agreements on his own authority. An example is the historical reciprocal tariff agreement authority described under the next question.) TPA legislation provides expedited legislative procedures (also known as "fast track" procedures) to facilitate congressional action on legislation to approve and implement trade agreements of the kinds specified in the TPA statute. TPA legislation also establishes trade negotiating objectives and notification and consultation requirements described later. Is TPA necessary? The President has the authority to negotiate international agreements, including free trade agreements (FTAs), but the Constitution gives Congress sole authority over the regulation of foreign commerce and tariffs. For 150 years, Congress exercised this authority over foreign trade by setting tariff rates directly. This policy changed with the Reciprocal Trade Agreements Act of 1934, in which Congress delegated temporary authority to the President to enter into (sign) reciprocal trade agreements that reduced tariffs within preapproved levels and implement them by proclamation without further congressional action. This authority was renewed a number of times until 1974. In the 1960s, as international trade expanded, nontariff barriers, such as antidumping measures, safety and certification requirements, and government procurement practices, became subjects of trade negotiations and agreements. Congress altered the authority delegated to the President to require enactment of an implementing bill to approve the agreement and authorize changes in U.S. law required to meet obligations of these new kinds. For trade agreements that contained such provisions, preapproval was no longer an option. Because an implementing bill faced potential amendment by Members of Congress that could alter a long-negotiated agreement, Congress adopted fast track authority in the Trade Act of 1974 ( P.L. 93-618 ) to ensure that the implementing bill could receive floor consideration and to provide a procedure under which it could not be amended. The act also established U.S. trade negotiating objectives and attempted to ensure executive branch notification of and consultation with Congress and the private sector. Fast track was renamed Trade Promotion Authority (TPA) in the Bipartisan Trade Promotion Authority Act of 2002 ( P.L. 107-210 ). Many observers point out that U.S. trade partners might be reluctant to negotiate with the United States, especially on politically sensitive issues, unless they are confident that the U.S. executive branch and Congress speak with one voice, that a trade agreement negotiated by the executive branch would receive timely legislative consideration, that it would not unravel by congressional amendments, and that the United States would implement the terms of the agreement reached. Others, however, have argued that because trade negotiations and agreements have become more complex and more comprehensive, bills to implement the agreements should be subject to amendment like other legislation. In practice, even though TPA is designed to ensure that Congress will act on implementing bills without amending them, it also affords Congress several procedural means to maintain its constitutional authority. What requirements have been placed on the President under TPA? In general, under TPA, Congress has required the President to notify Congress and consult with Congress and with private sector stakeholders before, during, and upon completion of trade agreement negotiations, whether for a new agreement or changes to an existing agreement. TPA-2015 instituted additional requirements for consultation during implementation of agreements approved by Congress. Congress also has required the President to strive to adhere to general and specific principal trade negotiating objectives in any trade agreement negotiated under TPA. After signing the agreement, the President submits a draft implementing bill to Congress, along with the text of the trade agreement and a statement of administrative action required to implement it. (See sections below.) Is there a deadline for the President to submit a draft implementing bill to Congress? No. If the United States enters into (signs) a trade agreement within a period for which TPA is provided, the President may submit the implementing bill to Congress a day on which both the House and the Senate are in session, regardless of whether TPA expired before that date. In practice, the submission of the implementing bill usually has been coordinated with leadership of the House and Senate. When was TPA/fast track first used? Trade promotion authority was first enacted on January 1, 1975, under the Trade Act of 1974. It was used to enact the Tokyo Round Agreements Act of 1979 ( P.L. 96-39 ), which implemented the 1974-1979 multilateral trade liberalization agreements reached under the Tokyo Round negotiations under the General Agreement on Tariffs and Trade (GATT), the predecessor to the World Trade Organization (WTO). Since that time it has been renewed four time times—1979, 1988, 2002, and 2015. In 1993, Congress provided a short-term extension to accommodate the completion of the GATT Uruguay Round negotiations. How many times has TPA/fast track been used? Since 1979, the authority has been used for 14 bilateral/regional free trade agreements (FTAs) and one additional set of multilateral trade liberalization agreements under the GATT (now the World Trade Organization [WTO])—the Uruguay Round Agreements Act of 1994. One FTA—the U.S.-Jordan FTA—was negotiated and approved by Congress without TPA. That FTA was largely considered noncontroversial and applies to only a small portion of U.S. total trade. Do other countries have a TPA-type legislative mechanism? In some countries, the executive may possess authority to conclude trade agreements without legislative approval. In others, especially in parliamentary systems, the head of government is typically able to secure approval of any requisite legislation without amendment under regular legislative procedures. In addition, some countries prohibit amendments to trade agreement legislation and others treat trade agreements as treaties that are self-executing. Can TPA procedures be used for consideration of the renegotiated North American Free Trade Agreement (NAFTA)? Yes. TPA applies both to negotiations of new agreements as well as changes to existing agreements. On May 18, 2017, pursuant to TPA, the President sent Congress a 90-day notification of his intent to begin talks with Canada and Mexico to renegotiate and modernize NAFTA, allowing the first round of negotiations to begin on August 16, 2017. The U.S. Trade Representative (USTR) submitted detailed negotiating objectives 30 days prior to the start of negotiations on July 17. USTR received public comments and held public hearings in June 2017. After a year of negotiations, USTR Lighthizer announced a preliminary agreement with Mexico on August 27, 2018. On August 31, President Trump gave Congress the required notice 90-day notice that he would sign a revised deal with Mexico. After further negotiations, Canada joined the pact and it was concluded on September 30, 2018. The three nations signed what is now known as the United States-Mexico-Canada Agreement (USMCA) on November 30, 2018. The Administration satisfied the requirement to provide Congress with a list of changes to U.S. law required to implement the agreement on January 29, 2019. However, the government shutdown delayed work on the International Trade Commission report on the economic effects of the agreement, and is now expected to be delivered to Congress by April 20, 2019. Trade Negotiating Objectives What are U.S. trade negotiating objectives? Congress exercises its trade policy role, in part, by defining trade negotiating objectives in TPA legislation. The negotiating objectives are definitive statements of U.S. trade policy that Congress expects the Administration to honor, if the implementing legislation is to be considered under expedited rules. Since the original fast track authorization in the Trade Act of 1974, Congress has revised and expanded the negotiating objectives in succeeding TPA/fast track authorization statutes to reflect changing priorities and the evolving international trade environment. For example, since the last grant of TPA in 2002, new issues associated with state-owned enterprises, digital trade in goods and services, and localization policies have come to the forefront of U.S. trade policy and are included in TPA-2015 as principal negotiating objectives. Under TPA-2015, Congress established trade negotiating objectives in three categories: (1) overall objectives; (2) principal objectives; and (3) capacity building and other priorities. These begin with broad goals that encapsulate the "overall" direction trade negotiations are expected to take, such as fostering U.S. and global economic growth and obtaining more favorable market access for U.S. products and services. Principal objectives are more specific and are considered the most politically critical set of objectives, the advancement of which is necessary for a U.S. trade agreement to receive expedited treatment under TPA. Capacity building objectives involve the provision of technical assistance to trading partners. Goods, Services, and Agriculture What are some of the negotiating objectives for market access for goods? The market access negotiating objectives under TPA seek to reduce or to eliminate tariff and nontariff barriers and practices that decrease market access for U.S. products. One new provision in TPA-2015 considers the "utilization of global chains" in the goal of trade liberalization. It also calls for the use of sectoral tariff and nontariff barrier elimination agreements to achieve greater market access. Agriculture (see below) and textiles and apparel are addressed by separate negotiating objectives. For textiles and apparel, U.S. negotiators are to seek competitive export opportunities "substantially equivalent to the opportunities afforded foreign exports in the U.S. markets and to achieve fairer and more open conditions of trade" in the sector. Both the general market access provisions and the textile and apparel provisions in TPA-2015 are the same as those in the 2002 act. Have U.S. negotiating objectives evolved on services trade? Services have become an increasingly important element of the U.S. economy, and the sector plays a prominent role in U.S. trade policy. The rising importance of services is reflected in their treatment under TPA statutes as a principal negotiating objective beginning with the 1984 Trade Act. Liberalization of trade in services was expressed in the 2002 Trade Act as a principal negotiating objective. It required that U.S. negotiators to make progress in reducing or eliminating barriers to trade in services, including regulations that deny nondiscriminatory treatment to U.S. services and inhibit the right of establishment (through foreign investment) to U.S. service providers. The content of the negotiating objective on services has not changed appreciably over the years. (Because foreign direct investment is an important mode of delivery of services, negotiating objectives on foreign investment [see below] pertain to services as well.) TPA-2015 expands the principal negotiating objectives on services in the 2002 TPA by highlighting the role of services in global value chains and calling for the pursuit of liberalized trade in services through all means, including plurilateral trade agreements (presumably referring to the proposed Trade in Services Agreement [TISA]). How did the negotiating objectives for agriculture differ from those in the 2002 TPA? TPA-2015 adds three new agriculture negotiating objectives to the 18 previously listed in the 2002 act. One lays out in greater detail what U.S. negotiators should achieve in negotiating robust trade rules on sanitary and phytosanitary (SPS) measures (i.e., those dealing with a country's food safety and animal and plant health laws and regulations). This increased emphasis aims to address the concerns expressed by U.S. agricultural exporters that other countries use SPS measures as disguised nontariff barriers, which undercut the market access openings that the United States negotiates in trade agreements. The second calls for trade negotiators to ensure transparency in how tariff-rate quotas (TRQs) are administered that may impede market access opportunities. The third seeks to eliminate and prevent the improper use of a country's system to protect or recognize geographical indications (GI). These are trademark-like terms used to protect the quality and reputation of distinctive agricultural products, wines, and spirits produced in a particular region of a country. This new objective is intended to counter in large part the European Union's efforts to include GI protection in its bilateral trade agreements for the names of its products that U.S. and other country exporters argue are generic in nature or commonly used across borders, such as parma ham or parmesan cheese. Foreign Investment What are U.S. negotiating objectives on foreign investment? The United States is the largest source and destination of foreign direct investment in the world. Both the 2002 act and TPA-2015 include identical principal negotiating objectives on foreign investment. The principal negotiating objectives on foreign investment are designed to reduce or eliminate artificial or trade distorting barriers to foreign investment, while ensuring that foreign investors in the United States are not accorded greater substantive rights with respect to investment protections than domestic investors in the United States, and to secure for investors important rights comparable to those that are available under the United States legal principles and practices.... TPA-2015 seeks to accomplish these goals by including provisions establishing protections for U.S. foreign investment, such as nondiscriminatory treatment, free transfer of investment-related capital flows, reducing or eliminating local performance requirements, and including established standards for compensation for expropriation consistent with U.S. legal principles and practices. These provisions are also part of the bilateral investments treaties (BIT) that the United States negotiates with other countries. To what extent does TPA address investor-state dispute settlement? Investor-state dispute settlement (ISDS) allows for private foreign investors to seek international arbitration against host governments to settle claims over alleged violations of foreign investment provisions in FTAs. While TPA does not mention a specific ISDS mechanism, it states that trade agreements should provide meaningful procedures for resolving investment disputes; seek to improve mechanisms used to resolve disputes between an investor and a government through mechanisms to eliminate frivolous claims and to deter the filing of frivolous claims; provide procedures to ensure the efficient selection of arbitrators and the expeditious disposition of claims; provide procedures to enhance opportunities for public input into the formulation of government positions; and seek to provide for an appellate body or similar mechanism to provide coherence to interpretations of investment provisions in trade agreements. How have these provisions evolved over time? Two negotiating objectives relating to foreign investment were initially listed under the Omnibus Trade and Competitiveness Act of 1988 fast-track authority. The 2002 TPA and TPA-2015 list eight. In addition to TPA, U.S. investment negotiating objectives are shaped by the U.S. Model BIT, the template used to negotiate U.S. BITs and FTA investment chapters. The Model BIT has been revised periodically in an effort to balance investor protections and other policy interests. The 2004 Model BIT, for instance, narrowed the definitions of covered investment and minimum standard of treatment, and connected the definition of direct and indirect expropriation to "property rights or property interests," reflecting the U.S. Constitution's Takings Clause and with possible implications for expropriation protection depending on foreign countries' definitions of property. It also clarified that only in rare cases do nondiscriminatory regulatory actions by governments to protect legitimate public welfare objectives result in indirect expropriation. In response to global economic changes, the 2012 Model BIT, among other things, clarified that its obligations apply to state-owned enterprises, as well as to the types of financial services that may fall under a prudential exception (such as to address balance of payments problems). Other examples of revisions to the Model BIT over time include more detailed provisions on ISDS, stronger aspirational language on environmental and labor standards, and enhanced transparency obligations. Will foreign investors be afforded "greater rights" than U.S. investors under U.S. trade agreements? TPA-2015 states that no trade agreement is to lead to the granting of foreign investors in the United States greater substantive rights than are granted to U.S. investors in the United States. Some have argued, however, that the use of ISDS itself implies greater procedural rights. Trade Remedies What are "trade remedies?" "Trade remedies" are statutory provisions that provide U.S. firms with the means to redress unfair trade practices by foreign actors, whether firms or governments. Examples are antidumping and countervailing duty laws. The "escape clause" or "safeguard provision" permits temporary restraints on import surges not considered to be unfairly traded that cause or threaten to cause serious injury, and thus may also be considered trade remedies. How does TPA address trade remedies? The principal trade negotiating objective concerning trade remedies in TPA-2015 and previous TPA legislation has been to "preserve the ability of the United States to rigorously enforce its trade laws" and to avoid concluding "agreements that weaken the effectiveness of domestic and international disciplines on unfair trade." Trade remedies have usually been addressed in the context of multilateral WTO negotiations, though some FTAs have included commitments related to trade remedies. Significantly, NAFTA includes—and the proposed USMCA maintains—a controversial mechanism ("Chapter 19" now Chapter 10.D) that enables other parties to challenge (and potentially overturn) trade remedy decisions using special tribunals. The objective reflects the perception by some Members of Congress that other countries have sought to weaken U.S. trade remedy laws. TPA-2015 also maintains past notification provisions that require the President to notify Congress about any proposals advanced in a negotiation that involve potential changes to U.S. trade remedy laws 180 days before signing (entering into) a trade agreement. Currency Issues Have currency practices ever been addressed in a TPA authorization? The extent to which some countries may use the value of their currency to gain competitive market advantage is a source of concern for certain industries and some Members of Congress. In TPA-2002, the President was to seek to establish consultative mechanisms with trading partners to examine the trade consequences of significant and unanticipated currency movements and to scrutinize whether a foreign government has manipulated its currency to promote a competitive advantage in international trade. This provision was contained in the section on "Promotion of Certain Priorities." How are currency issues addressed under TPA-2015? TPA-2015 elevates the topic of currency manipulation to a principal U.S. negotiating objective. The legislation, as introduced, stipulates that U.S. trade agreement partners "avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain unfair competitive advantage." It does not specifically define currency manipulation to include or exclude central bank intervention in the domestic economy, and, hence, it does not differentiate among the ways a government can affect the value of its currency, such as currency market intervention or central bank activities to increase the money supply to stimulate the domestic economy. The language calls for multiple remedies, "as appropriate," including "cooperative mechanisms, enforceable rules, reporting, monitoring, transparency, or other means." During floor consideration, the Senate considered and passed the so-called Hatch/Wyden amendment, which was adopted by the Senate by a vote of 70-29. This amendment sought to head off concerns that the language could be used to discourage central bank activities such as an increase in the money supply to stimulate the domestic economy, as well as to head off a currency amendment introduced by Senators Portman and Stabenow (defeated 48-51) that would have required the United States to negotiate "strong and enforceable rules against exchange rate manipulation," enforceable through the dispute settlement system of a potential agreement. The Hatch/Wyden amendment modified the currency language of the bill as introduced, defining unfair currency practices as "protracted large scale intervention in one direction in the exchange market and a persistently undervalued foreign exchange rate to gain an unfair competitive advantage in trade." The amended objective seeks to "establish accountability" through potential remedies such as "enforceable rules, transparency, reporting, monitoring, cooperative mechanism, or other means to address exchange rate manipulation." The legislation contains the original negotiating objective, as well as the language of the Hatch/Wyden amendment. How have discussions on trade agreements that were considered after the expiration of TPA-2002 contributed to TPA-2015 objectives? On May 10, 2007, a bipartisan group of congressional leaders and the Bush Administration released a statement on agreed principles in five policy areas, which were subsequently reflected in four U.S. FTAs then being considered for ratification, with Colombia, Panama, Peru, and South Korea. The policy areas covered included worker rights, environment protection, intellectual property rights, government procurement, and foreign investment. This agreement has since been referred to as the "May 10 th Agreement" (for details, see box on "The May 10 th Agreement," below). The extent to which these principles would be incorporated in negotiating objectives in any renewal of TPA authority, and reflected in future FTAs, was a source of debate among policymakers. Are the provisions of the May 10th Agreement incorporated into TPA-2015? TPA-2015 incorporates the labor and environmental principles of the May 10 th agreement, including requirements that a negotiating party's labor and environmental statutes adhere to internationally recognized core labor standards and to obligations under common multilateral environmental agreements. TPA-2015 also includes the language of the May 10 th agreement on investment, "ensuring that foreign investors in the United States are not granted greater substantive rights with respect to investment protections than U.S. investors in the United States." TPA-2015 does not specifically refer to the language of the May 10 th agreement on patent protection for pharmaceuticals, which were designed to achieve greater access to medicine in developing country FTA partners. Instead, TPA-2015 language seeks to "ensure that trade agreements foster innovation and access to medicine." Intellectual Property Rights (IPR) What are the key negotiating objectives concerning IPR? The United States has long supported the strengthening of intellectual property rights through trade agreements, and Congress has placed IPR protection as a principal negotiating objective since the 1988 grant of fast-track authority. The overall objectives on IPR under the 2002 TPA authority were the promotion of adequate and effective protection of IPR; market access for U.S. persons relying on IPR; and respect for the WTO Declaration on the Trade-related Aspects of Intellectual Property Rights (TRIPS) Agreement and Public Health. This last objective addressed concerns for the effect of patent protection for pharmaceuticals on innovation and access to medicine, especially in developing countries. These objectives are largely reflected in the five objectives in TPA-2015. The promotion of adequate and effective protection of IPR through the negotiation of trade agreements that reflect a standard of protection similar to that found in U.S. law is a key provision. Other provisions include strong protection of new technologies; standards of protection that keep pace with technological developments; nondiscrimination in the treatment of IPR; and strong enforcement of IPR. TPA-2015 also seeks to ensure that agreements negotiated foster innovation and access to medicine. Does TPA-2015 contain new IPR negotiating objectives? A new objective in TPA-2015 seeks to negotiate the prevention and elimination of government involvement in violations of IPR such as cybertheft or piracy. The enhanced protection of trade secrets and proprietary information collected by governments in the furtherance of regulations is contained in the negotiating objective on regulatory coherence. Labor and Environment How do the negotiating objectives on labor under the 2002 TPA compare to those of TPA-2015? Both the 2002 TPA and TPA-2015 include several negotiating objectives on labor issues and worker rights. While similar, they also differ in some fundamental ways. For example, the 2002 authority states that trade agreements are to ensure that a trading partner does not fail effectively to enforce its own labor statutes. The TPA-2015 requires that the United States ensure not only that a trading partner enforces its own labor statutes but also that those statutes include internationally recognized core labor standards as defined in the bill to mean the "core labor standards as stated in the ILO Declaration on Fundamental Principles and Rights to Work and its Follow-Up (1998)." It also states that parties shall not waive or derogate statutes or regulations implementing internationally recognized core labor standards in a manner affecting trade or investment between the United States and the parties to an agreement. In addition, the 2002 TPA allowed some discretion on the part of a trading partner government in enforcing its laws and stated that the government would be considered fulfilling its obligations if it exercised discretion, either through action or inaction, reasonably. TPA-2015, on the other hand, states that while the government retains discretion in implementing its labor statutes, the exercise of that discretion is not a reason not to comply with its obligations under the trade agreement. The labor—and environmental—provisions also contain language to strengthen the capacity of trading partners to adhere to labor and environmental standards, as well as a provision to reduce or eliminate policies that unduly threaten sustainable development. How do the environmental negotiating objectives under TPA-2015 compare to those of the 2002 TPA? Like the labor negotiating objectives, TPA-2015 provides not only that a party enforce its own environmental standards as in the 2002 act, but also that those laws be consistent with seven internationally recognized multilateral environmental agreements (MEAs) and other provisions. It also contains the abovementioned prohibition of waiver or derogation from environmental law in matters of trade and investment. The environmental objective contains language allowing a reasonable exercise of prosecutorial discretion in enforcement and allocation of resources: language similar to, but seemingly more flexible than, that included in the labor provisions. Would the labor and environmental provisions negotiated be subject to the same dispute settlement provisions as other parts of the agreement? TPA-2015 commits negotiators "to ensure that enforceable labor and environmental standards are subject to the same dispute settlement and remedies as other enforceable provisions under the agreement." Under the most recent U.S. trade agreements, this could mean the withdrawal of trade concessions until a dispute is resolved. By contrast, the 2002 TPA did not prescribe particular remedies—only suggesting that remedies should be "equivalent"—and trade agreements implemented using 2002 TPA provided separate remedies under dispute settlement, including the use of monetary penalties and technical assistance. Regulatory Practices How does TPA-2015 seek to address regulatory practices? The regulatory practices negotiation objective seeks to reduce or eliminate the use of governmental regulations (nontariff barriers)—such as discriminatory certification requirements or nontransparent health and safety standards—from impeding market access for U.S. goods, services, or investment. Like the 2002 TPA, it attempts to obtain commitments in trade agreements that proposed regulations are based on scientific principles, cost-benefit risk assessment, or other objective, nondiscriminatory standards. It also seeks more transparency and participation by affected parties in the development of regulations, consultative mechanisms to increase regulatory coherence, regulatory compatibility through harmonization or mutual recognition, and convergence in the standards-development process. A new provision in TPA-2015 seeks to limit governmental collection of undisclosed proprietary data—"except to satisfy a legitimate and justifiable regulatory interest"—and to protect those data against public disclosure. Does TPA-2015 address drug pricing and reimbursement issues? Yes, the regulatory practices negotiating objective contains language applicable to a foreign country's drug pricing system. TPA-2015 seeks to eliminate government price controls and reference prices "which deny full market access for United States products." TPA-2015 also seeks to ensure that regulatory regimes adhere to principles of transparency, procedural fairness, and nondiscrimination. Dispute Settlement (DS) What are the principal negotiating objectives on DS in FTAs? TPA legislation has sought to establish DS mechanisms to resolve disputes first through consultation, then by the withdrawal of benefits to encourage compliance with trade agreement commitments. TPA-2015 provisions aim to apply the principal DS negotiating objectives equally through equivalent access, procedures, and remedies. In addition, as noted above, TPA requires that labor and environmental disputes be subject to the same procedures and remedies as other disputes—an obligation that, in practice, allows for full dispute settlement of labor and environmental disputes under the agreement. How does TPA address DS at the WTO? TPA-2015, like its predecessors, also seeks to ensure that WTO DS panels and its appeals venue, the Appellate Body, "apply the WTO Agreement as written, without adding to or diminishing rights and obligations under the agreement," and use a standard of review applicable to the Uruguay Round Agreement in question, "including greater deference, where appropriate, to the fact finding and technical expertise of national investigating authorities." These provisions address the perception by some Members of Congress that the WTO dispute settlement bodies have interpreted WTO agreements in ways not foreseen or reflected in the agreement. New Issues Addressed in TPA-2015 What new negotiating objectives are contained in TPA-2015? Digital Trade in Goods and Services and Cross-Border Data Flows The internet not only has become a facilitator of international trade in goods and services given its borderless nature, but also is itself a source of trade in digital services, such as search engines or data storage. At the same time, however, digital trade and cross-border data flows increasingly have become the target of trade restricting measures, especially in emerging markets. The digital trade provisions update and expand upon the e-commerce provisions from the 2002 TPA that call for trade in digital goods and services to be treated no less favorably than corresponding physical goods or services in terms of applicability of trade agreements, the classification of a good or service, or regulation. Aside from ensuring that governments refrain from enacting measures impeding digital trade in goods and services, TPA-2015 extends that commitment to cross-border data flows, data processing, and data storage. It also calls for enhanced protection of trade secrets and proprietary information collected by governments in the furtherance of regulations. The promotion of strong IPR for technologies to facilitate digital trade is included in the IPR objectives, which extends the existing WTO moratorium on duties on electronic commerce transactions. State-Owned Enterprises (SOEs) U.S. firms often face competition from state-owned or state-influenced firms. The TPA-2015 principal negotiating objective for SOEs seeks to ensure that SOEs are not favored with discriminatory purchases or subsidies and that competition is based on commercial considerations in order that U.S. firms may compete on a "level playing field." Localization TPA-2015 adds a principal negotiating objective on "localization," the practice by which firms are required to locate facilities, intellectual property, services, or assets in a country as a condition of doing business. While localization can be motivated by privacy and security interests, there are concerns that such measures can be trade distorting and may be used for protectionist purposes. TPA-2015 directs U.S. negotiators to prevent and eliminate such practices, as well as the practice of indigenous innovation, where a country seeks to develop local technology by the enforced use of domestic standards or local content. The digital trade objectives described above also include localization provisions concerning the free flow of data. Localization barriers are also addressed in the foreign investment chapter with provisions to restrict or eliminate performance requirements or forced technology transfers in the establishment or operation of U.S. investments abroad. Human Rights TPA-2015 contains a negotiating objective to ensure the implementation of trade commitments through promotion of good governance, transparency, and the rule of law with U.S. trade partners, "which are important parts of the broader effort to create more open democratic societies and to promote respect for internationally recognized human rights." During floor consideration, the Senate adopted unopposed an amendment by Senator Lankford to add an overall negotiating objective to "take into account conditions relating to religious freedom of any party to negotiations for a trade agreement with the United States." What New Negotiating Objectives Were Added as a Result of Senate Consideration? The Senate Finance Committee adopted three amendments to TPA-2015 that were incorporated into the legislation ultimately passed by Congress. These amendments Made the negotiating objective on human rights (see above) a principal negotiating objective. As with the other principal negotiating objectives, expedited procedures can be conditioned on progress toward achieving these objectives. Discouraged potential trading partners from adopting policies to limit trade or investment relations with Israel. This amendment was specific to the then-proposed Trans-Atlantic Trade and Investment Partnership. Prohibited expedited consideration of trade agreements with countries ranked in the most problematic category of countries for human trafficking concerns (Tier III) in the annual report by the Department of State on Trafficking in Persons. What Changes Were Made as a Result of House Consideration? The House placed its amendments to TPA-2015 in the subsequently passed Trade Facilitation and Trade Enforcement Act of 2015 ( P.L. 114-125 ). These five amendments added the following: An overall negotiating objective "to ensure that trade agreements do not require changes to the immigration laws or obligate the United States to grant access or expand access to visas issued under.... the Immigration and Nationality Act." An overall negotiating objective "to ensure that trade agreements do not require changes to U.S. law or obligate the United States with respect to global warming or climate change, other than those fulfilling the other negotiating objectives" in TPA. A principal negotiating objective to expand market access, reduce tariff and nontariff barriers, and eliminate subsidies that distort trade in fish, shellfish, and seafood products. An amendment to the Section 4(c) consultation provisions to allow for additional accreditation for staffers of the chair and ranking member of the committees of jurisdiction to serve as delegates to negotiations. An amendment to the human trafficking provision (above), which would allow the President to submit a waiver if the country has taken concrete steps to implement the principal recommendations of the United States to combat trafficking. Congressional Consultation and Advisory Requirements The consultative, notification, and reporting requirements of TPA are designed to achieve greater transparency in trade negotiations and to maintain the role of Congress in shaping trade policy. Congress has required the executive branch to consult with Congress prior to and during trade negotiations, as well as upon their completion and the signing of (entering into) a trade agreement. TPA/fast track statutes have required the USTR to meet and consult with the House Ways and Means Committee, the Senate Finance Committee, and other committees that have jurisdiction over laws possibly affected by trade negotiations. How do the provisions on consultations in the TPA-2015 compare with previous statutes? While many of the provisions on consultation have some precedent in past grants of TPA in terms of advisory structure and transparency commitments, TPA-2015 contains some new provisions. These provisions require the following: The appointment of a Chief Transparency Officer at USTR. This official is required "to consult with Congress on transparency policy, coordinate transparency in trade negotiations, engage and assist the public, and advise the U.S. Trade Representative on transparency policy." That USTR make available, prior to initiating FTA negotiations with a new country, "a detailed and comprehensive summary of the specific objectives with respect to the negotiations, and a description of how the agreement, if successfully concluded, will further those objectives and benefit the United States," and periodically update the summary during negotiations. That the President publicly release the assessment by the U.S. International Trade Commission (ITC) of the potential impact of the trade agreement (see below), which had not been the case under the previous authority. That USTR consult with committees of jurisdiction after accepting a petition for review or taking enforcement actions in regard to potential violation of a trade agreement. The release of the negotiating text to the public 60 days prior to the agreement's being signed by the Administration. In addition, the final text of the implementing legislation and a draft Statement of Administrative Action must be submitted to Congress 30 days prior to its introduction. What are the Congressional Advisory Groups (CAGs) on Negotiations? TPA-2015 includes consultation requirements similar to those under the 2002 TPA and previous trade negotiating authorities. TPA-2015 provides for the establishment of separate Congressional Advisory Groups on Negotiations (CAGs) for each house—a House Advisory Group on Negotiations (HAGON), chaired by the chairman of the Ways and Means Committee, and a Senate Advisory Group on Negotiations (SAGON), chaired by the chairman of the Finance Committee. In addition to the chairmen, each CAG includes the ranking member and three additional members of the respective committee, no more than two of whom could be from the same political party. Each CAG also includes the chair and ranking member, or their designees, of committees of the respective chamber with jurisdiction over laws that could possibly be affected by the trade agreements. The CAGs replaces the Congressional Oversight Group (COG), a bicameral group with similar membership created under the 2002 TPA that reportedly met infrequently. For the CAGs, USTR is required to develop guidelines "to facilitate the useful and timely exchange of information between them and the Trade Representative." These guidelines include fixed-timetable briefings and access by members of the CAG and their cleared staffers to pertinent negotiating documents. The President also is required to meet with either group upon the request of the majority of that group prior to launching negotiations or at any time during the negotiations. TPA-2015 mandates that the USTR draw up several sets of guidelines to enhance consultations with Congress, the private sector Advisory Committee for Trade Policy and Negotiations (see below), sectoral and industry advisory groups, and the public at large. USTR was directed to produce the guidelines, in consultation with the chairmen and ranking members of the Senate Finance Committee and the House Ways and Means Committee, no later than 120 days after TPA-2015 was enacted. The guidelines are to provide for timely briefings on the negotiating objectives for any specific trade agreement, the status of the negotiations, and any changes in laws that might be required to implement the trade agreement. In addition, TPA-2015 requires the USTR to consult on trade negotiations with any Member of Congress who requests to do so. Who are Designated Congressional Advisors? Designated Congressional Advisors (DCAs) are Members of Congress who are accredited as official advisers to U.S. delegations to trade negotiations. Under Section 161 of the Trade Act of 1974, as amended, the Speaker of the House selects five Members from the Ways and Means Committee (no more than three of whom are to be of the same political party), and the President Pro Tempore of the Senate selects five Members from the Senate Finance Committee (no more than three of whom can be of the same political party), as DCAs. In addition, the Speaker and the Senate President Pro Tempore may each designate as DCAs members of committees that would have jurisdiction over matters that are the subject of trade policy considerations or trade negotiations. Members of the CAG who are not already DCAs may also become DCA members. Under TPA-2015, in addition to the above, any Member of the House may be designated by the Speaker as a DCA upon consultation with the chairman and ranking member of the House Ways and Means Committee and the chairman and ranking member of the committee from which the Member is selected. Similarly, any Member of the Senate may be designated a DCA upon consultation with the President Pro Tempore and the chairman and ranking member of the committee from which the Senator is selected. In addition, USTR is to accredit members of the HAGON and SAGON as official trade advisers to U.S. trade negotiation delegations by the USTR. Which Members of Congress have access to draft trade agreements and related trade negotiating documents? Under the authority of Executive Order 13526, the USTR gives classified status to draft texts of trade agreements. According to USTR, nevertheless, any Member may examine draft trade agreements and related trade negotiating documents, although the 2002 TPA did not explicitly provide for this practice. TPA-2015 expressly requires that the USTR provide Members and their appropriate staff, as well as appropriate committee staff, access to pertinent documents relating to trade negotiations, including classified materials. What are the requirements to consult with private sector stakeholders on trade policy? In order to ensure that private and public stakeholders have a voice in the formation of U.S. trade policy, Congress established a three-tier advisory committee system under Section 135 of the Trade Act of 1974, as amended. These committees advise the President on negotiations, agreements, and other matters of trade policy. At the top of the system is the 30-member Advisory Committee for Trade Policy and Negotiations (ACTPN) consisting of presidentially appointed representatives from local and state governments and representatives from the broad range of U.S. industries and labor groups. At the second tier are policy advisory committees—Trade and Environment Policy, Intergovernmental Policy, Labor Policy, Agriculture Policy, and Africa. The third tier consists of 17 sector-specific committees—one agricultural and 16 industrial sectors—which provide technical advice. In addition to consultations with the advisory committees, the USTR solicits the views of stakeholders through Federal Register notices and hearings. The legislation requires the USTR to develop guidelines on consultations with the private sector advisory committees also no later than 120 days after the legislation's entry into effect. The TPA/fast track authorities under the Trade Act of 1974, and under authorities thereafter, have required the President to submit reports from the various advisory committees on their views regarding the potential impact of an agreement negotiated under the TPA before the agreement is submitted for congressional approval. For example, the 2002 TPA requires the President to submit to Congress the reports of the advisory committees on a trade agreement no later than 30 calendar days after notifying Congress of his intent to enter into (sign) the trade agreement. Those reports are also required under TPA-2015. What are the requirements to consult with the public on trade policy? TPA-2015 expands the existing statutory requirement for consultation with the public. For example, it requires the USTR to develop guidelines for enhanced consultation with the public and to provide these guidelines no later than 120 calendar days after the legislation's entry into effect. The guidelines committed USTR to provide detailed information regarding trade policy online, as well as to provide public stakeholder events for interested parties to meet with and share their views with negotiators, typically during negotiating rounds. The President also is required to make public other mandated reports on the impact of future trade agreements on the environment, employment, and labor rights in the United States (see below). These guidelines did not provide for the public release of negotiating positions or texts during the course of the negotiations. Do specific import sensitive industries have special negotiation and consultation requirements? Under the 2002 Trade Act and TPA-2015, import sensitive products in the agriculture, fishing, and textile sectors have special assessment and consultation requirements before initiating negotiations. Notification and Reporting Requirements Another tool Congress has employed under TPA to ensure transparency of the negotiating process is to require the President to notify Congress prior to launching trade negotiations and prior to entering into (signing) a trade agreement. Do congressional notification requirements change under TPA-2015? TPA 2015 maintains TPA-2002 requirements that the President notify Congress 90 calendar days prior to initiating negotiations on a reciprocal trade agreement with a foreign country; notify Congress 90 calendar days prior to entering into (signing) a trade agreement; notify Congress 60 days prior to entering into the agreement of any expected changes in U.S. law that would be required in order to be in compliance with the trade agreement; notify the House Ways and Means Committee and the Senate Finance Committee of any changes in U.S. trade remedy laws (discussed earlier) that would be required by the trade agreement 180 calendar days prior to entering into a trade agreement; and comply with special notification and reporting requirements for agriculture, fishing industry, and textiles and apparel. What is the role of the U.S. International Trade Commission? The U.S. International Trade Commission (ITC) is an independent, quasijudicial federal agency with broad investigative responsibilities on matters related to international trade. One of its analytic functions is to examine and assess international trade agreements. Under TPA-2015, the President must submit the details of the proposed agreement to the ITC 90 calendar days prior to entering into (signing) the agreement. The ITC is required to produce an assessment of the potential economic impact of the agreement no later than 105 calendar days after the agreement is signed. Unlike TPA-2002, TPA-2015 requires that the reports be made public. What are the various reporting requirements under TPA-2015? Several reporting requirements were established in past TPA legislation; TPA-2015 maintains similar requirements and establishes new ones. These include the following: Extension disapproval resolution (see below). TPA was extended to July 1, 2021 in 2018. The President was required to produce the following reports in support of that extension: The President must report to Congress on the status and progress of current negotiations, and why the extension is necessary to complete negotiations. The Advisory Committee on Trade Policy and Negotiations must report on the progress made in the negotiations and a statement of its views on whether the extension should be granted. The International Trade Commission (ITC) must report on the economic impact of all trade agreements negotiated during the current period TPA is in force. Report on U.S. trade remedy laws. The President must report on any proposals that could change U.S. trade remedy laws to the committees of jurisdiction (House Ways and Means Committee and the Senate Finance Committee). Must be submitted 180 days before an agreement is signed. Upon entering into an agreement, the following reports must be completed: Advisory Committee Reports. The Advisory Committee for Trade Policy and Negotiations and appropriate policy, sectoral, and functional committees must report on whether and to what extent the agreement would promote the economic interests of the United States, and the overall and principal negotiating objectives of TPA. It must be submitted 30 days after the President notifies Congress of his intention to sign an agreement. ITC Assessment. The ITC must report on the likely impact of the agreement on the economy as a whole and on specific economic sectors. The President must provide information to the ITC on the agreement as it exists no later than 90 days before an agreement is signed (entered into) to inform the assessment. The ITC must report to Congress within 105 days after the agreement is signed. This report is to be made public under TPA-2015. Reports to be submitted by the President to committees of jurisdiction in relation to each trade agreement Environmental review of the agreement and the content and operation of consultative mechanisms established pursuant to TPA. Employment Impact Reviews and Report. Reviews the impact of future trade agreement on U.S. employment and labor markets. Labor Rights. A "meaningful" labor rights report on the country or countries in the negotiations and a description of any provisions that would require changes to the labor laws and practices of the United States. Implementation and Enforcement. A plan for the implementation and enforcement of the agreement, including border personnel requirements, agency staffing requirements, customs infrastructure requirements, impact on state and local governments, and cost analyses. Report on Penalties. A report one year after the imposition of a penalty or remedy under the trade agreement on the effectiveness of the penalty or remedy applied in enforcing U.S. law, whether the penalty or remedy was effective in changing the behavior of the party, and whether it had any adverse impact on other parties or interests. Report on TPA. The ITC is to submit a report on the economic impact of all trade agreements implemented under TPA procedures since 1984 one year after enactment and, again, no later than five years thereafter. Expedited Procedures and the Congressional Role Do the expedited legislative procedures differ under the proposed TPA-2015? TPA-2015 incorporates existing expedited procedures ("trade authorities procedures") prescribed in Section 151 of the Trade Act of 1974 for consideration of trade agreement implementing bills (see the text box). What is the purpose of the expedited procedures for considering implementing bills? The expedited TPA procedures include three core elements: a mechanism to ensure timely floor consideration, limits on debate, and a prohibition on amendment. The guarantee of floor consideration is intended to ensure that Congress will have an opportunity to consider and vote on the implementing bill whether or not the committees of jurisdiction or the leadership favor the legislation. Especially in the Senate, the limitation on debate helps ensure that opponents cannot prevent a final vote on an implementation bill by filibustering. The prohibition on amendments is intended to ensure that Congress will vote on the implementing bill in the form in which it is presented to Congress. In these ways, the expedited procedures help assure that Congress will act on an implementing bill, and that if the bill is enacted, its terms will implement the trade agreement that was negotiated. This arrangement helps to increase the confidence of U.S. negotiating partners that law enacted by the United States will implement the terms of the agreement, so that they will not be compelled to renegotiate it or give up on it. Why do the expedited procedures for implementing bills prohibit amendments? As noted above, if Congress were to amend an implementing bill, the legislation ultimately enacted might fail to implement the terms of the agreement that had been agreed to. In addition, if either house were to amend the implementing bill, it would likely become necessary to resolve the differences between the House and Senate versions through a conference committee (or through amendments between the houses). Since there is no way to compel the House and Senate to reach an agreement on a single version of the legislation, this prospect would make it impossible to ensure that Congress could complete action on the implementing bill expeditiously or, possibly, at all. What provisions are to be included in a trade agreement implementing bill to make it eligible for expedited consideration? Because trade agreement implementing bills are eligible for expedited congressional consideration under TPA, Congress has imposed restrictions on what may be included in these bills. The 2002 TPA legislation required that the implementing bill consist only of provisions that approve the trade agreement and a statement of administrative action proposed to implement it, together with provisions "necessary or appropriate" to implement the agreement, "repealing or amending existing laws or providing new statutory authority." What constitutes "necessary or appropriate" has been the subject of debate, with some Members arguing that the terms should not be interpreted too loosely, while others may argue for a broader interpretation. TPA-2015 includes the same basic language as the 2002 authority, except it requires that, in addition to provisions approving the trade agreement and statement of administrative action, an implementing bill may include " only such provisions as are strictly necessary or appropriate" (italics added). Along with the draft implementing bill, what other documents must the President submit to Congress for approval? Along with a draft implementing bill, the President submits to Congress a Statement of Administrative Action (SAA) and other supporting information. An SAA contains an authoritative expression of Administration views regarding the interpretation and application of the trade agreement for purposes of U.S. international obligations and domestic law. It describes significant administrative actions to be taken to implement the trade agreement. To support this statement, the President submits an explanation of how the implementing bill and administrative action will "change or affect U.S. law." The President is also to submit with the draft implementing bill a statement explaining how the agreement makes progress in achieving the "purposes, policies, priorities, and objectives" of the TPA, whether it changes an agreement previously negotiated, and how it "serves the interests of United States commerce," as well as how the implementing bill meets the requirement that its provisions altering existing law are "strictly necessary or appropriate." Must Congress consider covered trade agreements under the expedited legislative procedures? Each renewal of TPA has provided means by which Congress can determine not to extend expedited consideration to certain implementing bills. In TPA-2015, these mechanisms include the following: The "Extension Disapproval Resolution," through which Congress can deny a presidential request to extend TPA for additional years. The "Procedural Disapproval Resolution," through which Congress can deny expedited consideration for a specified trade agreement. An additional procedure, under which Congress could find that an implementing bill would change U.S. trade remedy laws in ways inconsistent with negotiating objectives on that subject. A "Consultation and Compliance Resolution," through which either chamber, by its own action, can deny the use of TPA procedures for consideration of a specified implementing bill in that chamber. Each house always retains its constitutional authority to override the statutory requirements of the TPA procedures and consider an implementing bill under its general rules or such other procedural conditions as it may determine. The following paragraphs discuss how each of these mechanisms functions to enable Congress to limit the use of TPA, implications of each, and relations among them. What is the effect of an "Extension Disapproval Resolution"? As already noted, TPA-2015 made expedited procedures available until July 1, 2018, and authorized the President to request that this period be extended through July 1, 2021. The President made a request to extend TPA on March 20, 2018, but the extension would have been denied if, before that date, either chamber adopted an "extension disapproval resolution" (EDR). Neither chamber did this, thus, TPA was extended until July 1, 2021. The 2002 renewal and other earlier TPA statutes contained similar provisions for an extension and EDR. Like previous grants of TPA, TPA-2015 effectively places the use of the EDR in the control of the House Committee on Ways and Means and the Senate Committee on Finance. Although any Member of the respective house may introduce an EDR, such a resolution may be considered on the floor in each chamber only if the respective revenue committee (and, in the House, also the Committee on Rules) reports it. If reported, however, the measure can be considered under an expedited procedure of its own, known as the "Section 152 procedure," which makes privileged a motion for consideration, limits debate, and prohibits amendment at any stage of the process. What is the effect of a "Procedural Disapproval Resolution"? Under TPA-2015, Congress may withdraw expedited legislative consideration from a particular implementing bill if it determines either (1) that the President has not adequately notified or consulted Congress on that agreement in the ways required by the act, or (2) that the agreement "fails to make progress in achieving the purposes, policies, priorities, and objectives" of the act. If both houses, within 60 days of each other, adopt a "procedural disapproval resolution" (PDR) on the same implementing bill, neither can use the expedited procedure to consider that implementing bill. In each chamber, the PDR is a simple resolution (H.Res. or S.Res.), requiring action only in the chamber of origin, so that no conference committee or other mechanism to resolve differences between the two chambers' measures is needed. Like an EDR, a PDR can be considered in each chamber under the expedited procedure of Section 152 (see previous paragraph), with a privileged motion for consideration, limited debate, and a prohibition on amendment. This mechanism affords Congress a means to enforce the requirements that a trade agreement advance the negotiating objectives established in statute and that the specified consultations, which enable Congress to engage with the process of negotiation, will occur. If, in the judgment of both houses, these conditions are not met, then Congress can decide not to accord expedited consideration to the implementing bill. As with the EDR, however, TPA-2015 effectively places the use of the PDR in the control of the House Committee on Ways and Means and the Senate Committee on Finance. Any Member of the respective chamber may introduce the resolution, but it may be considered on the floor only if the respective revenue committee (and, in the House, also the Committee on Rules) reports it. In this way the revenue committees serve, in effect, as the agent of Congress in maintaining its legislative prerogatives. With respect to a given trade agreement, moreover, the expedited procedure for considering a PDR may be used only for the first such resolution reported in each chamber. The effect of this limitation is that each chamber may attempt to withdraw expedited consideration from an implementing bill on a given trade agreement under this procedure only once. (Further implications of this limitation are noted in the later discussion on changes in trade remedy laws.) What is a "mock markup," and how may Congress use it to assert control over a trade agreement implementing bill? Although not embedded in statute, a "mock markup" has been a traditional, informal method for the House Ways and Means Committee and Senate Finance Committee to provide advice on the contents of the implementing bill before the President formally sends the draft bill to both houses, thus triggering the expedited procedures for the bill. Subsequent to the signing of the agreement, the committees generally conduct hearings on a draft implementing bill sent by the White House, followed by the advisory "markup." If the versions produced by the House and Senate Committees have significant differences, the two panels might hold a "mock conference." This process is not legally binding, and it is at presidential discretion whether to accept the advice. The process is called a "mock" markup because the bill under consideration is only a draft, it is not actually reported to the House or Senate, and the action of the committees operates only as a signal of their preferences to the executive. Often, nevertheless, the implementing bill that the President later submits to Congress tracks the results of the mock markup. If the revenue committees are dissatisfied with the implementing bill as submitted, they may respond by asking Congress to deny expedited consideration through the use of a PDR or one of the other methods described next, including bringing the bill to the floor under the general rules rather than the statutory expedited procedures. What may Congress do if an implementing bill contains provisions inconsistent with negotiating objectives on trade remedies, and with what effect? TPA-2015 retains a procedural mechanism from the 2002 authority, under which either house can adopt a simple resolution (H.Res. or S.Res.) finding that changes to U.S. trade remedy laws provided for in a trade agreement implementing bill submitted by the President are inconsistent with statutory negotiating objectives on that subject. Such action would respond to the report by the President to the revenue committees on this subject mentioned under " Trade Remedies ," above. Like a PDR, such a resolution could be introduced by any Member, but could receive floor consideration only if reported by the respective revenue committee (and, in the House, also by the Committee on Rules). If the respective committees had not previously reported any other such resolution with respect to the same agreement, the resolution would be subject to consideration under the expedited procedure of Section 152 (see " What is the effect of an "Extension Disapproval Resolution"? "). Unlike a PDR, however, TPA-2015 (like the 2002 authority) does not specify what effect the adoption of a such resolution, finding an implementing bill inconsistent with trade remedy objectives, would have on consideration of the implementing bill. As a result, it is not clear that adoption of a resolution of this kind would prevent either chamber from considering the implementing bill under its expedited procedure. Yet TPA-2015 (again like the 2002 authority) prescribes that if such a resolution has been reported in either chamber, then that chamber may not use the Section 152 expedited procedure to consider a PDR to deny expedited consideration to the same implementing bill. How does TPA-2015 permit a single house to withdraw expedited consideration from a specific implementation bill? TPA-2015 incorporates a mechanism, not present in previous TPA statutes, that permits either house, by its own action, to make a given implementing bill ineligible for expedited consideration in that chamber. As with the PDR, the emphasis of this proposal is on its potential use to counter what the chamber may consider inadequate consultation by the executive branch with respect to a trade agreement. This mechanism provides for use of a "Consultation and Compliance Resolution" (CCR), which is a simple resolution of either chamber (S.Res. or H.Res.) asserting that the President had "failed or refused to notify or consult" as required by the act, and therefore that "the trade authorities procedures ... shall not apply" in that chamber to the implementing bill in question. This form of action, however, contrasts with the use of the PDR, which has the effect of withdrawing expedited consideration in both chambers, but only if both agree to similar resolutions. Withdrawal of expedited consideration in only one chamber, nevertheless, would presumably suffice to prevent the effective operation of the expedited procedure as a whole, for the acting chamber might then either decline to consider the implementing bill at all, or might never bring consideration to a close and proceed to a vote, or might amend the bill, in which case a conference committee or other process of resolving differences between the two houses might become necessary, and might never be concluded. TPA-2015 provides separate procedures for a CCR in each chamber, and does not provide for expedited consideration in either. In the Senate, if the Committee on Finance "meets on whether to report an implementing bill," but does not report it favorably, it must then, instead, report a CCR. The Senate is not required to consider this resolution, but if a motion is offered to proceed to its consideration, it would normally be debatable, and could be filibustered, in which case a motion for cloture could be offered in order to limit consideration. If this motion does not receive the 60 votes necessary for adoption, the resolution is returned to committee, thereby preserving the eligibility of the implementing bill for expedited consideration. In order for the Senate to withdraw expedited consideration from an implementing bill under this procedure, accordingly, the resolution would have to secure the support of 60 Senators for cloture (unless opponents permitted the motion to consider the resolution, and then the resolution itself, to come to a vote without cloture). In addition, a cloture vote does not occur until two days after the cloture motion is offered, a matter under cloture may be considered for 30 additional hours after the cloture vote, and if the Senate agrees to the motion to proceed, the same conditions apply to consideration of the measure itself. As a result, adoption of a CCR in the Senate might require Senators to be willing to spend as much as two days getting to a cloture vote, plus 30 hours consideration, plus another two days until a cloture vote on the resolution itself, plus a further 30 hours consideration before a final vote on the resolution. In the House, the CCR process is triggered if the Committee on Ways and Means reports an implementing bill "with other than a favorable recommendation." If, on the day after the committee files such a report, a Member of the House submits a CCR, the committee must consider one such resolution within the next four days of session and report it within six days of session or be discharged from its consideration. The act does not specify how such a resolution would then reach the floor or under what terms it would be considered. Normally, a resolution affecting the order of business (often called a "special rule") would be considered by the Committee on Rules and reported as privileged, which means the committee could call it up by motion. In the past, when the House wished to withdraw expedited consideration from an implementing bill, it has used such resolutions reported by the Committee on Rules, as described below. Does Congress have means of overriding the TPA procedures in addition to those provided by TPA statutes? As the TPA statutes acknowledge, the expedited procedures for which they provide operate as procedural rules of each house, and therefore each house retains full authority, under the Constitution, to change or override them at any point. Under this authority, either house could choose not to consider an implementing bill under the expedited procedure, but instead under its general rules, which might, among other things, permit amendments. In practice, the House has usually considered implementing bills not under the statutory expedited procedure, but pursuant to special rules reported from the Committee on Rules. These special rules have normally retained the statutory prohibition against amendment (thereby duplicating the conditions under which the House usually considers any revenue bill). Such special rules have usually also barred a minority motion to recommit. However, the House could adopt a special rule permitting amendments to an implementation bill, and it has also adopted a resolution prohibiting consideration of an implementing bill for a specified trade agreement. The Senate normally considers implementing bills under the statutory expedited procedure, because supporters thereby avoid the possible need, in that chamber, to obtain a super-majority vote for cloture in order to limit debate. By unanimous consent, nevertheless, the Senate could agree to override any or all of the TPA procedures, including those that prohibit amendments to an implementing bill. Can Congress disapprove the President's launching trade negotiations with a trading partner? Congress does not have the constitutional authority to prevent the President from entering into negotiations with a foreign government. Under the Trade and Tariff Act of 1984 ( P.L. 98-573 ) and the Omnibus Trade and Competitiveness Act of 1988 ( P.L. 100-418 ), however, a bill to implement a trade agreement could have been denied expedited consideration if, within a 60-day period after the President notified the House Ways and Means Committee and the Senate Finance Committee of his intention to begin negotiations, either committee voted to disapprove the negotiation. This provision was not included either in the 2002 statute or TPA-2015. Does TPA constrain Congress's exercise of its constitutional authority on trade policy? Even though the TPA procedures are designed to ensure that Congress will act on implementing bills, and will do so without amending them, TPA legislation affords Congress several procedural means to maintain arguably tight reins on the executive branch's exercise of the delegated trade authority. In the provisions of successive TPA statutes, Congress has developed the various mechanisms just discussed for preserving its authority in relation to the content of implementing bills, even when those bills are eligible for consideration under the expedited procedure. In practice, these mechanisms enable the House Committee on Ways and Means and the Senate Committee on Finance (the "revenue committees") to operate as agents of Congress as a whole in protecting congressional prerogatives. TPA statutes include extensive, specific negotiating objectives to be pursued in covered trade agreements (see above). They also include extensive requirements for Congress to be notified of any trade agreement negotiations and consulted during their course. These requirements enable the revenue committees to monitor the negotiations actively and work to ensure that any trade agreements reached will be acceptable (see other sections above). The procedural mechanisms discussed in the preceding paragraphs, including the extension disapproval resolution, the procedural disapproval resolution, and the mock markup, enable Congress, and the two revenue committees in particular, to exercise a degree of control over the content and consideration of covered trade agreements that is comparable, in many respects, to that which these panels generally exercise over other legislation within their jurisdiction. Inasmuch as an implementing bill (if considered under the statutory expedited procedure) normally cannot be amended, however, the revenue committees exercise control in these cases instead through actions to shape the content of the implementing bill before it is introduced. In addition to these TPA-specific procedures, finally, each house retains the ability to consider implementing bills under its general rules rather than under the expedited procedure. National Sovereignty and Trade Agreements Can a trade agreement force the United States to change its laws? Neither the 2002 TPA authority nor previous TPA/fast track authorities contained provisions addressing the issue of national sovereignty. TPA-2015 states that no provision of any trade agreement entered into under the TPA inconsistent with any law of the United States, of any state, or any locality of the United States could have any effect. Nor could any provision of a trade agreement prevent the government of the United States, of any state, or any U.S. locality from amending its laws. This provision essentially provides that, for domestic purposes, any trade agreement adopted under the TPA authority is not self-executing. Therefore, any potential agreement adopted through the TPA procedures would not displace any federal, state, or local law without further action being taken by the appropriate legislature. Would legislation implementing the terms of a trade agreement submitted under the TPA supersede existing law? If the implementing legislation amends or changes U.S. law, then it would supersede existing U.S. law. However, under previous grants of TPA, changes to U.S. law made by an implementing bill are to be "necessary or appropriate" to implement the commitments under the trade agreement. TPA-2015 changes this provision to "strictly necessary or appropriate." What happens if a U.S. law violates a U.S. trade agreement? In general, if the United States does adopt an agreement with foreign countries, it would be bound by international law under the agreement. If a federal, state, or local law is found to be in violation of the free trade agreement, then the United States could be subject to removal of some benefits under the agreement, such as an increase in tariffs on its products, through a potential dispute resolution with a challenging country. The federal, state, or local government potentially would have to amend the law that is inconsistent with the trade agreement in order for the United States to avoid removal of benefits under the international agreement, but is not required to do so.

Legislation to reauthorize Trade Promotion Authority (TPA)—sometimes called "fast track"—the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015), was signed into law by former President Obama on June 29, 2015 (P.L. 114-26). If the President negotiates an international trade agreement that would reduce tariff or nontariff barriers to trade in ways that require changes in U.S. law, the United States can implement the agreement only through the enactment of legislation. If the trade agreement and the process of negotiating it meet certain requirements, TPA allows Congress to consider the required implementing bill under expedited procedures, pursuant to which the bill may come to the floor without action by the leadership, and can receive a guaranteed up-or-down vote with no amendments. Under TPA, an implementing bill may be eligible for expedited consideration if (1) the trade agreement was negotiated during the limited time period for which TPA is in effect; (2) the agreement advances a series of U.S. trade negotiating objectives specified in the TPA statute; (3) the negotiations were conducted in compliance with an extensive array of notification and consultation with Congress and other stakeholders; and (4) the President submits to Congress a draft implementing bill, which must meet specific content requirements, and a range of required supporting information. If, in any given case, Congress judges that these requirements have not been met, TPA provides mechanisms through which the eligibility of the implementing bill for expedited consideration may be withdrawn in one or both chambers. TPA is authorized through July 1, 2021. The United States has now renegotiated the North American Free Trade Agreement (NAFTA), now known as the United States-Mexico-Canada Agreement (USMCA) for which TPA could be used to consider implementing legislation. The issue of TPA reauthorization raises a number of questions regarding TPA, and this report addresses a number of those questions that are frequently asked, including the following: What is trade promotion authority? Is TPA necessary? What are trade negotiating objectives and how are they reflected in TPA statutes? What requirements does Congress impose on the President under TPA? Does TPA affect congressional authority on trade policy? For more information on TPA, see CRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy, by Ian F. Fergusson and CRS In Focus IF10038, Trade Promotion Authority (TPA), by Ian F. Fergusson.

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Introduction The Jones Act, which refers to Section 27 of the Merchant Marine Act of 1920 (P.L. 66-261), requires that vessels transporting cargo from one U.S. point to another U.S. point be U.S.-built, and owned and crewed by U.S. citizens. The act provides a significant degree of protection from foreign competition for U.S. shipyards, domestic carriers, and American merchant sailors. It is a subject of debate because some experts point out that it makes domestic ocean shipping relatively expensive, constrains the availability of ships, and contributes to making it much more costly to build merchant vessels in U.S. shipyards than in shipyards abroad. The Jones Act has been an issue in recent Congresses, coming into prominence amid debates over Puerto Rico's economic challenges and recovery from Hurricane Maria in 2017; in the investigation into the sinking of the 40-year-old ship El Faro with 33 fatalities during a hurricane in 2015; and in discussions about domestic transportation of oil and natural gas. The law's effectiveness in achieving national security goals has also been the subject of attention in conjunction with a congressional directive that the Administration develop a national maritime strategy, including strategies to increase the use of short sea shipping and enhance U.S. shipbuilding capability. In May 2018, the Office of Management and Budget requested public comment on federal requirements that could be modified or repealed to increase efficiency and reduce or eliminate unnecessary or unjustified regulatory burdens in the maritime sector. Legislative Context The Jones Act of 1920 was not the first law requiring that vessels transporting cargo domestically be U.S.-built, owned, and crewed. Rather, it was a restatement of a long-standing restriction that was temporarily suspended during World War I by P.L. 65-73, enacted October 6, 1917. Laws favoring a U.S.-flag fleet over a foreign fleet were initiated by the third act of the First Congress (1 Stat. 27, enacted July 20, 1789), which assessed lesser duties on vessels built and owned domestically than on those foreign-built and -owned. On September 1 of the same year, Congress specified that only a U.S.-built vessel owned by U.S. citizens and with a U.S. citizen captain could register as a U.S. vessel (1 Stat. 55). In 1817, Congress enacted a precursor to the Jones Act by disallowing any vessel wholly or partially foreign-owned from transporting domestic cargo between U.S. ports (3 Stat. 351). In 1886, this prohibition was extended to vessels transporting passengers domestically (24 Stat. 81). The early United States had a comparative advantage in shipbuilding due to its ample supplies of large timber. During the second half of the 1800s, it lost that advantage as wooden sailing ships gave way to iron steamships, with the advantage shifting to Scotland and England. Congress began debating how to respond to the steep drop-off in the share of U.S. foreign trade carried by U.S. vessels. The fall-off in domestic coastwise transport was less severe, but railroads began offering competition to coastal shipping. Proposals to allow foreign-built vessels to sail under the U.S. flag became known as the "free ship" movement. Opponents of the free ship movement argued that the higher cost of U.S. crews in and of itself would prevent a resurgence of trade carried by U.S. vessels even if foreign-built ships were allowed. While bills that would have allowed foreign-built vessels to qualify for U.S.-flag international service were reported by House and Senate committees in the late 1800s, it was in 1912 that Congress enacted such a measure (P.L. 62-33, 37 Stat. 562). Thus, since 1912, the domestic build requirement has principally applied to vessels making domestic voyages. In the late 1800s, Congress considered but did not pass bills that would have allowed foreign-built ships in domestic trade. Rather, Congress tightened the language concerning coastwise transport in response to shippers' attempts to avoid high-cost U.S. vessels. For instance, in 1891 a shipper loaded 250 kegs of nails at the Port of New York with an ultimate destination of Los Angeles (Redondo).The shipper loaded the merchandise on a foreign-flag ship bound for Antwerp, Belgium, where the goods were transferred to another foreign-flag ship bound for Los Angeles. Despite the circuitous routing and extra port charges, the freight charges were apparently less than they would have been using a U.S.-built and U.S.-owned ship to carry the nails directly between New York and Los Angeles. A court found that the shipper had acted legally. Similarly, shipments from Seattle to Alaska often were routed via Vancouver, Canada, so shippers could use foreign-flag ships for both legs. Congress amended the coastwise law in 1893 (27 Stat. 455) and again in 1898 (30 Stat. 248) to prohibit shippers from routing cargo through a foreign port so as to avoid coastwise laws. Nonetheless, U.S. shippers continued to use foreign-flag vessels in the Alaska trade by moving cargo between the United States and Vancouver, Canada, by rail. In the Merchant Marine Act of 1920, Senator Wesley Jones of Washington, chair of the Commerce Committee, sought to stop this practice by requiring Alaska-bound cargo to move through the Port of Seattle by amending the coastwise language to cover shipments "by land and water" and replacing shipments between "U.S. ports" with shipments between "U.S. points." These amendments remain current law. Shipbuilding Costs Debated The relative cost of building ships in the United States versus foreign countries was part of the debate leading up to passage of the Jones Act. Four years earlier, in the Shipping Act of 1916, Congress had requested annual reports on the subject from the federal agency in charge of maritime transportation. The minority report to a 1919 House committee report to the bill that would become the Jones Act expressed the view that banning foreign-built ships would result in more costly domestically built ships: … in order to build up and sustain an American merchant marine it is absolutely necessary to remove every restriction against American merchants acquiring ships, whether built in the United States or out of the United States, at the lowest possible price, in order to enable them to compete with other nations in the transportation of the commerce of the world. If our merchants are allowed to buy ships in the open world market and place them under American registry with the privilege of using them both in the coastwise and overseas trade, it will inevitably follow that ships under the American flag will be bought as cheaply as ships under other flags. On the other hand, if the American merchant shall be permitted to buy ships only from American builders in order to engage in our coastwise trade, it necessarily follows that every ship built in the United States will command a higher price than any foreign-built ship. Our American iron and steel manufacturers were unable to compete until they had to. When they had to they did compete successfully. Our shipbuilders can and will do likewise. A 1922 government report on shipbuilding indicated that U.S.-built ships cost 20% more than those built in foreign yards. The cost differential increased to 50% in the 1930s. In the 1950s, U.S. shipyard prices were double those of foreign yards, and by the 1990s, they were three times the price of foreign yards. Today, the price of a U.S.-built tanker is estimated to be about four times the global price of a similar vessel, while a U.S.-built container ship may cost five times the global price, according to one maritime consulting firm. The cost differential is also an issue for Department of Defense officials in charge of military sealift ships. As discussed later in this report, the military has modified a plan to build sealift ships domestically, finding it unaffordable, and instead will buy more used foreign-built cargo ships. Since U.S. shipyards do not build vessels for export, they are not required to compete with foreign shipyards on price or vessel characteristics. However, as was argued in the late 1800s, shipbuilding costs are not the only cost factor. U.S. crewing costs are higher than those of foreign-flag vessels. U.S.-flag ships have an operating cost differential estimated to be over $6 million per ship per year compared to foreign-flag ships. While crewing is the primary cost element, this estimate also includes insurance and ship maintenance costs. A 2011 study by the U.S. Maritime Administration (MARAD) found that in 2010, the average operating cost of a U.S.-flag ship was 2.7 times greater than a foreign-flag ship, but MARAD estimates that this cost differential has since increased. Statement of U.S. Maritime Policy A main thrust of the Merchant Marine Act of 1920 concerned the sale of a surplus of government cargo ships constructed for World War I. A second important and enduring aspect of the bill is its statement of maritime policy. The policy goals stated in the 1920 act, which appear in Section 27, have continued to the present day (46 U.S.C. §50101). The law stated the following: That it is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in times of war or national emergency, ultimately to be owned and operated privately by citizens of the United States; and it is hereby declared to be the policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine. This statement reflects the United States' status as an emerging power at that time. When World War I began in 1914, European nations utilized their ships for the war effort or kept them in harbors for fear of submarine attacks, leaving the United States with a shortage of ships for carrying its foreign trade. The Merchant Marine Act therefore emphasized that the United States should have its own merchant marine so as not to be dependent on any other nations' merchant vessels. What the Jones Act Requires The Jones Act applies only to domestic waterborne shipments. It does not apply to the nation's international waterborne trade, which is almost entirely carried by foreign-flag ships. The U.S. citizen crewing requirement means that the master, all of the officers, and 75% of the remaining crew must be U.S. citizens. If the U.S. owner of a Jones Act ship is a corporation, 75% of the corporation's stock must be owned by U.S. citizens. Regarding U.S. territories, the U.S. Virgin Islands, America Samoa, and the Northern Mariana Islands are exempt from the Jones Act. Therefore, foreign-flag ships can transport cargo between these islands and other U.S. points. Puerto Rico is exempt for passengers but not for cargo. Vessels traveling between Guam and another U.S. point must be U.S.-owned and -crewed but need not be U.S.-built. Regulatory Background The Coast Guard is in charge of enforcing the U.S.-build requirement for vessels (46 C.F.R. §§67.95-67.101), U.S. ownership of the carriers (46 C.F.R. §§67.30-67.43), and U.S. crewing (46 C.F.R. §10.221)—essentially, the licensing of Jones Act operators. It enforces these requirements when an operator seeks a "coastwise endorsement" (46 C.F.R. §67.19) from the agency. The terms "coastwise qualified" and "Jones Act qualified" are synonymous. Customs and Border Protection (CBP) is primarily responsible for determining what maritime activity falls under the act, namely defining what constitutes "transportation" and whether the origin and destination of a voyage are "U.S. points" (19 C.F.R. §§4.80–4.93). Agency interpretations of domestic shipping restrictions have been consistent since the late 1800s and early 1900s, as discussed further below. "U.S.-Built" Vessel Defined A significant element of the Jones Act is the requirement to use only "U.S.-built" vessels. Competing freight transportation modes have no requirement to purchase only domestically built equipment. Congress has not defined what constitutes a U.S.-built vessel, leaving this determination to the Coast Guard. Coast Guard regulations deem a vessel to be U.S.-built if (1) all "major components" of its hull and superstructure are fabricated in the United States, and (2) the vessel is assembled in the United States. The "superstructure" means the main deck and any other structural part above the main deck (e.g., the bridge, forecastle, pilot house). The Coast Guard holds that propulsion machinery (the ship's engine), other machinery, small engine room equipment modules, consoles, wiring, piping, certain mechanical systems and outfitting have no bearing on a U.S.-build determination. Consequently, for oceangoing ships, U.S. shipyards typically import engines from foreign manufacturers. This is allowed because engines are deemed components that are attached to the hull rather than an integral part of the hull's structure. A ship part or component that is self-supporting and independent of the vessel's structure and does not contribute to the overall integrity of the vessel or compromise the watertight envelope of the hull can be manufactured in a foreign country. However, the part or component must be attached or joined to the vessel in a U.S. shipyard, not an overseas yard. The Coast Guard's test for "major components" of the hull or superstructure is based on weight; up to 1.5% of the steel weight of hull and superstructure components can be manufactured abroad. By this reasoning, the propeller, stern bulb, bulbous bow, some rudders (depending on their design), and watertight closures used in U.S.-built vessels are often imported, as long as they (in the aggregate) do not exceed the steel weight limit. The Coast Guard also permits steel products in standard forms ("off the shelf") to be imported with no limit on their weight, but any shaping, molding, and cutting of the steel that is custom to the design of the vessel must be performed in a U.S. shipyard. Shipyards typically seek confirmation from the Coast Guard that incorporating certain foreign-built components in construction of a vessel will not disqualify the vessel from the Jones Act trade. These "determination letters" written by the Coast Guard detail which and to what extent foreign components are permissible. In the Coast Guard Authorization Act of 2018 ( P.L. 115-282 , §516) Congress directed the Coast Guard to publish these letters. Shipyard unions refer to ships built in this manner as "kit ships." They sued the Coast Guard in 2007, arguing that the Coast Guard's interpretation of the statute violated the Administrative Procedure Act. The U.S. District Court for the Eastern District of Pennsylvania sided with the Coast Guard, noting in part that the Coast Guard's interpretation is rooted and consistent with the Treasury Department's interpretation dating to at least the late 1800s (the Treasury Department was the agency of jurisdiction at that time), as well as U.S. Attorney General interpretations dating to the early 1900s. The shipyard unions' lawsuit was prompted by a Philadelphia shipyard's partnership with a South Korean shipbuilder, begun in 2004, to use the Korean builder's ship designs and other procurement services to build a series of Jones Act tankers. This partnership continues today and also includes container ships built in the Philadelphia shipyard. Since 2006, General Dynamics NASSCO of San Diego, another builder of Jones Act oceangoing ships, has partnered with Daewoo Shipbuilding of South Korea to procure vessel designs, engineering, and some of the materials for the commercial ships it has since built for Jones Act carriers. Importing engines and other major ship components would appear to undermine the Jones Act policy objective of a domestic shipbuilding capability independent of foreign yards. In the court case cited above, the shipyards argued that not allowing use of such foreign components would increase the cost of ships further. This would reduce orders for new ships and harm the domestic fleet. Passenger Vessel Itineraries The United States is the largest cruise ship market, but most Americans board foreign-flag cruise ships. This is because CBP has determined that a cruise ship serving a U.S. port does not have to be Jones Act-compliant as long as it has visited a distant foreign port (any port outside North and Central America, Bermuda, the Bahamas, and the Virgin Islands). Thus, for example, if a cruise ship includes Aruba or Curacao in its itinerary, it does not need to be Jones Act-compliant. The reasoning is that the main objective of such a cruise itinerary is to visit such foreign ports, not to transport passengers from one U.S. port to another U.S. port. This reasoning was articulated in a 1910 Attorney General's opinion. Another significant regulatory interpretation allowing for the prevalence of foreign cruise ships at U.S. ports is a 1985 rulemaking by the U.S. Customs Service (the predecessor of CBP). In this rulemaking, Customs allowed foreign-flag cruise ships to make round trips from a U.S. port and to visit other U.S. ports as long as they also include a visit to a nearby foreign port (such as those in Canada, Mexico, or Bermuda). All passengers must continue with the cruise until the cruise terminates at the same dock at which it began. Again, the reasoning is based on the primary intent of the cruise voyage; if the main purpose of the voyage is not domestic transportation of passengers then the Jones Act is not violated. Another type of passenger vessel excursion involves visits to no other ports. The purpose of the voyage could be whale watching, recreational diving, gambling, duty-free shopping, or deep-sea fishing, for example. These are so-called "voyages to nowhere" since passengers do not visit any other ports besides the one at which they embark and disembark. In these cases, CBP has determined that if such vessels stay within the 3-mile zone of U.S. territorial waters they must be Jones Act-compliant since CBP considers any places within such waters as "U.S. points." This interpretation is based on Treasury Decision 22275, issued in 1900. However, CBP has determined that if the vessel journeys beyond 3 miles from shore (into international waters), then it does not need to be Jones Act-compliant. This determination is based on a 1912 Attorney General opinion. But the policy regarding charter fishing boats differs from that regarding other passenger vessels. If charter fishing boats venture into international waters, they still must be Jones Act-compliant. This determination is by virtue of a 1936 ruling by the Bureau of Navigation and Steamboat Inspection (Circular Letter No. 103, June 3, 1936), and affirmed by Treasury Decision 55193(2) in 1960. Another element of CBP's interpretation of the Jones Act with respect to passenger vessels is its definition of a passenger. According to CBP, a passenger need not be a paying customer (such as a tour boat or cruise ship ticket holder); rather, the term encompasses anyone aboard a vessel who is not a member of the crew or an owner of the vessel. Thus, for example, an owner of a yacht who chooses to entertain business clients aboard his or her vessel must comply with the Jones Act. A construction company transporting construction workers to a construction site must use a Jones Act-compliant vessel. Offshore Oil and Gas Vessels In the offshore oil market, CBP's interpretations have affected "lightering" (the transfer of oil offshore from an oil tanker too large to transit a harbor to a smaller vessel) and offshore supply vessels (OSVs) used to supply oil platforms. CBP has determined that if a tanker to be lightered is anchored to the seabed and within 3 nautical miles of shore (which are U.S. territorial waters), it is a "U.S. point." Many lightering areas in the Gulf of Mexico are 60 to 80 miles offshore and therefore the lightering vessels can be foreign-flagged. Lightering operations in the Delaware Bay and elsewhere are within the 3-mile zone, and therefore lightering vessels operating in these areas must be Jones Act-compliant (in which case tank barges rather than ships are typically used as lighters). Regarding OSVs, two factors determine whether these vessels must be Jones Act-compliant in servicing offshore oil rigs. By virtue of the Outer Continental Shelf Lands Act of 1953 (P.L. 83-212), U.S. waters extend 200 miles offshore strictly for purposes related to the exploration, development, and production of offshore natural resources. CBP has determined that within this zone, only oil rigs attached to the seabed (anchored or submerged to) are "U.S. points." Another type of oil rig is not attached to the seabed: some mobile offshore drilling units (MODUs) are semisubmerged and can hold their positions with the use of propellers. CBP had determined that MODUs not attached to the seabed are not "U.S. points," and therefore foreign-flagged vessels were permitted to service these units. However, in 2008, Congress required that OSVs servicing MODUs be U.S.-owned and -crewed, but need not be U.S.-built ( P.L. 110-181 , §3525), which is the same requirement applied to U.S.-flag vessels engaged in international voyages. A second factor determining whether OSVs must be Jones Act-compliant is whether the OSV is transporting supplies or workers to the oil rig, or if the vessel is involved in installing equipment necessary for the operation of the rig. CBP defines "vessel equipment" as anything "necessary and appropriate for the navigation, operation or maintenance of a vessel or for the comfort and safety of persons on board." Consequently, a vessel laying cable or pipeline in U.S. waters does not need to be Jones Act-compliant. Similarly, while OSVs transporting supplies and rig workers must be Jones Act-compliant (if the rig is attached to the seabed), vessels involved in installing rig equipment or conducting geophysical surveying or diving inspections can be foreign-flagged, as well as "flotels," which are vessels that provide living quarters for construction workers. The distinction can be unclear. In 2017, CBP proposed that most or all activities performed by OSVs fall under the Jones Act, but after reviewing comments, the agency withdrew the proposal. Offshore Wind Farms Some question whether the Outer Continental Shelf Lands Act, and therefore the Jones Act, applies to offshore wind farms located beyond 3 miles from shore. Currently, wind farm developers are being guided by CBP's interpretations of the Jones Act with respect to OSVs and oil rigs. The Department of Energy has noted that the nonavailability of Jones Act-compliant "Tower Installation Vessels" (TIVs) can be a hindrance to offshore wind farm development, especially for installations in deeper water. In Europe, TIVs not only install the towers but also transport the equipment from shore to the offshore site. Since there are no Jones Act-compliant TIVs, U.S. wind developers either transport the equipment from foreign countries or use Jones Act-compliant vessels to transport the equipment to the site from a U.S. port alongside non-Jones Act-compliant TIVs to install the equipment. Foreign Blending Ports A third CBP interpretation of the Jones Act has been significant in shaping coastal maritime activity. CBP determined that if merchandise is transformed (manufactured or processed) into a new and different product at an intermediate foreign port, then the vessels transporting the original product from a U.S. port to this foreign port and transporting the transformed product from the foreign port to a U.S. port do not need to be Jones Act-compliant. For example, a Texas oil producer has shipped a gasoline product to a Bahamian storage facility where its product is blended with a different imported petroleum product to produce a final gasoline product that is shipped to New York. Foreign-flag tankers are allowed to make all of these shipments even though it could be argued that a portion of the cargo is being shipped between two U.S. points (Texas and New York). The transformation of the product into a new and different product at an intermediate foreign port distinguishes this case from the 1891 kegs-of-nails case mentioned above. This interpretation has precedent in a 1964 Customs Service ruling involving California rice being processed in the U.S. Virgin Islands (exempt from the Jones Act) before being shipped to Puerto Rico, with both shipment legs involving foreign-flag ships. The Jones Act Since 1920 Since 1920, Congress has enacted provisions that could be said to tighten Jones Act requirements, as well as provisions that exempt certain maritime activities from the requirements. In 1935, Congress forbade Jones Act-qualified vessels sold to foreign owners or registered under a foreign-flag to subsequently requalify as Jones Act-eligible (P.L. 74-191), meaning that they could never again be used in U.S. domestic trade. This provides additional protection from competition for Jones Act carriers if coastal shipping demand increases, because it can take two years to construct a new ship. In 1940, Congress expanded the Jones Act to cover towing vessels, such as river tugs that push barge tows and harbor tugs that assist larger ships, and salvage vessels operating in U.S. waters (P.L. 76-599). In 1988, Congress specified that waterborne transport of valueless material, such as dredge spoil or municipal solid waste, requires use of a Jones Act-qualified vessel ( P.L. 100-329 ). Precedents for Exempting the Jones Act Congress has enacted numerous exemptions or exceptions to the Jones Act. A list of these legislated exemptions and exceptions can be found in the Appendix . It has waived the Jones Act's restrictions when finding that no Jones Act-qualified operator was interested in providing service in a particular market, reasoning that the waiver thus would bring no harm to the domestic maritime industry. For instance, in 1984, Congress exempted passenger travel between Puerto Rico and any other U.S. port as long as no Jones Act-qualified operator was able to provide comparable service ( P.L. 98-563 ). This exemption remains in force, allowing foreign-flag cruise ships to carry passengers between the U.S. mainland and the island. On two occasions, in 1996 ( P.L. 104-324 ) and again in 2011 ( P.L. 112-61 ), Congress has permitted certain foreign-flagged liquefied natural gas (LNG) tankers to provide domestic service because none existed in the Jones Act fleet; no ship owners have made use of these exemptions (see Table A-1 ). Congress has also enacted exemptions due to a sudden spike in demand for Jones Act-qualified vessels. To address a vessel shortage, Congress enacted an exemption for iron ore carried on the Great Lakes during the 1940s that was related to a surge in steelmaking for the war effort. It did the same for a bumper grain harvest in 1951 (see Table A-1 ). In 1996, Congress enacted an exemption for vessels participating in oil spill cleanup operations when an insufficient number of Jones Act-qualified vessels are available. Congress has enacted Jones Act waivers for two innovations in vessel designs used in foreign trade but whose cargo operations included domestic legs that technically would otherwise fall under the Jones Act. One concerned a ship designed to carry river barges on international voyages, a technology known as Lighter Aboard Ship (LASH). In 1971, Congress exempted these specific barges from the Jones Act (P.L. 92-163). The exemption is no longer relevant, as this type of shipping is not now in use. In 1965, as container ships were about to come into use internationally, Congress exempted the movement of empty containers between U.S. ports from the Jones Act (P.L. 89-194). This exemption is restricted to containers used for international shipments, thus allowing the foreign-flagged container carriers to reposition their empty equipment along U.S. coastlines. Jones Act-compliant ships are necessary for transshipment of loaded international containers. This distinction between carriage of loaded and unloaded containers has ramifications for the development of marine highways or short sea shipping routes. Transshipment of international containerized cargo by feeder ships is prevalent abroad, but the practice does not exist in the United States. The Jones Act would require such ships be U.S.-built, -crewed, and -owned. Lack of transshipment services increases demand for rail and road connections to ports, as smaller feeder container ships do not play a role in distributing international containerized cargo among U.S. ports. Waivers for Specifically Named Vessels In addition to authorizing exemptions to the Jones Act under certain circumstances, Congress has enacted exemptions for specific vessels identified by name and identification number (a registration number with a state government, the Coast Guard, or International Maritime Organization). Typically, the legislative language does not indicate why a waiver was needed or describe the kind of vessel, its size, or its function. A search of the statutes at large under the terms "coastwise" and "endorsement" and "certificate of documentation" indicates that since 1989, at least 133 specific vessels have been granted Jones Act waivers by Congress in 16 separate legislative acts. These waivers typically appear in maritime-related legislation, such as a Coast Guard authorization bill. One act contains waivers for 67 vessels and another for 35 vessels. It appears in most cases that these vessels are not commercially significant—for instance, that they are not large or even moderately sized cargo or passenger vessels. Some of them are owned by nonprofit entities. One exception was the previously mentioned 2011 granting of waivers to three LNG tankers built in the United States in the late 1970s that subsequently became foreign-registered ( P.L. 112-61 ). In many cases, it appears the vessel needs a waiver because of a technicality in meeting Jones Act requirements; for example, the U.S.-citizen ownership history may be missing some records. In many cases, the statute granting the waiver places specific conditions on how the vessel can be used. Administrative Waivers in The Interest of National Defense As noted, the domestic shipping restrictions were waived during World War I. They were waived again in preparation for World War II (P.L. 77-507, 1942). In 1950, after the Korean War began, Congress enacted a provision allowing the executive branch to issue waivers "in the interest of national defense" (P.L. 81-891). This authority is still in effect, as the language did not specify that it was intended only for the conduct of that war. In 1991 and 2011, waivers were granted on national defense grounds to expedite oil shipments from the Strategic Petroleum Reserve in response to the Persian Gulf War and a conflict in Libya, respectively. In addition to military conflicts, the executive branch has waived the Jones Act for fuel resupply in the aftermath of natural disasters. This so-called "national defense waiver" authority has been the basis for recent waivers granted in the aftermath of major hurricanes, beginning with Hurricane Katrina in 2005 up to and including Hurricanes Harvey, Irma, and Maria in 2017 (see Table A-2 ). In 2008 ( P.L. 110-417 ), Congress inserted a role for MARAD to check on the availability of any Jones Act-qualified vessel before granting certain waivers. The lack of heavy-lift vessels in the Jones Act fleet has also prompted national defense waivers: in 2005 to allow a foreign-flag heavy-lift vessel to transport a radar system from Texas to Hawaii and in 2006 to allow an oil company to use a Chinese-flagged heavy-lift vessel to transport an oil rig from the Gulf Coast to Alaska. The national defense justification for the oil rig waiver was apparently based on addressing a fuel shortage in that region of Alaska. However, in 1992, Customs denied a waiver request to use a foreign-flag heavy-lift vessel to transport replicas of Christopher Columbus's Niña, Pinta, and Santa Maria vessels from Boston to San Francisco. A specific type of heavy-lift vessel is used in the construction of offshore oil rigs, but CBP has denied Jones Act waivers for these vessels even after Coast Guard and the Bureau of Safety and Environmental Enforcement in the Department of the Interior advised that not granting a waiver created a safety hazard for these operators. CBP has stated that the "national defense" justification is a high standard and that national defense waivers would not be issued for economic reasons such as commercial practicality or expediency. Consistent with this view, while CBP has issued national defense waivers in circumstances involving fuel shortages, it has not issued waivers that would merely favor domestic supply lines over offshore ones, even though one might argue the latter is a national security issue. For instance, in 1976, arguing that offshore supply lines are more vulnerable, some Members of Congress representing Gulf Coast states sought to have the Jones Act extended to the U.S. Virgin Islands. At the time, the largest refinery in North America was located in the U.S. Virgin Islands, and the refinery supplied petroleum products to the U.S. Northeast on foreign-flagged tankers. In 2014, northeast refineries reportedly contemplated seeking a Jones Act waiver to ship crude oil from Texas. These refineries import much of their crude oil. In 2018, the United States exported between 40 million and 80 million barrels of crude oil per month on foreign-flag tankers, imported about 150 million barrels per month from overseas sources on foreign-flag tankers, and shipped about 15 million barrels per month domestically on Jones Act tankers. A similar situation is occurring with liquefied natural gas (LNG): the United States has begun exporting substantial quantities by ship while continuing to import LNG by ship, but no LNG is shipped domestically. There are no LNG tankers in the Jones Act fleet, and it is unclear why shippers have not utilized the 1996 or 2011 waivers for LNG tankers mentioned above. Puerto Rico, which currently imports LNG from Trinidad and Tobago, is seeking a 10-year waiver of the Jones Act to receive bulk shipments of LNG from the U.S. mainland. The Jones Act Fleet Recent controversies over the Jones Act have concerned the oceangoing ship and offshore supply vessel sectors. The Jones Act also covers ships on the Great Lakes, river barges, harbor tugs, dredging vessels, and various kinds of passenger vessels. The Jones Act ship fleet, in particular, has shortcomings compared to the merchant fleet desired by the drafters of the 1920 act as they described it in the aforementioned statement of U.S. maritime policy. Oceangoing Ships As of March 2018, there were 99 oceangoing ships in the Jones Act-compliant fleet, employing about 3,380 mariners. The largest category of Jones Act ships is tankers. Of the 57 tankers in the fleet, 11 carry Alaskan crude oil to refineries on the West Coast, 44 are medium-sized product tankers that mostly carry refined products along the Atlantic Coast, and 2 are chemical or asphalt tankers. The dry cargo fleet includes 24 small to medium-sized container ships, 7 ships that have ramps for carrying vehicles (known as roll on/roll off vessels), and 2 dry bulk vessels designed to carry such commodities as grain and coal in bulk form. The fleet also includes 9 relatively small general-cargo vessels supplying subsistence harbors along Alaska's coast. As Figure 1 indicates, the number of oceangoing ships in the Jones Act fleet has shrunk to less than a quarter of what it was in 1950. The ships are much larger today than they were then, but their aggregate carrying capacity (DWT) is still less than in 1950. As shown in the figure, there was a pronounced drop in the size of the fleet in the late 1950s and early 1960s. At a 1967 congressional hearing, Alan Boyd, Secretary of Transportation in the Lyndon B. Johnson Administration, testified that the U.S. merchant marine was "too small, too old, and too unproductive," and stated, "you do not revitalize an industry by flooding it with Federal dollars and imprisoning it within a wall of protection." The Lyndon B. Johnson Administration appears to be the only Administration in the modern era that has called for the repeal of the Jones Act. While domestic ships are carrying fewer tons of freight today than they did in the 1950s, their most direct competitors, railroads and pipelines, are carrying more. Domestic ships have lost market share to land modes even though ships have economic advantages. Ocean carriers do not need to acquire and maintain rights-of-way like railroads and pipelines. They can move much more cargo per trip and per gallon of fuel than trucks and railroads. Although ships are slower than truck and rail modes, many shippers are willing to sacrifice transit time for substantially lower costs, as long as delivery schedules are reliable. The Jones Act fleet is almost entirely engaged in domestic trade routes where overland modes are not an option, serving Alaska, Hawaii, and Puerto Rico. In other words, it operates in markets where shippers have little alternative. Although the Jones Act can be said to have preserved a nucleus of a U.S. maritime industry, it has not succeeded in meeting the stated policy goal of sustaining a growing merchant marine that carries an increasing proportion of the nation's commerce. In the Merchant Marine Act of 1936 (P.L. 74-835, Section 101), Congress amended the policy goals articulated in the 1920 Act by adding the phrase "providing shipping service on all routes essential for maintaining the flow [of commerce] at all times," and also added the word "safest" to the policy goal of having the best equipped and most suitable types of vessels. At present, the Jones Act fleet does not appear to achieve either of these goals Ship Designs Missing from the Fleet One can also question whether the policy objective of having "the best equipped and most suitable types of vessels" has been achieved. Not all ship designs are represented in the Jones Act fleet. "Project cargo" or "heavy-lift" vessels are often used to carry oversized pieces of equipment such as smaller vessels, ship engines and modules, wind turbine parts, and power generation equipment. They would be useful for moving dredging fleets to project sites. There have not been any such vessels in the Jones Act fleet in recent decades. The Department of Defense has used "national defense" waivers of the Jones Act (see below) to move radar systems and newly built vessels on foreign-flag heavy-lift vessels. This type of cargo typically does not generate regular shipments in any one region; thus these ships would likely need to extend their market reach beyond the United States to include the international market. However, the higher cost structure of Jones Act operators is an obstacle to competing for international shipments. Two dry bulk ships are in the oceangoing Jones Act fleet, and they appear to be mostly inactive, possibly because they are nearly 40 years old. This is twice the economic life of a ship in the global fleet (where ships are typically sent for scrapping between 15 and 20 years of age). The sole Jones Act-qualified chemical tanker was built in 1968. No LNG tankers are in the Jones Act fleet despite new domestic markets as a result of the shale gas boom. The lack of sufficient Jones Act-qualified tanker capacity to move booming shale oil production coastwise added to pressure for lifting the crude oil export ban in 2015. Seagoing Barges In response to the high cost of U.S.-built and U.S.-crewed ships, the U.S. market has developed a unique vessel design, a seagoing barge called an articulated tug barge (ATB). MARAD estimates that over 150 ATBs are operating in the Jones Act trades. While ATBs are more capable than flatwater barges in handling sea swells (with a hinge between the tug and barge), they are still less capable than ships in handling heavy sea states. They are less reliable and less efficient over longer voyages because they are slower and smaller than tanker ships, and the notch between the barge and tug creates more resistance through the water than a single hull. Since ATBs sail closer to the coasts, they could pose a higher risk of grounding and provide less time to prevent spilled oil from reaching shorelines. ATB crews are not qualified to sail sealift ships. ATBs now carry more cargo (predominantly oil) on coastal voyages than does the tanker fleet (see Figure 2 ). Age of Fleet Raises Safety Concerns The El Faro was a Jones Act general cargo ship that sank in a hurricane in 2015. Because the ship was built in 1975, it was required to have only open lifeboats rather than the closed lifeboats with auto launchers required on ships built since 1983. After its sinking, the Coast Guard forbade its sister ship of the same age from sailing, and in congressional testimony noted concern about the condition of the rest of the U.S.-flag fleet: 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. Substantiating the Coast Guard's concern, in February 2019, the crew of the 46 year-old Jones Act containership Matsonia found a crack in the hull when looking for the source of an oil sheen in Oakland harbor. The Jones Act fleet today is relatively young compared to its prior composition because of shipbuilding undertaken after the large increase in shale oil production and before the lifting of the oil export ban. In part, new ships were needed to comply with tighter emissions requirements in the newly created North American emission control area. Today, just over one-third of the Jones Act oceangoing fleet (35 ships) is 21 years old or older, down from two-thirds (64 ships) in 2007. The Great Lakes Fleet Jones Act-compliant vessels operating in the Great Lakes are considerably older than the oceangoing fleet. The Great Lakes fleet consists of 33 dry bulk ships and several large barges carrying mostly iron ore, limestone, and coal used in steelmaking, and cement. The U.S. fleet of 1,000-foot freighters, the largest ships operating on the Great Lakes, was built between 1972 and 1981. The second-largest class of ships, around 700 feet in length, is older, with some of the vessels having originally been built in the 1940s or 1950s; a number of these were rebuilt in the 1970s. According to the U.S. Lake Carriers Association, ships operating in freshwater, such as the Great Lakes, can have longer lives than oceangoing vessels. Jones Act-compliant Great Lakes ships are much narrower for their length compared to the global dry bulk fleet because of the dimensions of the Soo Locks in Michigan. Domestic tonnage on the Great Lakes has declined steadily since the 1950s, and is now about half what it was then. The Canadian Great Lakes fleet illustrates the effect that vessel import policy can have on a domestic fleet. Canada's fleet was of similar age as the Jones Act fleet, with the youngest ship having been built in 1985, before Canada imposed a 25% tariff on newly constructed imported ships. While this import tariff was in effect, no new ships were added to the Canadian fleet. In 2010, Canada repealed the import tariff, and since then over 35 new dry bulk ships have been constructed in other countries specifically for service on the Great Lakes. These vessels cannot carry cargo between U.S. points. Inland River Fleet Thousands of tugs and barges carry mostly dry and liquid bulk commodities on the nation's inland rivers. The fleet includes several thousand tugs or pushboats that push the barge tows, about 20,000 dry cargo barges, and several thousand tank barges that carry liquid bulk cargoes. Tonnage is dominated by the export of corn and soybeans and domestic movement of coal. Since 1990, overall tonnage on the system has been flat or declining slightly. One of the two leading manufacturers of river barges ceased operation in April 2018 in response to the fall-off in demand for coal deliveries by barge. The Dredging Fleet The Dredging Act of 1906 (P.L. 59-185, 34 Stat. 204) requires that vessels engaged in dredging in U.S. waters be U.S.-built, -operated, and -crewed. The 1906 act was prompted by dredging work then being carried out in Galveston Bay, TX, after a calamitous 1900 hurricane. It required all dredge vessels henceforth to be U.S.-built. In 1988, Congress amended the Jones Act to define "merchandise" transported domestically by vessel to also include any valueless material ( P.L. 100-329 ). This change effectively required that dredge spoil be transported in Jones Act-qualified vessels. According to one study, the ban on foreign-built dredgers and foreign operators raises the cost of dredging U.S. harbors substantially. According to U.S. Army Corps of Engineers figures, while federal spending on navigation dredging has increased over the last decade by several hundred million dollars per year, the spending increase has not resulted in a larger volume of material being dredged from U.S. harbors. In addition to a limited supply of dredging vessels, increases in the cost of fuel, steel, and labor, as well as more stringent environmental requirements, are factors that may be causing cost increases. The U.S. privately owned fleet is much older and smaller, both in terms of the capacity of individual vessels and the total size of the fleet, compared to the four leading European dredging firms that perform work worldwide (except in U.S. waters). Each of the four European firms has a fleet of hopper dredges, the preferred type for dredging coastal harbors, whose total capacity is around three to four times the capacity of the entire U.S. hopper fleet. Three-quarters of the U.S. privately owned hopper dredge fleet is over 20 years of age, while about three-quarters of the European fleet is under 20 years. When the Army Corps bids harbor work requiring a hopper dredge, one of the four U.S. firms is the sole bidder over a third of the time. When the Army Corps schedules dredging projects for an upcoming year, it has periods when an insufficient number of dredges can perform the work. In addition to the dredge vessel, dredging projects involve a number of support vessels. One study found that mobilization and demobilization of the equipment in the U.S. market can amount to more than one-third of total project costs. Foreign firms use heavy-lift vessels to transport their dredge fleets to the next project. As indicated earlier, no such vessels are available in the Jones Act fleet. Offshore Supply Vessels The size of the OSV fleet can change significantly with changes in the oil market. In 2017, the offshore supply vessel fleet consisted of about 1,800 vessels, working mainly in the Gulf of Mexico. Over the last decade, annual construction averaged 32 vessels, but ranged between 4 and 53 vessels. Foreign-built vessels are relied upon for construction of rigs in deeper waters. These vessels need dynamic positioning propulsion systems to keep the vessel in place while performing the construction work, as the waters are too deep for anchoring. As mentioned above, similar vessels are lacking in the Jones Act fleet for installing wind towers in deeper waters. The Jones Act and Sealift Capability As with the commercial aspirations stated in the maritime policy of the Jones Act, there are also perceived shortcomings with respect to the domestic fleet's ability to serve as a naval auxiliary in times of war or national emergency. Since 1920, Congress has enacted programs that designate other fleets for sealift support, but the merchant mariners crewing Jones Act ships are still identified as contributing to the pool of mariners available to crew the sealift fleet. The shrinking size of the U.S. mariner pool puts in doubt its ability to sufficiently crew a reserve sealift fleet, as discussed further below. In 2014 ( P.L. 113-76 ), Congress directed the Department of Transportation and the Department of Defense to develop a national sealift strategy. This has yet to be issued. Sealift Crews The crews of Jones Act oceangoing ships are arguably the most salient and immediate element that could be called upon to support military sealift. Jones Act mariners typically have six months of shore leave per year, and those mariners on shore leave would be expected to crew a reserve fleet of government-owned cargo ships kept on standby for military sealift purposes (the Ready Reserve Force, or RRF). The Jones Act crew of oceangoing ships consists of about 3,380 merchant mariners, which is about 29% of the total mariner pool of 11,678 mariners that MARAD estimates would be required to crew the government-owned reserve fleet while still concurrently being able to operate the commercial fleet. The remaining pool of mariners would come from (1) the U.S.-flag privately owned international fleet enrolled in the Maritime Security Program (MSP) consisting of 60 ships and 2,386 commercial mariners, and (2) the Military Sealift Command (MSC) fleet of government-owned ships consisting of about 120 ships and 5,576 mariners. While MARAD estimates that there is a sufficient commercial mariner pool to crew the reserve sealift fleet during a surge lasting up to 180 days, a more prolonged sealift effort would start to entail crew rotations, and MARAD estimates a shortfall of about 1,800 mariners in that scenario. That the mariner pool is barely sufficient to sustain an immediate surge and is insufficient for a longer sealift effort has been a consistent finding of sealift officials for decades, even in previous periods when the mariner pool was much larger than it is today. For instance, this was the same finding by the Department of Defense Transportation Command (TRANSCOM) in 2004, when the RRF consisted of 59 ships and the mariner pool was 16,900. And in 1991, when the RRF consisted of 96 ships and the mariner pool was 25,000 (more than twice the size that it is today), the then MARAD Administrator testified that the mariner pool was barely sufficient to crew the reserve sealift fleet. Sealift Ships While the Jones Act's statement of maritime policy indicated a desire for a commercial fleet that also could provide sealift in times of war, since then three other fleets of ships have been established for purposes of military sealift: the RRF, MSC, and MSP. These ships are predominantly foreign-built. The RRF, a concept that originates in a 1954 act of Congress (P.L. 83-608), today consists of 46 ships that can sail upon either 5 or 10 days' notice and are on standby with a skeleton crew of about 600 commercial mariners (13 per ship), but would require an additional 1,200 mariners to sustain its operation once activated. The MSC fleet is controlled by TRANSCOM and has a subset of about 50 ships that carry military cargoes in port-to-port voyages similar to those undertaken by commercial ships. MSC ships are mostly crewed by civilian mariners who are federal employees. The MSP ships, a fleet established by Congress in 1996 ( P.L. 104-239 ), receive an operating subsidy of about $5 million per vessel per year to cover the additional cost of American crews and rely heavily on government cargoes (military and food aid) that pursuant to "cargo preference" law are reserved for them. As per long-standing agreements between MARAD, acting as advocate for the U.S. maritime industry, and the Department of Defense, the military is to utilize MSP ships and exhaust that capacity before it utilizes MSC ship capacity. While Jones Act operators are required to purchase more costly U.S.-built ships, the military sealift fleet is largely composed of more economical foreign-built ships. Jones Act operators are competing in the commercial marketplace while the sealift fleet is not. Instead of relying on the Jones Act commercial fleet to provide oceangoing shipbuilding capability, the sealift fleet could be required to be built domestically. The higher cost of the domestically built sealift fleet would be shared nationally, as is the case with other defense assets. Lower-cost coastwise ships would be more price-competitive with railroads, pipelines, and ATBs, thereby enlarging the mariner pool available for sealift support and increasing repair and maintenance work for U.S. shipyards. The sealift ships could also be designed to military specifications rather than be in conflict with commercial needs (see below). Divergence in Design of Commercial and Sealift Ships The military seeks cargo ships with flexible capabilities: ships not so large that they could face draft restrictions in some overseas harbors, ships with ramps or onboard cranes so that they can still unload cargo at underdeveloped or damaged ports, and ships that can carry a wide variety of cargo types and sizes. The majority of the military sealift fleet consists of product tankers for carrying fuel and roll-on/roll-off (Ro/Ro) ships that have ramps for moving tanks, trucks, and helicopters. It also consists of container ships used for moving ammunition and other supplies. The military's preference for versatility is in conflict with the commercial fleet's trend toward more specialized and larger ships, a trend driven by the need for ships with the lowest operating cost. General cargo and break-bulk ships capable of carrying a wide variety of cargo types and sizes and that were typically equipped with their own onboard cranes have been largely replaced by container ships without onboard cranes. Thus, commercial mariners may no longer have experience operating cargo cranes, as might be required in foreign ports where shore-based cranes are out of service or are not available. The largest container ships require 45 to 50 feet of water below the waterline, far more depth than many ports can provide. Ro/Ro ships have been replaced by "pure car carriers" that maximize the number of passenger cars they can carry, but may be less useful for military purposes. Cost pressures have induced commercial carriers to install engines that minimize fuel costs by operating at lower speeds and cannot achieve the higher speeds desired for military sealift ships. In addition, more stringent sulfur emission regulations recently enacted have prompted ship operators to convert to LNG-fueled engines, a fuel not globally available, or to install scrubbers, equipment that takes up cargo space and has no military utility. Licensing of engine crews is specific to engine type. Thus, a growing disparity exists between the military's ideal vessel designs and those of commercial carriers, as well as in the skill sets of the crew. Shipbuilding and Repair Industrial Base Besides the deep-sea ship crews, another purported Jones Act contribution to military sealift is preservation of a shipyard industrial base with the knowledge and skills to build and repair ships. The Merchant Marine Act of 1970 (P.L. 91-469) added as an additional objective of U.S. maritime policy to have a merchant marine "supplemented by efficient facilities for building and repairing vessels." U.S. shipyards typically build only two or three oceangoing ships per year, and none for export, so they do not achieve economies of scale. There may be gaps of several years in between orders for container ships. In recent years, the demand has been sufficient to sustain one shipyard that builds only commercial ships. However, this yard stated that its employment had fallen below 100 people and that it had no vessels under construction or on order as of March 31, 2019. The other shipyard that builds commercial ships also relies heavily on Navy orders. A larger number of shipyards build smaller vessels such as tour boats, ferries, tugs, barges, and offshore supply vessels. Around 1,000 barges are built in a typical year. These vessels also fall under the Jones Act domestic build requirement and are rarely built for export. However, the shipyards building smaller vessels lack dry docks of sufficient size to repair large ships. The government-owned sealift fleet is 44 years old on average, and many of the vessels are in need of repair. According to the Maritime Administrator, there is an insufficient number of large dry docks to service the sealift fleet, delaying their readiness to sail. Some of the reserve fleet has failed Coast Guard safety inspection, and some ships have too much steel rusted from their hulls to be seaworthy. For example, while sailing to a readiness exercise, a hole was found in the hull of one of the ships. According to TRANSCOM, the Navy's plan to recapitalize the reserve fleet includes building new vessels in domestic shipyards, repairing ships in the current fleet to extend their service life out to 60 years, and purchasing used, foreign-built ships. The Navy has found that repairing the vessels has thus far been three times more expensive and has taken twice as long as originally projected. It therefore is contemplating the need to accelerate the purchase of used, foreign-built ships because building new ships in U.S. yards is estimated to be 26 times more expensive and thus not affordable. In addition to the Jones Act, the Tariff Act of 1930 is intended to support U.S. shipyards by assessing a 50% duty on the price of any nonemergency repairs on U.S. flag ships done in foreign shipyards. A 2011 MARAD study found that many U.S.-flag international trading ships have repairs performed in foreign yards because, even with the 50% duty, the total cost is less than if the repairs were performed in a domestic shipyard. A U.S.-flag operator confirms that this is still the case in 2018. Appendix. Exemptions and Waivers

The Jones Act, which refers to Section 27 of the Merchant Marine Act of 1920 (P.L. 66-261), requires that vessels transporting cargo from one U.S. point to another U.S. point be U.S.-built, and owned and crewed by U.S. citizens. The act provides a significant degree of protection for U.S. shipyards, domestic carriers, and American merchant sailors. It is a subject of debate because some experts point out that it leads to high domestic ocean shipping costs and constrains the availability of ships for domestic use. The Jones Act has come into prominence amid debates over Puerto Rico's economic challenges and recovery from Hurricane Maria in 2017; in the investigation into the sinking of the ship El Faro with 33 fatalities during a hurricane in 2015; and in discussions about domestic transportation of oil and natural gas. The law's effectiveness in achieving national security goals has also been the subject of attention in conjunction with a congressional directive that the Administration develop a national maritime strategy, including strategies to increase the use of short sea shipping and enhance U.S. shipbuilding capability. The Jones Act of 1920 was not the first law requiring that vessels transporting cargo domestically be U.S.-built, owned, and crewed. It restated a long-standing restriction that was temporarily suspended during World War I. Since 1920, Congress has enacted provisions that could be said to tighten Jones Act requirements as well as provisions that exempt certain maritime activity from the requirements. In 1935, Congress forbade Jones Act-qualified vessels that were sold to foreign owners or registered under a foreign flag to subsequently requalify as Jones Act-eligible (P.L. 74-191). This provides additional protection from competition for Jones Act carriers if coastal shipping demand increases, because it can take around two years to construct a new ship. In 1940, Congress expanded the Jones Act to include towing and salvage vessels (P.L. 76-599). In 1988, Congress specified that waterborne transport of valueless material required use of a Jones Act-qualified vessel, such that transport of dredge spoil or municipal waste would fall under the law (P.L. 100-329). Generally, dredging and towing vessels, as well as Great Lakes ships, have occasioned less debate about the Jones Act than oceangoing ships and offshore supply vessels. Congress has enacted numerous exemptions or exceptions to the Jones Act. In some cases, Congress has enacted an exemption if there are no Jones Act-qualified carriers interested in providing service in a particular market (for example, passenger travel to and from Puerto Rico). Congress has allowed waivers of the Jones Act for national defense reasons, which most often have been executed to speed fuel deliveries to a region after a natural disaster disrupted normal supply lines. Regulatory interpretations of the Jones Act have been significant in defining what constitutes a "U.S.-built" vessel, what constitutes "transportation" between two U.S. points, and what are "U.S. points." The Coast Guard has determined that a U.S.-built vessel can be assembled with major foreign components such as engines, propellers, and stern and bow sections. This interpretation has been consistent from the late 1800s. Customs and Border Protection (CBP) has determined that cruise ship voyages that involve visits to foreign ports in addition to a domestic port are not domestic transportation and therefore not subject to the Jones Act. This interpretation also dates to the late 1800s. CBP's interpretations of what constitutes domestic transportation and U.S. points are significant to the offshore oil industry, as some of the vessels supporting that industry must be Jones Act-compliant while others need not be. By long-standing agreement, the military is to utilize U.S.-flag commercial ships for sealift before it utilizes government-owned vessels in its reserve fleet. Jones Act mariners are expected to crew sealift ships when needed, and thus the decades-long shrinkage of the oceangoing Jones Act fleet and mariner pool has been raised as a concern. The Department of Defense is planning to buy more used foreign-built ships for sealift rather than building them in the United States for cost reasons. It also has found that repairing its current fleet in U.S. shipyards is three times more expensive and has taken twice as long as estimated. Much of the commercial fleet is relatively old, raising safety concerns. Some useful types of ships are missing from the Jones Act-qualified fleet, such as heavy-lift vessels, liquefied natural gas (LNG) tankers, and deepwater offshore construction vessels. Both situations appear to some observers to be contrary to the policy goal of the Jones Act, which is to "have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in times of war or national emergency."

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What Is a "Section 123" Agreement? Under existing law (Atomic Energy Act [AEA] of 1954, as amended [P.L. 83-703; 42 U.S.C. §2153 et seq.]), all significant U.S. nuclear cooperation with other countries requires a peaceful nuclear cooperation agreement. Significant nuclear cooperation includes the transfer of U.S.-origin special nuclear material subject to licensing for commercial, medical, and industrial purposes, and the export of reactors and critical parts of reactors. Section 123 agreements are required for the export of commodities under NRC export licensing authority (10 C.F.R. 110). Such agreements, which are "congressional-executive agreements" requiring congressional approval, do not guarantee that cooperation will take place or that nuclear material will be transferred, but rather set the terms of reference and authorize cooperation. The AEA includes requirements for an agreement's content, conditions for the President to exempt an agreement from those requirements, presidential determinations and other supporting information to be submitted to Congress, conditions affecting the implementation of an agreement once it takes effect, and procedures for Congress to consider and approve the agreement. Section 123 of the AEA requires that any agreement for nuclear cooperation meet nine nonproliferation criteria and that the President submit any such agreement to the House Committee on Foreign Affairs and the Senate Committee on Foreign Relations. The Department of State is required to provide the President with an unclassified Nuclear Proliferation Assessment Statement (NPAS), which the President is to submit, along with the agreement, to those two committees. The State Department is also required to provide a classified annex to the NPAS, prepared in consultation with the Director of National Intelligence. The NPAS is meant to explain how the agreement meets the AEA nonproliferation requirements. The President must also make a written determination "that the performance of the proposed agreement will promote and will not constitute an unreasonable risk to, the common defense and security." Requirements Under the Atomic Energy Act Section 123 of the AEA specifies the necessary steps for engaging in nuclear cooperation with another country. Section 123a. states that the proposed agreement is to include the terms, conditions, duration, nature, and scope of cooperation and lists nine criteria that the agreement must meet. It also contains provisions for the President to exempt an agreement from any of several criteria described in that section and includes details on the kinds of information the executive branch must provide to Congress. Section 123b. specifies the process for submitting the text of the agreement to Congress. Section 123c. specifies the procedure for congressional approval of cooperation agreements that are limited in scope (e.g., do not transfer nuclear material or cover reactors larger than 5 megawatts electric [MWe]). This report does not discuss such agreements. Section 123d. specifies the procedure for congressional approval of agreements that do cover significant nuclear cooperation (transfer of nuclear material or reactors larger than 5 MWe), including exempted agreements. Section 123a., paragraphs (1) through (9), lists nine criteria that an agreement with a nonnuclear weapon state must meet unless the President determines an exemption is necessary. These include guarantees that safeguards on transferred nuclear material and equipment continue in perpetuity; International Atomic Energy Agency (IAEA) comprehensive safeguards are applied in nonnuclear weapon states; nothing transferred is used for any nuclear explosive device or for any other military purpose; the United States has the right to demand the return of transferred nuclear materials and equipment, as well as any special nuclear material produced through their use, if the cooperating state detonates a nuclear explosive device or terminates or abrogates an IAEA safeguards agreement; there is no retransfer of material or classified data without U.S. consent; physical security on nuclear material is maintained; there is no enrichment or reprocessing by the recipient state of transferred nuclear material or nuclear material produced with materials or facilities transferred pursuant to the agreement without prior approval; storage for transferred plutonium and highly enriched uranium is approved in advance by the United States; and any material or facility produced or constructed through use of special nuclear technology transferred under the cooperation agreement is subject to all of the above requirements. Although some experts have advocated requiring governments to forgo enrichment and reprocessing (a nonproliferation commitment sometimes referred to as the "Gold Standard") as a condition for concluding a nuclear cooperation agreement, the Atomic Energy Act does not include such a requirement (see Appendix B ). Exempted vs. Nonexempted Agreements The President may exempt an agreement for cooperation from any of the requirements in Section 123a. if he determines that the requirement would be "seriously prejudicial to the achievement of U.S. nonproliferation objectives or otherwise jeopardize the common defense and security." The AEA provides different requirements, conditions, and procedures for exempt and nonexempt agreements. To date, all of the Section 123 agreements in force are nonexempt agreements. Prior to the adoption of P.L. 109-401 , the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, the President would have needed to exempt the nuclear cooperation agreement with India from some requirements of Section 123a. However, P.L. 109-401 exempted nuclear cooperation with India from some of the AEA's requirements. Congressional Review Under the AEA, Congress has the opportunity to review a nuclear cooperation agreement for two time periods totaling 90 days of continuous session. The President must submit the text of the proposed agreement, along with required supporting documents (including the unclassified NPAS) to the House Foreign Affairs Committee and the Senate Foreign Relations Committee. The President is to consult with the committees "for a period of not less than 30 days of continuous session." After this period of consultation, the President is to submit the agreement to Congress, along with the classified annex to the NPAS and a statement of his approval of the agreement and determination that it will not damage U.S. national security interests. This action begins the second period, which consists of 60 days of continuous session. In practice, the President has sent the agreement to Congress at the beginning of the full 90-day period, which begins on the date of transmittal. Typically, the 60-day period has immediately followed the expiration of the 30-day period. The President transmits the text of the proposed agreement along with a letter of support with a national security determination, the unclassified NPAS, its classified annex, and letters of support for the agreement from the Secretary of State and the Nuclear Regulatory Commission. If the President has not exempted the agreement from any requirements of Section 123a., it may enter into force after the end of the 60-day period unless, during that time, Congress adopts a joint resolution disapproving the agreement and the resolution becomes law. If the agreement is an exempted agreement, Congress must adopt a joint resolution of approval and it must become law by the end of the 60-day period or the agreement may not enter into force. At the beginning of this 60-day period, joint resolutions of approval or disapproval, as appropriate, are to be automatically introduced in each house. During this period, the committees are to hold hearings on the proposed agreement and "submit a report to their respective bodies recommending whether it should be approved or disapproved." If either committee has not reported the requisite joint resolution of approval or disapproval by the end of 45 days, it is automatically discharged from further consideration of the measure. After the joint resolution is reported or discharged, Congress is to consider it under expedited procedures, as established by Section 130.i. of the AEA. Congress has used procedures outside the above-described process to adopt legislation approving some nuclear cooperation agreements (see Appendix C ). Section 202 of P.L. 110-369 , the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act, which President Bush signed into law October 8, 2008, amended Section 123 of the AEA to require the President to keep the Senate Foreign Relations Committee and the House Foreign Affairs Committee "fully and currently informed of any initiative or negotiations relating to a new or amended agreement for peaceful nuclear cooperation." Export Licensing The AEA sets out procedures for licensing exports to states with which the United States has nuclear cooperation agreements. (Sections 126, 127, and 128 codified as amended at 42 U.S.C. 2155, 2156, 2157.) Each export of nuclear material, equipment, or technology requires a specific export license or other authorization. The Nuclear Regulatory Commission (NRC) is required to meet criteria in Sections 127 and 128 in authorizing export licenses. These criteria are as follows: Application of IAEA safeguards to any material or facilities proposed to be exported, material or facilities previously exported, and to any special nuclear material used in or produced through the use thereof (these are not full-scope safeguards, but safeguards required under Article III.2 of the nuclear Nonproliferation Treaty [NPT]). Nothing exported can be used for any nuclear explosive device or for research on or development of any nuclear explosive device. Recipient states must have adequate physical security on "such material or facilities proposed to be exported and to any special nuclear material used in or produced through the use thereof." Recipient states are not to retransfer exported nuclear materials, facilities, sensitive nuclear technology, or "special nuclear material produced through the use of such material" without prior U.S. approval. Recipient states may not reprocess or alter in form or content exported nuclear material or special nuclear material produced though the use of exported nuclear material without prior U.S. approval. The foregoing conditions must be applied to any nuclear material or equipment that is produced or constructed under the jurisdiction of the recipient by or through the use of any exported sensitive nuclear technology. Section 128 requires that recipient nonnuclear weapon states must have full-scope IAEA safeguards. The President must judge that the proposed export or exemption will "not be inimical to the common defense and security" or that any export of that type "would not be inimical to the common defense and security because it lacks significance for nuclear explosive purposes." The executive branch may also consider other factors, such as "whether the license or exemption will materially advance the nonproliferation policy of the United States by encouraging the recipient nation to adhere" to the NPT; whether "failure to issue the license or grant the exemption would otherwise be seriously prejudicial" to U.S. nonproliferation objectives; and whether the recipient nation has agreed to conditions identical to those laid out in Section 127. Section 126b.(2) contains a provision for the President to authorize an export in the event that the NRC deems that the export would not meet Section 127 and 128 criteria. The President must determine "that failure to approve an export would be seriously prejudicial to the achievement of U.S. nonproliferation objectives or otherwise jeopardize the common defense and security." In that case, the President would submit his executive order, along with a detailed assessment and other documentation, to Congress for 60 days of continuous session. After 60 days of continuous session, the export would go through unless Congress were to adopt a concurrent resolution of disapproval. Section 128b.(2) contains a provision for the President to waive termination of exports by notifying Congress that the state has adopted full-scope safeguards or that the state has made significant progress toward adopting such safeguards, or that U.S. foreign policy interests dictate reconsideration. Such a determination would become effective unless Congress were to adopt a concurrent resolution of disapproval within 60 days of continuous session. Additionally, Section 129b.(1) forbids the export of "nuclear materials and equipment or sensitive nuclear technology" to any country designated as a state sponsor of terrorism. Section 129b.(3) allows the President to waive this provision. Iran-Related Restrictions The Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010 ( P.L. 111-195 ), which became law July 1, 2010, contains additional restrictions on licensing nuclear exports to countries with entities that have been sanctioned for conducting certain types of nuclear weapons-related transactions with Iran. Section 102a.(2)(A) of the law states that "no license may be issued for the export, and no approval may be given for the transfer or retransfer" of "any nuclear material, facilities, components, or other goods, services, or technology that are or would be subject to an agreement for cooperation between the United States" and such countries. Section 102 a.(2)(B), however, allows the President to waive these restrictions. Section 102a.(2)(C) allows the President to authorize licenses for nuclear exports "on a case-by-case basis" to entities (which have not been sanctioned) in countries subject to the restrictions described above. Subsequent Arrangements Section 131 of the AEA details procedures for subsequent arrangements to nuclear cooperation agreements concluded pursuant to Section 123. Such arrangements are required for forms of nuclear cooperation requiring additional congressional approval, such as transfers of nuclear material or technology and recipient states' enrichment or reprocessing of nuclear materials transferred pursuant to the agreement. Subsequent arrangements may also include arrangements for physical security, storage, or disposition of spent nuclear fuel; the application of safeguards on nuclear materials or equipment; or "any other arrangement which the President finds to be important from the standpoint of preventing proliferation." Before entering into a subsequent arrangement, the Secretary of Energy must publish in the Federal Register a determination that the arrangement "will not be inimical to the common defense and security." A proposed subsequent arrangement shall not take effect before 15 days after publication of both this determination and notice of the proposed arrangement. The Secretary of State is required to prepare an unclassified Nuclear Proliferation Assessment Statement (NPAS) if, "in the view of" the Secretary of State, Secretary of Energy, Secretary of Defense, or the Nuclear Regulatory Commission, a proposed subsequent arrangement "might significantly contribute to proliferation." The Secretary of State is to submit the NPAS to the Secretary of Energy within 60 days of receiving a copy of the proposed subsequent arrangement. The President may waive the 60-day requirement if the Secretary of State so requests, but must notify both the House Foreign Affairs Committee and Senate Foreign Relations Committee of any such waiver and the justification for it. The Secretary of Energy may not enter into the subsequent arrangement before receiving the NPAS. Section 131 specifies requirements for certain types of subsequent arrangements. Section 131b. describes procedures for the executive branch to follow before entering into a subsequent arrangement involving the reprocessing of U.S.-origin nuclear material or nuclear material produced with U.S.-supplied nuclear technology. These procedures also cover subsequent arrangements allowing the retransfer of such material to a "third country for reprocessing" or "the subsequent retransfer" of more than 500 grams of any plutonium produced by reprocessing such material. The Secretary of Energy must provide both the House Foreign Affairs Committee and Senate Foreign Relations Committee with a report describing the reasons for entering into the arrangement. Additionally, 15 days of continuous session must elapse before the Secretary may enter into the arrangement, unless the President judges that "an emergency exists due to unforeseen circumstances requiring immediate entry" into the arrangement. In such a case, the waiting period would be 15 calendar days. If a subsequent arrangement described in the above paragraph involves a facility that has not processed spent nuclear reactor fuel prior to March 10, 1978 (when the Nuclear Nonproliferation Act of 1978 was enacted), the Secretaries of State and Energy must judge that the arrangement "will not result in a significant increase of the risk of proliferation." In making this judgment, the Secretaries are to give "foremost consideration ... to whether or not the reprocessing or retransfer will take place under conditions that will ensure timely warning to the United States of any diversion well in advance of the time at which the non-nuclear weapon state could transform the diverted material into a nuclear explosive device." For a subsequent arrangement involving reprocessing in a facility that has processed spent nuclear reactor fuel prior to March 10, 1978, the Secretary of Energy will "attempt to ensure" that reprocessing "shall take place under conditions" that would satisfy the timely-warning conditions described above. Section 131f. specifies procedures for congressional approval of subsequent arrangements involving the storage or disposition of foreign spent nuclear fuel in the United States. Section 133 states that, before approving a subsequent arrangement involving certain transfers of special nuclear material, the Secretary of Energy must consult with the Secretary of Defense "on whether the physical protection of that material during the export or transfer will be adequate to deter theft, sabotage, and other acts of international terrorism which would result in the diversion of that material." If the Secretary of Defense determines that "the export or transfer might be subject to a genuine terrorist threat," that Secretary is required to provide a written risk assessment of the risk and a "description of the actions" that he or she "considers necessary to upgrade physical protection measures." Examples of Subsequent Arrangements U.S.-Japan Agreement The first test of the subsequent arrangement provisions came in August 1978, when the Department of Energy informed the House and Senate foreign relations committees of a Japanese request for approval of the transfer of spent fuel assemblies from Japan to the United Kingdom for reprocessing. This was the first "subsequent arrangement" approved. The United States and Japan entered into similar arrangements until 1988, when the two governments revised their nuclear cooperation agreement. That agreement included an "implementing agreement," which provided 30-year advance consent for the transfer of spent fuel from Japan to Europe for reprocessing. While controversial, Congress did not block the nuclear cooperation agreement. A subsequent arrangement was also necessary for the sea transport from Europe to Japan of plutonium that had been separated from the Japanese spent fuel. The Department of Energy approved a Japanese request for 30-year advance consent for the sea transport of plutonium. It was submitted to Congress as a subsequent arrangement, and took effect in October 1988. U.S.-India Agreement The U.S. nuclear cooperation agreement with India grants New Delhi consent to reprocess nuclear material transferred pursuant to the agreement, as well as "nuclear material and by-product material used in or produced through the use of nuclear material, non-nuclear material, or equipment so transferred." However, the agreement also includes a requirement that India first build a new national reprocessing facility to be operated under IAEA safeguards. The two countries signed a subsequent arrangement July 30, 2010, which governs the procedures for operating two new reprocessing facilities in India. The agreement also describes procedures for U.S. officials to inspect and receive information about physical protection measures at the new facilities. The arrangement would not have taken effect if Congress had adopted a joint resolution of disapproval within 30 days of continuous session; Congress did not adopt such a resolution. If India were to construct any additional facilities to reprocess fuel from U.S.-supplied reactors, a new subsequent arrangement would need to be submitted to Congress. Termination of Cooperation Section 129a. of the AEA requires that the United States end exports of nuclear materials and equipment or sensitive nuclear technology to any nonnuclear weapon state that, after March 10, 1978, the President determines to have detonated a nuclear explosive device; terminated or abrogated IAEA safeguards; materially violated an IAEA safeguards agreement; or engaged in activities involving source or special nuclear material and having "direct significance" for the manufacture or acquisition of nuclear explosive devices, and "has failed to take steps which, in the President's judgment, represent sufficient progress toward terminating such activities." Section 129a. also requires that the United States halt exports to any nation the President determines to have materially violated the terms of an agreement for cooperation with the United States; assisted, encouraged, or induced any nonnuclear weapon state to obtain nuclear explosives or the materials and technologies needed to manufacture them; or retransferred or entered into an agreement for exporting reprocessing equipment, materials, or technology to a nonnuclear weapon state, unless in connection with an international agreement to which the United States subscribes. The President can waive termination of exports if he determines that "cessation of such exports would be seriously prejudicial to the achievement of United States nonproliferation objectives or otherwise jeopardize the common defense and security." The President must submit his determination to Congress, which is then referred to the House Committee on Foreign Affairs and the Senate Foreign Relations Committee for 60 days of continuous session. The determination becomes effective unless Congress adopts a joint resolution opposing the determination. Part 810 Agreements Section 57.b. (2) of the Atomic Energy Act allows for limited forms of nuclear cooperation related to the "development or production of any special nuclear material outside of the United States" if that activity has been authorized by the Secretary of Energy following a determination that it "will not be inimical to the interest of the United States." The Secretary may only make such a finding with "the concurrence of the Department of State, and after consultation with the Nuclear Regulatory Commission [NRC], the Department of Commerce, and the Department of Defense." Authorizations of such activities are also known as "Part 810 authorizations," after 10 Code of Federal Regulations (C.F.R.) Part 810. Part 810 regulations describe activities that are "generally authorized" by the Secretary of Energy and activities that require "specific authorization" by the Secretary. Some "generally authorized activities" are limited to a list of "generally authorized destinations." These regulations also detail "reporting requirements for authorized activities." Part 810 authorizations mostly involve unclassified nuclear technology transfer and services, such as nuclear reactor designs, nuclear facility operational information and training, and nuclear fuel fabrication. Such an authorization is not required for exports of components and materials licensed by NRC governed by 10 C.F.R. Part 110. Civilian nuclear cooperation agreements under Section 123 of the Atomic Energy Act of 1954, as amended (hereinafter Atomic Energy Act or AEA), are not required for an 810 authorization or for transmission of nuclear-related information, except for restricted data. Such agreements are, however, required for such forms of nuclear cooperation as the transfer of U.S.-origin special nuclear material subject to licensing for commercial, medical, and industrial purposes; the export of reactors and critical parts of reactors; and other commodities under NRC export licensing authority (10 C.F.R. 110). The NRC may also authorize activities governed by Part 810 authorizations under a 123 agreement or under a subsequent arrangement to such an agreement. It is worth noting that Part 810.9 includes "[w]hether the United States has an agreement for cooperation in force covering exports to the country or entity involved" as a factor for the Secretary of Energy to use in determining that an activity "will not be inimical to the interest [sic] of the United States." Moreover, the list of "generally authorized destinations" is "based principally on the United States agreements for civil nuclear cooperation," according to guidance from the National Nuclear Security Administration. Recent Legislative Activity S. 3785/H.R. 7350 On December 19, 2018, Senators Markey and Rubio introduced S. 3785 , the No Nuclear Weapons for Saudi Arabia Act of 2018, and Representatives Sherman and Messer introduced the companion bill, H.R. 7350 . The bills would require a joint resolution of approval for a 123 agreement with Saudi Arabia. In addition, the bills' text includes the sense of Congress that no 123 agreement should be approved until Saudi Arabia has "been truthful and transparent with regard to the death of Jamal Khashoggi" and prosecuted those responsible, "renounced uranium enrichment and reprocessing on its territory," concluded an IAEA Additional Protocol, and made "substantial progress on the protection of human rights, including the release of political prisoners." The bills require the President to submit a report assessing progress on the above actions along with a proposed agreement. The text also includes a statement of policy that the United States should oppose sales of nuclear technology to Saudi Arabia through the Nuclear Suppliers Group (NSG) until Saudi Arabia has renounced enrichment and reprocessing. H.R. 7351 On December 19, 2018, Representative Brad Sherman introduced H.R. 7351 , the Nuclear Cooperation Agreements Reform Act of 2018, which would amend the Atomic Energy Act to require nonexempt nuclear cooperation agreements to include several additional provisions. These provisions include a legally binding "commitment" from the cooperating government stipulating that "no enrichment or reprocessing activities, or acquisition or construction of such facilities, [would] occur within the territory over which the cooperating party exercises sovereignty"; "a guaranty by the cooperating party that no nationals of a third country" would be "permitted access to any reactor, related equipment, or sensitive materials transferred under" the agreement without prior U.S. consent; a "commitment to maintain" or enact "a legal regime providing for adequate protection from civil liability that will allow for the participation of United States suppliers in any effort by the country to develop civilian nuclear power"; and a stipulation that the United States can demand the return of transferred items if the cooperating government "violates or abrogates any provision" of its IAEA safeguards agreement. H.R. 7351 would also require a cooperating party to sign, ratify, and implement an Additional Protocol to its IAEA safeguards agreement; implement a number of export control-related measures; comply with "all United Nations conventions to which the United States is a party and all [UN] Security Council resolutions regarding the prevention of the proliferation of weapons of mass destruction"; and be party to, as well as fully implement, "the provisions and guidelines" of the Biological Weapons Convention and the Chemical Weapons Convention, as well as "all other international agreements to which the United States is a party regarding the export of nuclear, chemical, biological, and advanced conventional weapons, including missiles and other delivery systems." In addition, the bill would prohibit nuclear cooperation agreements with a country designated as a Destination of Diversion Concern pursuant to the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 ( P.L. 111-195 ). The bill would also prohibit such agreements with a country that is not "closely cooperating with the United States to prevent state sponsors of terrorism" from "acquiring or developing" nuclear, chemical, or biological (NBC) weapons "or related technologies" or "destabilizing numbers and types of advanced conventional weapons." H.R. 7351 would also limit the duration of a nuclear cooperation agreement to 15 years, as well as prohibit nuclear-related exports to a country identified in the most recent version of a report mandated by the National Defense Authorization Act for Fiscal Year 1998 ( P.L. 105-85 ) as possessing or seeking to "acquire or develop" NBC weapons, ballistic missiles, or cruise missiles. Moreover, the bill would amend the AEA's congressional notification provisions concerning ongoing nuclear cooperation agreement negotiations by requiring the President to "consult" with the Senate Foreign Relations Committee and the House Foreign Affairs Committee concerning such initiative or negotiations beginning not later than 15 calendar days after the initiation of any such negotiations, or the receipt or transmission of a draft agreement, whichever occurs first, and monthly thereafter until such time as the negotiations are concluded. These consultations would include the provision of "current working drafts and proposed text put forward for negotiation by the parties for inclusion in such agreement." The bill would also require the President to submit a report to the House Foreign Affairs and Senate Foreign Relations Committees "on the extent to which each country that engages in civil nuclear exports ... requires nuclear nonproliferation requirements as conditions for export comparable to those" in the AEA as amended by the bill, which would also stipulate that the report include "the extent to which the exports of each such country incorporate United States-origin components, technology, or materials that require United States approval for re-export"; "the civil nuclear-related trade and investments in the United States by any entity from each such country"; and a list of "any United States grant, concessionary loan or loan guarantee, or any other incentive or inducement to any such country or entity related to nuclear exports or investments in the United States." H.R. 7351 contains provisions concerning U.S. foreign assistance. For example, the bill would prohibit "assistance (other than humanitarian assistance) under any provision of law ... to a country that has withdrawn" from the NPT. H.R. 7351 would also require the United States to "seek the return of any material, equipment, or components transferred under" a nuclear cooperation agreement with such a country, as well as the return of any "special fissionable material produced through the use" of such transferred items. In addition, the bill would prohibit any assistance under the Foreign Assistance Act of 1961 [FAA], the Arms Export Control Act [AECA], the Foreign Military Sales Act [FMSA], the Food for Peace Act, the Peace Corps Act, or the Export-Import Bank Act of 1945 to any country if the Secretary of State determines that the government of the country has repeatedly provided support for acts of proliferation of equipment, technology, or materials to support the design, acquisition, manufacture, or use of weapons of mass destruction or the acquisition or development of missiles to carry such weapons. This section of the bill includes a reporting requirement and a presidential waiver provision. H.R. 7351 would also require the U.S. government to "take into consideration whether" proposed recipients of assistance pursuant to the AECA, FAA, or FMSA, have Additional Protocols to their IAEA safeguards agreements. The bill would also permit joint resolutions approving nuclear cooperation agreements to "include any other provisions to accompany such proposed agreement for cooperation.'' Lastly, H.R. 7351 would require Congress to enact a joint resolution of approval for subsequent arrangements to nuclear cooperation agreements. Appendix A. Key Dates for Bilateral Civilian Nuclear Cooperation ("Section 123") Agreements Appendix B. Enrichment and Reprocessing Restrictions Although some experts have advocated requiring governments to forgo enrichment and reprocessing (a nonproliferation commitment sometimes referred to as the "Gold Standard") as a condition for concluding a nuclear cooperation agreement, the Atomic Energy Act (AEA) does not include such a requirement. In recent years, the United States has attempted to persuade certain countries with which it is negotiating nuclear cooperation agreements to forgo enrichment and reprocessing and conclude Additional Protocols to their International Atomic Energy Agency (IAEA) safeguards agreements; past U.S. nuclear cooperation agreements have not included these additional components. The AEA does mandate that U.S. nuclear cooperation agreements require U.S. consent for any "alteration in form or content" (to include enrichment or reprocessing) of U.S.-origin material or any material processed in a plant containing transferred U.S. nuclear technology. Such agreements also require U.S. consent for any retransfer of material or technology. The United States has argued that its December 2009 nuclear cooperation agreement with the United Arab Emirates (UAE) could set a useful precedent for mitigating the dangers of nuclear proliferation. For example, President Barack Obama's May 21, 2009, letter transmitting the agreement to Congress argued that the agreement had "the potential to serve as a model for other countries in the region that wish to pursue responsible nuclear energy development." Similarly, then-State Department spokesperson P.J. Crowley described the agreement as "the gold standard" during an August 5, 2010, press briefing, although the Obama Administration generally did not use this term when describing its nuclear cooperation policies. The U.S.-UAE agreement's status as a potential model is grounded in two nonproliferation provisions not found in other U.S. nuclear cooperation agreements. First, the agreement requires the country to bring into force the Additional Protocol to its safeguards agreement before the United States licenses "exports of nuclear material, equipment, components, or technology" pursuant to the agreement. Second, the agreement states that the UAE shall not possess sensitive nuclear facilities within its territory or otherwise engage in activities within its territory for, or relating to, the enrichment or reprocessing of material, or for the alteration in form or content (except by irradiation or further irradiation or, if agreed by the Parties, post-irradiation examination) of plutonium, uranium 233, high enriched uranium, or irradiated source or special fissionable material. The U.S.-UAE agreement also provides the United States with the right to terminate nuclear cooperation and to require the return of any nuclear "material, equipment or components ... and any special fissionable material produced through their use" if, after the agreement's entry into force, the UAE "possesses sensitive nuclear facilities within its territory or otherwise engages in activities within its territory relating to enrichment of uranium or reprocessing of nuclear fuel." Notwithstanding its characterization of the U.S.-UAE agreement, the Obama Administration announced in December 2013 after an interagency review that renouncing domestic enrichment and reprocessing would not be a prerequisite to concluding a nuclear cooperation agreement for all countries, and each partner country would be considered individually. The U.S. nuclear cooperation agreement with Vietnam, which the two governments concluded in 2014, did not include a provision requiring the country to forgo enrichment and reprocessing, although the agreement's preamble includes a political commitment stating that Vietnam intends to rely on international markets for its nuclear fuel supply, rather than acquiring sensitive nuclear technologies. Appendix C. Nuclear Cooperation Agreements Approved Outside Atomic Energy Act Process Congress has used legislation to approve nuclear cooperation agreements that did not use the legislative process mandated by the Atomic Energy Act (AEA) of 1954, as amended. Australia On May 5, 2010, President Barack Obama submitted a renewed U.S.-Australia nuclear cooperation agreement to Congress for approval. H.R. 6411 , which the House adopted on November 30, 2010, would have approved the agreement even if there had not been sufficient legislative days remaining in the 111 th Congress; the Senate did not adopt its version of the bill ( S. 3844 ). These bills were not needed because the 111 th Congress contained a sufficient number of days for the agreement to enter into force. China In 1985, President Ronald Reagan submitted the first U.S.-China nuclear cooperation agreement to Congress, which adopted a joint resolution, P.L. 99-183 , requiring that the President make certain nonproliferation-related certifications in order for the agreement to be implemented. P.L. 99-183 required a presidential certification and a report followed by a period of 30 days of continuous session of Congress. P.L. 101-246 , the Foreign Relations Authorization Act for Fiscal Years 1990 and 1991, imposed sanctions on China, including suspending nuclear cooperation and requiring an additional presidential certification on Beijing's nuclear nonproliferation assurances. Before a summit with China, President William Clinton on January 12, 1998, signed the required certifications regarding China's nuclear nonproliferation policy and practices. Clinton also issued a certification and waived a sanction imposed under P.L. 101-246 . Congressional review ended on March 18, 1998, allowing the agreement to be implemented. India P.L. 109-401 , which became law on December 18, 2006, permitted the President to waive several provisions of the AEA with respect to a nuclear cooperation agreement with India. On September 10, 2008, President George W. Bush submitted to Congress a determination that P.L. 109-401 's requirements for such an agreement to proceed had been met. President Bush signed P.L. 110-369 , which approved the agreement, into law on October 8, 2008. Norway The President submitted an extension of the U.S.-Norway nuclear cooperation agreement to Congress on June 14, 2016. P.L. 114-320 , which became law on December 16, 2016, approved the agreement "[n]otwithstanding the provisions for congressional consideration" in the AEA, thereby addressing concerns that that there was an insufficient number of legislative days remaining in the 114 th Congress for congressional consideration.

In order for the United States to engage in significant civilian nuclear cooperation with other states, it must conclude a framework agreement that meets specific requirements under Section 123 of the Atomic Energy Act (AEA). Significant nuclear cooperation includes the export of reactors, critical parts of reactors, and reactor fuel. The AEA also provides for export control licensing procedures and criteria for terminating cooperation. Congressional review is required for Section 123 agreements; the AEA establishes special parliamentary procedures by which Congress may act on a proposed agreement.

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Introduction Several federal laws address the services and protections received by students with disabilities. The application of these laws may change depending upon the student's situation, and most common ly at times of transition—whether the student moves to a new school district or state, or between preschool and kindergarten, elementary school and junior high, junior high and high school, or high school and postsecondary education. Often the biggest transition for students with disabilities and their families is from the supports and services provided in the preschool-12th grade (P-12) public education system to a college or university. At the P-12 level, three main federal laws impact students with disabilities: the Individuals with Disabilities Education Act (IDEA), Section 504 of the Rehabilitation Act of 1973 (Section 504), and the Americans with Disabilities Act (ADA). For students receiving special education under the IDEA or receiving accommodations and services under Section 504, transitioning from the P-12 public education system to an institution of higher education (IHE) may affect how the school assesses their disability, their eligibility for receiving accommodations or services, and the supports, services, and accommodations available to them. This report examines those laws' impact on students with disabilities in three key respects: how they define disability; how they determine eligibility for services and protections; and how they ensure students with disabilities receive the accommodations and services they need to participate in all levels of education. Laws Protecting Students with Disabilities Section 504 of the Rehabilitation Act of 1973 In 1973, following two major federal district court decisions concluding that children with disabilities have the same right of access to public education as other children, Congress enacted the first of a series of civil rights statutes protecting individuals with disabilities: Section 504 of the Rehabilitation Act of 1973. The Rehabilitation Act of 1973 provided a statutory basis for the Rehabilitation Services Administration and funding for projects and studies supporting the employment of people with disabilities. Section 504 was the last section of the Act and the only section concerned with the civil rights of people with disabilities. That provision accordingly provides broad antidiscrimination protections for the disabled, prohibiting any "program or activity" that receives federal financial assistance from excluding "otherwise qualified individual[s] with a disability" from participating in, or benefiting from, those programs. Given the reach of federal funding, Section 504's guarantee of nondiscrimination stretches quite far, covering not just the P-12 public schools but also postsecondary education, employment, and access to public facilities as well. And because of that breadth, the act remains a key legal protection for students with disabilities today. Students who receive accommodations under Section 504 in high school may have an easier time transitioning to a postsecondary educational environment because the basic protections under Section 504 remain the same regardless of the age or education level of the person with a disability. As explained later in this report, the U.S. Department of Education (ED) has developed separate Section 504 regulations covering these different levels of education, including Preschool, Elementary, and Secondary Education (Subpart D) and Postsecondary Education (Subpart E). ED's Office of Civil Rights (OCR) has a primary role in enforcing Section 504 in the education context, affecting a significant number of students. In the 2013-2014 school year (SY), OCR reported that nearly 1 million public school students received some sort of service under Section 504. And at the postsecondary level, where students with disabilities receive protection under both Section 504 and the ADA, in SY 2015-2016, approximately 19.5% of undergraduates and 12.0% of post-baccalaureate students reported having a disability. The Individuals with Disabilities Education Act Two years after enactment of the Rehabilitation Act, Congress passed the Education for All Handicapped Children Act, later renamed the IDEA, which focused directly on children with disabilities' access to education. At the time of the IDEA's adoption, Congress found that more than half of all children with disabilities were not receiving appropriate educational services and that 1 million children with disabilities were excluded entirely from the public school system. Congress determined, in addition, that many children participating in public school programs had undiagnosed disabilities that harmed their educational progress. To address these findings, Congress laid down a clear mandate to any state seeking funds under the act: in order to receive those funds, the state must "identify and evaluate" all children with disabilities residing "within [their] borders" to ensure those children receive a free appropriate public education. The IDEA has been comprehensively reauthorized five times since its original enactment in 1975, most recently in 2004. ED's Office of Special Education Programs in the Office of Special Education and Rehabilitative Services administers the act, and it remains the main federal statute governing special education for children from birth through age 21. The IDEA does so by supplementing state and local funding to pay for some of the additional or excess costs of educating children with disabilities. Of particular importance is Part B of the act, which protects the right of individuals with disabilities, from age 3 through 21, to a "free appropriate public education" (FAPE). In SY2017-2018, approximately 7 million children ages 3 through 21 received special education and related services under Part B of the IDEA . Students served under Part B of the IDEA represent about 13.6% of all P-12 public school students. The Americans with Disabilities Act of 1990 The ADA, as amended, has been described as "the most sweeping anti-discrimination measure since the Civil Rights Act of 1964." Its purpose, as explained in the act itself, is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." The ADA therefore provides broad nondiscrimination protection for individuals with disabilities, applicable across many settings. Title II of the act, in particular, prohibits any "public entity," such as a public school, from discriminating based on disability, while Title III similarly forbids discrimination by "public accommodations," including nonparochial private schools. The ADA Amendments Act adopted in 2008 and made effective January 1, 2009, broadened the scope of the ADA's definition of disabilities, and, through conforming amendments, Section 504's definition as well. The ADA Amendments Act extends the ADA and Section 504 coverage to more clearly encompass all public, and some private, P-12 schools and nearly all postsecondary IHEs. According to the U.S. Census Bureau, 12.7% of the civilian noninstitutionalized population were reported to have a disability in 2017 (about 40.7 million people), including 4.2% of all children under age 18 (roughly 3.1 million) and 6.4% of all adults ages 18 to 34 (about 4.7 million). These individuals are covered by the broad protections of the ADA when accessing most services and facilities, including secondary and postsecondary educational institutions. Defining "Disability" The IDEA's Categorical Definition of "Disability" The IDEA incorporates a categorical definition of "disability," identifying a covered "child with a disability" as any "child" having at least one of 13 conditions specifically categorized in the act. Thus, to qualify for services under the IDEA a student of qualifying age must satisfy two requirements. First, the student must have a documented disability that falls in one of the categories enumerated in the IDEA, as further specified by ED's implementing regulation. And second, as a result of that disability the student must require "special education and related services" in order to benefit from public education. Only if the student meets both criteria will he or she be eligible to receive the principal benefit of the act: specially designed instruction or special education in which the content or the delivery of the instruction is adapted to the child's individual needs, detailed in a plan known as an individualized education program (IEP). Consequently, a child who has a disability not recognized under the act, or has a disability that may require related services but not special education, has no right under the IDEA to the special education and related services provided through an IEP. Each IDEA disability category is broadly defined in ED's regulations implementing the act. And that breadth has given states some room to adopt more specific requirements for these categories, so long as those further requirements do not exclude children otherwise eligible for services under the act. Thus, for example, while the IDEA expressly covers a child suffering from some "other health impairments" (OHI), the act itself does not specify the sort of disorders that might count as such. In its IDEA regulations, ED has provided a complex definition of that statutory OHI category, listing a series of examples of disorders that may qualify under it. And some states, in their own implementing regulations, have further elaborated on ED's definition, particularly its condition that, to qualify under the IDEA, an OHI must "adversely affect[] a child's educational performance." Delaware, for instance, lists five broad requirements under "Eligibility Criteria for Other Health Impairment," one of which specifically outlines criteria for determining whether children with attention deficit disorder (ADD) and attention deficit hyperactivity disorder (ADHD) have an OHI. When a child's eligibility under the IDEA is due to ADD or ADHD, Delaware's regulation requires evaluators to examine the child according to an additional six factors, and within those six factors 18 symptoms, to determine whether the child's ADD or ADHD qualifies as an OHI. Other states, meanwhile, impose no criteria beyond those found in ED's IDEA regulations for assessing whether a child has an OHI. Section 504 and the ADA's Functional Definition of "Disability" Sections 504 and the ADA draw on a common definition of "disability," one that is substantially broader than the categorical definition found in the IDEA. Under both laws, an "individual with a disability" includes "any person who (i) has a physical or mental impairment which substantially limits one or more major life activities, (ii) has a record of such an impairment, or (iii) is regarded as having such an impairment." This definition, unlike the IDEA's, is not restricted to the educational context. And also unlike the definition used in IDEA, the definition found in Section 504 and the ADA is broadly functional, protecting individuals with any "impairment" affecting a bodily or intellectual function—like seeing, hearing, walking, or thinking. The conditions covered by Section 504 and the ADA are therefore not confined to a particular list of "disability" categories—"autism," for example, or "specific learning disability"—as they are under the IDEA. As a result, an impairment qualifying as a "disability" under the IDEA will generally also be covered by Section 504 and the ADA, though not the reverse. Although the ADA Amendments Act maintains essentially the same statutory language as the original ADA, the subsequent act introduced several new "rules of construction" clarifying Congress's intent for the ADA's crucial term—"disability" —to be construed broadly. These rules of construction regarding the definition of disability—applicable to both the ADA and Section 504—provide that: the definition of disability shall be construed in favor of broad coverage to the maximum extent permitted by the terms of the act; the term "substantially limits" shall be interpreted consistently with the findings and purposes of the Amendments Act; an impairment that substantially limits one major life activity need not limit other major life activities to be considered a disability; an impairment that is episodic or in remission is a disability if it would have substantially limited a major life activity when active; and the determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures, except that the ameliorative effects of ordinary eyeglasses or contact lenses shall be considered. The ADA Amendments Act also included a conforming amendment to the Rehabilitation Act of 1973, applying these more generous rules of construction to Section 504. ED's OCR consequently enforces the regulations implementing both Section 504 and Title II of the ADA consistently with the ADA Amendments Act. Preschool Through Secondary Education Versus Postsecondary Education The IDEA covers all children with disabilities residing in states that receive financial assistance under the act. It does not extend, however, to students with disabilities in college or other postsecondary education and training programs. But Section 504 does, and ED has issued separate regulations specifically elaborating that provision's application to preschool, elementary, and secondary education, as well as to postsecondary education. The ADA also does not directly address the provisions of educational services; it instead prohibits discrimination against individuals with disabilities across many contexts, including by a "public entity" like a public school. The following sections of this report identify key provisions in the IDEA, Section 504, and the ADA, explain how they apply in particular situations, and analyze how they differ between students in P-12 and postsecondary education settings when more than one law applies. Table 1 also summarizes and compares key characteristics of the IDEA, Section 504, and the ADA. Evaluation and Placement Evaluations in Preschool, Elementary, and Secondary Education Child Find The IDEA requires each state that receives funds under the act to have in place policies and procedures to identify, locate, and evaluate all children residing in the state who may have a disability requiring special education and related services. These policies and procedures—known as "Child Find" —have broad application, covering all children ages 3 to 21 through their time in high school, including those who are homeless or wards of the state, attend private schools, or, according to IDEA's regulations, are highly mobile, like migrant children. The regulations implementing Section 504 contain similar provisions requiring recipients of federal money operating public elementary and secondary schools "to identify and locate every qualified handicapped person residing in the recipient's jurisdiction who is not receiving a public education." Section 504's regulations also require LEAs to evaluate students individually before classifying them as having a disability or providing them with accommodations, special education, or related services. But these responsibilities apply only to students in public elementary or secondary schools. Students protected by Section 504 in colleges and universities are responsible for providing their IHEs with documentation of their disabilities and for working with the IHE's disability support services personnel to arrange any accommodations they may need. And the same is true under the ADA. Evaluation A child who has been identified as having (or possibly having) a disability must be evaluated by his or her LEA before receiving special education and related services under the IDEA or Section 504. The ADA, by contrast, contains no such requirement. Under the IDEA, individuals may qualify for an IEP only if they have been determined to have a qualifying disability for which they need special education and/or related services to benefit from public education. But a child who has a disability that does not adversely affect his or her educational performance—as required to be eligible for an IEP under several IDEA disability categories —may still qualify for a plan under Section 504. Under the IDEA, either a child's parent or the LEA may request an initial evaluation. In general, the LEA must obtain informed consent from a child's parent before conducting an initial evaluation. That consent, however, does not transfer—parental consent to an evaluation, that is, does not imply consent to special education and related services. In addition, the initial evaluation must take place within 60 days of receiving parental consent or within an alternative time frame established by the state. Section 504, unlike the IDEA, does not explicitly call either for parental consent to an evaluation or for an evaluation to take place within a specific period after being requested. ED's OCR has nevertheless interpreted Section 504 to require LEAs to obtain parental consent to an initial evaluation. But under Section 504, like under the IDEA, a parent's refusal of an evaluation may not be the final word. OCR has construed Section 504 to allow an LEA, whenever it "suspects a student needs or is believed to need special instruction and parental consent is withheld," to "use due process hearing procedures to seek to override the parents' denial of consent for an initial evaluation." In conducting an initial evaluation of a child suspected of having a disability, both the IDEA and Section 504 regulations require LEAs to use valid and reliable assessment tools tailored to assess a child's specific areas of educational need. The IDEA emphasizes the importance of using multiple measures of assessing whether children are eligible for services under the statute, requiring LEAs to "use a variety of assessment tools and strategies to gather relevant functional, developmental, and academic information, including information provided by the parent." The IDEA also requires that LEAs use multiple measures or assessments to determine whether a child is "a child with a disability" under the act, as well as to determine whether an educational program is appropriate. The Section 504 regulations, for their part, also require LEAs "to draw upon information from a variety of sources" when interpreting evaluation data, "including aptitude and achievement tests, teacher recommendations, and adaptive behavior." And the Section 504 regulations likewise "establish procedures to ensure that information obtained from all relevant sources is documented and carefully considered." Assessments and other evaluation materials used to assess a child under the IDEA must be selected and administered to avoid discriminating on a racial or cultural basis. They must also be provided and administered in the language and form most likely to yield accurate information about what the child knows and can do academically, developmentally, and functionally. Section 504's regulations do not address children's native language or the possibility of racially or culturally discriminatory evaluation materials. However, they do include "social or cultural background" information as one of several sources LEAs should draw upon in interpreting evaluation data and in making placement decisions. After completing an evaluation for an IEP under the IDEA, the LEA must determine whether the child is a "child with a disability" under the act, and, if so, what his or her educational needs are, including the participation of qualified professionals and the child's parents. Section 504, by contrast, does not expressly require that a child's parents participate in placement decisions. Section 504 regulations instead provide only that placement decisions be made "by a group of persons, including those knowledgeable about the child, the meaning of the evaluation data, and the placement options." ED's regulations under Section 504 do mandate, however, that LEAs have in place "a system of procedural safeguards that includes notice, an opportunity for the parents or guardian of the person to examine relevant records, an impartial hearing with opportunity for participation by the person's parents or guardian and representation by counsel, and a review procedure." Reevaluations Under IDEA regulation, reevaluations are required if a child's teacher or parent makes a request or if the LEA determines that a child's educational and service needs, or functional performance warrant reevaluation. For example, a reevaluation might be warranted if a child's performance in school significantly improves, suggesting that the child no longer requires special education and related services, or if a child is not making progress toward the goals in his or her IEP, suggesting that changes are needed in the special education or related services the LEA is providing. A reevaluation may not be done more than once a year unless the parents and LEA agree, and must be done at least once every three years unless the parent and the LEA agree that a reevaluation is unnecessary. In general, the child's parent(s) must consent to a reevaluation, as well as to the initial evaluation. Before any such reevaluation, an LEA may not change a child's eligibility for educational services under the IDEA, unless the child graduates from high school with a regular diploma or reaches the age at which state law no longer provides a FAPE. The briefer Section 504 regulations simply require LEAs to establish procedures for "the periodic reevaluation of students who have been provided special education and related services." Reevaluation procedures consistent with the IDEA also satisfy this regulatory requirement. Evaluations and Reevaluations in Postsecondary Education As noted, at the postsecondary level educational institutions have no responsibility for evaluating students for a disability. However, if a student requests modifications, accommodations, or auxiliary aids or services because of a disability, IHEs are allowed, though not required, to request that the student provide "reasonable" documentation of his or her disability and need for the requested accommodations or services. Before the ADA Amendments Act in 2008, which clarified Congress's intent that "disability" under the ADA and Section 504 be construed broadly, there had been significant confusion among IHEs about what a student could be required to use to document a disability. Different IHEs developed their own requirements for the evaluation/reevaluation materials students needed to submit to establish a disability warranting accommodations and services. Some universities required students to produce "recent" documentation of an evaluation or reevaluation for a disability, while other schools, looking to the IDEA as a guide, instead required comprehensive evaluations that were no more than three years old. Requirements for "recent" documentation may apply to returning postsecondary students; students who had been served under Section 504 in high school; students who attended private schools that did not require or provide evaluations to determine students' disability status; and any postsecondary student with a disability whose disability had last been comprehensively evaluated in the ninth grade or earlier. Such students would need to be reevaluated at their own expense to prove that they were still a student with a disability, if they wanted to receive accommodations or supports at the postsecondary level. Prior to the passage of the ADA Amendments Act, several courts struck down triennial evaluation requirements used by colleges and universities, as well as requirements that students be regularly reevaluated for the presence of a disability even when they were permanently disabled and had sufficient (but not recent) proof of their disability status. And the ADA Amendments Act only reinforced the breadth of the ADA's and Section 504's protection, with its implementing regulations explaining that: The primary purpose of the ADA Amendments Act is to make it easier for people with disabilities to obtain protection under the ADA. Consistent with the ADA Amendments Act's purpose of reinstating a broad scope of protection under the ADA, the definition of "disability" in this part shall be construed broadly in favor of expansive coverage to the maximum extent permitted by the terms of the ADA. The primary object of attention in cases brought under the ADA should be whether entities covered under the ADA have complied with their obligations and whether discrimination has occurred, not whether the individual meets the definition of "disability." The question of whether an individual meets the definition of "disability" under this part should not demand extensive analysis. Also since the passage of the ADA Amendments Act, IHEs and professional organizations have prepared their own informal guidance for disability support services staff, professors, and anyone else responsible for confirming a student's disability and request for accommodations. Current guidance for IHEs tends to support the use of postsecondary students' past evaluations for special education services or accommodations under Section 504, or other information from external or third parties, as potentially useful supporting documentation but not necessarily required for determining a disability. Placements in Preschool, Elementary and Secondary Education Public School Placements Determining an appropriate public school placement for a child with a disability calls for similar considerations under both the IDEA and Section 504. However, as with many other aspects of P-12 education for children with disabilities discussed in this report, there are more specific provisions on placement decisions in the IDEA than in Section 504. For example, the IDEA requires that a placement decision for a child with a disability be determined at least annually; be based on the child's IEP; and be made by a group of people who are knowledgeable about the child, the meaning of the evaluation data, and the placement options, including the child's parents. In comparison, Section 504 does not require placement decisions to be determined at any particular time interval. Nor does it require those decisions to be based on a child's educational plan under Section 504 or include specific persons as a part of the deliberations—parents included. In other aspects of their placement provisions, the IDEA and Section 504 are more alike. For example, like the IDEA, Section 504 regulation requires that a child with a disability be placed in the regular educational environment to the maximum extent appropriate to the needs of the child. Under the IDEA and its implementing regulations, when determining a child's placement, states must have in effect policies and procedures to ensure that LEAs are providing a free appropriate public education in the least restrictive environment (LRE)—that children with disabilities, in other words, receive their education alongside children who do not have disabilities, to the maximum extent appropriate. Section 504's regulations do not use the same terminology as the IDEA—there is no express mention of an LRE, for instance—but both require, in academic and nonacademic settings (e.g., lunch, recess), that children with disabilities be educated with their nondisabled peers "to the maximum extent appropriate to [their] needs." Under the IDEA, LEAs "must ensure that a continuum of alternative placements [are] available to meet children's needs for special education and related services." This includes "instruction in regular classes," with the provision of supplementary services when appropriate, as well as "special classes, special schools, home instruction, and instruction in hospitals and institutions." In contrast to IDEA's focus on a continuum of services to enable an appropriate placement for each child with a disability, Section 504's main concern, as a civil-rights law, is to ensure that children with disabilities are not discriminated against in their placements, so that children with disabilities can participate whenever possible in academic and nonacademic activities alongside their peers without disabilities. In cases where a child with a disability does need to attend a facility specifically for children with disabilities, the LEA must ensure that the facility and the services and activities it provides are "comparable to the LEA's other facilities, services, and activities." Unlike the IDEA, the Section 504 regulations do not mandate the use of an IEP, though an IEP that satisfies the IDEA will also satisfy Section 504. And the regulations implementing Section 504, unlike those under the IDEA, do not detail how a student's educational plan developed under Section 504—often called a "504 plan"—must be created. Thus, for example, while the IDEA specifies the members who must be invited to participate in a child's IEP team including the child's parents, no similar requirement appears in Section 504 or its regulations. In addition, any accommodations, special education, and related services described in a student's IEP or 504 plan must be implemented in all of the student's classes, whether they are special education classes, regular education classes, or accelerated classes. For example, ED has determined that denying students with disabilities access to accelerated programs such as Advanced Placement and International Baccalaureate classes violates Section 504 regulations as well as the regulations implementing the IDEA. Even though schools may have eligibility requirements for such courses, ED has concluded that both sets of regulations make it "unlawful to deny a student with a disability admission to an accelerated class or program solely because of that student's need for special education or related aids and services." Private School Placements Because the IDEA is designed to improve the education of all children with qualifying disabilities, the act also provides benefits and services to eligible children enrolled by their parents in private school. As a result, the IDEA as well as ED's implementing regulations each have extensive provisions addressing children with disabilities who attend private schools. Those provisions range from funding conditions to LEAs' and State Education Agencies' (SEAs') responsibilities under Child Find to the procedural safeguards protecting families of children with disabilities in private schools. Most of the IDEA's provisions on private school placements, however, fall into two broad categories: those related to children placed in or referred to private schools by public agencies, and those related to children enrolled in private schools by their parents. Together, these provisions outline the various procedural, financial, and educational responsibilities of SEAs, LEAs, private schools, and parents of children with disabilities in private schools, depending on who decided to place the child in private school. In contrast, the Section 504 regulations addressing students with disabilities in private schools do not address SEAs, LEAs, or parents of children with disabilities. They instead outline general responsibilities toward students with disabilities that are incumbent on any private educational institution receiving federal financial assistance. Thus, under Section 504 regulations, a private elementary or secondary school that receives federal funds "may not exclude a student with a disability if the student can, with minor adjustments, be provided an appropriate education within that institution's program or activity." Nor may a recipient of federal funds charge more to educate students with disabilities than those without disabilities, according to ED's Section 504 regulations, "except to the extent that any additional charge is justified by a substantial increase in cost to the federal funding recipient." Postsecondary Education: Access and Admissions The IDEA requires IEP teams to include postsecondary transition goals and services in each student's IEP beginning no later than when students are 16 years old. Transition goals and services are individualized. For a student planning to pursue postsecondary education, transition services could include helping the student select colleges to apply to or complete applications; obtain accommodations, such as extended time on standardized college placement tests; practice self-advocacy skills; or any other services that the IEP team agrees would help the student prepare for postsecondary education. However, no matter what transition services students with disabilities receive in high school, those transition services will end once they exit the P-12 public school system and enter an IHE. At the postsecondary level, Section 504 and the ADA require IHEs to provide broad nondiscrimination protection to students who have a disability or who are regarded as having one. However, Section 504 and the ADA do not require IHEs to seek out students with disabilities to provide them with these protections, to evaluate students who are suspected of having a disability, or to arrange proactively for accommodations for students who had been evaluated and found eligible for services under IDEA, Section 504, or the ADA. At the postsecondary level, students must self-identify as having a disability, provide appropriate documentation of their disability, and arrange with campus disability support services for any accommodations and services to which they may be entitled. Section 504 and the ADA protect students applying for postsecondary education from discrimination in two basic ways: (1) in the eligibility requirements and admissions policies and procedures adopted by those institutions, and (2) following admission, in any activities, programs, aid, benefits, or services offered to students. ADA regulations also prohibit public accommodations, including IHEs, from imposing or applying eligibility criteria that screen out individuals with disabilities from fully and equally enjoying any goods, services, facilities, privileges, advantages, or accommodations they offer. Section 504 regulations likewise prohibit discrimination in admissions policies, including admissions testing. And the ADA regulations extend those prohibitions to private entities that "offer[] examinations or courses related to applications, licensing, certification, or credentialing for secondary or postsecondary education, professional, or trade purposes," requiring them to provide those examinations or courses "in a place and manner accessible to persons with disabilities or offer alternative accessible arrangements." Free Appropriate Public Education FAPE in Preschool, Elementary and Secondary Education At the P-12 level, the IDEA, Section 504, and the ADA all guarantee students with disabilities a free appropriate public education. Those provisions, while similar, are not identical. Their differences largely have to do with details, but they generally can be traced to a more basic difference in statutory design: "the IDEA guarantees individually tailored educational services, while Title II [of the ADA] and [Section] 504 promise nondiscriminatory access to public institutions." The IDEA's provisions addressing a FAPE are consequently much more detailed than their counterparts in Section 504, the same that apply, according to ED, under Title II of the ADA. These differences among the three statutory schemes have also led to some judicial disagreement about how to relate their violations: specifically, whether denying an eligible child the IDEA's procedural or substantive guarantees also amounts to disability discrimination, in violation of Section 504 (and, by extension, Title II of the ADA). At least some of the lower courts have found these violations to overlap, so that a valid claim under the IDEA will "almost always" support one under Section 504. Other courts, however, have taken the opposite view: for them, "something more than a mere failure to provide the 'free appropriate education' required by [IDEA] must be shown" before those courts will draw the discriminatory inference required for a violation of Section 504. What that something is also appears to vary somewhat by court, but several have insisted on a showing of at least "bad faith or gross misjudgment . . . before a [Section] 504 violation [will] be made out" in this context. Whatever its differences with Section 504, Part B of the IDEA nevertheless mandates that every recipient state provide a FAPE to all disabled children between the ages of 3 and 21 residing "within its borders." "An eligible child [therefore] acquires a 'substantive right' to such an education once a State accepts the IDEA's financial assistance," and the state's denial of that education therefore entitles eligible students to legal relief, whether in the form of an injunction for the improperly denied services or money damages. What a FAPE entails, and what demands it puts on a school district, will therefore vary from student to student. At a minimum, however, a FAPE consists of "special education and related services"—"specially designed instruction," in other words, that "meets the unique needs of a child with a disability. And for that instruction to qualify as a FAPE, it must also be "provided at public expense, under public supervision, and without charge; meet[] the standards of the [SEA];" encompass preschool through secondary school; and conform to the student's IEP. A child's IEP accordingly "serves as the 'primary vehicle' for providing [him or her] with the promised FAPE," by specifying the particular special education and related services that the LEA will provide to meet the child's needs. Apart from these procedural minimums, the substantive guarantee of a FAPE remains highly general. And that generality has provoked one of the most commonly litigated questions under the act: What does an "appropriate" public education require of an IEP? In an early decision under the act— Board of Education v. Rowley —the U.S. Supreme Court appeared to set the bar fairly low. There the Court concluded that a school district could satisfy its responsibility of providing a FAPE so long as it had met two basic conditions. The school district had to have observed all of the IDEA's procedural rules, and it had to have provided an IEP "reasonably calculated" to "confer some educational benefit" on the child. But that latter condition—requiring an IEP that conferred "some educational benefit"—did little to resolve the basic ambiguity in the IDEA's guarantee of a FAPE: How much benefit would make an IEP "appropriate"? The lower federal courts were therefore left to fashion for themselves a more concrete standard for deciding whether an IEP had provided an eligible child with enough of a benefit to satisfy Rowley . On this point some courts took a minimalist view, requiring an IEP to provide at least some educational benefit —a benefit, in other words, that is "barely more than de minimis ." Other courts, however, read Rowley as calling for much more, demanding evidence that an IEP had provided "meaningful benefit to the child." Faced with this circuit split, in 2017, the Supreme Court took the opportunity in Endrew F. v. Douglas County School District to clarify just how much of a benefit an eligible child must receive through an IEP. The Court did so by returning to its Rowley standard: to provide an eligible child a FAPE under the IDEA, the Court explained, a school must "offer an IEP reasonably calculated to enable a child to make progress appropriate in light of the child's circumstance."  Thus, "for a child fully integrated in the regular classroom, an IEP typically should . . . be 'reasonably calculated to enable the child to achieve passing marks and advance from grade to grade.'" The Court cautioned, however, that an appropriate measure of "progress" would depend on the child's circumstances—and especially on the child's integration into the regular classroom. For children with disabilities not integrated into the regular classroom, an "appropriate" IEP therefore "need not aim for grade-level advancement." Endrew F. clearly rejected, then, the more minimalist view of a FAPE. "[T]he IDEA demands more" from an IEP than the "barely more than de minimis progress" that the lower court upheld there. A child's IEP must instead be "appropriately ambitious in light of his circumstances," so that that child, like every other, "ha[s] the chance to meet challenging objectives" despite his differing goals. Although the Court did not explicitly compare its refined standard in Endrew F. with the view from the other side of the circuit split—that an appropriate IEP needed to confer a meaningful benefit on a child—several lower courts have taken Endrew F. to vindicate that meaningful-benefit standard nonetheless. As the U.S. Court of Appeals for the First Circuit explained, Endrew F. appears to call for an IEP of exactly the same quality that that circuit had expected all along under Rowley . Thus, "[a]t a bare minimum," that standard demands an IEP that includes "the child's present level of educational attainment, the short-and long-term goals for his or her education, objective criteria with which to measure progress toward these goals, and the specific services to be offered." Whether the other circuits will also agree on that "bare minimum" remains to be seen. Postsecondary Education and a FAPE The right of students with disabilities to a FAPE under the IDEA has a still more definite limit: it does not extend to students in colleges, universities, or any other postsecondary education or training programs. Instead, the IDEA requires only that LEAs provide qualifying students with disabilities a FAPE until they exit high school—whether by graduating, dropping out—or until they surpass the maximum age for IDEA services, 21 years old. Section 504 and the ADA, on the other hand, have no such limit. They instead protect students of all ages from discrimination based on their disability, both during the admissions process and while enrolled as a student. Like the IDEA, however, Section 504's regulations ensure a FAPE only to students in P-12 public schools, a guarantee that ED has read to be "incorporated in the general nondiscrimination provisions of the Title II regulation" under the ADA as well. Adaptations, Accommodations, and Services Preschool, Elementary, and Secondary Education To receive services under the IDEA, a child must be evaluated and found eligible for an IEP under one of the IDEA disability categories and must because of that disability require special education and related services to benefit from public education. In the IDEA, "special education" means instruction designed to meet the unique needs of a child with a disability, provided at no cost to the child's parents. It may include instruction conducted in both academic and nonacademic settings, including in the classroom, in the home, and in hospitals and institutions, as well as instruction in physical education. In comparison, "related services" are intended to assist a child with a disability to benefit from special education—such as nursing services during the school day for a student who relies on a ventilator. Among the related services provided by the IDEA are speech-language pathology and audiology services; interpreting services, psychological services; physical and occupational therapy; recreation, including therapeutic recreation; social work services; counseling services; and, certain medical and school nurse services. Besides special education and related services, under the IDEA and implementing regulations children with disabilities may receive supplementary aids and services and other supports in regular education classes, and in extracurricular and nonacademic settings, to enable them to be educated with nondisabled children to the maximum extent appropriate. The combination of special education, related services, and other supplementary aids and services a child receives is determined by the child's IEP team, taking into consideration the child's academic, developmental, and functional needs. As discussed, the IDEA defines a FAPE as special education and related services that are provided at public expense, meet the standards of the SEA, and conform to the student's IEP. As part of their right to a FAPE, each child receiving services under the IDEA must have an IEP stating the specific special education and related services the LEA will provide to meet his or her needs. Unlike the IDEA, an "appropriate education" under Section 504 regulation is defined as the provision of regular or special education and related aids and services designed to meet individual educational needs of children with disabilities as adequately as the needs of children without disabilities are met and that comply with procedural requirements. Note, however, that the IDEA specifically requires the provision of special education and related services, while Section 504 requires the provision of regular or special education and related aids and services. Thus, a child with a Section 504 plan may be served by a "regular" education with related aids and services, while under the IDEA a qualifying child must be provided "special education." Postsecondary Education: Adaptations and Accommodations To receive accommodations or services under the ADA or Section 504 at the postsecondary level, students with disabilities must seek out the person or office at their IHEs responsible for arranging accommodations for students with disabilities, request the accommodations they need, and provide the documentation and/or personal history necessary to support their request. ED's regulations implementing Title II of the ADA include specific requirements to guide disability and accommodation services personnel at IHEs when considering such requests. Thus, for example, the regulations instruct IHEs, [w]hen considering requests for modifications, accommodations, or auxiliary aids or services, [to] give[] considerable weight to documentation of past modifications, accommodations, or auxiliary aids or services received in similar testing situations, as well as such modifications, accommodations, or related aids and services provided in response to an [IEP] provided under the [IDEA] or a . . . Section 504 Plan. Once students have provided adequate documentation of their disabilities to the appropriate person or office, Section 504 and Title II of the ADA protect them from discrimination based on their disabilities. Section 504's regulations on postsecondary education programs and activities elaborate on IHEs' responsibilities for adopting and maintaining nondiscriminatory practices toward students with disabilities, including through accommodations, modifications, or adaptations across many contexts, from course examinations to housing and counseling services to financial and employment assistance.

The Individuals with Disabilities Education Act (IDEA), Section 504 of the Rehabilitation Act (Section 504), and the Americans with Disabilities Act (ADA) each play a significant part in federal efforts to support the education of individuals with disabilities. These statutory frameworks, while overlapping, differ in scope and in their application to students with disabilities. As a result, when students with disabilities transition between levels of schooling, the accommodations and services they must be provided under federal law may change. For example, while the IDEA, the ADA, and Section 504 potentially apply to children with disabilities from preschool through 12th grade (P-12), only the ADA and Section 504 apply to students in an institution of higher education. More generally, application of the IDEA, Section 504, and the ADA to students with disabilities is determined by (1) the definition of "disability" employed by each framework; (2) the mechanisms employed under each law to determine whether a student has a qualifying disability; and (3) the adaptations, accommodations, and services that must be provided to students with disabilities under each law. Individuals with Disabilities Education Act (IDEA) The IDEA, as amended, authorizes federal grants to states to support the education of children with disabilities. The act requires that states, as a condition for receiving funds, provide students with disabilities a range of substantive and procedural protections. For example, states and local education agencies (LEAs) must (1) identify, locate, and evaluate all children with disabilities residing in the state, regardless of the severity of their disability, to determine which children are eligible for special education and related services; (2) convene a team, which includes the parents of each eligible child with a disability, to develop an individual education program (IEP) spelling out the specific special education and related services to be provided to that child to ensure a "free appropriate public education" (FAPE); and (3) provide procedural safeguards to children with disabilities and their parents, including a right to an administrative hearing to challenge determinations and placements, with the ability to appeal the ruling to federal district court. Of the three legal frameworks discussed in this report, only the IDEA is focused squarely on educational matters, and its statutory provisions and implementing regulations specifically detail the rights of children with disabilities and their families in U.S. public schools. Of the three laws examined here, the IDEA is also the only one that fixes an age limit, with its substantive and procedural guarantees applying to persons with disabilities from birth until they reach 21 years or exit high school, if earlier. Section 504 of the Rehabilitation Act of 1973 Section 504 is an antidiscrimination provision within a broader federal law providing rehabilitation services to people with disabilities. Section 504 protects individuals from disability discrimination in programs and activities that receive federal financial assistance, including elementary and secondary schools, as well as many colleges and universities. While Section 504 is terse in describing covered entities' obligations, the statute's implementing regulations, including those promulgated by the U.S. Department of Education (ED) applicable in the educational context, are extensive. For example, Section 504 and its implementing regulations require all schools receiving federal funds to make their application forms and course materials accessible to people with disabilities. Americans with Disabilities Act of 1990 (ADA) Enacted in 1990, the ADA provides broad nondiscrimination protection for individuals with disabilities across a range of institutional contexts, both public and private, including employment, public services, transportation, telecommunications, public accommodations, and services operated by private entities. In an educational context, the ADA and implementing regulations effectively require both public schools and many P-12 private schools to ensure that students with disabilities are not excluded, denied services, segregated, or otherwise treated differently than other individuals because of their disability, unless the school can demonstrate that taking those steps would fundamentally alter the nature of the school's program or cause an undue financial burden. The ADA's statutory provisions and implementing regulations outline the types of modifications that must be made for individuals with disabilities, including the removal of barriers, alterations to new and existing buildings, accessible seating in assembly areas, and accessible examinations and course materials.

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Introduction A growing number of Americans report that they use marijuana. As more states decriminalize the use of marijuana, the question of what impact marijuana usage has on the risk of a driver being involved in a motor vehicle crash has become more pertinent. In a survey, the majority of state highway safety offices rated drugged driving an issue at least as important as driving while impaired by alcohol. When faced with the issue of driver impairment due to marijuana, some stakeholders tend to approach the issue using the analogy of driver impairment due to alcohol. However, there are important differences between the two substances. The fact that alcohol reduces a user's ability to think clearly and to perform physical tasks has been known for decades. Extensive research has established correlations between the extent of alcohol consumption and impairment, including drivers' reaction times. Much less research has been done on marijuana. Marijuana is a more complex substance than alcohol. It is absorbed in the body differently from alcohol; it affects the body in different ways from alcohol; tests for its presence in the body produce more complicated results than tests for the presence of alcohol; and correlating its effects with its levels in the body is much more complicated than for alcohol. That marijuana usage increases a driver's risk of crashing is not clearly established. Studies of marijuana's impact on a driver's performance have thus far found that, while marijuana usage can measurably affect a driver's performance in a laboratory setting, that effect may not translate into an increased likelihood of the driver being involved in a motor vehicle crash in a real-world setting, where many other variables affect the risk of a crash. Some studies of actual crashes have estimated a small increase in the risk of crash involvement as a result of marijuana usage, while others have estimated little or no increase in the likelihood of a crash from using marijuana. This CRS report addresses various aspects of the issue of marijuana-impaired driving, including patterns of marijuana use, the relationship and detection of marijuana use and driver impairment, and related state law and law enforcement challenges. The report also references the congressionally required July 2017 report by the Department of Transportation's National Highway Traffic Safety Administration (NHTSA), Marijuana-Impaired Driving: A Report to Congress (hereinafter referred to as NHTSA's 2017 Marijuana-Impaired Driving Report to Congress), as well as other studies and research. Patterns of Marijuana Use Marijuana is a variety of the Cannabis sativa plant, and contains hundreds of chemical compounds. Two significant compounds found in marijuana are tetrahydrocannabinol (THC), the primary psychoactive compound, and cannabidiol (CBD); CBD is being tested for medicinal purposes, and is not itself psychoactive. Marijuana use has been recorded for millennia. In the 20 th century, the sale, possession, and use of marijuana were made illegal in most countries, including the United States. In recent years, however, the trend appears to be moving toward acceptance of marijuana usage. In public opinion polls, the percentage of Americans favoring legalization of marijuana has increased significantly. As of May 2019 33 states and the District of Columbia have enacted laws legalizing marijuana use under certain conditions, generally for medicinal purposes. Since Colorado and Washington State legalized recreational marijuana in 2012, the number of states in which recreational use of marijuana is permitted has grown to 10, plus the District of Columbia. These jurisdictions are home to one-quarter of the U.S. population. In addition to states that have legalized recreational marijuana use, another 23 states and Puerto Rico allow marijuana to be used for treating medical conditions ("medical marijuana"). Several other states are considering legalizing recreational use of marijuana. Since 2002, the Substance Abuse and Mental Health Services Administration in the U.S. Department of Health and Human Services has conducted an annual, nationally representative survey of substance use among individuals ages 12 and older. The percentage of individuals age 18 and older who self-report marijuana use in the previous month has grown slowly but steadily since 2008. Self-reported use is highest among young adults (ages 18-25) compared to all other age groups; it rose from 16.6% to 22.1% between 2008 and 2017. Self-reported use among adults age 26 and older rose from 4.2% to 7.9% over the same period. This study does not break out usage patterns by state, but other studies have found that reported usage has increased in virtually all states, both in those that have loosened restrictions on marijuana usage and those that have not. Thus, the impact of a state's treatment of marijuana on the extent of marijuana usage is not clear. Some observers have speculated that states' loosening of restrictions on marijuana usage might lead to increased usage. But the fact that usage by adults appears to be increasing in both states that have and those that have not loosened restrictions suggests that other factors may also be involved. NHTSA has sponsored a periodic roadside survey of alcohol use among drivers for decades. The last two surveys (2007 and 2013-2014) also looked at drug use. In the 2013-2014 survey, 12.7% of drivers in the nighttime sample tested positive for THC, up from 8.7% in the 2007 survey. NHTSA did not report concentrations of THC and did not attempt to evaluate impairment. The data do not permit state-level comparisons. What Is Impaired Driving? Driving is among the most dangerous activities the average person engages in. It involves piloting a multiton vehicle at relatively high speeds, usually surrounded by many other such vehicles, and often bicyclists and pedestrians as well. A moment's inattention can, but usually does not, result in a crash. Crashes are usually not serious: the vast majority of crashes result only in damage to the vehicles involved. But in a significant percentage of crashes, one or more people are injured (29.3%), and in a fraction of crashes, people die (0.5%). Because of the potential danger to the public posed by drivers, all 50 states, the District of Columbia, and Puerto Rico have laws barring driving while impaired. Impairment involves driving performance that is degraded from its "normal" level by some cause. Many things can impair a driver's performance including alcohol, other drugs, fatigue, distraction, and emotional states such as fear or anger. Some state laws against impaired driving require that the state prove that a driver's impairment was caused by the substance or behavior at issue. Other state laws, known as per se laws, provide that a driver is automatically guilty of driving while impaired if specified levels of a potentially impairing substance are found in his or her body (e.g., blood alcohol content (BAC) of .08% or higher, or, in some states, THC in the blood; see Table 1 ). Detecting Impairment Currently, detecting marijuana impairment through a standardized test is more complicated than detecting alcohol impairment. Evaluating impairment due to alcohol is relatively straightforward. Alcohol is a central nervous system depressant, the effects of which have been extensively observed and studied for a century. It is a liquid that enters the bloodstream quickly and is metabolized (converted into other substances) by the body fairly quickly. Alcohol in the body can be measured in a person's breath, blood, or urine. A person's BAC peaks within an hour after drinking, and declines gradually and linearly after that. The degree of impairment at various BAC levels is fairly well-established, and many studies have established that a driver's risk of being involved in a crash increases as the driver's BAC level increases. In the United States, congressional encouragement has led every state to legislate that a driver whose BAC is .08% or higher is too impaired to drive legally. However, studies indicate there is some degree of impairment at far lower levels of BAC. In several European countries, driving with a BAC of .05% or higher is prohibited, and the State of Utah recently lowered its per se impaired BAC level to .05%. In the United States, commercial truck drivers are barred from performing safety-sensitive functions (such as driving) at a BAC of .04%. Relatively simple tests, such as breath analysis conducted by a police officer at the roadside or analysis of blood or urine samples taken in a clinic, can determine whether an individual's BAC exceeds the legal threshold. Since every state has a law prohibiting driving with a specific BAC level, such tests can be presented as evidence of impairment in court. Detecting impairment due to use of marijuana is more difficult. The body metabolizes marijuana differently from alcohol. The level of THC (the psychoactive ingredient of marijuana) in the body drops quickly within an hour after usage, yet traces of THC (nonpsychoactive metabolites) can still be found in the body weeks after usage of marijuana. There is as yet no scientifically demonstrated correlation between levels of THC and degrees of impairment of driver performance, and epidemiological studies disagree as to whether marijuana use by a driver results in increased crash risk. Marijuana's Impact on Driver Crash Risk Relatively few studies have been done of the effect of marijuana use on driver performance. This is due, in part, to the requirements that must be met to use marijuana in studies due to its status as a controlled substance under federal law and many state laws. Another factor complicating studies of marijuana's effects on drivers is that the potency of THC in marijuana (i.e., the concentration of THC) can vary from one plant to another. The marijuana produced by the only approved source of marijuana for federally funded research is considered by some researchers to be low quality (potency). Also, the way in which marijuana is processed can affect the potency of the product, and the way the user chooses to ingest marijuana may affect the level of THC in the body. The lack of correlation between both marijuana consumption and the level of THC in a person's system and THC levels and driver impairment reduces the usefulness of rule-of-thumb guides of impairment. In contrast, many drivers use rules-of-thumb to guide their alcohol consumption. While emphasizing that even low levels of alcohol consumption can cause drivers to be impaired, tables published on the internet suggest that two drinks may place a 120-pound female in breach of the 0.08% BAC threshold and leave a 160-pound male with "driving skills significantly affected." The National Transportation Safety Board has advised that "about 2 alcoholic drinks" within an hour will cause a 160-pound male to experience decline in visual functions and in the ability to perform two tasks at the same time. Based on current knowledge and enforcement capabilities, it is not possible to articulate a similarly simple level or rate of marijuana consumption and a corresponding effect on driving ability. Studies of Crash Risk Associated With Marijuana Usage To date, results from studies that have examined the association between marijuana use and crash risk have been inconsistent. As described in the 2017 NHTSA report to Congress, one study estimated the increased crash risk from marijuana usage at 1.83 times that of an unimpaired driver, while another study found no association between risk of being involved in a crash and marijuana use. Other studies have estimated the increased crash risk for drivers testing positive for marijuana at between zero and three times that for unimpaired drivers, roughly comparable to the increased crash risk of having a blood alcohol content of between .01% and .05%, well below the legal per se impaired level of .08 BAC. For purposes of comparison, a driver with a BAC of .08% is considered to be five to 20 times more likely to be involved in a crash than an unimpaired driver. In NHTSA's 2017 Marijuana-Impaired Driving Report to Congress, NHTSA's survey of the research literature found differences between driving by subjects dosed with alcohol and subjects dosed with marijuana. Marijuana-dosed subjects driving in a simulator or in an instrumented vehicle on a closed course tended to drive below the speed limit, to allow a greater distance between themselves and vehicles ahead of them, and to take fewer risks than when they were not under the influence of marijuana. The study authors hypothesized that the subjects felt effects of the marijuana and were consciously altering their driving behavior to compensate. By contrast, subjects who were dosed with alcohol tended to drive faster than the speed limit, to follow leading cars more closely, and to generally drive in a riskier fashion than when they were not under the influence of alcohol. The NHTSA report includes the caveat that impacts on driving performance that can be measured under controlled conditions may or may not be significant under real-world conditions. NHTSA states that while laboratory studies are useful in identifying how substances affect the performance of driving tasks, only epidemiological studies (i.e., studies that look at actual crashes and the factors involved) are useful in predicting their impact on real-world crash risk. Relatively few epidemiological studies of marijuana usage and crash risk have been conducted, and the few that have been conducted have generally found low or no increased risk of crashes from marijuana use. In reports examining many aspects of marijuana use and its effects, the National Academy of Sciences (NAS) in a 2017 report and the National Institutes of Health in a 2018 report reference various studies on the impact of marijuana consumption on driver performance to state that cannabis use prior to driving increases the risk of being involved in a motor vehicle accident. For example, the NAS committee that produced the 2017 report looked at systematic reviews of driving under the influence of marijuana and at recently published primary literature. The NAS committee's report concluded, "There is substantial evidence of a statistical association between cannabis use and increased risk of motor vehicle crashes." Several factors complicate the effort to determine what, if any, impact marijuana usage has on the likelihood of being involved in a crash. Chief among these factors is the distinction between correlation (things that occur together) and causation (one thing that causes another thing). A driver who has been involved in a crash may have used marijuana shortly before the crash; that correlation (marijuana usage and crash involvement) does not alone prove causation (that the marijuana usage was the cause of the driver being involved in a crash). For example, in the United States the population group with the highest rate of motor vehicle crashes, by far, is young male drivers (generally defined as those between the ages of 16 and 19). Young males are also the population group with the highest prevalence of marijuana use. When a young male driver is involved in a motor vehicle crash, and has recently used marijuana, it is difficult to separate the role, if any, of the effects of marijuana usage from the other factors that may contribute to the exceptionally high rate of crash involvement of young male drivers. Law Enforcement An impaired driving arrest typically begins with a law enforcement officer stopping a driver for a traffic violation or observing a driver at a crash scene or a checkpoint. If the officer suspects that the driver is impaired by alcohol, based on the driver's behavior and signs such as the odor of alcohol or other evidence of its presence, the officer may administer a field sobriety test or preliminary breath test to check for alcohol impairment. Training for the Standard Field Sobriety Test for alcohol impairment is usually included in basic police academy courses. The test includes 1) a driver heel-to-toe walk and turn test, and 2) a driver one-leg standing test. Law enforcement officers often are not trained in recognizing impairment from marijuana or other drugs. NHTSA, with input from law enforcement organizations, has developed two training programs for law enforcement officers to recognize drug impairment in drivers during roadside stops. Advanced Roadside Impaired Driving Enforcement (ARIDE) is a 16-hour course providing basic information on drug impairment, including indications of impairment from both marijuana and other opioids. From 2009 through 2015, around 8% of the nation's patrol officers received ARIDE training. Drug Recognition Experts (DRE) are trained not only to identify impairment by drugs but also to differentiate between categories of drugs. DRE training consists of 72 hours of classroom training and 40 to 60 hours of fieldwork. This represents a considerable investment of resources on the part of the trainee's organization, since it takes the officer away from regular duties for three to four weeks. As of 2016, around 1% of the nation's patrol officers were active DREs. In evaluating drivers suspected of impairment, DREs administer a 12-step evaluation lasting around 90 minutes. This is not a roadside test; the DRE testing protocol calls for the testing to be done in a controlled environment. Adherence to the protocol is important for the validity of the results. Tests for Marijuana Use Urine, hair follicles, blood, and saliva can be tested for evidence of THC and its metabolites. At present THC cannot be measured accurately in a person's breath. Blood tests are considered the gold standard in establishing the presence of marijuana for impaired driving cases. To conduct a blood test of a driver suspected of driving under the influence of marijuana, police typically must obtain a search warrant and have the blood drawn by a nurse or person licensed to draw blood (phlebotomist). Testing of oral fluid can readily detect the presence of marijuana or its metabolites, and such testing is less complicated than blood testing. It may require a search warrant. Devices that can not only collect but also test oral fluids at the point of arrest (i.e., in the field) are available, but their accuracy and reliability have been questioned. Marijuana can be found in oral fluids as a result of environmental exposure. Hair testing is of little reliability for drug-impaired driving enforcement, as THC can be found in hair months after usage, so a positive result cannot be used to establish usage around the time of driving. THC in hair follicles can result from environmental exposure to second-hand smoke rather than direct consumption of marijuana. Also, the use of hair products can affect test results. Urine testing cannot be reliably used to establish drug use around the time of driving, as THC and its metabolites can be detected in urine for days, or even weeks, after usage. The decision as to whether a driver who tests positive for marijuana should be arrested or charged with driving while impaired is not straightforward, because tests for the presence of marijuana in a driver's body are inadequate to determine impairment. The value of testing a person for the presence of alcohol lies largely in the well-established link between levels of alcohol in a person's blood and impairing effects associated with that blood alcohol content. Similar links between levels of THC in a person's body and levels of impairment have not been established. The concentration of THC in a person's blood rises rapidly after consumption, then drops rapidly, within an hour or two. Impairing effects appear rapidly, but may remain for some time. Consequently, tests that show the amount of THC in the subject's body are poor indicators of impairment, how recently a person has used marijuana, or whether the person used marijuana or was simply exposed to second-hand smoke. Moreover, tests can show the presence of metabolites of THC, which themselves are not impairing, for weeks after consumption. Also, studies indicate that individuals can adapt to the impairing effects of marijuana, such that a level of THC that could indicate impairment in an occasional marijuana user may not have the same impairment effect on an experienced user. State Laws Regarding Marijuana and Impaired Driving Some states have " per se " ("in itself") laws that make it illegal for a driver to have more than a certain concentration of THC in his or her system. In some other states, it is illegal for a person to drive with any trace of marijuana ("zero tolerance") in his or her system (see Table 1 ). Drivers have challenged convictions under per se marijuana impairment laws, with differing results. Some courts, acknowledging the testimony of experts that there is, at present, no reliable test to indicate impairment from marijuana, have nevertheless supported a state's per se standard as a reasonable effort to combat impaired driving in the absence of effective measurements of impairment. Other courts have overturned per se convictions on various grounds (e.g., that while the state legislation included all metabolites of marijuana, it was not reasonable to convict a driver of impairment when the driver tested positive for a metabolite that does not have an impairing effect). Federal Regulations Governing Testing for Drug Use Marijuana possession and usage remain illegal under federal law. In addition, people holding certain jobs, including federal employees and transportation workers in safety-sensitive positions (such as airline pilots, aircraft maintenance personnel, railroad engineers, ship captains, commercial truck drivers, and bus drivers), are prohibited from consuming any amount of marijuana, regardless of state laws. Federal regulations require that transportation workers in safety-sensitive positions be tested for alcohol and certain drugs before beginning work for a new employer, if they are involved in a serious crash, and also at random. Safety-sensitive workers who appear to be under the influence of drugs or alcohol while at work can be tested immediately. Those who test positive must be evaluated by a substance abuse professional, complete counseling or treatment as prescribed by the evaluator, undergo a follow-up evaluation, and be tested again before returning to their safety-sensitive work. Those who return to safety-sensitive work after a positive test must be tested at least six times with no advance notice in the following 12 months. The follow-up period of intensive testing can be extended an additional four years. Approximately 12 million transportation workers are subject to these rules. In 2009, the U.S. Department of Transportation stated that it is "unacceptable for any safety-sensitive employee subject to drug testing under the Department of Transportation's drug testing regulations to use marijuana." Regardless of many states having legalized more uses of marijuana, safety-sensitive employees remain subject to drug testing and may lose their jobs for marijuana use that is legal under state law. Options for Congress There are several subjects on which better information may aid policymaking around the issue of marijuana and impairment. These include continued research into whether a quantitative standard can be established that correlates the level of THC in a person's body and the level of impairment, and better data on the prevalence of marijuana use by drivers, especially among drivers involved in crashes and drivers arrested for impaired driving. Currently, most states do not distinguish in their records whether drivers arrested for impaired driving are impaired by alcohol or other substances. Substance-specific impaired driving data could be of particular use in analyzing prelegalization and post-legalization data within a state and differences across states with different legal treatment of marijuana use. Given that currently the most reliable means of detecting impairment among drivers who have used marijuana is by observation of physiological, cognitive, and psychomotor indicators by law enforcement officers, another policy option is additional support for training of law enforcement officers in detecting impairment. To improve the handling of drug-impaired driving cases, the Governors Highway Safety Association has recommended that prosecutors and judges assigned to drug-impaired driving cases receive training in the issue. Among the roughly 12 million transportation workers whose safety-sensitive status subjects them to federally mandated drug testing, federal regulations provide no opportunity for legal use of marijuana, regardless of the status of marijuana under state law. As previously discussed, regulations that apply to safety-sensitive employees do provide an avenue for an employee who has tested positive to regain a safety-sensitive position. CRS could not identify any data on how many safety-sensitive transportation employees have lost their jobs as a result of positive tests for marijuana use. Considering the length of time that marijuana is detectable in the body after usage, and the uncertainty about the impairing effect of marijuana on driving performance, Congress and other federal policymakers may elect to reexamine the rationale for testing all safety-sensitive transportation workers for marijuana usage. Alternatively, Congress and federal policymakers may opt to maintain the status quo until more research results become available.

A growing number of Americans report that they use marijuana. Most states now allow the use of marijuana for treatment of medical conditions. Ten states and the District of Columbia, representing a quarter of the U.S. population, have decriminalized the recreational use of marijuana, and other states are considering following suit. As the opportunity for legal use of marijuana grows, there is concern about the impact of marijuana usage on highway safety. In a 2018 survey, the majority of state highway safety officers considered drugged driving an issue at least as important as driving while impaired by alcohol (which is associated with over 10,000 highway deaths each year). As of May 2019, 18 states have enacted laws declaring that a specified concentration of THC in a driver's body constitutes evidence of impairment and is inherently illegal (referred to as per se laws), similar to the .08% blood alcohol content (BAC) standard of alcohol impairment. Advocates of loosening restrictions on marijuana often compare marijuana usage to drinking alcohol, which may contribute to some stakeholders viewing marijuana use and driving as similar to alcohol's impairment of driving. Research studies indicate that marijuana's effects on drivers' performance may vary from the effects of alcohol, in ways that challenge dealing with marijuana impairment and driving similarly to alcohol-impaired driving. Alcohol is a nervous system depressant that is absorbed into the blood and metabolized by the body fairly quickly, such that there is little trace of alcohol after 24 hours. Its impairing effects have been extensively studied over many decades, and the association between levels of alcohol consumption and degrees of impairment is well-established. By contrast, marijuana is a nervous system stimulant. It contains over 500 chemical compounds, only one of which, tetrahydrocannabinol (THC), is significantly psychoactive. Its effects are felt quickly after smoking, but more slowly when consumed in other forms (e.g., in food). It is metabolized quickly, but the body can store THC in fat cells, so that traces of THC can be found up to several weeks after consumption. Its impairing effects have been the subject of limited study, due in part to its status as a controlled substance under federal law. Although laboratory studies have shown that marijuana consumption can affect a person's response times and motor performance, studies of the impact of marijuana consumption on a driver's risk of being involved in a crash have produced conflicting results, with some studies finding little or no increased risk of a crash from marijuana usage. Levels of impairment that can be identified in laboratory settings may not have a significant impact in real world settings, where many variables affect the likelihood of a crash occurring. Research studies have been unable to consistently correlate levels of marijuana consumption, or THC in a person's body, and levels of impairment. Thus some researchers, and the National Highway Traffic Safety Administration, have observed that using a measure of THC as evidence of a driver's impairment is not supported by scientific evidence to date. Congress, state legislatures, and other decisionmakers may address the topic of marijuana use and driver impairment through various policy options, including whether or not to support additional research on the impact of marijuana on driver performance and on measurement techniques for marijuana impairment, as well as training for law enforcement on identifying marijuana impairment. Other deliberations may address federal regulations on marijuana use and testing for transportation safety-sensitive employees.

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Introduction 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 mission has evolved with the changing needs of the nation. It began with improving and regulating navigation channels thereby facilitating the movement of goods between states and for import and export. Congress then charged the agency to help in reducing the damages from floods. More recently, Congress has authorized the agency to restore aquatic ecosystems. USACE operates more than 700 dams; has built 14,500 miles of levees; and improves and maintains more than 900 coastal, Great Lakes, and inland harbors, as well as 12,000 miles of inland waterways. Congress directs and oversees the specific navigation, flood control, and ecosystem restoration projects that USACE plans and constructs through authorization legislation, annual and supplemental appropriations legislation, and oversight efforts. The agency typically is working with nonfederal project sponsors in the development of these water resource projects. The demand for USACE projects typically exceeds the federal appropriations for these projects. Broadly, Congress is faced with considering how well the nation is addressing its water resource needs and what is the current and future role of USACE in addressing those needs. Part of the issue is how effective, efficient, and equitable is the USACE project delivery process in meeting the nation's needs. Unlike with federal funding for highways and municipal water infrastructure, the majority of federal funds provided to USACE for water resource projects are not distributed by formula to states or through competitive grant programs. Instead, USACE is directly engaged in the planning and construction of projects; the majority of its appropriations are used performing work on specific studies and contracting for construction of projects authorized by Congress. Scope and Structure of Report This report examines the standard development and delivery of a USACE water resource project (e.g., steps in the process, role of Congress, nonfederal project sponsor role). It also presents the evolving alternative project delivery and innovative finance options. This report provides an overview of USACE water resource authorization and project delivery processes and selected related issues. The report discusses the following topics: primer on the agency and its authorization legislation, typically titled as a Water Resources Development Act (WRDA); standard process for planning and construction of USACE water resource projects; interest in and authorities for alternative project delivery and innovative finance for water resource projects; and other USACE authorities, including its authorities for Continuing Authorities Programs (CAPs) and technical assistance, emergency response, and reimbursable work. Appendix A describes the evolution of USACE water resource missions and authorities. Appendix B provides an overview of Water Resources Development Acts and other USACE civil works omnibus authorization bills enacted from 1986 through 2018, which are collectively referred to herein as WRDAs. Primer on the Agency and Its Authorization The civil works program is led by a civilian Assistant Secretary of the Army for Civil Works, who reports to the Secretary of the Army. A military Chief of Engineers oversees the agency's civil and military operations and reports on civil works matters to the Assistant Secretary for Civil Works. A civilian Director of Civil Works reports to the Chief of Engineers. The agency's civil works responsibilities are organized under eight divisions, which are further divided into 38 districts. The districts and divisions perform both military and civil works activities and are led by Army officers. An officer typically is in a specific district or division leadership position for two to three years; a Chief of Engineers often serves for roughly four years. In 2018, the Trump Administration has expressed interest in the possibility of removing USACE from the Department of Defense; for more information on the status of this proposal, see " Proposals on Reorganizing USACE Functions " later in this report. Local interests and Members of Congress often are particularly interested in USACE pursuing a project because these projects can have significant local and regional economic benefits and environmental effects. In recent decades, Congress has legislated on most USACE authorizations through WRDAs. Congress uses WRDA legislation to authorize USACE water resource studies, projects, and programs and to establish policies (e.g., nonfederal cost-share requirements). WRDAs generally authorize new activities that are added to the pool of existing authorized activities. The authorization can be project-specific, programmatic, or general. Most project-specific authorizations in WRDAs fall into three general categories: project studies, construction projects, and modifications to existing projects. WRDAs also have deauthorized projects and established deauthorization processes. A limited set of USACE authorizations expire unless a subsequent WRDA extends the authorizations. Generally, a study or construction authorization by itself is insufficient for USACE to proceed. For the most part, the agency can only pursue what it is both authorized and funded to perform. Federal funding for USACE civil works activities generally is provided in annual Energy and Water Development appropriations acts and at times through supplemental appropriations acts. Over the last decade, annual USACE appropriations have ranged from $4.7 billion in FY2013 to $7.0 billion in FY2019. An increasing share of the appropriations has been used for operation and maintenance (O&M) of USACE owned and operated projects. In recent years, Congress has directed more than 50% of the enacted annual appropriations to O&M and limited the number of new studies and construction projects initiated with annual appropriations. For more on USACE appropriations, see the following: CRS Report R45326, Army Corps of Engineers Annual and Supplemental Appropriations: Issues for Congress , by Nicole T. Carter; CRS In Focus IF10864, Army Corps of Engineers: FY2019 Appropriations , by Nicole T. Carter; and CRS In Focus IF11137, Army Corps of Engineers: FY2020 Appropriations , by Nicole T. Carter and Anna E. Normand. The agency identified a $98 billion backlog of projects that have construction authorization that are under construction or are awaiting construction funding. That is, the rate at which Congress authorizes USACE to perform work has exceeded the work that can be accomplished with the agency's appropriations. For context, annual appropriations for construction funding in FY2018 and FY2019 were $2.1 billion and $2.2 billion, respectively. Given that USACE starts only a few construction projects using discretionary appropriations in a fiscal year (e.g., five using annual appropriations provided in FY2019), numerous projects authorized for construction in previous WRDAs remain unfunded. USACE may have hundreds of authorized studies that are not currently funded, and few new studies are funded annually. Congress allowed USACE to initiate six new studies using FY2019 appropriations. USACE Authorization Legislation: 1986 to Present Process 1986 to 2014 Beginning with WRDA 1986 ( P.L. 99-662 ), Congress loosely followed a biennial WRDA cycle for a number of years. WRDAs were enacted in 1988 ( P.L. 100-676 ), 1990 ( P.L. 101-640 ), 1992 ( P.L. 102-580 ), 1996 ( P.L. 104-303 ), 1999 ( P.L. 106-53 ), and 2000 ( P.L. 106-541 ). Deliberations on authorization of particular USACE projects and interest in altering how the agency developed, economically justified, and mitigated for its projects resulted extended beyond the biennial cycle, Congress enacting the next WRDA in 2007 ( P.L. 110-114 ). Congress did not enact a WRDA for a number of years following WRDA 2007. An issue that complicated enactment was devising a way to develop an omnibus water authorization bill that identified specific studies and projects to authorize and modify, as congressionally directed spending (known as earmarks ) received increasing scrutiny. 2014 The Water Resources Reform and Development Act of 2014 (WRRDA 2014; P.L. 113-121 ) was enacted in June 2014. It authorized 34 construction projects that had received agency review, had Chief of Engineers reports (also known as Chief's r eports ), and had been the subject of a congressional hearing, thereby overcoming most concerns related to earmarks in the legislation. WRRDA 2014 also created a new process for identifying nonfederal interest in and support for USACE studies and projects. For more on WRRDA 2014, see CRS Report R43298, Water Resources Reform and Development Act of 2014: Comparison of Select Provisions , by Nicole T. Carter et al. 2016, 2018, and the Section 7001 Annual Report Process In Section 7001 of WRRDA 2014, Congress called for the Secretary of the Army to submit an annual report to the congressional authorizing committees—the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee—of potential and publicly submitted study and project authorization proposals for Congress to consider for authorization. The process to develop and transmit this report, referred to as the Section 7001 process, provides Congress a means by which to identify new studies and other activities for potential inclusion in an omnibus authorization bill. The Assistant Secretary of the Army delivered to Congress a Section 7001 annual report in February 2015, February 2016, March 2017, and February 2018. A notice requesting public submissions for consideration for the fifth Section 7001 annual report was published on April 20, 2018. USACE accepted submissions through August 20, 2018. These submissions are to be considered for inclusion in the annual report expected to be delivered to the authorizing committees in mid-2019. USACE has indicated that the next call for submissions is expected to open in May 2019. With WRDA 2016, which was Title I of the Water Infrastructure Improvements for the Nation Act (WIIN; P.L. 114-322 , enacted in December 2016), Congress returned enactment of USACE authorization legislation to a biennial timeframe. WRDA 2016 authorized new studies based on proposals in the Section 7001 reports and construction projects based on Chief's reports. The 115 th Congress enacted America's Water Infrastructure Act of 2018 (AWIA 2018, P.L. 115-270 ) in October 2018. AWIA 2018 includes the Water Resources Development Act of 2018 (WRDA 2018) as Title I of the bill. Like WRDA 2016, Congress used the Section 7001 reports to identify new studies, and Chief's reports to identify the construction projects that Congress authorized in WRDA 2018. Future Authorization Legislation Like previous Congresses, the 116 th Congress may consider WRDA legislation. These deliberations are likely to be shaped by many factors, such as policy proposals by the President, congressional policies on earmarks, and development of an infrastructure initiative or other actions or developments that may alter the framework and context for federal and nonfederal investments. Congress also may have available various reports to inform its WRDA development and deliberations. In addition to the Section 7001 reports and Chief's reports, the authorizing committees receive annually a report required by Section 1002 of WRRDA 2014. The Section 1002 report identifies when USACE feasibility studies—the detailed studies of the water resource problem that are developed to inform the Chief's report and congressional authorization—are anticipated to reach various milestones. At the start of FY2019, USACE currently had roughly 100 active feasibility studies. In addition to feasibility studies, Congress may be presented with other types of studies recommending actions that require congressional authorization. These studies include postauthorization change reports for modifying an authorized project prior to or during construction, reevaluation reports for a modification to a constructed project, and reports recommending deauthorization of constructed projects that no longer serve their authorized purposes. Reports and analyses by Government Accountability Office (GAO), Inspector Generals, Congressional Budget Office, National Academy of Sciences (NAS), National Academy of Public Administration, Inland Waterway Users Board, Environmental Advisory Board to the Chief of Engineers, advocacy and industry groups, and others also may influence congressional deliberations. Efforts to Shape the Future of USACE Proposals on Reorganizing USACE Functions In June 2018, the Trump Administration proposed to move the civil works activities from the Department of Defense to the Department of Transportation and the Department of the Interior to consolidate and align the USACE civil works missions with these agencies. Although some Members of Congress have indicated support for looking at which USACE functions may not need to be in the Department of Defense, the conference report that accompanied the USACE appropriations for FY2019 ( P.L. 115-244 ), H.Rept. 115-929 , stated the following: The conferees are opposed to the proposed reorganization as it could ultimately have detrimental impacts for implementation of the Civil Works program and for numerous non-federal entities that rely on the Corps' technical expertise, including in response to natural disasters.… Further, this type of proposal, as the Department of Defense and the Corps are well aware, will require enactment of legislation, which has neither been proposed nor requested to date. Therefore, no funds provided in the Act or any previous Act to any agency shall be used to implement this proposal. As previously noted, USACE's central civil works responsibilities are to support coastal and inland commercial navigation, reduce riverine flood and coastal storm damage, and protect and restore aquatic ecosystems in U.S. states and territories. Additional project benefits also may be developed, including water supply, hydropower, recreation, fish and wildlife enhancement, and so on. In addition, USACE has certain regulatory responsibilities that Congress has assigned to the Secretary of the Army; these responsibilities include issuing permits for private actions that may affect navigation, wetlands, and other waters of the United States. As part of its military and civil responsibilities and under the National Response Framework, USACE participates in emergency response activities (see " Natural Disaster and Emergency Response Activities " section of this report). For more information on USACE civil works responsibilities, see Appendix A . The Trump Administration has not provided additional details on its June 2018 reorganization proposal for USACE in subsequent public documents. More recently, USACE and the Assistant Secretary of the Army have focused their attention on efforts to "revolutionize USACE civil works" as part of the Trump Administration's reform of how infrastructure projects are regulated, funded, delivered, and maintained. The three objectives of the effort are: (1) accelerate USACE project delivery, (2) transform project financing and budgeting, and (3) regulatory reform (e.g., improve the permitting process). For more on how USACE projects are delivered and how options for project delivery and financing have changed, see " Standard Project Delivery Process " and " Alternative Project Delivery and Innovative Finance ," respectively. WRDA 2018 Studies on Future of USACE and Economic Evaluation of Projects The 115 th Congress enacted provisions that support receiving information to inform discussions about improving the project delivery and budgeting for projects. In WRDA 2018, Congress included the following provisions: Section 1102, Study of the Future of the United States Army Corps of Engineers; and Section 1103, Study on Economic and Budgetary Analyses. In Section 1102 of WRDA 2018, Congress required that the Secretary of the Army to contract with the National Academy of Sciences to evaluate the following: USACE's ability of carry out its mission and responsibilities and the potential effects of transferring functions and resources from the Department of Defense to a new or existing federal agency; and how to improve USACE's project delivery, taking into account the annual appropriations process, the leadership and geographic structure at the divisions and districts, and the rotation of senior USACE leaders. The legislation requires that the study be completed within two years of enactment (which would be October 2020). In Section 1103 of WRDA 2018, Congress required that the Secretary of the Army contract with the NAS to do the following: review the economic principles and methods used by the USACE to formulate, evaluate, and budget for water resources development projects, and recommend changes to improve transparency, return on federal investment, cost savings, and prioritization in USACE budgeting of these projects. Standard Project Delivery Process Standard USACE project delivery consists of the agency leading the study, design, and construction of authorized water resource projects. Nonfederal project sponsors typically share in study and construction costs, providing the land and other real estate interests, and identifying locally preferred alternatives. Since the 1950s, questions related to how project beneficiaries and sponsors should share in the cost and delivery of USACE projects have been the subject of debate and negotiation. Much of the basic arrangement for how costs and responsibilities are currently shared was established by Congress in the 1980s, with adjustments in subsequent legislation, including in recent statutes. Congressional authorization and appropriations processes are critical actions in a multistep process to deliver a USACE project. This section describes the standard delivery process for most USACE projects, which consists of the following basic steps: Congressional study authorization is obtained in a WRDA or similar authorization legislation. USACE performs a feasibility study, if funds are appropriated. Congressional construction authorization is pursued. USACE can perform preconstruction engineering and design while awaiting construction authorization, if funds are appropriated. Congress authorizes construction in a WRDA or similar authorization legislation, and USACE constructs the project, if funds are appropriated. The process is not automatic. Appropriations are required to perform studies and construction; that is, congressional study and construction authorizations are necessary but insufficient for USACE to proceed. Major steps in the process are shown in Figure 1 . For most water resource activities, USACE needs a nonfederal sponsor to share the study and construction costs. Since WRDA 1986, nonfederal sponsors have been responsible for funding a portion of studies and construction, and they may be 100% responsible for O&M and repair of certain types of projects (e.g., flood risk reduction and aquatic ecosystem restoration). Most flood risk reduction and ecosystem restoration projects are transferred to nonfederal owners after construction; many navigation and multipurpose dams are federally owned and operated. Nonfederal sponsors generally are state, tribal, territory, county, or local agencies or governments. Although sponsors typically need to have some taxing authority, Congress has authorized that some USACE activities can have nonprofit and other entities as the nonfederal project sponsor; a few authorities allow for private entities as partners. Table 1 provides general information on the duration and federal share of costs for various phases in USACE project delivery. Project delivery often takes longer than the combined duration of each phase shown in Table 1 because some phases require congressional authorization before they can begin and action on each step is subject to the availability of appropriations. Feasibility Study and Chief's Report A USACE water resource project starts with a feasibility study (sometimes referred to as an investigation) of the water resource issue and an evaluation of the alternatives to address the issue. The purpose of the USACE study process is to inform federal decisions on whether there is a federal interest in authorizing a USACE construction project. USACE generally requires two types of congressional action to initiate a study—study authorization and then appropriations. Congress generally authorizes USACE studies in WRDA legislation. Once a study is authorized, appropriations are sought from monies generally provided in the annual Energy and Water Development appropriations acts. Within USACE, projects are largely planned at the district level and approved at the division level and USACE headquarters. Early in the study process, USACE assesses the level of interest and support of nonfederal entities that may be potential sponsors that share project costs and other responsibilities. USACE also investigates the nature of the water resource problem and assesses the federal government's interest. If USACE recommends proceeding and a nonfederal sponsor is willing to contribute to the study, a feasibility study begins. The cost of the feasibility study (including related environmental studies) is split equally between USACE and the nonfederal project sponsor, as shown in Table 1 . The objective of the feasibility study is to formulate and recommend solutions to the identified water resource problem. During the first few months of a feasibility study, the local USACE district formulates alternative plans, investigates engineering feasibility, conducts benefit-cost analyses, and assesses environmental impacts under the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. §4321). (For more information on NEPA compliance and cost-benefit analyses, see the box "USACE Feasibility Studies: National Environmental Policy Act Compliance and Economic Analyses.") The evaluation of USACE water resource projects is governed by the 1983 Principles and Guidelines for Water and Related Resources Implementation Studies (often referred to as the P&G) and by policy direction provided in WRDA bills and other enacted legislation. An important outcome of the feasibility analysis is determination of whether the project warrants further federal investment. Under the P&G, the federal objective in planning generally is to contribute to national economic development (NED) consistent with protecting the nation's environment. A feasibility study generally identifies a tentatively preferred plan, which typically is the plan that maximizes the NED consistent with protecting the environment (referred to as the NED plan). The Assistant Secretary of the Army has the authority to grant an exception and recommend a plan other than the NED plan. In some circumstances, the nonfederal sponsor may support an alternative other than the NED plan, which is known as the locally preferred plan (LPP). If the LPP is recommended and authorized, the nonfederal entity is typically responsible for 100% of the difference in project costs (construction and operation and maintenance costs) between the LPP and the NED plan. Once the final feasibility study is available, the Chief of Engineers signs a recommendation on the project, known as the Chief's report. USACE submits the completed Chief's reports to the congressional authorizing committees (33 U.S.C. §2282a) and transmits the reports to the Assistant Secretary of the Army for Civil Works and the Office of Management and Budget (OMB) for Administration review. Since the mid-1990s, Congress has authorized many projects based on Chief's reports prior to completion of the project review by the Assistant Secretary and OMB. Preconstruction Engineering and Design USACE preconstruction engineering and design (PED) of a project may begin after the Chief's report subject to the availability of appropriations (33 U.S.C. §2287). PED consists of finalizing the project's design, preparing construction plans and specifications, and drafting construction contracts for advertisement. USACE work on PED is subject to the availability of USACE appropriations. Once funded, the average duration of PED is two years, but the duration varies widely depending on the size and complexity of a project. PED costs are distributed between the federal and nonfederal sponsor in the same proportion as the cost-share arrangement for the construction phase; see Table 2 for information on the cost-share requirements for construction. Construction and Operation and Maintenance Once the project receives congressional construction authorization, federal funds for construction are sought in the annual appropriations process. Once construction funds are available, USACE typically functions as the project manager; that is, USACE staff, rather than the nonfederal project sponsor, usually are responsible for implementing construction. Although project management may be performed by USACE personnel, physical construction is contracted out to private engineering and construction contractors. When USACE manages construction, the agency typically pursues reimbursement of the nonfederal cost share during project construction. Post-construction ownership and operations responsibilities depend on the type of project. When construction is complete, USACE may own and operate the constructed project (e.g., navigation projects) or ownership and maintenance responsibilities may transfer to the nonfederal sponsor (e.g., most flood damage reduction projects). The cost-share responsibilities for construction and O&M vary by project purpose, as shown in Table 2 . Table 2 first provides the cost share for the primary project purposes of navigation, flood and storm damage reduction, and aquatic ecosystem restoration. Next, it provides the cost shares for additional project purposes, which can be added to a project that has at least one of the three primary purposes at its core. WRDA 1986 increased local cost-share requirements; some subsequent WRDAs further adjusted cost sharing. Deviation from the standard cost-sharing arrangements for individual projects is infrequent and typically requires specific authorization by Congress. Changes After Construction Authorization A project may undergo some changes after authorization. If project features or estimated costs change significantly, additional congressional authorization may be necessary. Congressional authorization for a significant modification typically is sought in a WRDA. Requests for such modifications or for the study of such modifications also are solicited through the Section 7001 annual report process. For less significant modifications, additional authorization often is not necessary. Section 902 of WRDA 1986, as amended (33 U.S.C. §2280), generally allows for increases in total project costs of up to 20% (after accounting for inflation of construction costs) without additional congressional authorization. Changes After Construction: Section 408 Permissions to Alter a USACE Project If nonfederal entities are interested in altering USACE civil works projects after construction, the entity generally must obtain permission from USACE. The agency's authority to allow alterations to its projects derives from Section 14 of the Rivers and Harbors Act of 1899, also known as Section 408 based on its codification at 33 U.S.C. §408. This provision states that the Secretary of the Army may "grant permission for the alteration or permanent occupation or use of any of the aforementioned public works when in the judgment of the Secretary such occupation or use will not be injurious to the public interest and will not impair the usefulness of such work." Pursuant to the regulations, USACE conducts a technical review of the proposed alteration's effects on the USACE project. Section 408 permissions may be required not only for projects operated and maintained by USACE, but also federally authorized civil works projects operated and maintained by nonfederal project sponsors (e.g., many USACE-constructed, locally maintained levees). At the end of the Section 408 process, USACE chooses to approve or deny permission for the alteration. USACE may attach conditions to its Section 408 permission. Deauthorization Processes and Divestiture Deauthorization of Projects Most authorizations of USACE construction projects are not time limited. To manage the backlog of authorized projects that are not constructed, Congress has enacted various deauthorization processes. General Deauthorization Authority. Of the current deauthorization authorities for unconstructed projects, the oldest directs the Secretary of the Army to transmit to Congress annually a list of authorized projects and project elements that did not receive obligations of funding during the last five full fiscal years (33 U.S.C. §579a(b)(2)). If funds are not obligated for the planning, design, or construction of the project or project element during the following fiscal year, the project or project element is deauthorized. The final project deauthorization list is published in the Federal Register . The process is initiated when the Secretary of the Army transmits the list. WRDA 2018 One-Time Process. Section 1301 of WRDA 2018 created a one-time process to deauthorize at least $4 billion of authorized projects that are unconstructed and are "no longer viable for construction." This process can deauthorize unconstructed projects or project elements authorized prior to WRDA 2007, projects on the list produced pursuant to the general deauthorization authority (33 U.S.C. §579a(b)(2)), and unconstructed projects requested to be deauthorized by the nonfederal sponsor. WRDA 2016 One-Time Process. Section 1301 of WRDA 2016 created a one-time process to deauthorize projects with federal costs to complete of at least $10 billion that are "no longer viable for construction." This process can only deauthorize projects authorized prior to WRDA 2007. Projects Authorized in WRDA 2018, WRDA 2016 , and WRRDA 2014 . Section 1302 of WRDA 2018 requires that a project authorized in WRDA 2018 be automatically deauthorized if no funding had been obligated for its construction after 10 years of enactment (i.e., 10 years after October 2018), unless certain conditions apply). Section 1302 of WRDA 2016 requires that any project authorized in WRDA 2016 be automatically deauthorized if after 10 years of enactment (December 2026) no funding had been obligated for its construction, unless certain conditions apply. Section 6003 of WRRDA 2014, as amended by Sec. 1330 of WRDA 2018, requires that any project authorized in WRRDA 2014 be automatically deauthorized if after 10 years of enactment (June 2024) no funding had been obligated for its construction. USACE has not addressed uncertainties regarding how implementation of these authorities is to be coordinated. A separate divestiture process is used to dispose of constructed projects or project elements and other real property interests associated with civil works projects. Some divestitures also may require explicit congressional deauthorization. USACE divestitures historically either have been limited to projects or real property interests that no longer serve their authorized purposes (e.g., navigation channels that no longer have commercial navigation) or have been conducted pursuant to specific congressional direction. While Section 1301 of WRDA 2018 appears to provide a one-time opportunity for unconstructed projects to be deauthorized, there currently is no formal process similar to the Section 7001 annual report process for a nonfederal entity to propose that a constructed project be deauthorized. Congress has deauthorized unconstructed and constructed projects and project elements in WRDA legislation. Deauthorization of Studies There are two authorities for deauthorizing studies: The Secretary of the Army is directed to transmit to Congress annually a list of incomplete authorized studies that have not received appropriations for five full fiscal years (33 U.S.C. §2264). The study list is not required to be published in the Federal Register . Congress has 90 days after submission of the study list to appropriate funds for a study; otherwise, the study is deauthorized. WRRDA 2014, as amended by WRDA 2018, requires that a feasibility study that remains incomplete 10 years after initiation is automatically deauthorized. CRS has no data indicating that studies have been deauthorized through these processes in recent years. USACE has indicated that the agency is reviewing its 5,600 study authorities to identify studies for deauthorization. Alternative Project Delivery and Innovative Finance Interest in Alternative Delivery As nonfederal entities have become more involved in USACE projects and their funding, they have expressed frustration with the time it takes USACE to complete studies and construction. Delayed completion of water resource projects can postpone some or all of a project's anticipated benefits. The impact of these delays varies by the type of project. Delayed completion of flood risk reduction projects may prolong a community's vulnerability to certain coastal and riverine floods, thereby contributing to the potential cost of disaster response and recovery. Delayed investment in navigation projects may result in postponed transportation cost savings from improved efficiency and in greater reliance on road and rail transport. Delayed aquatic ecosystem restoration projects may result in missed opportunities to attenuate wetlands loss and realize related ecosystem benefits, such as those for water quality and fisheries. Another concern with long project delivery is the potential for an increase in project costs. The Government Accountability Office in a 2013 report summarized its findings regarding cost growth at USACE flood control projects. GAO's detailed review of eight projects found that a factor contributing to cost increases at these USACE-led flood risk reduction projects was funding below the capability level. Other factors included design changes, initial USACE cost estimates being lower than later cost estimates, and differences in contract estimates and actual contract costs. When testifying in 2013, USACE Deputy Commanding General for Civil and Emergency Operations Major General Michael J. Walsh noted that how much funding is put toward a project significantly impacts the duration of project delivery. Although President Trump (as well as previous Presidents) and many Members of Congress have expressed interest in improving the nation's infrastructure, including its water resource infrastructure, balancing the potential benefits of such improvements and concerns about increased federal expenditures poses an ongoing challenge. While a subset of authorized USACE construction activities is included in the President's budget request and funded annually by congressional appropriations, numerous authorized USACE projects or project elements have not received federal construction funding. Competition for USACE discretionary appropriations has increased interest in alternative project delivery and innovative financing , including private financing and public-private partnerships (P3s). In a June 21, 2017, memorandum, the agency's Director of Civil Works announced the initiation of a comprehensive review to identify opportunities to enhance project delivery, organizational efficiency, and effectiveness. Congress, particularly in WRRDA 2014, WRDA 2016, and WRDA 2018, has authorized and extended alternative ways to advance and deliver USACE studies and projects. To expand delivery options, Congress has increased the flexibility in the nonfederal funding of USACE-led activities, nonfederal leadership of USACE studies and projects, and P3s. It also has authorized new financing mechanisms for water resource projects. Some of these expanded delivery and financed options are discussed below. Expansion of Delivery Options WRRDA 2014 and WRDA 2016 expanded the authorities for nonfederal entities to perform studies and construct projects (or elements of projects) that typically would have been undertaken by USACE. These statutes also provided that the costs of these nonfederal-led activities are shared by the federal government largely as if USACE had performed them. That is, nonfederal entities advancing water resource projects may be eligible to receive credit or reimbursement (without interest) subject to the availability of federal appropriations for their investments that exceed the required nonfederal share of project costs. These authorities typically require that the nonfederal entity leading the project comply with the same laws and regulations that would apply if the work were being performed by USACE. Private sector access to financing and expertise and experience with complex project management are all seen as potential advantages for the delivery of some types of public infrastructure. Interest has expanded in recent years in allowing private engagement in U.S. water resource projects, which would follow the models used in other U.S. infrastructure sectors, such as transportation, and in international examples of private provision of public infrastructure and related services. WRRDA 2014 directed USACE to establish pilot programs to evaluate the effectiveness and efficiency of allowing nonfederal applicants to carry out certain authorized projects. For example, WRRDA 2014 included the following: Section 5014 authorized a P3 pilot program, and Section 1043 authorized the transfer of federal funds to nonfederal entities to use for the construction of authorized USACE projects. The 116th Congress may consider water resource project financing and delivery during deliberations on USACE appropriations and authorization legislation, as well as during discussions of broader infrastructure initiatives. In H.Rept. 115-929 , which accompanied USACE FY2019 appropriations, congressional appropriators directed USACE to continue to develop its policy approach for public-private partnerships. For a discussion of some of the issues that have impeded greater private-sector participation and P3 efforts for USACE and water resource projects (e.g., limitations on USACE entering into long-term contracts and challenges to assessing project-specific user fees) see CRS Testimony TE10023, America's Water Resources Infrastructure: Approaches to Enhanced Project Delivery , by Nicole T. Carter. Under these authorities, additional nonfederal investments may, in the near term, achieve progress on some water resource projects, thereby potentially making federal funding available for other authorized USACE projects. However, additional nonfederal investment may have potential trade-offs for the federal government, including reduced federal influence over the set of studies and construction projects receiving, expecting, and eligible for federal support. Others raise concerns that these provisions alter how USACE funds are used by directing federal dollars toward projects with nonfederal sponsors that can provide more nonfederal funding upfront. A concern from the nonfederal perspective is the challenge of obtaining federal reimbursement. Water Infrastructure Finance and Innovation Act WRRDA 2014 in Sections 5021 through 5035 authorized the Water Infrastructure Finance and Innovation Act (WIFIA), a program to provide direct loans and loan guarantees for identified categories of water projects. The WIFIA concept is modeled after a similar program that assists transportation projects: the Transportation Infrastructure Finance and Innovation Act, or TIFIA, program. Congress established WIFIA with roles for both USACE and the Environmental Protection Agency (EPA). EPA's WIFIA program is funded and operational; USACE's WIFIA program remains in the development phase. WIFIA authorized both agencies to provide assistance in the form of loans and loan guarantees, and it identified each agency to provide that assistance for certain types of water projects. Under the WIFIA program, USACE is authorized to provide WIFIA support for a number of different project types, such as flood damage reduction projects, hurricane and storm damage reduction projects, environmental restoration projects, coastal or inland harbor navigation improvement projects, inland and intracoastal waterways navigation projects, or a combination of these projects. WRRDA 2014 included a number of project selection criteria that would affect whether individual projects are eligible to receive USACE WIFIA funding. WRDA 2018 amended the WIFIA authorization of appropriations provided by WRRDA 2014. WRRDA 2014 authorized WIFIA appropriations for each of FY2015 through FY2019 for $50 million for each of the EPA Administrator and the Secretary of the Army. WRDA 2018 added an authorization of appropriations for the EPA Administration for $50 million for each of FY2020 and FY2021. Implementation of WIFIA requires congressional appropriations to cover administrative expenses (i.e., "start-up" costs) and subsidy costs (i.e., the presumed default rate on guaranteed loans). Each agency also must promulgate regulations for the implementation of its WIFIA program. EPA has developed its regulations; USACE has not. The Administration has requested and Congress has provided funds for EPA's WIFIA. EPA is implementing its WIFIA authority. In contrast, the Administration had not requested funding for USACE's WIFIA start-up costs. Congress has directed USACE to develop the structure for its WIFIA program; however, the USACE WIFIA program has not advanced sufficiently to be operational. In H.Rept. 115-929 for FY2019, congressional appropriators directed USACE to continue to develop its WIFIA proposals for future budget submissions and to allow for WIFIA development expenses to be funded through the USACE Expenses account. Similar to recent years, the President's FY2020 request did not request funding for USACE's WIFIA. For a discussion of issues related to USACE implementation of WIFIA, see CRS Testimony TE10023, America's Water Resources Infrastructure: Approaches to Enhanced Project Delivery , by Nicole T. Carter. Other USACE Authorities and Activities There are exceptions to the standard project delivery process described above. USACE has some general authorities to undertake small projects, technical assistance, and emergency actions. Congress also has specifically authorized USACE to undertake numerous municipal water and wastewater projects. USACE also performs work on a reimbursable basis for other agencies and entities. These additional authorities are described below. Small Projects Under Continuing Authorities Programs The agency's authorities to undertake small projects are called Continuing Authorities Programs (CAPs). Projects under these authorities can be conducted without project-specific congressional study or construction authorization and without project-specific appropriations; these activities are performed at USACE's discretion without the need for inclusion in the Section 7001 reports. According to USACE, once funded, CAP projects generally take three years from feasibility phase initiation to construction completion. For most CAP authorities, Congress has limited the project size and scope as shown in Table 3 . The CAPs typically are referred to by the section number in the bill in which the CAP was first authorized. WRRDA 2014 requires the Assistant Secretary of the Army to publish prioritization criteria for the CAPs and an annual CAP report. For more information, see CRS In Focus IF11106, Army Corps of Engineers: Continuing Authorities Programs , by Anna E. Normand. Planning and Technical Assistance and Tribal Programs Congress has granted USACE some general authorities to provide technical assistance related to water resources planning and for floodplain management. Congress also has authorized USACE to provide technical and construction assistance to tribes. Except where noted in Table 4 , USACE does not need project-specific authority to undertake activities under the authorities listed in Table 4 . Natural Disaster and Emergency Response Activities National Response Framework For assistance for presidentially declared disasters pursuant to the Stafford Act ( P.L. 93-288 ), USACE may be tasked with performing various response and recovery activities. These activities are funded through the Disaster Relief Fund and performed at the direction of the Federal Emergency Management Agency (FEMA) and the President and at the request of the governor of a state or territory with an affected area. Under the National Response Framework, USACE coordinates emergency support for public works and engineering . This support includes technical assistance, engineering, and construction management as well as emergency contracting, power, and repair of public water and wastewater and solid waste facilities. USACE also assists in monitoring and stabilizing damaged structures and in demolishing structures designated as immediate hazards to public health and safety. In addition, the agency provides technical assistance in clearing, removing, and disposing of contaminated and uncontaminated debris from public property and in establishing ground and water routes into affected areas. USACE coordinates contaminated debris management with EPA. Flood Fighting and Emergency Response In addition to work performed as part of the National Response Framework, Congress has given USACE its own emergency response authority. This is commonly referred to as the agency's P.L. 84-99 authority, based on the act in which it was originally authorized, the Flood Control and Coastal Emergency Act (P.L. 84-99, 33 U.S.C. §701n). The act authorizes USACE to perform emergency response and disaster assistance. It also authorizes disaster preparedness, advance measures, emergency operations (disaster response and post-flood response), rehabilitation of certain damaged flood control works, protection or repair of certain federally authorized shore protection works threatened by coastal storms, emergency dredging, and flood-related rescue operations. These activities are limited to actions to save lives and protect improved property (public facilities/services and residential or commercial developments). USACE also has some authorities to assist with selected activities during drought. Most of the agency's emergency response work (including the repair program described below) generally is funded through supplemental appropriations provided directly to USACE. Until supplemental appropriations are provided, Congress has provided USACE with authority to transfer money from ongoing USACE projects to emergency operations (33 U.S.C. §701n). Repair of Damaged Levees and Other Flood and Storm Projects In P.L. 84-99, Congress authorized USACE to rehabilitate damaged flood control works (e.g., levees) and federally constructed hurricane or shore protection projects (e.g., federal beach nourishment projects) and to conduct related inspections. This authority is referred to as the Rehabilitation and Inspection Program (RIP). To be eligible for rehabilitation assistance, the project must be in active status at the time of damage by wind, wave, or water action other than ordinary nature. Active RIP status is maintained by proper project maintenance as determined during an annual or semiannual inspection and by the correction of deficiencies identified during periodic inspections. As of early 2017, RIP included around 1,100 projects consisting of 14,000 miles of levees and 33 dams. For locally constructed projects, 80% of the cost to repair the damage is paid using federal funds and 20% is paid by the levee or dam owner. For federally constructed projects, the entire repair cost is a federal responsibility (except the nonfederal sponsor is responsible for the cost of obtaining the sand or other material used in the repair). For damage to be repaired, USACE must determine that repair has a favorable benefit-cost ratio. Local sponsors assume any rehabilitation cost for damage to an active project attributable to deficient maintenance. WRDA 2016 allows that in conducting repair or restoration work under RIP, an increase in the level of protection can be made if the nonfederal sponsor pays for the additional protection. Assistance for Environmental Infrastructure/Municipal Water and Wastewater Since 1992, Congress has authorized and provided for USACE assistance with design and construction of municipal drinking water and wastewater infrastructure projects. This assistance has included treatment facilities, such as recycling and desalination plants; distribution and collection works, such as stormwater collection and recycled water distribution; and surface water protection and development projects. This assistance is broadly labeled environmental infrastructure at USACE. Most USACE environmental infrastructure assistance is authorized for a specific geographic location (e.g., city, county, multiple counties) under Section 219 of WRDA 1992 ( P.L. 102-580 ), as amended; however, other similar authorities, sometimes covering regions or states, exist in multiple sections of WRDAs and in selected Energy and Water Development Appropriations acts. The nature of USACE's involvement (e.g., a grant from USACE to the project owner or USACE acting as the construction project manager) and nonfederal cost share vary according to the specifics of the authorization. Most USACE environmental infrastructure assistance requires cost sharing, typically designated at 75% federal and 25% nonfederal; however, some of the assistance authorities are for 65% federal and 35% nonfederal cost sharing. Under Section 219, USACE performs the authorized work; for environmental infrastructure projects authorized in other provisions, USACE often can use appropriated funds to reimburse nonfederal sponsors for work they perform. Since 1992, Congress has authorized USACE to contribute assistance to more than 300 of these projects and to state and regional programs, with authorizations of appropriations totaling more than $5 billion. WRRDA 2014 expanded authorizations and authorization of appropriations for specific multi-state environmental infrastructure activities. In WRDA 2016 and WRDA 2018, Congress expanded the Section 7001 process, allowing nonfederal entities to propose modifications to existing authorities for environmental infrastructure assistance. (For more on Section 7001 process, see " 2016, 2018, and the Section 7001 Annual Report Process .") Although no Administration has included environmental infrastructure in a USACE budget request since the first congressional authorization in 1992, Congress regularly includes USACE environmental infrastructure funds in appropriations bills. Congress provided $50 million in FY2015, $55 million in each of FY2016 and FY2017, $70 million in FY2018, and $77 million in FY2019. These funds are part of the "additional funding" provided by Congress in enacted appropriations bills. After enactment of an appropriations bill, the Administration follows guidance provided in the bill and accompanying reports to direct its use of these funds on authorized environmental infrastructure assistance activities. The selected environmental infrastructure assistance activities are identified in the agency's work plan for the fiscal year, which is typically available within two months after enactment of appropriations. Recently, funds have been used to continue ongoing environmental infrastructure assistance. Because environmental infrastructure activities are not traditional USACE water resource projects, they are not subject to USACE planning process (e.g., a benefit-cost analysis and feasibility study are not performed). USACE environmental infrastructure assistance activities, however, are subject to federal laws, such as NEPA. Reimbursable Work In addition to its work for the Department of the Army under USACE's military program, USACE under various authorities also may perform work on a reimbursable basis for other DOD entities, federal agencies, states, tribes, local governments, and foreign governments. Other departments and agencies often call upon USACE's engineering and contracting expertise, as well as experience with land and water restoration and research and development. USACE contracts with private firms to perform most of the work. According to the Chief of Engineers in March 2019 testimony, USACE only accepts requests for reimbursable work that are deemed consistent with USACE's core technical expertise, are in the national interest, and that can be executed without impacting USACE's primary military and civil works missions. An example of reimbursable work include USACE's execution of contracts for EPA's efforts to remediate contaminated sites. Another example is USACE's contract management for border barrier and road construction at the U.S.-Mexico border for the Department of Homeland Security's Customs and Border Protection. USACE may perform this reimbursable work pursuant to broad authorities (e.g., Economy in Government Act, 31 U.S.C. §1535; Intergovernmental Cooperation Act, 31 U.S.C. §6505) or agency-specific authorities (e.g., 10 U.S.C §3036(e) known as the Chief's Economy Act). Appendix A. Evolution of USACE Civil Works Responsibilities The civil responsibilities of the U.S. Army Corps of Engineers (USACE) began with creating and regulating navigable channels and later flood control projects. Navigation projects include river deepening, channel widening, lock expansion, dam operations, and disposal of dredged material. Flood control projects are intended to reduce riverine and coastal storm damage; these projects range from levees and floodwalls to dams and river channelization. Many USACE projects are multipurpose—that is, they provide water supply, recreation, and hydropower in addition to navigation or flood control. USACE environmental activities involve wetlands and aquatic ecosystem restoration and environmental mitigation activities for USACE facilities. The agency's regulatory responsibility for navigable waters extends to issuing permits for private actions that might affect navigation, wetlands, and other waters of the United States. Navigation and Flood Control (1802-1950s) The agency's civil works mission developed in the 19 th century. In 1824, Congress passed legislation charging military engineers with planning roads and canals to move goods and people. In 1850, Congress directed USACE to engage in its first planning exercise—flood control for the lower Mississippi River. In 1899, Congress directed the agency to regulate obstructions of navigable waters (see box titled "USACE Regulatory Activities: Permits and Their Authorities). During the 1920s, Congress expanded USACE's ability to incorporate hydropower into multipurpose projects and authorized the agency to undertake comprehensive surveys to establish river-basin development plans. The Flood Control Act of 1928 (70 Stat. 391) authorized USACE to construct flood control projects on the Mississippi and Tributaries (known as the MR&T project), and modified a 1917 authority for flood control project on the Sacramento River in California. The modern era of federal flood control emerged with the Flood Control Act of 1936 (49 Stat. 1570), which declared flood control a "proper" federal activity in the national interest. The 1944 Flood Control Act (33 U.S.C. §708) significantly augmented the agency's involvement in large multipurpose projects and authorized agreements for the temporary use of surplus water. The Flood Control Act of 1950 (33 U.S.C. §701n) began the agency's emergency operations through authorization for flood preparedness and emergency operations. The Water Supply Act of 1958 (43 U.S.C. §390b) gave USACE authority to include some reservoir storage for municipal and industrial water supply in reservoir projects at 100% nonfederal cost. Changing Priorities (1960-1985) From 1970 to 1985, Congress authorized no major water projects, scaled back several authorized projects, and passed laws that altered project operations and water delivery programs to protect the environment. The 1970s marked a transformation in USACE project planning. The 1969 National Environmental Policy Act (42 U.S.C. §4321) and the Endangered Species Act of 1973 (16 U.S.C. §1531) required federal agencies to consider environmental impacts, increase public participation in planning, and consult with other federal agencies. Enactment in 1972 of what became the Clean Water Act also expanded the USACE's regulatory responsibilities; for more on the USACE role in implementing Section 404 of the Clean Water Act (33 U.S.C. §1344), see the text box "USACE Regulatory Activities: Permits and Their Authorities." Executive orders (E.O. 11988 and E.O. 11990) united the goals of reducing flood losses and decreasing environmental damage by recognizing the value of wetlands and by requiring federal agencies to evaluate potential effects of actions on floodplains and to minimize wetlands impacts. Various dam failures and safety concerns in the United States—Buffalo Creek Dam (private), West Virginia in 1972; Reclamation's Teton Dam (Bureau of Reclamation), Idaho in 1976; and Kelly Barnes Dam (private), Georgia in 1977; among others—drew public and elected officials' attention. Much of the current federal dam safety framework developed out of executive orders and policies in the late 1970s and legislation in the 1980s. These include the USACE's lead role in the National Inventory of Dams; for more information, see the text box "National Inventory of Dams." Environmental Mission and Nonfederal Responsibility (1986-2000) Congress changed the rules for USACE water projects and their funding through the 1986 Water Resources Development Act (WRDA 1986; 33 U.S.C. §2211). WRDA 1986 established new cost-share formulas, resulting in greater financial and decision-making roles for nonfederal stakeholders. It also reestablished the tradition of biennial consideration of an omnibus USACE water resource authorization bill. WRDA 1990 (33 U.S.C. §§1252, 2316) explicitly expanded the agency's mission to include environmental protection and increased its responsibility for contamination cleanup, dredged material disposal, and hazardous waste management. WRDA 1992 (33 U.S.C. §2326) authorized USACE to use the "spoils" from dredging in implementing projects for protecting, restoring, and creating aquatic and ecologically related habitats, including wetlands. WRDA 1996 (33 U.S.C. §2330) gave USACE limited programmatic authority to undertake aquatic ecosystem restoration projects. Although USACE has been involved with numerous environmental restoration projects in recent years, WRDA 2000 approved a restoration program for the Florida Everglades that represented the agency's first multiyear, multibillion-dollar effort of this type. Evolving Demands and Processes (2001-present) The agency's aging infrastructure and efforts to enhance the security of its infrastructure from terrorism and natural threats have expanded USACE activities in infrastructure rehabilitation, maintenance, and protection. USACE has been involved in significant flood-related disaster response and recovery activities, including following Hurricane Katrina in 2005, Hurricane Sandy in 2012, and the 2017 hurricane season. WRDA 2007 included provision to expand levee safety efforts. USACE also has redirected its flood control activities to incorporate concepts of flood risk management and, more recently, flood resilience. The regularity with which USACE has received congressional appropriations for natural disaster response has increased attention to its role in emergency response, infrastructure repair, and post-disaster recovery and to the potential for nature-based flood risk reduction measures. WRDA 2007 continued the expansion of the agency's ecosystem restoration activities by authorizing billions of dollars for these activities, including large-scale restoration efforts in coastal Louisiana and the Upper Mississippi River. WRRDA 2014, WRDA 2016, and WRDA 2018 have expanded opportunities for nonfederal public and private participation in project delivery and financing and aimed to improve the efficiency of USACE planning activities. Appendix B. Water Resources Development Acts from 1986 through 2018 This appendix provides an overview of omnibus U.S. Army Corps of Engineers (USACE) authorization legislation from 1986 to 2016. It first presents a table with the various pieces of legislation that functioned as USACE omnibus authorization bills and identifies the titles relevant to USACE. The appendix next provides supplementary information to what was provided in " USACE Authorization Legislation: 1986 to Present Process " regarding the evolution of the bills and the contents of specific bills. Overview Table Table B-1 provides additional information on each of the bills that functioned as an omnibus USACE authorization bill often titled as a Water Resource Development Act (WRDA) since 1986. The table includes the following bills. WRDA 1986 ( P.L. 99-662 ) WRDA 1988 ( P.L. 100-676 ) WRDA 1990 ( P.L. 101-640 ) WRDA 1992 ( P.L. 102-580 ) WRDA 1996 ( P.L. 104-303 ) WRDA 1999 ( P.L. 106-53 ) WRDA 2000 ( P.L. 106-541 ) WRDA 2007 ( P.L. 110-114 ) Water Resources Reform and Development Act of 2014 (WRRDA 2014; P.L. 113-121 ) Water Infrastructure Improvements for the Nation Act (WIIN; P.L. 114-322 ) America's Water Infrastructure Act of 2018 (AWIA 2018, P.L. 115-270 ) The table lists the titles used in the bills and the agency or department related to the majority of the provisions in each of those titles. The titles are shown in the table as being primarily associated with either USACE civil works or primarily associated with programs and activities of agencies or departments other than USACE (with the relevant agency or department shown in parentheses). The placement in one of the two columns of the table is a broad sorting and does not reflect the details of each provision within a title. For titles listed as primarily USACE, a few provisions in a title may relate principally to other agencies or departments while the bulk of the title is USACE related, and vice versa for titles listed as not primarily associated with USACE. Titles related to revenue and trust funds that are closely associated with USACE projects and USACE appropriations are shown in the table as USACE titles. As appropriate, clarifying notes are provided in the final column. As shown in Table B-1 , USACE was the focus of the majority of titles for all of the bills except WIIN and AWIA 2018. For two of the bills—WRDA 1992 and WRRDA 2014—there were titles for which the majority of the provisions were related to the U.S. Environmental Protection Agency (EPA) while also being related to USACE activities. For example, Title V of WRRDA 2014 included authorizations that included both EPA and USACE, authorities only related to EPA, and an authority only related to USACE. WRDA 1992 had a title with provisions that related most closely to EPA's role in sediment management; USACE, however, has a role in sediment management more broadly as well as being mentioned in a few of the provisions of Title V of WRDA 1992. In contrast, WIIN included titles on water-related programs and projects spanning various agencies and departments other than USACE. Title I of the bill—which had a short title designated as WRDA 2016—focused specifically on USACE water resource authorizations, while Titles II, III, and IV focused primarily on other agencies; many of the specific provisions in these titles had no or little relationship to USACE. 1986 Through WRDA 2007 WRDA 1986 marked the end of a stalemate between Congress and the executive branch regarding USACE authorizations. It resolved long-standing disputes related to cost sharing, user fees, and environmental requirements. Prior to 1986, disputes over these and other matters had largely prevented enactment of major USACE civil works legislation since 1970. Biennial consideration of USACE authorization legislation resumed after WRDA 1986 in part to avoid long delays between the planning and execution of projects. Interest in authorizing new projects, increasing authorized funding levels, and modifying existing projects is often intense, thus prompting regular WRDA consideration. WRDA enactment was less consistent for a period. Controversial project authorizations and disagreements over the need for and direction of change in how USACE plans, constructs, and operates projects contributed to WRDA bills not being enacted in the 107 th , 108 th , and 109 th Congresses. The 110 th Congress enacted WRDA 2007 in November 2007, overriding a presidential veto. 2007 Through 2018 No WRDA bill was enacted between WRDA 2007 and WRRDA 2014. With WRDA 2016, Congress returned enactment of USACE authorization legislation to a biennial time frame. WRRDA 2014 and WRDA 2016 attempted to address frustrations among some stakeholders with the pace of study and construction of USACE projects by allowing interested nonfederal entities, including private entities, to have greater roles in project development, construction, and financing. WRRDA 2014, which was enacted on June 10, 2014, authorized 34 construction projects that had received agency review, had Chief of Engineers reports (also known as Chief's re ports ), and had been the subject of a congressional hearing, thereby overcoming concerns related to congressionally directed spending (known as earmarks ). These 34 construction projects represented $15.6 billion in federal authorization of appropriations. WRRDA 2014 also altered processes and authorizations for project delivery options, including expanded opportunities for nonfederal entities to lead projects and for innovative financing, such as public-private partnerships. WRDA 2016 authorized new USACE water resource studies (which were among those studies identified in the Section 7001 annual reports submitted in February 2015 and February 2016) and projects, as well as modifications to ongoing construction projects. Each of the construction authorizations for new projects had a Chief's report. WRDA 2016 authorized 30 new construction projects at a federal cost of more than $10 billion. Various USACE provisions in WRDA 2016 related to how nonfederal sponsors may participate in the financing of water infrastructure activities. For more on WRDA 2016 and the other titles of WIIN, see CRS In Focus IF10536, Water Infrastructure Improvements for the Nation Act (WIIN) , by Nicole T. Carter et al. The 115 th Congress enacted America's Water Infrastructure Act of 2018 (AWIA 2018, P.L. 115-270 ) in October 2018. AWIA 2018 included the Water Resources Development Act of 2018 (WRDA 2018) as Title I of the bill. WRDA 2018 focused on USACE activities and dam and levee safety programs (that also relate to authorities of the Federal Emergency Management Agency). Other titles of AWIA 2018 addressed EPA water programs, Department of the Interior water authorities, water and related infrastructure authorities related to tribes, and hydropower (including authorities of the Federal Energy Regulatory Commission). Regarding USACE project authorizations, WRDA 2018 authorized 12 new construction projects at a total cost of $5.6 billion ($3.7 billion federal and $1.9 billion nonfederal); modified 4 projects, increasing the projects' authorization of appropriations by approximately $1.3 billion ($1.1 billion federal and $0.2 billion nonfederal); and authorized project studies. WRDA 2018 expanded most of the agency's programmatic authorization of appropriations levels by 25%. WRDA 2018 also amended existing deauthorization efforts and authorities and established a process to deauthorize $4 billion in construction projects previously authorized by Congress that have not been constructed. In addition, WRDA 2018 included provisions requiring various reports from USACE and reports by the National Academy of Sciences.

At the direction of Congress, the U.S. Army Corps of Engineers (USACE) in the Department of Defense (DOD) undertakes water resource development activities. USACE develops civil works projects principally to improve navigable channels, reduce flood and storm damage, and restore aquatic ecosystems. Congress directs USACE through authorizations and appropriations legislation. Congress often considers USACE authorization legislation biennially and appropriations annually. USACE attracts congressional attention because its projects can have significant local and regional economic benefits and environmental effects. This report summarizes authorization legislation, project delivery, authorities for alternative project delivery, and other USACE authorities. Authorization Legislation. For USACE studies and projects, congressional study and project authorization generally is required prior to being eligible for federal appropriations. Congress generally considers an omnibus USACE authorization bill biennially. The bill is typically titled a Water Resources Development Act (WRDA). Agency action on an authorization typically requires funding; that is, both an authorization and an appropriation would be needed to proceed. Most water resource project authorizations in WRDAs fall into three general categories: project studies, construction projects, and modifications to existing projects. A few provisions in WRDA bills have time-limited authorizations; therefore, some WRDA provisions may reauthorize expired or expiring authorities. Recent authorization bills include: America's Water Infrastructure Act of 2018 (AWIA 2018; P.L. 115-270), which included Title I, Water Resources Development Act of 2018 (WRDA 2018) which focused on USACE civil works; Water Infrastructure Improvements for the Nation Act (WIIN; P.L. 114-322), which included Title I ,Water Resources Development Act of 2016 (WRDA 2016) which focused on USACE civil works; and Water Resources Reform and Development Act of 2014 (WRRDA 2014; P.L. 113-121), which was largely, but not wholly, focused on USACE civil works. In WRRDA 2014, Congress developed processes for identifying site-specific studies and projects for authorization to overcome concerns related to congressionally directed spending (known as earmarks). Congress also used these processes for WRDA 2016 and WRDA 2018. Standard and Alternative Project Delivery. The standard process for a USACE project requires two separate congressional authorizations—one for studying feasibility, and a subsequent one for construction—as well as appropriations for both. In recent years, congressional authorization for project construction has been based on a favorable report by the Chief of Engineers (a Chief's report) and an accompanying feasibility report. For most activities, Congress requires a nonfederal sponsor to share some portion of study and construction costs. For some project types (e.g., local flood control), nonfederal sponsors are responsible for operation and maintenance. WRRDA 2014, WRDA 2016, and WRDA 2018 expanded the opportunities for interested nonfederal entities, including private entities, to have greater roles in project development, construction, and financing. WRRDA 2014 also authorized, through the Water Infrastructure Finance and Innovation Act (WIFIA), a program to provide direct loans and loan guarantees for water projects. Although the WIFIA program administered by the U.S. Environmental Protection Agency is operational, the USACE WIFIA program for navigation, flood risk reduction, and ecosystem restoration projects has not been implemented. Other USACE Activities and Authorities. Congress has granted USACE general authorities to undertake some activities without requiring additional congressional authorization, including emergency actions related to flooding and limited actions in response to drought. Additionally, under the National Response Framework, USACE may be tasked with performing activities in response to an emergency or disaster, principally associated with public works and engineering such as providing temporary roofing and emergency power restoration. In addition to its work for the Department of the Army under USACE's military program, USACE under various authorities also may perform work on a reimbursable basis for other DOD entities, federal agencies, state and local governments, and foreign governments (e.g., USACE manages the construction of multiple border barrier projects on a reimbursable basis for Customs and Border Protection).

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Ho use Legislative Resource Center 292 Cannon House Office Building [phone number scrubbed] To order publications: [phone number scrubbed] or email [email address scrubbed] http://clerk.house.gov/about/offices_lrc.aspx House offices only: https://housenet.house.gov/campus/service-providers/legislative-resource-center For current and historical House documents, directories, payroll and financial disclosure reports, and lobbyist registrations. The House Legislative Resource Center is a part of the House Library (see below). House Legislative Counsel 337 Ford House Office Building [phone number scrubbed] https://legcounsel.house.gov House offices only: http://legcoun.house.gov/members/ For assistance with legislative drafting and preparation of conference reports. 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House Technology Call Center H2-694 Ford House Office Building [phone number scrubbed] or [phone number scrubbed] House offices only: https://housenet.house.gov/technology For technical assistance with, and training on, office computers and wireless devices, websites, software, and databases. Senate Offices and Websites Senate Website http://www.senate.gov Senate offices only (Webster): http://webster.senate.gov Websites of Senators, leadership offices and organizations, committees, and support offices. The restricted Webster website is a portal to the various "Senate Offices Only" sites described below and also provides access to commercial database subscriptions, including ProQuest Congressional and LexisNexis. Secretary of the Senate S312 Capitol [phone number scrubbed] To order publications: [phone number scrubbed] Senate offices only: http://webster.senate.gov/secretary For current and historical Senate documents, directories, payroll and financial disclosure reports, archival assistance, and lobbyist registrations. Note: The Senate Document Room is located at B04 Hart Senate Office Building and can be reached at [phone number scrubbed]. Senate IT/Computer Supp or t Services 2 Massachusetts Avenue, NE (Postal Square Building, 6 th Floor) [phone number scrubbed] Senate offices only: http://webster.senate.gov/officeequipment/computers/itcomputer-support/ Provides technical assistance with, and training on, office computers and wireless devices, websites, software, and databases. Senate Legislative Counsel 668 Dirksen Senate Office Building [phone number scrubbed] http://slc.senate.gov For assistance with legislative drafting and preparation of conference reports. Senate Library B15 Russell Senate Office Building [phone number scrubbed] or email [email address scrubbed] Senate offices only: http://webster.senate.gov/library Provides reference assistance for Senate offices, including assistance in searching Congress.gov. Offers classes on research topics and has the most complete collection of Senate publications. Senate Parliamentarian S133 Capitol [phone number scrubbed] Senate offices only: http://webster.senate.gov/secretary/departments/Parliamentarian For assistance with legislative rules, precedents, and practices. Additional Legislative Support Resources Congress.gov Website https://www.congress.gov For timely, accurate and complete legislative information, 93 rd Congress (1973-1974)-present. Content includes legislation, floor votes, schedules, the Congressional Record , and committee publications. The site is also a portal to a variety of government, commercial, and academic legislative sources. Legislative branch users have additional access to restricted content on the site, such as CQ Markup Reports and CRS reports concerning specific bills. Congress.gov is a public legislative website that launched in 2016. It superseded THOMAS and will replace the LIS website for legislative branch users sometime in 2019. Staff may continue to use the LIS website at http://www.lis.gov for some search capabilities that are not yet replicated on Congress.gov. Congressional Research Service Library of Congress, Madison Building, LM-205 La Follette Congressional Reading Room, LM-202 Main number to place requests: [phone number scrubbed] Hotline for "ready reference" questions: [phone number scrubbed] Congressional offices only: http://www.crs.gov To register for Twitter feed, go to http://www.crs.gov/Resources/Twitter For confidential, authoritative, and objective research and analysis on legislative and oversight issues before Congress, as well as programs designed to help staffers learn about such topics as budget and appropriations, legal research, and legislative process and procedure. Congressional Budget Office H2-410 Ford House Office Building [phone number scrubbed] To order publications: email [email address scrubbed] http://www.cbo.gov https://twitter.com/uscbo For budget projections, budget information, and cost estimates for bills reported out of committee. Governmen t Accountability Office 441 G Street, NW [phone number scrubbed] To order publications: [phone number scrubbed] http://www.gao.gov http://twitter.com/USGAO Congressional offices only: http://watchdog.gao.gov For independent, nonpartisan reports on agency audits, policy analysis, and program evaluations. As the investigative arm of Congress, GAO supports congressional oversight by reporting on federal government programs, investigating allegations of improper agency activities, and adjudicating government contract disputes. Government Publishing Office https://www.gpo.gov https://www.govinfo.gov (see below) http://twitter.com/USGPO Congressional offices only: http://www.gpo.gov/congressional/ Govinfo ( https://www.govinfo.gov ) replaced GPO's Federal Digital System (FDsys) website in December 2018. Govinfo provides access to the same publications and search functionality as FDsys, but has a new look and new features. For congressional and executive branch documents, such as the Federal Register and the U.S. Government Manual. Law Library of Congress Law Library Reading Room, LM-242 Library of Congress [phone number scrubbed] Congressional offices only: [phone number scrubbed] http://www.loc.gov/law http://twitter.com/lawlibcongress Congressional offices only: http://www.loc.gov/law/congress For legal research and reference; offers special services to congressional offices, including reports, briefings, and training on legal topics. National Archives and Records Administration 700 Pennsylvania Avenue, NW [phone number scrubbed] Congressional offices only: http://www.archives.gov/congress Listings of newly enacted laws and law numbers: http://www.archives.gov/federal-register/laws/current.html http://twitter.com/usnatarchives For newly enacted laws, older Executive Orders and Presidential Proclamations, and access to congressional committee records that are stored in the Center for Legislative Archives. For Office of the Federal Register and information about newly assigned public law numbers: [phone number scrubbed]. PUBLAWS-L, an email list about newly enacted laws. To sign up: http://www.archives.gov/federal-register/laws/updates.html . Office of Management and Budget 725 17 th Street, NW (New Executive Office Building) [phone number scrubbed] https://www.whitehouse.gov/omb/ https://twitter.com/OMBPress For copies of the President's federal budget proposals, proposed legislation, testimony, reports, PAYGO scorecards, and other documents associated with the Administration's agenda. OMB serves as the implementation and enforcement arm of presidential policy government-wide. White House Executive Clerk's Office 1600 Pennsylvania Avenue, NW [phone number scrubbed] (remain on the line after recording to reach a live person) https://www.whitehouse.gov/briefings-statements/ To find out if the President has received, signed, or vetoed recent legislation. White House Website http://www.whitehouse.gov http://twitter.com/whitehouse For current presidential Administration documents, such as executive orders and presidential proclamations. Note: Older, as well as archived, executive orders are available through the National Archives' Executive Orders web page at http://www.archives.gov/federal-register/executive-orders/ . For executive orders, click on the link by President, by year, to view executive orders for each year. For presidential proclamations, click on the link "view all Presidential Documents" on the top right of this website page, then click on the link by President for a list arranged in reverse chronological order (most recent first).

This report provides a brief list of key House, Senate, legislative support agencies, and executive branch offices, as well as links to online resources of use to new congressional staff who work with legislative procedures and conduct legislative research. Some of the websites listed are available only to congressional offices; other sites are restricted by chamber and are only available to those staff working in either House or Senate offices. This report is intended for congressional use only and will be updated annually.

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Background Federal law provides that all aliens must enter the United States pursuant to the Immigration and Nationality Act (INA). The two major categories of aliens in the INA are (1) immigrants, who are admitted to the United States permanently, and (2) nonimmigrants, who are admitted for temporary reasons (e.g., students, tourists, temporary workers, or business travelers). Foreign nationals who lack prope r immigration authorization generally fall into three categories: (1) those who are admitted legally and then overstay their nonimmigrant visas, (2) those who enter the country surreptitiously without inspection, and (3) those who are admitted on the basis of fraudulent documents. In all three instances, the aliens are in violation of the INA and subject to removal. Temporary Protected Status (TPS), codified by INA Section 244, provides temporary relief from removal and work authorization to foreign nationals in the United States from countries experiencing armed conflict, natural disaster, or other extraordinary circumstances that prevent their safe return. This report begins by situating TPS in the context of humanitarian responses to migration. Another form of blanket relief from removal —Deferred Enforced Departure (DED)—is also described, as is the historical use of these relief mechanisms. This report then provides data on the countries currently designated for TPS, including the conditions that have contributed to their designation. Past legislation to provide lawful permanent resident status to certain TPS-designated foreign nationals is also described. The report concludes with examples of activity in the 115 th and 116 th Congresses related to TPS. Humanitarian Response As a State Party to the 1967 United Nations Protocol Relating to the Status of Refugees (hereinafter, U.N. Protocol), the United States agrees to the principle of nonrefoulement , which asserts that a refugee should not be returned to a country where he/she faces serious threats to his/her life or freedom. (This is now considered a rule of customary international law.) Nonrefoulement is embodied in several provisions of U.S. immigration law. Most notably, it is reflected in INA provisions requiring the government to withhold the removal of a foreign national to a country in which his or her life or freedom would be threatened on the basis of race, religion, nationality, membership in a particular social group, or political opinion. The legal definition of a refugee in the INA, which is consistent with the U.N. Protocol, specifies that a refugee is a person who is unwilling or unable to return to his/her country of nationality or habitual residence because of persecution or a well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion. This definition also applies to individuals seeking asylum. Under the INA, refugees and asylees differ on the physical location of the persons seeking the status. Those who are displaced abroad to a country other than their home country apply for refugee status, while those who are in the United States or at a U.S. port of entry apply for asylum. Other foreign nationals in the United States who may elicit a humanitarian response do not meet the legal definition for asylum; under certain circumstances these persons may be eligible for relief from removal through TPS or DED. Temporary Protected Status TPS is a blanket form of humanitarian relief. It is the statutory embodiment of safe haven for foreign nationals within the United States who may not meet the legal definition of refugee or asylee but are nonetheless fleeing—or reluctant to return to—potentially dangerous situations. TPS was established by Congress as part of the Immigration Act of 1990 ( P.L. 101-649 ). The statute gives the Secretary of the Department of Homeland Security (DHS), in consultation with other government agencies (most notably the Department of State), the authority to designate a country for TPS under one or more of the following conditions: ongoing armed conflict in a foreign state that poses a serious threat to personal safety; a foreign state request for TPS because it temporarily cannot handle the return of its nationals due to an environmental disaster; or extraordinary and temporary conditions in a foreign state that prevent its nationals from safely returning. A foreign state may not be designated for TPS if the Secretary of DHS finds that allowing its nationals to temporarily stay in the United States is against the U.S. national interest. The Secretary of DHS can designate a country for TPS for periods of 6 to 18 months and can extend these periods if the country continues to meet the conditions for designation. To obtain TPS, eligible foreign nationals within the United States must pay specified fees and submit an application to DHS's U.S. Citizenship and Immigration Services (USCIS) before the deadline set forth in the Federal Register notice announcing the TPS designation. The application must include supporting documentation as evidence of eligibility (e.g., a passport issued by the designated country and records showing continuous physical presence in the United States since the date established in the TPS designation). The statute specifies grounds of inadmissibility that cannot be waived, including those relating to criminal convictions, drug offenses, terrorist activity, and the persecution of others. Individuals granted TPS are eligible for employment authorization, cannot be detained on the basis of their immigration status, and are not subject to removal while they retain TPS relief. They may be deemed ineligible for public assistance by a state and may travel abroad with the prior consent of the DHS Secretary. TPS does not provide a path to lawful permanent residence or citizenship, but a TPS recipient is not barred from adjusting to nonimmigrant or immigrant status if he or she meets the requirements. DHS has indicated that information it collects when an individual registers for TPS may be used to enforce immigration law or in any criminal proceeding. In addition, withdrawal of an alien's TPS may subject the alien to exclusion or deportation proceedings. Deferred Enforced Departure In addition to TPS, there is another form of blanket relief from removal known as deferred enforced departure (DED), formerly known as extended voluntary departure (EVD). DED is a temporary, discretionary, administrative stay of removal granted to aliens from designated countries. Unlike TPS, a DED designation emanates from the President's constitutional powers to conduct foreign relations and has no statutory basis. DED was first used in 1990 and has been used a total of five times (see " Historical Use of Blanket Relief "). Liberia is the only country currently designated under DED, and that designation is scheduled to end on March 30, 2020. DED and EVD have been used on a country-specific basis to provide relief from removal at the President's discretion, usually in response to war, civil unrest, or natural disasters. When Presidents grant DED through an executive order or presidential memorandum, they generally provide eligibility guidelines, such as demonstration of continuous presence in the United States since a specific date. Unlike TPS, the Secretary of State does not need to be consulted when DED is granted. In contrast to recipients of TPS, individuals who benefit from DED are not required to register for the status with USCIS unless they are applying for work authorization. Instead, DED is triggered when a protected individual is identified for removal. Historical Use of Blanket Relief In 1990, when Congress enacted the TPS statute, it also granted TPS for 18 months to Salvadoran nationals who were residing in the United States. Since then, the Attorney General (and, later, the Secretary of DHS), in consultation with the State Department, granted and subsequently terminated TPS for foreign nationals in the United States from the following countries: Angola, Bosnia-Herzegovina, Burundi, Guinea, Lebanon, Liberia, the Kosovo Province of Serbia, Kuwait, Rwanda, and Sierra Leone. Rather than extending the initial Salvadoran TPS when it expired in 1992, the George H. W. Bush Administration granted DED to an estimated 190,000 Salvadorans through December 1994. This Administration also granted DED to about 80,000 Chinese nationals in the United States following the Tiananmen Square massacre in June 1989, and these individuals retained DED status through January 1994. In December 1997, President Bill Clinton instructed the Attorney General to grant DED to Haitian nationals in the United States for one year, providing time for the Administration to work with Congress on long-term legislative relief for Haitians. President George W. Bush directed that DED be provided to Liberian nationals whose TPS was expiring in September 2007; this status was extended several times by President Obama. President Trump has terminated DED for Liberians, with an effective date of March 30, 2020 (for more details, see " Liberia "). Countries Designated for Temporary Protections Approximately 417,000 foreign nationals from the following 10 countries have TPS: El Salvador, Haiti, Honduras, Nepal, Nicaragua, Somalia, South Sudan, Sudan, Syria, and Yemen. In addition, certain Liberian nationals are covered by a designation of DED (see " Liberia " section below). The Administration has announced terminations of temporary protections for seven of these countries (six with TPS and one with DED). Several lawsuits have been filed challenging these decisions. Table 1 lists the current TPS-designated countries, the most recent decision—to extend or terminate—by the Secretary of DHS, the date from which individuals are required to have continuously resided in the United States, and the designation's expiration date. In addition, Table 1 shows the approximate number of individuals from each country who registered during the previous registration period and the number of individuals with TPS as of November 29, 2018. Central America The only time Congress has granted TPS was in 1990 (as part of the law establishing TPS) to eligible Salvadoran nationals in the United States. In the aftermath of Hurricane Mitch in November 1998, then-Attorney General Janet Reno announced that she would temporarily suspend the deportation of nationals from El Salvador, Guatemala, Honduras, and Nicaragua. On January 5, 1999, the Attorney General designated Honduras and Nicaragua for TPS due to extraordinary displacement and damage from Hurricane Mitch. Prior to leaving office in January 2001, the Clinton Administration said it would temporarily halt deportations to El Salvador because of a major earthquake. In 2001, the George W. Bush Administration decided to grant TPS to Salvadoran nationals following two earthquakes that rocked the country. Over the years, the George W. Bush Administration granted, and the Obama Administration extended, TPS to Central Americans from El Salvador, Honduras, and Nicaragua on the rationale that it was still unsafe for nationals to return due to the disruption of living conditions from environmental disasters. Beginning in late 2017, the Trump Administration announced decisions to terminate TPS for Nicaragua and El Salvador and to put on hold a decision about Honduras. In November 2017, DHS announced that TPS for Nicaragua would end on January 5, 2019—12 months after its last designation would have expired—due to nearly completed recovery efforts following Hurricane Mitch. On the same day, DHS announced that more information was necessary to make a determination about TPS for Honduras; as a result, statute dictates that its status be extended for six months. On January 8, 2018, DHS announced the decision to terminate TPS for El Salvador—whose nationals account for about 60% of TPS recipients—after an 18-month transition period. El Salvador's TPS designation is scheduled to end on September 9, 2019. On May 4, 2018, DHS announced the decision to terminate the TPS designation for Honduras, with an 18-month delay (until January 5, 2020) to allow for an orderly transition. As of the date of this report, the terminations for El Salvador and Honduras are on hold as the result of a court order. The large number of Central Americans with TPS, along with their length of U.S. residence and resulting substantial economic and family ties, have led some to support extending TPS for Central Americans and Salvadorans in particular. Supporters have argued that ongoing violence and political unrest have left these countries unable to adequately handle the return of their nationals and that a large-scale return could have negative consequences for the United States economy and labor supply, American families, foreign relations, and the flow of remittances sent by Central Americans living in the United States to their relatives in Central America. Opponents have argued that ending TPS for these countries is a move toward correctly interpreting the original intent of the program—to provide temporary safe haven. There is some support in Congress for a legislative means of allowing TPS recipients with several years of U.S. residence to remain in the United States permanently (see " Selected Activity in the 115th and 116th Congress " below); others argue that Congress's intent in creating the statute was to provide temporary relief and that no special consideration should be given to allow these individuals to stay in the United States. Haiti The devastation caused by the January 12, 2010, earthquake in Haiti prompted calls for the Obama Administration to grant TPS to Haitian nationals in the United States. The scale of the humanitarian crisis after the earthquake—with estimates of thousands of Haitians dead and reports of the total collapse of Port au Prince's infrastructure—led DHS to grant TPS for 18 months to Haitian nationals who were in the United States as of January 12, 2010. At the time, then-DHS Secretary Janet Napolitano stated: "Providing a temporary refuge for Haitian nationals who are currently in the United States and whose personal safety would be endangered by returning to Haiti is part of this Administration's continuing efforts to support Haiti's recovery." On July 13, 2010, DHS announced an extension of the TPS registration period for Haitian nationals, citing difficulties nationals were experiencing in obtaining documents to establish identity and nationality, and in gathering funds required to apply for TPS. DHS extended the TPS designation for Haiti in May 2011, providing another 18 months of TPS, through January 22, 2013. At the same time, DHS issued a redesignation, enabling eligible Haitian nationals who arrived in the United States up to one year after the earthquake to receive TPS. The redesignation targeted individuals who were allowed to enter the United States immediately after the earthquake on temporary visas or humanitarian parole, but were not covered by the initial TPS designation. Subsequently, then-Secretary Jeh Johnson extended Haiti's designation several times, through July 22, 2017. A May 2, 2017, letter from members of the Congressional Black Caucus to then-DHS Secretary John Kelly urged an 18-month extension of TPS for Haiti, citing continued recovery difficulties from the 2010 earthquake that killed over 300,000 people, an ongoing cholera epidemic, and additional damages from Hurricane Matthew in 2016. On May 24, 2017, then-Secretary Kelly extended Haiti's TPS designation for six months (the minimum allowed by statute), from its planned expiration on July 22, 2017, to January 22, 2018, and encouraged beneficiaries to prepare to return to Haiti should its designation be terminated after six months. An October 4, 2017, letter from the Haitian ambassador to Acting DHS Secretary Elaine Duke requested that Haiti's designation be extended for an additional 18 months. On November 20, 2017, DHS announced its decision to terminate TPS for Haiti, with an 18-month transition period. Its designation is set to terminate on July 22, 2019. As of the date of this report, the termination is on hold as the result of a court order. Liberia Liberians in the United States first received TPS in March 1991 following the outbreak of civil war. Although that war ended, a second civil war began in 1999 and escalated in 2000. Approximately 10,000 Liberians in the United States were given DED in 1999 after their TPS expired. Their DED status was subsequently extended to September 29, 2002. On October 1, 2002, Liberia was redesignated for TPS for a period of 12 months, and that status continued to be extended. On September 20, 2006, the George W. Bush Administration announced that TPS for Liberia would expire on October 1, 2007, but that this population would be eligible for DED until March 31, 2009. On March 23, 2009, President Obama extended DED for those Liberians until March 31, 2010, and several times thereafter. As a result of the Ebola outbreak in West Africa in 2014, eligible Liberians were again granted TPS, as were eligible Sierra Leoneans and Guineans. On September 26, 2016, DHS issued a notice for Liberia providing a six-month extension of TPS benefits, to May 21, 2017, to allow for an "orderly transition" of affected persons' immigration status, and did the same for similarly affected Sierra Leoneans and Guineans. This action voided a previously scheduled November 21, 2016, expiration of TPS for all three countries. Liberia's DED status was extended by President Obama through March 31, 2018, for a specially designated population of Liberians who had been residing in the United States since October 2002. President Trump announced on March 27, 2018, that extending DED for Liberia was not warranted due to improved conditions in Liberia, but that the United States' foreign policy interests warranted a 12-month wind-down period. A lawsuit challenging the termination was filed in federal court on March 8, 2019. Three days before the effective termination date, President Trump announced a 12-month extension of the wind-down period, to last through March 30, 2020. Approximately 840 Liberians have approved employment authorization documents (EADs) under that DED directive. This number does not reflect all Liberians who might be covered under this DED announcement—only those who applied for and received an EAD. Nepal Nepal was devastated by a massive earthquake on April 25, 2015, killing over 8,000 people. The earthquake and subsequent aftershocks demolished much of Nepal's housing and infrastructure in many areas. Over half a million homes were reportedly destroyed. On June 24, 2015, citing a substantial but temporary disruption in living conditions as a result of the earthquake, then-DHS Secretary Jeh Johnson designated Nepal for TPS for an 18-month period. TPS for Nepal was extended for 18 months in October 2016. On April 26, 2018, Secretary Nielsen announced her decision to terminate the TPS designation for Nepal, citing her assessment that the original conditions under which the country was designated are no longer substantial and that Nepal can adequately handle the return of its nationals. A 12-month delay of the termination date to allow for an orderly transition was also announced; the TPS designation for Nepal is thus set to terminate on June 24, 2019. As of the date of this report, the termination is on hold as the result of a court order. Somalia Somalia has endured decades of chronic instability and humanitarian crises. Since the collapse of the authoritarian Siad Barre regime in 1991, it has lacked a viable central authority capable of exerting territorial control, securing its borders, or providing security and services to its people. Somalia was first designated for TPS in 1991 based on extraordinary and temporary conditions "that prevent[ed] aliens who are nationals of Somalia from returning to Somalia in safety." Through 23 subsequent extensions or redesignations, Somalia has maintained TPS due to insecurity and ongoing armed conflict that present serious threats to the safety of returnees. DHS announced the latest extension—for 18 months—on July 19, 2018, and its current expiration date is March 17, 2020. Sudan and South Sudan Decades of civil war preceded South Sudan's secession from the Republic of Sudan in 2011. Citing both ongoing armed conflict and extraordinary and temporary conditions that would prevent the safe return of Sudanese nationals, the Attorney General designated Sudan for TPS on November 4, 1997. Since then, Sudan has been redesignated or had its designation extended 14 times. On July 9, 2011, South Sudan became a new nation. With South Sudan's independence from the Republic of Sudan, questions arose about whether nationals of the new nation would continue to be eligible for TPS. In response, the DHS Secretary designated South Sudan for TPS on October 17, 2011. TPS has since been extended or redesignated five times due to ongoing armed conflict and extraordinary and temporary conditions in South Sudan, including "ongoing civil war marked by brutal violence against civilians, egregious human rights violations and abuses, and a humanitarian disaster on a devastating scale across the country." The latest extension was for 18 months and expires on November 2, 2020. Meanwhile, citing improved conditions in Sudan, including a reduction in violence and an increase in food harvests, then-Acting DHS Secretary Elaine Duke announced in September 2017 that Sudan's TPS designation would expire on November 2, 2018. As of the date of this report, the termination is on hold as the result of a court order. Syria The political uprising of 2011 in Syria grew into an intensely violent civil war that has led to 5.6 million Syrians fleeing the country and 6 million more internally displaced by 2018. On March 29, 2012, then-Secretary of Homeland Security Janet Napolitano designated the Syrian Arab Republic (Syria) for TPS through September 30, 2013, citing temporary extraordinary conditions that would make it unsafe for Syrian nationals already in the United States to return to the country. In that initial granting of TPS, Secretary Napolitano made clear that DHS would conduct full background checks on Syrians registering for TPS. TPS for Syrian nationals has since been extended. The 18-month extension on August 1, 2016, was accompanied by a redesignation, which updated the required arrival date into the United States for Syrians from January 5, 2015, to August 1, 2016. On January 31, 2018, Secretary Nielsen announced her decision to extend the TPS designation for Syria for another 18 months, citing the ongoing armed conflict and extraordinary conditions that prompted the original designation. This announcement did not include a redesignation; thus, Syrians who entered the United States after August 1, 2016, are not eligible. Yemen On September 3, 2015, then-Secretary Jeh Johnson designated Yemen for TPS through March 3, 2017, due to ongoing armed conflict in the country. A 2015 DHS press release stated that "requiring Yemeni nationals in the United States to return to Yemen would pose a serious threat to their personal safety." The civil war in Yemen reached new levels in 2017. The United Nations estimated that the civilian death toll had reached 10,000, and the World Food Program reported that 60% of Yemenis, or 17 million people, were in "crisis" or "emergency" food situations. Relief efforts in the region have been complicated by ongoing violence and considerable damage to the country's infrastructure. On January 4, 2017, DHS extended and redesignated Yemen's current TPS designation through September 3, 2018. The redesignation updated the required arrival date into the United States for individuals from Yemen from September 3, 2015, to January 4, 2017. The Federal Register notice explained that the "continued deterioration of the conditions for civilians in Yemen and the resulting need to offer protection to individuals who have arrived in the United States after the eligibility cutoff dates" warranted the redesignation of TPS. On July 5, 2018, DHS extended Yemen's TPS designation for another 18 months, resulting in an expiration date of March 3, 2020. State of Residence of TPS Recipients Individuals with TPS reside in all 50 states, the District of Columbia, and the U.S. territories. The highest populations live in traditional immigrant gateway states: California, Florida, Texas, and New York. In addition to these four, six other states had at least 10,000 TPS recipients as of November 2018: Virginia, Maryland, New Jersey, Massachusetts, North Carolina, and Georgia. Hawaii, Wyoming, Vermont, and Montana had fewer than 100 individuals with TPS. See Figure 1 and Table A-1 . Adjustment of Status A grant of TPS does not provide a recipient with a designated pathway to lawful permanent resident (LPR) status; however, a TPS recipient is not barred from adjusting to nonimmigrant or immigrant status if he or she meets the requirements. There are statutory limitations on Congress providing adjustment of status to TPS recipients. Over the years, Congress has provided eligibility for LPR status to groups of nationals who had been given temporary relief from removal. In 1992, Congress enacted legislation allowing Chinese nationals who had DED following the Tiananmen Square massacre to adjust to LPR status ( P.L. 102-404 ). The Nicaraguan Adjustment and Central American Relief Act (NACARA) (Title II of P.L. 105-100 ), which became law in 1997, provided eligibility for LPR status to certain Nicaraguans, Cubans, Guatemalans, Salvadorans, and nationals of the former Soviet bloc who had applied for asylum and had been living in the United States for a certain period of time. The 105 th Congress passed the Haitian Refugee Immigration Fairness Act, enabling Haitians who had filed asylum claims or who were paroled into the United States before December 31, 1995, to adjust to legal permanent residence ( P.L. 105-277 ). Legislation that would have allowed nationals from various countries that have had TPS to adjust to LPR status received action in past Congresses, but was not enacted. For instance, the Senate-passed comprehensive immigration reform bill in the 113 th Congress ( S. 744 ) did not include specific provisions for foreign nationals with TPS to adjust status, but many would have qualified for the registered provisional immigrant status that S. 744 would have established. Selected Activity in the 115th and 116th Congresses Various proposals related to TPS have been introduced in the 115 th and 116 th Congresses. Some bills would extend or expand TPS designations for certain countries (e.g., Venezuela), prohibit federal funds from being used to implement recent TPS terminations, or provide adjustment to LPR status for TPS recipients who have been living in the United States for several years. Other bills variously seek to limit the program by transferring authority from DHS to Congress to designate foreign states; making unauthorized aliens and members of criminal gangs ineligible; restricting the criteria for designating a foreign state; making TPS recipients subject to detention and expedited removal; or phasing out the program. Appendix.

When civil unrest, violence, or natural disasters erupt in countries around the world, concerns arise over the ability of foreign nationals in the United States from those countries to safely return. Provisions exist in the Immigration and Nationality Act (INA) to offer temporary protected status (TPS) and other forms of relief from removal under specified circumstances. The Secretary of Homeland Security has the discretion to designate a country for TPS for periods of 6 to 18 months and can extend these periods if the country continues to meet the conditions for designation. Congress has also provided TPS legislatively. A foreign national who is granted TPS receives a registration document and employment authorization for the duration of a given TPS designation. The United States currently provides TPS to approximately 417,000 foreign nationals from 10 countries: El Salvador, Haiti, Honduras, Nepal, Nicaragua, Somalia, South Sudan, Sudan, Syria, and Yemen. Certain Liberians maintain relief under a similar administrative mechanism known as Deferred Enforced Departure (DED). Since September 2017, the Secretary of Homeland Security has announced plans to terminate TPS for six countries—El Salvador, Haiti, Honduras, Nepal, Nicaragua, and Sudan—and extend TPS for Somalia, South Sudan, Syria, and Yemen. In March 2018, President Trump announced an end to DED for Liberia. Several lawsuits have been filed challenging the TPS and DED termination decisions. There is ongoing debate about whether foreign nationals who have been living in the United States for long periods of time with TPS or DED should receive a pathway to lawful permanent resident (LPR) status. Various proposals related to TPS have been introduced in the 115th and 116th Congresses, including to expand the program to additional countries (e.g., Venezuela), provide a pathway to LPR status, prohibit gang members or those without lawful status from receiving TPS, and phase out the program.

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Introduction The Federal Reserve's (the Fed's) responsibilities as the nation's central bank fall into four main categories: monetary policy, provision of emergency liquidity through the lender of last resort function, supervision of certain types of banks and other financial firms for safety and soundness, and provision of payment system services to financial firms and the government. Congress has delegated responsibility for monetary policy to the Fed, but retains oversight responsibilities to ensure that the Fed is adhering to its statutory mandate of "maximum employment, stable prices, and moderate long-term interest rates." The Fed has defined stable prices as a longer-run goal of 2% inflation—the change in overall prices, as measured by the Personal Consumption Expenditures (PCE) price index. By contrast, the Fed states that "it would not be appropriate to specify a fixed goal for employment; rather, the Committee's policy decisions must be informed by assessments of the maximum level of employment, recognizing that such assessments are necessarily uncertain and subject to revision." Monetary policy can be used to stabilize business cycle fluctuations (alternating periods of economic expansions and recessions) in the short run, while it mainly affects inflation in the long run. The Fed's conventional tool for monetary policy is to target the federal funds rate —the overnight, interbank lending rate. This report provides an overview of how monetary policy works and recent developments, a summary of the Fed's actions following the financial crisis, and ends with a brief overview of the Fed's regulatory responsibilities. Recent Monetary Policy Developments In December 2008, in the midst of the financial crisis and the "Great Recession," the Fed lowered the federal funds rate to a range of 0% to 0.25%. This was the first time rates were ever lowered to what is referred to as the zero lower bound . The recession ended in 2009, but as the economic recovery consistently proved weaker than expected in the years that followed, the Fed repeatedly pushed back its time frame for raising interest rates. As a result, the economic expansion was in its seventh year and the unemployment rate was already near the Fed's estimate of full employment when it began raising rates on December 16, 2015. This was a departure from past practice—in the previous two economic expansions, the Fed began raising rates within three years of the preceding recession ending. Since then, the Fed has continued to raise rates in a series of steps to incrementally tighten monetary policy. The Fed raised rates once in 2016, three times in 2017, and four times in 2018, by 0.25 percentage points each time. The Fed has stated that "some further gradual increases in ... the federal funds rate" are necessary to fulfill its mandate. The Fed describes its plans as "data dependent," meaning they would be altered if actual employment or inflation deviate from its forecast. Although monetary policy is now less stimulative than it had been at the zero lower bound, the Fed is still adding stimulus to the economy as long as the federal funds rate is below what economists call the "neutral rate" (or the long-run equilibrium rate). To illustrate, the federal funds rate is currently similar to the inflation rate, meaning that the real (i.e., inflation-adjusted) federal funds rate is around zero. However, there is uncertainty as to what constitutes a neutral rate today. By historical standards, a zero real interest rate would be well below the neutral rate, but the neutral rate appears to have fallen following the financial crisis, so that current rates may be close to the neutral rate today. Typically, the Fed keeps interest rates below the neutral rate when the economy is operating below full employment, at neutral levels when the economy is near full employment, and above the neutral rate when the economy is at risk of overheating. Indeed, the Fed identifies this as one of its "three key principles of good monetary policy." Because of lags between changes in interest rates and their economic effects, in the past, the Fed has often preemptively changed its monetary policy stance before the economy reaches the state that the Fed is anticipating. In this business cycle, the Fed has maintained a (progressively less) stimulative monetary policy throughout the expansion, boosting economic activity. In one sense, this policy could be viewed as having successfully delivered on the Fed's mandated goals of full employment and stable prices. The unemployment rate has been below 5% since 2015 and is now lower than the rate believed to be consistent with full employment. Other labor market measures are also consistent with full employment, with the possible exception of the still-low labor force participation rate. Economic theory posits that lower unemployment will lead to higher inflation in the short run, but inflation has not proven responsive to lower unemployment in recent years. After remaining persistently below the Fed's 2% target from mid-2012 to early 2018 as measured by core PCE, inflation has remained around 2% in 2018 as measured by headline or core PCE. Economic growth has also picked up beginning in the second quarter of 2017, after being persistently low by historical standards throughout the expansion. Contributing to the 2018 growth acceleration, a more expansionary fiscal policy (larger structural budget deficit) added more stimulus to the economy in the short run. Two notable policy changes contributing to fiscal stimulus in 2018 were the 2017 tax cuts ( P.L. 115-97 ) and the boost to discretionary spending in FY2018 and FY2019 agreed to in P.L. 115-123 . The Fed did little to offset this fiscal stimulus, as the pace of monetary tightening in 2018 was only slightly faster than in 2017. Despite strong economic data (which is only available with a lag), the Fed announced in January 2019 that it would be "patient" before raising rates again in light of increased economic uncertainty and financial volatility. The Fed's intended policy path poses risks. If the Fed waits too long to raise rates again, the economy could overheat, resulting in high inflation and posing risk to financial stability. As an example of how overly stimulative monetary policy can lead to the latter, critics contend that the Fed contributed to the precrisis housing bubble by keeping interest rates too low for too long during the economic recovery starting in 2001. Critics see these risks as outweighing any marginal benefit associated with monetary stimulus when the economy is already so close to full employment. Raising rates more quickly would also provide more "headroom" for the Fed to lower rates more aggressively during the next economic downturn. The potential percentage point reduction in rates before hitting the zero bound is currently smaller than the rate cuts that the Fed has undertaken in past recessions. Alternatively, there is uncertainty about whether strong growth, low unemployment, inflation around 2%, and the generally benign economic environment will continue. Economic expansions do not "die of old age"; nevertheless, the current expansion is already the second longest on record and cannot last forever. The flattening of the yield curve (i.e., long-term Treasury yields are similar to short-term Treasury yields) is seen by some as a warning signal that rates are too high. Although there is a risk of stimulative monetary policy causing the economy to overheat, there is also a risk that tightening too quickly could be harmful if the economy slows. Some critics would prefer clear evidence that inflation is above the Fed's target or financial conditions are unstable before the Fed raises rates again. How Does the Federal Reserve Execute Monetary Policy? Monetary policy refers to the actions the Fed undertakes to influence the availability and cost of money and credit to promote the goals mandated by Congress, a stable price level and maximum sustainable employment. Because the expectations of households as consumers and businesses as purchasers of capital goods exert an important influence on the major portion of spending in the United States, and because these expectations are influenced in important ways by the Fed's actions, a broader definition of monetary policy would include the directives, policies, statements, economic forecasts, and other Fed actions, especially those made by or associated with the chairman of its Board of Governors, who is the nation's central banker. The Fed's Federal Open Market Committee (FOMC) meets every six weeks to choose a federal funds target and sometimes meets on an ad hoc basis if it wants to change the target between regularly scheduled meetings. The FOMC is composed of the 7 Fed governors, the President of the Federal Reserve Bank of New York, and 4 of the other 11 regional Federal Reserve Bank presidents serving on a rotating basis. Policy Tools The Fed targets the federal funds rate to carry out monetary policy. The federal funds rate is determined in the private market for overnight reserves of depository institutions (called the federal funds market). At the end of a given period, usually a day, depository institutions must calculate how many dollars of reserves they want or need to hold against their reservable liabilities (deposits). Some institutions may discover a reserve shortage (too few reservable assets relative to those they want to hold), whereas others may have reservable assets in excess of their wants. These reserves can be borrowed and lent on an overnight basis in a private market called the federal funds market. The interest rate in this market is called the federal funds rate. If it wishes to expand money and credit, the Fed will lower the target, which encourages more lending activity and, thus, greater demand in the economy. Conversely, if it wishes to tighten money and credit, the Fed will raise the target. The federal funds rate is linked to the interest rates that banks and other financial institutions charge for loans. Thus, whereas the Fed may directly influence only a very short-term interest rate, this rate influences other longer-term rates. However, this relationship is far from being on a one-to-one basis because longer-term market rates are influenced not only by what the Fed is doing today, but also by what it is expected to do in the future and by what inflation is expected to be in the future. This fact highlights the importance of expectations in explaining market interest rates. For that reason, a growing body of literature urges the Fed to be very transparent in explaining what its policy is, will be, and in making a commitment to adhere to that policy. The Fed has responded to this literature and is increasingly transparent in explaining its policy measures and what these measures are expected to accomplish. The Federal Reserve uses two methods to maintain its target for the federal funds rate: The Fed can also change the federal funds rate by changing reserve requirements, which specify what portion of customer deposits (primarily checking accounts) banks must hold as vault cash or on deposit at the Fed. Thus, reserve requirements affect the liquidity available within the federal funds market. Statute sets the numerical levels of reserve requirements, although the Fed has some discretion to adjust them. Currently, banks are required to hold 0% to 10% of customer deposits that qualify as net transaction accounts in reserves, depending on the size of the bank's deposits. This tool is used rarely—the percentage was last changed in 1992. Each of these tools works by altering the overall liquidity available for use by the banking system, which influences the amount of assets these institutions can acquire. These assets are often called credit because they represent loans the institutions have made to businesses and households, among others. Targeting Interest Rates Versus Targeting the Money Supply The Fed's control over monetary policy stems from its exclusive ability to alter the money supply and credit conditions more broadly. The Fed directly controls the monetary base , which is made up of currency (Federal Reserve notes) and bank reserves. The size of the monetary base, in turn, influences broader measures of the money supply, which include close substitutes to currency, such as demand deposits (e.g., checking accounts) held at banks. The Fed's definition of monetary policy as the actions it undertakes to influence the availability and cost of money and credit suggests two ways to measure the stance of monetary policy. One is to look at the cost of money and credit as measured by the rate of interest relative to inflation (or inflation projections), and the other is to look at the growth of money and credit itself. Thus, it is possible to look at either interest rates or the growth in the supply of money and credit in coming to a conclusion about the current stance of monetary policy—that is, whether it is expansionary (adding stimulus to the economy), contractionary (slowing economic activity), or neutral. During the high inflation experience of the 1970s the Fed placed greater emphasis on money supply growth, but since then, most central banks including the Fed have preferred to formulate monetary policy in terms of the cost of money and credit rather than in terms of their supply. The Fed conducts monetary policy by focusing on the cost of money and credit as proxied by the federal funds rate. Real Versus Nominal Interest Rates A simple comparison of market interest rates over time as an indicator of changes in the stance of monetary policy is potentially misleading, however. Economists call the interest rate that is essential to decisions made by households and businesses to buy capital goods the real interest rate. It is often proxied by subtracting from the market interest rate the actual or expected rate of inflation. If inflation rises and market interest rates remain the same, then real interest rates have fallen, with a similar economic effect as if market rates (called nominal rates) had fallen by the same amount with a constant inflation rate. The federal funds rate is only one of the many interest rates in the financial system that determines economic activity. For these other rates, the real rate is largely independent of the amount of money and credit over the longer run because it is determined by the interaction of saving and investment (or the demand for capital goods). The internationalization of capital markets means that for most developed countries the relevant interaction between saving and investment that determines the real interest rate is on a global basis. Thus, real rates in the United States depend not only on U.S. national saving and investment but also on the saving and investment of other countries. For that reason, national interest rates are influenced by international credit conditions and business cycles. Economic Effects of Monetary Policy in the Short Run and Long Run How do changes in short-term interest rates affect the overall economy? In the short run, an expansionary monetary policy that reduces interest rates increases interest-sensitive spending, all else equal. Interest-sensitive spending includes physical investment (i.e., plant and equipment) by firms, residential investment (housing construction), and consumer-durable spending (e.g., automobiles and appliances) by households. As discussed in the next section, it also encourages exchange rate depreciation that causes exports to rise and imports to fall, all else equal. To reduce spending in the economy, the Fed raises interest rates and the process works in reverse. An examination of U.S. economic history will show that money- and credit-induced demand expansions can have a positive effect on U.S. GDP growth and total employment. The extent to which greater interest-sensitive spending results in an increase in overall spending in the economy in the short run will depend in part on how close the economy is to full employment. When the economy is near full employment, the increase in spending is likely to be dissipated through higher inflation more quickly. When the economy is far below full employment, inflationary pressures are more likely to be muted. This same history, however, also suggests that over the longer run, a more rapid rate of growth of money and credit is largely dissipated in a more rapid rate of inflation with little, if any, lasting effect on real GDP and employment. Economists have two explanations for this paradoxical behavior. First, they note that, in the short run, many economies have an elaborate system of contracts (both implicit and explicit) that makes it difficult in a short period for significant adjustments to take place in wages and prices in response to a more rapid growth of money and credit. Second, they note that expectations for one reason or another are slow to adjust to the longer-run consequences of major changes in monetary policy. This slow adjustment also adds rigidities to wages and prices. Because of these rigidities, changes in the growth of money and credit that change aggregate demand can have a large initial effect on output and employment, albeit with a policy lag of six to eight quarters before the broader economy fully responds to monetary policy measures. Over the longer run, as contracts are renegotiated and expectations adjust, wages and prices rise in response to the change in demand and much of the change in output and employment is undone. Thus, monetary policy can matter in the short run but be fairly neutral for GDP growth and employment in the longer run. In societies in which high rates of inflation are endemic, price adjustments are very rapid. During the final stages of very rapid inflations, called hyperinflation, the ability of more rapid rates of growth of money and credit to alter GDP growth and employment is virtually nonexistent, if not negative. Monetary Versus Fiscal Policy Either fiscal policy (defined here as changes in the structural budget deficit, caused by policy changes to government spending or taxes) or monetary policy can be used to alter overall spending in the economy. However, there are several important differences to consider between the two. First, economic conditions change rapidly, and in practice monetary policy can be more nimble than fiscal policy. The Fed meets every six weeks to consider changes in interest rates and can call an unscheduled meeting any time. Large changes to fiscal policy typically occur once a year at most. Once a decision to alter fiscal policy has been made, the proposal must travel through a long and arduous legislative process that can last months before it can become law, whereas monetary policy changes are made instantly. Both monetary and fiscal policy measures are thought to take more than a year to achieve their full impact on the economy due to pipeline effects. In the case of monetary policy, interest rates throughout the economy may change rapidly, but it takes longer for economic actors to change their spending patterns in response. For example, in response to a lower interest rate, a business must put together a loan proposal, apply for a loan, receive approval for the loan, and then put the funds to use. In the case of fiscal policy, once legislation has been enacted, it may take some time for authorized spending to be outlayed. An agency must approve projects and select and negotiate with contractors before funds can be released. In the case of transfers or tax cuts, recipients must receive the funds and then alter their private spending patterns before the economy-wide effects are felt. For both monetary and fiscal policy, further rounds of private and public decisionmaking must occur before multiplier or ripple effects are fully felt. Second, monetary policy is determined based only on the Fed's mandate, whereas fiscal policy is determined based on competing political goals. Fiscal policy changes have macroeconomic implications regardless of whether that was policymakers' primary intent. Political constraints have prevented increases in budget deficits from being fully reversed during expansions. Over the course of the business cycle, aggregate spending in the economy can be expected to be too high as often as it is too low. This means that stabilization policy should be tightened as often as it is loosened, yet increasing the budget deficit has proven to be much more popular than implementing the spending cuts or tax increases necessary to reduce it. As a result, the budget has been in deficit in all but five years since 1961, which has led to an accumulation of federal debt that gives policymakers less leeway to potentially undertake a robust expansionary fiscal policy, if needed, in the future. By contrast, the Fed is more insulated from political pressures, as discussed in the previous section, and experience shows that it is willing to raise or lower interest rates. Third, the long-run consequences of fiscal and monetary policy differ. Expansionary fiscal policy creates federal debt that must be serviced by future generations. Some of this debt will be "owed to ourselves," but some (presently, about half) will be owed to foreigners. To the extent that expansionary fiscal policy crowds out private investment, it leaves future national income lower than it otherwise would have been. Monetary policy does not have this effect on generational equity, although different levels of interest rates will affect borrowers and lenders differently. Furthermore, the government faces a budget constraint that limits the scope of expansionary fiscal policy—it can only issue debt as long as investors believe the debt will be honored, even if economic conditions require larger deficits to restore equilibrium. Fourth, openness of an economy to highly mobile capital flows changes the relative effectiveness of fiscal and monetary policy. Expansionary fiscal policy would be expected to lead to higher interest rates, all else equal, which would attract foreign capital looking for a higher rate of return, causing the value of the dollar to rise. Foreign capital can only enter the United States on net through a trade deficit. Thus, higher foreign capital inflows lead to higher imports, which reduce spending on domestically produced substitutes and lower spending on exports. The increase in the trade deficit would cancel out the expansionary effects of the increase in the budget deficit to some extent (in theory, entirely if capital is perfectly mobile). Expansionary monetary policy would have the opposite effect—lower interest rates would cause capital to flow abroad in search of higher rates of return elsewhere, causing the value of the dollar to fall. Foreign capital outflows would reduce the trade deficit through an increase in spending on exports and domestically produced import substitutes. Thus, foreign capital flows would (tend to) magnify the expansionary effects of monetary policy. Fifth, fiscal policy can be targeted to specific recipients. In the case of normal open market operations, monetary policy cannot. This difference could be considered an advantage or a disadvantage. On the one hand, policymakers could target stimulus to aid the sectors of the economy most in need or most likely to respond positively to stimulus. On the other hand, stimulus could be allocated on the basis of political or other noneconomic factors that reduce the macroeconomic effectiveness of the stimulus. As a result, both fiscal and monetary policy have distributional implications, but the latter's are largely incidental whereas the former's can be explicitly chosen. In cases in which economic activity is extremely depressed, monetary policy may lose some of its effectiveness. When interest rates become extremely low, interest-sensitive spending may no longer be very responsive to further rate cuts. Furthermore, interest rates cannot be lowered below zero so traditional monetary policy is limited by this "zero lower bound." In this scenario, fiscal policy may be more effective. As is discussed in the next section, some argue that the U.S. economy experienced this scenario following the recent financial crisis. Of course, using monetary and fiscal policy to stabilize the economy are not mutually exclusive policy options. But because of the Fed's independence from Congress and the Administration, the two policy options are not always coordinated. If Congress and the Fed were to choose compatible fiscal and monetary policies, respectively, then the economic effects would be more powerful than if either policy were implemented in isolation. For example, if stimulative monetary and fiscal policies were implemented, the resulting economic stimulus would be larger than if one policy were stimulative and the other were neutral. Alternatively, if Congress and the Fed were to select incompatible policies, these policies could partially negate each other. For example, a stimulative fiscal policy and contractionary monetary policy may end up having little net effect on aggregate demand (although there may be considerable distributional effects). Thus, when fiscal and monetary policymakers disagree in the current system, they can potentially choose policies with the intent of offsetting each other's actions. Whether this arrangement is better or worse for the economy depends on what policies are chosen. If one actor chooses inappropriate policies, then the lack of coordination allows the other actor to try to negate its effects. Unconventional Monetary Policy During and After the Financial Crisis When the United States experienced the worst financial crisis since the Great Depression, the Fed undertook increasingly unprecedented steps in an attempt to restore financial stability. These steps included reducing the federal funds rate to the zero lower bound, providing direct financial assistance to financial firms, and "quantitative easing." These unconventional policy decisions continue to have consequences for monetary policy today, as the Fed embarks on monetary policy "normalization." The Early Stages of the Crisis and the Zero Lower Bound The bursting of the housing bubble led to the onset of a financial crisis that affected both depository institutions and other segments of the financial sector involved with housing finance. As the delinquency rates on home mortgages rose to record numbers, financial firms exposed to the mortgage market suffered capital losses and lost access to liquidity. The contagious nature of this development was soon obvious as other types of loans and credit became adversely affected. This, in turn, spilled over into the broader economy, as the lack of credit soon had a negative effect on both production and aggregate demand. In December 2007, the economy entered a recession. As the housing slump's spillover effects to the financial system, as well as its international scope, became apparent, the Fed responded by reducing the federal funds target and the discount rate. Beginning on September 18, 2007, and ending on December 16, 2008, the federal funds target was reduced from 5.25% to a range between 0% and 0.25%, where it remained until December 2015. Economists call this the zero lower bound to signify that once the federal funds rate is lowered to zero, conventional open market operations cannot be used to provide further stimulus. The Fed attempted to achieve additional monetary stimulus at the zero bound through a pledge to keep the federal funds rate low for an extended period of time, which has been called forward guidance or forward commitment . The decision to maintain a target interest rate near zero was unprecedented. First, short-term interest rates have never before been reduced to zero in the history of the Federal Reserve. Second, the Fed waited much longer than usual to begin tightening monetary policy in the current recovery. For example, in the previous two expansions, the Fed began raising rates less than three years after the preceding recession ended. Direct Assistance During and After the Financial Crisis With liquidity problems persisting as the federal funds rate was reduced, it appeared that the traditional transmission mechanism linking monetary policy to activity in the broader economy was not working. Monetary authorities became concerned that the liquidity provided to the banking system was not reaching other parts of the financial system. As noted above, using only traditional monetary policy tools, additional monetary stimulus cannot be provided once the federal funds rate has reached its zero bound. To circumvent this problem, the Fed decided to use nontraditional methods to provide additional monetary policy stimulus. First, the Federal Reserve introduced a number of emergency credit facilities to provide increased liquidity directly to financial firms and markets. The first facility was introduced in December 2007, and several were added after the worsening of the crisis in September 2008. These facilities were designed to fill perceived gaps between open market operations and the discount window, and most of them were designed to provide short-term loans backed by collateral that exceeded the value of the loan. A number of the recipients were nonbanks that are outside the regulatory umbrella of the Federal Reserve; this marked the first time that the Fed had lent to nonbanks since the Great Depression. The Fed authorized these actions under Section 13(3) of the Federal Reserve Act, a seldom-used emergency provision that allowed it to extend credit to nonbank financial institutions and to nonfinancial firms as well. The Fed provided assistance through liquidity facilities, which included both the traditional discount window and the newly created emergency facilities mentioned above, and through direct support to prevent the failure of two specific institutions, American International Group (AIG) and Bear Stearns. The amount of assistance provided was an order of magnitude larger than normal Fed lending, as shown in Figure 1 . Total assistance from the Federal Reserve at the beginning of August 2007 was approximately $234 million provided through liquidity facilities, with no direct support given. In mid-December 2008, this number reached a high of $1.6 trillion, with a near-high of $108 billion given in direct support. From that point on, it fell steadily. Assistance provided through liquidity facilities fell below $100 billion in February 2010, when many facilities were allowed to expire, and support to specific institutions fell below $100 billion in January 2011. The last loan from the crisis was repaid on October 29, 2014. Central bank liquidity swaps (temporary currency exchanges between the Fed and central foreign banks) are the only facility created during the crisis still active, but they have not been used on a large scale since 2012. All assistance through expired facilities has been fully repaid with interest. In 2010, the Dodd-Frank Act changed Section 13(3) to rule out direct support to specific institutions in the future. From the introduction of its first emergency lending facility in December 2007 to the worsening of the crisis in September 2008, the Fed sterilized the effects of lending on its balance sheet (i.e., prevented the balance sheet from growing) by selling an offsetting amount of Treasury securities. After September 2008, assistance exceeded remaining Treasury holdings, and the Fed allowed its balance sheet to grow. Between September 2008 and November 2008, the Fed's balance sheet more than doubled in size, increasing from less than $1 trillion to more than $2 trillion. The loans and other assistance provided by the Federal Reserve to banks and nonbank institutions are considered assets on this balance sheet because they represent money owed to the Fed. With the federal funds rate at its zero bound and direct lending falling as financial conditions began to normalize in 2009, the Fed faced the decision of whether to try to provide additional monetary stimulus through unconventional measures. It did so through two unconventional tools—large-scale asset purchases (quantitative easing) and forward guidance. Quantitative Easing and the Growth in the Fed's Balance Sheet and Bank Reserves With short-term rates constrained by the zero bound, the Fed hoped to reduce long-term rates through large-scale asset purchases, which were popularly referred to as quantitative easing (QE). Between 2009 and 2014, the Fed undertook three rounds of QE, buying U.S. Treasury securities, agency debt, and agency mortgage-backed securities (MBS). These securities now comprise most of the assets on the Fed's balance sheet. To understand the effect of quantitative easing on the economy, it is first necessary to describe its effect on the Fed's balance sheet. In 2009, the Fed's emergency lending declined rapidly as market conditions stabilized, which would have caused the balance sheet to decline if the Fed took no other action. Instead, asset purchases under the first round of QE (QE1) offset the decline in lending, and from November 2008 to November 2010, the overall size of the Fed's balance sheet did not vary by much. Its composition changed because of QE1, however—the amount of Fed loans outstanding fell to less than $50 billion at the end of 2010, whereas holdings of securities rose from less than $500 billion in November 2008 to more than $2 trillion in November 2010. The second round of QE, QE2, increased the Fed's balance sheet from $2.3 trillion in November 2010 to $2.9 trillion in mid-2011. It remained around that level until September 2012, when it began rising for the duration of the third round, QE3. It was about $4.5 trillion (comprised of $2.5 trillion of Treasury securities, $1.7 trillion MBS, and $0.4 trillion of agency debt) when QE3 ended in October 2014, and has remained at that level since. Table 1 summarizes the Fed's QE purchases. In total, the Fed's balance sheet increased by more than $2.5 trillion over the course of the three rounds of QE, making it about five times larger than it was before the crisis. This increase in the Fed's assets must be matched by a corresponding increase in the liabilities on its balance sheet. The Fed's liabilities mostly take the form of currency, bank reserves, and cash deposited by the U.S. Treasury at the Fed. QE has mainly resulted in an increase in bank reserves, from about $46 billion in August 2008 to $820 billion at the end of 2008. Since October 2009, bank reserves have exceeded $1 trillion, and they have been between $2.5 trillion and $2.8 trillion since 2014. The increase in bank reserves can be seen as the inevitable outcome of the increase in assets held by the Fed because the bank reserves, in effect, financed the Fed's asset purchases and loan programs. Reserves increase because when the Fed makes loans or purchases assets, it credits the proceeds to the recipients' reserve accounts at the Fed. The intended purpose of QE was to put downward pressure on long-term interest rates. Purchasing long-term Treasury securities and MBS should directly reduce the rates on those securities, all else equal. The hope is that a reduction in those rates feeds through to private borrowing rates throughout the economy, stimulating spending on interest-sensitive consumer durables, housing, and business investment in plant and equipment. Indeed, Treasury and mortgage rates have been unusually low since the crisis compared with the past few decades, although the timing of declines in those rates does not match up closely to the timing of asset purchases. Determining whether QE reduced rates more broadly and stimulated interest-sensitive spending requires controlling for other factors, such as the weak economy, which tends to reduce both rates and interest-sensitive spending. The increase in the Fed's balance sheet has the potential to be inflationary because bank reserves are a component of the portion of the money supply controlled by the Fed (called the monetary base ), which grew at an unprecedented pace during QE. In practice, overall measures of the money supply have not grown as quickly as the monetary base, and inflation has remained below the Fed's goal of 2% for most of the period since 2008. The growth in the monetary base has not translated into higher inflation because bank reserves have mostly remained deposited at the Fed and have not led to increased lending or asset purchases by banks. Another concern is that by holding large amounts of MBS, the Fed is allocating credit to the housing sector, putting the rest of the economy at a disadvantage compared with that sector. Advocates of MBS purchases note that housing was the sector of the economy most in need of stabilization, given the nature of the crisis (this argument becomes less persuasive as the housing market continues to rebound); that MBS markets are more liquid than most alternatives, limiting the potential for the Fed's purchases to be disruptive; and that the Fed is legally permitted to purchase few other assets, besides Treasury securities. The "Exit Strategy": Normalization of Monetary Policy After QE On October 29, 2014, the Fed announced that it would stop making large-scale asset purchases at the end of the month. Now that QE is completed, attention has turned to the Fed's "exit strategy" from QE and zero interest rates. The Fed laid out its plans to normalize monetary policy in a statement in September 2014. It plans to continue implementing monetary policy by targeting the federal funds rate. The basic challenge to doing so is that the Fed cannot effectively alter the federal funds rate by altering reserve levels (as it did before the crisis) because QE has flooded the market with excess bank reserves. In other words, in the presence of more than $2 trillion in bank reserves, the market-clearing federal funds rate is close to zero even if the Fed would like it to be higher. The most straightforward way to return to normal monetary policy would be to remove those excess reserves by shrinking the balance sheet through asset sales. The Fed does not intend to sell any securities, however. Instead, it is gradually reducing the balance sheet by ceasing to roll over securities as they mature, which began in September 2017—almost three years after QE ended. Initially, it allowed only $6 billion of Treasuries and $4 billion of MBS to run off each month, which was gradually increased to $30 billion of Treasuries and $20 billion of MBS per month, where it will remain until normalization is completed. The Fed believes that it would only cease shrinking the balance sheet or use QE again in the future if it its ability to stimulate the economy using reductions in the federal funds rate were insufficient. The Fed intends to ultimately reduce the balance sheet until it holds "no more securities than necessary to implement monetary policy efficiently and effectively." The Fed has stated that it foresees a balance sheet size that is consistent with this goal will be larger than it was before the crisis. In part, that is because other liabilities on the Fed's balance sheet are larger—there is more currency in circulation now than there was before the crisis, and the Treasury has kept larger balances on average in its account at the Fed. But the balance sheet will also be significantly larger because the Fed decided in January 2019 to continue using its new method of targeting the federal funds rate even after normalization is completed. Under the new method, the federal funds rate is not determined by supply and demand in the market for bank reserves, and the Fed would prefer to maintain abundant bank reserves so that it does not have to use open market operations to respond to changes in banks' demand for reserves. By contrast, if it went back to the pre-crisis method of targeting the federal funds rate, only minimal excess reserve balances would be necessary (but perhaps more than before the crisis), so its balance sheet could be much smaller. The Fed has not yet announced when the wind-down will be completed or how large the balance sheet would be upon completion, but the January 2019 FOMC minutes noted the wind-down could be completed as soon as this year. In that case, the balance sheet would not be much smaller than its current size of $4 trillion when normalization is completed—more than four times larger than its pre-crisis size. Although the Fed has stated that it intends to eventually stop holding MBS, the Fed would still have sizable MBS holdings in 2025, according to projections from the New York Fed. In order to raise the federal funds rate in the presence of large reserves, the Fed has raised the two market interest rates that are close substitutes—it has directly raised the rate it pays banks on reserves held at the Fed and used large-scale reverse repurchase agreements (repos) to alter repo rates. In 2008, Congress granted the Fed the authority to pay interest on reserves. Because banks can earn interest on excess reserves by lending them in the federal funds market or by depositing them at the Fed, raising the interest rate on bank reserves should also raise the federal funds rate. In this way, the Fed can lock up excess liquidity to avoid any potentially inflationary effects because reserves kept at the Fed cannot be put to use by banks to finance activity in the broader economy. In practice, the interest rate that the Fed has paid banks on reserves has been slightly higher than the federal funds rate, which some have criticized as a subsidy to banks. Reverse repos are another tool for draining liquidity from the system and influencing short-term market rates. They drain liquidity from the financial system because cash is transferred from market participants to the Fed. As a result, interest rates in the repo market, one of the largest short-term lending markets, rise. The Fed has long conducted open market operations through the repo market, but since 2013 it has engaged in a much larger volume of reverse repos with a broader range of nonbank counterparties, including the government-sponsored enterprises (such as Fannie Mae and Freddie Mac) and certain money market funds, through a new Overnight Reverse Repurchase Operations Facility. The Fed is currently not capping the amount of overnight reverse repos offered through this facility. There has been some concern about the potential ramifications of the Fed becoming a dominant participant in this market and expanding its counterparties. For example, will counterparties only be willing to transact with the Fed in a panic, and will the Fed be exposed to counterparty risk with nonbanks that it does not regulate? Appendix. Regulatory Responsibilities The Fed has distinct roles as a central bank and a regulator. Its main regulatory responsibilities are as follows: B ank regulation . The Fed supervises bank holding companies (BHCs) and thrift holding companies (THCs), which include all large and thousands of small depositories, for safety and soundness. The Dodd-Frank Act requires the Fed to subject BHCs with more than $50 billion in consolidated assets to enhanced prudential regulation (i.e., stricter standards than are applied to similar firms) in an effort to mitigate the systemic risk they pose. The Fed is also the prudential regulator of U.S. branches of foreign banks and state banks that have elected to become members of the Federal Reserve System. Often in concert with the other banking regulators, it promulgates rules and supervisory guidelines that apply to banks in areas such as capital adequacy, and examines depository firms under its supervision to ensure that those rules are being followed and those firms are conducting business prudently. The Fed's supervisory authority includes consumer protection for banks under its jurisdiction that have $10 billion or less in assets. P rudential regulat ion of nonbank systemically important financial institutions . The Dodd-Frank Act allows the Financial Stability Oversight Council (FSOC) to designate nonbank financial firms as systemically important (SIFIs). Designated firms are supervised by the Fed for safety and soundness. Since enactment, the number of designated firms has ranged from four, initially, to none today. R egulation of the payment system . The Fed regulates the retail and wholesale payment system for safety and soundness. It also operates parts of the payment system, such as interbank settlements and check clearing. The Dodd-Frank Act subjects payment, clearing, and settlement systems designated as systemically important by the FSOC to enhanced supervision by the Fed (along with the Securities and Exchange Commission and the Commodity Futures Trading Commission, depending on the type of system). M argin requirements . The Fed sets margin requirements on the purchases of certain securities, such as stocks, in certain private transactions. The purpose of margin requirements is to mandate what proportion of the purchase can be made on credit. The Fed attempts to mitigate systemic risk and prevent financial instability through these regulatory responsibilities, as well as through its lender of last resort activities and participation on the FSOC (whose mandate is to identify risks and respond to emerging threats to financial stability). The Fed has focused more on attempting to mitigate systemic risk through its regulations since the financial crisis, and has also restructured its internal operations to facilitate a macroprudential approach to supervision and regulation.

Congress has delegated responsibility for monetary policy to the Federal Reserve (the Fed), the nation's central bank, but retains oversight responsibilities for ensuring that the Fed is adhering to its statutory mandate of "maximum employment, stable prices, and moderate long-term interest rates." To meet its price stability mandate, the Fed has set a longer-run goal of 2% inflation. The Fed's control over monetary policy stems from its exclusive ability to alter the money supply and credit conditions more broadly. Normally, the Fed conducts monetary policy by setting a target for the federal funds rate, the rate at which banks borrow and lend reserves on an overnight basis. It meets its target through open market operations, financial transactions traditionally involving U.S. Treasury securities. Beginning in 2007, the federal funds target was reduced from 5.25% to a range of 0% to 0.25% in December 2008, which economists call the zero lower bound. By historical standards, rates were kept unusually low for an unusually long time to mitigate the effects of the financial crisis and its aftermath. Starting in December 2015, the Fed has been raising interest rates and expects to gradually raise rates further. The Fed raised rates once in 2016, three times in 2017, and four times in 2018, by 0.25 percentage points each time. In light of increased economic uncertainty and financial volatility, the Fed announced in January 2019 that it would be "patient" before raising rates again. The Fed influences interest rates to affect interest-sensitive spending, such as business capital spending on plant and equipment, household spending on consumer durables, and residential investment. In addition, when interest rates diverge between countries, it causes capital flows that affect the exchange rate between foreign currencies and the dollar, which in turn affects spending on exports and imports. Through these channels, monetary policy can be used to stimulate or slow aggregate spending in the short run. In the long run, monetary policy mainly affects inflation. A low and stable rate of inflation promotes price transparency and, thereby, sounder economic decisions. The Fed's relative independence from Congress and the Administration has been justified by many economists on the grounds that it reduces political pressure to make monetary policy decisions that are inconsistent with a long-term focus on stable inflation. But independence reduces accountability to Congress and the Administration, and recent legislation and criticism of the Fed by the President has raised the question about the proper balance between the two. While the federal funds target was at the zero lower bound, the Fed attempted to provide additional stimulus through unsterilized purchases of Treasury and mortgage-backed securities (MBS), a practice popularly referred to as quantitative easing (QE). Between 2009 and 2014, the Fed undertook three rounds of QE. The third round was completed in October 2014, at which point the Fed's balance sheet was $4.5 trillion—five times its precrisis size. After QE ended, the Fed maintained the balance sheet at the same level until September 2017, when it began to very gradually reduce it to a more normal size. The Fed has raised interest rates in the presence of a large balance sheet through the use of two new tools—by paying banks interest on reserves held at the Fed and by engaging in reverse repurchase agreements (reverse repos) through a new overnight facility. In January 2019, the Fed announced that it would continue using these tools to set interest rates permanently, in which case the balance sheet may not get much smaller than its current size of $4 trillion. With regard to its mandate, the Fed believes that unemployment is currently lower than the rate that it considers consistent with maximum employment, and inflation is close to the Fed's 2% goal by the Fed's preferred measure. Even after recent rate increases, monetary policy is still considered expansionary. This monetary policy stance is unusually stimulative compared with policy in this stage of previous expansions, and is being coupled with a stimulative fiscal policy (larger structural budget deficit). Debate is currently focused on how quickly the Fed should raise rates. Some contend the greater risk is that raising rates too slowly at full employment will cause inflation to become too high or cause financial instability, whereas others contend that raising rates too quickly will cause inflation to remain too low and choke off the expansion.

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The Budget and Homeland Security (William L. Painter; February 28, 2019) Congress at times has sought to ascertain how much the government spends on securing the homeland, either in current terms or historically. Several factors compromise the authoritativeness of any answer to this question. One such complication is the lack of a consensus definition of what constitutes home land security, and another is that homeland security activities are carried out across the federal government, in partnership with other public and private sector entities. This insight examines those two complicating factors, and presents what information is available on historical homeland security budget authority and current DHS appropriations. Defining Homeland Security No statutory definition of homeland security reflects the breadth of the current enterprise. The Department of Homeland Security is not solely dedicated to homeland security missions, nor is it the only part of the federal government with homeland security responsibilities. The concept of homeland security in U.S. policy evolved over the last two decades. Homeland security as a policy concept was discussed before the terrorist attacks of September 11, 2001. Entities like the Gilmore Commission and the Hart-Rudman Commission discussed the need to evolve national security thinking in response to the increasing relative risks posed by nonstate actors, including terrorist groups. After 9/11, policymakers concluded that a new approach was needed to address these risks. A presidential council and department were established, and a series of presidential directives were issued in the name of "homeland security." These efforts defined homeland security as a response to terrorism. Later, multilevel government responses to disasters such as Hurricane Katrina expanded the concept of homeland security to include disasters, public health emergencies, and other events that threaten the United States, its economy, the rule of law, and government operations. Some criminal justice elements could arguably be included in a broad definition of homeland security. This evolution of the concept of homeland security made it distinct from other federal government security operations such as homeland defense. Homeland defense is primarily a Department of Defense (DOD) activity and is defined by DOD as "... the protection of U.S. sovereignty, territory, domestic population, and critical defense infrastructure against external threats and aggression, or other threats as directed by the President." Homeland security, on the other hand, is a more broadly coordinated effort, involving not only military activities, but the operations of civilian agencies at all levels of government. The Federal Homeland Security Enterprise The Homeland Security Act of 2002 established the Department of Homeland Security (DHS). The department was assembled from components pulled from 22 different government agencies and began official operations on March 1, 2003. Since then, DHS has undergone a series of restructurings and reorganizations to improve its effectiveness. Although DHS does include many of the homeland security functions of the federal government, several of these functions or parts of these functions remain at their original executive branch agencies and departments, including the Departments of Justice, State, Defense, and Transportation. Not all of the missions of DHS are officially "homeland security" missions. Some DHS components have legacy missions that do not directly relate to conventional homeland security definitions, such as the Coast Guard, and Congress has in the past debated whether FEMA and its disaster relief and recovery missions belong in the department. Analyzing Costs Across Government Section 889 of the Homeland Security Act of 2002 required the President's annual budget request to include an analysis of homeland security funding across the federal government—not just DHS. This requirement remained in effect through the FY2017 funding cycle. The resulting data series, which included agency-reported data on spending in three categories—preventing and disrupting terrorist attacks; protecting the American people, critical infrastructure, and key resources; and responding to and recovering from incidents—provides a limited snapshot of the scope of the federal government's investment in homeland security. According to these data, from FY2003 through FY2017, the entire U.S. government directed roughly $878 billion (in nominal dollars of budget authority) to those three mission sets. Annual budget authority rose from roughly $41 billion in FY2003 to a peak in FY2009 of almost $74 billion. After that peak, reported annual homeland security budget authority hovered between $66 billion and $73 billion. Thirty different agencies reported having some amount of homeland security budget authority. One can compare this growth in homeland security budget authority to the budget authority provided to DHS. The enacted budget for DHS rose from an Administration-projected $31.2 billion in FY2003, to almost $68.4 billion in FY2017. FY2019 DHS Appropriations For FY2019, the Trump Administration initially requested almost $75 billion in budget authority for DHS, including over $47 billion in adjusted net discretionary budget authority through the appropriations process. This included almost $7 billion to pay for the costs of major disasters under the Stafford Act. The Administration requested additional Overseas Contingency Operations (OCO) funding for the Coast Guard as a transfer from the U.S. Navy. Neither the Senate nor the House bill reported out of their respective appropriations committees in response to that request received floor consideration. Continuing appropriations expired on December 21, 2018, leading to a 35-day partial shutdown of federal government components without enacted annual appropriations—including DHS. This was the longest such shutdown in the history of the U.S. government. On February 15, the President signed into law P.L. 116-5 , which included the FY2019 DHS annual appropriations act. The act included almost $56 billion in adjusted net discretionary budget authority, including $12 billion for the costs of major disasters, and $165 million for Coast Guard OCO funding. The current budget environment may present challenges to homeland security programs and DHS going forward. The funding demands of ongoing capital investment efforts, such as the proposed border wall and ongoing recapitalization efforts, and staffing needs for cybersecurity, border security, and immigration enforcement, may compete with one another for limited funding across the government and within DHS. The U.S. Intelligence Community (Michael E. DeVine; February 1, 2019) Intelligence support of homeland security is a primary mission of the entire Intelligence Community (IC). In fulfilling this mission, changes to IC organization and process, since 9/11, have enabled more integrated and effective support than witnessed or envisioned since its inception. The terrorist attacks of 9/11 revealed how barriers between intelligence and law enforcement, which originally had been created to protect civil liberties, had become too rigid, thus preventing efficient, effective coordination against threats. In its final report, the Commission on Terrorist Attacks upon the United States (the 9/11 Commission ) identified how these barriers contributed to degrading U.S. national security. The findings resulted in Congress and the executive branch enacting legislation and providing policies and regulations designed to enhance information sharing across the U.S. government. The Homeland Security Act of 2002 ( P.L. 107-296 ) gave the Department of Homeland Security (DHS) responsibility for integrating law enforcement and intelligence information relating to terrorist threats to the homeland. Provisions in the Intelligence Reform and Terrorist Prevention Act (IRTPA) of 2004 ( P.L. 108-458 ) established the National Counterterrorism Center (NCTC) as the coordinator at the federal level for terrorism information and assessment and created the position of Director of National Intelligence (DNI) to provide strategic management across the 17 organizational elements of the IC. New legal authorities accompanied these organizational changes. At the federal, state, and local levels, initiatives to improve collaboration across the federal government include the FBI-led Joint Terrorism Task Forces (JTTFs) and, more recently, the DHS National Network of Fusion Centers (NNFC). Within the IC, the FBI Intelligence Branch (FBI/IB), and DHS's Office of Intelligence and Analysis (OIA), and the Coast Guard Intelligence (CG-2) enterprise, are most closely associated with homeland security. OIA combines information collected by DHS components as part of their operational activities (i.e., those conducted at airports, seaports, and the border) with foreign intelligence from the IC; law enforcement information from federal, state, local, territorial and tribal sources; and private sector data about critical infrastructure and strategic resources. OIA analytical products focus on a wide range of threats to the homeland to include foreign and domestic terrorism, border security, human trafficking, and public health. OIA's customers range from the U.S. President to border patrol agents, Coast Guard personnel, airport screeners, and local first responders. Much of the information sharing is done through the NNFC—with OIA providing personnel, systems, and training. The Coast Guard Intelligence (CG-2) enterprise is the intelligence component of the United States Coast Guard (USCG). It serves as the primary USCG interface with the IC on intelligence policy, planning, budgeting and oversight matters related to maritime security and border protection. CG-2 has a component Counterintelligence Service, a Cryptologic Group, and an Intelligence Coordination Center to provide analysis and supporting products on maritime border security. CG-2 also receives support from field operational intelligence components including the Atlantic and Pacific Area Intelligence Divisions, Maritime Intelligence Fusion Centers for the Atlantic and Pacific, and intelligence staffs supporting Coast Guard districts and sectors. FBI/IB includes four component organizations: The Directorate of Intelligence has responsibility for all FBI intelligence functions, and includes intelligence elements and personnel at FBI Headquarters in field divisions. The Office of Partner Engagement develops and maintains intelligence sharing relationships across the IC, and with state, local, tribal, territorial, and international partners. The Office of Private Sector conducts outreach to businesses impacted by threats to vulnerable sectors of the economy such as critical infrastructure, the supply chain, and financial institutions. Finally, the Bureau Intelligence Council provides internal to the FBI a forum for senior-level dialogue on integrated assessments of domestic threats. While the intelligence organizations of FBI and DHS are the only IC elements solely dedicated to intelligence support of homeland security, all IC elements, to varying degrees, have some level of responsibility for the overarching mission of homeland security. For example, in addition to NCTC, the Office of the DNI (ODNI) includes the Cyber Threat Intelligence Integration Center (CTIIC). It was established in 2015 and is responsible at the federal level for providing all - source analysis of intelligence relating to cyber threats to the United States. Much like NCTC for terrorism, CTIIC provides outreach to other intelligence organizations across the federal government and at the state, and local levels to facilitate intelligence sharing and provide an integrated effort for assessing and providing warning of cyber threats to the homeland. IC organizational developments since 9/11 underscore the importance of adhering to privacy and civil liberties protections that many feared might be compromised by the more integrated approach to intelligence and law enforcement. This is particularly true considering the changing nature of the threat: The focus of intelligence support of homeland security has evolved from state-centric to increasingly focusing on nonstate actors, often individuals acting alone or as part of a group not associated with any state. Collecting against these threats, therefore, requires strict adherence to intelligence oversight rules and regulations, and annual training by the IC workforce for the protection of privacy and civil liberties. Homeland Security Research and Development (Daniel Morgan; January 22, 2019) Overview In the Department of Homeland Security (DHS), the Directorate of Science and Technology (S&T) has primary responsibility for establishing, administering, and coordinating research and development (R&D) activities. The Domestic Nuclear Detection Office (DNDO) is responsible for R&D relating to nuclear and radiological threats. Several other DHS components, such as the Coast Guard, also fund R&D and R&D-related activities associated with their missions. The Common Appropriations Structure that DHS introduced in its FY2017 budget includes an account titled Research and Development in seven different DHS components. Issues for DHS R&D in the 116 th Congress may include coordination, organization, and impact. Coordination of R&D The Under Secretary for S&T, who leads the S&T Directorate, has statutory responsibility for coordinating homeland security R&D both within DHS and across the federal government (6 U.S.C. §182). The Director of DNDO also has an interagency coordination role with respect to nuclear detection R&D (6 U.S.C. §592). Both internal and external coordination are long-standing congressional interests. Regarding internal coordination, the Government Accountability Office (GAO) concluded in a 2012 report that because so many components of the department are involved, it is difficult for DHS to oversee R&D department-wide. In January 2014, the joint explanatory statement for the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) directed DHS to implement and report on new policies for R&D prioritization. It also directed DHS to review and implement policies and guidance for defining and overseeing R&D department-wide. In July 2014, GAO reported that DHS had updated its guidance to include a definition of R&D and was conducting R&D portfolio reviews across the department, but that it had not yet developed policy guidance for DHS-wide R&D oversight, coordination, and tracking. In December 2015, the joint explanatory statement for the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) stated that DHS "lacks a mechanism for capturing and understanding research and development (R&D) activities conducted across DHS, as well as coordinating R&D to reflect departmental priorities." A challenge for external coordination is that the majority of homeland security-related R&D is conducted by other agencies, most notably the Department of Defense and the Department of Health and Human Services. The Homeland Security Act of 2002 directs the Under Secretary for S&T, "in consultation with other appropriate executive agencies," to develop a government-wide national policy and strategic plan for homeland security R&D (6 U.S.C. §182), but no such plan has ever been issued. Instead, the S&T Directorate has developed R&D plans with selected individual agencies, and the National Science and Technology Council (a coordinating entity in the Executive Office of the President) has issued government-wide R&D strategies in selected topical areas, such as biosurveillance. Organization for R&D DHS has reorganized its R&D-related activities several times. In December 2017, it established a new Countering Weapons of Mass Destruction Office (CWMDO), consolidating DNDO, most functions of the Office of Health Affairs (OHA), and some other elements. DNDO and OHA were themselves both created, more than a decade ago, largely by reorganizing elements of the S&T Directorate. The Countering Weapons of Mass Destruction Act of 2018 ( P.L. 115-387 ) expressly authorized the establishment and activities of CWMDO. The 116 th Congress may examine the implementation of that act. The organization of DHS laboratory facilities may also be a focus of attention in the 116 th Congress. At its establishment, the S&T Directorate acquired laboratories from other departments, including the Plum Island Animal Disease Center (from the Department of Agriculture) and the National Urban Security Technology Laboratory, then known as the Environmental Measurements Laboratory (from the Department of Energy). It subsequently absorbed some laboratory facilities from other DHS components (such as the Transportation Security Laboratory from the Transportation Security Administration), but other DHS components retained their own laboratories (such as the U.S. Coast Guard Research and Development Center). During the 115 th Congress, the Federal Bureau of Investigation agreed to assume some of the operational costs of the S&T Directorate's National Biodefense Analysis and Countermeasures Center, and DHS proposed to transfer operational responsibility for the National Bio and Agro-Defense Facility—a biocontainment laboratory currently being built by the S&T Directorate in Manhattan, Kansas—to the Department of Agriculture. Impact of R&D Results In testimony at a Senate hearing in 2018, the Administration's nominee to be Under Secretary for S&T described the S&T Directorate's mission as "to deliver results" and referred to "timely delivery and solid return on investment." Members of Congress and other stakeholders have sometimes questioned the impact of DHS R&D programs and whether enough of their results are ultimately implemented in products actually used in the U.S. homeland security enterprise. Part of the debate has been about finding the right balance between near-term and long-term goals. In testimony at House hearing in 2017, a former Under Secretary for S&T stated that the directorate "has worked hard to focus on being highly relevant—shifting from the past focus on long-term basic research to near-term operational impact." Yet testimony from an industry witness at the same House hearing stated that "there is a perception among some in the industry that S&T programs only infrequently significantly impact the operational or procurement activities of the DHS components." The 116 th Congress may continue to examine the effectiveness and impact of DHS R&D. National Strategy for Counterterrorism (John W. Rollins, January 29, 2019) On October 4, 2018, President Trump released his Administration's first National Strategy for Counterterrorism. The overarching goal of the strategy is to "defeat the terrorists who threaten America's safety, prevent future attacks, and protect our national interests." In describing the need for this strategy, National Security Advisor John Bolton stated that the terrorist "landscape is more fluid and complex than ever" and that the strategy will not "focus on a single organization but will counter all terrorists with the ability and intent to harm the United States, its citizens and our interests." The strategy states that a " new approach " will be implemented containing six primary thematic areas of focus: (1) pursuing terrorists to their source; (2) isolating terrorists from their sources of support; (3) modernizing and integrating the United States' counterterrorism authorities and tools; (4) protecting American infrastructure and enhancing resilience; (5) countering terrorist radicalization and recruitment; and (6) strengthening the counterterrorism abilities of U.S. international partners. In announcing the strategy, President Trump stated, "When it comes to terrorism, we will do whatever is necessary to protect our Nation." In contrast, former President Obama's final National Strategy for Counterterrorism, published on June 28, 2011, primarily focused on global terrorist threats emanating from Al Qaeda and associated entities. The overarching goal of this strategy was to "disrupt, dismantle, and eventually defeat Al Qaeda and its affiliates and adherents to ensure the security of our citizens and interests." This strategy stated that the "preeminent security threat to the United States continues to be from Al Qaeda and its affiliates and adherents." The strategy focused on the threats posed by geographic dispersal of Al Qaeda, its affiliates, and adherents, and identified principles that would guide United States counterterrorism efforts: Adhering to Core Values, Building Security Partnerships, Applying Tools and Capabilities Appropriately, and Building a Culture of Resilience. In announcing the release of this strategy, President Obama included a quote from the speech he gave announcing the killing of Osama Bin Laden, "As a country, we will never tolerate our security being threatened, nor stand idly by when our people have been killed. We will be relentless in defense of our citizens and our friends and allies. We will be true to the values that make us who we are. And on nights like this one, we can say to those families who have lost loved ones to Al Qaeda's terror: Justice has been done." Since President Trump's Counterterrorism Strategy was published, many security observers have pointed to the similarities and differences between the two Administration's approaches to counterterrorism. Table 1 , below, presents the language contained in each strategy identifying major thematic aspects of the two counterterrorism strategies. Energy Infrastructure Security (Paul Parfomak; March 1, 2019) Ongoing threats against the nation's natural gas, oil, and refined product pipelines have heightened concerns about the security risks to these pipelines, their linkage to the electric power sector, and federal programs to protect them. In a December 2018 study, the Government Accountability Office (GAO) stated that, since the terrorist attacks of September 11, 2001, "new threats to the nation's pipeline systems have evolved to include sabotage by environmental activists and cyber attack or intrusion by nations." In a 2018 Federal Register notice, the Transportation Security Administration stated that it expects pipeline companies will report approximately 32 "security incidents" annually—both physical and cyber. The Pipeline and LNG Facility Cybersecurity Preparedness Act ( H.R. 370 , S. 300 ) would require the Secretary of Energy to enhance coordination among government agencies and the energy sector in pipeline security; coordinate incident response and recovery; support the development of pipeline cybersecurity applications, technologies, demonstration projects, and training curricula; and provide technical tools for pipeline security. Pipeline Physical Security Congress and federal agencies have raised concerns since at least 2010 about the physical security of energy pipelines, especially cross-border oil pipelines. These security concerns were heightened in 2016 after environmentalists in the United States disrupted five pipelines transporting oil from Canada. In 2018, the Transportation Security Administration's Surface Security Plan identified improvised explosive devices as key risks to energy pipelines, which "are vulnerable to terrorist attacks largely due to their stationary nature, the volatility of transported products, and [their] dispersed nature." Among these risks, according to some analysts, are the possibility of multiple, coordinated attacks with explosives on the natural gas pipeline system, which potentially could "create unprecedented challenges for restoring gas flows." Pipeline Cybersecurity As with any internet-enabled technology, the computer systems used to operate much of the pipeline system are vulnerable to outside manipulation. An attacker can exploit a pipeline control system in a number of ways to disrupt or damage pipelines. Such cybersecurity risks came to the fore in 2012 after reports of a series of cyber intrusions among U.S. natural gas pipeline operators. In April 2018, new cyberattacks reportedly caused the shutdown of the customer communications systems (separate from operation systems) at four of the nation's largest natural gas pipeline companies. Most recently, in January 2019, congressional testimony by the Director of National Intelligence singled out gas pipelines as critical infrastructure vulnerable to cyberattacks which could cause disruption "for days to weeks." Pipeline and Electric Power Interdependency Pipeline cybersecurity concerns are exacerbated by growing interdependency between the pipeline and electric power sectors. A 2017 Department of Energy (DOE) staff report highlighted the electric power sector's growing reliance upon natural gas-fired generation and, as a result, security vulnerabilities associated with pipeline gas supplies. These concerns were echoed in a June 2018 op-ed by two commissioners on the Federal Energy Regulatory Commission (FERC) who wrote, "as … natural gas has become a major part of the fuel mix, the cybersecurity threats to that supply have taken on new urgency." A November 2018 report by the PJM regional transmission organization concluded that "while there is no imminent threat," the security of generation fuel supplies, especially natural gas and fuel oil, "has become an increasing area of focus." In a February 2019 congressional hearing on electric grid security, the head of the North American Electric Reliability Corporation (NERC) testified that pipeline and electric grid interdependency "is fundamental" to security. The Federal Pipeline Security Program The Transportation Security Administration (TSA) within the Department of Homeland Security (DHS) administers the federal program for pipeline security. The Aviation and Transportation Security Act of 2001 ( P.L. 107-71 ), which established TSA, authorized the agency "to issue, rescind, and revise such regulations as are necessary" to carry out its functions (§101). The Implementing Recommendations of the 9/11 Commission Act of 2007 ( P.L. 110-53 ) directs TSA to promulgate pipeline security regulations and carry out necessary inspection and enforcement if the agency determines that regulations are appropriate (§1557(d)). However, to date, TSA has not issued such regulations, relying instead upon industry compliance with voluntary guidelines for pipeline physical and cybersecurity. The pipeline industry maintains that regulations are unnecessary because pipeline operators have voluntarily implemented effective physical and cybersecurity programs. The 2018 GAO study identified a number of weaknesses in the TSA program, including inadequate staffing, outdated risk assessments, and uncertainty about the content and effectiveness of its security standards. In fulfilling its responsibilities, TSA cooperates with the Department of Transportation's (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA)—the federal regulator of pipeline safety—under the terms of a 2004 memorandum of understanding (MOU) and a 2006 annex to facilitate transportation security collaboration. TSA also cooperates with DOE's recently established Office of Cybersecurity, Energy Security, and Emergency Response (CESER), whose mission includes "emergency preparedness and coordinated response to disruptions to the energy sector, including physical and cyber-attacks." TSA also collaborates with the Office of Energy Infrastructure Security at the Federal Energy Regulatory Commission—the agency which regulates the reliability and security of the bulk power electric grid. Issues for Congress Over the last few years, most debate about the federal pipeline security program has revolved around four principal issues. Some in Congress have suggested that TSA's current pipeline security authority and voluntary standards approach may be appropriate, but that the agency may require greater resources to more effectively carry out its mission. Others stakeholders have debated whether security standards in the pipeline sector should be mandatory—as they are in the electric power sector—especially given their growing interdependency. Still others have questioned whether any of TSA's regulatory authority over pipeline security should move to another agency, such as the DOE, DOT, or FERC, which they believe could be better positioned to execute it. Concern about the quality, specificity, and sharing of information about pipeline threats also has been an issue. U.S. Secret Service Protection of Persons and Facilities (Shawn Reese; March 6, 2019) Congress has historically legislated and conducted oversight on the U.S. Secret Service (USSS) because of USSS' public mission of protecting individuals such as the President and his family, and the USSS mission of investigating financial crimes. Most recently, the 115 th Congress conducted oversight on challenges facing the Service and held hearings on legislation that addressed costs associated with USSS protective detail operations and special agents' pay. These two issues remain pertinent in the 116 th Congress due to recent, but failed, attacks on USSS protectees, and the media's and public's attention on the cost the USSS incurs while protecting President Donald Trump and his family. USSS Protection Operations and Security Breaches In October 2018, attempted bombings targeted former President Barack Obama, former Vice President Joe Biden, and former First Lady Hillary Clinton. Prior to these attempted attacks, the media reported other USSS security breaches, including two intruders (March and October 2017) climbing the White House fence, and the USSS losing a government laptop that contained blueprints and security plans for the Trump Tower in New York City. Various security breaches during President Obama's Administration resulted in several congressional committee hearings. Presidential safety is and has been a concern throughout the nation's history. For example, fears of kidnapping and assassination threats to Abraham Lincoln began with his journey to Washington, DC, for the inauguration in 1861. Ten Presidents have been victims of direct assaults by assassins, with four resulting in death. Since the USSS started protecting Presidents in 1906, seven assaults have occurred, with one resulting in death (President John F. Kennedy). 18 U.S.C. Section 3056(a) explicitly identifies the following individuals authorized for USSS protection: President, Vice President, President- and Vice President-elect; immediate families of those listed above; former Presidents, their spouses, and their children under the age of 16; former Vice Presidents, their spouses, and their children under the age of 16; visiting heads of foreign states or governments; distinguished foreign visitors and official U.S. representatives on special missions abroad; and major presidential and vice presidential candidates within 120 days of the general presidential elections, and their spouses. USSS Protection Costs Regardless of the location of protectees or costs associated with protective detail operations, the USSS is statutorily required to provide full-time security. Congress has reinforced this requirement in the past. In 1976, Congress required the USSS to not only secure the White House, but also the personal residences of the President and Vice President. However, the costs incurred by the USSS during the Trump Administration have generated interest and scrutiny. This includes the USSS leasing property from President Trump, and the frequency with which President Trump and his family have traveled. Reportedly, the USSS leased property in Trump Tower in New York City. The USSS informed CRS that leasing property from a protectee is not a new requirement with the Trump Administration, but the USSS would neither confirm nor deny leasing Trump Tower property. The USSS stated that it has leased a structure in the past at former Vice President Joe Biden's personal home in Delaware to conduct security operations. The USSS will not confirm if it is still leasing this property. Another protection cost issue other than leasing property from protectees is the overall cost of protective detail operations. One aspect of protective detail operations that has garnered attention from the media and the public is President Trump's and his family's travel. Some question whether the President and his family have traveled more than other Presidents and their families and what, if any, impact that has on security costs. The security cost of this travel is difficult to assess, because the USSS is required to provide only annual budget justification information on "Protection of Persons and Facilities." The USSS does not provide specific costs related to individual presidential, or immediate family travel. The USSS states that it does not provide specific costs associated with protectee protection due to the information being a security concern. Conclusion USSS security operations and the costs associated with these operations represent consistent issues of congressional concern. USSS protectees have been—and may continue to be—targeted by assassins. Congress may wish to consider USSS protection issues within this broader context as it conducts oversight and considers funding for the ever-evolving threats to USSS protectees and the rapidly changing technology used in USSS security operations. Protection of Executive Branch Officials (Shawn Reese; February 19, 2019) Due to the October 2018 attempted bombing attacks on current and former government officials (and others), there may be congressional interest in policy issues surrounding protective details for government officials. Attacks against political leaders and other public figures have been a consistent security issue in the United States. According to a 1998 U.S. Marshals Service (USMS) report, data on assassinations and assassination attempts against federal officials suggest that elected officials are more likely to be targeted than those holding senior appointed positions. Congress also may be interested due to media reports of costs or budgetary requests associated with funding security details for the heads of some departments and agencies, including the Department of Education, the Department of Labor, and the Environmental Protection Agency. In a 2000 report, the Government Accountability Office (GAO) stated that it was able to identify only one instance when a Cabinet Secretary was physically harmed as a result of an assassination attempt. This occurred when one of the Lincoln assassination conspirators attacked then-Secretary of State William Seward in his home in 1865. Even with few attempted attacks against appointed officials, GAO reported that federal law enforcement entities have provided personal protection details (PPDs) to selected executive branch officials since at least the late 1960s. In total, GAO reported that from FY1997 through FY1999, 42 officials at 31 executive branch agencies received security protection. Personnel from 27 different agencies protected the 42 officials: personnel from their own agencies or departments protected 36 officials, and personnel from other agencies or departments, such as the U.S. Secret Service (USSS) and the USMS, protected the remaining 6 officials. This Insight provides a summary of the statutory authority for executive branch official security, a Trump Administration proposal to consolidate this security under the USMS, and issues for congressional consideration. Statutory Authority for Protection The USSS and the State Department are the only two agencies that have specific statutory authority to protect executive branch officials. The USSS is authorized to protect specific individuals under 18 U.S.C. §3056(a); the State Department's Diplomatic Security Service special agents are authorized to protect specific individuals under 22 U.S.C. §2709(a)(3). In 2000, GAO reported that other agencies providing protective security details to executive branch officials cited various other legal authorities. These authorities included the Inspector General Act of 1978 (5 U.S.C., App. 3), a specific delegation of authority set forth in 7 C.F.R. §2.33(a)(2), and a 1970 memorandum from the White House Counsel to Cabinet departments. Trump Administration Proposal The Trump Administration proposed consolidating protective details at certain civilian executive branch agencies under the USMS to more effectively and efficiently monitor and respond to potential threats. This proposal was made in an attempt to standardize executive branch official protection in agencies that currently have USMS security details or have their own employees deputized by the USMS. This proposal would not affect any law enforcement or military agencies with explicit statutory authority to protect executive branch officials, such as the USSS or the Department of State's Diplomatic Security Service. Threat assessments would be conducted with support from the USSS. Specifically, the Trump Administration proposed that the USMS be given the authority to manage protective security details of specified executive branch officials. These officials include the Secretaries of Education, Labor, Energy, Commerce, Veterans Affairs, Agriculture, Transportation, Housing and Urban Development, and the Interior; the Deputy Attorney General; and the Administrator of the Environmental Protection Agency. The Trump Administration proposed that Deputy U.S. Marshals would protect all of these Cabinet officials. Currently, the USMS provides Deputy U.S. Marshals only for the Secretary of Education and the Deputy Attorney General's protective details. These two departments, however, do not have explicit statutory authority for protective details. Potential Issues for Congress The Administration's proposal appears to authorize the USMS to staff all protective details of executive branch officials (excluding the USSS and the Departments of State and Defense) deemed to need security, even protective security details that presently are staffed by agencies' employees. Even though the USMS implements or oversees the protection of certain executive branch officials, there appears to be no current study or research to assess the number of additional U.S. Marshals that would be needed to expand protective details to identified executive branch officials under this proposal. Additionally, the proposal does not address the funding that may be needed for USMS protection of executive branch officials. The proposal, however, does state that the Office of Management and Budget would coordinate with the Department of Justice and affected agencies on the budgetary implications. Drug Trafficking at the Southwest Border (Kristin Finklea; January 31, 2019) The United States sustains a multi-billion dollar illegal drug market. An estimated 28.6 million Americans, or 10.6% of the population age 12 or older, had used illicit drugs at least once in the past month in 2016. The 2018 National Drug Threat Assessment indicates that Mexican transnational criminal organizations (TCOs) continue to dominate the U.S. drug market. They "remain the greatest criminal drug threat to the United States; no other group is currently positioned to challenge them." The Drug Enforcement Administration (DEA) indicates that these TCOs maintain and expand their influence by controlling lucrative smuggling corridors along the Southwest border and by engaging in business alliances with other criminal networks, transnational gangs, and U.S.-based gangs. TCOs either transport or produce and transport illicit drugs north across the U.S.-Mexico border. Traffickers move drugs through ports of entry, concealing them in passenger vehicles or comingling them with licit goods on tractor trailers. Traffickers also rely on cross-border subterranean tunnels and ultralight aircraft to smuggle drugs, as well as other transit methods such as cargo trains, passenger busses, maritime vessels, or backpackers/"mules." While drugs are the primary goods trafficked by TCOs, they also generate income from other illegal activities such as the smuggling of humans and weapons, counterfeiting and piracy, kidnapping for ransom, and extortion. After being smuggled across the border, the drugs are distributed and sold within the United States. The illicit proceeds may then be laundered or smuggled as bulk cash back across the border. While the amount of bulk cash seized has declined over the past decade, it remains a preferred method of moving illicit proceeds—along with money or value transfer systems and trade-based money laundering. More recently, traffickers have relied on virtual currencies like Bitcoin to move money more securely. To facilitate the distribution and local sale of drugs in the United States, Mexican drug traffickers have sometimes formed relationships with U.S. gangs. Trafficking and distribution of illicit drugs is a primary source of revenue for these U.S.-based gangs and is among the most common of their criminal activities. Gangs may work with a variety of drug trafficking organizations, and are often involved in selling multiple types of drugs. Current domestic drug threats, fueled in part by Mexican traffickers, include opioids such as heroin, fentanyl, and diverted or counterfeit controlled prescription drugs; marijuana; methamphetamine; cocaine; and synthetic psychoactive drugs. While marijuana remains the most commonly used illicit drug, officials are increasingly concerned about the U.S. opioid epidemic. As part of this, the most recent data show an elevated level of heroin use in the United States, including elevated overdose deaths linked to heroin and other opioids, and there has been a simultaneous increase in its availability, fueled by a number of factors including increased production and trafficking of heroin by Mexican criminal networks. Increases in Mexican heroin production and its availability in the United States have been coupled with increased heroin seizures at the Southwest border. According to the DEA, the amount of heroin seized in the United States, including at the Southwest border, has generally increased over the past decade; nationwide heroin seizures reached 7,979 kg in 2017, with 3,090 kg (39%) seized at the Southwest border, up from about 2,000 kg seized at the Southwest border a decade earlier. In addition to heroin, officials have become increasingly concerned with the trafficking of fentanyl, particularly nonpharmaceutical, illicit fentanyl. Fentanyl can be mixed with heroin and/or other drugs, sometimes without the consumer's knowledge, and has been involved in an increasing number of opioid overdoses. Nonpharmaceutical fentanyl found in the United States is manufactured in China and Mexico. It is trafficked into the United States across the Southwest border or delivered through mail couriers directly from China, or from China through Canada. Federal law enforcement has a number of enforcement initiatives aimed at countering drug trafficking, both generally and at the Southwest border. For example, the Organized Crime Drug Enforcement Task Force (OCDETF) program targets major drug trafficking and money laundering organizations, with the intent to disrupt and dismantle them. The OCDETFs target organizations that have been identified on the Consolidated Priority Organization Targets (CPOT) List, the "most wanted" list of drug trafficking and money laundering organizations. In addition, the High Intensity Drug Trafficking Areas (HIDTA) program provides financial assistance to federal, state, local, and tribal law enforcement agencies operating in regions of the United States that have been deemed critical drug trafficking areas. There are 29 designated HIDTAs throughout the United States and its territories, including a Southwest border HIDTA that is a partnership of the New Mexico, West Texas, South Texas, Arizona, and San Diego-Imperial HIDTAs. Several existing strategies may also be leveraged to counter Southwest border drug trafficking. For instance, the National Southwest Border Counternarcotics Strategy (NSBCS), first launched in 2009, outlines domestic and transnational efforts to reduce the flow of illegal drugs, money, and contraband across the Southwest border. In addition, the 2011 Strategy to Combat Transnational Organized Crime provided the federal government's first broad conceptualization of transnational organized crime, highlighting it as a national security concern and outlining threats posed by TCOs—one being the expansion of drug trafficking. The 116 th Congress may consider a number of options in attempting to reduce drug trafficking from Mexico to the United States. For instance, Congress may question whether the Trump Administration will continue or alter priorities set forth by existing strategies. Policymakers may also be interested in examining various federal drug control agencies' roles in reducing Southwest border trafficking. This could involve oversight of federal law enforcement and initiatives such as the OCDETF program, as well as the Office of National Drug Control Policy (ONDCP) and its role in establishing a National Drug Control Strategy and Budget, among other efforts. Border Security Between Ports of Entry (Audrey Singer; February 11, 2019) The United States' southern border with Mexico runs for approximately 2,000 miles over diverse terrain, varied population densities, and discontinuous sections of public, private, and tribal land ownership. The Department of Homeland Security (DHS) Customs and Border Protection (CBP) is primarily responsible for border security, including the construction and maintenance of tactical infrastructure, installation and monitoring of surveillance technology, and the deployment of border patrol agents to prevent unlawful entries of people and contraband into the United States (including unauthorized migrants, terrorists, firearms, narcotics, etc.). CBP's border management and control responsibilities also include facilitating legitimate travel and commerce. Existing statute pertaining to border security confers broad authority to DHS to construct barriers along the U.S. border to deter unlawful crossings, and more specifically directs DHS to deploy fencing along "at least 700 miles" of the southern border with Mexico. The primary statute is the Illegal Immigration and Immigrant Responsibility ACT (IIRIRA) as amended by the REAL ID Act of 2005 , the Secure Fence Act of 2006 , and the Consolidated Appropriations Act of 2008 . On January 25, 2017, President Trump issued Executive Order 13767 "Border Security and Immigration Enforcement Improvements," which addresses, in part, the physical security of the southern border and instructed the DHS Secretary to "take all appropriate steps to immediately plan, design, and construct a physical wall along the southern border, using appropriate materials and technology to most effectively achieve complete operational control." The order did not identify the expected mileage of barriers to be constructed. The three main dimensions of border security are tactical infrastructure, surveillance technology, and personnel. Tactical Infrastructure. Physical barriers between ports of entry (POE) on the southern border vary in age, purpose, form, and location. GAO reports that at the end of FY2015, about one-third of the southern border, or 654 miles, had a primary layer of fencing: approximately 350 miles designed to keep out pedestrians, and 300 miles to prevent vehicles from entering. Approximately 90% of the 654 miles of primary fencing is located in the five contiguous Border Patrol sectors located in California, Arizona, and New Mexico, while the remaining 10% is in the four eastern sectors (largely in Texas) where the Rio Grande River delineates most of the border. About 82% of primary pedestrian fencing and 75% of primary vehicle fencing are considered "modern" and were constructed between 2006 and 2011. Across 37 discontinuous miles, the primary layer is backed by a secondary layer (pedestrian) as well as an additional 14 miles of tertiary fencing (typically to delineate property lines). No new miles of primary fencing have been constructed since the 654 miles were completed in 2015, but sections of legacy fencing and breached areas have been replaced. Additional tactical infrastructure includes roads, gates, bridges, and lighting designed to support border enforcement, and to disrupt and impede illicit activity. Surveillance Technology. To assist in the detection, identification, and apprehension of individuals illegally entering the United States between POEs, CBP also maintains border surveillance technology. Ground technology includes sensors, cameras, and radar tailored to fit specific terrain and population densities. Aerial and marine surveillance vessels, manned and unmanned, patrol inaccessible regions. Personnel. Approximately 19,500 Border Patrol agents were stationed nationwide, with most (16,600) at the southern border in FY2017. Subject to available appropriations, Executive Order 13767 calls on CBP to take appropriate action to hire an additional 5,000 Border Patrol agents. However, CBP continues to face challenges attaining statutorily established minimum staffing levels for its Border Patrol positions despite increased recruitment and retention efforts. Southern border security may be improved by changes to tactical infrastructure, surveillance technology, and personnel. A challenge facing policymakers is in determining the optimal mix of border security strategies given the difficulty of measuring the effectiveness of current efforts. While the number of apprehensions of illegal entrants has long been used to measure U.S. Border Patrol performance, it does not measure illegal border crossers who evade detection by the Border Patrol. When apprehensions decline, whether it is due to fewer illegal entrants getting caught or fewer attempting to enter illegally is not known. Other difficulties include measuring the contribution of any single border security component in isolation from the others, assessing the extent to which enforcement actions deter illegal crossing attempts, and evaluating ongoing enforcement efforts outside of border-specific actions and their impact on border security. Section 1092 of the FY2017 National Defense Authorization Act (NDAA) directs the Secretary of Homeland Security to provide annual metrics on border security that are intended to help address some of the challenges of measuring the impact of border security efforts. DHS has produced baseline estimates that go beyond apprehensions statistics to measure progress towards meeting the goals contained in Executive Order 13767. Congress, through CBP appropriations—and appropriations to its predecessor agency, the Immigration and Naturalization Service (INS)—has invested in tactical infrastructure, surveillance technology, and personnel since the 1980s. Given the changing level of detail and structure of appropriations for border infrastructure over time, it is not possible to develop a consistent history of congressional appropriations specifically for border infrastructure. However, CBP has provided the Congressional Research Service (CRS) with some historical information on how it has allocated funding for border barrier planning, construction, and operations and support. Between FY2007 and FY2018, CBP allocated just over $5.0 billion to these activities, including almost $1.4 billion specifically for border barrier construction and improvement through a new "Wall Program" activity in its FY2018 budget. The 116 th Congress is considering a mix of tactical infrastructure, including fencing, surveillance technologies, and personnel to enhance border security between U.S. POEs. Some experts have warned that the northern border may need more resources and oversight than it is currently receiving in light of potential national security risks. Other border security priorities that may be considered during the 116 th Congress include improvements to existing facilities and screening and detection capacity at U.S. POEs. National Preparedness Policy (Shawn Reese; February 19, 2019) The United States is threatened by a wide array of hazards, including natural disasters, acts of terrorism, viral pandemics, and man-made disasters, such as the Deepwater Horizon oil spill. The way the nation strategically prioritizes and allocates resources to prepare for all hazards can significantly influence the ultimate cost to society, both in the number of human casualties and the scope and magnitude of economic damage. As authorized in part by the Post-Katrina Emergency Reform Act of 2006 (PKEMRA; P.L. 109-295 ), the President, acting through the Federal Emergency Management Agency (FEMA) Administrator, is directed to create a "national preparedness goal" (NPG) and develop a "national preparedness system" (NPS) that will help "ensure the Nation's ability to prevent, respond to, recover from, and mitigate against natural disasters, acts of terrorism, and other man-made disasters" (6 U.S.C. §§743-744). Currently, NPG and NPS implementation is guided by Presidential Policy Directive 8: National Preparedness (PPD-8), issued by then-President Barack Obama on March 30, 2011. PPD-8 rescinded the existing Homeland Security Presidential Directive 8: National Preparedness (HSPD-8), which was released and signed by then-President George W. Bush on December 17, 2003. As directed by PPD-8, the NPS is supported by numerous strategic component policies, national planning frameworks (e.g., the National Response Framework), and federal interagency operational plans (e.g., the Protection Federal Interagency Operational Plan). In brief, the NPS and its many component policies represent the federal government's strategic vision and planning, with input from the whole community, as it relates to preparing the nation for all hazards. The NPS also establishes methods for achieving the nation's desired level of preparedness for both federal and nonfederal partners by identifying the core capabilities necessary to achieve the NPG. A capability is defined in law as "the ability to provide the means to accomplish one or more tasks under specific conditions and to specific performance standards. A capability may be achieved with any combination of properly planned, organized, equipped, trained, and exercised personnel that achieves the intended outcome." A core capability is defined in PPD-8 as a capability that is "necessary to prepare for the specific types of incidents that pose the greatest risk to the security of the Nation." Furthermore, the NPS includes annual National Preparedness Reports that document progress made toward achieving national preparedness objectives. The reports rely heavily on self-assessment processes, called the Threat and Hazard Identification and Risk Assessment (THIRA) and Stakeholder Preparedness Review (SPR), to incorporate the perceived risks and capabilities of the whole community into the NPS. In this respect, the NPS's influence may extend to federal, state, and local budgetary decisions, the assignment of duties and responsibilities across the nation, and the creation of long-term policy objectives for disaster preparedness. It is within the Administration's discretion to retain, revise, or replace the overarching guidance of PPD-8, and the 116 th Congress may provide oversight of the NPS. Congress may have interest in overseeing a variety of factors related to the NPS, such as whether the NPS conforms to the objectives of Congress, as outlined in the PKEMRA statute; the NPS is properly informed by quantitative and qualitative data and outcome metrics, such as those gathered by the THIRA and SPR, as has been regularly recommended by the Government Accountability Office; federal roles and responsibilities have, in Congress's opinion, been properly assigned and resourced to execute the core capabilities needed to prevent, protect against, mitigate the effects of, respond to, and recover from the greatest risks; nonfederal resources and stakeholders are efficiently incorporated into NPS policies; and federal, state, and local government officials are allocating the appropriate amount of resources to the disaster preparedness mission relative to other homeland security missions. Ultimately, if the NPS is determined not to fulfill the objectives of the 116 th Congress, Congress could consider amending the PKEMRA statute to create new requirements, or revise existing provisions, to manage the amount of discretion afforded to the President in NPS implementation. This could mean, for example, the 116 th Congress directly assigning certain preparedness responsibilities to federal agencies through authorizing legislation different than those indicated by national preparedness frameworks. As a hypothetical example, Congress could decide that certain federal agencies, such as the Department of Commerce or Housing and Urban Development, should take more or less of a role in the leadership of disaster recovery efforts following major incidents than is prescribed by the National Disaster Recovery Framework. Congress also may consider prioritizing the amount of budget authority provided to some core capabilities relative to others. As a hypothetical example, Congress may prioritize resourcing those federal programs needed to support the nation's core capability of "Screening, Search, and Detection" versus resourcing those federal programs needed to support "Fatality Management Services." Disaster Housing Assistance (Elizabeth M. Webster; February 26, 2019) After the President issues an emergency or major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, 42 U.S.C. §§5121 et seq.), the Federal Emergency Management Agency (FEMA) may provide various temporary housing assistance programs to meet disaster survivors' needs. However, limitations on these programs may make it difficult to transition disaster survivors into permanent housing. This Insight provides an overview of the primary housing assistance programs available under the Stafford Act, and potential considerations for Congress. Transitional Sheltering Assistance FEMA-provided housing assistance may include short-term, emergency sheltering accommodations under Section 403 of the Stafford Act (42 U.S.C. §5170b), including the Transitional Sheltering Assistance (TSA) program, which received significant attention as it was coming to an end for disaster survivors of Hurricane Maria from Puerto Rico. This transition process highlighted challenges to helping individuals and families obtain interim and permanent housing following a disaster. TSA is intended to provide short-term hotel/motel accommodations to individuals and families who are unable to return to their pre-disaster primary residence because a declared disaster rendered it uninhabitable or inaccessible. The initial period of TSA assistance is 5-14 days, and it can be extended in 14-day intervals for up to 6 months from the date of the disaster declaration. However, some Hurricane Maria disaster survivors from Puerto Rico remained in the TSA program for nearly one year due to extensions of the program (including by court order). Hurricane Maria is not the only incident that has received multiple TSA program extensions; disaster survivors of Hurricanes Harvey, Irma, and Sandy also received extensions for nearly a year. Research suggests that housing-instable individuals and families may have an "increased risk of adverse mental health outcomes," which may reveal a drawback to using an emergency sheltering solution, such as TSA, to house individuals and families in hotels/motels for extended periods of time. Individuals and Households Program Interim housing needs may be better met through FEMA's Individuals and Households Program (IHP) under Section 408 of the Stafford Act (42 U.S.C. §5174). Financial (e.g., assistance to reimburse temporary lodging expenses and rent alternate housing accommodations) and/or direct (e.g., multi-family lease and repair and manufactured housing units (MHUs)) assistance 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. IHP assistance is intended to be temporary, and is generally limited to a period of 18 months from the date of the declaration, but may be extended by FEMA. Although IHP provides various assistance options, eligibility and programmatic limitations exist on their receipt and use. For example, disaster survivors whose primary residence is determined to be habitable or who have access to adequate rent-free housing may be ineligible to receive assistance, even if they are unable to return for other reasons (e.g., lack of employment). Challenges to providing financial assistance, such as rental assistance, may include lack of available, affordable housing stock. Additionally, regulations and policies may not permit FEMA to immediately adjust rental payment rates to reflect the location where a disaster survivor has relocated . So even if housing stock is available, the difference in cost may result in the inability of some eligible applicants to secure a housing unit. Challenges to providing direct assistance, such as MHUs, may include restrictions on the placement of MHUs. Additionally, FEMA's direct lease assistance program is usually only offered if rental resources are scarce, and the area where direct lease assistance is available may be limited. Further, following a catastrophic incident additional challenges include the need to restore infrastructure, community services, and employment opportunities, which may impact where disaster survivors decide to locate following a disaster. This decision may impact the benefits for which they may be eligible. Disaster Housing Assistance Program Following Hurricanes Katrina and Rita, Ike and Gustav, and Sandy, FEMA executed Interagency Agreements with the U.S. Department of Housing and Urban Development (HUD) to administer the Disaster Housing Assistance Program (DHAP) in order to provide rental assistance and case management services. Although DHAP fell under Section 408 of the Stafford Act and was funded through the Disaster Relief Fund, it was not subject to some of the limitations of the IHP, and it may have allowed families to receive more assistance for longer periods of time than they may have received under IHP. Despite being identified as a promising interim housing strategy and potential solution to the challenge of meeting long-term housing needs in the National Disaster Housing Strategy, FEMA has not implemented DHAP following more recent disasters. Most recently, in response to the Governor of Puerto Rico's request to authorize DHAP, FEMA stated DHAP would not be implemented, because FEMA and HUD "offered multiple housing solutions that are better able to meet the current housing needs of impacted survivors." FEMA also noted that the Office of Inspector General (OIG) had raised concerns about DHAP's cost effectiveness; the OIG recommended that, before FEMA activates DHAP again, it "[c]onduct a cost-benefit analysis.... " Potential Considerations for Congress FEMA provides temporary housing assistance to meet short-term and interim disaster housing needs; however, clearly defining the use of these programs and identifying a process to assist some disaster survivors with attaining permanent housing may be needed to comprehensively address disaster housing needs throughout all phases of recovery. Congress may request an evaluation of FEMA's capacity to adequately and cost-effectively meet the needs of disaster survivors. Congress may also evaluate the roles of government and private/nonprofit entities in providing disaster housing assistance; require FEMA to collaborate with disaster housing partners to identify and outline short, interim, and long-term disaster housing solutions; and require an update to the National Disaster Housing Strategy to reflect the roles and responsibilities of housing partners, current practices and solutions, and the findings of any such evaluations. Congress may also pursue legislative solutions, including by consolidating, eliminating, or revising existing authorities and programs, or creating new programs that address unmet needs. The Disaster Recovery Reform Act (Elizabeth M. Webster; February 26, 2019) The Disaster Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254 ), which became law on October 5, 2018, is the most comprehensive legislation on 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, previous to that, the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA, P.L. 109-295 ). The legislation focuses on improving predisaster 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, 42 U.S.C. §§5121 et seq. ). Generally, DRRA's amendments to the Stafford Act apply to major disasters and emergencies declared on or after August 1, 2017. Other new authorities apply to major disasters and emergencies declared on or after January 1, 2016. Congress may consider tracking the implementation of DRRA's requirements, which include "more than 50 provisions that require FEMA policy or regulation changes for full implementation.... " In addition to its reporting and rulemaking requirements—many of which include 2019 deadlines—much of DRRA's implementation is at FEMA's discretion. This Insight provides an overview of some of DRRA's broad impacts with a few significant, illustrative provisions, and potential considerations for Congress. Potential Investments in Preparedness, Response, and Recovery DRRA includes provisions that have the potential to improve disaster preparedness, response, and recovery, but also to increase federal spending. For example, under the revised authority under Section 203 of the Stafford Act (42 U.S.C. §5133)—Predisaster Hazard Mitigation—the President may provide financial and technical assistance by setting aside up to 6% of the estimated aggregated amount of certain federal grant assistance from the Disaster Relief Fund (DRF), including grants made pursuant to awards of Public Assistance (PA) and Individual Assistance (IA) under the Stafford Act. Previously, predisaster mitigation was funded by discretionary annual appropriations, and financial assistance was limited by the amount available in the National Predisaster Mitigation Fund, which was separate from the DRF. Post-DRRA, predisaster mitigation has the potential to have significantly higher funding through the new set-aside from the DRF, but how this will be implemented and managed by FEMA remains uncertain. Additionally, DRRA may significantly increase the amount of financial assistance provided under Section 408 of the Stafford Act (42 U.S.C. §5174)—Federal Assistance to Individuals and Households. Prior to DRRA, an individual or household could receive up to $33,300 (FY2017; adjusted annually) in financial assistance, including both housing assistance and other needs assistance (ONA). Post-DRRA, financial assistance for repairs and replacement of housing may not exceed $34,900 (FY2019; adjusted annually), and separate from that, financial assistance for ONA may not exceed $34,900 (FY2019; adjusted annually). Financial assistance to rent alternate housing accommodations is not subject to the cap. In the past, the maximum amount of financial assistance may have resulted in applicants with significant home damage and/or other needs having little to no remaining funding available to pay for rental assistance. Changes post-DRRA may result in increased spending on temporary disaster housing assistance and ONA. FEMA may also pilot some provisions of the DRRA, as it has done with regard to management costs incurred in the administration of the PA Program and the Hazard Mitigation Grant Program (HMGP). Following the passage of DRRA, the PA management cost reimbursement rate increased to 12% of the total grant award; 7% may be used by the grantee, and 5% by the subgrantee. Previously, PA management costs were capped at 3.34% for major disasters and 3.90% for emergency declarations. Additionally, the HMGP management cost reimbursement rate increased to 15% of the total grant award; 10% may be used by the grantee, and 5% by the subgrantee. Previously, HMGP management costs were capped at 4.89% for major disasters. In addition, prior to DRRA, there was not a pass-through requirement for subgrantees to receive a percentage of management costs. Limitations on the Ability to Recoup Funding A number of DRRA provisions may restrict FEMA's ability to recoup assistance, and the retroactive implementation of these provisions may be of interest to Congress. For example, FEMA may waive a debt owed by an individual or household if distributed in error by FEMA and if its collection would be inequitable, provided there was no fault on behalf of the debtor. Additionally, with regard to Section 705 of the Stafford Act (42 U.S.C. §5205)—Disaster Grant Closeout Procedures—DRRA amends the statute of limitations on FEMA's ability to recover assistance. No administrative action to recover payments may 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." Prior to the passage of DRRA, the statute of limitations applied to the final expenditure report for the disaster or emergency. This is a significant change because it may take years to close all of the projects associated with a disaster. Previously, it was possible to 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. Increased Agency Accountability and Transparency DRRA includes reporting requirements that may influence decisionmaking regarding future disaster response and recovery. The earliest reports were due not later than 90 days after DRRA's enactment (thus a deadline of January 3, 2019). Some provisions also include briefings ahead of the reporting deadline. In addition to FEMA, other federal entities are assigned responsibilities (e.g., the Office of Inspector General for the Department of Homeland Security, which was required to initiate an audit of certain FEMA contracts by November 4, 2018). Potential Considerations for Congress In general, among other options, Congress may consider whether to evaluate if FEMA's implementation of provisions fulfills congressional intent; review the effectiveness and impacts of FEMA's DRRA-related regulations and policy guidance; or assess the effects of DRRA-related changes to federal assistance for past and future disasters. The National Flood Insurance Program (NFIP) (Diane P. Horn; February 19, 2019) The National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. §§4001 et seq.) and is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has two main policy goals: (1) to provide access to primary flood insurance, thereby allowing for the transfer of some of the financial risk from property owners to the federal government, and (2) to mitigate and reduce the nation's comprehensive flood risk through the development and implementation of floodplain management standards. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods. The NFIP engages in many "noninsurance" activities in the public interest: it identifies and maps flood hazards, disseminates flood-risk information through flood maps, requires community land-use and building-code standards, contributes to community resilience by providing a mechanism to fund rebuilding after a flood, and offers grants and incentive programs for household- and community-level investments in flood-risk reduction. Over 22,000 communities participate in the NFIP, with more than 5.1 million policies providing over $1.3 trillion in coverage. The program collects more than $4.7 billion in annual revenue from policyholders' premiums, fees, and surcharges. Floods are the most common natural disaster in the United States, and all 50 states have experienced floods in recent years. Structure of the NFIP The NFIP is managed by the Federal Emergency Management Agency (FEMA) through its subcomponent, the Federal Insurance and Mitigation Administration (FIMA). Communities are not legally required to participate in the program; they participate voluntarily to obtain access to NFIP flood insurance. Communities choosing to participate in the NFIP are required to adopt land-use and control measures with effective enforcement provisions and to regulate development in the floodplain. FEMA has set forth in federal regulations the minimum standards required for participation in the NFIP; however, these standards have the force of law only if they are adopted and enforced by a state or local government. Legal enforcement of floodplain management standards is the responsibility of participating NFIP communities, which also can elect to adopt higher standards to mitigate flood risk. The NFIP approaches the goal of reducing comprehensive flood risk primarily by requiring participating communities to collaborate with FEMA to develop and adopt flood maps called Flood Insurance Rate Maps (FIRMs). Property owners in the mapped Special Flood Hazard Area (SFHA), defined as an area with a 1% annual chance of flooding, are required to purchase flood insurance as a condition of receiving a federally backed mortgage. This mandatory purchase requirement is enforced by the lender rather than FEMA. Property owners who do not obtain flood insurance when required may find that they are not eligible for certain types of disaster assistance after a flood. Financial Standing of the NFIP The NFIP is funded from (1) premiums, fees, and surcharges paid by NFIP policyholders; (2) annual appropriations for flood-hazard mapping and risk analysis; (3) borrowing from the Treasury when the balance of the National Flood Insurance Fund is insufficient to pay the NFIP's obligations (e.g., insurance claims); and (4) reinsurance proceeds if NFIP losses are sufficiently large. The NFIP was not designed to retain funding to cover claims for truly extreme events; instead, the statute allows the program to borrow money from the Treasury for such events. For most of the NFIP's history, the program was able to borrow relatively small amounts from the Treasury to pay claims and then repay the loans with interest. However, this changed when Congress increased the borrowing limit to $20.775 billion to pay claims in the aftermath of the 2005 hurricane season (particularly Hurricanes Katrina, Rita, and Wilma). Congress increased the borrowing limit again in 2013, after Hurricane Sandy, to the current limit of $30.425 billion. The 2017 hurricane season was the second-largest claims year in the NFIP's history, with approximately $10.5 billion currently paid in response to Hurricanes Harvey, Irma, and Maria. At the beginning of the 2017 hurricane season, the NFIP owed $24.6 billion. On September 22, 2017, the NFIP borrowed the remaining $5.825 billion from the Treasury to cover claims from Hurricane Harvey, reaching the NFIP's borrowing limit. On October 26, 2017, Congress canceled $16 billion of NFIP debt in order to pay claims for Hurricanes Harvey, Irma, and Maria. FEMA borrowed another $6.1 billion on November 9, 2017, bringing the debt back up to $20.525 billion. For the 2018 hurricane season, as of November 2018, the NFIP had paid $117 million in claims for Hurricanes Florence and Michael. As of January 2019, the NFIP has $9.9 billion of remaining borrowing authority. The NFIP's debt is conceptually owed by current and future participants in the NFIP, as the insurance program itself owes the debt to the Treasury and pays for accruing interest on that debt through the premium revenues of policyholders. Since 2005, the NFIP has paid $2.82 billion in principal repayments and $4.2 billion in interest to service the debt through the premiums collected on insurance policies. The October 2017 cancellation of $16 billion of NFIP debt represents the first time that NFIP debt has been canceled. NFIP Reauthorization Since the end of FY2017, Congress has enacted 10 short-term NFIP reauthorizations. The NFIP is currently authorized until May 31, 2019. The statute for the NFIP does not contain a comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key components of the program. Unless reauthorized or amended by Congress, the following will occur on May 31, 2019: (1) the authority to provide new flood insurance contracts will expire; however, insurance contracts entered into before the expiration would continue until the end of their policy term and (2) the authority for the NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. National Flood Insurance Program (NFIP) Reauthorization and Reform (Diane P. Horn; February 19, 2019) NFIP Reauthorization The National Flood Insurance Program (NFIP) is the primary source of flood insurance for residential properties in the United States, with more than 5.1 million policies providing over $1.3 trillion in coverage in over 22,000 communities. Since the end of FY2017, 10 short-term NFIP reauthorizations have been enacted, and the NFIP is currently authorized until May 31, 2019. Unless reauthorized or amended by Congress, on May 31, 2019, (1) the authority to provide new flood insurance contracts will expire and (2) the authority for the NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion . A number of bills were introduced in the 115 th Congress to provide longer-term reauthorization of the NFIP and numerous other changes to the program. The House passed H.R. 2874 on November 14, 2017. Three reauthorization bills were introduced in the Senate, S. 1313 , S. 1368 , and S. 1571 ; however, none of these were considered by the Senate in the 115 th Congress. Premiums and Affordability Historically, Congress has asked the Federal Emergency Management Agency (FEMA) to set NFIP premiums that are simultaneously "risk-based" and "reasonable." Except for certain subsidies, statute directs that NFIP flood insurance rates should reflect the true flood risk to the property. Properties paying less than the full risk-based rate are determined by the date when the structure was built relative to the date of the community's Flood Insurance Rate Map (FIRM), rather than the flood risk or the policyholder's ability to pay. Congress has directed FEMA to subsidize flood insurance for properties built before the community's first FIRM (the pre-FIRM subsidy ). When FIRMs are updated, FEMA also "grandfathers" properties at their rate from past FIRMs through a cross-subsidy. Under existing law, pre-FIRM subsidies are being phased out, whereas grandfathering is retained indefinitely. Reforming the premium structure to reflect full risk-based rates could place the NFIP on a more financially sustainable path, risk-based price signals could give policyholders a clearer understanding of their true flood risk, and a reformed rate structure could encourage more private insurers to enter the market. However, charging risk-based premiums may mean that insurance for some properties becomes unaffordable. FEMA currently does not have the authority or funding to implement an affordability program. An NFIP-funded affordability program would require either raising flood insurance rates for NFIP policyholders or diverting resources from another existing use. Properties with Multiple Losses An area of controversy involves NFIP coverage of properties that have suffered multiple flood losses. One concern is the cost to the program; another is whether the NFIP should continue to insure properties that are likely to have further losses. According to FEMA, claims on repetitive loss (RL) and severe repetitive loss (SRL) properties since 1968 amount to approximately $17 billion, or approximately 30% of claims paid. Reducing the number of RL and SRL properties, through mitigation or relocation, could reduce claims and improve the NFIP's financial position. Under current statute, the NFIP cannot refuse to insure any property; however, from April 1, 2019, FEMA will introduce an SRL premium equal to 5% of the annual premium for SRL properties. Private Flood Insurance Private insurers play a major role in administering the NFIP through the Write-Your-Own (WYO) program, where private insurance companies are paid to issue and service NFIP policies. WYO companies take on little flood risk themselves; instead, the NFIP retains the financial risk of paying claims for these policies. Few private insurers compete with the NFIP in the primary residential flood insurance market. However, private insurer interest in providing flood coverage has increased recently, and many see private insurance as a way of transferring flood risk from the federal government to the private sector. For example, FEMA has transferred $4.322 billion of its flood risk to the capital markets through reinsurance in 2017, 2018, and 2019. Private flood insurance may offer some potential advantages over the NFIP, including more flexible policies, broader coverage, integrated coverage with homeowners' insurance, business interruption insurance, or lower-cost coverage for some consumers. Private marketing also might increase the overall amount of flood coverage purchased. More people purchasing flood insurance, either NFIP or private, could help to reduce the amount of disaster assistance provided by the federal government. Increasing private insurance, however, may have some disadvantages compared to the NFIP. Unlike the NFIP, private coverage availability would not be guaranteed to all floodplain residents, and consumer protections could vary in different states. In addition, private sector competition might increase the financial exposure and volatility of the NFIP, as private markets likely will seek out policies that offer the greatest likelihood of profit. In the most extreme case, the private market might "cherry-pick" (i.e., adversely select) the profitable, lower-risk NFIP policies that are "overpriced" either due to cross-subsidization or imprecise rate structures. This could leave the NFIP with a higher density of actuarially unsound policies that are directly subsidized or benefit from cross-subsidization. An increase in private flood insurance policies that "depopulates" the NFIP also may undermine the NFIP's ability to generate revenue, reducing the ability or extending the time required to repay previously incurred debt. The NFIP's role has historically been broader than just providing insurance. As currently authorized, the NFIP also encompasses social goals to provide flood insurance in flood-prone areas to those who otherwise would not be able to obtain it and to reduce the government's cost after floods. The NFIP has tried to reduce the impact of floods through flood-mapping and mitigation efforts. It is unclear how effectively the NFIP could play this broader role if private insurance became a large part of the flood marketplace. The majority of funding for flood mapping and floodplain management comes from the Federal Policy Fee (FPF), paid by all NFIP policyholders. To the extent that the private flood insurance market grows and policies move from the NFIP to private insurers, FEMA would no longer collect the FPF on those policies and less money would be available for floodplain mapping and management. Community Disaster Loans (Michael H. Cecire; April 24, 2019) The Community Disaster Loan (CDL) program was developed to help local governments manage tax and other revenue shortages following a disaster. Administered by the Federal Emergency Management Agency (FEMA), CDLs provide financial liquidity to local governments through a structured loan that may be converted to grants when certain financial conditions are met . CDLs are codified in Section 417 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( 42 U.S.C. §5184 , as amended). Modified "non-traditional" CDL programs were developed in response to Hurricanes Rita and Katrina in 2005, and CDL-type programs for Puerto Rico and the U.S. Virgin Islands (USVI) were developed following 2017's Hurricanes Harvey, Irma, and Maria. This Insight provides an overview of traditional and non-traditional CDLs and the policy issues they may raise in the 116th Congress, particularly with regard to CDL-type instruments developed for Puerto Rico and USVI. The CDL program may be of interest to Congress given observed increases in frequency and severity of disaster events and apparent congressional interest in oversight issues related to federal disaster response in Puerto Rico and USVI. Overview of Traditional CDLs CDLs were first authorized in the Disaster Relief Act of 1974 ( P.L. 93-288 ) but are defined and established in the Stafford Act (which amended the Disaster Relief Act) to help local governments manage acute tax and other revenue loss after a disaster, which could inhibit their ability to adequately serve their communities during recovery. To qualify for a traditional CDL, an applicant must be located in a presidentially declared disaster area; show substantial loss (greater than 5%) of tax and other revenues; not be in arrears on any other previous CDL loans; and be permitted to take federal loans under their respective state law. CDLs are statutorily capped at $5 million ( P.L. 106-390 ); and are structured around underwriting criteria that account for estimated revenue losses, the local government's annual operating budget, and a disaster's economic effects. CDLs are five-year loans, extendable to 10 years at FEMA's discretion (44 C.F.R. §206.367(c)), with interest rates determined by the Treasury Secretary. FEMA also issues guidance on how a CDL can be canceled, which involves submitting evidence of disaster-related operating deficits and associated revenue analyses to FEMA. Overview of Non-Traditional CDLs In special circumstances, Congress has authorized FEMA to administer non-traditional CDLs and CDL-type programs with different eligibility and technical requirements. Unlike traditional CDLs, these loans are not subject to the $5 million cap, and eligible areas are more geographically concentrated. For example, as part of the federal response to extensive economic damage caused by Hurricanes Katrina and Rita, Congress passed legislation in 2005 ( P.L. 109-88 ) and 2006 ( P.L. 109-234 ) to make approximately $1 billion available to support nearly $1.4 billion of non-traditional CDLs. While these non-traditional CDLs initially prohibited cancelation, subsequent 2007 legislation ( P.L. 110-28 ) mandated that cancelation be allowed. CDL-Type Program in Puerto Rico and USVI Following Hurricanes Harvey, Irma, and Maria, Congress passed legislation ( P.L. 115-72 ) providing funding for CDL-type loan instruments for Puerto Rico and USVI. This was not the first time territories received CDLs, with USVI receiving nearly $180 million in CDL funding after Hurricanes Hugo (1989) and Marilyn (1995) prior to the $5 million cap's enactment. However, while the 2017 loan instruments were based on CDLs defined in the Stafford Act, and appropriations were made to the same fund drawn for CDLs, the resulting program was functionally different due to significant exceptions and modifications, including: Territorial governments were considered municipalities for the purposes of the program; The $5 million cap was lifted; Loan recipients were allowed to receive more than one loan; Loans could only be canceled at the discretion of the Secretary of Homeland Security in consultation with the Secretary of the Treasury; and The Secretary of Homeland Security, in consultation with the Secretary of the Treasury, solely determined the "terms, conditions, eligible uses, and timing and amount" of such loans. The CDL-type instrument's statutory ambiguities related to loan cancelation and terms were further complicated by Puerto Rico's broader fiscal crisis and the existence of a federal oversight board, as established by the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (PROMESA; P.L. 114-187 ; see CRS Report R44532, The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; H.R. 5278, S. 2328) , coordinated by D. Andrew Austin). Subsequent legislation in February 2018 ( P.L. 115-123 ) required the Puerto Rican government to establish oversight board-approved recovery plans with monthly reports as a requirement for the CDL-type loan disbursement. Given this CDL-type instrument's statutory ambiguities, the constitutional limitations of territories, and the extent of disaster across the entirety of both territories, the CDL-type program raises potential questions of equity compared to federal disaster response to states, such as in the aftermath of Hurricanes Katrina and Rita, where CDL-type disaster assistance was more comprehensive and less restricted. Potential Policy Issues for Congress Should the rate and severity of disaster-related damages continue along recent trends or accelerate, traditional CDLs or their non-traditional analogues may be increasingly utilized for disaster response or recovery purposes. However, due to their relatively low funding cap and specialized nature, traditional CDLs may be inadequately suited to widespread and severe disaster events. However, non-traditional CDLs or CDL-type instruments may lack sufficiently defined disbursement and cancelation criteria, which potentially contribute to concerns over equity and utility. With respect to Puerto Rico and USVI, Congress may seek to specify program terms and cancelation criteria to bring these instruments more in line with traditional CDLs, or the types used following Hurricanes Katrina and Rita. Considering the CDL program in broader terms, Congress may consider structuring CDLs more expansively to account for a wider universe of disaster and emergency scenarios, such as state- or executive agency-based disaster declarations, expanding or lifting the $5 million cap, or simplifying the loan forgiveness process. One potential alternative would be to restructure CDLs with automatic forgiveness thresholds based on predetermined triggering criteria. Congress could also develop disaster assistance instruments that separately address immediate governmental liquidity, disaster response, and long-term recovery needs. Firefighter Assistance Grants (Lennard P. Kruger; March 27, 2019) Background Structural firefighting—which typically refers to fighting fires in residential, commercial, and other types of buildings—is primarily the responsibility of local governments. During the 1990s, shortfalls in state and local budgets, coupled with increased responsibilities of local fire departments, led many in the fire service community to call for additional financial support from the federal government. In response, Congress established firefighter assistance grant programs within the Federal Emergency Management Agency (FEMA) to provide additional support for local fire departments. In 2000, the 106 th Congress established the Assistance to Firefighters Grant Program (AFG), which provides grants directly to local fire departments and unaffiliated Emergency Medical Services (EMS) organizations to help address a variety of equipment, vehicle, training, and other firefighter-related and EMS needs. AFG also supports fire prevention projects and firefighter health and safety research and development through the Firefighter Prevention and Safety (FP&S) grant program. Subsequently, in 2003, the 108 th Congress established the Staffing for Adequate Fire and Emergency Response (SAFER) Program, which provides grants to fund firefighter hiring by career and combination fire departments, and recruitment and retention by volunteer and combination fire departments. Funding Firefighter assistance grants are distributed nationwide to career, volunteer, combination, and paid-on-call fire departments serving urban, suburban, and rural areas. There is no set geographical formula for the distribution of AFG or SAFER grants. Award decisions are made by a peer panel based on the merits of the application and the needs of the community. The majority of AFG funding goes to rural (mostly volunteer) fire departments, while the majority of SAFER funding goes to urban (mostly career) fire departments. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) appropriated $700 million for firefighter assistance grants, consisting of $350 million for AFG and $350 million for SAFER, with funds to remain available through September 30, 2020. Dating back to the programs' establishment, Congress has appropriated a total of $8.325 billion to AFG (since FY2001), and $4.235 billion to SAFER (since FY2005). Reauthorization On January 3, 2018, the President signed the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 ( P.L. 115-98 ). P.L. 115-98 extended the AFG and SAFER authorization through FY2023 at a level of $750 million for each program (plus additional annual increases based on the Consumer Price Index); extended sunset provisions for AFG and SAFER through September 30, 2024; provided that the U.S. Fire Administration (USFA) may develop and make widely available an online training course on AFG and SAFER grant administration; expanded SAFER hiring grant eligibility to cover the conversion of part-time or paid-on-call firefighters to full-time firefighters; directed FEMA, acting through the Administrator of USFA, to develop and implement a grant monitoring and oversight framework to mitigate and minimize risks of fraud, waste, abuse, and mismanagement related to the AFG and SAFER grant programs; and made various technical corrections to the AFG and SAFER statute. Impact of Government Shutdown Firefighter assistance grants were impacted by the partial government shutdown. For all three grant programs (AFG, SAFER, and FP&S) the application and awards process was delayed. For the 2018 round, the application windows for AFG and FP&S closed in October and December, respectively, but the processing of those applications could not move forward until the shutdown ended. The opening of the 2018 round application window for SAFER grants was also delayed, and subsequently opened on February 15, 2019. For grants already awarded (in the 2017 and previous rounds), grant recipients were unable to draw down funds during the shutdown, which may have disrupted the ability of the grantees to continue grant-funded activities, including personnel costs covered by SAFER grants. This disruption may continue after the government shutdown due to a backlog of payment requests that will need to be processed once furloughed FEMA grant personnel return to work. For additional discussion on the impact of delayed grant payments due to a government shutdown, see CRS In Focus IF11020, Introduction to the U.S. Economy: Business Investment . Issues An issue for the 116 th Congress is how equitably and effectively grants are being distributed and used to protect the health and safety of the public and firefighting personnel against fire and fire-related hazards. Another issue is annual appropriations for AFG and SAFER. As is the case with many federal programs, concerns over the federal budget deficit could impact funding levels for AFG and SAFER. At the same time, firefighter assistance budgets will likely receive heightened scrutiny from the fire service community, given the local budgetary shortfalls that many fire departments may face. Additionally, a continuing issue related to SAFER hiring grants has been whether SAFER statutory restrictions should be waived to permit grantees to use SAFER funds for retention and rehiring. Division F, Title III, Section 307 of the Consolidated Appropriations Act, 2018 states that FEMA "may" grant SAFER waiver authority. However, for the 2018 round of SAFER awards, FEMA has chosen not to exercise that authority, and thus will not provide SAFER hiring grants for retaining or rehiring firefighters. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) (Division A, Title III, Section 307) also includes SAFER waiver authority for the FY2019 round of SAFER awards. Emergency Communications (Jill C. Gallagher; January 29, 2019) Overview First responders and other emergency personnel use emergency communications systems to communicate with each other during day-to-day operations and large-scale disasters. Emergency communication systems are also used to enable communications between the public and response agencies. Emergency communication systems include 911 systems that receive calls from the public, requesting assistance or reporting an emergency, and that relay those calls to response agencies (e.g., local police and fire departments); land mobile radio (LMR) systems that allow police, firefighters, and emergency medical service (EMS) workers to communicate with each other during day-to-day operations and disasters; the First Responder Network (FirstNet), the nationwide public safety broadband network, which is currently under deployment and scheduled for completion in 2022, will enable response agencies at all levels of government to communicate via voice and data (e.g., text, videos); and alerting systems that notify people of emergencies and warn people of danger. These systems often rely on different technologies that can inhibit interoperability and response. For example, 911 systems are not able to send 911 text messages to first responders in the field. State and local police and fire agencies use various radio technologies that can connect responders within their agency, but may not be interoperable with surrounding systems. Federal, state, and local public safety agencies are investing in Internet Protocol (IP)-based technologies to improve communications, coordination, and response. The federal government has created an IP-based national alerting system that allows authorized agencies to send a single alert through multiple alerting systems. The federal government has also invested in FirstNet, a nationwide seamless, IP-based, high-speed mobile communications network that will enable public safety users to communicate via voice and data with other public safety agencies. There is also interest at all levels of government in upgrading 911 systems to next generation, IP-based systems, to enable callers to share data and to interconnect systems. Opportunities and Challenges of New Technologies As emergency communications systems converge toward a common IP-based platform, there are opportunities and challenges. Advancements in geo-location technologies present opportunities to find 911 callers more easily; however, integration of these technologies into legacy 911 systems is challenging. Advancements in alerting have enabled officials to send alerts to mobile phones, yet some people still rely on landline phones for communications. Interconnecting systems could improve information sharing but presents challenges in terms of privacy and security of data flowing across multiple networks. IP-based technologies enable emergency communications systems to interconnect, creating the potential for nationwide systems. The emergence of nationwide systems may create a need for new policies that integrate these new technologies into response plans and protocols, and policies that support collaborative planning, training, and exercises across all levels of government to improve response. Further, migration to new technologies is costly. Not all jurisdictions may be able to fund technology upgrades. Adoption of new technologies may also require upgrades to and investments in emergency communications systems and private telecommunications networks. Issues for the 116th Congress The 116 th Congress may continue its oversight of the effectiveness of emergency communications before, during, and after natural or man-made disasters (e.g., hurricanes, wildfires), and the roles and responsibilities of federal, state, and local agencies, and private telecommunications providers during response. Congress may also to examine the effectiveness of federal programs established to promote and support emergency communications, including National 9-1-1 Program administered by the National Highway and Traffic Safety Administration (NHTSA) in the U.S. Department of Transportation, which provides federal leadership and coordination in supporting and promoting optimal 911 services; First Responder Network Authority (FirstNet), the federal authority within the National Telecommunications and Information Administration (NTIA) in the U.S. Department of Commerce established to create the nationwide public safety broadband network; Integrated Public Alert and Warning System (IPAWS), the national alerting system administered by the Federal Emergency Management Agency (FEMA); Emergency Communications Division in the U.S. Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA), which is responsible for promoting interoperable and coordinated communications across all levels of government; and federal grant programs that fund emergency communications. Congress may also focus on the activities of the Federal Communications Commission (FCC) Public Safety and Homeland Security Bureau (PSHSB), which administers FCC policies related to emergency communications, including rules for carriers supporting 911 services; state and local use of 911 fees; public safety spectrum; public alerts, including rules for carriers delivering wireless alerts to mobile phones; disaster management and reporting of private network outages; and restoration efforts. U.S. National Health Security (Sarah A. Lister, February 11, 2019) In its quadrennial National Health Security Strategy , the U.S. Department of Health and Human Services (HHS) states: U.S. National Health Security actions protect the nation's physical and psychological health, limit economic losses, and preserve confidence in government and the national will to pursue its interests when threatened by incidents that result in serious health consequences whether natural, accidental, or deliberate. The strategy aims to ensure the resilience of the nation's public health and health care systems against potential threats, including natural disasters and human-caused incidents, emerging and pandemic infectious diseases, acts of terrorism, and potentially catastrophic risks posed by nation-state actors. By law, the HHS Secretary "shall lead all Federal public health and medical response to public health emergencies and incidents covered by the [ National Response Framework ]," and the HHS Assistant Secretary for Preparedness and Response (ASPR) shall "[s]erve as the principal advisor to the Secretary on all matters related to Federal public health and medical preparedness and response for public health emergencies." However, under the nation's federal system of government, state and local agencies and private entities are principally responsible for ensuring health security and responding to threats. The federal government's ability to affect national health security, through funding assistance and other policies, is relatively limited. The nation's public health emergency management laws have expanded considerably following the terrorist attacks in 2001. Since then, a number of public health emergencies revealed both improvements in the nation's readiness, and persistent gaps. The National Health Security Preparedness Index (NHSPI, or the Index), a public-private partnership begun in 2013, currently assesses preparedness, using 140 measures, across all 50 states and the District of Columbia. In its latest comprehensive report, for 2017, NHSPI found overall incremental improvements over earlier years. However, the report highlighted differing preparedness levels among states, stating: Large differences in preparedness persisted across states, and those in the Deep South and Mountain West regions lagged significantly behind the rest of the nation. If current trends continue, the average state will require 9 more years to reach health security levels currently found in the best-prepared states. In addition, measures of health care delivery—for example, the number of certain types of health care providers (including mental health providers) per unit of population, access to trauma centers, the extent of preparedness planning in long-term care facilities, and uptake of electronic health record systems—continued to yield the lowest scores. The readiness of individual health care facilities and services to respond to a mass casualty incident or other public health emergency has been a persistent health security challenge. Aiming to address this, the HHS Centers for Medicare & Medicaid Services (CMS) has implemented a rule that requires 17 different types of health care facilities and service providers to meet a suite of preparedness benchmarks in order to participate in (i.e., receive payments from) the Medicare and Medicaid programs. The Emergency Preparedness (EP) Rule became effective in November 2017. Policymakers may be interested to see, in NHSPI results and through other studies, the extent to which the EP Rule yields meaningful improvements in national health system preparedness in the future. For incidents declared by the President as major disasters or emergencies under the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( P.L. 93-288 , as amended), public assistance is available to help federal, state, and local agencies with the costs of some public health emergency response activities, such as ensuring food and water safety. However, no federal assistance program is designed specifically to cover the uninsured costs of individual health care services that may be needed as a consequence of a disaster. There is no consensus that this should be a federal responsibility. Nonetheless, during mass casualty incidents, hospitals and health care providers may face expectations to deliver care without a clear payment source of reimbursement. Also, the response to an incident could necessitate activities that begin before Stafford Act reimbursement to HHS has been approved, or that are not eligible for reimbursement under the act. (For example, there is no precedent for a major disaster declaration under the Stafford Act for an outbreak of infectious disease, and only one declaration of emergency, for West Nile virus in 2000.) Although the HHS Secretary has authority for a no-year Public Health Emergency Fund (PHEF), Congress has not appropriated monies to it for many years, and no funds are currently available. On several occasions Congress has provided supplemental appropriations to address uncompensated disaster-related health care costs and otherwise unreimbursed state and local response costs flowing from a public health emergency. These incidents include Hurricane Katrina and Hurricane Sandy, the 2009 H1N1 influenza pandemic, and the Ebola and Zika virus outbreaks. Supplemental appropriations for hurricane relief were provided for costs (such as uncompensated care) that were not reimbursed under the Stafford Act. The act was not invoked for the three infectious disease incidents, and supplemental appropriations were therefore needed to fund most aspects of the federal response to those outbreaks. Some policymakers, concerned about the inherent uncertainty in supplemental appropriations, have proposed dedicated funding approaches for public health emergency response. Two proposals in the 115 th Congress ( S. 196 , H.R. 3579 ) would have appropriated funds to the PHEF. These measures did not advance. In appropriations for FY2019 ( P.L. 115-245 ), Congress established and appropriated $50 million (to remain available until expended) to an Infectious Diseases Rapid Response Reserve Fund , to be administered by the Director of the HHS Centers for Disease Control and Prevention (CDC) "to prevent, prepare for, or respond to an infectious disease emergency." The 116 th Congress may choose to examine any uses of this new fund by CDC, and to consider appropriations to the PHEF, as well as other options to improve national health security preparedness. Cybersecurity (Chris Jaikaran; March 29, 2019) Introduction For policymaking purposes, cybersecurity can be considered the security of cyberspace . Taking this broad view allows policymakers to examine discrete elements of cybersecurity and determine which parts to address through the legislative process. Cyberspace, itself, includes the infrastructure necessary for the internet to work (e.g., wires, modems, and servers), the services used via the internet (e.g., web applications and websites), the devices on the network (e.g., computers and Internet-of-Things devices), and the users of those devices. Cybersecurity involves many interrelated issues, such as education; workforce management; research and development; intelligence; law enforcement; and defense. Recent congressional activity and Member statements suggest that five specific cybersecurity topics with an intersection to homeland security may arise during the 116 th Congress. This Insight first discusses the importance of risk management for cybersecurity, then introduces each of those topics: Information Sharing, Critical Infrastructure Protection and Cybersecurity, Cyber Supply Chain Risk Management, Federal Agency Oversight, and Data Protection and Privacy. Risk Management When computer scientists refer to cybersecurity, they are generally not talking about security as an absolute and achievable state of safety. Rather, they refer to cybersecurity as a process of risk management. Risk can be managed in four ways: it can be avoided, transferred, controlled, and accepted. To know the appropriate course of action, an organization must first understand which risks they face. Risks can be understood as the threats an organization faces, the vulnerabilities they have to their systems, and the consequences or impacts of a successful attack against them. Risks can be managed against systems, networks, and data. In managing those risks, managers employ an information security model to understand risk areas and tools to address risks. Policymakers could choose to examine these risk management factors holistically, or to consider specific elements and ways to address specific risk factors. Policy Areas Information Sharing Policymakers could choose to examine information sharing as a tool that may strengthen an organization's cybersecurity. The need to maintain current awareness of the relationships between technologies and attacks is a reason that information sharing is frequently included in the cybersecurity discussion. Through information sharing, one party seeks to bolster the knowledge of its partners. Information may provide opportunities for organizations to learn from one another, reduce their vulnerability to hacking, and quickly adapt to changing conditions. Successful information sharing occurs when an organization receives information, has the capability to process it, knows how to use it, and makes a change to its practices to better secure itself. However, the advantage to sharing information is only realized when the result is a valuable change in behavior because of the information shared. Some organizations may miss critical information, lack the expertise to understand it, lack the resources to take action, or otherwise not change their behavior. Critical Infrastructure Protection and Cybersecurity The National Infrastructure Protection Plan directs the owners and operators of facilities under the nation's 16 critical infrastructure sectors and the sector-governing bodies to consider cybersecurity risks to their sectors. However, their ability to understand risk and to provide resources to manage risk for their sectors varies. In an effort to bolster cybersecurity risk management, policymakers could choose to direct federal agencies to provide assistance to a sector or sectors; to engage in rulemaking; or to otherwise incentivize cybersecurity activities (e.g., expediting security clearances or prioritizing federal contracting opportunities). To assist a sector, some agencies have specific programs designed to provide information, technical assistance, or capabilities for critical infrastructure. DHS can provide assistance to all sectors. The National Institute of Standards and Technology (NIST) has published a cybersecurity framework to assist those responsible for critical infrastructure. Cyber Supply Chain Risk Management Recent news articles and government reports have focused attention on cyber supply chain issues. Managing risks associated with a global and complex product supply chain for information technology (IT) is known as cyber supply chain risk management (C-SCRM). C-SCRM refers to addressing both the risks that foreign adversaries may introduce to products and unintentional risks, such as poor quality control and vendor management. Policymakers could choose to pursue legislative options to clarify agency responsibilities relative to C-SCRM, such as increasing awareness, providing oversight, prohibiting certain companies from supplying components or services, or requiring an entity to evaluate products for cyber supply chain risks. Federal Agency Oversight Federal agencies collect, process, store, and transmit sensitive information such as personally identifiable information and national security information. Agencies rely on IT to use this information and requested over $17 billion in cybersecurity funding for FY2020. Yet, the Government Accountability Office (GAO) bi-annually highlights that agencies face various challenges in IT management. This is despite existing statutes, guidance, and resources agencies have to assist in managing their IT. Congress could choose to pursue investigations, hearings, or legislation to improve oversight of the government's overall IT program(s), or could focus on an individual agency's cybersecurity efforts. In pursuing this oversight, Congress may review agency spending on IT and cybersecurity, and follow up on GAO and Inspector General (IG) recommendations related to improving agency IT management. Data Security and Privacy The Equifax breach and multiple Facebook incidents have highlighted data security and privacy issues. While these concepts may be interrelated, and certain technologies, like encryption, can help achieve both, for policymaking and operational purposes they are distinct. Data security refers to strategies to keep out unauthorized users, while privacy refers to using data regardless of where it is stored or who accessed it. In keeping with the concept of risk management, it is important to consider "from what" one is seeking to secure their data or seek to keep it private when designing policies or strategies for security and privacy. Policymakers could choose to pursue comprehensive (such as the General Data Protection Regulation) or sectoral (such as the Health Insurance Portability and Accountability Act, HIPAA , standards) approaches to data security and privacy. In the past, the federal government has addressed these issues sectorally . But recent state and federal discussions have focused on more comprehensive approaches. Department of Homeland Security Human Resources Management (Barbara L. Schwemle; February 8, 2019) Human resources management (HRM) underlies the Department of Homeland Security's (DHS) mission and performance. DHS's Chief Human Capital Officer (CHCO) "is responsible for the Department's human capital program," which is described as including such elements as "human resources policy, systems, and programs for strategic workforce planning, recruitment and hiring, pay and leave, performance management, employee development, executive resources, labor relations, work/life and safety and health." Under Title 5, Section 1402, of the United States Code , a CHCO's functions include "setting the workforce development strategy" and aligning HRM with "organization mission, strategic goals, and performance outcomes." DHS's Management Directorate web page includes the CHCO position under the Under Secretary for Management (USM). The Organizational Chart and Leadership web pages do not include the position under the USM nor explain that difference. At DHS, the CHCO is a career Senior Executive Service position. The incumbent CHCO assumed the position in January 2016. The 116 th Congress may decide to conduct oversight of DHS CHCO operations—including placement, role, and functions within the department—and DHS human resources management. Such reviews could focus on the department's plans for, and performance of, HRM. These plans are set forth in a Strategic Plan and an Annual Performance Report. The latter report for FY2020 is expected to be published along with the release of the department's budget request. Congress may also examine DHS activities related to the President's Management Agenda (PMA), particularly the agenda's Cross-Agency Priority Goal (CAP) to develop the federal workforce. These topics are briefly discussed below. Hearings, roundtables, and meetings with officials and employees could inform congressional oversight on DHS appropriations, administration, and management as they relate to HRM. Annually, on or about the anniversary of DHS's official inception, which occurred on March 1, 2003, Congress could consider conducting a review that focuses specifically on the CHCO operations and HRM policies and programs. The DHS FY2020 budget request, anticipated in March 2019, may enable Congress to conduct such a review within the context of the department's Strategic Plan, Performance Report, and PMA activities. DHS Strategic Plan Section 2 of the GPRA Modernization Act of 2010 ( P.L. 111-352 ) requires agency heads to submit a strategic plan that provides, among other things, "a description of how the goals and objectives are to be achieved," including a description of the "human, capital … resources required to achieve those goals and objectives." Section 230 of the Office of Management and Budget's (OMB) Circular No. A-11 (2018), "Preparation, Submission and Execution of the Budget," stated: An agency's Strategic Plan should provide the context for decisions about performance goals, priorities, strategic human capital planning and budget planning. It should provide the framework for the detail published in agency Annual Performance Plans, Annual Performance Reports and on Performance.gov. DHS published its most recent publicly available Strategic Plan, covering FY2014-FY2018, in September 2015. The plan briefly mentioned HRM. To "strengthen service delivery and manage DHS resources," the plan stated that the department would "[r]ecruit, hire, retain, and develop a highly qualified, diverse, effective, mission-focused, and resilient workforce." Specific objectives identified to accomplish this were "1) building an effective, mission-focused, diverse, and inspiring cadre of leaders; 2) recruiting a highly qualified and diverse workforce; 3) retaining an engaged workforce; and 4) solidifying a DHS culture of mission performance, adaptability, accountability, equity, and results." To obtain an understanding of progress on the plan's HRM components to date, Congress could ask the department to document the specific framework for these four objectives and the conditions and factors related to each being fulfilled. Congress could also ask DHS to include a statement about the expected publication of an updated Strategic Plan on the Strategic Planning page of its website. DHS Annual Performance Report A Performance Report, required by Section 3 of P.L. 111-352 , is to be published by the first Monday in February each year and cover "each program activity set forth in the budget." Among the other requirements that are specified at Title 31, Section 1115(b), of the United States Code , the plan must "provide a description of how the performance goals are to be achieved," including "the operation processes, training, skills and technology, and the human, capital, information, and other resources and strategies required to meet those performance goals." DHS published its most recent Performance Report, covering FY2017-FY2019, in February 2018. The report noted that the Human Capital Operating Plan (HCOP) identifies "goals, objectives, and performance measures linked to DHS strategy" and "emphasizes management integration, accountability tracking, and the use of human capital data analysis to meet DHS mission needs." According to the department, the HCOP is used to "identify and address critical skills gaps." The Performance Report stated that Component Recruitment and Outreach Plans specify "recruitment strategies" as "a key element to sustain progress in skill gap closure." The HCOP and the Component Recruitment and Outreach Plans do not appear to be publicly available on the department's website. Congress could suggest that the department include a link to these documents on DHS.gov to facilitate consultation and oversight about measurable results for performance goals. President's Management Agenda The President Donald Trump Administration describes the PMA as setting forth "a long-term vision for modernizing the Federal Government." The PMA is to be implemented through CAPs that address "critical government-wide challenges." One such CAP—led by the Office of Personnel Management, OMB, and the Department of Defense—is "Developing a Workforce for the 21 st Century." It seeks a strategic human capital management framework that enables managers to "hire the best employees, remove the worst employees, and engage employees." Three CAP subgoals under this objective are "Improve Employee Performance Management and Engagement," "Reskill and Redeploy Human Capital Resources," and "Simple and Strategic Hiring." The DHS CHCO is the leader for the third CAP subgoal, which includes strategies to reduce hiring times; "better differentiate applicants' qualifications, competencies, and experience;" and "eliminate burdensome policies and procedures." Congressional oversight of PMA activities at DHS could focus on such matters as key initiatives, measureable results, and anticipated timelines for accomplishing subgoals. DHS Unity of Effort (William L. Painter; March 8, 2019) An unresolved debate dating from the origin of the Department of Homeland Security (DHS) is the extent of department management involvement in the functioning of departmental components. Some policy experts supported a strong management function, which would replace the leadership of the components, while others supported a limited management function that allowed DHS components to function freely in their areas of expertise, much as they had before. Once the department was established in 2003, it became clear that a small management cadre could not provide adequate coordination of policy or oversight of the department. The benefits of coordinated action by a large organization, including setting operational and budgetary priorities, were being lost due to the lack of a capable management cadre with the capacity to manage the department's diverse missions. As its components continued to perform their missions, the department undertook efforts to establish a unified identity and way of doing business. The term "One DHS" was used to describe these initiatives under Tom Ridge, the first Secretary of DHS, and the efforts continued through secretaries Michael Chertoff and Janet Napolitano. On April 22, 2014, Jeh Johnson, the fourth secretary of DHS, issued a memorandum to DHS leadership, entitled "Strengthening Departmental Unity of Effort." This now-widely circulated memorandum set out an agenda to reform the Department of Homeland Security's way of doing business by implementing new analytical and decisionmaking processes to develop strategy, plan, and identify joint requirements across multiple department components. These would bring component leadership together above the component level to ensure unity of effort across the department. Secretary Johnson described it this way in a Federal Times interview: We've embarked on a unity of effort initiative that promotes greater coordination among departments, greater centralized decision-making at headquarters, a more strategic approach to our budget building process, a more strategic departmentwide approach to our acquisition strategy. It is clearly a balance. Within the Department of Homeland Security there are components that long predated the Department of Homeland Security. And so what we are not asking components to do is to all act and behave together. They are distinct cultures.... But what we are asking and expecting our component leadership to do is participate with us in a more strategic approach to promote greater efficiency in how we operate, how we conduct ourselves, particularly in our budget process and in our acquisitions. The memorandum laid out four areas of initial focus. 1. The first was to bring together senior leaders of the department in two groups: a Senior Leaders Council to discuss "overall policy, strategy, operations and Departmental guidance," and a Deputies Management Action Group (DMAG) to "advance joint requirements development, program and budget review, acquisition reform, operational planning, and joint operations." 2. The second area was to make improvements to the departmental management processes for investments. Specifically, incorporating strategic analysis and joint requirements planning into the annual budget development process, directing the DMAG to develop and facilitate a component-driven joint requirements process, and reviewing and updating the DHS acquisition oversight framework. 3. The third was developing a stronger strategy, planning, and analytic capability within the Office of Policy. 4. The fourth was to improve coordination of cross-component operations. Bipartisan and bicameral support for these reforms was shown in several hearings during the 113 th and 114 th Congresses. Both House and Senate Appropriations Committee reports have included language supportive of the department's managerial reorganization, although there has been concern expressed about keeping Congress informed about progress and consequences of reorganizations in the field. Several of the action items included in the memorandum were completed in 2014, such as the establishment of a Cost Analysis Division in the Office of the Chief Financial Officer in May 2014. The role of this division is to ensure life-cycle cost estimates are part of major acquisition plans. DHS also completed development of a Southern Border and Approaches Campaign Plan—a four-year strategic framework for joint operations securing the southern border of the United States. In 2015, DHS implemented a Unity of Effort Award, presented by the Secretary, recognizing "outstanding efforts to significantly improve efficiency and effectiveness across the U.S. Department of Homeland Security," specifically noting contributions to the unity of effort initiative. At the end of the 114 th Congress, Title XIX of the FY2017 National Defense Authorization Act provided specific statutory authority to DHS for certain activities connected with the Unity of Effort initiative, including authorizing joint task forces and redefining the role of the former Office of Policy and renaming it the Office of Strategy, Policy, and Plans. At the confirmation hearing for General John Kelly, interest in management reform and the future of Johnson's Unity of Effort initiative was apparent, with both General Kelly and some Senators praising the progress that had been made. However, Secretary Kelly's six-month tenure at the department was largely devoted to other issues. Then-Deputy Secretary Elaine Duke, after a six-month tenure as Acting Secretary, noted in early 2018 that the border security mission at DHS was one where the unity of effort initiative was maturing, as components worked together to accomplish their missions. Secretary Kirstjen Nielsen, who assumed the post in December 2017, indicated in her pre-confirmation questionnaire that she intended "to assess the effectiveness of current unity of effort programs and processes and strengthen them where needed," highlighting interest in "integrating and leveraging" capabilities and promoting joint education and training. Congress may debate the appropriate role of departmental management at DHS, the extent of engagement Congress should have as reforms go forward, and the progress of management reforms, including whether they are having the desired effect. Congress may wish to follow up on the Secretary's priorities as outlined in her questionnaire.

In 2001, in the wake of the terrorist attacks of September 11, "homeland security" went from being a concept discussed among a relatively small cadre of policymakers and strategic thinkers to one broadly discussed among policymakers, including a broad swath of those in Congress. Debates over how to implement coordinated homeland security policy led to the passage of the Homeland Security Act of 2002 (P.L. 107-296), the establishment of the Department of Homeland Security (DHS), and extensive legislative activity in the ensuing years. Initially, homeland security was largely seen as counterterrorism activities. Today, homeland security is a broad and complex network of interrelated issues, in policymaking terms. For example, in its executive summary, the Quadrennial Homeland Security Review issued in 2014 delineated the missions of the homeland security enterprise as follows: prevent terrorism and enhance security; secure and manage the borders; enforce and administer immigration laws; safeguard and secure cyberspace; and strengthen national preparedness and resilience. This report compiles a series of Insights by CRS experts across an array of homeland security issues that may come before the 116th Congress. Several homeland security topics are also covered in CRS Report R45500, Transportation Security: Issues for the 116th Congress. The information contained in the Insights only scratches the surface of these selected issues. Congressional clients may obtain more detailed information on these topic and others by contacting the relevant CRS expert listed in CRS Report R45684, Selected Homeland Security Issues in the 116th Congress: CRS Experts.

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

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

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Introduction The last several years have seen renewed debate over the role that race plays in higher education—a debate over "affirmative action." A high-profile lawsuit challenging Harvard University's consideration of race in admitting its incoming classes, and the recent withdrawal of Obama Administration-era guidance addressing similar race-conscious policies, have focused the debate on "affirmative action" in perhaps its more familiar sense: the voluntary consideration of student applicants' race as a way of increasing the participation of racial minorities in higher education. Meanwhile, a recent lawsuit involving Maryland's university system has brought renewed attention to "affirmative action" in its other, original sense: the mandatory use of race by public higher education systems to eliminate the remnants of state-imposed racial segregation. This report addresses "affirmative action" in each of these two senses and discusses how the federal courts have analyzed them under the Fourteenth Amendment's guarantee of "equal protection." The report first considers "affirmative action" in its original sense: the mandatory race-conscious measures that the federal courts have imposed on de jure segregated public university systems. The Supreme Court has made clear that a state that had a segregated system of education must eliminate all "vestiges" of that system, including through expressly race-conscious remedies. In its consequential 1992 decision United States v. Fordice , the Court charted a three-step inquiry for assessing whether a state has fulfilled that constitutional obligation, examining whether a current policy is traceable to the de jure segregated system, has continued discriminatory effect, and can be modified or practicably eliminated consistent with sound educational policy. Outside this de jure context, "affirmative action" has come to refer to a different category of race-conscious policies. These involve what the Court once called the "benign" use of racial classifications —voluntary measures designed not directly to remedy past governmental discrimination, but to increase the representation of racial minorities previously excluded from various societal institutions. And in the context of higher education the Court has addressed one type of policy in particular: the use of race as a factor in admissions decisions, a practice now observed by many public and private colleges and universities. As this report explains, the federal courts have come to subject these voluntary "affirmative action" policies to a particularly searching form of review, known today as strict scrutiny. And they have so far upheld those policies under a single theory: that the educational benefits that flow from a diverse student body uniquely justify some consideration of race when deciding how to assemble an incoming class. To rely on that diversity rationale, however, the Court now requires universities to articulate in concrete and precise terms what their diversity-related goals are, and why they have chosen those goals in particular. And even once those goals are established, a university must still show that its admissions policy achieves its diversity-related goals as precisely as possible, while ultimately "treat[ing] each applicant as an individual." Because both lines of cases discussed here have their roots in the Equal Protection Clause, this report focuses primarily on public universities, all of which are directly subject to constitutional requirements. But those same requirements apply equally to private colleges and universities that receive federal funds pursuant to Title VI of the Civil Rights Act of 1964 (Title VI or the Act), which similarly prohibits recipients of federal dollars from discriminating on the basis of race. This report concludes by discussing the role that Title VI plays in ensuring equal protection in higher education, both public and private, including several avenues for congressional action under the Act. "Affirmative Action" as Affirmative Obligation: Dismantling De Jure Segregation De Jure Segregation in Higher Ed and the Equal Protection Clause Though government-sanctioned racial segregation in public education is commonly associated with primary and secondary schools, numerous states had also mandated or permitted racial segregation in institutions of higher education, including through the latter part of the 20 th century, categorically excluding black students solely because of their race. Though the Supreme Court held decades ago that state-sanctioned racial segregation in higher education violates the Equal Protection Clause, such intentional segregation, or practices arising from formerly de jure segregated university systems and their discriminatory effects, may still persist. Addressing such circumstances, the Supreme Court has held the Equal Protection Clause to require states to eliminate all vestiges of their formerly de jure segregated public university systems that continue to have discriminatory effect. As the Court concluded in United States v. Fordice , state actors "shall be adjudged in violation of the Constitution and Title VI [of the Civil Rights Act]" to the extent they have failed to satisfy this affirmative duty to dismantle a de jure segregated public university system. A state actor therefore remains in violation of the Equal Protection Clause today if it maintains a policy or practice "traceable" to a formerly de jure segregated public university system that continues to foster racial segregation. Where such a violation is shown, race-conscious measures are not only constitutionally permissible, but may be constitutionally required to remedy and eliminate such unconstitutional remnants. Segregated Colleges and Universities Before 1954 As in the K-12 context, a number of states maintained racially segregated public university systems and denied black students admission to post-secondary schools—including colleges, law schools, and doctoral programs —on the basis that these institutions educated white students only. Prior to 1954—the year of the Supreme Court's landmark Brown v. Board of Education decision ( Brown I ) —the Court had interpreted the Equal Protection Clause to permit state-sanctioned racially segregated public educational systems, provided that the separate schools for black students were substantially equal to those reserved for white students. For example, in its 1950 decision Sweatt v. Painter , the Court addressed an equal protection claim raised by a black student challenging the University of Texas Law School's denial of his admission based on his race, pursuant to its white-only admissions policy. At the time of the plaintiff's application in 1946, the state did not have a law school that admitted black students. Denying the plaintiff's requested relief for admission, the state trial court instead granted additional time to Texas to create a law school for black students; the state thereafter created a law school at the Texas State University for Negroes. The Supreme Court, however, held that the law school—which, among other features, lacked accreditation —did not offer an education "substantially equal" to that which the plaintiff would receive at the University of Texas Law School. On that basis—the absence of a separate but equivalent legal education—the Court held that the Equal Protection Clause required the plaintiff's admission to the University of Texas Law School. A decisive turn in the Court's interpretation and application of the Equal Protection Clause, however, came by way of its 1954 decision in Brown I . There, the Court held for the first time that race-based segregation "in the field of public education" violates the Equal Protection Clause. The Court concluded that race-based segregation in public schools deprives minority students of equal educational opportunities, and observed that segregation commonly denotes inferiority of the minority group. Segregated educational facilities, the Court concluded, are "inherently unequal." The Court's holding in Brown I applies with equal force to public higher education—that is, to public colleges and universities —as does the Court's subsequent 1955 decision in the same case (" Brown II "), in which the Court addressed how school authorities and federal courts were to implement the mandate of Brown I . Indeed, one of the Court's earliest applications of Brown I and Brown II was in the higher education context. In that case, State of Fla. Ex. Rel. Hawkins v. Board of Control , the Supreme Court vacated a Florida supreme court decision that declined to order the state's white-only law school to admit a black student. Relying on language in Brown II that courts could consider practical obstacles to a school's transition to desegregation, the Florida court refused to order the plaintiff's admission. The Supreme Court vacated the state court's decision, concluding that in the case of admitting a black student "to a graduate professional school, there [wa]s no reason for delay" and that he was "entitled to prompt admission under the rules and regulations applicable to other qualified candidates." The Affirmative Duty to Eliminate De Jure Segregation in Higher Education Following Brown I and Brown II , the Court's equal protection jurisprudence in the public education context expanded significantly to address questions regarding the scope and sufficiency of state actions to "dismantle" racially segregated systems in public school districts across the country, and various challenges to district court-ordered remedies. As the Court revisited these legal standards over time, it continued to describe the affirmative duty of formerly segregated public school entities as the duty to "take all steps necessary to eliminate the vestiges of the unconstitutional de jure system" to the extent practicable. Turning to the context of higher education, the Court addressed, in its 1992 decision United States v. Fordice , how these equal protection principles and legal standards apply to a state's affirmative duty to dismantle a formerly de jure segregated public university system. United States v. Fordice (1992) Though it had "many occasions to evaluate whether a public school district has met its affirmative obligation to dismantle its prior de jure segregated system in elementary and secondary schools," the Court explained, Fordice presented the issue of "what standards to apply" in determining whether the state has met this obligation in the university context. At issue before the Court was Mississippi's prior de jure public university system. The Court observed that since establishing the University of Mississippi as an institution of "higher education exclusively of white persons" in 1848, Mississippi had created four more exclusively white institutions and three exclusively black institutions through 1950. Thereafter, it continued to maintain its racially segregated public university system, and admitted its first black student to the University of Mississippi in 1962 "only by court order." For the "next 12 years," the state's segregated university system "remained largely intact." Around 1987, when the case went to trial, over 99 percent of the state's white students attended the five universities that had been formerly white-only, while the three formerly black-only institutions had student bodies between 92 percent to 99 percent black. Citing its precedent addressing de jure segregation in the K-12 context, the Court stated that "[o]ur decisions establish that a [s]tate does not satisfy its constitutional obligations until it eradicates policies and practices traceable to its prior de jure dual system that continue to foster segregation." Perhaps critically, in the context of remedying a formerly de jure segregated system, a state's "adoption and implementation of race-neutral policies alone " is not sufficient to demonstrate that it has "completely abandoned its prior dual system." Aside from segregative admissions policies, the Court explained, a state's other policies may shape and determine student choice and attendance, and continue to foster segregation. Instead, to determine whether a state has satisfied its affirmative duty to dismantle its de jure public university system, the Court set out a three-step analysis. First , the analysis examines whether the challenged policy or practice maintained by the state is "traceable to its prior [ de jure ] system." By way of example, the Court identified four policies that, in its view, were "readily apparent" vestiges of de jure segregation: admissions standards based on a test-score range originally adopted for discriminatory reasons; unnecessary program duplication throughout the university system (e.g., multiple institutions offering the same "nonbasic" courses); the state's academic mission assignments to its higher education institutions (e.g., assigning the broadest academic missions to only formerly white-only institutions and the narrowest academic mission to a formerly black-only institution); and the continued operation of all public universities established in the de jure segregated system. With respect to traceability, the Court's analysis reflects that where a current policy functions based on distinctions or a framework created in a formerly de jure system, traceability can be shown. For example, when concluding that the state's designation of academic missions to its universities was traceable to de jure segregation, the Court cited evidence that the state's current method of assigning its universities into three academic missions levels largely mirrored a three-tiered grouping of its universities in the de jure system. In addition and more generally, an interim change or new, nondiscriminatory justification for a current policy does not necessarily sever its traceability to a de jure system. Where the traceability of a policy or policies is shown, a party need not show discriminatory intent with respect to those challenged policies. Where traceability is not shown—that is, where the policies "do not have such historical antecedents" to de jure segregation—an equal protection challenge would then require "a showing of discriminatory purpose." In those instances, the Court explained, "the question becomes whether the fact of racial separation establishes a new violation of the Fourteenth Amendment under traditional principles." Second , once traceability is shown, the analysis turns to whether those traceable policies have continued discriminatory or "segregative" effects in student choice, enrollment, or other facets of the university system. At this stage, the Court noted that a court should not consider "this issue in isolation," but rather examine the "combined effects" of all the challenged policies together "in evaluating whether the State ha[s] met its duty to dismantle its prior de jure segregated system." In light of this instruction, it appears the focus of the second step of the test is not on establishing causation between specific racial disparities and specific policies—by this stage, a court has already found traceability—but rather to evaluate whether a state has sufficiently dismantled its formerly de jure system. Consistent with the state's burden of proving it has dismantled its de jure segregated system, the state must show the absence of segregative effects; plaintiffs are not required to establish this second element. Third , because traceable policies that have discriminatory effects "run afoul of the Equal Protection Clause," such policies must accordingly "be reformed to the extent practicable and consistent with sound educational practices." Thus, at the third step, a court assesses whether traceable policies can be "practicably eliminated" "consistent with sound educational practices," with the burden on the state to show that the challenged policies are "not susceptible to elimination without eroding sound educational policy." Because the Court remanded the case to the lower court to address practicable elimination, its analysis in Fordice on this point is limited. The Court suggested, however, that if a current policy lacks sound educational justification, it reasonably follows that it can be practicably eliminated in part or in whole. In addition, the Court observed that in some cases, a merger or closure of institutions could be constitutionally required to eliminate vestiges, should other methods fail to eliminate their discriminatory effects. Finally, the Court repeatedly stated that so long as vestiges remain, which have discriminatory effects, the state remains in violation of the Equal Protection Clause unless it can show it cannot practicably eliminate those policies or practices. In addition, Justice O'Connor, in a separate concurring opinion in Fordice , emphasized the "narrow" circumstances under which a state could maintain a traceable policy or practice with segregative effects. In her view, courts may "infer lack of good faith" on the part of the state if it could accomplish educational objectives through less segregative means, and the state has a "'heavy burden'" to explain its preference for retaining the challenged practice. Moreover, even if the state shows that retaining certain traceable policies or practices is "essential to accomplish its legitimate goals," Justice O'Connor asserted that the state must still prove it has "counteracted and minimized the segregative impact of such policies to the extent possible." Flagship Universities and Historically Black Colleges and Universities (HBCUs) The Court in Fordice observed that the closure or merger of certain institutions may be constitutionally required, consistent with its holding that any vestige of a de jure segregated system that continues to have discriminatory effect must be eliminated to the extent practicable and consistent with sound educational policy. Yet that invited a new—and more difficult—set of questions: which institutions would be most subject to closure or merger, and under what circumstances would such action be required? Significantly, the Court did not categorically identify which institutions would be most subject to such remedial action —a state's flagship, formerly white-only institutions from which a de jure system originated, for example, or formerly black-only institutions created to preserve white-only admission at other institutions. Instead, the Court concluded that it was unable to determine—on the record presented in Fordice —whether closures or mergers were required in that case and directed the lower court on remand to "carefully explore" several considerations. This instruction to the lower court, while not part of the holding in Fordice , suggests that several factors are relevant for determining whether merger or closure is constitutionally required. In addition, the Court observed that maintaining all eight higher education institutions in Mississippi was "wasteful and irrational," particularly in light of the close geographic proximity between some of the universities. This observation suggests that close proximity between institutions offering similar programs could be a relevant factor in assessing remedial closure or merger as well. Regarding the fate of a state's historically black institutions, Justice Thomas, in a concurring opinion, did not read Fordice to "forbid[]" those institutions' continued operation or "foreclose the possibility that there exists 'sound educational justification' for maintaining historically black colleges as such ." Justice Thomas emphasized that "[d]espite the shameful history of state-enforced segregation," historically black colleges and universities were and remain institutions critical to the academic flourishing and leadership development of many students, and observed that "[i]t would be ironic, to say the least, if the institutions that sustained blacks during segregation were themselves destroyed in an effort to combat its vestiges." In his view, though a state is not constitutionally required to maintain its historically black institutions as such, their continued operation is constitutionally permissible, so long as admission is open to all students "on a race-neutral basis, but with established traditions and programs that might disproportionately appeal to one race or another." Legal Challenges Following Fordice Following Fordice , plaintiffs, including the United States in Title VI enforcement actions, have brought suit challenging practices allegedly traceable to a state's de jure segregated university system. Challenged practices have included unnecessary program duplication, which the Court identified in Fordice as one of the "readily apparent" remnants of de jure segregation, as well as others such as scholarship policies, funding practices, and the use of curricula at formerly white-only institutions with little representation of black history and culture. More recently, in 2018, a legal challenge against the State of Maryland alleged that practices relating to capital and operational funding, unnecessary program duplication, and the limited institutional missions of the state's formerly black-only institutions are traceable to the state's formerly de jure segregated higher education system. To date, however, only a few federal appellate courts have had occasion to analyze Fordice -based claims, and the Supreme Court has not, since its 1992 decision, addressed claims challenging higher education policies or practices as unconstitutional vestiges of de jure segregation. Though development of the Fordice standard in federal case law is limited, the few appellate decisions applying Fordice provide at least some analytical examples and reflect discernible differences in approach, particularly with respect to the evidence sufficient to satisfy the third element of the Fordice standard—that elimination of a practice is not possible, despite being traceable and having continued discriminatory effect. Unnecessary Program Duplication: Program Transfers to Mergers As discussed above, the Supreme Court in Fordice identified "unnecessary program duplication" as a practice traceable to the prior de jure segregated system of higher education at issue in that case, stating that "it can hardly be denied" that such duplication was a requisite feature of the prior dual system because "the whole notion of 'separate but equal' required duplicative programs in two sets of schools." Drawing upon that rationale, courts that have addressed unnecessary program duplication have generally had little difficulty tracing duplicative courses and degree programs to prior de jure segregation. On the matter of if and how program duplication might be eliminated, however, there is lesser consensus. Generally, federal courts have considered several methods for eliminating program duplication, such as transferring existing programs from one institution to another, eliminating certain programs altogether, creating cooperative programs, and—perhaps most drastically—merging institutions. Challenges to Disproportionate Allocations of Federal and State Land Grants Plaintiffs have also raised equal protection challenges to state funding practices that allocate all or most of their federal and state land grants to institutions that were formerly white-only in a de jure system while dedicating significantly less or no funds to formerly black-only institutions. More specifically, these cases have concerned a state's allocation of federal land grants provided annually to support research on agricultural issues and the dissemination or "extension" of that research. At issue in Knight v. Alabama , for example, was the State of Alabama's allocation of federal funds between its two land grant universities, Auburn University, formerly white-only in the de jure system, and Alabama A&M University (A&M), formerly established as black-only. The state allocated to Auburn the entirety of Alabama's approximately $4 million in federal aid for agricultural research, and allocated an additional $14 million to Auburn in state funds. Meanwhile, the state had "for years" allocated no federal aid to A&M and given state funds for agricultural research in amounts that "today still totals less than $200,000 each year." The U.S. Court of Appeals for the Eleventh Circuit held that the state's current funding allocation was traceable to de jure segregation and instructed the lower court on remand to make determinations with respect to the second and third parts of the Fordice test. On the issue of practicable elimination, the Eleventh Circuit observed that reduced efficiency would not necessarily render a proposed modification impracticable or educationally unsound. By contrast, the Fifth Circuit affirmed a district court's ruling that permitted a state to retain its traceable funding practices. There, despite finding traceability and discriminatory effects, the district court had concluded, based on inefficiencies related to running more than one agricultural research program, that it was not practicable for the state to eliminate its exclusive funding allocation to its formerly white-only land grant institution. Open Questions After Fordice The Supreme Court has not revisited its analysis in Fordice , leaving open questions about the permissible applications of its three-part legal standard to an array of fact patterns and legal theories. Similarly, as discussed above, few courts of appeals have addressed claims under Fordice , limiting the development and interpretation of Fordice in federal case law. One such unresolved question is under what circumstances, if any, traceability can be established under Fordice when a state makes changes to an originally discriminatory policy such that the current policy functions differently, but there is still some evidence of traceability between the two, or perpetuation of similar segregative effects under the changed policy as under the original policy. In addition, the Supreme Court and circuit courts have not yet expressly addressed how far a district court may go in remedying an unconstitutional vestige or remnant of a prior de jure public university system. In the K-12 context, the Supreme Court has upheld district court orders that set certain faculty and student ratios at schools in noncompliant school districts, to desegregate them pursuant to Brown and its progeny . It remains unclear, however, whether the district courts enjoy similar authority under Fordice to order similarly extensive remedies. Indeed, the few cases alleging Fordice -type claims that did reach the federal appellate courts ultimately resolved in settlements, thus leaving little judicial guidance on the scope of a court's authority to mandate specific remedies if a state fails to dismantle its formerly de jure segregated public university system. With respect to these unresolved questions, the Supreme Court's express reliance in Fordice on precedent addressing de jure segregation in the primary and secondary school context suggests that at least some of this same precedent should inform future analyses, with adaptation to the higher education context. Racial Segregation and Discriminatory Intent A finding of a state entity's intent to segregate students by race in the higher education context is critical to showing a violation of the Equal Protection Clause, and has significant legal consequences. In such cases of de jure —that is, intentional, state-imposed —segregation, the state has an affirmative duty under the Equal Protection Clause to eliminate all vestiges of its de jure system by dismantling the infrastructure and other mechanisms that produced the discriminatory segregation. According to the Supreme Court's 1992 Fordice decision, this duty commands more than just the repeal of state laws sanctioning racial segregation in higher education. The state must also uproot or reform any policy or practice "traceable" to its formerly de jure system that continues to have discriminatory effect. In Fordice , the state's intent to racially segregate its higher education system was plain: with the founding of the University of Mississippi in 1848, Mississippi explicitly set out to create a public university "dedicated to the higher education exclusively of white persons," and racially segregated its public university system over the next 100 years through the creation of other "exclusively white institutions" and "solely black institutions." Nor was Mississippi's system unique in this regard. "[D]ual system[s]" of public higher education—one for black students, another for white—were codified in other state and local laws throughout the country. Thus far, federal courts that have addressed de jure segregation in higher education have done so in the context of such codified segregation, as in Fordice . The absence of a codified dual system of higher education, however, may not mean that a university system was not or is not intentionally segregated. As reflected in the Supreme Court decision Keyes v. School District No. 1, Denver, Colorado , even when state authorities have not segregated their public schools by statute, they may still have engaged in unconstitutional racial segregation. Thus, in the K-12 context, federal courts have found de jure segregation based on evidence reflecting a state actor's impermissible segregative intent. This line of cases would appear to apply in the context of higher education as well. As the Court noted in Fordice , where a plaintiff is unable to show that a policy or practice is a vestige of prior de jure segregation, she may nonetheless prove a "new" constitutional violation with evidence of a present-day intent to racially segregate students "under traditional principles" governing discriminatory intent. This would be consistent with the Court's application of Brown and its progeny broadly across "the field of public education," including higher education, as reflected in Fordice . Because the Supreme Court has yet to address segregative intent in higher education, it is unclear what intent evidence would be sufficient to establish a de jure segregated public university or institution, apart from a law codifying such segregation. As a general matter, though, a court's determination of discriminatory intent is a fact-intensive, "sensitive inquiry." And the Supreme Court has observed that this is even more so in cases alleging de jure segregation in public education. Where the evidence indicates, for example, that a state actor undertook a policy or practice knowing that doing so would have the "foreseeable" effect of segregating students by race, that evidence may support an inference of de jure segregation. In addition, at least in the K-12 context, a finding of a state entity's segregative intent in one part of a school system creates a rebuttable presumption that segregation found in other parts of the same system was also intentional. De jure segregation proved by such nonstatutory evidence generally triggers the same affirmative obligation on the state to eliminate the vestiges of its state-imposed segregation, as when de jure segregation is shown through state or local laws. Though segregative intent analyses at the K-12 level may be instructive, the guidance these decisions provide may be limited by the nature of the evidence at issue in those particular cases: the method of student assignment to elementary or secondary schools, for example, or the drawing of attendance zones to create racially segregated schools. It appears unlikely that such evidence would be at issue or directly applicable in cases alleging segregative intent at the collegiate or graduate level. Nonetheless, these decisions generally suggest that categorical distinctions—between evidence indicative of de jure segregation and evidence of existing segregation insufficiently linked to state intent—are difficult to draw. Indeed, given the difficulties that can arise in a court's analysis of "segregative intent," over the years a number of Justices have called into question the rationale and basis for the distinction between de jure and so-called de facto segregation, though the majority of the Court has recognized and continues to recognize this distinction. Whatever the open questions may be regarding the evidence sufficient to show segregative intent, particularly in the higher education context, Fordice instructs that a plaintiff need not provide evidence of new discriminatory intent when alleging that a state has failed to eliminate vestiges of a prior de jure segregated system. And with respect to remedying intentional racial segregation, the Court has repeatedly held that a state not only may use a broad array of explicit race-conscious policies and practices to remedy its constitutional violation, but often must do so. By themselves, race-neutral measures simply may not be enough, the Court has explained, to provide equitable, make-whole relief for intentionally segregative acts. This affirmative obligation to consider race arises, however, only in the context of de jure segregation. Outside that de jure context, institutions of higher education subject to the Equal Protection Clause have no such duty to remedy racial segregation. Nor may they—or the federal courts, for that matter—use the same broad array of race-conscious measures available for remedying de jure segregation. De jure segregation, however, is not the only context in which race-conscious measures in higher education may be used. For over forty years colleges and universities have considered race as a way of increasing the racial diversity of their student bodies, independent from a legal basis relating to de jure segregation. Thus far, however, the Supreme Court has addressed only one type of discretionary race-conscious measure in the higher education context: admissions policies. And when evaluating these discretionary policies, the Court reviews them under a notably different analytical lens, looking to their precision in achieving certain concretely defined and "compelling" educational interests, as explained more fully below. Beyond De Jure: Judicial Scrutiny of Racial Classifications "Affirmative action" in its original sense grew out of the states' affirmative obligation under the Equal Protection Clause to rid their public institutions of the lingering vestiges of de jure segregation. But "affirmative action" has also come to refer to race-conscious policies developed outside this de jure context. These are policies voluntarily adopted by institutions to help racial minorities overcome the effects of their earlier exclusion. And unlike the measures ordered by the courts to right the wrongs of de jure segregation, these policies are strictly voluntary, with their legality consequently turning on constitutional considerations unlike those involved in the de jure context. "Affirmative action" in this more familiar, voluntary sense has also been among the most contentious subjects in constitutional law. In the forty years since Regents of the University of California v. Bakke , when the Court first addressed those programs' constitutionality, the Justices have divided sharply over when or whether such programs can survive constitutional scrutiny. And a major point of disagreement among the Justices—lingering to this day —is how strictly to review those policies and what the government or other state entity must do to justify its use of "benign" racial classifications. In recent decisions, the Court has reviewed such classifications under a seemingly "elastic" regime of strict scrutiny, accepting those classifications only where they have been narrowly tailored to serve compelling government interests. Equal Protection and Racial Classifications The constitutional guarantee of equal protection broadly prohibits the government from employing "arbitrary classification[s]." And the use of racial classifications in particular has long been of special concern for the courts. Indeed, this "heightened judicial solicitude" for racial categorizing has roots nearly as old as the Fourteenth Amendment itself. As the Supreme Court explained in an early decision under the Amendment, the "spirit and meaning" of the Equal Protection Clause was "that the law in the States shall be the same for the black as for the white; that all persons, whether colored or white, shall stand equal before the laws of the States, and, in regard to the colored race, ... that no discrimination shall be made against them by law because of their color." In the decades since, the Court has only made clearer that it regards the government's use of racial classifications as "inherently suspect" and therefore subject to more demanding scrutiny than other classifications, which are typically reviewed only for basic rationality. There has been significant disagreement, however, over just how rigidly the courts should scrutinize a racial classification, especially when the point of the classification is to benefit racial minorities, as in the case of affirmative action. That issue came before the Court for the first time in Bakke , involving a challenge to an affirmative action admissions program begun at the then newly created medical school at the University of California at Davis (the Medical School). And the Court's fractured decision there prefigured the central disagreements that the Justices still face in reviewing so-called "benign" racial classifications. 1. Bakke's Splintered Levels of Scrutiny In the early 1970s, not long after the Medical School opened, it adopted a race-conscious admissions policy to increase its enrollment of certain "disadvantaged" students. Under that policy, the school each year would set aside 16 seats in its entering class of 100 specifically for members of this "disadvantaged" group, to be admitted by a "special admissions" committee. Although many white students sought admission under this "special" policy, the committee considered only students of specifically identified racial minorities. After Allan Bakke, a white male, twice sought—and was denied—admission to the school, he brought suit challenging the set-aside under the Equal Protection Clause as well as Title VI, which prohibits institutional recipients of federal funds—like the Medical School—from discriminating on the basis of race. Bakke's case eventually found its way to the Supreme Court and into the hands of a divided bench. The Justices found themselves particularly at odds over the case's threshold question—what level of scrutiny the Court should apply in reviewing Bakke's challenge. Justice Stevens, writing for a quartet of Justices, concluded that the program violated Title VI, sidestepping the constitutional question. Another four Justices would have reached the equal protection challenge, and in doing so would have required the Medical School to point to "important governmental objectives" that justified its admissions policy's use of "remedial" racial classifications, along with evidence that their use was "substantially related to" achieving those important objectives . Under that standard—a form of intermediate scrutiny —these Justices would have upheld the policy. Justice Powell, announcing the Court's judgment but writing for himself, insisted that all "racial and ethnic distinctions" drawn by the government must be regarded as "inherently suspect," calling for "the most exacting judicial examination." What that meant in Bakke , according to Justice Powell, was that the Medical School would need to prove that its use of the "special admissions" carve-out was "precisely tailored to serve a compelling governmental interest"—the standard of review now known simply as strict scrutiny . And because, in his view, the school could come forward with no such proof, Justice Powell concluded that its affirmative-action policy could not survive the Court's scrutiny, whether under the Fourteenth Amendment or the overlapping standards of Title VI. 2. Settling on Strict Scrutiny Because Bakke yielded no majority opinion, it could only hint at how the Court might treat other "benign" race-conscious policies that did not involve the sort of apparent quota invalidated in that case or cases outside the unique context of higher education. That uncertainty would last another decade, as the Court, in another series of splintered decisions, weighed constitutional challenges to differently structured affirmative action policies in other contexts, each time without resolving the appropriate standard of review. That uncertainty appeared to abate with the Court's 1989 decision in Richmond v. J.A. Croson , Co. There, for the first time, five Justices clearly signaled that they would apply strict scrutiny to affirmative action plans implemented at the state and local levels, including the program they invalidated in that case, involving the City of Richmond's set-aside of public work funds for minority-owned businesses. But the next year, in Metro Broadcasting, Inc. v. FCC , the Court, in another 5-4 ruling, suggested that it would review federal affirmative action plans differently. In the Court's view there, "benign race-conscious measures mandated by Congress " need only "serve important governmental objectives" and be "substantially related to the achievement of those objectives"—satisfying an intermediate level of scrutiny. Just a few years later, however, in Adarand Constructors, Inc. v. Peńa , the Supreme Court reversed course. There, in a federal contracting case, the Court drew a different lesson from its pre- Metro line of race-classification cases: in the view of the Adarand majority, "any person, of whatever race, has the right to demand that any governmental actor subject to the Constitution justify any racial classification subjecting that person to unequal treatment under the strictest judicial scrutiny." That simple rule therefore precluded the divided regime upheld in Metro Broadcasting , subjecting the states' use of racial classifications to strict scrutiny, while relaxing the review of comparable classifications enacted by Congress. Instead, the Adarand Court held, "[f]ederal racial classifications, like those of a State, must serve a compelling governmental interest, and must be narrowly tailored to further that interest." And to the extent that Metro Broadcasting was "inconsistent" with that uniform rule, it was accordingly overruled. After Adarand strict scrutiny therefore became the test of any classification that subjected individuals to unequal treatment based on their race, no matter which state actor was doing the classifying. And the Court expressly extended that holding to the context of higher education. As the Court reaffirmed in Fisher v. University of Texas , "because racial characteristics so seldom provide a relevant basis for disparate treatment," "[r]ace may not be considered [by a university] unless [its] admissions process can withstand strict scrutiny." It therefore appears that a classification that subjects individuals to unequal treatment because of their race, even if for a "benign" purpose, will have to satisfy strict scrutiny. In its canonical formulation, that test calls for measuring such classifications along the two dimensions Justice Powell identified in Bakke : (1) the classification must serve a compelling governmental interest and (2) the use of that classification must also be narrowly tailored to achieving that interest. The government has the burden of proving both, and neither is easy to do. Indeed, in the sixty years that separated the Court's now-repudiated decision in Korematsu v. United States from Grutter v. Bollinger , when the Court first upheld an affirmative action policy at a public university, the only other "racial classifications upheld under strict scrutiny [have been] race-based remedies for prior racial discrimination by the government." To many commentators "strict scrutiny" has thus come to seem rather more "strict in theory, but fatal in fact" —a point sometimes echoed by the Justices themselves. Voluntary "Affirmative Action" in Higher Education: Scrutinizing Admissions Strict scrutiny may typically be fatal in fact, but affirmative action policies in higher education have been a notable exception. Partly this has to do with the Equal Protection Clause itself, and the often crucial difference that a particular context makes in deciding cases under that "broad provision[]." And for several Justices the context of affirmative action, involving the arguably "benign" use of race, has seemed particularly distinctive. Yet, despite this contextual difference, the Court has made it clear that its scrutiny of race-conscious admission policies is still every bit as strict. Or, as Justice Kennedy put the point in the first Fisher case, even though "[s]trict scrutiny must not be 'strict in theory, but fatal in fact,'" it must also "not be strict in theory but feeble in fact." This seeming tension—between the strictness of the Court's scrutiny and its approval of race-conscious admissions policies—has led the Court to adjust its framework for scrutinizing similar policies over the years. And since Bakke that framework appears to have shifted in two significant respects, corresponding to each of the two prongs of strict scrutiny. First, the Court now requires public universities that adopt affirmative action admissions policies to explain in increasingly "concrete and precise" terms what diversity-related educational goals those policies serve and why the university has chosen to pursue them. Anything less, the Court has held, would fail to present an interest sufficiently compelling under strict scrutiny. Second, the Court also now expects universities to prove that their policies achieve those "concrete and precise goals" in an appropriately "flexible" way, as most clearly exemplified by the Harvard plan that Justice Powell singled out in Bakke . That model has yielded "five hallmarks" of an appropriately tailored affirmative action policy, criteria that have since guided lower courts in assessing other affirmative action plans. From "Student Body Diversity" to Concrete and Particular Diversity-Related Goals For a university's affirmative action policy to survive strict scrutiny, a university must first "demonstrate with clarity that its 'purpose or interest is both constitutionally permissible and substantial." The Court has recognized only a single interest that meets that standard: "the attainment of a diverse student body." What exactly that interest amounts to—and how, consequently, a university should ensure it has appropriately tailored its policy to achieve that interest—has been a point of uncertainty since Bakke . With its two decisions in Fisher v. University of Texas , however, the Court appears now to require a more "concrete and precise" articulation of the diversity-related educational goals a university hopes to achieve through its affirmative action admissions policy. In addition, the Court also now appears to expect a university to provide a reasoned and principled explanation of why the school believes it important to achieve those goals. 1. Bakke and the Diversity Interest The diversity rationale emerged with the Court's first encounter with a voluntary affirmative-action policy, in Bakke . There—in an opinion for the Court joined by no other Justice—Justice Powell explained what interests clearly would not count as compelling enough to satisfy strict scrutiny. Those included the Medical School's alleged interest in having "some specified percentage" of certain racial or ethnic groups in a student body and its interest in "remedying ... the effects of societal discrimination," as well as the school's particular interest in "the delivery of health-care services to communities currently underserved." None of these interests, Justice Powell concluded, provided a reason substantial enough to justify turning to race-conscious measures. Nor has the Court said otherwise since. But Justice Powell was also clear about what interest he believed would satisfy strict scrutiny: "student body diversity." And just as importantly, he also explained why: colleges and universities, he suggested, had a uniquely academic interest in promoting an "atmosphere of speculation, experiment, and creation"—an interest, more simply, in "academic freedom." That interest, Justice Powell observed, was not only "essential to the quality of higher education," but had also long "been viewed as a special concern of the First Amendment." Thus the "right to select those students who will contribute the most to the robust exchange of ideas" not only allowed a university "to achieve a goal that is of paramount importance in the fulfillment of its mission," it also represented a "countervailing constitutional interest" that, in Justice Powell's view, called for the Court's respect. In Bakke , Justice Powell set out the basic theory for why diversity could justify an affirmative action policy, at least "in the context of a university's admissions program. But he gave few details about what that interest encompassed. As he saw it, that interest must have its limits: pursuing diversity would not allow a university to resort to racial quotas, for example, nor could the school disregard other "constitutional limitations protecting individual rights." But Justice Powell declined to indicate where those other limitations fell or how they circumscribed the goals a university could permissibly seek in the name of a diverse student body. And because the Bakke Court fractured as it did, with no one opinion commanding a majority of the Justices' votes, the lessons of that case have been hard to discern, especially after the Court appeared to decline a similar diversity rationale in later cases outside higher education. Perhaps unsurprisingly, the lower courts soon came to reflect this uncertain division of opinion in later cases involving affirmative action programs at other public universities. 2. "Critical Mass" and Diversity Some clarity over Bakke 's diversity theory came in 2003, with a pair of decisions reviewing affirmative action policies of the University of Michigan: Grutter v. Bollinger , challenging the university's law school admission program, and Gratz v. Bollinger , challenging the policy used by the university's undergraduate program. Grutter , especially, helped clarify what an interest in diversity involved, and how a university could rely on that interest to defend a race-conscious admissions policy. Under the admissions policy of the University of Michigan Law School ( the Law School) challenged in Grutter , applicants to incoming classes were admitted under a policy that weighed a composite of the applicant's LSAT score and undergraduate GPA along with several more individualized factors, including the applicant's race. The Law School set out to create classes with what it called a "critical mass of underrepresented minority students," to ensure that those students felt "encourage[d] ... to participate in the classroom and not feel isolated." The school, however, never explicitly assigned a numerical target for any particular racial group, though it did track, on an ongoing basis, "the racial composition of the developing class." A rejected white applicant claimed the Law School's admission policy discriminated against her based on her race, in violation of the Equal Protection Clause and Title VI. And her challenge eventually reached the Supreme Court, alongside its companion case, Gratz , challenging the university's admissions policy for its undergraduate program. Given the uncertainties surrounding Bakke 's bottom line, the first major question in Grutter centered on the basic goal of the Law School's policy: Is achieving student diversity an interest compelling enough to justify a school's use of race at all in its admissions decisions? And for the first time the Supreme Court held that it was. Writing for a clear majority, Justice O'Connor adopted the view Justice Powell set out in Bakke : "student body diversity is a compelling state interest that can justify the use of race in university admissions." More than that, the Court made clear that it was willing to defer to the Law School's understanding of that interest, and its goal of "enroll[ing] a 'critical mass' of minority students.'" As Justice O'Connor explained for the Court, by enrolling a "critical mass" of students, the Law School was trying to achieve the "substantial" "educational benefits that diversity is designed to produce"—benefits such as "promot[ing] cross-racial understanding," "break[ing] down racial stereotypes," "promot[ing] learning outcomes," and "better prepar[ing students] as professionals." Achieving a "critical mass" of underrepresented students, the Court agreed, was simply one way that the Law School could try to vindicate those diversity-related educational benefits. And because this interest was deemed compelling enough to satisfy strict scrutiny, the Court was therefore willing to treat the school's use of the "critical mass" target as a permissible proxy for achieving those benefits. Not all the Justices agreed, however, that the university's invocation of "critical mass" made the diversity interest more concrete or compelling. In dissent, Justice Kennedy sided with Chief Justice Rehnquist's view that "the concept of critical mass [was] a delusion used by the Law School to mask its attempt to make race an automatic factor in most instances and to achieve numerical goals indistinguishable from quotas." That "delusion," according to Justice Kennedy, did not just make the school's appeal to "critical mass" "inconsistent with [the] individual consideration" of applicants. It also, in his view, turned the school's admissions policy into a veiled form of racial balancing. And all four dissenting Justices found that result incompatible with the Equal Protection Clause. 3. From "Critical Mass" to "Concrete and Precise Goals" Grutter appeared to settle the major question left open by the fractured decision in Bakke : whether achieving student diversity was a compelling enough interest for a public university to justify its consideration of race in its admissions policies. Grutter confirmed not only that the Court still viewed student diversity as a compelling interest, but also that a school could vindicate that interest by seeking to enroll a "critical mass" of underrepresented minorities in its incoming classes. The ruling also effectively swept aside contrary lower court decisions that struck down other state universities' affirmative action policies, including in Texas. In the wake of Grutter , the University of Texas (UT Austin) decided to revisit its applicant review process, eventually choosing to introduce race as one of the factors considered in its admissions policy. Under the revised policy, UT Austin would continue to admit all Texas high school students who graduated in the top ten percent of their class, and fill in the rest of its incoming undergraduate classes using an index score incorporating two assessments: (1) an "Academic Index" (AI) that weighed the applicant's SAT score and academic record; and (2) a "Personal Achievement Index" (PAI) that included a more holistic appraisal of the student's character and, following post- Grutter revisions, also factored in the applicant's race. Abigail Fisher, a white Texas student whose application to UT Austin was rejected under this process, challenged the AI-PAI system. That system, she argued, had discriminated against her as a white applicant by allegedly allowing race to figure in the decision to reject her application, in violation of the Equal Protection Clause. Her challenge eventually made its way to the Supreme Court as Fisher v. University of Texas , where the Supreme Court remanded the challenge to the lower court to review UT Austin's policy under strict scrutiny ( Fis her I ), and then upon appeal upheld the school's admission policy ( Fis her II ). In her suit, Fisher did not challenge Grutter 's basic holding—that the university had a compelling interest in student diversity, or even that the school could pursue that interest in diversity by enrolling a "critical mass" of underrepresented minorities. But when the Court finally took up her challenge on the merits in Fisher II , Justice Kennedy also took the occasion to revisit Grutter 's analysis, offering several "controlling principles" on behalf of the four-Justice majority that would guide its review of UT Austin's race-conscious admissions policy. In Fisher II , as in Fisher I , Justice Kennedy confirmed that Grutter 's bottom line remained good law: "obtaining 'the educational benefits that flow from student body diversity,'" he confirmed, was still an interest compelling enough to satisfy strict scrutiny. But perhaps mindful of his dissent in Grutter , Justice Kennedy also clarified that "asserting an interest in the educational benefits of diversity writ large" would not suffice. That, he explained, would make the "university's goals" too "elusory or amorphous" "to permit judicial scrutiny of the policies adopted to reach them." The Court thus cut two new benchmarks for reviewing a university's asserted interest in resorting to race as a factor in its admissions policy. First, the university had to articulate "precise and concrete goals" that its race-conscious policy served, goals "sufficiently measurable" under "judicial scrutiny." And, second, the university had to provide a "'reasoned, principled explanation' for its decision to pursue those goals"—a sound academic rationale, in other words, for wanting to achieve whatever diversity-related goals it set for itself. In the majority's view, UT Austin's use of race in its admissions decisions measured up to both benchmarks. According to the Court, the first benchmark was straightforwardly met: the goals UT Austin articulated, Justice Kennedy pointed out, effectively "mirror[ed] the 'compelling interest' th[e] Court ha[d] approved in its prior cases." And under Grutter , the majority concluded, those benefits passed constitutional muster. Notably, however, achieving critical mass was not among those Justice Kennedy listed. Nor did Justice Kennedy return to the question he raised in Grutter : whether the "critical mass" concept even has a place among the "concrete and precise goals" that could survive strict scrutiny. But that question was also arguably beside the point in Fisher II . As Justice Kennedy emphasized for the Court, the goals that UT Austin articulated were clearly constitutionally adequate, having come nearly verbatim from the Court's case law. And the university's officials had all offered "the same, consistent 'reasoned, principled explanation'" for pursuing them—meeting the Court's second benchmark. That was apparently enough for the Court to conclude that a compelling interest justified the university's diluted use of race in its holistic review of applications. The Harvard Plan and the Five Hallmarks of Narrow Tailoring With Fisher I and II , the Court reiterated that the educational benefits that come with a racially diverse student body count among the few interests compelling enough to survive strict scrutiny. But Fisher I and II also narrowed that interest: seeking student body diversity had to involve objectives more specific than the simple desire for "diversity writ large." Rather, under the Fisher formulation, the university must articulate the "concrete and precise goals" it expects its affirmative action policy to accomplish, along with a "reasoned, principled explanation" of why it has chosen to pursue them. So long as a university does that, it will likely have a strong case, under Fisher I and II , that a compelling interest supports its use of a race-conscious admissions policy. That, however, is only the first of two tests that a policy has to pass under strict scrutiny. The second—probing whether the university has narrowly tailored its policy to achieve those diversity-related benefits—has proved equally critical in the Court's review of affirmative action policies. And once again owing to Justice Powell's opinion in Bakke , the Court appears to have embraced a model of what a narrowly tailored policy looks like: Harvard College's admissions program endorsed in Bakke , now more commonly known as the "Harvard plan." The Harvard plan has also provided the Court with a basis for developing more specific criteria for evaluating other affirmative action policies—what one court has described as the "five hallmarks of a narrowly tailored affirmative action plan." A Narrowly Tailored Affirmative Action Policy: Bakke's Harvard Plan The first affirmative action program to come before the Court—the policy challenged in Bakke at U.C. Davis's Medical School—was also the first to falter under the Court's scrutiny. But because the Justices were unable to cobble together a majority there, they also settled on no single rationale for why the Medical School's policy could not survive the Court's scrutiny. This uncertainty left the lower courts without clear guidance on the permissibility of race-conscious admissions policies structured differently than the one struck down in Bakke . In announcing the judgment in Bakke , however, Justice Powell offered a clear reason why, in his view, the Medical School's policy could not survive a challenge under the Equal Protection Clause. The school's 16-seat set-aside for minority students was not "the only effective means of serving [the school's] interest in diversity" —in constitutional parlance, the set-aside was not narrowly tailored. And to explain why not, Justice Powell pointed to the Harvard plan as an example of an appropriately tailored affirmative action policy. That plan, according to Justice Powell, had several significant features that distinguished it—favorably—from the set-aside struck down in Bakk e : In [Harvard's] admissions program, race or ethnic background [is] deemed a "plus" in a particular applicant's file, yet it does not insulate the individual from comparison with all other candidates for the available seats. The file of a particular black applicant may be examined for his potential contribution to diversity without the factor of race being decisive when compared, for example, with that of an applicant identified as an Italian-American if the latter is thought to exhibit qualities more likely to promote beneficial educational pluralism. Such qualities could include exceptional personal talents, unique work or service experience, leadership potential, maturity, demonstrated compassion, a history of overcoming disadvantage, ability to communicate with the poor, or other qualifications deemed important ... [And] the weight attributed to a particular quality may vary from year to year depending upon the 'mix' both of the student body and the applicants for the incoming class. Unlike this "flexible" system of review, the Medical School policy at issue in Bakke was rigid: reserving a predetermined number of seats for a "selected ethnic group." In Justice Powell's view, that technique effectively precluded a more holistic review, that "treats each applicant as an individual." "[R]ace or ethnic origin," as he saw it, did not serve as "a single though important element" of an applicant's file in the Medical School's policy; it had instead become a factor that "foreclosed" other applicants "from all consideration for [certain] seat[s] simply because [they were] not the right color or had the wrong surname." A program like that, Justice Powell concluded, could not be narrowly tailored—precisely because another more individualized and "holistic" model, like Harvard's, could serve instead. Ratifying the Harvard Model Even if Bakke suggested that the Court's scrutiny of a race-conscious admissions policy would be every bit as strict as for other racial classifications, later cases have made clear that such scrutiny need not always be fatal. The companion cases of Grutter v. Bollinger and Gratz v. Bollinger offer clear examples: each involved affirmative action admissions policies at the University of Michigan, and each yielded a different bottom line, with the Court upholding the Law School's policy in Grutter while striking down the university's undergraduate admissions policy in Gratz . But those diverging results appeared to proceed from a common starting point: how closely the challenged admissions policy resembled the Harvard plan. In the case of the Law School's admissions policy, the Court found the resemblance quite close. As Justice O'Connor explained for the Court in Grutter , "the Law School engages in a highly individualized, holistic review of each applicant's file, giving serious consideration to all the ways an applicant might contribute to a diverse educational environment." It therefore did not award "mechanical, predetermined diversity 'bonuses' based on race or ethnicity." And "[l]ike the Harvard Plan, the Law School's admissions policy" accorded each applicant the same sort of flexible consideration that Justice Powell had called for in Bakke . That "policy st[ood] in sharp contrast," however, with the way the Court viewed the university's undergraduate admissions policy in Gratz . Under the undergraduate policy, admissions officers automatically awarded "20 points, or one-fifth of the points needed to guarantee admission, to every single 'underrepresented minority' applicant solely because of race." As Chief Justice Rehnquist explained for the Court, that policy therefore violated a basic feature of "[t]he admission program Justice Powell described" in Bakke —a program that "did not contemplate that any single characteristic automatically ensured a specific and identifiable contribution to a university's diversity." The result was a policy that did not "offer applicants the individualized selection process described in Harvard's example," and that could consequently not pass strict scrutiny. On that point Justice O'Connor also agreed. As she explained in supplying her decisive fifth vote, the undergraduate policy simply did not "enable[] admissions officers to make nuanced judgments with respect to the contributions each applicant is likely to make to the diversity of the incoming class," unlike the Law School's more holistic policy. This was true even though the undergraduate policy "assign[ed] 20 points to some 'soft' variables other than race," such as "leadership and service, personal achievement, and geographic diversity." None of that, in Justice O'Connor's view, could counteract the more problematic effect of those factors' being "capped at much lower levels," so that "even the most outstanding national high school leader could never receive more than five points for his or her accomplishments—a mere quarter of the points automatically assigned to an underrepresented minority solely based on the fact of his or her race." That weighting, though not problematic in all cases, had all but ensured there "that the diversity contributions of applicants [could not] be individually assessed." A thumb pressed that heavily on the racial scale, Justice O'Connor concluded, came too close to the "nonindividualized, mechanical" balancing condemned by Bakke to survive strict scrutiny. Five Hallmarks of a Narrowly Tailored Admissions Policy Despite their contrasting results, Gratz and Grutter gestured at several basic criteria by which to assess a university's race-conscious admissions policy. Those criteria, as the U.S. Court of Appeals for the Ninth Circuit later described them, could be summed up in "five hallmarks of a narrowly tailored affirmative action plan." And all five can be traced in one way or another to Justice Powell's analysis of the Harvard plan. 1. No Quotas. Perhaps the clearest violation of the requirement that a policy be narrowly tailored is the use of racial quotas. As Justice O'Connor explained in Grutter , a "'quota' is a program in which a certain fixed number or proportion of opportunities are reserved exclusively for certain minority groups," consequently "insulat[ing] the individual [applicant] from comparison with all other candidates for the available seats." And as Justice Powell emphasized in Bakke , and as has been consistently reaffirmed by the Court since, "[t]o be narrowly tailored, a race-conscious admissions program cannot use a quota system." This ban on quotas therefore precludes the use of a rigid set-aside like the one challenged in Bakke . And it likewise rules out the sort of "mechanical," automatic points system that was once in place at the University of Michigan's undergraduate college and was later invalidated in Gratz . 2. Individualized Consideration. The flip side of the Court's refusal to accept racial quotas has been its insistence on individualizing the consideration of applicants. As Justice Kennedy reaffirmed in Fisher I , echoing Justice Powell's description of the Harvard plan in Bakke , an appropriately tailored program "must 'remain flexible enough to ensure that each applicant is evaluated as an individual and not in a way that makes an applicant's race or ethnicity the defining feature of his or her application.'" And as the Court suggested in Gratz and Grutter , an acceptable plan will therefore engage in a "highly individualized, holistic review of each applicant's file, giving serious consideration to all the ways an applicant might contribute to a diverse educational environment." Such review allows "the use of race as one of many 'plus factors' in an admissions program," like in the University of Michigan Law School's policy upheld in Grutter . It also appears to bar a school from "automatically award[ing] points to applicants from certain racial minorities" as an effectively decisive factor, as it became under the university's undergraduate policy. 3. Serious, Good-Faith Consideration of Race-Neutral or More Flexible Alternatives. Neither of these two criteria, however, implies that a university must exhaust "every conceivable race-neutral alternative" before turning to a race-conscious policy. Instead, a university need only provide evidence that it undertook "serious, good faith consideration of workable race-neutral alternatives" before resorting to its choice of a race-conscious plan, but that those alternatives either did not suffice to meet its approved educational goals or would have required some sacrifice of its "reputation for academic excellence." The same holds true, moreover, of more flexible race-conscious alternatives. Thus Justice Powell explained in Bakke that the Medical School's program was not narrowly tailored when the school could have adopted the more individualized, holistic program then in use at Harvard, an option the Medical School apparently did not consider. 4. No Undue Harm. Even though the Court has allowed the use of race-conscious admissions policies under the exacting standard of strict scrutiny, it has also long "acknowledge[d] that 'there are serious problems of justice connected with the idea of preference itself.'" In Grutter , Justice O'Connor drew another corollary from that apparent discomfort with racial preferences. "[A] race-conscious admissions program," she explained, must "not unduly harm members of any racial group." What this corollary means more specifically remains unclear; so far it has received only passing attention from the Court. At the least, Justice O'Connor suggested, a race-conscious admissions policy must not "unduly burden individuals who are not members of the favored racial and ethnic groups." And in Grutter , Justice O'Connor put more flesh on that analysis: an affirmative action policy that closely resembled the Harvard plan, she suggested, would not "unduly harm" other applicants. It remains to be seen, however, whether this principle might take on new life in the Court's review of other plans. 5. Ongoing Review. In Grutter , Justice O'Connor also drew a fifth and final corollary from the basic premise that the Fourteenth Amendment was meant "to do away with all governmentally imposed discrimination based on race." "[R]ace-conscious admissions policies," she concluded, "must be limited in time." This requirement, Justice O'Connor explained for the Court, reflected a consideration apparently unique to racial classifications: "however compelling their goals, [they] are potentially so dangerous that they may be employed no more broadly than the interest demands." Doctrinally, this meant there could be no "permanent justification" for race-conscious admissions policies in higher education; sooner or later they had to end, as the university conceded in its briefing. Practically, this "logical end point" could come in one of several ways. It could take the form of an explicit "durational limit," such as a sunset provision. Or it could arrive as a result of "periodic reviews to determine whether racial preferences are still necessary to achieve student body diversity." But, however a university chooses to pursue that end, it has an "ongoing obligation to engage in constant deliberation and continued reflection regarding its admissions policies" and the role race plays in them, or whether it should continue to play one at all. For several Justices this ongoing obligation of review also pointed to something more definite—an expiration date, when "the use of racial preferences will no longer be necessary to further [the school's] interest" in student body diversity. Looking back over the quarter-century since Bakke , Justice O'Connor "expect[ed]" that day to come twenty-five years after casting her deciding votes in Gratz and Grutter —ten years from this writing. What exactly this meant, as either a practical or doctrinal matter, also remains unclear. Indeed, even then several of her fellow Justices seemed less sure, or simply unsure, what to make of that unusually specific constitutional deadline. But with six Justices having since departed the Court, Justices O'Connor and Kennedy included, it remains to be seen whether in the next ten years race-conscious admissions policies will reach this foreordained "logical end point." What seems clear for now, however, is that the Harvard plan described in Bakke remains the Court's working model of a constitutionally satisfactory race-conscious admissions policy. And that, as the Court has consistently said since, is a policy capable of achieving the diversity "essential" to the life of a modern university, while still "treat[ing] each applicant as an individual." Title VI and Higher Education Race has come to play two major doctrinal roles in higher education today, mirroring the two senses of "affirmative action" discussed in this report: the mandatory role, rooted in the affirmative obligation states have to eliminate the vestiges of de jure segregation, and the voluntary role, particularly in admissions decisions at selective colleges and universities. In the context of higher education, the Court has so far considered these two forms of "affirmative action" only in relation to public universities, and then primarily as a matter of constitutional law, under the Fourteenth Amendment's Equal Protection Clause. But many of those cases have also involved claims brought under Title VI of the Civil Rights Act of 1964 (Title VI or the Act). And while the Court has read Title VI's protections to overlap with the Equal Protection Clause, Congress still has a significant say over the substantive scope of Title VI as well as its enforcement. Agency Interpretation and Enforcement of Title VI Title VI generally protects participants in federally funded "program[s] or activit[ies]" from discrimination based on their "race, color, or national origin." To ensure that statutory right, the Act grants all federal funding agencies the authority to issue implementing regulations, and the power to enforce the regulations they issue. In practice, much of the interpretive authority falls to the U.S. Department of Justice (DOJ), and for educational programs, the U.S. Department of Education (ED). Both DOJ and ED have also established their own processes for receiving and investigating complaints of suspected Title VI violations. ED, meanwhile, has also issued its own set of rules to govern the federal education dollars it disburses each year, reaching some 4,700 colleges and universities. Every agency that awards federal funds—ED included—has the authority not just to issue implementing regulations but to enforce those rules against noncompliant recipients, including through an investigation that may, upon a finding of noncompliance, result in the termination, suspension, or refusal to grant federal funds. Thus, for example, where ED finds a school in violation of Title VI or its implementing regulations the department may seek to cut off federal funding through an "administrative fund termination proceeding," as it has in at least some cases. And since the passage of the Civil Rights Restoration Act of 1987, the courts have read the scope of liability under Title VI broadly. With respect to the termination of funds, a Title VI violation in one program at a college or university could therefore jeopardize funding for the institution as a whole. Withdrawing funds may be the ultimate means of enforcing Title VI, but it is far from exclusive. DOJ, for its part, has also sought to achieve compliance through the federal courts, intervening in some private suits alleging Title VI violations and otherwise representing executive branch agencies, such as ED, in lawsuits seeking enforcement of Title VI. DOJ has participated in cases challenging practices of formerly de jure segregated public university systems as well as in settlements resolving such Fordice -related claims. DOJ has also taken a position in cases challenging affirmative action admissions policies, most recently in the ongoing litigation surrounding Harvard College's admissions policies. ED has ventured into this area as well, having recently opened investigations into the admissions decisions at several prominent private universities. Congress and Title VI Congress continues to have considerable say over how Title VI works—at least within the parameters of the Supreme Court's equal protection jurisprudence. Perhaps the most direct way of doing so is by amendment. As a general matter, Congress could revise Title VI in one of two directions, to make the statute either (1) more restrictive than the Court's current Equal Protection jurisprudence or (2) expressly permissive of race-conscious measures that the Court has upheld or has thus far not addressed. In the more restrictive direction, Congress could prohibit recipients of federal funds from using voluntary race-conscious measures at all—a result that four Justices in Bakke argued Title VI already requires, but which the Court has so far not embraced. A statutory revision of that kind would also implicitly reject the Harvard Plan discussed in Bakke , by excluding race as a permissible factor in admissions decisions at the many universities subject to Title VI, including the many private universities that receive federal funds. And, consequently, an amendment along these lines would make unlawful the type of admissions policies that the Court has approved under the Equal Protection Clause, like those at issue in Grutter and Fisher II . On the other hand, Congress could expressly open other avenues for effectuating Title VI's antidiscrimination mandate. This could include incorporating a private right of action to bring suit under Title VI, which, at present, is an implied right with no statutorily defined remedies. More consequentially, Congress could also amend Title VI to provide for disparate impact liability—that is, a Title VI violation based on a funding recipient's use of certain policies or practices that disproportionately and negatively impact members of a protected class, as already exists under Title VII of the same Act. A provision addressing disparate impact liability—either its availability or foreclosure under Title VI—would resolve a significant and ongoing debate on the issue. Such an addition would also be one way of clarifying whether Congress does in fact intend for Title VI to be read coextensively with the Equal Protection Clause. Beyond legislative amendments, Congress also exercises oversight over the agencies charged with carrying out Title VI's antidiscrimination mandate. As discussed earlier, DOJ and ED are primarily responsible for enforcing Title VI in educational programs. For its part, ED investigates and seeks compliance through its Office for Civil Rights, while the Educational Opportunities Section of the Department of Justice's (DOJ's) Civil Rights Division typically enforces Title VI in educational programs for the department. Both offices maintain public archives documenting their past and current investigations, as well as wider-ranging reports detailing their enforcement priorities and investigatory procedures. And because Title VI applies to a wide variety of entities that receive federal financial assistance, not just colleges and universities, DOJ also publishes news and updates on Title VI enforcement activity in other programmatic areas, from agencies across the federal government. Conclusion Race has come to play two major doctrinal roles in higher education today, reflecting the two senses of "affirmative action" discussed in this report. "Affirmative action" in its original sense grew out of the affirmative obligation imposed on the states by the Equal Protection Clause to eliminate the vestiges of de jure segregation from their public schools. And in that sense, "affirmative action" involves the mandatory use of race-conscious measures in higher education to right the enduring wrongs of state-sanctioned segregation. But "affirmative action" has also come to refer to race-conscious policies outside this de jure context—policies voluntarily adopted by institutions to help racial minorities overcome the effects of their earlier exclusion. In higher education, none has been more salient—or stirred more debate—than the race-conscious admissions policies that colleges and universities across the country have used to diversify their student bodies. Thus far, remedial measures addressing de jure segregation, and voluntary measures designed to promote student-body diversity, have been the only race-conscious measures that the Court has approved under the Equal Protection Clause. And both remain areas of active litigation and administrative enforcement. Over the years, however, the Court has made it clear that it will subject voluntary "affirmative action" policies to especially close scrutiny, approving them only when they can be shown to be narrowly tailored to serve compelling educational goals. It has approved such polices twice already, most recently in 2016. Still, several Justices have suggested that the rationales supporting these voluntary race-conscious measures will one day run out. But for the time being, at least, these two lines of authority nevertheless provide a place for affirmative action in higher education today. This authority, however, leaves questions as of yet unexplored. It appears to be an open question, for example, whether a public institution of higher education can cite its own history of intentional exclusion, or else its "past discrimination," as a basis for adopting a race-conscious admissions policy, among other measures. Whether—and how—the courts might assess such untested arguments would likely turn on a range of factors, including the further development of the two lines of authority addressed in this report. Regardless of those and other possible developments, however, Congress still has a significant say in in this area, through its authority not just to revise Title VI but to oversee the Act's enforcement.

When federal courts have analyzed and addressed "affirmative action" in higher education, they have done so in two distinct but related senses, both under the Fourteenth Amendment's guarantee of "equal protection." The first has its roots in the original sense of "affirmative action:" the mandatory use of race by public education systems to eliminate the remnants of state-imposed racial segregation. Because state-sanctioned race segregation in public education violates the Fourteenth Amendment's Equal Protection Clause, in certain cases involving a state's formerly de jure segregated public university system, a state's consideration of race in its higher education policies and practices may be an affirmative obligation. As the U.S. Supreme Court explained in its consequential 1992 decision United States v. Fordice, equal protection may require states that formerly maintained de jure segregated university systems to consider race for the purpose of eliminating all vestiges of their prior "dual" systems. Drawing upon its precedent addressing racially segregated public schools in the K-12 context, the Court established a three-part legal standard in Fordice for evaluating the sufficiency and effectiveness of a state's efforts in "dismantl[ing]" its formerly de jure segregated public university system. To that remedial end, mandatory race-conscious measures—in this de jure context—are not limited to admissions. Instead, remedies may also address policies and practices relating to academic programs, institutional missions, funding, and other aspects of public university operations. Outside this de jure context, "affirmative action" has come to refer to a different category of race-conscious policies. These involve what the Court at one time called the "benign" use of racial classifications—voluntary measures designed not to remedy past de jure discrimination, but to help racial minorities overcome the effects of their earlier exclusion. And for institutions of higher education, the Court has addressed one type of affirmative action policy in particular: the use of race as a factor in admissions decisions, a practice now widely observed by both public and private colleges and universities. The federal courts have come to subject these voluntary race-conscious policies—"affirmative action" in its perhaps more familiar sense—to a particularly searching form of review known as strict scrutiny. And even though this heightened judicial scrutiny has long been regarded as strict in theory but fatal in fact, the Court's review of race-conscious admissions policies in higher education has proved a notable exception, with the Court having twice upheld universities' use of race as one of many factors considered when assembling their incoming classes. The Court has long grappled with this seeming tension—between the strictness of its scrutiny and its approval of race-conscious admissions policies—beginning with its landmark 1978 decision in Regents of the University of California v. Bakke through its 2016 decision in Fisher v. University of Texas. Though the Equal Protection Clause generally concerns public universities and their constitutional obligations under the Fourteenth Amendment, federal statutory law also plays a role in ensuring equal protection in higher education. To that end, Title VI of the Civil Rights Act of 1964 prohibits recipients of federal funding—including private colleges and universities—from, at a minimum, discriminating against students and applicants in a manner that would violate the Equal Protection Clause. Federal agencies, including the Departments of Justice and Education, investigate and administratively enforce institutions' compliance with Title VI.

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Introduction The Land and Water Conservation Fund (LWCF) Act of 1965 was enacted to "assist in preserving, developing, and assuring accessibility to ... outdoor recreation resources." Two main goals of the law were to facilitate participation in recreation and "to strengthen the health and vitality" of U.S. citizens. To accomplish these goals, purposes of the law included "providing funds" for federal land acquisition and for federal assistance to states generally related to outdoor recreation. The fund is authorized to receive $900 million in revenues annually under the LWCF Act. Each year the fund accrues revenues at this level. The fund accumulates the majority of its revenues from oil and gas leases on the Outer Continental Shelf (OCS). It also accumulates revenues from the federal motorboat fuel tax and surplus property sales. However, revenues that accrue under the LWCF Act are available only if appropriated by Congress through the discretionary appropriations process. The LWCF receives additional revenue (beyond the $900 million) from OCS leasing under the Gulf of Mexico Energy Security Act of 2006 (GOMESA). Unlike revenues under the LWCF Act, GOMESA revenues are mandatory appropriations (and thus are not subject to annual appropriation by Congress). They can be used only for grants to states for outdoor recreation purposes. The overall level of annual appropriations (discretionary and mandatory combined) has varied widely since the fund's origin in FY1965. Of the total revenues that have accrued throughout the program's history ($40.9 billion), less than half have been appropriated ($18.9 billion) through FY2019. Thus, the unappropriated balance in the fund is estimated at $22.0 billion through FY2019. The LWCF Act outlines uses of the fund for federal and state purposes. It states that of the total made available to the fund, not less than 40% is to be used for "federal purposes" and not less than 40% is to be used to provide "financial assistance to states." The act lists the federal purposes for which the President is to allot LWCF funds "unless otherwise allotted in the appropriation Act making them available." These purposes primarily relate to the acquisition of lands and waters (and interests therein) by the federal government. With regard to state purposes, the act authorizes a matching grant program to states for outdoor recreation purposes. In practice, over the history of the LWCF, appropriations acts have provided funding for three general purposes. First, for each year since FY1965, appropriations for land acquisition have been provided to some or all of the major federal land management agencies—the Bureau of Land Management (BLM), Fish and Wildlife Service (FWS), National Park Service (NPS), and Forest Service (FS). Second, for nearly every year since FY1965, appropriations have funded the outdoor recreation matching grant program, to assist states in recreational planning, acquiring recreational lands and waters, and developing outdoor recreational facilities. Third, beginning in FY1998, appropriations from the LWCF have been provided each year, except FY1999, to fund other federal programs with related natural resource purposes. Hereinafter, the third type of appropriations is referred to as funding other purposes . The $18.9 billion appropriated from the fund through FY2019 has been allocated in different proportions among federal land acquisition, the state grant program, and other purposes. The largest portion of the total—$11.4 billion—has been appropriated for federal land acquisition. The state grant program has received the second-largest portion, $4.8 billion. Other purposes have received the remaining $2.7 billion. Appendix A shows the total LWCF appropriation for other purposes. Congress continues to consider the extent to which the LWCF should fund purposes other than federal land acquisition and outdoor recreation grants to states. Some traditional LWCF advocates and beneficiaries have expressed concern about expanding the use of the funds, particularly if such expansion results in lower appropriations for land acquisition and outdoor recreation grants to states. Some Members of Congress, Presidents, and stakeholders have supported funding other purposes in order to draw on the balance in the fund for policy priorities, to shift the focus of the fund from land acquisition, or to achieve other goals. A number of measures introduced in recent Congresses sought to authorize funding from the LWCF for various other purposes. These measures were not enacted. They included proposals to specify an amount or percentage of funding for two programs that are currently funded by the LWCF—the Forest Legacy Program and Cooperative Endangered Species Conservation grants—although the LWCF Act does not specifically authorize this funding. Other proposals sought to authorize programs or activities that have not been funded by LWCF in the past, or that have been rarely funded by LWCF in the past. For instance, one 115 th Congress bill would have authorized LWCF funding for certain programs and activities of the major land management agencies, including deferred maintenance, critical infrastructure, visitor services, and clean-up efforts; the Payments in Lieu of Taxes Program; and certain offshore energy exploration, innovation, and education activities. As another example, one 115 th Congress bill proposed to authorize LWCF funding for financial assistance from the Secretary of Housing and Urban Development for park and recreation infrastructure projects. The balance of this report discusses the other purposes for which LWCF appropriations have been provided throughout the fund's history. It identifies the amount of funding contained in annual appropriations laws for other purposes and the types of purposes for which funds have been appropriated. LWCF Appropriations for Other Purposes Level of Funding A total of $72.0 million was appropriated from the LWCF for other purposes in FY1998, the first year in which LWCF was used to fund other purposes. The total included $60.0 million for maintenance needs of the four land management agencies and $12.0 million for rehabilitation and maintenance of the Beartooth Highway (in Wyoming and Montana). In FY1998, total LWCF appropriations had spiked to approximately $969 million from the FY1997 level of about $159 million. Both the dollar amounts and the percentages of annual LWCF appropriations for other purposes have varied widely since FY1998. (See Appendix B .) Over the most recent 10 years, LWCF appropriations for other purposes fluctuated, declining overall from $132.5 million in FY2010 to $93.3 million in FY2019 (in current dollars). However, the FY2019 level was the highest appropriation since FY2010. Beginning in FY2011, appropriations for other purposes in each year have been less than $100 million, as was the case for FY1998-FY2000. Appropriations for other purposes were at their lowest dollar amount in FY1999, when no funds for other purposes were appropriated. The next-lowest dollar value was provided for FY2000, when a total of $20.0 million was appropriated for three purposes: Elwha River Ecosystem restoration (in Washington), deferred maintenance of the NPS, and the FS Forest Legacy program. By contrast, from FY2001 to FY2010, appropriations for other purposes exceeded $100 million in each year. In fact, during four of these years (FY2004-FY2007), the annual appropriation was between $200 million and $225 million. The appropriation surpassed $400 million in another year during the period. Specifically, the $456.0 million appropriation in FY2001 was more than double the amount provided for other purposes in any other year. These appropriations were used to fund more than a dozen programs in the Clinton Administration's Lands Legacy Initiative. In that year, total LWCF appropriations exceeded the annual authorization level, totaling nearly $1 billion. This record level of funding was provided partly in response to President Clinton's Lands Legacy Initiative, which sought $1.4 billion for about two dozen resource-protection programs, including the LWCF. It also was provided partly in response to some congressional interest in securing increased and more certain funding for the LWCF. The highest percentage of annual funds provided for other purposes occurred in FY2006 and FY2007 (59% in both years), in response to President George W. Bush's request for funding for an array of programs. For instance, in FY2007 the Bush Administration sought funding from the LWCF for 15 programs in addition to land acquisition and state grants. For that year, the appropriation for five other purposes was $216.1 million, out of a total LWCF appropriation of $366.1 million. In some years, the appropriation for other purposes was significantly less than the Administration requested. For example, for FY2008 the Bush Administration sought $313.1 million for other purposes, or 83% of the total request of $378.7 million. The FY2008 appropriation for other purposes was $101.3 million, or 40% of the LWCF total of $255.1 million. The $2.7 billion appropriated from the LWCF from FY1998 to FY2019 for other purposes represents 27% of the $10.0 billion total appropriations from LWCF during the period. FWS and FS have received the largest shares of the appropriations for other purposes, about $1.4 billion (53%) and $1.0 billion (38%), respectively. BLM, NPS, the U.S. Geological Survey, and the Bureau of Indian Affairs have shared the remaining $0.2 billion (9%) of the appropriations for other purposes. (See Figure 1 .) Types of Purposes Because there is no set of other purposes specified in the LWCF Act to be funded from the LWCF, presidents have sought funds for a variety of purposes. Congress has chosen which of these requests to fund from the LWCF, and whether to fund any additional programs from the LWCF not suggested by the President. Appropriations for other purposes have been provided for more than a dozen diverse natural resource-related programs, including facility maintenance of the land management agencies, ecosystem restoration, the Historic Preservation Fund, the Payments in Lieu of Taxes program, the FS Forest Legacy program, FWS State and Tribal Wildlife Grants, the FWS Cooperative Endangered Species Conservation Fund, U.S. Geological Survey science and cooperative programs, and Bureau of Indian Affairs Indian Land and Water Claim Settlements. (See Appendix A .) Although in earlier years several other purposes typically were funded from LWCF, since FY2008, funds have been appropriated annually only for grants under two programs: Forest Legacy and Cooperative Endangered Species Conservation Fund. (See Appendix B and Figure 2 . ) The total appropriation from LWCF for these two programs (since FY1998) is $1.7 billion, or 63% of all appropriations for other purposes ($2.7 billion). These two programs and a third grant program funded prior to FY2008 from LWCF—FWS State and Tribal Wildlife Grants—have received more than three-quarters ($2.1 billion, 79%) of the total appropriations for other purposes. The appropriations through FY2019 are $944.4 million for Forest Legacy (35% of the other purposes total), $753.3 million for Cooperative Endangered Species Conservation Fund (28% of total), and $448.5 million for State and Tribal Wildlife Grants (17% of total). Grants under the Forest Legacy program are used to acquire lands or conservation easements to preserve private forests threatened by conversion to non-forest uses, such as agriculture or residences. FS provides matching grants to states through a competitive process that requires state approval and then national approval and ranking. The ranking is based on the importance of the project (potential public benefits from protection), the likelihood of the forest's conversion to non-forest uses, and the strategic relevance of the project, among other factors. The program is implemented primarily through state partners, usually state forestry agencies. State partners generally acquire, hold, and administer the easements or land purchases, although the federal government also may do so. The Cooperative Endangered Species Conservation Fund provides grants "for species and habitat conservation actions on non-Federal lands, including habitat acquisition, conservation planning, habitat restoration, status surveys, captive propagation and reintroduction, research, and education." In addition to appropriations from LWCF, the Cooperative Endangered Species Conservation Fund typically receives additional appropriations. In recent years, the appropriations from LWCF generally have been used for two types of land acquisition grants provided to state and territories on a matching basis. Recovery land acquisition grants have been made for acquisition of habitats in support of species recovery goals and objectives. Habitat conservation plan land acquisition grants have been made for acquisition of lands that are associated with habitat conservation plans. State and Tribal Wildlife Grants are provided to states, territories, and tribes to develop and implement programs for the benefit of fish and wildlife and their habitats, including nongame species. State and Tribal Wildlife Grants received funding from the LWCF for FY2001-FY2007; subsequently, funding has been provided from the General Fund of the U.S. Treasury. Currently, the largest portion of the program is for formula grants to states and territories on a matching basis. Funds from the formula grants may be used to develop state conservation plans and to implement specific conservation projects. Smaller amounts of funding have been appropriated for competitive grants to states and territories, and to tribal governments. The competitive grant programs do not have matching requirements. Appendix A shows the total LWCF appropriations for other purposes summed from FY1998 to FY2019. Appendix B shows the other purposes that received LWCF appropriations each year, the amount of LWCF appropriations for each purpose, and the total annual appropriations for other purposes. Appendix A. Total LWCF Appropriations for Other Purposes Appendix B. Annual LWCF Appropriations for Other Purposes

The Land and Water Conservation Fund (LWCF) Act of 1965 (P.L. 88-578) created the LWCF in the Treasury as a funding source to implement the outdoor recreation goals set out by the act. The LWCF Act authorizes the fund to receive $900 million annually, with the monies available only if appropriated by Congress (i.e., discretionary appropriations). The fund also receives mandatory appropriations under the Gulf of Mexico Energy Security Act of 2006 (GOMESA). The level of annual appropriations for the LWCF has varied since the origin of the fund in FY1965. The LWCF Act outlines uses of the fund for federal and state purposes. Of the total made available through appropriations or deposits under GOMESA, not less than 40% is to be used for "federal purposes" and not less than 40% is to be used to provide "financial assistance to states." The act lists the federal purposes for which the President is to allot LWCF funds "unless otherwise allotted in the appropriation Act making them available." These purposes primarily relate to acquisition of lands and waters (and interests therein) by the federal government. With regard to state purposes, the act authorizes a matching grant program to states for outdoor recreation purposes. Throughout the LWCF's history, appropriations acts typically have provided funds for land acquisition and outdoor recreational grants to states. Beginning in FY1998, appropriations also have been provided each year (except FY1999) to fund other purposes related to natural resources. The extent to which the LWCF should be used for purposes other than federal land acquisition and outdoor recreation grants to states, and which other purposes should be funded from the LWCF, continue to be the subject of legislation and debate in Congress. In the past few decades, Presidents have sought LWCF funds for a variety of other purposes. Congress chooses which if any of these requests to fund, and has chosen programs not sought by the President for a particular year. Among other programs, appropriations have been provided for facility maintenance of the land management agencies, ecosystem restoration, the Historic Preservation Fund, the Payments in Lieu of Taxes program, the Forest Legacy Program, State and Tribal Wildlife Grants (under the Fish and Wildlife Service), the Cooperative Endangered Species Conservation Fund, U.S. Geological Survey science and cooperative programs, and Bureau of Indian Affairs Indian Land and Water Claim Settlements. Since FY1998, a total of $2.7 billion has been appropriated for other purposes, of a total LWCF appropriation of $18.9 billion over the history of the fund. The Fish and Wildlife Service and the Forest Service have received the largest shares of the total appropriations for other purposes, about $1.4 billion (53%) and $1.0.billion (38%), respectively, from FY1998 to FY2019. Several agencies shared the remaining $0.2 billion (9%) of the appropriations. Both the dollar amounts and the percentages of annual LWCF appropriations for other purposes have varied widely since FY1998. The dollar amounts have ranged from $0 in FY1999 to $456.0 million in FY2001. The percentage of annual funds provided for other purposes ranged from 0% in FY1999 to a high of 59% in both FY2006 and FY2007. In some years, the appropriation for other purposes was significantly less than the Administration requested. For instance, for FY2008, the George W. Bush Administration sought $313.1 million; the appropriation was $101.3 million. The appropriation for other purposes last exceeded $100.0 million in FY2010, and most recently was $93.3 million, in FY2019. Prior to FY2008, several other purposes typically were funded each year from LWCF. Since FY2008, funds have been appropriated annually only for grants under two programs: Forest Legacy and Cooperative Endangered Species Conservation Fund. These two programs and a third grant program—State and Tribal Wildlife Grants—have received more than three-quarters ($2.1 billion, 79%) of the total appropriation for other purposes since FY1998.

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Introduction Disclosure provisions that require commercial actors to convey specified information to consumers occupy an uneasy and shifting space in First Amendment jurisprudence. The First Amendment's Free Speech Clause protects the right to speak as well as the right not to speak, and at least outside the context of commercial speech, courts generally disfavor any government action that compels speech. Indeed, the Supreme Court in 1943 described the First Amendment's protection against compelled speech as a "fixed star in our constitutional constellation." Accordingly, government actions mandating speech are generally subject to strict scrutiny by courts, and will be upheld "only if the government proves that they are narrowly tailored to serve compelling state interests." However, the Court has also long accepted a variety of laws that require commercial actors to make certain disclosures to consumers, confirming that Congress can compel certain disclosures, even those involving protected speech, without running afoul of the First Amendment. Commercial disclosure requirements have largely withstood constitutional scrutiny in part because, historically, commercial speech has received less protection under the First Amendment than other speech. The government's ability to more freely regulate commercial speech has been linked to its general authority "to regulate commercial transactions." Thus, notwithstanding the fact that commercial disclosure requirements compel speech, courts generally have not analyzed such provisions under the strict scrutiny standard. Instead, courts have often employed less rigorous standards to evaluate such provisions. The precise nature of a court's First Amendment analysis, however, will depend on the character of the disclosure requirement at issue. In a recent decision, the Supreme Court distilled and explained its prior cases on this subject. First, the Court said that it has upheld some commercial disclosure requirements that target conduct and only incidentally burden speech. This rubric likely only applies if the disclosure provision is part of a larger scheme regulating commercial conduct. If the disclosure provision instead regulates "speech as speech," it might be subject either to intermediate scrutiny, as a government regulation of commercial speech, or to something closer to rational basis review, if the disclosure provision qualifies for review under the Supreme Court's decision in Zauderer v. Office of Disciplinary Counsel . Some of the Court's recent cases, however, have suggested that in certain circumstances, disclosure requirements may be subject to heightened scrutiny. This report begins with a short background on how courts generally view commercial speech under the First Amendment, then reviews in more detail the possible legal frameworks for analyzing the constitutionality of commercial disclosure requirements. First Amendment Protection of Commercial Speech Supreme Court precedent explaining the application of the First Amendment to commercial disclosure requirements is relatively recent. The Court did not squarely hold that purely commercial speech was entitled to any protection under the First Amendment until 1976 in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council . The Court has defined commercial speech alternately as speech that "does 'no more than propose a commercial transaction'" and as "expression related solely to the economic interests of the speaker and its audience." In Virginia Board of Pharmacy , the Court said that commercial speech was protected, but it also emphasized that the First Amendment did not prohibit all regulations of such speech. In particular, the Court said that it foresaw "no obstacle" to government regulation of "false" speech, or even of commercial speech that is only "deceptive or misleading." In subsequent cases, the Court has explained why "regulation to assure truthfulness" is more readily allowed in the context of commercial speech, as compared with other types of speech. While the First Amendment usually protects even untruthful speech, in order to better encourage uninhibited and robust debate, the Court has recognized that regulating "for truthfulness" in the commercial arena is unlikely to "undesirably inhibit spontaneity" because commercial speech is generally less likely to be spontaneous. Instead, it is more calculated, motivated by a "commercial interest." In particular, if a particular advertisement concerns a subject in which "the public lacks sophistication" and cannot verify the claims, the Court has suggested that the government may have a freer hand to address such concerns. Four years after Virginia Board of Pharmacy , in 1980, the Supreme Court set out the standard that generally governs a court's analysis of government restrictions on commercial speech in Central Hudson Gas & Electric Corp. v. Public Service Commission . The Court first explained that commercial speech enjoys "lesser protection" than "other constitutionally guaranteed expression." After emphasizing that First Amendment protection for commercial speech "is based on the informational function of advertising," the Court said that "there can be no constitutional objection to the suppression of commercial messages that do not accurately inform the public about lawful activity." Accordingly, the Court held that the government may prohibit "forms of communication more likely to deceive the public than to inform it" as well as "commercial speech related to illegal activity." But if the regulated "communication is neither misleading nor related to unlawful activity," the government's action is subject to intermediate scrutiny. Under Central Hudson 's intermediate standard, the government must prove that the government's interest is "substantial," and that the regulation "directly advances" that interest and is "not more extensive than is necessary to serve that interest." The Central Hudson test continues to govern the constitutional analysis of government acts that infringe on commercial speech. However, in certain circumstances, commercial speech may lose its commercial character if "it is inextricably intertwined with otherwise fully protected speech." And more generally, some members of the Supreme Court have questioned whether commercial speech should categorically receive less protection under the First Amendment, suggesting that in at least some circumstances, infringements on commercial speech should instead be subject to strict scrutiny. Commentators have pointed out that, as a practical matter, Supreme Court decisions have increasingly struck down, rather than upheld, restrictions on commercial speech. Also relevant to the discussion of disclosure requirements, judges and legal scholars have noted that the Court may be adjusting the role of the content neutrality doctrine with respect to commercial speech. As a general matter, if a law is "content-based," in the sense that it "target[s] speech based on its communicative content," it will be subject to strict scrutiny. The Supreme Court stated in Reed v. Town of Gilbert that a regulation is content-based if it "applies to particular speech because of the topic discussed or the idea or message expressed," if it "cannot be 'justified without reference to the content of the regulated speech,'" or if it was "adopted by the government 'because of disagreement with the message [the speech] conveys.'" Disclosure requirements are generally considered content-based, given that they require regulated parties to speak a certain message, and outside the commercial context, ordinarily trigger the application of strict scrutiny. In Central Hudson , however, the Supreme Court explained that in the context of commercial speech, "regulation of its content" is permissible. And, as commentators have pointed out, "the very category of commercial speech is a content-based category." Nonetheless, the Court has struck down certain regulations that prohibit commercial speech solely because its content is commercial, suggesting that content neutrality might be relevant in the commercial sphere. In its 2011 decision in Sorrell v. IMS Health, Inc. , the Supreme Court considered the constitutionality of a state law prohibiting pharmacies from disclosing certain pharmacy records for marketing purposes. After observing that the law included "content- and speaker-based restrictions on the sale, disclosure, and use of" covered information, the Court concluded that the law was "designed to impose a specific, content-based burden on protected expression" because it applied specifically to marketing, a particular type of speech. Consequently, the law was subject to "heightened judicial scrutiny," notwithstanding the fact that the "burdened speech result[ed] from an economic motive" and was therefore commercial. Ultimately, however, the Court declined to say definitively whether Central Hudson or "a stricter form of judicial scrutiny" should apply because, in the Court's view, the law failed to pass constitutional muster even under Central Hudson . As discussed in more detail below, the shifting role of content neutrality in commercial speech doctrine holds special significance for commercial disclosure requirements: these requirements are content-based because they "compel[] individuals to speak a particular message." At least one legal scholar has suggested that lower courts have read Sorrell as an expression of the Supreme Court's increasing skepticism toward restrictions on commercial speech and, since that decision, have been more likely to strike down commercial disclosure requirements. However, the Court did not expressly limit the reach of Central Hudson in Sorrell or in subsequent cases, suggesting that, at least for now, Central Hudson 's standard of review applies even when a challenged action would otherwise trigger strict scrutiny as a content-based regulation of speech. Indeed, lower courts analyzing commercial disclosure requirements usually ask whether Zauderer or Central Hudson supplies the appropriate standard of review, contemplating at most only intermediate scrutiny —even in cases decided after Sorrell . Regulation of Speech Incidental to Regulatory Scheme Targeting Conduct In its First Amendment jurisprudence, the Supreme Court has generally distinguished between laws that regulate conduct and laws that regulate speech. The Court has held that conduct-focused regulations will not violate the First Amendment by merely incidentally burdening speech. For instance, while the government may regulate prices, attempts to regulate "the communication of prices" implicate the First Amendment. To take another example, the Court has noted that pursuant to "a ban on race-based hiring," a regulation "directed at commerce or conduct," the government "may require employers to remove 'White Applicants Only' signs." To differentiate a regulation targeting conduct from one targeting speech, the Court generally looks to the purpose of the law, asking whether the law appears to target certain content or certain speakers. As part of this inquiry, the Court may also ask whether a regulation applies because of the communicative content of the regulated party's actions. This distinction between speech and conduct is especially significant in the context of commercial speech, given that such speech "occurs in an area traditionally subject to government regulation." Thus, in 1978, the Supreme Court said: "[I]t has never been deemed an abridgment of freedom of speech or press to make a course of conduct illegal merely because the conduct was in part initiated, evidenced, or carried out by means of language, either spoken, written, or printed." Numerous examples could be cited of communications that are regulated without offending the First Amendment, such as the exchange of information about securities, corporate proxy statements, the exchange of price and production information among competitors, and employers' threats of retaliation for the labor activities of employees. Each of these examples illustrates that the State does not lose its power to regulate commercial activity deemed harmful to the public whenever speech is a component of that activity. The Court has previously "upheld regulations of professional conduct that incidentally burden speech." For example, the Court upheld an informed consent requirement in Planned Parenthood of S outheastern Pennsylvania v. Casey . The Casey challengers argued that a law requiring doctors to inform patients seeking abortions about "the nature of the procedure, the health risks of the abortion and of childbirth, and the probable gestational age of the unborn child" compelled doctors to speak in violation of the First Amendment. The Court rejected that argument, concluding that while "the physician's First Amendment rights not to speak are implicated," this was "only as part of the practice of medicine, subject to reasonable licensing and regulation by the State." In National Institute of Family and Life Advocates (NIFLA) v. Becerra , the Supreme Court emphasized that the informed consent requirement upheld in Casey was part of the broader regulation of professional conduct: specifically, the practice of medicine. By contrast, the Court held that the disclosure requirement at issue in NIFLA , which required certain health facilities to provide clients with information about state-sponsored services, could not be upheld as "an informed-consent requirement or any other regulation of professional conduct" because it was not tied to any medical procedure. Instead, in the Court's view, the requirement "regulate[d] speech as speech," as opposed to regulating speech only incidentally. While the Court has made clear that the First Amendment does not prohibit such incidental regulation of commercial speech, it has not articulated one overarching standard for evaluating whether such provisions are constitutionally permissible. Its decisions in this area have considered a wide variety of government actions incidentally burdening speech, and it may be that the standard varies according to the nature of the particular speech restriction evaluated. In some cases, the Court has suggested that "the First Amendment is not implicated by the enforcement" of a broader regulatory scheme where the regulated conduct does not have "a significant expressive element" or the statute does not inevitably single out "those engaged in expressive activity." In other cases where the Court has upheld a regulation that it characterized as focused on conduct rather than speech, the Court investigated the strength of the government's interest and asked whether the regulation advances that interest, suggesting that the Court subjected the regulation to some First Amendment scrutiny—albeit using a relatively relaxed standard. The Court has never explicitly held that a commercial disclosure requirement qualifies as a constitutionally permissible incidental restriction on commercial speech. While Planned Parenthood of Southeastern Pennsylvania v. Casey did involve a disclosure requirement, the Court did not address whether the informed consent requirement involved commercial or noncommercial speech either in Casey or when discussing that requirement in NIFLA . In NIFLA , the Court held that a state law imposing disclosure requirements on clinics providing pregnancy-related services could not be characterized as a regulation that only incidentally burdened speech because the requirement was not tied to any specific medical procedures. However, the Court never expressly stated whether it considered the disclosures to consist of commercial or noncommercial speech. Similarly, in Expressions Hair Design v. Schneiderman , the Court rejected the application of this doctrine without expressly characterizing the government action as a commercial disclosure requirement. In that case, the Court considered the constitutionality of a state law prohibiting sellers from imposing surcharges on customers who use credit cards. The Supreme Court rejected the argument that this law primarily "regulated conduct, not speech," concluding that the law did not merely regulate pricing, but regulated the communication of prices by prohibiting merchants from posting a cash price and an additional credit card surcharge. The Court then remanded the case to the lower courts to consider the First Amendment challenges in the first instance, leaving open the question of whether the provision could be characterized as a requirement for sellers to disclose an item's credit card price, rather than as a prohibition of certain speech. As these cases suggest, the Court has seemed reluctant in recent years to uphold government actions as conduct-focused regulations that merely incidentally burden speech, especially in the context of compelled disclosure requirements. Instead, the Court has distinguished the few cases upholding government acts as incidental restrictions and subjected disclosure requirements to further scrutiny. Nonetheless, the Court has left open the possibility that commercial disclosure requirements might, in the future, qualify as permissible incidental speech regulation, if they are part of a broader regulatory scheme. Regulation of Speech as Speech If the government regulates "speech as speech," its actions will implicate the First Amendment's protections for freedom of speech and may trigger heightened standards of scrutiny. However, the First Amendment does not prescribe a single analysis for all government actions that potentially infringe on free speech protections. Instead, a court's review will depend on the nature of both the government action and the speech itself. This section first introduces the three possible levels of scrutiny a court might use to analyze a speech regulation and then explains their application to compelled commercial disclosures in more detail. Three Levels of Scrutiny In the context of commercial disclosure requirements, there are three primary categories of First Amendment analysis that may be relevant. First, as a general rule, government actions that compel speech are usually subject to strict scrutiny. To survive strict scrutiny, the government must show that the challenged action is "narrowly tailored to serve compelling state interests." Laws are unlikely to meet this "stringent standard." Second, as discussed above, government actions regulating commercial speech generally receive only intermediate scrutiny. The intermediate scrutiny standard, pursuant to Central Hudson , requires a "substantial" state interest and requires the government to prove that the law "directly advances" that interest and "is not more extensive than is necessary to serve that interest." This standard is less demanding than strict scrutiny, but laws may still be struck down under this test. The final and most lenient category—one specific to commercial disclosure requirements—comes from a 1985 case, Zauderer v. Office of Disciplinary Counsel . In that case, the Supreme Court considered the constitutionality of state disciplinary rules regulating attorney advertising. As relevant here, the rules required advertisements referring to contingent-fee rates to disclose how the fee would be calculated. An attorney who had been disciplined by the state for violating these provisions argued that this disclosure requirement was unconstitutional because the state failed to meet the standards set out in Central Hudson . The Court acknowledged that it had previously held that prohibitions on commercial speech were subject to heightened scrutiny under Central Hudson , and that it had "held that in some instances compulsion to speak may be as violative of the First Amendment as prohibitions on speech." "But," the Court said, "[t]he interests at stake in this case are not of the same order as those" implicated in cases involving the compulsion of noncommercial speech. Instead, the Court noted that the state's provision only involved "commercial advertising, and its prescription has taken the form of a requirement that appellant include in his advertising purely factual and uncontroversial information about the terms under which his services will be available." In this commercial context, the Court said that the attorney's "constitutionally protected interest in not providing any particular factual information in his advertising is minimal," noting that in previous cases it had stated that states might "appropriately require[]" warnings or disclaimers "in order to dissipate the possibility of consumer confusion or deception." Rather than applying heightened scrutiny, the Court held that under these circumstances, "an advertiser's rights are adequately protected as long as disclosure requirements are reasonably related to the State's interest in preventing deception of consumers." The Zauderer Court did warn, however, that commercial disclosure requirements raise First Amendment concerns, observing that "unjustified or unduly burdensome disclosure requirements might offend the First Amendment by chilling protected commercial speech." But the Court rejected the contention that the disclosure requirement before it was unduly burdensome. Instead, the Court concluded that "[t]he State's position that it is deceptive to employ advertising that refers to contingent-fee arrangements without mentioning the client's liability for costs is reasonable enough to support a requirement that information regarding the client's liability for costs be disclosed." Although the state had not submitted evidence that clients were in fact being misled, the Court stated that "the possibility of deception" was "self-evident," making the state's "assumption that substantial numbers of potential clients would be . . . misled" regarding the terms of payment reasonable. Applying Zauderer Zauderer sets out the most lenient of the three standards of review discussed above, and, as a result, a commercial disclosure requirement is most likely to be upheld if it is reviewed under the rubric of that case. However, the Zauderer standard of review has been interpreted to apply only to certain types of disclosure requirements. As described by the Court and discussed above, the state regulation upheld in Zauderer required "purely factual and uncontroversial information about the terms under which [attorneys'] services [would] be available," and the provision was "reasonably related to the State's interest in preventing deception of consumers." Subsequent cases in both the Supreme Court and the lower courts have tested the extent to which this reasonableness review applies outside of the specific factual circumstances presented in Zauderer . Supreme Court Precedent The Supreme Court has decided whether to apply Zauderer review to government acts compelling commercial speech in three significant cases. First, in United States v. United Foods , decided in 2001, the Court invalidated a federal statute that compelled "handlers of fresh mushrooms to fund advertising for the product." United Foods thus involved a compelled subsidy, rather than a compelled disclosure. The Court concluded that these statutorily compelled subsidies for government-favored speech implicated the First Amendment and that "mandat[ing] support" from objecting parties was "contrary to . . . First Amendment principles." The Court held that Zauderer was inapplicable, noting that in the case before it, there was "no suggestion . . . that the mandatory assessments . . . are somehow necessary to make voluntary advertisements nonmisleading for consumers." By contrast, the Court applied Zauderer in a 2010 decision, Milavetz, Gallop & Milavetz, P.A. v. United States , another case concerning attorney advertising. In that case, the Court considered an attorney's First Amendment challenges to a federal statute that required "debt relief agencies" to "make certain disclosures in their advertisements." "Debt relief agencies" was a statutorily defined term covering some attorneys who provided clients with bankruptcy assistance. Among other things, agencies advertising "bankruptcy assistance services or . . . the benefits of bankruptcy" were required to disclose that they were "a debt relief agency" that "help[ed] people file for bankruptcy relief under the Bankruptcy Code." Rejecting the challenger's contention that Central Hudson 's intermediate scrutiny governed the disclosure requirement, the Court held instead that "the less exacting scrutiny described in Zauderer " governed its review. The Court concluded that the provision "share[d] the essential features of the rule at issue in Zauderer ." The disclosure requirement was "intended to combat the problem of inherently misleading commercial advertisements—specifically, the promise of debt relief without any reference to the possibility of filing for bankruptcy, which has inherent costs." Further, the law required the covered entities to provide "only an accurate statement identifying the advertiser's legal status and the character of the assistance provided." As in Zauderer , where the "possibility of deception" was "self-evident," the Court was not troubled by the lack of evidence that current advertisements were misleading. Instead, "evidence in the congressional record demonstrating a pattern of advertisements that hold out the promise of debt relief without alerting consumers to its potential cost" was "adequate." The Court ultimately upheld the disclosure requirement as "reasonably related to the [Government's] interest in preventing deception of consumers." Most recently, in 2018, the Court considered the application of Zauderer in NIFLA . That case involved two distinct disclosure requirements imposed by California's Reproductive Freedom, Accountability, Comprehensive Care, and Transparency Act (FACT Act), which regulated crisis pregnancy centers. First, the FACT Act required any " licensed covered facility" to notify clients that "California has public programs that provide immediate free or low-cost access to comprehensive family planning services (including all FDA-approved methods of contraception), prenatal care, and abortion for eligible women," and give the telephone number of the local social services office. Second, any " unlicensed covered facility" had to provide notice that the "facility is not licensed as a medical facility by the State of California and has no licensed medical provider who provides or directly supervises the provision of services." The Court first held that Zauderer 's reasonableness review did not apply to the licensed notice. In the Court's view, the notice was "not limited to 'purely factual and uncontroversial information about the terms under which . . . services will be available.'" The Court explained that the disclosure requirement "in no way relate[d] to the services that licensed clinics provide." The Court said that instead, the law "require[d] these clinics to disclose information about state -sponsored services—including abortion, anything but an 'uncontroversial' topic." The Court ultimately held that the licensed notice could not "survive even intermediate scrutiny." Turning to the unlicensed notice, the Court determined that it did not need to "decide whether the Zauderer standard applies to the unlicensed notice" because the disclosure requirement failed scrutiny even under Zauderer . The Court said that "under Zauderer , a disclosure requirement cannot be 'unjustified or unduly burdensome.'" The Court interpreted this statement to require that the government prove it was seeking "to remedy a harm that is 'potentially real, not purely hypothetical.'" Based on the record on appeal, the Court found that California's stated interest in "ensuring that pregnant women in California know when they are getting medical care from licensed professionals" was "purely hypothetical." Further, the Court held in the alternative that "[e]ven if California had presented a nonhypothetical justification for the unlicensed notice, the FACT Act unduly burden[ed] protected speech" by requiring a government statement to be placed in all advertisements, regardless of an advertisement's length or content. The Court also expressed concern that the unlicensed notice "target[ed]" certain speakers in imposing those burdens by focusing on "facilities that primarily provide 'pregnancy-related' services." Defining a Zauderer Disclosure While the Supreme Court has emphasized that Zauderer 's reasonableness review is available only for certain types of compelled commercial disclosures, lower courts have disagreed on the precise circumstances required to apply Zauderer . A few requirements have emerged in the case law. First, courts agree that to qualify for review under Zauderer , a commercial disclosure requirement must compel speech that is "factual and uncontroversial." Next, the disclosure must be related to the goods or services the speaker provides. Finally, courts have disagreed on the type of government interest that may be asserted to justify a Zauderer -eligible regulation: while Zauderer itself approved of the challenged disclosure requirement after concluding that the state was permissibly seeking to "prevent[] deception of consumers," lower courts have sometimes applied Zauderer review even where the regulation is not specifically intended to prevent deception. Before discussing the particulars of these requirements, it is worth noting that these elements are related to the Court's overarching justifications for affording the government more leeway to regulate commercial speech. The seminal Supreme Court case establishing that commercial speech is protected by the First Amendment, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council , tied commercial speech's value to its ability to inform consumers. Critically, the Court said that governments could continue to ban false or misleading commercial speech , noting in another case that "the public and private benefits from commercial speech derive from confidence in its accuracy and reliability." It was against this background that the Court in Zauderer concluded that the provision requiring the disclosure of factual information about contingent fee arrangements did not involve First Amendment interests "of the same order as those" involved in other cases involving the compulsion of noncommercial speech. Accordingly, the state acted reasonably by prescribing that attorneys had to include in their advertising "purely factual and uncontroversial information about the terms under which [their] services [would] be available." Factual and Uncontroversial The first element for a commercial disclosure requirement to be eligible for Zauderer review is that the government regulation must require the disclosure of "factual and uncontroversial" information. The two parts of Zauderer's initial requirement are often evaluated as one, although courts have sometimes pointed out that "factual" and "uncontroversial," logically, connote two different things. Viewing the two words together, some have characterized the "factual and uncontroversial" requirement as distinguishing regulations that compel the disclosure of facts from those that compel individuals to state opinions or ideologies. As discussed, the Supreme Court has said that the value of commercial speech largely lies in its ability to inform consumers. And in Zauderer , the Court emphasized that because protection for commercial speech is justified by its informational value, the attorney challenging the disclosure requirement had a "minimal" First Amendment interest "in not providing any particular factual information in his advertising." As the Second Circuit has explained: Commercial disclosure requirements are treated differently from restrictions on commercial speech because mandated disclosure of accurate, factual, commercial information does not offend the core First Amendment values of promoting efficient exchange of information or protecting individual liberty interests. Such disclosure furthers, rather than hinders, the First Amendment goal of the discovery of truth and contributes to the efficiency of the "marketplace of ideas." Protection of the robust and free flow of accurate information is the principal First Amendment justification for protecting commercial speech, and requiring disclosure of truthful information promotes that goal. In such a case, then, less exacting scrutiny is required than where truthful, nonmisleading commercial speech is restricted. In this vein, the Supreme Court upheld disclosure requirements regarding the nature of contingent fee arrangements in Zauderer and statements clarifying the nature of the bankruptcy-related assistance provided by debt relief agencies in Milavetz . Lower courts have approved as "factual and uncontroversial" within the meaning of Zauderer a variety of other commercial disclosure requirements, including regulations requiring the disclosure of: country-of-origin information for meat; calorie information at restaurants; the fact that products contain mercury; and textual and graphic warnings about the health risks of tobacco products. By contrast, in a 2015 opinion, the D.C. Circuit concluded that a federal regulation requiring firms to disclose whether their products used "conflict minerals" that originated "in the Democratic Republic of the Congo or an adjoining country" could not be characterized as factual and uncontroversial. The court said that "[t]he label '[not] conflict free' is a metaphor that conveys moral responsibility for the Congo war. . . . An issuer, including an issuer who condemns the atrocities of the Congo war in the strongest terms, may disagree with that assessment of its moral responsibility. . . . By compelling an issuer to confess blood on its hands, the statute interferes with that exercise of the freedom of speech under the First Amendment." Similarly, the Seventh Circuit, in a 2006 opinion, held that disclosure requirements in a state law regulating sexually explicit video games were not "factual and uncontroversial" as required for Zauderer to apply. In relevant part, the law required "video game retailers to place a four square-inch label with the numerals '18' on any 'sexually explicit' video game," and to post signs and provide brochures "explaining the video game rating system." The court held first that the sticker "ultimately communicates a subjective and highly controversial message—that the game's content is sexually explicit." Similarly, the panel concluded that "the message" communicated by the signs and brochures was "neither purely factual nor uncontroversial" because it was "intended to communicate that any video games in the store can be properly judged pursuant to the standards described in the . . . ratings." As mentioned above, some courts have treated "factual" and "uncontroversial" as two distinct requirements. But at times, courts have struggled to define "controversial," standing alone. The D.C. Circuit has suggested that controversial must mean that a disclosure "communicates a message that is controversial for some reason other than dispute about simple factual accuracy." One trial court interpreting a decision of the Second Circuit suggested that "it is the nature of the regulation of compelled speech that controls, not the nature of the legislative debate that gave rise to its enactment." That court then noted that other courts had equated controversial messages with disclosures that are "opinion-based." Courts have disagreed about whether a disclosure may be characterized as "controversial" because it is "inflammatory" or "evoke[s] an emotional response." In NIFLA , the Supreme Court struck down the licensed notice after noting that the required disclosures related to "abortion, anything but an 'uncontroversial' topic," although it did not further explain when a topic is "uncontroversial" for purposes of Zauderer. Related to Speaker's Services Second, to be eligible for review under Zauderer , a commercial disclosure requirement must be related to the services provided by the speaker. In Zauderer itself, the Court had noted that the disputed disclosure required the attorney to provide information in his advertising "about the terms under which his services will be available." By and large, lower courts, at least prior to NIFLA, had not treated this relationship to the speaker's services as a distinct requirement. The Court in NIFLA , however, said that this was a necessary prerequisite for Zauderer review and held in that case that the notice requirement for licensed clinics at issue was not "relate[d] to the services that licensed clinics provide" because it instead provided information "about state -sponsored services." Intended to Prevent Deception Judges have disagreed on whether there exists a third requirement for Zauderer review. In Zauderer itself, the Supreme Court noted that the disclosure requirements at issue in that case were intended to "prevent[] deception of customers." Further, when applying Zauderer review to the bankruptcy-related disclosures at issue in Milavetz , the Court stated that the disclosures were "intended to combat the problem of inherently misleading commercial advertisements." Perhaps most notably, in United Foods , the Court explained its decision not to apply Zauderer by noting that there was "no suggestion" that the compelled subsidies at issue in that case were "somehow necessary to make voluntary advertisements nonmisleading for consumers." The Supreme Court's decisions applying Zauderer have thus suggested that one factor in deciding whether to apply this "reasonably related" review is whether the targeted commercial speech is misleading, or whether the state's interest in requiring the disclosure is to prevent "consumer confusion or deception." Nonetheless, the Court has not squarely held that this is a necessary condition for Zauderer review, and several lower courts have rejected this position. The D.C. Circuit concluded that Zauderer 's justification characterizing "the speaker's interest in opposing forced disclosure of such information as 'minimal' seems inherently applicable beyond" the state's "interest in remedying deception." The Second Circuit has also held that Zauderer review applies more broadly. In rejecting a litigant's argument that the Supreme Court's decision in United Foods limited Zauderer only to laws intended to prevent consumer deception, the Second Circuit said that United Foods "simply distinguishes Zauderer on the basis that the compelled speech in Zauderer was necessary to prevent deception of consumers; it does not provide that all other disclosure requirements are subject to heightened scrutiny." Zauderer Review If a commercial disclosure requirement involves only "purely factual and uncontroversial information" about the goods or services being sold, and is therefore eligible for review under Zauderer , then it will be constitutional so long as the disclosure requirement is "reasonably related" to the government's interest. This reasonableness review is relatively lenient, especially as compared with the standards that would otherwise apply to compelled speech. But, as emphasized in NIFLA , even under Zauderer , "unjustified or unduly burdensome disclosure requirements might offend the First Amendment by chilling protected commercial speech." Lower courts had previously come to different conclusions regarding whether "unjustified or unduly burdensome" presented an additional inquiry, to be conducted separately from the reasonableness inquiry otherwise prescribed by Zauderer , or whether instead this inquiry was subsumed by the "reasonably related" inquiry. NIFLA did not entirely resolve this issue, although it did frame its analysis using the "unjustified or unduly burdensome" language rather than the language of rational basis review. Government Interest In Zauderer , the Supreme Court upheld the contingent fee disclosure after concluding that the requirement was "reasonably related to the State's interest in preventing deception of consumers." But as noted above, lower courts have largely concluded that Zauderer 's reasonableness review may govern the analysis even when the government asserts an interest other than preventing consumer deception. The D.C. Circuit has, so far, largely declined to articulate a clear standard for "what type of interest might suffice." That court did conclude in one case that where the government's interest was "substantial under Central Hudson 's standard," that would qualify as a sufficient interest under Zauderer . Perhaps taking a different approach, in a case upholding a disclosure requirement under Zauderer , the Second Circuit described the state's interest as "legitimate and significant." Other than "the interest in correcting misleading or confusing commercial speech," the federal courts of appeals have upheld commercial disclosure requirements where the government asserted interests in food safety, preventing obesity, "protecting human health and the environment from mercury poisoning," and in protecting health benefit providers "from questionable . . . business practices." By contrast, the Second Circuit held in International Dairy Foods Association v. Amestoy that "consumer curiosity alone is not a strong enough state interest to sustain the compulsion of even an accurate, factual statement." In NIFLA , the Supreme Court indicated that under Zauderer , the government must assert an interest that is "more than 'purely hypothetical.'" As discussed above, the State of California's justification for the notice requiring unlicensed clinics to disclose that they were unlicensed was to "ensur[e] that pregnant women in California know when they are getting medical care from licensed professionals." The Court concluded that the state had "point[ed] to nothing suggesting that pregnant women do not already know that the covered facilities are staffed by unlicensed medical professionals." NIFLA 's requirement that the government provide evidence supporting an asserted interest differs from the Court's approach in Zauderer itself and in Milavetz . In both Zauderer and Milavetz , the Court rejected arguments that the government had failed to present sufficient evidence to support its interest in the disclosure requirement, concluding that in both of those cases, "the possibility of deception" in the regulated advertisements was "self-evident." Although the standard is not entirely clear, it is possible that in future cases the Court could conclude again that a particular advertisement is so obviously deceptive that the government does not need to submit significant evidence proving that the advertisements are misleading. "Reasonably Related" If the government has asserted a sufficient interest, then under Zauderer , it needs to show only that the disputed disclosure requirement is "reasonably related" to that interest. Describing the Supreme Court's decision in Zauderer , the D.C. Circuit has said that the "evidentiary parsing" required by more rigorous First Amendment tests "is hardly necessary when the government uses a disclosure mandate to achieve a goal of informing consumers about a particular product trait, assuming of course that the reason for informing consumers qualifies as an adequate interest." That court further elaborated that "[t]he self-evident tendency of a disclosure mandate to assure that recipients get the mandated information may in part explain why, where that is the goal, many such mandates have persisted for decades without anyone questioning their constitutionality." Similarly, the Second Circuit has observed in one case that "while the First Amendment precludes the government from restricting commercial speech without showing that 'the harms it recites are real and that its restriction will in fact alleviate them to a material degree,'" the First Amendment "does not demand 'evidence or empirical data' to demonstrate the rationality of mandated disclosures in the commercial context." Notwithstanding the suggestion that little evidence is required to show that a disclosure requirement is reasonably related to an appropriate government interest, lower courts have often relied on the government's evidence supporting the disputed requirement when they uphold the provision. This showing may be easiest where the government asserts an interest in preventing misleading speech, given "the self-evident tendency of a disclosure mandate to assure that recipients get the mandated information." Additionally, courts have sometimes held that commercial disclosure requirements fail even this lenient test for rationality, particularly where the government has asserted an interest other than preventing consumer confusion. For example, in National Association of Manufacturers v. SEC , the D.C. Circuit held that a provision requiring companies to disclose whether their products were "conflict free" violated the First Amendment. In defending this rule, the government asserted an interest in "ameliorat[ing] the humanitarian crisis in the [Democratic Republic of the Congo (DRC)]." In the court's view, however, the government had failed to demonstrate that its measure would achieve this interest. The D.C. Circuit observed that the government had "offered little substance beyond" statements by political officials to support "the effectiveness of the measure." The court assumed that the government's theory "must be that the forced disclosure regime will [lead to boycotts that] decrease the revenue of armed groups in the DRC and their loss of revenue will end or at least diminish the humanitarian crisis there." But in the view of the court, this theory could not justify the regulation, as the idea was "entirely unproven and rest[ed] on pure speculation." To take another example, the Third Circuit struck down a commercial disclosure requirement concerning attorney advertising in Dwyer v. Cappell . In that case, an attorney challenged a state regulation that prohibited attorneys from using quotations from judicial opinions in their advertising unless they presented "the full text" of those opinions. The state argued that such quotations were "inherently misleading because laypersons . . . would understand them to be judicial endorsements." The court, however, said that even assuming "that excerpts of judicial opinions are potentially misleading to some persons," the state had failed "to explain how [an attorney's] providing a complete judicial opinion somehow dispels this assumed threat of deception." The court reasoned that "providing a full judicial opinion does not reveal to a potential client that an excerpt of the same opinion is not an endorsement." Additionally, the court held that the disputed requirement was "unduly burdensome," as it "effectively rules out the possibility that [an attorney] can advertise with even an accurately quoted excerpt of a judicial statement about his abilities." And in the view of the Third Circuit, "that type of restriction—an outright ban on advertising with judicial excerpts—would properly be analyzed under the heightened Central Hudson standard of scrutiny." As Dwyer suggests, courts may strike down disclosure requirements under Zauderer if the requirement is "unduly burdensome." In NIFLA , the Supreme Court held that the unlicensed notice was likely unconstitutional because it "unduly burden[ed] protected speech," noting that it applied to all advertisements for these licensed facilities, regardless of their content. In particular, the majority opinion highlighted one hypothetical discussed at oral argument, noting that "a billboard for an unlicensed facility that says 'Choose Life' would have to surround that two-word statement with a 29-word statement from the government, in as many as 13 different languages." In this instance, the Court said, the notice would "drown[] out the facility's own message," and therefore be unduly burdensome. Heightened Standards: Central Hudson and Strict Scrutiny If a commercial disclosure requirement is not a factual and uncontroversial disclosure related to the speaker's goods or services under Zauderer , courts will likely apply a heightened standard of review. Under prevailing Supreme Court precedent, if a provision does not qualify for Zauderer 's reasonableness review, a court may review the challenged regulation under Central Hudson . As discussed above, Central Hudson established the general standard of review for government restrictions on commercial speech. The Supreme Court described "a four-part analysis:" At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest. The Court has described the Central Hudson test as "intermediate" scrutiny. If a disclosure requirement affects commercial speech but does not qualify for Zauderer review, courts have generally held that Central Hudson 's intermediate scrutiny applies. However, courts have sometimes suggested that some higher standard of review, more stringent than Central Hudson 's intermediate scrutiny, should apply to commercial disclosure requirements that do not qualify for review under Zauderer . Some lower court judges have concluded that because such disclosures compel particular speech and are by definition not content-neutral, they should be evaluated under strict scrutiny. In contrast to Central Hudson review, which requires the government to show that a law is "not more extensive than is necessary to serve" a "substantial" interest, strict scrutiny "requires the Government to prove that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest." The Supreme Court has suggested—but not squarely held—that at least some types of commercial disclosure requirements might be subject to some form of scrutiny more strict than Central Hudson . In NIFLA , the Supreme Court considered the constitutionality of state provisions requiring crisis pregnancy centers to make certain disclosures to clients and in their advertising. The Court suggested that the provision requiring licensed facilities to disseminate notices about state-provided services might be subject to strict scrutiny as a content-based regulation of speech, but concluded that it did not need to resolve that question because the notice could not "survive even intermediate scrutiny." Significantly, however, the NIFLA Court never described the licensed notice as involving commercial speech. In the decision below, the Ninth Circuit had held that the notice should not be subject to strict scrutiny because it regulated "professional speech." That court, like other federal courts of appeals, had recognized "speech that occurs between professionals and their clients in the context of their professional relationship" "as a separate category of speech that is subject to different rules." The Ninth Circuit had concluded that speech that was part of the practice of a profession could be regulated by the state, subject only to intermediate scrutiny. The Court rejected this idea, saying that the First Amendment does not encompass a tradition of lower scrutiny "for a category called 'professional speech.'" Ultimately, the Court said that it saw no "persuasive reason" to treat "professional speech as a unique category that is exempt from ordinary First Amendment principles." To the extent that "professional speech" could be seen to overlap with commercial speech, this sentence could be read to suggest that commercial speech should also be subject to "ordinary First Amendment principles." This suggestion would seem to conflict with prior cases saying that commercial speech occupies a "subordinate position in the scale of First Amendment values." Although the NIFLA Court implicitly suggested that disclosure requirements for professionals might constitute commercial speech by evaluating the FACT Act's requirements under Zauderer and Central Hudson , it never expressly clarified whether "professional speech" overlaps with commercial speech. Because the FACT Act's requirements applied outside of the advertising context, it may be open to some debate whether these licensed notices involved commercial speech. The unlicensed notice challenged in NIFLA was required to be included in advertising, and advertisements are "classic examples of commercial speech." But the unlicensed notice was also required to be posted on-site, and the state required licensed facilities to post disclosures on-site or to otherwise distribute the notice to clients directly. Further, in a similar context, at least one federal court of appeals concluded that a Baltimore ordinance requiring certain pregnancy centers to make specified disclosures regulated noncommercial speech. That court said the pregnancy centers were not motivated by economic interest or proposing a commercial transaction, but were instead "provid[ing] free information about pregnancy, abortion, and birth control as informed by a religious and political belief." If the licensed disclosures in NIFLA did not regulate commercial speech, then it would be unsurprising that the Court would consider applying strict scrutiny rather than Central Hudson . Others, however, have pointed out that crisis pregnancy centers, even if they do not charge fees, operate "in a marketplace where other providers generally charge fees," and argued that these centers "are engaged in commercial activity by providing physical and mental health services to pregnant women." And more generally, some have pointed out the similarities between "professional" and commercial speech. The fact that the NIFLA Court did not directly address the relationship between professional and commercial speech may suggest that heightened scrutiny may be necessary with respect to some commercial disclosure requirements. Specifically, the Court did not cite the commercial speech doctrine as "a persuasive reason for treating professional speech as a unique category that is exempt from ordinary First Amendment principles." At least one commentator has argued that the Court's failure to mention Central Hudson —"not even to dismiss it as . . . another inapposite exception to Reed 's general rule [of strict scrutiny]"—may suggest that the Court is seeking to limit Central Hudson 's holding that commercial speech may be more freely regulated than other speech under the First Amendment. Although NIFLA may not have expressly altered the framework used to evaluate commercial disclosure requirements, it may nonetheless signal that the Supreme Court will view them with more skepticism in the future. The majority opinion, authored by Justice Thomas, emphasized that "[t]he dangers associated with content-based regulations of speech are also present in the context of professional speech." Even if "professional speech" is not coterminous with "commercial speech," this statement does seem to suggest that the Court believes content neutrality principles are relevant in the commercial sphere. In dissent, Justice Breyer, viewing the majority opinion as adopting such a view, argued that the majority's approach, "if taken literally, could radically change prior law, perhaps placing much securities law or consumer protection law at constitutional risk." He pointed out that "[v]irtually every disclosure law could be considered 'content based,' for virtually every disclosure law requires individuals 'to speak a particular message.'" In response to Justice Breyer, the NIFLA majority stated that it did not "question the legality of health and safety warnings long considered permissible, or purely factual and uncontroversial disclosures about commercial products." This view echoed the Court's prior statement that "[p]urely commercial speech is more susceptible to compelled disclosure requirements." Following the Court's 2010 decision in Reed , in which the Court articulated a more "precise test to determine whether speech regulations are content based," many lower courts had rejected the idea that content-based requirements affecting only commercial speech should be subject to strict scrutiny, even if they otherwise discriminated based on content under Reed . But because NIFLA appeared to suggest that content neutrality is relevant in the commercial sphere, it seems reasonable to think that lower courts may now be more likely to conclude that strict scrutiny could apply to content-based commercial disclosure requirements. This would be consistent with what some commentators have described as the Court's increasingly heightened scrutiny of restrictions on commercial speech. For now, though, Central Hudson generally continues to govern the analysis of government actions affecting lawful, non-misleading commercial speech, including commercial disclosure requirements that do not qualify for Zauderer review. As discussed, Central Hudson requires that the government prove that its interest is "substantial," and that the regulation "directly advances" that interest and is "not more extensive than is necessary to serve that interest." Government regulations are more likely to fail this more rigorous standard than the Zauderer reasonableness standard, often because a court believes there is some less restrictive means available for the government to achieve its goals. Courts will require more "evidence of a measure's effectiveness" under Central Hudson , as compared to Zauderer . However, Central Hudson is more forgiving than strict scrutiny, and courts do uphold government actions infringing on commercial speech under Central Hudson . For example, in Spirit Airlines v. Department of Transportation , the D.C. Circuit concluded that a federal regulation governing the way that airlines must display flight prices "satisfie[d] . . . the Central Hudson test." In the court's view, "[t]he government interest—ensuring the accuracy of commercial information in the marketplace—[was] clearly and directly advanced by a regulation requiring that the total, final price be the most prominent" price displayed. And the regulation was "reasonably tailored to accomplish that end" because the rule "simply regulate[d] the manner of disclosure." Government actions are unlikely to be upheld if a court applies strict scrutiny. Nonetheless, some scholars have argued that many disclosure requirements might survive strict scrutiny, and the Supreme Court has, in rare instances, said that the government may "directly regulate speech to address extraordinary problems, where its regulations are appropriately tailored to resolve those problems without imposing an unnecessarily great restriction on speech." It is possible that a court could hold that the government has a compelling interest in protecting consumers, for example, and that particular disclosures are narrowly tailored to meet that interest. The Supreme Court has long emphasized that the government can regulate commercial activity "deemed harmful to the public." But a court would likely require more proof from the government under strict scrutiny and likely would not simply accept the government's allegations as "self-evident" under such review. Considerations for Congress Congress has enacted a wide variety of disclosure requirements, many of which arguably compel commercial speech. For example, the Securities and Exchange Act of 1934 sets out disclosure requirements for registering securities. Federal law, among a host of other food labeling requirements, requires "bioengineered food" to bear a label disclosing that the food is bioengineered. Direct-to-consumer advertisements for prescription drugs must contain a series of disclosures, including the drug's name and side effects. Certain appliances must contain labels disclosing information about their energy efficiency. Bills in the 115 th and 116 th Congresses have proposed additional disclosure requirements, including a bill that would require large online platforms to disclose any studies conducted on users for the purposes of promoting engagement, and a bill that would require public companies to disclose climate-related risks. Recent Supreme Court precedent suggests that the Court is more closely reviewing commercial disclosure requirements, perhaps moving away from a more deferential treatment of such provisions. In NIFLA , the Court held that a disclosure requirement was likely unconstitutional under Zauderer because the government had not presented sufficient evidence to justify the measure —even though in other cases, the Court had rejected similar challenges to commercial disclosure requirements, saying that the government did not need to present more evidence because the harm it sought to remedy was "self-evident." Further, the Court has recently suggested that if a law regulating commercial speech discriminates on the basis of content—as all disclosure requirements seemingly do —then this content discrimination might subject the law to heightened scrutiny. If the Court further embraces this view, it could be a marked departure from its opinions holding that commercial speech could be regulated on the basis of its content, so long as the government's justification for the content discrimination were sufficiently related to its legitimate interests in regulating the speech. In concurring and dissenting opinions that have been joined by other Justices, Justice Breyer has argued that insofar as the Court's recent decisions suggest that commercial disclosure requirements should be subject to heightened scrutiny, they are inconsistent with prior case law and are not a proper application of the First Amendment. The Supreme Court said in NIFLA that it was "not question[ing] the legality of health and safety warnings long considered permissible, or purely factual and uncontroversial disclosures about commercial products." And lower courts have frequently upheld commercial disclosure requirements, perhaps suggesting that disclosures of the kind cited by Justice Breyer are not in danger of wholesale invalidation under the First Amendment. However, the majority opinion in NIFLA did not clarify what kind of disclosures it would consider permissible, and its opinion made clear that disclosure requirements should be scrutinized in light of the speakers they cover and the burdens they pose. Moreover, although the NIFLA Court said that it was not questioning these disclosures' "legality," it left open the possibility that these disclosure should nonetheless be subject to heightened scrutiny. This statement may mean only that the Court believes that many commercial disclosure requirements would meet a higher standard of scrutiny. At least one federal appellate court seems to have taken NIFLA as a signal that lower courts should more closely scrutinize commercial disclosure requirements. In American Beverage Association v. City & County of San Francisco , the Ninth Circuit, sitting en banc , relied on NIFLA to reverse a prior decision that had upheld an ordinance requiring "health warnings on advertisements for certain sugar-sweetened beverages." While a panel of judges had previously concluded that the disclosure requirement was constitutional under Zauderer , the full Ninth Circuit, reviewing that decision, said: " NIFLA requires us to reexamine how we approach a First Amendment claim concerning compelled speech." Namely, the court held that, in light of NIFLA , the health warnings were likely unjustified and unduly burdensome under Zauderer , noting that the regulation required the warnings to "occupy at least 20% of those products' labels or advertisements"—but that the record showed that "a smaller warning—half the size—would accomplish [the government's] stated goals." As such, the court held that the warnings violated the First Amendment "by chilling protected speech." Accordingly, when Congress and federal agencies consider adopting new commercial disclosure requirements, or reauthorizing old ones, it may be wise to develop a record with more evidence demonstrating a need for the regulation. Under any level of scrutiny, courts will examine the government's asserted purpose for the legislation, as well as how closely tailored the disclosure requirement is to achieve that purpose. Under Zauderer , particularly in light of NIFLA , courts may ask for evidence to support the government's claim that the regulated speech is misleading or that the government has some other interest in regulating that speech, and will likely scrutinize the disclosure requirement to make sure it is not unduly burdensome. Under intermediate scrutiny or strict scrutiny, a court may also ask whether the government considered alternative policies that would be less restrictive of speech, examining more closely the government's justifications for choosing a disclosure requirement.

Federal law contains a wide variety of disclosure requirements, including food labels, securities registrations, and disclosures about prescription drugs in direct-to-consumer advertising. These disclosure provisions require commercial actors to make statements that they otherwise might not, compelling speech and implicating the Free Speech Clause of the First Amendment. Nonetheless, while commercial disclosure requirements may regulate protected speech, that fact in and of itself does not render such provisions unconstitutional. The Supreme Court has historically allowed greater regulation of commercial speech than of other types of speech. Since at least the mid-1970s, however, the Supreme Court has been increasingly protective of commercial speech. This trend, along with other developments in First Amendment law, has led some commentators to question whether the Supreme Court might apply a stricter test in assessing commercial disclosure requirements in the near future. Nonetheless, governing Supreme Court precedent provides that disclosure requirements generally receive lesser judicial scrutiny when they compel only commercial speech, as opposed to noncommercial speech. In National Institute of Family and Life Advocates v. Becerra, a decision released in June 2018, the Supreme Court explained that it has applied a lower level of scrutiny to compelled disclosures under two circumstances. First, the Supreme Court has sometimes upheld laws that regulate commercial speech if the speech regulation is part of a larger regulatory scheme that is focused on conduct and only incidentally burdens speech. If a law is properly characterized as a regulation of conduct, rather than speech, then it may be subject to rational basis review, a deferential standard that asks only whether the regulation is a rational way to address the problem. However, it can be difficult to distinguish speech from conduct, and the Supreme Court has not frequently invoked this doctrine to uphold laws against First Amendment challenges. Second, the Supreme Court has sometimes applied a lower level of scrutiny to certain commercial disclosure requirements under the authority of a 1985 case, Zauderer v. Office of Disciplinary Counsel. In Zauderer, the Court upheld a disclosure requirement after noting that the challenged provision compelled only "factual and uncontroversial information about the terms under which . . . services will be available." The Court said that under the circumstances, the service provider's First Amendment rights were sufficiently protected because the disclosure requirement was "reasonably related" to the government's interest "in preventing deception of consumers." Lower courts have generally interpreted Zauderer to mean that if a commercial disclosure provision requires only "factual and uncontroversial information" about the goods or services being offered, it should be analyzed under rational basis review. If a commercial disclosure requirement does not qualify for review under Zauderer, then it will most likely be analyzed under the intermediate standard that generally applies to government actions that regulate commercial speech. Some legal scholars have argued that recent Supreme Court case law suggests the Court may subject commercial disclosure provisions to stricter scrutiny in the future, either by limiting the factual circumstances under which these two doctrines apply or by creating express exceptions to these doctrines. If a court applies a heightened level of scrutiny, it may require the government to present more evidence of the problem it is seeking to remedy and stronger justifications for choosing a disclosure requirement to achieve its purposes.

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Why Is This Issue Important to Congress? The Army's Optionally Manned Fighting Vehicle (OMFV) is expected to be the third attempt to replace the M-2 Bradley Infantry Fighting Vehicle (IFV) which has been in service since the early 1980s. Despite numerous upgrades since its introduction, the Army contends the M-2 is near the end of its useful life and can no longer accommodate the types of upgrades needed for it to be effective on the modern battlefield. Because the OMFV would be an important weapon system in the Army's Armored Brigade Combat Teams (ABCTs), Congress may be concerned with how the OMFV would impact the effectiveness of ground forces over the full spectrum of military operations. Moreover, Congress might also be concerned with how much more capable the OMFV is projected to be over the M-2 to ensure that it is not a costly marginal improvement over the current system. A number of past unsuccessful Army acquisition programs have served to heighten congressional oversight of Army programs, and the OMFV will likely be subject to a high degree of congressional interest. In addition to these primary concerns, how the Army plans to use the new congressionally-granted Section 804 Middle Tier Acquisition Authority as well as overall program affordability could be potential oversight issues for Congress. The Next Generation Combat Vehicle (NGCV) Becomes the Optionally Manned Fighting Vehicle (OMFV) In June 2018, the Army established the Next Generation Combat Vehicle (NGCV) program to replace the M-2 Bradley Infantry Fighting Vehicle (IFV), which has been in service since the early 1980s. In October 2018, Army leadership reportedly decided to redesignate the NGCV as the Optionally Manned Fighting Vehicle (OMFV) and add additional vehicle programs to what would be called the NGCV Program. Under the new NGCV Program, the following systems are planned for development: The Optionally Manned Fighting Vehicle (OMFV) : the M-2 Bradley IFV replacement. The Armored Multi-Purpose Vehicle (AMPV) : the M-113 vehicle replacement. Mobile Protected Firepower (MPF) : a light tank for Infantry Brigade Combat Teams (IBCTs). Robotic Combat Vehicles (RCVs) : three versions, Light, Medium, and Heavy. The Decisive Lethality Platform (DLP) : the M-1 Abrams tank replacement. Two programs—AMPV and MPF—are in Low Rate Initial Production (LRIP) and Prototype Development, respectively. Reportedly, the AMPV and MPF programs, which were overseen by Program Executive Office (PEO) Ground Combat Systems, will continue to be overseen by PEO Ground Combat Systems, but the NGCV Cross Functional Team (CFT) will determine their respective operational requirements and acquisition schedule. Report Focus on OMFV Because AMPV and MPF are discussed in earlier CRS reports and the OMFV is in the early stages of development, the remainder of this report focuses on the OMFV and associated RCVs. Because the DLP is intended to replace the Army's second major ground combat system—the M-1 Abrams Tank—it will be addressed in a separate CRS report in the future. Preliminary OMFV Requirements5 The Army's preliminary basic operational requirements for the OMFV include the following: Optionally manned . It must have the ability to conduct remotely controlled operations while the crew is off-platform. Capacity. It should eventually operate with no more than two crewmen and possess sufficient volume under armor to carry at least six soldiers. Transportability . Two OMFVs should be transportable by one C-17 and be ready for combat within 15 minutes. Dense urban terrain operations and mobility . Platforms should include the ability to super elevate weapons and simultaneously engage threats using main gun and an independent weapons system. Protection. It must possess requisite protection to survive on the contemporary and future battlefield. Growth. It should possess sufficient size, weight, architecture, power, and cooling for automotive and electrical purposes to meet all platform needs and allow for preplanned product improvements. Lethality. It should apply immediate, precise, and decisively lethal extended range medium-caliber, directed energy, and missile fires in day/night/all-weather conditions, while moving and/or stationary against moving and/or stationary targets. The platform should allow for mounted, dismount, and unmanned system target handover. Embedded p latform t raining . It should have embedded training systems that have interoperability with the Synthetic Training Environment. Sustainability. Industry should demonstrate innovations that achieve breakthroughs in power generation and management to obtain increased operational range and fuel efficiency, increased silent watch, part and component reliability, and significantly reduced sustainment burden. Additional requirements include the capacity to accommodate reactive armor, an Active Protection System (APS), artificial intelligence, and Directed-energy weapons and advanced target sensors. Background The Army's Current Infantry Fighting Vehicle (IFV) The M-2 Bradley is an Infantry Fighting Vehicle (IFV) used to transport infantry on the battlefield and provide fire support to dismounted troops and suppress or destroy enemy fighting vehicles. The M-2 has a crew of three—commander, gunner, and driver—and carries seven fully equipped infantry soldiers. M-2 Bradley IFVs are primarily found in the Army's Armored Brigade Combat Teams (ABCT). The first M-2 prototypes were delivered to the Army in December 1978, and the first delivery of M-2s to units started in May 1981. The M-2 Bradley has been upgraded often since 1981, and the Army reportedly announced in January 2018 that it plans to undertake an upgrade to the M-2A5 version planned for the mid-2020s. M-2 Limitations and the Need for a Replacement Despite numerous upgrades over its lifetime, the M-2 Bradley has what some consider a notable limitation. Although the M-2 Bradley can accommodate seven fully equipped infantry soldiers, infantry squads consist of nine soldiers. As a result, "each mechanized [ABCT] infantry platoon has to divide three squads between four Bradleys, meaning that all the members of a squad are not able to ride in the same vehicle." This limitation raises both command and control and employment challenges for Bradley-mounted infantry squads and platoons. The M-2 Bradley first saw combat in 1991 in Operation Desert Storm, where its crews were generally satisfied with its performance. The M-2's service in 2003's Operation Iraqi Freedom (OIF) was also considered satisfactory. However, reports of vehicle and crew losses attributed to mines, improvised explosive devices (IEDs), and anti-tank rockets—despite the addition of reactive armor to the M-2—raised concerns about the survivability of the Bradley. Furthermore, the M-2 Bradley is reportedly reaching the technological limits of its capacity to accommodate new electronics, armor, and defense systems. By some accounts, M-2 Bradleys during OIF routinely had to turn off certain electronic systems to gain enough power for anti-roadside-bomb jammers. Moreover, current efforts to mount active protection systems (APS) on M-2 Bradleys to destroy incoming anti-tank rockets and missiles are proving difficult. Given its almost four decades of service, operational limitations, demonstrated combat vulnerabilities, and difficulties in upgrading current models, the M-2 Bradley is arguably a candidate for replacement. Past Attempts to Replace the M-2 Bradley IFV The Army has twice attempted to replace the M-2 Bradley IFV—first as part of the Future Combat System (FCS) Program, which was cancelled by the Secretary of Defense in 2009, and second with the Ground Combat Vehicle (GCV) Program, cancelled by the Secretary of Defense in 2014. These cancellations, along with a series of high-profile studies, such as the 2011 Decker-Wagner Army Acquisition Review, have led many to call into question the Army's ability to develop and field ground combat systems. Why the FCS and GCV Programs Were Cancelled FCS Introduced in 1999 by Army Chief of Staff General Eric Shinseki, FCS was envisioned as a family of networked, manned and unmanned vehicles, and aircraft for the future battlefield. The Army believed that advanced sensor technology would result in total battlefield awareness, permitting the development of lesser-armored combat vehicles and the ability to engage and destroy targets beyond the line-of-sight. However, a variety of factors led to the program's cancellation, including a complicated, industry-led management approach; the failure of a number of critical technologies to perform as envisioned; and frequently changing requirements from Army leadership—all of which resulted in program costs increasing by 25%. After $21.4 billion already spent and the program only in the preproduction phase, then Secretary Gates restructured the program in 2009, effectively cancelling it. GCV23 Recognizing the need to replace the M-2 Bradley, as part of the FCS "restructuring," the Army was directed by the Secretary of Defense in 2009 to develop a ground combat vehicle (GCV) that would be relevant across the entire spectrum of Army operations, incorporating combat lessons learned in Iraq and Afghanistan. In 2010, the Army, in conjunction with the Pentagon's acquisition office, conducted a review of the GCV program to "review GCV core elements including acquisition strategy, vehicle capabilities, operational needs, program schedule, cost performance, and technological specifications." This review found that the GCV relied on too many immature technologies, had too many performance requirements, and was required by Army leadership to have too many capabilities to make it affordable. In February 2014, the Army recommended terminating the GCV program and redirecting the funds toward developing a next-generation platform. The cost of GCV cancellation was estimated at $1.5 billion. After the Ground Combat Vehicle (GCV): The Next Generation Combat Vehicle (NGCV) Program In the aftermath of the GCV program, the Army embarked on a Future Fighting Vehicle (FFV) effort in 2015. Army officials—described as "cautious" and "in no hurry to initiate an infantry fighting vehicle program"—instead initiated industry studies to "understand the trade space before leaping into a new program." In general, Army combat vehicle modernization efforts post-FCS have been characterized as upgrading existing platforms as opposed to developing new systems. This was due in part to reluctance of senior Army leadership, but also to significant budgetary restrictions imposed on the Army during this period. Some in Congress, however, were not pleased with the slow pace of Army modernization, reportedly noting the Army was "woefully behind on modernization" and was "essentially organized and equipped as it was in the 1980s." In June 2018, in part due to congressional concerns, the Army announced a new modernization strategy and designated NGCVs as the second of its six modernization priorities. Originally, the NGCV was considered the program to replace the M-2 Bradley. Development of the NGCV would be managed by the Program Executive Officer (PEO) Ground Combat Systems, under the Assistant Secretary of the Army (ASA), Acquisition, Logistics, and Technology (ALT). Army Futures Command (AFC) and Cross-Functional Teams (CFTs) Army Futures Command29 In November 2017, the Army established a Modernization Task Force to examine the options for establishing an Army Futures Command (AFC) that would establish unity of command and effort as the Army consolidated its modernization process under one roof. Formerly, Army modernization activities were primarily spread among Forces Command (FORSCOM), Training and Doctrine Command (TRADOC), Army Materiel Command (AMC), Army Test and Evaluation Command (ATEC), and the Army Deputy Chief of Staff G-8. Intended to be a 4-star headquarters largely drawn from existing Army commands, AFC was planned to be established in an urban environment with ready access to academic, technological, and industrial expertise. On July 13, 2018, the Army announced that AFC would be headquartered in Austin, TX, and that it had achieved initial operating capability on July 1, 2018. According to the Army, when AFC reaches full operating capacity in summer 2019, the headquarters will comprise approximately 500 personnel (about 100 uniformed and 400 Army civilians). Sub-organizations, many of which currently reside within FORSCOM, TRADOC, and AMC, are to transition to AFC, but there are no plans to physically move units or personnel from these commands at the present time. Cross-Functional Teams (CFTs) Army Futures Command intends to use what it calls Cross-Functional Teams (CFT) as part of its mission, which includes the development of NGCV. As a means to "increase the efficiency of its requirements and technology development efforts, the Army established cross-functional team pilots for modernization" in October 2017. These CFTs are intended to leverage expertise from industry and academia; identify ways to use experimentation, prototyping, and demonstrations; and Identify opportunities to improve the efficiency of requirements development and the overall defense systems acquisition process. The eight CFTs are Long Range Precision Fires at Ft. Sill, OK; Next Generation Combat Vehicle at Detroit Arsenal, MI; Future Vertical Lift at Redstone Arsenal, AL; Network Command, Control, Communication, and Intelligence at Aberdeen Proving Ground, MD; Assured Positioning, Navigation and Timing at Redstone Arsenal, AL; Air and Missile Defense at Ft. Sill, OK; Soldier Lethality at Ft. Benning, GA; and Synthetic Training Environment in Orlando, FL. CFTs are to be a part of AFC. Regarding the NGCV, program acquisition authority is derived from Assistant Secretary of the Army (ASA) for Acquisition, Logistics, and Technology (ALT), who is also the senior Army Acquisition Executive (AAE), to whom the Program Executive Officers (PEOs) report. AFC is to be responsible for requirements and to support PEOs. The NGCV Program Manager (PM), who is subordinate to PEO Ground Combat Systems, is to remain under the control of ASA (ALT) but are to be teamed with CFTs under control of the AFC. The Government Accountability Office (GAO) notes, however Army Futures Command has not yet established policies and procedures detailing how it will execute its assigned mission, roles, and responsibilities. For example, we found that it is not yet clear how Army Futures Command will coordinate its responsibilities with existing acquisition organizations within the Army that do not directly report to it. One such organization is the Office of the Assistant Secretary of the Army for Acquisition, Logistics and Technology [ASA (ALT)]—the civilian authority responsible for the overall supervision of acquisition matters for the Army—and the acquisition offices it oversees. The Army's explanation of how the NGCV program is to be administered and managed, along with GAO's findings regarding AFC not yet having established policies and procedures, suggests a current degree of uncertainty as to how the NGCV program will be managed. Army's OMFV Acquisition Approach36 Figure 1 depicts the Department of Defense (DOD) Systems Acquisition Framework, which illustrates the various phases of systems development and acquisitions and is applicable to the procurement of Army ground combat systems. Original OMFV Acquisition Plan Reportedly, the original OMFV plan called for five years of Technology Development, starting in FY2019, and leading up to a FY2024 Milestone B decision to move the program into the Engineering and Manufacturing Development phase. If the Engineering and Manufacturing Development phase proved successful, the Army planned for a Milestone C decision to move the program into the Production and Deployment phase in FY2028, with the intent of equipping the first unit by FY2032. Secretary of the Army Accelerates the Program In April 2018, Secretary of the Army Mark Esper, noting that industry could deliver OMFV prototypes by FY2021, reportedly stated he wanted to accelerate the OMFV timeline. After examining a number of possible courses of action, the Army reportedly settled on a timeline that would result in an FY2026 fielding of the OMFV. This being the case, the Army reportedly will pursue a "heavily modified off-the-shelf model meaning a mature chassis and turret integrated with new sensors." Unofficially, some Army officials suggested they would like to see a 50 mm cannon on industry-proposed vehicles. Under this new acquisition approach, the Army plans to award up to two vendors three-year Engineering and Manufacturing Development (EMD) contracts in the first quarter of FY2020; if EMD is successful, make a Milestone C decision to move the program into the Production and Development phase in the third quarter of FY2023; and Equip first units in the first quarter of FY2026. Potential OMFV Candidates Reportedly, the Army plans eventually to award a production contract for up to 3,590 OMFVs to a single vendor. Although the Army reportedly expects five to seven vendors to compete for the OMFV EMD contract, three vendors have already showcased prospective platforms. BAE Systems BAE Systems is proposing its fifth-generation CV-90. The CV-90 was first fielded in Europe in the 1990s. The latest version mounts a 35 mm cannon provided by Northrop Grumman that can accommodate 50 mm munitions. The CV-90 also features the Israeli IMI Systems Iron Fist active protection system (APS), which is currently being tested on the M-2 Bradley. The CV-90 can accommodate a three-person crew and five infantry soldiers. General Dynamics Land Systems (GDLS) GDLS is proposing its Griffin III technology demonstrator, which uses the British Ajax scout vehicle chassis. The Griffin III mounts a 50 mm cannon and can accommodate an APS and host unmanned aerial vehicles (UAVs). The Griffin II can accommodate a two-person crew and six infantry soldiers. Raytheon/Rheinmetall Raytheon/Rheinmetall is proposing its Lynx vehicle. It can mount a 50 mm cannon and thermal sights, and can accommodate both APS and UAVs. Raytheon states that the Lynx can accommodate an entire nine-soldier infantry squad. Robotic Combat Vehicles (RCVs) and the OMFV As part of the revised NGCV Program, the Army plans to develop three RCV variants: Light, Medium, and Heavy. The Army reportedly envisions employing RCVs as "scouts" and "escorts" for manned OMFVs. RCVs could precede OMFVs into battle to deter ambushes and could be used to guard the flanks of OMFV formations. Initially, RCVs would be controlled by operators riding in NGCVs, but the Army hopes that improved ground navigation technology and artificial intelligence will permit a single operator to control multiple RCVs. The following sections provide a brief overview of each variant. Robotic Combat Vehicle–Light (RCV–L) The RCV–L is to be less than 10 tons, with a single vehicle capable of being transported by rotary wing assets. It should be able to accommodate an anti-tank guided missile (ATGM) or a recoilless weapon. It is also expected to have a robust sensor package and be capable of integration with UAVs. The RCV–L is considered to be "expendable." Robotic Combat Vehicle–Medium (RCV–M) The RCV–M is to be between 10 to 20 tons, with a single vehicle capable of being transported by a C-130 aircraft. It should be able to accommodate multiple ATGMs, a medium cannon, or a large recoilless cannon. It is also expected to have a robust sensor package and be capable of integration with UAVs. The RCV–M is considered to be a "durable" system and more survivable than the RCV–L. Robotic Combat Vehicle–Heavy (RCV–H) The RC–H is to be between 20 to 30 tons, with two vehicles capable of being transported by a C-17 aircraft. It is also expected to be able to accommodate an onboard weapon system capable of destroying enemy IFVs and tanks. It should also have a robust sensor package and be capable of integration with UAVs. The RCV–H is considered to be a "nonexpendable" system and more survivable than the other RCVs. RCV Acquisition Approach Reportedly, the Army does not have a formal acquisition approach for the RCV, but it plans to experiment from FY2020 to FY2023 with human interface devices and reconnaissance and lethality technologies. Reportedly, the Army plans to issue prototype contracts in November 2019. Depending on the outcome of experimentation with prototypes, the Army expects a procurement decision in FY2023. OMFV, RCV, and Section 804 Middle Tier Acquisition Authority Section 804 of the National Defense Authorization Act for FY2016 ( P.L. 114-92 ) provides authority to the Department of Defense (DOD) to rapidly prototype and/or rapidly field capabilities outside the traditional acquisition system. Referred to as "804 Authority," it is intended to deliver a prototype capability in two to five years under two distinct pathways: Rapid Prototyping or Rapid Fielding. One of the benefits of using 804 Authority is that the services can bypass the Joint Requirements Oversight Council (JROC) and the Joint Capabilities Integration Development Systems (JCIDS), two oversight bodies that, according to some critics, slow the acquisition process. Under Rapid Prototyping, the objectives are to field a prototype that can be demonstrated in an operational environment, and Provide for residual operational capability within five years of an approved requirement. Under Rapid Fielding, the objectives are to begin production within six months, and Complete fielding within five years of an approved requirement. For the OMFV program, the Army reportedly plans to use Rapid Prototyping under Section 804 to permit the program to enter at the EMD Phase, thereby avoiding a two- to three-year Technical Maturation Phase. Regarding the RCV program, the Army's Robotic Campaign Plan indicates that Section 804 authority is an "option" for RCV development. Concerns with Section 804 Authority While many in DOD have embraced the use of Section 804 authority, some have expressed concerns. Supporters of Section 804 authority contend that provides "an alternative path for systems that can be fielded within five years or use proven technologies to upgrade existing systems while bypassing typical oversight bodies that are said to slow the acquisition process." Critics, however, argue that "new rapid prototyping authorities won't eliminate the complexities of technology development." One former Under Secretary of Defense for Acquisition, Technology, and Logistics, Frank Kendall, reportedly warns What determines how long a development program takes is the product. Complexity and technical difficulty drive schedule. That can't be wished away. Requirements set by operators drive both complexity and technical difficulty. You have to begin there. It is possible to build some kinds of prototypes quickly if requirements are reduced and designs are simplified. Whether an operator will want that product is another question. It's also possible to set totally unrealistic schedules and get industry to bid on them. There is a great deal of history that teaches us that this is a really bad idea. Others contend that for this authority to work as intended, "maintaining visibility of 804 prototyping would be vital to ensure the authority is properly used" and that "developing a data collection and analytical process will enable DOD to have insight into how these projects are being managed and executed." In this regard, congressional oversight of programs employing Section 804 authority could prove essential to ensuring a proper and prudent use of this congressionally authorized authority. FY2020 OMFV and RCV Budget Request62 The Army requested $378 million in Research, Development, Test, and Evaluation (RDT&E) funding for the OMFV program and $109 million in RDT&E funding for the RCV in its FY2020 budget request. In terms of the OMFV, funding is planned to be used for, among other things, maturing technological upgrades for integration into the vehicle, including nondevelopmental active protection systems (APS), the XM 913 50 mm cannon, and the 3 rd Generation Forward Looking Infrared Radar (FLIR). FY2020 funding for RCVs is planned for finishing building prototypes of surrogate platforms and conducting manned-unmanned teaming evaluations. Potential Issues for Congress How Will the OMFV Program Avoid the Same Fate as the Cancelled FCS and GCV Programs? The OMFV is expected to be the Army's third attempt to replace the M-2 Bradley IFV after two costly previous attempts were cancelled, perhaps casting doubt on the Army's ability to design and field major ground combat systems. While many factors contributed to the cancelled FCS and GCV programs, two common problems were (1) overreliance on too many immature technologies, as well as the failure of some critical technologies, and (2) frequently changing performance requirements from Army leadership, resulting in increased program costs. Although the Army suggests that an emphasis on prototyping and the creation of the Army Futures Command (AFC) may remedy such problems, it can be argued these remedies are, at best, too general and lack specific measures necessary to ensure that past problems do not recur. To enhance program oversight and avoid potential problems in the OMFV program, Congress might consider requiring the Army to articulate the specific measures it will employ to mitigate technological challenges and leadership-generated "requirements creep." In terms of requirements, it may be beneficial to have answers to the following questions: Who in the Army will have input into OMFV performance requirements? Who in the Army adjudicates the inputs for OMFV performance requirements? Who in the Army will be responsible for the final decision on OMFV performance requirements? Understanding these standards could help policymakers conduct oversight in terms of overall OMFV program accountability, especially if requirements change over the lifecycle of the program. Army Futures Command's (AFC's) Role in OMFV and RCV Program Management One of the reasons cited for the failure of the FCS program was a "complicated program management approach." Program management of major defense systems typically involves a number of organizations and multiple authorities and processes. Even by those standards, however, program management of the OMFV and RCV programs is arguably overly complicated and somewhat ill-defined (see pages 6-7). Determining AFC's role in OMFV and RCV program management, and how it will relate to the ASA (ALT) and PEO Ground Combat Systems and other organizations, may be a work in progress; however, at some point, having a clearly established management structure with agreed authorities and responsibilities is likely to be essential for ultimate program success. Toward this end, Congress might consider examining, in detail, the Army's proposed program management structure and authorities and processes for OMFV and RCV to help ensure that program management will be efficient and effective, and not a programmatic detriment (as it was in the case of the FCS). The Relationship Between the OMFV and RCVs As previously noted, the Army envisions employing RCVs as "scouts" and "escorts" for manned OMFVs. In addition to enhancing OMFV survivability, RCVs could potentially increase the overall lethality of ABCTs. Army leadership has stated that the Army's first priority is replacing the Bradley with the OMFV, that the RCV will mature on a longer timeline than the OMFV, and that the OMFV will later be joined by the RCV. Given technological challenges, particularly autonomous ground navigation and artificial intelligence improvement, the Army's vision for RCV may not be achievable by the planned FY2026 fielding date or for many years thereafter. The Army describes the OMFV and RCV as "complementary" systems, but a more nuanced description of both the systematic and operational relationship between the two could be beneficial. While the OMFV appears to offer a significant improvement over the M-2 Bradley—given weapon systems technological advances by potential adversaries—operating alone without accompanying RCVs, the OMFV may offer little or marginal operational improvement over the M-2 Bradley. Recognizing the risks associated with a scenario where RCV fielding is significantly delayed or postponed due to technological challenges—along with a better understanding of the systematic and operational relationship between the OMFV and the RCV—could prove useful for policymakers. Another potential oversight question for Congress could be what is the role of Army Futures Command (AFC) in integrating requirements between OMFV and RCVs? Section 804 Authority and the OMFV To some, the use of Section 804 authority offers great promise in developing and fielding qualifying weapon systems quickly and cost-effectively. Others note that rapid prototyping authorities under Section 804 will not eliminate the complexities of technology development and that operational requirements also drive the complexity and technical difficulty of a project. In acknowledging the potential benefits that Section 804 authority could bring to the Army's third attempt to replace the M-2 Bradley, as well as the risks associated with its use over a more traditional acquisition approach, policymakers might decide to examine the potential costs, benefits, and risks associated with using Section 804 authority for the OMFV program.

In June 2018, in part due to congressional concerns, the Army announced a new modernization strategy and designated the Next Generation Combat Vehicle (NGCV) as the program to replace the M-2 Bradley. In October 2018, Army leadership decided to redesignate the NGCV as the Optionally Manned Fighting Vehicle (OMFV) and to add additional vehicle programs to what would be called the NGCV Program. The M-2 Bradley, which has been in service since 1981, is an Infantry Fighting Vehicle (IFV) used to transport infantry on the battlefield and provide fire support to dismounted troops and suppress or destroy enemy fighting vehicles. Updated numerous times since its introduction, the M-2 Bradley is widely considered to have reached the technological limits of its capacity to accommodate new electronics, armor, and defense systems. Two past efforts to replace the M-2 Bradley—the Future Combat System (FCS) Program and the Ground Combat Vehicle (GCV) Program—were cancelled for programmatic and cost-associated reasons. In late 2018, the Army established Army Futures Command (AFC), intended to establish unity of command and effort while consolidating the Army's modernization process under one roof. AFC is intended to play a significant role in OMFV development and acquisition. Hoping to field the OMFV in FY2026, the Army plans to employ Section 804 Middle Tier Acquisition Authority for rapid prototyping. The Army plans to develop, in parallel, three complementary classes of Robotic Combat Vehicles (RCVs) intended to accompany the OMFV into combat both to protect the OMFV and provide additional fire support. For RCVs to be successfully developed, problems with autonomous ground navigation will need to be resolved and artificial intelligence must evolve to permit the RCVs to function as intended. The Army has stated that a new congressionally-granted acquisition authority—referred to as Section 804 authority—might also be used in RCV development. The Army requested $378 million in Research, Development, Test, and Evaluation (RDT&E) funding for the OMFV program and $109 million in RDT&E funding for the RCV in its FY2020 budget request. Potential issues for Congress include the following: How will the OMFV program avoid the same fate as the cancelled FCS and GCV programs? What is the Army Futures Command's (AFC's) role in program management? What is the relationship between the OMFV and RCVs? What are some of the benefits and concerns regarding Section 804 authority and the OMFV?

crs_R45697

crs_R45697_0

Introduction The U.S. farm sector is vast and varied. It encompasses production activities related to traditional field crops (such as corn, soybeans, wheat, and cotton) and livestock and poultry products (including meat, dairy, and eggs), as well as fruits, tree nuts, and vegetables. In addition, U.S. agricultural output includes greenhouse and nursery products, forest products, custom work, machine hire, and other farm-related activities. The intensity and economic importance of each of these activities, as well as their underlying market structure and production processes, vary regionally based on the agro-climatic setting, market conditions, and other factors. As a result, farm income and rural economic conditions may vary substantially across the United States. Annual U.S. net farm income is the single most watched indicator of farm sector well-being, as it captures and reflects the entirety of economic activity across the range of production processes, input expenses, and marketing conditions that have prevailed during a specific time period. When national net farm income is reported together with a measure of the national farm debt-to-asset ratio, the two summary statistics provide a quick and widely referenced indicator of the economic well-being of the national farm economy. USDA's 2019 Farm Income Forecast In the first of three official U.S. farm income outlook releases scheduled for 2019, ERS projects that U.S. net farm income will rise slightly in 2019 to $69.4 billion, up $6.3 billion (+10%) from last year. Net cash income (calculated on a cash-flow basis) is also projected higher in 2019 (+4.7%) to $95.7 billion. However, the initial 2019 net farm income forecast is below (-18%) the 10-year average of $84.8 billion and represents continued agriculture-sector economic weakness since 2013's record high of $123.8 billion. Substantial Uncertainties Underpin the Outlook Abundant domestic and international supplies of grains and oilseeds suggest a fourth straight year of relatively weak commodity prices in 2018 ( Figure A-1 through Figure A-4 , and Table A-4 ). However, considerable uncertainty remains concerning whether the United States will achieve a resolution to its trade dispute with China and other major trading partners, what crops U.S. producers will decide to plant across the major growing regions of the United States ( Figure 3 ), whether farmers and ranchers will continue to expand livestock production ( Figure 8 ), what weather and growing conditions will prevail during the principal plant-growth season, and how domestic and international demand will evolve during the year. Selected Highlights Since the record highs of 2012 and 2013, net cash income and net farm income have fallen by 29% and 44%, respectively ( Figure 1 ), thus continuing a general downward trend in farm income since 2013—primarily the result of a significant decline in most farm commodity prices since 2013-2014. Cash receipts for most major field crops (feed grains, hay, and wheat), oilseeds ( Figure 12 ), and animal products (beef, pork, broilers, eggs, and milk— Figure 14 ), are projected at $381.5 billion in 2019 (+2.3%) but have declined since their highs in 2012 and 2014 as U.S. and global grain and oilseed stocks and animal herds have rebuilt. Government payments in 2019 are projected down (-17%) from 2018 at $11.5 billion—due largely to lower payments under both the Market Facilitation Program (MFP) and revenue-support programs ( Figure 16 ). Total production expenses for 2019 ( Figure 18 ), at $372 billion, are projected up slightly from 2018 (+0.6%), driven largely by feed, labor, and interest costs. Global demand for U.S. agricultural exports ( Figure 22 ) is projected at $141.5 billion in 2019, down 1% from 2018, due largely to a decline in sales to China. Farm asset values and debt levels are projected to reach record levels in 2019—asset values at $3.1 trillion (+1.5%) and farm debt at $427 billion (+3.9%)—pushing the projected debt-to-asset ratio up to 13.9%, the highest level since 2002 ( Figure 28 ). U.S. Agriculture Outlook: 2019 Overview Farm production choices in 2019 will largely be determined by producers' expectations for relative net returns from both the market and government programs across the various crops and livestock activities. Growing-season weather, yields, and harvest-time market prices are unknown early in the year when producers must lock in their production decisions for the year. Heading into 2019, most of the major growing zones ( Figure 3 ) across the Corn Belt, Plain States, Delta, and Southeast are largely free of drought ( Figure 4 ). Some dryness persists primarily in the mountain states, the Pacific Northwest, and southern Texas. Instead of dryness, excessive precipitation and early spring flooding present potential hindrances to the normal crop-choice and planting routines for 2019, particularly in the western Corn Belt ( Figure 5 ). Large Corn and Soybean Crops Continue to Dominate Commodity Markets Corn and soybeans are the two largest U.S. commercial crops in terms of both value and acreage. For the past several years, U.S. corn and soybean crops have experienced strong growth in both productivity and output, thus helping to build stockpiles at the end of the marketing year. This has been particularly true for soybeans, which have seen rapid growth in yield, acres planted, and stocks. This pattern reached a historic point in 2018 when, for the first time in history, U.S. soybean plantings (at 89.196 million acres) narrowly exceeded corn plantings (89.120 million acres). The record soybean plantings, coupled with the second-highest yields on record (51.6 bushels/acres), produced a record U.S. soybean harvest of 4.5 billion bushels and record ending stocks (900 million bushels) in 2018. The record harvest and abundant supply, coupled with the sudden loss of China as the principal buyer of U.S. soybeans in 2018, have pressured soybean farm prices lower (-8%) to a projected $8.60/bushel for the 2018/2019 marketing year—the lowest farm price since 2006 ( Figure 6 ). Like soybeans, USDA estimated the second-highest corn yields on record in 2018 at 176.4 bushels/acre (just behind the previous year's record yield of 176.6 bushels/acre). As a result, the United States produced the third-largest corn harvest on record at 14.4 billion bushels. Despite the near-record production, USDA predicts that record large domestic usage (including for livestock feed, ethanol production, other industrial processing, and seed) plus large exports will result in a small reduction in corn ending stocks, a decline in the ending stocks-to-use ratio to 14.0% (down from 14.5%) and a slightly higher season average farm price of $3.55/bushel. Both wheat and upland cotton farm prices are projected up slightly from 2017 despite relatively abundant stocks-to-use ratios, largely on the strength of international demand. The corn and soybean crops provide important inputs for the domestic livestock, poultry, and biofuels sectors. In addition, the United States is traditionally one of the world's leading exporters of corn, soybeans, and soybean products—vegetable oil and meal. During the recent five-year period from 2013/2014 to 2017/2018, the United States exported 49% of its soybean production and 15% of its corn crop. As a result, the export outlook for these two crops is critical to both farm sector profitability and regional economic activity across large swaths of the United States as well as in international markets. However, a tariff-related trade dispute between the United States and several major trading partners (in particular, China) has cast uncertainty over the corn and soybean markets. The trade dispute has resulted in lower purchases of U.S. agricultural products by China in 2018, with continued diminished prospects for 2019. China was the top export market for U.S. agricultural products in 2017 with $25.9 billion in purchases. With the realization of diminished Chinese purchases, USDA has revised downward its expected export value to China for 2018 to $20.5 billion and for 2019 to $13.6 billion. Similarly, USDA has lowered its U.S. soybean export forecast from its initial estimate of 2.3 billion bushels in May 2018 to 1.875 billion bushels in its March 8, 2019, World Agricultural Supply and Demand Estimates report. The marketing year for corn and soybeans extends through August 2019. Thus, these forecasts depend on whether the trade dispute continues unabated or how the terms of any resolution (if one were to occur) would impact trade in the remaining months of the marketing year in 2019. The rapid expansion of U.S. soybean production has come largely at the expense of the wheat sector, which has been steadily losing acreage over the past several decades ( Figure 7 ). In 2017 U.S. wheat-planted acres were the lowest in over 100 years. Poor planting conditions in the fall of 2018 (for the 2019 winter wheat crop) across several states have resulted in the lowest estimated plantings outlook for winter wheat since 1909. The contraction in area is expected to support wheat prices and possibly lead to expanded spring wheat plantings in the Northern Plains in 2019. Livestock Outlook for 2019 USDA's February 2019 Cattle report reported that U.S. cattle herd expansion, which has been growing since 2015, has slowed markedly but is still projected to grow through 2019. Similarly, U.S. hog and poultry flocks have been growing and are expected to continue to expand in 2019. A key uncertainty for the meat-producing sector is whether demand will expand rapidly enough to absorb the continued growth in output or whether surplus production will begin to pressure prices lower. For 2019, expected production of beef (+1.6%), pork (+4.2%), broilers (+1.2%), and eggs (+2.3%) are projected to expand relatively robustly. This growth in protein production was preceded by strong growth rates in 2018: beef (+2.6%), pork (+2.9%), broilers (+2.2%), and eggs (+2.1%). USDA projects that combined domestic and export demand will continue to grow for red meat (+1.7%) and poultry (+0.9%) but at slower rates than projected meat production, thus contributing to the outlook for lower prices and profit margins for livestock in 2019. Feed Margins Signal Profit Outlook The changing conditions for the U.S. livestock sector may be tracked by the evolution of the ratios of livestock output prices to feed costs ( Figure 10 ). A higher ratio suggests greater profitability for producers. The cattle-, hog-, and broiler-to-feed margins all moved upward in during 2014 but have exhibited volatility during the 2015-2018 period. The hog, cattle, and broiler sectors remain profitable. However, continued production growth of between 2% and 4% for red meat and poultry suggests that prices are vulnerable to weakness in demand. Both the milk- and hog-to-feed ratios fell during 2018, suggesting eroding profitability. While this result varies widely across the United States, many small or marginally profitable hog and milk producers face continued financial difficulties. In addition, both U.S. and global milk production are projected to continue growing in 2019. As a result, milk prices could come under further pressure in 2019, although USDA is currently projecting milk prices up slightly in 2019. Background on the U.S. Cattle-Beef Sector Record profitability among cow-calf producers in 2014, coupled with then-improved forage conditions, helped to trigger the beef cow herd expansion ( Figure 9 ). The continued cattle expansion through 2019—despite weakening profitability—is primarily the result of a lag in the biological response to the strong market price signals of late 2014. During the 2007-2014 period, high feed and forage prices plus widespread drought in the Southern Plains—the largest U.S. cattle production region—had resulted in an 8% contraction of the U.S. cattle inventory ( Figure 9 ). Reduced beef supplies led to higher producer and consumer prices, which in turn triggered the slow rebuilding phase in the cattle cycle that started in 2014 (see the price-to-feed ratio for steers and heifers, Figure 10 ). The resulting continued expansion of beef supplies pressured market prices lower in 2016. The lower price outlook is expected to persist through 2019 despite strong domestic and international demand across all meat categories—beef, pork, and poultry ( Table A-4 ). Gross Cash Income Highlights Projected farm-sector revenue sources in 2019 include crop revenues (47% of sector revenues), livestock receipts (42%), government payments (3%), and other farm-related income (8%), including crop insurance indemnities, machine hire, and custom work. Total farm sector gross cash income for 2019 is projected to be up (+1.4%) to $427.5 billion, driven by increases in both crop (+2%) and livestock (+2.6%) receipts ( Figure 11 ). Cash receipts from direct government payments (-17%) and other farm-related income (-1.2) are down slightly from 2018. Crop Receipts Total crop sales peaked in 2012 at $231.6 billion when a nationwide drought pushed commodity prices to record or near-record levels. In 2019, crop sales are projected at $201.7 billion, up slightly from 2018 ( Figure 12 ). Projections for 2019 and percentage changes from 2018 include: Feed crops—corn, barley, oats, sorghum, and hay: $58.8 billion (+4.0%); Oil crops—soybeans, peanuts, and other oilseeds: $39.5 billion (-6.6%); Fruits and nuts: $32.9 billion (+8.2%); Vegetables and melons: $18.6 billion (+0.9%); Food grains—wheat and rice: $12.4 billion (+6.2%); Cotton: $8.3 billion (+6.5%); and Other crops including tobacco, sugar, greenhouse, and nursery: $29.8 billion (+2%). Livestock Receipts The livestock sector includes cattle, hogs, sheep, poultry and eggs, dairy, and other minor activities. Cash receipts for the livestock sector grew steadily from 2009 to 2014, when it peaked at a record $212.8 billion. However, the sector turned downward in 2015 (-11.0%) and again in 2016 (-14.1%), driven largely by projected year-over-year price declines across major livestock categories ( Table A-4 and Figure 14 ). In 2017, livestock sector cash receipts recovered with year-to-year growth of 8.1% to $176.0 billion. In 2018, cash receipts were nearly unchanged. In 2019, cash receipts are projected up 2.6% for the sector at $179.9 billion as cattle and dairy sales partially offset declines in hog and poultry. Projections for 2019 (and percentage changes from 2018) include: Cattle and calf sales: $69.2 billion (+4.0%); Poultry and egg sales: $46.0 billion (-0.7%); Dairy sales, valued at $37.8 billion (+7.8%); Hog sales: $19.5 billion (-3.2%); and Miscellaneous livestock, valued at $7.4 billion (+2.7%). Government Payments Government payments include direct payments (decoupled payments based on historical planted acres), price-contingent payments (program outlays linked to market conditions), conservation payments (including the Conservation Reserve Program and other environmental-based outlays), ad hoc and emergency disaster assistance payments (including emergency supplemental crop and livestock disaster payments and market loss assistance payments for relief of low commodity prices), and other miscellaneous outlays (including market facilitation payments, cotton ginning cost-share, biomass crop assistance program, peanut quota buyout, milk income loss, tobacco transition, and other miscellaneous payments). Total government payments of $11.5 billion still represent a relatively small share (3%) of projected gross cash income of $427.5 billion in 2019. In contrast, government payments are expected to represent 16% of the projected net farm income of $69.4 billion. However, the importance of government payments as a percentage of net farm income varies nationally by crop and livestock sector and by region. Government payments in 2019 are projected down 16.8% from 2018 at $11.5 billion ( Figure 16 and Table A-4 ). Government payments in 2018 were inflated by unexpected payments of approximately $5.2 billion under the MFP initiated by USDA in response to the U.S.-China trade dispute. MFP payments to qualifying agricultural producers were estimated at $5.7 billion in 2018 and are projected at $3.5 billion in 2019, thus accounting for a year-to-year difference of -$2.2 billion. USDA ad hoc disaster assistance, at $1.4 billion, is projected up (+20.4%). MFP and ad hoc disaster assistance payments are expected to add $6.8 billion, or about 12%, to net farm income in 2018 and $4.9 billion, or about 8%, to net farm income in 2019. Payments under the Agricultural Risk Coverage and Price Loss Coverage programs are projected lower in 2019 at $1.7 billion compared with an estimated $3.0 billion in 2018 (see "Price Contingent" in Figure 16 ). No payments are forecast under the marketing loan program in 2019, the same as in 2018, as program crop prices are expected to remain above most farm-bill loan rates through 2019. The new Dairy Margin Coverage program is expected to make $600 million in payments in 2019, up from $188 million under the previous milk Margin Protection Program (MPP) in 2018 (see next section for details). Conservation programs include all conservation programs operated by USDA's Farm Service Agency and the Natural Resources Conservation Service that provide direct payments to producers. Estimated conservation payments of $4.3 billion are forecast for 2019, up slightly from $4.0 billion in 2018. Dairy Margin Coverage Program Outlook The 2018 farm bill (Agricultural Improvement Act of 2018, P.L. 115-334 ) made several changes to the previous MPP program, including a new name—the Dairy Margin Coverage (DMC) program—and expanded margin coverage choices from the original range of $4.00-$8.00 per hundredweight (cwt.). Under the 2018 farm bill, milk producers have the option of covering the milk-to-feed margin at a $9.50/cwt. threshold on the first 5 million pounds of milk coverage under the program. The DMC margin differs from the USDA-reported milk-to-feed ratio shown in Figure 10 but reflects the same market forces. As of January 2019, the formula-based milk-to-feed margin used to determine government payments was below the newly instituted $9.50/cwt. threshold ( Figure 17 ), thus increasing the likelihood of DMC payments in 2019. Production Expenses Total production expenses for 2019 for the U.S. agricultural sector are projected to be up slightly (+0.6%) from 2018 in nominal dollars at $372.0 billion ( Figure 18 ). Production expenses peaked in both nominal and inflation-adjusted dollars in 2014, then declined for two years before resuming their upward trend in nominal dollars in 2017. But how have production expenses moved relative to revenues? A comparison of the indexes of prices paid (an indicator of expenses) versus prices received (an indicator of revenues) reveals that the prices received index generally declined from 2014 through 2016, rebounded in 2017, then declined again in 2018 ( Figure 19 ). Farm input prices (as reflected by the prices paid index) showed a similar pattern but with a much smaller decline from their 2014 peak, thus suggesting that farm sector profit margins have been squeezed since 2014. Production expenses will affect crop and livestock farms differently. The principal expenses for livestock farms are feed costs, purchases of feeder animals and poultry, and hired labor. Feed costs, labor expenses, interest costs, and property taxes are all projected up in 2019 ( Figure 20 ). In contrast, fuel, land rent, and fertilizer costs are projected lower. Cash Rental Rates Renting or leasing land is a way for young or beginning farmers to enter agriculture without incurring debt associated with land purchases. It is also a means for existing farm operations to adjust production more quickly in response to changing market and production conditions while avoiding risks associated with land ownership. The share of rented farmland varies widely by region and production activity. However, for some farms it constitutes an important component of farm operating expenses. Since 2002, about 38% of agricultural land used in U.S. farming operations has been rented. The majority of rented land in farms is rented from nonoperating landlords. Nationally in 2012, 30% of all land in farms was rented from someone other than a farm operator. Some farmland is rented from other farm operations—nationally about 8% of all land in farms in 2012 (the most recent year for which data are available)—and thus constitutes a source of income for some operator landlords. Total net rent to nonoperator landlords is projected to be down (-2.1%) at $14.3 billion in 2019. Cash rental rates for 2019 are not yet available. Average cash rental rates for 2018 were up year-over-year ($138 per acre versus $136 in 2017). Although rental rates—which for 2019 were set the preceding fall of 2018 or in early spring of 2019—dipped in 2016, they still reflect the high crop prices and large net returns of the preceding several years, especially the 2011-2014 period ( Figure 21 ). The national rental rate for cropland peaked at $144 per acre in 2015. Agricultural Trade Outlook U.S. agricultural exports have been a major contributor to farm income, especially since 2005. As a result, the downturn in those exports that started in 2015 ( Figure 22 ) deepened the downturn in farm income that had started in 2013 ( Figure 1 ). Key U.S. Agricultural Trade Highlights USDA projects U.S. agricultural exports at $141.5 billion in FY2019, down slightly (-1%) from $143.4 billion in FY2018. Export data include processed and unprocessed agricultural products. This downturn masks larger country-level changes that have occurred as a result of ongoing trade disputes (as discussed below). In FY2019, U.S. agricultural imports are projected nearly unchanged at $127.0 billion, but the resultant agricultural trade surplus of $14.5 billion would be the lowest since 2007. A substantial portion of the surge in U.S. agricultural exports that occurred between 2010 and 2014 was due to higher-priced grain and feed shipments, including record oilseed exports to China and growing animal product exports to East Asia. As commodity prices have leveled off, so too have export values (see the commodity price indexes in Figure A-1 and Figure A-2 ). In FY2017, the top three markets for U.S. agricultural exports were China, Canada, and Mexico, in that order. Together, these three countries accounted for 46% of total U.S. agricultural exports during the five-year period FY2014-FY2018 ( Figure 23 ). However, in FY2019 the combined share of U.S. exports taken by China, Canada, and Mexico is projected down to 42% largely due to sharply lower exports to China. The ordering of the top three markets is reordered to Canada, Mexico, and China, as China is projected to barely stay ahead of the European Union and Japan as a destination for U.S. agricultural exports. From FY2014 through FY2017, China imported an average of $26.2 billion of U.S. agricultural products. However, USDA forecasts China's imports of U.S. agricultural products to decline to $20.5 billion in FY2018 and to $13.6 billion in FY2019 as a result of the U.S.-China trade dispute. The fourth- and fifth-largest U.S. export markets are the European Union and Japan, which have accounted for a combined 17% of U.S. agricultural exports during the FY2014-FY2018 period. This same share is projected to continue in FY2019 ( Figure 23 ). These two markets have shown relatively limited growth in recent years when compared with the rest of the world. The "Rest of World" (ROW) component of U.S. agricultural trade—South and Central America, the Middle East, Africa, and Southeast Asia—has shown strong import growth in recent years. ROW is expected to account for 41% of U.S. agricultural exports in FY2019. ROW import growth is being driven in part by both population and GDP growth but also from shifting trade patterns as some products previously targeting China have been diverted to new markets. Over the past four decades, U.S. agricultural exports have experienced fairly steady growth in shipments of high-value products—including horticultural products, livestock, poultry, and dairy. High-valued exports are forecast at $94.3 billion for a 66.6% share of U.S. agricultural exports in FY2019 ( Figure 24 ). In contrast, bulk commodity shipments (primarily wheat, rice, feed grains, soybeans, cotton, and unmanufactured tobacco) are forecast at a 33.4% share of total U.S. agricultural exports in FY2019 at $47.2 billion. This compares with an average share of over 60% during the 1970s and into the 1980s. As grain and oilseed prices decline, so will the bulk value share of U.S. exports. U.S. Farm and Manufactured Agricultural Product Export Shares The share of agricultural production (based on value) sold outside the country indicates the level of U.S. agriculture's dependence on foreign markets, as well as the overall market for U.S. agricultural products. As a share of total farm and manufactured agricultural production, U.S. exports were estimated to account for 19.8% of the overall market for agricultural products from 2008 through 2016—the most recent data year for this calculation ( Figure 25 ). The export share of agricultural production varies by product category. At the upper end of the range for export shares, the bulk food grain export share has varied between 50% and 80% since 2008, while the oilseed export share has ranged between 47% and 58%. The mid-spectrum range of export shares includes the export share for fruit and tree nuts, which has ranged from 37% to 45%, while meat products have ranged from 27% to 41%. At the low end of the spectrum, the export share of vegetable and melon sales has ranged from 15% to 18%, the dairy products export share from 9% to 24%, and the agricultural-based beverage export share between 7% and 13%. Farm Asset Values and Debt The U.S. farm income and asset-value situation and outlook suggest a relatively stable financial position heading into 2019 for the agriculture sector as a whole—but with considerable uncertainty regarding the downward outlook for prices and market conditions for the sector and an increasing dependency on international markets to absorb domestic surpluses Farm asset values—which reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments—are projected to be up 1.5% in 2019 to a nominal $3.1 trillion ( Table A-3 ). In inflation-adjusted terms (using 2017 dollars), farm asset values peaked in 2014 ( Figure 26 ). Nominally higher farm asset values are expected in 2019 due to higher real estate values (+1.8%), which offset a slight decrease in nonreal estate values (-0.1%). Real estate is projected to account for 83% of total farm sector asset value. Crop land values are closely linked to commodity prices. The leveling off of crop land values since 2015 reflects mixed forecasts for commodity prices (corn, soybeans, and cotton lower; wheat, rice, and livestock products higher) and the uncertainty associated with international commodity markets ( Figure 27 ). Total farm debt is forecast to rise to a record $426.7 billion in 2019 (+3.9%) ( Table A-3 ). Farm equity—or net worth, defined as asset value minus debt—is projected to be up slightly (+1.1%) at $2.7 trillion in 2019 ( Table A-3 ). The farm debt-to-asset ratio is forecast up in 2019 at 13.9%, the highest level since 2002 but still relatively low by historical standards ( Figure 28 ). Average Farm Household Income A farm can have both an on-farm and an off-farm component to its income statement and balance sheet of assets and debt. Thus, the well-being of farm operator households is not equivalent to the financial performance of the farm sector or of farm businesses because of the inclusion of nonfarm investments, jobs, and other links to the nonfarm economy. Average farm household income (sum of on- and off-farm income) is projected at $115,588 in 2019 ( Table A-2 ), up 4.3% from 2018 and below the record of $134,164 in 2014. About 18% ($20,365) of total farm household income is from farm production activities, and the remaining 82% ($95,223) is earned off the farm (including financial investments). The share of farm income derived from off-farm sources had increased steadily for decades but peaked at about 95% in 2000 ( Figure 29 ). Total vs. Farm Household Average Income Since the late 1990s, farm household incomes have surged ahead of average U.S. household incomes ( Figure 30 ). In 2017 (the last year for which comparable data were available), the average farm household income of $113,495 was about 32% higher than the average U.S. household income of $86,220 ( Table A-2 ). Appendix. Supporting Charts and Tables Figure A-1 to Figure A-4 present USDA data on monthly farm prices received for several major farm commodities—corn, soybeans, wheat, upland cotton, rice, milk, cattle, hogs, and chickens. The data are presented in an indexed format where monthly price data for year 2010 = 100 to facilitate comparisons. USDA Farm Income Data Tables Table A-1 to Table A-3 present aggregate farm income variables that summarize the financial situation of U.S. agriculture. In addition, Table A-4 presents the annual average farm price received for several major commodities, including the USDA forecast for the 2018-2019 marketing year.

This report uses the U.S. Department of Agriculture's (USDA) farm income projections (as of March 6, 2019) and agricultural trade outlook update (as of February 21, 2019) to describe the U.S. farm economic outlook. According to USDA's Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at $69.4 billion in 2019, up $6.3 billion (+10%) from last year. The forecast rise in 2019 net farm income is the result of an increase in gross returns (up $8.5 billion or +2%)—including continued payments under the trade aid package announced by USDA in July 2018—partially offset by slightly higher production expenses (up $2.2 billion or +0.6%). Net farm income is calculated on an accrual basis. Net cash income (calculated on a cash-flow basis) is also projected higher in 2019 (+4.7%) to $95.7 billion. The 2019 net farm income forecast is substantially below (-18%) the 10-year average of $84.8 billion (in nominal dollars)—primarily the result of the outlook for continued weak prices for most major crops. Commodity prices are under pressure from a record soybean and near-record corn harvest in 2018, diminished export prospects due to an ongoing trade dispute with China, and burdensome stocks. Government payments are projected down nearly 17% from 2018 at $11.5 billion—due largely to lower market facilitation payments by USDA. Market facilitation payments to qualifying agricultural producers—in response to the U.S.-China trade dispute—were an estimated $5.2 billion in 2018 and are projected at $3.5 billion in 2019. Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) payments are also projected lower in 2019 ($1.7 billion) versus 2018 ($3.0 billion). Payments to dairy producers under the new Dairy Margin Coverage (DMC) program are projected up over 200% at $600 million, while payments under conservation and disaster assistance are projected up in 2019 at $4.3 billion (+8.6%) and $1.4 billion (+20%). Since 2008, U.S. agricultural exports have accounted for a 20% share of U.S. farm and manufactured or processed agricultural sales. In 2018 total agricultural exports were estimated up 2% at $143.4 billion. However, abundant supplies in international markets, strong competition from major foreign competitors, and the ongoing U.S.-China trade dispute are expected to shift trade patterns and lower U.S. export prospects slightly (-1%) in 2019. In addition to the outlook for slightly higher farm income, farm asset value is also projected up 1.5% from 2018 to $3.1 trillion. However, aggregate farm debt is projected record large at $426.7 billion—up 3.9% from 2018. Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. USDA farmland values are projected to rise 1.8% in 2019, similar to the increases of 1.9% in 2018 and 2.3% in 2017. Because they comprise such a significant portion of the U.S. farm sector's asset base (83%), change in farmland values is a critical barometer of the farm sector's financial performance. At the farm household level, average farm household incomes have been well above average U.S. household incomes since the late 1990s. However, that advantage has narrowed in recent years. In 2014, the average farm household income (including off-farm income sources) was about 77% higher than the average U.S. household income. In 2017 (the last year with comparable data), that advantage is expected to decline to 32%. The outlook for below average net farm income and relatively weak prices for most major program crops signals the likelihood of continued relatively lean times ahead. The U.S. agricultural sector's well-being remains dependent on continued growth in domestic and foreign demand to sustain prices at current modest levels. In addition to commodity prices, the financial picture for the agricultural sector as a whole heading into 2019 will hinge on both domestic and international macroeconomic factors, including interest rates, economic growth, and consumer demand. This report uses the U.S. Department of Agriculture's (USDA) farm income projections (as of March 6, 2019) and agricultural trade outlook update (as of February 21, 2019) to describe the U.S. farm economic outlook. According to USDA's Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at $69.4 billion in 2019, up $6.3 billion (+10%) from last year. The forecast rise in 2019 net farm income is the result of an increase in gross returns (up $8.5 billion or +2%)—including continued payments under the trade aid package announced by USDA in July 2018—partially offset by slightly higher production expenses (up $2.2 billion or +0.6%). Net farm income is calculated on an accrual basis. Net cash income (calculated on a cash-flow basis) is also projected higher in 2019 (+4.7%) to $95.7 billion. The 2019 net farm income forecast is substantially below (-18%) the 10-year average of $84.8 billion (in nominal dollars)—primarily the result of the outlook for continued weak prices for most major crops. Commodity prices are under pressure from a record soybean and near-record corn harvest in 2018, diminished export prospects due to an ongoing trade dispute with China, and burdensome stocks. Government payments are projected down nearly 17% from 2018 at $11.5 billion—due largely to lower market facilitation payments by USDA. Market facilitation payments to qualifying agricultural producers—in response to the U.S.-China trade dispute—were an estimated $5.2 billion in 2018 and are projected at $3.5 billion in 2019. Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) payments are also projected lower in 2019 ($1.7 billion) versus 2018 ($3.0 billion). Payments to dairy producers under the new Dairy Margin Coverage (DMC) program are projected up over 200% at $600 million, while payments under conservation and disaster assistance are projected up in 2019 at $4.3 billion (+8.6%) and $1.4 billion (+20%). Since 2008, U.S. agricultural exports have accounted for a 20% share of U.S. farm and manufactured or processed agricultural sales. In 2018 total agricultural exports were estimated up 2% at $143.4 billion. However, abundant supplies in international markets, strong competition from major foreign competitors, and the ongoing U.S.-China trade dispute are expected to shift trade patterns and lower U.S. export prospects slightly (-1%) in 2019. In addition to the outlook for slightly higher farm income, farm asset value is also projected up 1.5% from 2018 to $3.1 trillion. However, aggregate farm debt is projected record large at $426.7 billion—up 3.9% from 2018. Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. USDA farmland values are projected to rise 1.8% in 2019, similar to the increases of 1.9% in 2018 and 2.3% in 2017. Because they comprise such a significant portion of the U.S. farm sector's asset base (83%), change in farmland values is a critical barometer of the farm sector's financial performance. At the farm household level, average farm household incomes have been well above average U.S. household incomes since the late 1990s. However, that advantage has narrowed in recent years. In 2014, the average farm household income (including off-farm income sources) was about 77% higher than the average U.S. household income. In 2017 (the last year with comparable data), that advantage is expected to decline to 32%. The outlook for below average net farm income and relatively weak prices for most major program crops signals the likelihood of continued relatively lean times ahead. The U.S. agricultural sector's well-being remains dependent on continued growth in domestic and foreign demand to sustain prices at current modest levels. In addition to commodity prices, the financial picture for the agricultural sector as a whole heading into 2019 will hinge on both domestic and international macroeconomic factors, including interest rates, economic growth, and consumer demand.

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Introduction Election administration attracted significant attention in 2000, when issues with the vote count delayed the results of the presidential race. Administrative issues have also been reported in subsequent election cycles. For example, issues with voter registration were reported in multiple states in 2016 and 2018. Some responses to such reports focus on the rules of elections. The Help America Vote Act of 2002 (HAVA; P.L. 107-252 ; 116 Stat. 1666), for example, requires states to establish a uniform standard of what counts as a vote for each voting system they use (52 U.S.C. §21081(a)(6)), and bills have been introduced in recent Congresses to change how voter registration is handled. Other responses focus on the systems that apply election rules. In the United States, that typically means state and local systems. The administration of elections in the United States is highly decentralized. Elections are primarily administered by thousands of state and local systems rather than a single, unified national system. Understanding how those state and local systems work may be relevant to Congress for at least two reasons. First, the way state and local election systems work can affect how well federal action on election administration serves its intended purposes. Most federal action on election administration is carried out by state and local election systems. Interactions between the workings of those systems and federal actions can help determine how effective the federal actions are at achieving their objectives. Second, Congress can require or encourage changes to the way state and local election systems work. Congress has a number of tools for influencing election administration policy. The use of these tools can—either intentionally or unintentionally—affect the workings of the state and local systems that administer federal elections. This report is intended to help Congress understand how state and local election systems work and how their workings might relate to federal activity on election administration. It starts by describing the distribution of election administration duties at the state and local levels and the structures of the state and local systems that conduct elections. It then uses examples from past federal action on election administration to illustrate some of the ways the duties and structures of state and local election systems interact with federal activity. It closes by introducing some considerations that may be relevant to Members interested in election administration. Scope and Format of the Report This report focuses on the administration of federal elections in the states by executive and legislative branches of state and local government. Much of the discussion applies to nonfederal as well as federal elections, but the report is intended explicitly to address only federal elections. The report also does not cover the federal role in administering federal elections, election administration in the U.S. territories, the role of law enforcement and the courts in election administration, or issues of constitutional or legal interpretation. The typical federal election process has three main parts: voter registration, vote casting, and vote counting. This report focuses on those three parts of the process rather than on other aspects of campaigns and elections, such as campaign finance and redistricting. Finally, the way federal elections are administered varies between and within states. A full accounting of the variations is beyond the scope of this report. Instead, the report describes general patterns and illustrates them with examples. Examples appear in text boxes like the box below, which describes the role the text boxes play in the report in more detail. Distribution of State and Local Election Administration Duties Election administration involves making decisions about the rules of elections, such as whether voters should be able to register online, whether they should be required to show photo identification at the polls, and whether election results should be audited. It also involves conducting elections in accordance with those decisions and paying for the activities and resources required to conduct them. These three election administration duties can be described as policymaking, implementation, and funding. This section describes some common patterns in the distribution of these duties at the state and local levels. Policymaking In the U.S. system, states generally play the primary decisionmaking role in election administration. State legislatures, with input from their governors, can make state laws about the administration of elections and make or initiate election administration amendments to their state constitutions. State laws and constitutions can also delegate or defer responsibility for decisions about the administration of elections to other state or local officials and to voters. The U.S. Constitution also provides for a federal role with respect to decisionmaking about elections, and Congress has exercised such powers in a number of instances. For more information about federal laws governing the state and local conduct of federal elections, see the Appendix . Box 1 uses examples from voter registration to illustrate a number of these approaches to policymaking. It starts with a discussion of a registration policy enacted by the federal government and then describes an adjustment to the policy made, respectively, by a state legislature on the recommendation of a state executive branch official, by state executive branch officials, and by voters. State and local officials may be granted decisionmaking authority explicitly by a variety of constitutional provisions, laws, charters, ordinances, and regulations at multiple levels of government. They may also be left discretion over policy details that are not specified in legislative or regulatory text. For example, states may set out general guidelines for voting technology and ballot design but leave decisions about exactly which machines to buy or how to lay out ballots to local officials. Voters have a say in election administration measures that are referred to the ballot by their state legislatures. Some states also offer citizen initiatives or popular referendums, which voters can use to propose their own state election administration statutes or state constitutional amendments or to repeal or affirm election administration laws adopted by their state legislatures. Table 1 lists the citizen initiative and popular referendum options available to voters in states that offer such mechanisms, as presented by the Initiative & Referendum Institute at the University of Southern California in January 2019. Box 2 uses examples from the November 2018 election to illustrate how states and voters have used ballot measures to make election administration policy. It describes a statewide proposal to enact automatic voter registration in Nevada that was initiated by citizens, and a statewide proposal to enact a voter ID requirement in North Carolina that was referred to the ballot by the state legislature. Implementation Early U.S. elections were conducted almost entirely locally. Some states have departed from that tradition. For example, in Alaska, the state conducts elections above the borough level, and, in Delaware, all elections are conducted by the state. Congress has also shifted some responsibility for conducting elections to the state level. For example, the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA; P.L. 99-410 ; 100 Stat. 924) requires states to designate a single state office to provide absent uniformed services and overseas voters with information about voter registration and absentee voting (52 U.S.C. §20302(b)). The NVRA requires states to designate a chief state election official to coordinate state responsibilities under the act (52 U.S.C. §20509), and HAVA requires chief state election officials to implement statewide voter registration lists and oversee development of plans for use of federal election administration funding (52 U.S.C. §21083(a)(1)(A); 52 U.S.C. §21005(a)). However, the day-to-day implementation of election administration policy is still mostly handled by localities. For example, localities typically add eligible voters to the voter rolls; design and print ballots; recruit and train poll workers; select and prepare polling places; store and transport voting equipment; and count, canvass, and report election results. The level of locality primarily responsible for conducting elections is typically the county, but there are some exceptions. The New England states, which have a strong tradition of township government, tend to assign primary responsibility to municipalities. Some states also split implementation duties between counties and municipalities. Responsibility for implementing election administration policy may also be divided between offices or agencies at the same level of local government. For example, according to one scholarly source, as of 2015, localities in about one-third of states split responsibility for conducting elections between two or more offices or agencies. Table 2 lists the states identified by those scholars. Funding Election administration involves both intermittent and ongoing costs. Intermittent costs include irregular expenses like the costs of acquiring voting equipment. Ongoing costs include expenses that are linked to and recur with each individual election, such as the costs of printing ballots, paying poll workers, and transporting voting equipment to polling places, as well as expenses that are incurred whether or not there is an election, such as the costs of training election officials, maintaining voter registration lists, and providing IT support for online voter registration systems. The federal government does not supply ongoing funding to states and localities to conduct elections. To date, Congress has authorized significant federal funding for state and local election administration in one bill: HAVA. HAVA authorized $3.65 billion for three main types of formula-based payments to states as well as additional funding for a number of smaller grant and payment programs (52 U.S.C. §§20901-20906; 52 U.S.C. §§21001-21072). Congress appropriated most of the $3.65 billion for the three types of formula-based payments between FY2003 and FY2010 and appropriated an additional $380 million in March 2018. That means states and localities are responsible for most of the costs of conducting federal elections. Localities typically assume primary responsibility for those costs, with states contributing to varying degrees. All states have supplied or committed to supplying matching funds as required to receive federal HAVA funds (52 U.S.C. §21003(b)(5)(a)). All states but North Dakota, which does not have voter registration, have also contributed to establishing and maintaining the statewide voter registration lists required by HAVA (52 U.S.C. §21083(a)). State contributions to other costs vary. Many states used HAVA funding to help replace or update voting technology, and some have put additional money from state coffers toward those expenses. Table 3 lists state contributions to the costs of acquiring voting equipment, as reported by the U.S. Government Accountability Office (GAO) in 2018. Table 4 provides information from the same report about states' contributions to the costs of maintaining and operating voting equipment. As GAO uses the terms in the survey, operation costs "include things such as poll worker labor to set up equipment, postage for mailing absentee or vote-by-mail ballots, paper and printing supplies for paper ballots or voter-verified paper trails, and electricity to operate equipment during elections." Maintenance costs "include things such as labor to conduct maintenance between elections of any equipment hardware and software as well as any required parts." Some states cover or contribute to the costs of training local election officials, and some share election-specific costs, such as printing ballots and transporting voting equipment. Box 3 uses five examples of cost-sharing arrangements for election-specific costs of federal elections to illustrate the range of approaches states have taken to such arrangements. Structures of State and Local Election Implementation Systems The structures of the state and local systems that conduct federal elections vary both between and within states. Common variations include differences related to the leadership of the election system; relationship between local election officials and the state; and population size and density of the jurisdiction served by the system. This section describes these structural variations. Leadership The state and local election systems that conduct federal elections may be led by an individual, such as the state secretary of state or a town or county clerk; a group, such as a state elections commission or a county board of elections; or a combination of individuals or groups, such as a state secretary of state and state board of elections, or a city clerk and city registrar of voters. Election system leadership may be chosen by voters or appointed by an authority such as the governor or state legislature. The selection method—and the leaders themselves—may be partisan, bipartisan, or nonpartisan. Federal law requires states to designate a chief election official to carry out certain tasks. Table 5 lists the titles of chief state election officials, as reported to CRS by the EAC, and the methods of selecting them, as listed by the National Association of Secretaries of State (NASS) and the National Association of State Legislatures (NCSL). The leadership types and selection methods of local election systems may vary within a state. Box 4 uses examples from Florida and Wisconsin to illustrate such variations. It describes the different causes of variation in the two states and a recent change in Florida to a more uniform selection process. The leadership structures of both state and local systems can also change over time. Box 5 uses the two states from Box 4 to illustrate the types of changes states might make, how they might make them, and how frequently they might make them. It describes one change that was approved by voters as a ballot measure and a number of others that were enacted legislatively. State-Local Relationship Another way in which the structures of election systems can vary is in the relationship between local election officials and the state. Some local election officials operate largely independently, whereas others rely on state officials or resources for some, most, or all basic functions. For example, as noted in " Funding ," states may provide some or all of the training for local election officials. As described in more detail in " Jurisdiction Size and Density ," local election officials who serve smaller or more rural jurisdictions may also depend on their states to provide specialized expertise, such as legal or technical know-how. States also have varying types and degrees of influence over local election officials. Choices about other structural features, such as the method used to select the leadership of local election systems, can shape this aspect of the state-local relationship. For example, in some states, state officials appoint and can remove local election officials. State officials in other states may have other options for influencing local officials. For example, state officials may have the power to initiate legal action against local officials, to provide or withhold funding for local election administration, or to certify and decertify voting systems. However, they tend to have less control over how local officials perform their election administration duties than state officials with appointment and removal authority. As described in more detail in " Compliance with Federal Requirements ," this dynamic may be especially pronounced for local officials who are popularly elected. Such officials are accountable primarily to voters rather than to the state. Jurisdiction Size and Density Other structural variations between election systems derive from differences in the population size and density of the jurisdictions they serve. Some election jurisdictions reported serving fewer than 100 eligible registered voters in the 2016 election, for example, whereas Los Angeles County reported serving 6.8 million. The eligible registered voters in that county alone reportedly outnumbered the eligible registrants in each of 40 other states. Election jurisdictions also differ in population density. For example, Los Angeles County is an urban center, and many small jurisdictions are rural. Jurisdictions with different population sizes and densities have different election administration advantages and face different administrative challenges. For example, voter registration list maintenance is typically more straightforward in small jurisdictions because their lists are shorter and election officials are more likely to know registrants personally. Meanwhile, large jurisdictions tend to have larger tax bases and more resources. Those differences between jurisdictions may be reflected in the internal structures of the election systems that serve them. One example of such a structural difference is the size and specialization of the system's staff. Larger jurisdictions, which typically have more personnel, may have much of the specialized expertise they need in-house. Smaller jurisdictions, which may have only one part-time employee dedicated to election administration, are more likely to rely on outside expertise. For example, according to law professors Steven F. Huefner, Daniel P. Tokaji, and Edward B. Foley, smaller jurisdictions in Illinois have looked to state attorneys for election law expertise and to voting equipment vendors for technical support. Another type of difference related to jurisdiction size and density is variation in the allocation of system resources. A study prepared for the U.S. Election Assistance Commission in 2013 found that election officials in rural jurisdictions were more likely than their urban counterparts to use paid print advertising for voter outreach. Election officials in urban jurisdictions were more likely to use websites and social media. Small jurisdictions may also allocate a larger share of their resources to meeting state and federal requirements than larger jurisdictions because there are often fixed start-up costs to required changes, and smaller jurisdictions may be less equipped to capitalize on economies of scale. For example, political scientists Heather M. Creek and Kimberly A. Karnes report, "There is a minimum cost to the acquisition and maintenance of voting technology that applies whether the district is purchasing 5 or 500 machines." Interactions with the Federal Role in Election Administration The duties and structures of state and local election systems can affect the implementation of federal election administration laws. Perhaps as a result, Congress has specified how states and localities should distribute certain election administration duties and structure certain elements of their election systems. Changes to the duties and structures of state and local election systems have sometimes also been side effects of other federal activity on election administration. Selected Effects of State and Local Duties and Structures on Federal Action This section provides examples of ways in which the distribution of election administration duties at the state and local levels and the structures of state and local election systems can affect the implementation of federal election administration law. These examples include federal efforts to affect the administration of elections through (1) requirements, (2) funding, and (3) information sharing. Compliance with Federal Requirements Congress can use requirements to regulate how states and localities administer certain aspects of federal elections. How well such requirements serve their intended purposes depends in part on how closely states and localities comply with them. How closely states and localities comply with federal requirements may, in turn, be affected by the duties and structures of the state and local election systems that implement them. For example, UOCAVA assigns responsibility for complying with some of its requirements to the states (52 U.S.C. §20302), but the tasks required for compliance are often handled by local officials. One scholar, law professor Justin Weinstein-Tull, indicates that this means that the officials who are held liable for compliance with UOCAVA requirements may differ from the officials who take or fail to take the actions needed to comply. Box 6 provides an illustration of this phenomenon as reported by state officials in Alabama. Timeliness and Tailoring of Federal Funding The federal government can provide funding for state and local election administration, which may be conditional on the adoption of certain election administration policies or practices. How well such funding serves its intended purposes may depend in part on how timely it is and how well-tailored it is to its objectives. Duties and structures of state and local election systems may affect how quickly federal funding is claimed and used and how well the uses to which it is put serve federal objectives. For example, HAVA has authorized payments to states to meet its requirements (52 U.S.C. §21007). It has directed those payments to be disbursed to states (52 U.S.C. §21001(a)) and charged chief state election officials with overseeing decisions about how to spend them (52 U.S.C. §21005(a)). State election officials run federal elections in some states, but those states are the exception. As noted in " Implementation " and " Funding ," most states assign election administration implementation and funding duties to local officials. That means that the officials who receive HAVA funding and are charged with overseeing decisions about how to use it often differ from the officials who conduct and pay for the activities and resources it is intended to fund. That has had at least two reported consequences. First, in some cases, it has reportedly delayed access to or use of some HAVA funds. Directing HAVA funding to states introduces opportunities for state-level delays, such as decisions by state officials to wait to claim the funds or requirements in state law to obtain approval to do so. Second, some local officials have stated the view that their states' shares of HAVA funding were not put to what they considered the areas of greatest need. Box 7 provides examples of such consequences as described by state and local officials in Nevada, Minnesota, and Virginia. Timeliness of Federal Information Sharing Congress can require or facilitate information sharing with states and localities by federal agencies. As with funding, the effectiveness of federal information sharing may depend in part on how timely it is. How quickly federal agencies share information with the appropriate state and local officials may be affected by the distribution of election administration duties at the state and federal levels. Box 8 provides an example of such an effect reported by NASS. Selected Effects of Federal Action on State and Local Duties and Structures Past federal action has resulted in both intentional and unintentional changes to state and local election systems. Some federal laws include provisions that are specifically designed to establish certain responsibilities for election administration at the state level. For example, the NVRA requires states to designate chief state election officials to coordinate state responsibilities under the act (52 U.S.C. §20509), and HAVA charges chief state election officials with implementing a statewide voter registration system (52 U.S.C. §21083(a)(1)(A)). Federal regulation has reportedly also had the side effect of shifting the distribution of other election administration duties. For example, the agency-based registration requirements in the NVRA divide voter registration responsibilities between traditional election offices and offices that had not historically been involved in election administration, such as motor vehicle and public assistance agencies (52 U.S.C. §20504; 52 U.S.C. §20506). According to Hale, Montjoy, and Brown, "the need to pass implementing legislation and the complexity of legal and technical requirements" in federal laws such as HAVA and the NVRA has also "led many states to grant new or additional rule-making power" to their chief state election officials. Potential Considerations for Congress Congress has considered legislation—some of which has been enacted and some of which has not—that would change election rules or the state and local systems that implement them. The interactions between the duties and structures of state and local election systems and past federal actions suggest some considerations that may be relevant to future congressional consideration of proposals that would affect the administration of federal elections. The following questions may be of interest to Members as they consider making changes to election administration or maintaining current rules and structures: How would any proposed change interact with the duties and structures of state and local election systems? Would the duties and structures of state and local election systems make a proposed change difficult to implement? Would the design of a proposed change need to be adjusted to accommodate variations between or within states? Which of the policy tools available to Congress is best suited to achieving the purpose of a proposed change? For example, would it be more effective to advance a proposed change with a federal requirement, or incentivize it via federal funding? How might the nature of the state and local system inform a proposed change? For example, if it is a federal requirement, who is charged with compliance; who is responsible for the tasks required for compliance; and what is the relationship between the two? If it is federal funding, to whom should it be distributed, and who should be involved in making decisions about how to use it? Would a proposed change have the effect, either intentionally or unintentionally, of altering the duties or structures of state or local election systems? If so, what are the advantages and disadvantages of such changes? Are there complications with a proposed change that are not specifically related to election administration? For example, could there be federalism-related issues with intervening in the relationships between states and their political subdivisions? Appendix. Selected Federal Statutes Governing State and Local Administration of Federal Elections

The administration of elections in the United States is highly decentralized. Elections are primarily administered by thousands of state and local systems rather than a single, unified national system. States and localities share responsibility for most election administration duties. Exactly how responsibilities are assigned at the state and local levels varies both between and within states, but there are some general patterns in the distribution of duties. States typically have primary responsibility for making decisions about the rules of elections (policymaking). Localities typically have primary responsibility for conducting elections in accordance with those rules (implementation). Localities, with varying contributions from states, typically also have primary responsibility for paying for the activities and resources required to conduct elections (funding). The structures of the state and local systems that conduct elections also vary between and within states. Common variations include differences related to the leadership of the system, the relationship between local election officials and the state, and the population size and density of the jurisdiction the system serves. The leadership of a state or local election system may be elected or appointed, and both the leaders and the methods used to select them may be partisan, bipartisan, or nonpartisan. State officials may have more or less direct influence over local election officials, and the extent of their influence may be affected by other structural features of the state's election systems, such as the methods used to select local officials. Finally, larger election jurisdictions have different administrative advantages and challenges than smaller ones, and more urban jurisdictions have different advantages and challenges than more rural ones. These differences between jurisdictions may be reflected in structural features of the election systems that serve them, such as how the systems allocate resources and where they find specialized expertise. Understanding the duties and structures of state and local election systems may be relevant to Congress for at least two reasons. First, the way state and local election systems work can affect how well federal action on election administration serves its intended purposes. The effectiveness of federal action depends in part on how it is implemented. How it is implemented can depend, in turn, on how the state and local election systems that implement it work. Second, Congress can make or incentivize changes to the way state and local election systems work. Congress has a number of policy tools it can use to affect the administration of federal elections. The use of these tools can—either intentionally or unintentionally—affect the state and local election systems that administer federal elections.

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T he unemployment insurance (UI) system has two primary objectives: (1) to provide temporary, partial wage replacement for involuntarily unemployed workers and (2) to stabilize the economy during recessions. In support of these goals, several UI programs provide benefits for eligible unemployed workers. Overview of Unemployment Insurance Programs In general, when eligible workers lose their jobs, the joint federal-state Unemployment Compensation (UC) program may provide up to 26 weeks of income support through regular UC benefit payments. UC benefits may be extended for up to 13 weeks or 20 weeks by the Extended Benefit (EB) program if certain economic situations exist within the state. As of the date of this publication, although both the UC and EB programs are authorized, no state is in an active EB period. For an overview of EB, see the Appendix . Unemployment Compensation Program The Social Security Act of 1935 (P.L. 74-271) authorizes the joint federal-state UC program to provide unemployment benefits. Most states provide up to a maximum of 26 weeks of UC benefits. Former federal workers may be eligible for unemployment benefits through the Unemployment Compensation for Federal Employees (UCFE) program. Former U.S. military servicemembers may be eligible for unemployment benefits through the Unemployment Compensation for Ex-Servicemembers (UCX) program. The Emergency Unemployment Compensation Act of 1991 ( P.L. 102-164 ) provides that ex-servicemembers be treated the same as other unemployed workers with respect to benefit levels, the waiting period for benefits, and benefit duration. Although federal laws and regulations provide broad guidelines on UC benefit coverage, eligibility, and determination, the specifics regarding UC benefits are determined by each state. This results in essentially 53 different programs. Generally, UC eligibility is based on attaining qualified wages and employment in covered work over a 12-month period (called a base period) prior to unemployment. All states require a worker to have earned a certain amount of wages or to have worked for a certain period of time (or both) within the base period to be eligible to receive any UC benefits. The methods states use to determine eligibility vary greatly. Most state benefit formulas replace approximately half of a claimant's average weekly wage up to a weekly maximum. Additionally, each state's UC law requires individuals to have lost their jobs through no fault of their own, and recipients must be able to work, available for work, and actively seeking work. These eligibility requirements help ensure that UC benefits are directed toward workers with significant labor market experience and who are unemployed because of economic conditions. UC Financing The UC program is financed by federal taxes under the Federal Unemployment Tax Act (FUTA) and by state payroll taxes under each state's State Unemployment Tax Act (SUTA). The 0.6% effective net FUTA tax paid by employers on the first $7,000 of each employee's earnings (equaling no more than $42 per worker per year) funds federal and state administrative costs, loans to insolvent state UC accounts, the federal share (50%) of EB payments, and state employment services. SUTA taxes on employers are limited by federal law to funding regular UC benefits and the state share (50%) of EB payments. Federal law requires that the state tax be on at least the first $7,000 of each employee's earnings and that the maximum state tax rate be at least 5.4%. Federal law also requires each employer's state tax rate to be based on the amount of UC paid to former employees (known as "experience rating"). Within these broad requirements, each state has great flexibility in determining its SUTA structure. Generally, the more UC benefits paid out to its former employees, the higher the tax rate of the employer, up to a maximum established by state law. Funds from FUTA and SUTA are deposited in the appropriate accounts within the Unemployment Trust Fund (UTF). Unemployment Insurance Benefits and the Sequester The sequester order required by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and implemented on March 1, 2013 (after being delayed by P.L. 112-240 ), affected some but not all types of UI expenditures. Regular UC, UCX, and UCFE payments are not subject to the sequester reductions. EB and most forms of administrative funding are subject to the sequester reductions. FY2019 Sequester of Unemployment Insurance Benefits The FY2019 sequestration order requires a 6.2% reduction in all nonexempt nondefense mandatory expenditures, but no sequestration reductions are applicable to discretionary programs, projects, and activities. As a result, EB expenditures are required to be reduced 6.2% (only on the federal share of EB benefits) for weeks of unemployment during FY2019. As of January 22, 2019, EB has not been activated in any state during FY2019. Unemployment Insurance and the Recent Partial Government Shutdown The lapse in federal appropriations that occurred from December 22, 2018, until January 25, 2019, caused a partial government shutdown. As a result, during this lapse in appropriations, agencies without funding furloughed federal employees, and many federal employees excepted from furlough were working without pay. Furloughed federal employees may be eligible for UCFE benefits. States are required to operate the UCFE program under the same terms and conditions that apply to regular state UC. Therefore, UCFE eligibility is determined under the laws of the state in which an individual's official duty station in federal civilian service is located. Federal employees who are in furlough status on account of a government shutdown are generally treated by state law as laid off with an expectation of recall. Depending on state laws and regulations, the state may have an option to not require federal employees to search for work given an expected recall. However, according to guidance from U.S. Department of Labor (DOL), excepted federal employees who are performing services (but working without pay) would generally be ineligible for UCFE benefits based on states' definitions of "unemployment." Private-sector workers who are furloughed or laid off due to the partial government shutdown because they were employed by government contractors or other businesses may be eligible for regular UC benefits. UC eligibility for these workers would be based on the requirements set out under the state laws in the state where they had worked. In this climate, there has been congressional interest in assisting furloughed and excepted federal employees through the UI system. For example, as described below in the section on " Unemployment Compensation for Excepted Federal Employees During a Government Shutdown ," there are proposals to provide new authority to pay UCFE benefits to excepted federal workers who are working without pay. The most recent lapse in federal appropriations began December 22, 2018, and ended on January 25, 2019, with the enactment of H.J.Res. 28 . Because retroactive pay for furloughed and excepted federal employees was authorized under S. 24 , the Government Employee Fair Treatment Act of 2019 (enacted January 16, 2019), UCFE payments made to federal employee claimants during this lapse in appropriations may be deemed an overpayment, subject to state UC laws regarding overpayment recovery. According to guidance from the Office of Personnel Management on this issue The state UI agency will determine whether or not an overpayment exists and, generally, the recovery of the UCFE overpayment is a matter for state action under its law; however, some state UI laws require the employer to recover such overpayment by collecting the overpayment amount from the employee. The Federal and state agencies will need to coordinate to determine the required action in accordance with the individual state UI law. Federal agencies are encouraged to develop lists or spreadsheets that can be provided to the state(s) containing the employees' names, social security numbers, and the amounts and periods of time covered by the retroactive payment. State UC Loans and Solvency Concerns If a recession is deep enough and if state unemployment tax (SUTA) revenue is inadequate for long periods of time, states may have insufficient funds to pay for UC benefits. Federal law, which requires states to pay these benefits, provides a loan mechanism within the UTF framework that an insolvent state may use to meet its UC benefit payment obligations. States must pay back these loans. If the loans are not paid back quickly (depending on the timing of the beginning of the loan period), states may face interest charges, and states' employers may face increased net FUTA rates until the loans are repaid. The U.S. Virgin Islands is the only jurisdiction with an outstanding loan. As of January 18, 2019, it had an outstanding loan of $68.4 million from the federal accounts within the UTF. At the end of 2017, fewer than half of states (24) had accrued enough funds in their accounts to meet or exceed the minimally solvent standard of an average high cost multiple (AHCM) of 1.0 in order to be prepared for a recession. Reemployment Services and Eligibility Assessments Beginning in FY2015, DOL funded state efforts "addressing individual reemployment needs of UI claimants, and working to prevent and detect UI overpayments" through the voluntary Reemployment Services and Eligibility Assessment (RESEA) program. RESEA provides funding to states to conduct in-person interviews with selected UI claimants to (1) assure that claimants are complying with the eligibility rules, (2) determine if reemployment services are needed for the claimant to secure future employment, (3) refer the individual to reemployment services as necessary, and (4) provide labor market information that addresses the claimant's specific needs. Section 30206 of P.L. 115-123 codified the authority for DOL to administer a RESEA program. It also set out various requirements for states to use certain types of evidence-based interventions for UI claimants under RESEA and allocated discretionary funding for RESEA across three categories (base funding, outcome payments, and research and technical assistance). State RESEA programs must include reasonable notice and accommodations to participating UI beneficiaries. On April 4, 2019, DOL published a proposed methodology to allocate base RESEA funds and outcome payments. DOL requested state and public comments on this proposal by May 6, 2019. President's Budget Proposal for FY2020 The President's budget for FY2020 proposes changes to several aspects of the UI system. It would create a new required standard for state account balances within the UTF and a new benefit entitlement for paid parental leave financed through state unemployment taxes. The President's FY2020 budget also proposes a set of additional integrity measures, including the required use of certain databases to confirm UC eligibility and requiring Social Security Disability Insurance (SSDI) benefits offset UI benefits. New Minimum Account Balance for State UTF Accounts The President's budget proposal for FY2020 would require states to maintain a minimum level of solvency in their UTF account balances to be at least half (0.5) of the state's AHCM. The proposal would alter the rules for calculating the net FUTA rate, requiring a higher net FUTA rate on a state's employers if that state maintained an AHCM of less than 0.5 on January 1 of two or more consecutive years. The additional FUTA revenue would be deposited into the state UTF account and would be terminated once the state met the 0.5 AHCM criteria. Paid Family Leave Benefit The President's budget proposal for FY2020 would require states to establish a paid parental leave benefit by 2020, using the UC program as its base for an administrative framework. States would be required to provide six weeks of benefits to a worker on leave or otherwise absent from work for the birth or adoption of the worker's child. States would have discretion to determine the parameters of eligibility and financing for this new paid parental leave benefit. UI Program Integrity Requirements to Use Particular Data Sources for Program Integrity The President's 2020 budget would require states to use three specific data sources to confirm an individual's eligibility for UC benefits: the State Information Data Exchange System (SIDES, administered by Information Technology Support Center [ITSC] and DOL); the National Directory for New Hires (NDNH, administered by the Department of Health and Human Services); and the Prisoner Update Processing System (PUPS, administered by the Social Security Administration). Additional Integrity Proposals The proposal would create several additional integrity measures, including giving the Secretary of Labor the authority to implement new corrective action measures in response to poor state administrative performance within the program; allowing states to retain a percentage of UC overpayments for program integrity use; requiring states to deposit all UC penalty and interest payments into a special state fund, with these funds required to be used for improving state UI administration as well as providing reemployment services for UI claimants; and offsetting SSDI benefits to account for concurrent receipt of UI benefits. 2018 DOL Proposed Rule on UC Drug Testing Section 2105 of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ; February 22, 2012) amended federal law to allow states to conduct two types of drug testing. First, it expanded the long-standing state option to disqualify UC applicants who were discharged from employment with their most recent employer (as defined under state law) for unlawful drug use by allowing states to drug test these applicants to determine UC benefit eligibility or disqualification. Second, it allowed states to drug test UC applicants for whom suitable work (as defined under state law) is available only in an occupation that regularly conducts drug testing, to be determined under new regulations issued by the Secretary of Labor. As required by  P.L. 112-96 , on August 1, 2016, DOL promulgated  20 C.F.R. Part 620 ,  a new rule to implement the provisions of the law relating to the drug testing of UC applicants for whom suitable work (as defined under state law) is available only in an occupation that regularly conducts drug testing. Amid concerns voiced by stakeholders about the 2016 DOL rule, Congress repealed this UC drug testing rule using the Congressional Review Act (CRA) via H.J.Res. 42 / P.L. 115-17 . On November 5, 2018, DOL published a Notice of Proposed Rulemaking (NPRM) to reissue the rule identifying occupations that regularly conduct drug testing for purposes of Section 2105 of  P.L. 112-96 . The CRA prohibits an agency from reissuing the rule in "substantially the same form" or issuing a "new rule that is substantially the same" as the disapproved rule, "unless the reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule." Notably, this is the first time an agency has proposed to reissue a rule after the original version was disapproved under the CRA. According to the 2018 NPRM, DOL has addressed the reissue requirements of the CRA by proposing a substantially different and more flexible approach to the statutory requirements than the 2016 Rule, enabling states to enact legislation to require drug testing for a far larger group of UC applicants than the previous rule permitted. This flexibility is intended to respect the diversity of states' economies and the different roles played by employment drug testing in those economies. Comments on the proposed 2018 rule were required to be submitted by January 4, 2019. Legislative Proposals in the 116th Congress Unemployment Compensation for Excepted Federal Employees During a Government Shutdown On January 16, 2019, Senator Richard Blumenthal introduced S. 165 , the Federal Unemployment Compensation Equity Act of 2019. This proposal would amend UCFE law and create a new permanent UCFE eligibility category for excepted federal employees who are unpaid but required to work during a government shutdown due to a lapse in appropriations. During any shutdown beginning on or after December 22, 2018, all excepted federal workers would be deemed eligible for UCFE benefits. Additionally, these employees would not be subject to a one-week waiting period (otherwise often required under state laws) before UCFE benefits were to be paid. On January 23, 2019, Representative Debbie Dingell introduced H.R. 725 , the Pay Federal Workers Act. This proposal would also provide UCFE benefits in a similar manner to S. 165 , including permanently amending 5 U.S.C. Chapter 85 to provide federal authority for these benefits. On January 23, 2019, Representative Anthony Brown introduced H.R. 720 . This proposal would deem excepted federal employees during a government shutdown to be eligible for UCFE during FY2019. The authority to provide UCFE to these excepted workers would expire at the end of FY2019. On February 8, 2019, Representative Katie Hill introduced H.R. 1117 , the Shutdown Fairness Act of 2019. This proposal would deem excepted federal employees and unpaid military servicemembers during a government shutdown to be eligible for UCFE or UCX during FY2019. The authority to provide UCFE to these excepted workers would expire at the end of FY2019. Self-Employment and Relocation Assistance Benefits On January 15, 2019, Senator Ron Wyden and Representative Danny Davis introduced S. 136 and H.R. 556 , the Economic Ladders to End Volatility and Advance Training and Employment Act of 2019 (the ELEVATE Act) . Among other provisions, this proposal would establish new self-employment and relocation assistance benefits for unemployed workers to be administered by the Social Security Administration, in consultation with DOL. The self-employment assistance benefits would provide weekly income replacement (half of prior earnings up to the maximum weekly benefit amount in the state) for up to of 26 weeks to individuals. They would be available to individuals who are (1) eligible for any type of UI benefit; or ineligible for any type of UI benefit, but became involuntarily unemployed over the previous 12 weeks; or were previously self-employed, but lost a hiring contract, and (2) have a viable business plan approved by their state department of labor, workforce board, or the Small Business Administration. Additionally, Section 3 of S. 136 and H.R. 556 would provide up to $2,000 (or more, depending on family size) to fund to up to 90% of certain relocation expenses for eligible individuals and their families. In order to be eligible for this relocation assistance, an individual must be a (1) dislocated worker, (2) long-term unemployed individual, or (3) underemployed individual and also have filed a claim for relocation assistance and obtained suitable work with an expectation of obtaining such work in a new geographic region. Domestic Violence On March 7, 2019, Representative Karen Bass introduced H.R. 1585 , the Violence Against Women Reauthorization Act of 2019. Among many other provisions, Section 703 of H.R. 1585 would require states to consider an individual who quit employment because of sexual harassment, domestic violence, sexual assault, or stalking to be eligible for UC benefits. The House passed H.R. 1585 on April 4, 2019. Reemployment Services and Eligibility Assessments On March 14, 2019, Representative Stephanie Murphy introduced H.R. 1759 , the Building on Reemployment Improvements to Deliver Good Employment (BRIDGE) for Workers Act. This proposal would extend eligibility to any claimant of unemployment benefits, including those profiled as likely to exhaust benefits (rather than limiting eligibility to those who were profiled as likely to exhaust benefits). The House passed H.R. 1759 on April 9, 2019. Appendix. Extended Benefit Program The Extended Benefit (EB) program was established by the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA; P.L. 91-373) (26 U.S.C. §3304, note). EUCA may extend receipt of unemployment benefits (extended benefits) at the state level if certain economic conditions exist within the state. As of the date of this publication, EB is not active in any state. Extended Benefit Triggers The EB program is triggered when a state's insured unemployment rate (IUR) or total unemployment rate (TUR) reaches certain levels. All states must pay up to 13 weeks of EB if the IUR for the previous 13 weeks is at least 5% and is 120% of the average of the rates for the same 13-week period in each of the two previous years. States may choose to enact two other optional thresholds. (States may choose one, two, or none.) If the state has chosen one or more of the EB trigger options, it would provide the following: Option 1—up to an additional 13 weeks of benefits if the state's IUR is at least 6%, regardless of previous years' averages. Option 2—up to an additional 13 weeks of benefits if the state's TUR is at least 6.5% and is at least 110% of the state's average TUR for the same 13 weeks in either of the previous two years; up to an additional 20 weeks of benefits if the state's TUR is at least 8% and is at least 110% of the state's average TUR for the same 13 weeks in either of the previous two years. EB benefits are not "grandfathered" (phased out) when a state triggers "off" the program. When a state triggers "off" of an EB period, all EB benefit payments in the state cease immediately regardless of individual entitlement. The EB benefit amount is equal to the eligible individual's weekly regular UC benefits. Under permanent law, FUTA finances half (50%) of the EB payments and 100% of EB administrative costs. States fund the other half (50%) of EB benefit costs through their SUTA. Domestic Violence On March 7, 2019, Representative Karen Bass introduced H.R. 1585 , the Violence Against Women Reauthorization Act of 2019. Among many other provisions, Section 703 of H.R. 1585 would require states to consider an individual who quit employment because of sexual harassment, domestic violence, sexual assault, or stalking to be eligible for UC benefits. The House passed H.R. 1585 on April 4, 2019. Reemployment Services and Eligibility Assessments On March 14, 2019, Representative Stephanie Murphy introduced H.R. 1759 , the Building on Reemployment Improvements to Deliver Good Employment (BRIDGE) for Workers Act. This proposal would extend eligibility to any claimant of unemployment benefits, including those profiled as likely to exhaust benefits (rather than limiting eligibility to those who were profiled as likely to exhaust benefits). The House passed H.R. 1759 on April 9, 2019.

The 116th Congress has begun to consider several issues related to two programs in the unemployment insurance (UI) system: Unemployment Compensation (UC) and Unemployment Compensation for Federal Employees (UCFE). The lapse in federal appropriations that occurred from December 22, 2018, to January 25, 2019, created a partial government shutdown. As a result, agencies without funding furloughed many federal employees, and many federal employees excepted from furlough were working without pay during the lapse in appropriations. Furloughed federal employees may be eligible for UCFE benefits. Private-sector workers who are furloughed or laid off due to the partial government shutdown because they were employed by government contractors may be eligible for regular UC benefits. But, according to guidance from the U.S. Department of Labor (DOL), excepted federal employees who are performing services (without pay) would generally be ineligible for UCFE benefits based on states' definitions of "unemployment." In this climate, there has been congressional interest in assisting furloughed and excepted federal employees through the UI system. UI legislative issues currently facing the 116th Congress include the following: the effects of the FY2019 sequester order on UI programs and benefits, the role of UI in providing temporary income replacement during a government shutdown, state fiscal concerns related to financing UC benefits, reemployment services and eligibility assessments (RESEA), potential consideration of the UI proposals included in the President's FY2020 budget, and congressional oversight related to a proposed UC drug testing rule reissued by DOL after previously being disapproved using the Congressional Review Act. In the 116th Congress, policymakers have introduced legislation related to UCFE benefits in response to the recent partial government shutdown (S. 165, H.R. 720, H.R. 725, and H.R. 1117), legislation to provide self-employment and relocation assistance benefits (S. 136 and H.R. 556), legislation to require that states consider an individual who quit employment because of sexual harassment, domestic violence, sexual assault, or stalking to be eligible for UC benefits (H.R. 1585), and legislation to amend Title III of the Social Security Act to extend RESEA to all UC claimants (H.R. 1759). For a brief overview of UC, see CRS In Focus IF10336, The Fundamentals of Unemployment Compensation.

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Background In 1956, the Army began the development of a family of air-transportable, armored multi-purpose vehicles intended to provide a lightweight, amphibious armored personnel carrier for armor and mechanized infantry units. Known as the M-113, it entered production in 1960 and saw extensive wartime service in Vietnam. Considered a reliable and versatile vehicle, a number of different variations of the M-113 were produced to fulfill such roles as a command and control vehicle, mortar carrier, and armored ambulance, to name but a few. The Army began replacing the M-113 infantry carrier version in the early 1980s with the M-2 Bradley Infantry Fighting Vehicle, but many non-infantry carrier versions of the M-113 were retained in service. The Armored Multi-Purpose Vehicle (AMPV)2 According to the Army The Armored Multi-Purpose Vehicle (AMPV) is the proposed United States Army program for replacement of the M-113 Family of Vehicles (FOV) to mitigate current and future capability gaps in force protection, mobility, reliability, and interoperability by mission role variant within the Heavy Brigade Combat Team (HBCT) [now known as the Armored Brigade Combat Team – ABCT]. The AMPV will have multiple variants tailored to specific mission roles within HBCT. Mission roles are as follows: General Purpose, Medical Evacuation, Medical Treatment, Mortar Carrier, and Mission Command. AMPV is a vehicle integration program. The Army's AMPV Requirements3 Regarding the decision to replace remaining M-113s, the Army notes the following: The M-113 lacks the force protection and mobility needed to operate as part of combined arms teams within complex operational environments. For example, "commanders will not allow them to leave Forward Operating Bases (FOBs) or enter contested areas without extensive mission protection and route clearance." The use of other vehicles for M-113 mission sets (casualty evacuations, for example) reduces unit combat effectiveness. The majority of the Army's M-113s are found in Armored Brigade Combat Teams (ABCTs), where they comprise 32% of the tracked armored vehicles organic to that organization. The 114 M-113 variants in the ABCT are distributed as follows: AMPVs at Echelons Above Brigade (EAB)5 In addition to the AMPV requirement in the ABCTs, the Army also planned to procure an additional 1,922 AMPVs to replace M-113s in Echelons Above Brigade (EAB). The Army notes that these AMPVs might have different requirements than the ABCT AMPVs. DOD estimates if the M-113s are replaced by AMPVs at EAB, total program costs could be increased by an additional $6.5 billion. Program Overview8 According to the Government Accountability Office (GAO), in March 2012, the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD, AT&L) approved a materiel development decision for AMPV and authorized the Army's entry into the materiel solution analysis phase. The Army completed the AMPV analysis of alternatives (AoA) in July 2012 and proposed a nondevelopmental vehicle (the candidate vehicle will be either an existing vehicle or a modified existing vehicle—not a vehicle that is specially designed and not in current service). Because the AMPV is to be a nondevelopmental vehicle, DOD decided the program would start at Milestone B, Engineering and Manufacturing Development (EMD) Phase and skip the Milestone A, Technology Development Phase. The Army planned for a full and open competition and aimed to award one industry bidder a 42-month EMD contract to develop all five AMPV variants. A draft Request for Proposal (RFP) released in March 2013 stated the EMD contract would be worth $1.46 billion, including $388 million for 29 EMD prototypes for testing between 2014 and 2017 and $1.08 billion for 289 low-rate initial production (LRIP) models between 2018 and 2020. The Army had planned on releasing the formal RFP in June 2013 but instead slipped the date until mid-September 2013, citing a delayed Defense Acquisition Board review attributed in part to Department of Defense civilian furloughs. The EMD contract award was originally planned for late 2014. The Army planned for an average unit manufacturing cost (AUMC) of $1.8 million per vehicle. Department of Defense (DOD) Approves AMPV Program10 On November 26, 2013, DOD issued an Acquisition Decision Memorandum (ADM) officially approving the Army's entry into the Milestone B, Engineering and Manufacturing Development (EMD) Phase. The ADM directed the Army to impose an Average Procurement Unit Cost less than or equal to $3.2 million at a production rate of not less than 180 vehicles per year. In addition, operations and sustainment costs were to be less than or equal to $400,000 per vehicle per year. The Army was also directed to down select to a single prime contractor at the completion of Milestone B. Army Issues AMPV Draft Request for Proposal (RFP)11 Also on November 26, 2013, the Army issued a new draft Request for Proposal (RFP) for the AMPV. This RFP stipulated the Army planned to award a five-year EMD contract in May 2014 worth $458 million to a single contractor for 29 prototypes. While the March 2013 RFP established an Average Unit Manufacturing Cost Ceiling for each AMPV at $1.8 million, this was rescinded to permit vendors greater flexibility. The EMD phase was scheduled to run between FY2015 and FY2019, followed by three years of low-rate initial production (LRIP) starting in 2020. Selected Program Activities Army Awards ABCT AMPV Contract to BAE12 On December 23, 2014, the Army announced it had selected BAE Systems Land and Armaments L.P. as the winner of the EMD contract. The initial award was for 52 months valued at about $382 million. During this period of performance, BAE was to produce 29 vehicles, which would be put through "rigorous developmental and operational testing." In addition, the award provided for an optional low-rate initial production (LRIP) phase award in the future. If this phase is awarded, BAE would produce an additional 289 vehicles for a total contract value of $1.2 billion. The Army, in its announcement, emphasized the BAE EMD contract did not pertain to the 1,922 EAB AMPVs. AMPV Completes Critical Design Review According to reports, the AMPV successfully completed its Critical Design Review (CDR) on June 23, 2016. Successful completion of a CDR demonstrates the AMPV's design is stable, can be expected to meet established performance standards, and the program can be accomplished within its established budget. Roll Out of First AMPV for Testing15 On December 15, 2016, BAE delivered the first general purpose AMPV to the Army for testing. The Army plans for six months of contractor tests, followed by one year of government testing and then Limited User Testing. In April 2018, BAE reportedly delivered all 29 AMPVs to the Army for testing. AMPV Begins Developmental Testing17 In September 2017, the Army reportedly started reliability, availability, and maintainability (RAM) testing for the AMPV. DOD defines RAM as follows: Reliability is the probability of an item to perform a required function under stated conditions for a specified period of time. Reliability is further divided into mission reliability and logistics reliability. Availability is a measure of the degree to which an item is in an operable state and can be committed at the start of a mission when the mission is called for at an unknown (random) point in time. Availability as measured by the user is a function of how often failures occur and corrective maintenance is required, how often preventive maintenance is performed, how quickly indicated failures can be isolated and repaired, how quickly preventive maintenance tasks can be performed, and how long logistics support delays contribute to down time. Maintainability is the ability of an item to be retained in, or restored to, a specified condition when maintenance is performed by personnel having specified skill levels, using prescribed procedures and resources, at each prescribed level of maintenance and repair. Army EAB Upgraded M-113 Effort Put on Hold Due to budgetary constraints, the Army reportedly planned to provide upgraded EAB M-113s to a small number of units outside the continental United States and in South Korea and Europe. In August 2017, Army officials reportedly noted "that the amount of time and resources it would take to achieve a pure fleet solution for both ABCTs and EAB units would likely push fielding into FY 2040 and beyond, which is not a suitable course of action." Officials also suggested that upgrading M-113s for EAB use was "an interim solution until we can get to the optimal solution." The Army had planned to issue a request for proposal (RFP) for upgraded M-113s in the summer of 2018. A number of vendors, including General Dynamics Land Systems (GDLS), BAE Systems, and Science Applications International Corporation (SAIC), reportedly planned to respond to the RFP. Reportedly, on May 21, 2018, the Army indefinitely postponed its plans to upgrade EAB M-113s and also put on hold plans to issue an RFP for upgraded M-113s. AMPV Becomes Part of the Army's Next Generation Combat Vehicle (NGCV) Program23 In October 2018, Army leadership reportedly made the AMPV part of the Army's NGCV program, which is to be overseen by the Army's Futures Command (AFC). Previously, AMPV was overseen by the Program Executive Officer (PEO) for Ground Combat Systems (GCS), but program authority is now shared with the AFC's NGCV Cross Functional Team (CFT). Reportedly, the PEO GCS will retain acquisition legal authorities, but the CFT is to have input on requirements and acquisition schedule. The CFT is also to help prioritize corrective actions needed to address deficiencies identified during testing, as well as identify the resources that will be required. AMPV Moves Into Production and Deployment Phase of Acquisition and Selects a Vendor25 In December 2018, the AMPV program received approval to move into the Production and Deployment phase of acquisition. BAE Systems is to start the production of the first batch of 551 of a total of 2,907 AMPVs, with initial vehicle delivery early in 2020. The Army is expected to field 258 vehicles as part of the European Deterrence Initiative (EDI) in FY2020 and two brigade sets' worth of AMPVs by the end of calendar year 2020. Echelon Above Brigade M-133 Replacement Cancelled26 In January 2019, it was reported that the Army had decided to cancel M-113 replacement at echelons above brigade (EAB) and reprogram funding for higher priorities. At this point, it is not readily apparent how the Army plans to address its previous 1,922 EAB AMPV requirement. Potential Revised AMPV Procurement Rate27 On March 13, 2019, Army leadership reportedly announced the Army had decided to cut funding over the next five years for 93 programs—including the AMPV—to increase available funding for its new modernization strategy. While the Army has yet to release its final five-year reduction plan, program officials reportedly stated that the AMPV's overall top-line requirement would likely remain unchanged, but the Army would likely slow the per-year procurement rate. Other Program Issues DOD Inspector General (IG) Concerns29 An April 28, 2017, DOD IG report noted the Army has effectively managed the AMPV program, in particular keeping it within cost requirements and scheduled timeframes, but also expressed the following concerns: The program might not meet entry requirements for initial production and testing (Milestone C) because the Army has not fully resolved vehicle performance and design demonstration concerns. As a result of the aforementioned performance and design concerns, the AMPV could experience increased costs and schedule delays as a result of addressing the IG's concerns. Because the U.S. Army Deputy Chief of Staff, Programming (G-8) had not revised the procurement quantities to reflect changes to the Army's equipment and force structure requirements, the program's estimated total cost and Average Procurement Unit Cost is not accurate. Government Accountability Office (GAO) 2018 Weapon Systems Annual Assessment Concerns An April 2018 GAO Weapon Systems Annual Assessment expressed the following concerns: The program has experienced development contract cost growth of over 20 percent above target cost due to continued challenges meeting logistics, performance, and production requirements. However, program officials noted that the government's official cost position for AMPV development—based on the independent cost estimate prepared by the Office of Cost Assessment and Program Evaluation—has not changed as it includes adequate margin to account for the cost growth to date. AMPV remains dependent on other programs—such as the Army's Handheld, Manpack, and Small Form Fit Radios—for its key communication and networking capabilities. However, these programs have experienced their own acquisition challenges delaying their availability for the AMPV program. The program is including a legacy radio platform in its production vehicle design configuration, which will, according to program officials, readily accommodate future networking capabilities provided by these other programs. Given the aforementioned 2017 DOD IG concerns and GAO's 2018 concerns regarding cost growth, difficulties meeting a variety of developmental requirements, and dependencies on other programs that are experiencing developmental challenges, the AMPV program will likely receive significant scrutiny and oversight to insure it remains a cost effective and viable program. Director, Operational Test and Evaluation (DOT&E) FY2018 Annual Report32 DOT&E's FY2018 Annual Report noted the following: Preliminary observations of the Limited Users Test indicate the AMPV meets or exceeds its goal of replacing the M113 family of vehicles (FoV) with a more capable platform. The AMPV demonstrated superior power and mobility over the M113 FoV. The AMPV was able to maintain its position in the formation. The AMPV operational mission availability and reliability were far superior to the M113 FoV. The platform provides potential for growth for power demand. Having common parts among all the variants should improve overall availability. The Mission Command variant facilitates digital mission command. The Medical Treatment and Medical Evacuation variants provide improved patient care and treatment capability with a new capability of conducting treatment on the move. The following deficiencies, if uncorrected, could adversely affect AMPV performance: The driver's and vehicle commander's displays would frequently lock up, and the reboots each took 10 minutes. Due to the physical size and location, the commander's weapons station degraded situational awareness of the vehicle commander. The Joint Battle Command Platform and radios in the Mission Command vehicle cannot be removed from their docking stations within the vehicle. This limits the ability of the command group to share a common operational picture when operating as a Tactical Operations Center. The capability to support analog operations is degraded without the stowage for mapboards and plotting boards. The Medical Evacuation vehicle seat stowage and litter lift are difficult to use. (The program manager has identified a design change to correct this deficiency.) The Mortar Carrier's ammunition storage is not optimized to support the mortar system. There is water leakage from the hatch and the roof leaks, affecting the electronics in all variants and patient care in the medical variants. The preliminary survivability assessment identified minor vehicle design vulnerabilities that the Program Office is addressing with the vendor in order to meet survivability and force protections requirements. Department of Defense FY2020 AMPV Budget Request33 The FY2020 budget request includes Research Development, Testing and Evaluation (RDT&E) and Procurement funding requests for the AMPV in both the Base and Overseas Contingency Operations (OCO) budgets, as well as FY2020 requested quantities. The Army notes that FY2020 OCO funding will procure 66 AMPVs to support U.S. European Command's (USEUCOM's) requirement for unit equipment sets to deter potential adversaries and support the European Deterrence Initiative (EDI). Potential Issues for Congress The Way Ahead: Upgraded M-113s at Echelons Above Brigade (EAB) As previously noted, the Army's optimal solution would be to replace EAB M-113s with AMPVs, but the Army felt that given current and projected budgetary constraints, only selected EAB units outside the continental United States and in South Korea and Europe would receive AMPVs while the remainder would receive upgraded M-113s as an interim solution. Reportedly, on May 21, 2018, the Army indefinitely postponed its plans to upgrade EAB M-113s and also put on hold plans to issue an RFP for upgraded M-113s. Reportedly in January 2019, the Army decided to cancel M-113 at EAB replacement efforts. Given the frequently changing nature of the Army's plans for addressing the replacement of legacy M-113s at EAB and the decision to cancel M-113 EAB replacement, it is not unreasonable to question if the Army has a clearly defined "way ahead" for addressing M-113s at EAB. Will the Army simply "leave" M-113s at EAB and continue to maintain them, will they replaced by another vehicle, or is the Army still trying to decide on a course of action and a program strategy? DOD Inspector General (IG), Government Accountability Office (GAO), and Director, Operational Test and Evaluation (DOT&E) Concerns DOD's April 2017 IG report, while acknowledging effective management of the AMPV program, also raised fundamental concerns about performance and design, as well as inaccurate procurement quantities, which could adversely impact program costs. GAO's 2018 concerns regarding cost growth, difficulties meeting a variety of developmental requirements, and dependencies on other programs that are experiencing developmental challenges suggest that programmatic issues continue. DOT&E's 2018 findings noted a number of performance concerns as well. Given these concerns, a more in-depth examination of identified AMPV program deficiencies might prove beneficial for DOD and policymakers alike. Potential Revised AMPV Procurement Rate As previously noted, on March 13, 2019, Army leadership reportedly announced the Army had decided to cut funding over the next five years for 93 programs—including the AMPV—to increase available funding for its new modernization strategy. While the Army is not expected to change its overall AMPV top-line requirement, it could slow the per- year procurement rate. Once the Army has finalized its revised modernization plan, including program cuts, it could be beneficial to provide policymakers with a revised overall AMPV procurement plan, as well as a new fielding plan for units—both Active and Reserves—designated to receive AMPVs.

The Armored Multi-Purpose Vehicle (AMPV) is the Army's proposed replacement for the Vietnam-era M-113 personnel carriers, which are still in service in a variety of support capacities in Armored Brigade Combat Teams (ABCTs). While M-113s no longer serve as infantry fighting vehicles, five variants of the M-113 are used as command and control vehicles, general purpose vehicles, mortar carriers, and medical treatment and evacuation vehicles. The AMPV is intended to be a nondevelopmental program (candidate vehicles will be either existing vehicles or modified existing vehicles—not vehicles that are specially designed and not currently in service). Some suggest a nondevelopmental vehicle might make it easier for the Army to eventually field this system to the force, as most of the Army's past developmental programs, such as the Ground Combat Vehicle (GCV), the Future Combat System (FCS), the Crusader self-propelled artillery system, and the Comanche helicopter, were cancelled before they could be fully developed and fielded. On November 26, 2013, the Army issued a Request for Proposal (RFP) for the AMPV. This RFP stipulated the Army planned to award a five-year Engineering and Manufacturing Development (EMD) contract in May 2014 worth $458 million to a single contractor for 29 prototypes. While the March 2013 RFP established an Average Unit Manufacturing Cost Ceiling for each AMPV at $1.8 million, this was rescinded to permit vendors greater flexibility. The EMD phase was scheduled to run between FY2015 and FY2019, followed by three years of low-rate initial production (LRIP) starting in 2020. As of 2018, the Army planned to procure 2,936 AMPVs to replace M-113s in ABCTs. The Army also has plans to replace 1,922 M-113s at Echelons Above Brigade (EAB), and the Department of Defense (DOD) estimates that if the M-113s are replaced by AMPVs at EAB, total program costs could be increased by an additional $6.5 billion. While the Army would like a pure fleet of AMPVs, budgetary constraints could preclude this. On December 23, 2014, the Army announced it had selected BAE Systems Land and Armaments L.P. as the winner of the EMD contract. The initial award was for 52 months, valued at about $382 million. In addition, the award provided for an optional low-rate initial production (LRIP) phase. The EMD contract did not include EAB AMPV variants. The AMPV reportedly successfully completed its Critical Design Review (CDR) on June 23, 2016. On December 15, 2016, BAE delivered the first general purpose AMPV to the Army for testing. In September 2017, the Army began AMPV reliability, availability, and maintainability (RAM) testing. Also in 2017, based on budgetary constraints, the Army decided it would upgrade a number of EAB M-113s instead of replacing them with AMPVs. In May 2018, the Army decided to put the EAB M-113 upgrade effort on hold. On March 13, 2019, Army leadership reportedly announced the Army had decided to cut funding over the next five years for 93 programs—including the AMPV—to increase available funding for its new modernization strategy. This cut is not expected to affect the overall AMPV requirement but could slow the AMPV production rate. Other program issues include DOD Inspector General (IG) concerns regarding performance and design concerns, as well as inaccurate procurement quantities, which could result in inaccurate program costs. The Government Accountability Office (GAO) in 2018 expressed concerns regarding cost growth, difficulties meeting a variety of developmental requirements, and dependencies on other programs that are experiencing developmental challenges. Potential issues for Congress include a "way ahead" for upgraded M-113s at EAB, DOD Inspector General (IG) and GAO concerns, and the potential revised AMPV procurement rate.

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I n 1994, Congress passed and President Clinton signed the Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ). The act, among other things, made federal and state prisoners ineligible to receive Pell Grants. The Pell Grant program is the single largest source of federal grant aid supporting postsecondary education students. The Violent Crime Control and Law Enforcement Act of 1994 was passed during a period when federal and state policymakers were adopting increasingly punitive measures―such as establishing new crimes, increasing penalties for certain offenses, requiring convicted offenders to serve a greater proportion of their sentences before being eligible for release, and making convicted offenders ineligible for certain government assistance programs―as a means to combat violent crime. However, concerns about the financial and social costs of an increasing prison population and what prisons are doing to rehabilitate prisoners and prevent recidivism have led some policymakers to consider whether some of the "tough on crime" policies of the 1980s and 1990s need to be changed. Policymakers have started to reconsider whether prisoners should be prohibited from utilizing Pell Grants to participate in postsecondary education programs while they are incarcerated. Legislation was introduced in the 115 th and 116 th Congresses that would have allowed incarcerated individuals to receive Pell Grants. As Senator Lamar Alexander noted "most prisoners, sooner or later, are released from prison, and no one is helped when they do not have the skills to find a job. Making Pell grants available to them in the right circumstances is a good idea." In addition, both the Obama Administration and Trump Administration recommended expanding Pell Grants or other targeted federal financial aid to prisoners who are eligible for release after serving a period of incarceration. However, reestablishing prisoners' eligibility for Pell Grants is not without controversy. Legislation was introduced in the 115 th Congress that would have ended the Second Chance Pell Experiment, a program begun under the Obama Administration that evaluates the effects of granting prisoners access to Pell Grants. Opposition to allowing prisoners to receive Pell Grants stems from the belief that taxpayer money should not be used to finance the education of prisoners, especially if it might compromise assistance to non-prisoners. Of note, under current Pell Grant program rules, expanding Pell Grant eligibility to prisoners would not affect the eligibility of non-prisoners or award levels of non-prisoners. This report provides a discussion of issues policymakers might consider if Congress takes up legislation to allow individuals incarcerated in federal and state facilities to receive Pell Grants. Before discussing these issues, the report offers a brief examination of relevant data on the prison population and the educational participation and attainment of incarcerated adults. This is followed by an overview of the history of the prohibition on allowing incarcerated individuals to receive Pell Grants, and a brief discussion of who is eligible for Pell Grants. Prison Populations and Postsecondary Education This section provides information on the number of prisoners in the United States from 1980 to 2018 and an overview of the latest recidivism data from the Department of Justice's Bureau of Justice Statistics (BJS). It also describes the educational attainment of prisoners, and their participation in and completion of educational programs offered to them. The recent debate over prisoners' eligibility for Pell Grants is driven, in part, by concerns that the prohibition on prisoners receiving Pell Grants is hampering access to postsecondary education that could aid prisoners' rehabilitation, assist their efforts to find employment after being released, and help them become productive and law-abiding members of their communities. These concerns are combined with an acknowledgment that "tough on crime" policies contributed to a prison population that grew throughout the 1980s, 1990s, and the early 2000s and, because most offenders sentenced to prison will eventually be released, more people returning to their communities after serving a period of incarceration. The growth in the prison population combined with the Pell Grant ban means that an increasing number of prisoners are unable to participate in postsecondary education and large numbers of ex-prisoners are potentially returning to their communities without having enhanced skills or education while in prison that could aid them in becoming law-abiding citizens. The prison population in the United States increased steadily from 1980 to 2009 before decreasing somewhat from 2010 to 2018 (the most recent year for which prison population data are available). There were approximately 1,471,000 prisoners under the jurisdiction of state and federal correctional authorities in 2018, compared to 330,000 prisoners in 1980. Increased prison populations are a function of increases in prison admissions, among other things, but growth in the prison population absent large increases in the percentage of convicted offenders who were sentenced to death or life in prison without the possibility of parole means that there has also been an increase in the number of people released from prison annually. Approximately 626,000 prisoners were released by state and federal correctional authorities in 2016, up from approximately 158,000 prisoners released in 1980. A recent study by the Bureau of Justice Statistics (BJS) found that 44% of prisoners released from custody in 2005 were rearrested in the first year after their release and 83% of released prisoners had been rearrested after nine years. A review of research on corrections-based educational programming suggests that prisoners who participate in postsecondary education while incarcerated recidivate at lower rates than prisoners who do not participate. However, methodological limitations in many of the studies mean that alternative explanations for the results―for example, that prisoners who took postsecondary coursework had a greater desire to reform themselves―cannot be excluded. Employment and educational attainment have also been linked. Data from the Census Bureau's American Community Survey (ACS) indicate that the employment rate of adults ages 25-64 increases as their level of educational attainment increases. Sixty percent of adults without a high school diploma were in the labor force in 2017 compared to 87% of adults with at least a bachelor's degree. ACS data further indicate that incarcerated individuals have lower levels of educational attainment than the general population. Figure 1 shows that approximately one-third (31%) of incarcerated adults (age 25 or older) have less than a high school diploma, while 12% of non-incarcerated adults have not completed high school. While incarcerated individuals have relatively low levels of educational attainment, data suggests that a large percentage of prisoners are not advancing their education while they are incarcerated. Based on a survey of 1,546 inmates in state, federal, and private prisons, the Department of Education's National Center for Education Statistics (NCES) reported that more than half (58%) did not further their education during their current period of incarceration. The NCES study did not ask prisoners whether the cost of postsecondary education prevented them from participating, but the Institute for Higher Education Policy notes that self-financing can be a barrier for prisoners who want to participate in postsecondary education while they are incarcerated. Background on Pell Grants for Incarcerated Individuals Prior to 1992, all incarcerated individuals were eligible to receive aid under Title IV of the Higher Education Act of 1965 (HEA; P.L. 89-329, as amended), including Pell Grants and loans. Pell Grants are need-based aid that is intended to be the foundation for all federal need-based student aid awarded to undergraduates. A 1982 report by the General Accounting Office (now known as the Government Accountability Office; GAO) estimated that approximately 11,000 federal and state prisoners received Pell Grants in academic year (AY) 1979-1980. ED's Office of the Inspector General (OIG) estimated that about 25,000 prisoners each year received Pell Grants during the period from 1988 to 1992. The 1982 GAO report noted that some states and schools also provided considerable financial assistance to prisoners. The 1980s and 1990s were marked by several policy initiatives at the state and federal level to augment penalties for convicted offenders. In addition, Congress was concerned about schools established solely to take advantage of the HEA Title IV funds provided to incarcerated students, and the possibility of high student loan default rates among individuals formerly or currently incarcerated. Some financial aid administrators questioned whether Pell Grants were the most appropriate source of rehabilitative aid for incarcerated students. The Higher Education Amendments of 1992 ( P.L. 102-325 ) limited the eligibility of incarcerated students to HEA Title IV aid in several ways: Individuals who were sentenced to life in prison without the possibility of parole and those who were sentenced to death were prohibited from receiving a Pell Grant. Pell Grant aid provided to incarcerated students in each fiscal year had to supplement and not supplant the level of postsecondary education assistance provided by the state to incarcerated individuals in FY1988. No incarcerated student was eligible to receive a loan (this remains current law). The cost of attendance for incarcerated students was limited to tuition and fees, and required books and supplies (this remains current law). An institution of higher education (IHE) became ineligible to participate in the HEA Title IV programs if more than 25% of its enrolled students were incarcerated (this remains current law). GAO published a report in 1994 in response to remaining congressional concerns regarding the use of Pell Grants by incarcerated individuals. The report provided data on the number of inmates receiving Pell Grants, described the effect of allowing incarcerated individuals to receive Pell Grants on grants for other needy students, and reviewed the research at that time on the effect of correctional education on recidivism rates. Using ED data for AY1993-1994, GAO reported that approximately 23,000 Pell Grant recipients were incarcerated (less than 1% of all recipients), and the average amount of the Pell Grant was the same regardless of whether individuals were incarcerated or not. Of Pell Grant recipients who were incarcerated, 39% were enrolled in public two-year IHEs, 35% were enrolled in private nonprofit four-year IHEs, and 12% were enrolled in public four-year IHEs. The remaining 14% of incarcerated students were enrolled in public, private nonprofit, or private for-profit programs that granted certificates (10%) or private nonprofit or private for-profit two-year IHEs (4%). GAO indicated that because the Pell Grant program operates as an entitlement for students, the number and amount of Pell Grants for incarcerated individuals had no effect on Pell Grant availability for individuals who were not incarcerated. Finally, GAO concluded that the studies on incarcerated students' participation in educational programming and recidivism "have resulted in conflicting findings" because isolating the effect of correctional education on recidivism was not possible in existing studies for two primary reasons: many interrelated factors affecting recidivism are difficult to define and measure, and an experimental design that randomly assigns prisoners to treatment and control groups would be necessary to eliminate the effect of motivated prisoners self-selecting into correctional education programs. The culmination of the "tough on crime" approach in setting federal policy was the enactment of the Violent Crime Control and Law Enforcement Act of 1994 (VCCLEA, P.L. 103-322 ). The act, among other things, authorized grants to assist states that enacted "truth in sentencing" laws with building new prisons, expanded the number of offenses for which the federal death penalty applies, and established a series of new federal crimes. With respect to the HEA, the VCCLEA eliminated the supplement not supplant provision relating to Pell Grant funds made available to incarcerated individuals and the prohibition on Pell Grant receipt by individuals sentenced to life in prison or the death penalty. The VCCLEA also established the current prohibition against any individuals incarcerated in federal and state penal institutions receiving Pell Grants. As a likely consequence of the newly enacted prohibition on prisoners receiving Pell Grants, combined with previously enacted prohibitions on the receipt of HEA Title IV student loans, the availability of postsecondary education programs to state prisoners and their enrollment in such programs declined. After prisoners were prohibited from receiving Pell Grants, approximately half of the postsecondary correctional education programs closed and those that remained were reduced in size. In addition, from 1991 to 2004 the percentage of state prison inmates enrolling in college courses declined from 14% to 7%. In 2008, Congress passed and President George W. Bush signed into law the Higher Education Opportunity Act ( P.L. 110-315 ), which prohibited those individuals who upon completion of a period of incarceration for a forcible or nonforcible sexual offense were subject to an involuntary civil commitment from receiving Pell Grants. This prohibition was partially in response to the fact that 54 individuals who were civilly committed sex offenders in Florida had received Pell Grants in 2004. Current Pell Grant Eligibility Under Department of Education (ED) regulations for HEA Title IV, an incarcerated student is defined as any "student who is serving a criminal sentence in a federal, state, or local penitentiary, prison, jail, reformatory, work farm, or other similar correctional institution." The definition does not include an individual who is confined in a correctional facility prior to the imposition of any criminal sentence or juvenile disposition, such as an individual confined in a local jail while awaiting trial. Similarly, it does not include students confined or housed in less restrictive settings such as halfway houses or home detention, or who are serving their sentences only on weekends. To be eligible for a Pell Grant, a student must meet requirements established by Title IV of the HEA. Some requirements apply to all of the HEA Title IV student aid programs, and some are specific to the Pell Grant program. Among the requirements generally applicable to the HEA Title IV student aid programs for AY2018-2019 are the following: Students must have a high school diploma or a general educational development (GED) certificate; must have completed an eligible homeschool program; or must have shown an "ability to benefit" from postsecondary education and either be enrolled in an eligible career pathway program or have been initially enrolled in an eligible postsecondary program prior to July 1, 2012. Males who are subject to registration with the Selective Service System (SSS) must be registered with the Selective Service. Students must not be in default on any HEA Title IV student loan. Specific eligibility requirements for the Pell Grant program that may be germane to criminal justice involved individuals include, but are not limited to, the following: Students must not be incarcerated in a federal or state penal institution. Students must not be subject to an involuntary civil commitment following incarceration for a sexual offense (as determined under the Federal Bureau of Investigation's (FBI's) Uniform Crime Reporting (UCR) Program). Therefore, students serving a sentence in a federal or state penal institution, operated by a federal or state government or a contractor, are ineligible for Pell Grants. Other alleged and convicted offenders, however, may be eligible for a Pell Grant. Those incarcerated in a juvenile justice facility or a local or county jail may be eligible. Individuals in a halfway house or home detention, serving a jail sentence only on weekends, or confined prior to the imposition of any criminal sentence or juvenile disposition are eligible for Pell Grants. The other HEA Title IV student aid programs also have eligibility rules for incarcerated students (see regulatory definition above). No incarcerated individual is eligible for any of the loan programs. Incarcerated students are eligible for the Federal Supplemental Educational Opportunity Grant (FSEOG) program and the Federal Work-Study (FWS) program. Despite statutory eligibility, it is unlikely that incarcerated individuals would receive FSEOG or FWS aid because such funds are limited, the aid is subject to additional eligibility requirements established by each IHE, and offering FWS jobs in a correctional setting would be difficult. Second Chance Pell Experiment In 2015, ED initiated the Second Chance Pell Experiment to determine if access to Pell Grants would increase the enrollment of incarcerated individuals in high-quality postsecondary education programs. The initiative was part of the "Obama Administration's commitment to create a fairer, more effective criminal justice system, reduce recidivism, and combat the impact of mass incarceration on communities." HEA Section 487A authorizes the Secretary of Education to waive certain HEA Title IV statutory or regulatory requirements, except for requirements related to award rules, at a limited number of IHEs in order to provide recommendations for proposed regulations and initiatives. The Secretary used this waiver authority to implement the Second Chance Pell Grant Experiment. In promoting the experiment, ED highlighted research finding that making postsecondary education and training opportunities available to incarcerated individuals increases educational attainment, reduces recidivism, and improves post-release employment opportunities and earnings. Under the Second Chance Pell Experiment, participating IHEs, in partnership with federal and/or state prisons, award Pell Grants to individuals who are otherwise Pell-eligible except that they are incarcerated in a federal or state prison. Priority is given to students who are likely to be released from prison within five years. Incarcerated students must enroll in educational programs that lead to high-demand occupations from which such individuals are not legally barred. Education programs may not be offered through correspondence, but may be offered online. In addition, students must be able to complete such programs either while incarcerated or after being released. Participating IHEs must offer academic and career guidance, as well as transition services. Finally, the Pell Grant aid offered under the experiment must supplement and not supplant such postsecondary education assistance provided by the IHE, the prison, or another source. There are 65 IHEs participating in the experiment, enrolling approximately 8,500 inmates in the first year, 11,000 in the second year, and 10,000 in the third year of the experiment. More than one-half of the participating IHEs are public two-year colleges. Approximately two-thirds of participating IHEs already provided postsecondary correctional education prior to joining the experiment. Some IHEs experienced start-up difficulties related to accreditation approvals, the availability of adequate facilities and space, recruiting eligible prisoners, and enrolling a sufficient number of prisoners to make the program financially viable. Of the programs originally planned, approximately 35% were designed to award a postsecondary certificate, 47% were designed to award an associate's degree, and 18% were designed to award a bachelor's degree. ED generally issues reports of experiments that analyze and summarize IHE-reported outcomes and "address how the experiment: reduced administrative burden; avoided creating additional costs to taxpayers; and improved aid delivery services or otherwise benefited students." The reports are intended to inform federal legislative decisionmaking. In February 2019, ED announced that the experiment would be extended an additional year but did not provide an estimate of the release of any data or an evaluation of the program. In April 2019, GAO reported on the status of the Second Chance Pell Experiment (hereafter referred to as the 2019 GAO report ). According to the report, in AY2017-2018, 59 schools disbursed $22.3 million in Pell Grants to over 6,000 prisoners under the experiment. Schools reported various challenges implementing the experiment including, but not limited to, prisoners not being registered for Selective Service, prisoners being in default on a HEA Title IV student loan, and prisoners and school staff having difficulty proving prisoner income and financial need. Select Issues and Discussion Many prisoners are interested in participating in postsecondary education, but one of the most significant barriers to prisoners taking college-level classes is their lack of resources. Providing access to Pell Grants could help reduce this barrier. However, there are several issues policymakers might consider before expanding access to Pell Grants, including overall program costs, whether the federal government should support more research on the effects of postsecondary education in correctional institutions, obstacles to providing access to postsecondary education in a correctional environment, and barriers returning prisoners might face when trying to find post-release employment related to their education. Increased Pell Grant Program Costs Expanding Pell Grant eligibility to some or all federal and state prisoners will increase Pell Grant program costs. The Pell Grant program is funded by a mix of annual discretionary appropriations and permanent mandatory appropriations. Expanding eligibility would increase both discretionary and mandatory costs. The Pell Grant program is often referred to as a quasi-entitlement because, since AY1990-1991, eligible students receive the Pell Grant award level calculated for them without regard to available appropriations. Expanding eligibility without instituting other provisions would not reduce awards for any otherwise eligible individuals and would only expand the pool of eligible individuals. The increase in program costs that would result from making federal and state prisoners eligible for Pell Grants who are currently ineligible would be limited by several provisions under current law: Students must have a high school diploma (or equivalent) or be enrolled in an eligible career pathway program that leads to high school completion and postsecondary credential attainment. As discussed above, 31% of incarcerated individuals do not have a high school diploma (or equivalent) and thus would only be eligible for a Pell Grant if enrolled in an eligible career pathway program. Students must not have already completed the curriculum requirements of a bachelor's or higher degree. As discussed above, 3% of incarcerated individuals have a bachelor's or higher degree. The Pell Grant award for incarcerated students may not exceed the cost of tuition and fees and, if required, books and supplies. The average AY2017-2018 Pell Grant was $4,032 for all undergraduates and $3,541 for students participating in the Second Chance Pell Experiment. Eligibility Factors The following sections describe subgroups of individuals that may require additional consideration when extending Pell Grant eligibility. Pell Grant Eligibility for Prisoners Who Might Not Be Released If policymakers choose to reinstate prisoners' eligibility for Pell Grants, part of the justification for doing so is that taking college coursework might help prisoners obtain post-release employment and reduce their risk of recidivism. However, this reasoning raises a question about whether prisoners who might never be released should be eligible to receive Pell Grants. The current Second Chance Pell Experiment excludes individuals who are unlikely to be released and gives priority to students who are expected to be released within five years. Prisoners who might never be released include those who have been sentenced to periods of incarceration that would realistically exceed their natural life spans and those convicted of sex offenses who could be civilly committed to a secure psychiatric facility after serving their sentences because they are at high risk of committing a violent sex offense. A study conducted by the Sentencing Project found that in 2016, a total of 161,957 state and federal prisoners were serving life sentences. This includes 108,667 prisoners sentenced to life with the possibility of parole (LWP) and 53,290 prisoners sentenced to life without parole (LWOP). Prisoners serving life sentences accounted for one out of every nine prisoners in 2016. The Sentencing Project also found that another 44,311 prisoners were serving virtual life sentences, which were defined as sentences where a prisoner would have to serve at least 50 years of incarceration before being eligible for release. Virtual lifers , while still technically eligible for release (i.e., they were not sentenced to LWOP), are prisoners whose sentences are so long they will most likely spend the rest of their lives in prison. Of note, the Sentencing Project's definition of virtual lifers does not include older prisoners who are sentenced to incarceration and might serve less than 50 years, but because of their advanced age are likely to die in prison. The number of prisoners serving life and virtual life sentences accounted for 14% of all inmates in 2016. The Sentencing Project's research found that a handful of states accounted for the majority of prisoners with LWP, LWOP, and virtual life sentences. Four states (California, Georgia, New York, and Texas) accounted for 55% of all prisoners serving LWP. Four states (California, Florida, Louisiana, and Pennsylvania) and the Bureau of Prisons (BOP) accounted for 53% of all prisoners serving LWOP. Five states (Illinois, Indiana, Louisiana, Pennsylvania, and Texas) accounted for 55% of prisoners with virtual life sentences. The Sentencing Project also found that from 2003 to 2016 there was a 27% increase in the number of prisoners serving any type of life sentence, though the number of prisoners sentenced to LWOP increased by 59% while the number of prisoners sentenced to LWP increased by 18%. When debating about possibly expanding eligibility for Pell Grants, policymakers might also consider whether civilly committed sex offenders, who might never be released, should be allowed to participate in the program. Laws regarding the civil commitment of sex offenders (also known as sexually violent predator or sexually dangerous persons statutes) allow for the involuntary civil commitment of certain sex offenders at the conclusion of their prison sentences. As of 2015, 20 states, the District of Columbia, and the federal government had laws that allowed for the civil commitment of sexually violent predators and sexually dangerous persons. Individuals who are civilly committed are held until courts deem that they no longer meet the criteria for civil commitment. These individuals are held in secure treatment facilities. In general, for someone to be civilly committed the individual must have committed a qualifying sex offense, have a qualifying mental condition (e.g., a personality disorder or a paraphilia ), and be identified as high risk to commit another sexual offense as a result of the disorder. The Prison Policy Initiative reported that 5,430 offenders were civilly committed in 2016 in 15 states. Unlike most prison sentences, there is no set period of time for when someone who is civilly committed will be released. For example, Minnesota has yet to release any civilly committed sex offenders committed to its custody since the mid-1980s, and 40 individuals have died in custody. Pell Grant Eligibility of Individuals Who Lack Selective Service Registration Congress may consider whether to amend the HEA Title IV and Pell Grant eligibility requirement for Selective Service registration because it is an obstacle for some men who have been involved in the criminal justice system. Most men aged 18–25 are required to register with the SSS. Men who are required to register and do not do so are ineligible for Pell Grants, unless they did not knowingly and willfully fail to register. Men ages 18-25 who are incarcerated are not required to register with the Selective Service while they are in prison. Some research shows that men who have been involved in the criminal justice system are at a higher risk for failing to register due to misunderstandings and misinformation. Under current regulations, a man who did not register may still achieve eligibility through one of several processes. If he was not required to register, he can provide evidence of his exception. If he is age 25 or younger, he can register. If he was unable to register for reasons beyond his control, he can provide evidence of the circumstances that prevented him from registering. If he has already served on active duty in the Armed Forces, he can provide evidence of such. If he did not knowingly and willfully fail to register, he may submit to his school an advisory opinion from the SSS that does not dispute his claim that he did not knowingly and willfully fail to register, and the school must not have evidence to the contrary. For incarcerated or previously incarcerated men 26 and older who failed to register, proving Pell Grant eligibility may be cumbersome. Some IHEs in the Second Chance Pell Experiment have advocated waiving the Selective Service registration requirement for incarcerated individuals in order to increase enrollments. The waiver could potentially reduce or eliminate the burden of proving eligibility or establishing eligibility for men 26 and older who were incarcerated at any time during the ages of 18 to 25. Pell Grant Eligibility of Individuals Who Have Not Completed Secondary School If postsecondary education completion by prisoners is a policy objective, the large proportion of prisoners who have not completed a secondary school education may also need to be addressed. As shown previously in Figure 1 , approximately one-third of incarcerated individuals have not completed high school. There are two primary federal approaches for educating adults who have not completed secondary school: supporting elementary and secondary education and supporting postsecondary career pathways. Many correctional systems spend a significant proportion of available funding on providing Adult Basic Education (ABE) and GED preparation courses. Even in cases where prisoners have a high school diploma or GED, they might still need remedial education in order to complete and pass college-level courses. Congress might consider whether there is a need for additional funding or a restructuring of programs to support ABE and GED preparation courses in prisons, or to diagnose learning disabilities in prisoners. There are several federal programs that provide some support that can be used for the secondary education of prisoners: The Adult Education and Family Literacy Act (AEFLA; P.L. 113-128 ), which provides grants to states for basic education for out-of-school adults, specifies that each state must subgrant funds to support educational activities for individuals in correctional institutions and for other institutionalized individuals. AEFLA provides formula grants to states that award competitive grants and contracts to local providers. States may award up to 20% of the funds made available to local providers for programs for corrections education and the education of other institutionalized individuals. The Strengthening Career and Technical Education for the 21 st Century Act ( P.L. 115-224 ) supports the development of career and technical education (CTE) programs that impart technical or occupational skills at the secondary and postsecondary levels. The majority of funding is awarded as formula grants to states, which are authorized to spend up to 2% of their allocation to serve individuals in state institutions, such as state correctional institutions, juvenile justice facilities, and educational institutions that serve individuals with disabilities. The Second Chance Act of 2007, as amended ( P.L. 110-199 ), authorized a series of competitive grants to support offender reentry programs operated by state, local, and tribal governments and nonprofit organizations. These programs include the Adult and Juvenile State and Local Offender Demonstration Program, which may support adult education and training, among several allowable uses. Another of these programs is the Grant Program to Evaluate and Improve Educational Methods at Prisons, Jails, and Juvenile Facilities, which authorizes grants to evaluate and improve academic and vocational education in prisons, jails, and juvenile facilities. Under current provisions in the HEA, schools may establish career pathway programs for students who are not high school graduates but can demonstrate an ability to benefit from postsecondary education. Students enrolled in career pathway programs may be eligible for Pell Grants and other HEA Title IV aid. A career pathway program combines occupational skills training, counseling, workforce preparation, high school completion, postsecondary education, and postsecondary credential attainment. The ability to benefit may be demonstrated by the student passing an examination approved by ED to be eligible for federal student aid, or by successfully completing six credit hours or 225 clock hours of college work applicable to a certificate or degree offered by a postsecondary institution. Ability to benefit tests must be proctored by a certified test administrator and given at an assessment center facility. Administering ability to benefit tests to incarcerated individuals might be challenging. If incarcerated individuals do not take the ability to benefit test, they would have to successfully complete six credit hours or 225 clock hours of college work to become eligible for HEA Title IV aid. Should Congress want to take additional steps to promote postsecondary educational pursuits of incarcerated individuals, it might consider encouraging the development of career pathway programs in correctional environments such that prisoners who have not completed high school may pursue postsecondary education with the aid of a Pell Grant. Additional Research on the Effects of Postsecondary Education in Correctional Institutions As outlined above, there is a lack of regular, comprehensive data on postsecondary education in correctional facilities. The evaluation literature on the effect of postsecondary education on recidivism would benefit from more routinely collected and complete data on postsecondary education that allows for methodologically rigorous studies. This suggests that there might be a role for the federal government to play in collecting and reporting data on postsecondary education in correctional institutions and supporting more rigorous evaluations of postsecondary education for prisoners. BJS collects data on the prison population through its annual National Prisoner Statistics (NPS) program and its Survey of Prison Inmates (SPI). The First Step Act of 2018 ( P.L. 115-391 ) requires BJS to collect data through the NPS on the number of federal prisoners who have a high school diploma or GED prior to entering prison, the number who obtain a GED while incarcerated, and the number of BOP facilities with remote learning capabilities. The SPI collects data related to prisoner participation in education and job training, but the data are collected sporadically. The most recent iteration was conducted in 2016. Prior to that, BJS conducted the SPI in 1974, 1979, 1986, 1991, 1997, and 2004, when it was known as the Survey of Inmates in State and Federal Correctional Facilities. Neither the NPS or the SPI collects data on the types of degrees prisoners seek, how many receive a postsecondary certificate or degree, how much time they spend taking courses, how instruction is provided (e.g., onsite, through correspondence courses, online), or how postsecondary education programs are funded. Nonetheless, BJS has decades of experience collecting data on prison inmates from state correctional agencies and BOP. Congress could consider expanding BJS's mandate under 34 U.S.C. Section 10132 to require the collection and reporting of more detailed data on postsecondary education in correctional facilities. However, states participate in the NPS program voluntarily, so if data collection efforts become too burdensome there is the possibility that some state correctional systems will decline to participate. As a way of promoting state participation in data collection efforts, policymakers might also consider whether to make participation a condition of receiving grant funds under a program such as the Edward Byrne Memorial Justice Assistance Grant (JAG) program. One limitation of both of the NPS program and the SPI is that they only collect data on prisoners while they are incarcerated. Variables that are necessary to evaluate the effectiveness of postsecondary correctional education programs―such as rearrest, reconviction, and reincarceration; post-release educational attainment; post-release employment, and the nature of post-release employment; to just name a few―can only be collected after prisoners have been released, and sometimes several years after they have been released. Even though there are existing data sources that could be used to measure recidivism (e.g., criminal history records data maintained by the Federal Bureau of Investigation (FBI) or in state criminal history repositories), a new federally sponsored longitudinal data collection effort to track whether prisoners attain education credentials post-release or find employment post-release would enable additional research on the relationship between education and post-incarceration success. In addition, policymakers might consider whether to authorize the FBI to share criminal history records with non-governmental research organizations for the purpose of promoting and conducting recidivism research. Congress might also consider other ways to promote research on prisoners' postsecondary education and its impact on recidivism and employment. The literature on postsecondary correctional education lacks studies that utilized randomized controlled trials, which are regarded as the gold standard of social science research. While randomized controlled trials could help draw more definitive conclusions about whether participation in postsecondary education reduces recidivism, it might also undermine the aims of the proposed policy change. A randomized controlled trial would require prisoners to be randomly assigned to a treatment group (postsecondary education programming) or a control group (no postsecondary education programming). This means that some prisoners who might have otherwise enrolled in postsecondary education programming would not be allowed to access it while incarcerated. Although, there are ethical considerations when conducting randomized controlled trials on prisoners and they are afforded additional protections as subjects of behavioral science research studies. Congress could also promote more rigorous evaluations of postsecondary correctional education by providing funding to the National Institute of Justice―the research, development, and evaluation agency of the Department of Justice―that is specifically dedicated for this purpose. It has been argued that evaluations of correctional education programs and other prison-based programming should focus on outcomes other than just recidivism and employment. Cessation of criminal activity is considered an important marker of rehabilitation. However, the emphasis on evaluating how correctional education programs affect recidivism means that little is known about the process whereby education programs help shape how released prisoners re-integrate into their communities. As noted previously, correctional education is believed to help prisoners improve their cognitive skills and abilities, which, in turn, enables them to continue their education and/or training upon release and secure gainful employment. While there is value in improving the quality of evaluations that assess the effect of correctional education on recidivism and employment, there might be value as well in better understanding how the availability of, and participation in, correctional education programs affect changes in motivation, literacy gains, development of concrete skills, disciplinary actions, postsecondary credits earned, and completion of educational programs. Policymakers might also consider whether the federal government should support research into ways to improve the delivery of postsecondary correctional education programs. There is a dearth of methodologically rigorous research on the best way to deliver postsecondary education in prison. For example, prior research seldom accounted for differences in the initial educational level of prisoners. Additionally, there is little research on the effectiveness of different modalities of providing postsecondary education (e.g., in-person instruction, correspondence courses, online learning) or whether the amount of time spent engaging in postsecondary education (i.e., the dosage ) has an effect on recidivism. Obstacles to Providing Access to Postsecondary Education in a Correctional Environment The following sections describe considerations unique to providing and delivering postsecondary education in a correctional environment. Unaccommodating Correctional Environments Even if Congress were to provide access to Pell Grants for certain prisoners, factors related to the correctional environment might limit the ability of prisoners to participate in postsecondary education programs. Three recurring resource challenges identified by ED and GAO are space, access to educational equipment or supplies, and trained staff. In 2016, 14 states and BOP held more inmates than their maximum capacity. Correctional systems and institutions that are over capacity might not be able to provide sufficient classroom space to meet an increase in demand for postsecondary instruction. Prisons in rural areas might also have problems finding instructors who are nearby or are willing to commute to the prison in order to teach college courses. Additionally, even trained educators will require training on effective teaching strategies for correctional students and techniques and procedures for working in restrictive prison environments. It is not unusual for prisoners to be moved from one prison facility to another within the same state or within the federal prison system. Common reasons for the transfer of federal prisoners include security reclassification, medical treatment, and program participation. A prisoner who is transferred from one facility to another would be unable to complete a college course he or she is currently enrolled in if it is an in-person-only class not offered at the facility to which the prisoner is transferred. Programs that are accessible, integrated, and transferrable in every prison in a state or across the federal prison system may reduce the need for transferred prisoners to restart their postsecondary education in a new facility. The Institute for Higher Education Policy (IHEP) argued that many of the resource problems that limit access to postsecondary education could be addressed by providing more access to online courses. However, many correctional agencies limit the ability of prisoners to access the internet. Congress might consider whether there are steps that could be taken to promote online postsecondary courses for prisoners. For example, Congress could support a program to develop and test security protocols for prisoner internet access that allows them access to specific, but not all, web content. Complicated Systems of Responsibility for Correctional Education There are a variety of arrangements through which educational programming is provided to prisoners. In some states, correctional education is the responsibility of the correctional agency; in other states, a separate entity is responsible for providing it, either through a correctional school district or through the state's education department. Having separate agencies responsible for confining prisoners and providing prisoner education can add additional layers of bureaucracy and the agencies' missions might, at times, conflict. Beyond this, in many states the warden of each correctional institution is the one who makes the decision about whether postsecondary education courses will be offered at the prison. Also, the warden can cancel postsecondary courses if he or she objects to them. A 2019 GAO report described the importance of schools coordinating with prison staff and state corrections agencies. This suggests that for an effective expansion of educational activities to occur, there might be a need for states and BOP to have a uniform or coordinated curriculum across all correctional facilities in their respective systems. Policymakers might consider whether there is a need to promote more consistent policies in how states provide correctional education. For example, Congress could place conditions on federal funds to require state correctional departments to determine what type of postsecondary education courses will be available at each facility. Inadequate Education Program Design The educational programs accessed by prisoners may not be designed to increase their academic and post-release success given the unique attributes of the prison population. ED provides a research-based guide for developing education programs to help incarcerated adults transition successfully to their communities. For example, incarcerated individuals may benefit from supportive services. Support services may include assistance selecting academic programs, tutoring, assistance with study skills, assistance with financial literacy, academic and employment counseling, or other academic supports to help them succeed in individual courses and their program of study. For example, some individuals may require advice and assistance in choosing courses, educational programs, and careers that will transfer more easily to practical employment in their post-release communities of choice. Practical employment options for former prisoners are those that provide earnings that permit self-sufficiency, are open to individuals with a criminal record, and are available despite any possible residential or transportation constraints. Some individuals may want to complete their program of study post-release. An incarcerated student who begins a postsecondary degree program through a postsecondary correctional education program may not be able to complete such degree before release and would benefit from the postsecondary correctional education program credits being fully transferrable or articulated to an educational program available to noninstitutionalized students. Strategic partnerships that ensure institutional courses are fully transferrable and articulated to multiple academic programs may increase the program completion rate. Increasing Opportunities for Post-Release Employment In addition to issues related to providing greater access to postsecondary education in prisons, policymakers might also consider issues related to prisoners being able to utilize the education and skills they learned during their coursework to secure post-release employment. Vocational certificates are a form of postsecondary credential that is popular with prisoners. One study found that approximately one in three prisoners (29%) would like to enroll in courses where they could obtain certificates from colleges or trade schools, which is greater than the proportion of prisoners who reported that they would like to enroll in courses that offer an associate's degree (18%), bachelor's degree (14%), master's degree (5%), professional degree (1%), or doctorate degree (2%). However, it is important that the vocational training inmates receive while incarcerated is aligned with employment opportunities that are available in the local job markets to which inmates will return. As IHEP notes, "learning vocational skills that are quickly made obsolete by technological advances or that are irrelevant to local employment opportunities is a waste of money by funders and effort by students." Policymakers might consider whether there should there be mandated coordination between correctional agencies, state departments of labor, and business organizations to ensure that inmates are using Pell Grants to participate in postsecondary education programs that provide the skills needed to secure meaningful employment when they are released. A criminal history can be a barrier to securing employment in a variety of fields, either because formerly incarcerated individuals are prohibited from working in the field due to a provision in law or regulation, or because employers are wary of hiring someone with a criminal history. One estimate suggested that in 2010, 12% of noninstitutionalized men had a felony conviction, and in 2014, 34% of unemployed working-age men had a criminal record. Increasing access to Pell Grants might be for naught if prisoners cannot get hired because of their criminal histories. Policymakers might consider whether there is a need to undertake efforts to reduce the collateral consequences of a criminal history on post-release employment. For example, Congress could consider expanding the Department of Labor's Federal Bonding Program for employers that hire recently released prisoners.

In 1994, Congress passed and President Clinton signed the Violent Crime Control and Law Enforcement Act of 1994 (P.L. 103-322), which, among other things, made prisoners ineligible for Pell Grants. However, concerns about the financial and social costs of the growing prison population combined with concerns about the recidivism rate of released prisoners have led some policymakers to reconsider whether prisoners should be allowed to use Pell Grants to help cover the cost of postsecondary coursework. Pell Grants are intended to assist in making the benefits of postsecondary education available to eligible students who demonstrate financial need. Under Department of Education (ED) regulations, any student who is "serving a criminal sentence in a federal or state penitentiary, prison, jail, reformatory, work farm, or other similar correctional institution" is not eligible to receive a Pell Grant. However, in 2015 ED used its authority under the Higher Education Act (HEA) to create the Second Chance Pell Experiment to determine if access to Pell Grants would increase the enrollment of incarcerated individuals in high-quality postsecondary correctional education programs. Under the experiment, participating institutions of higher education, in partnership with federal and/or state correctional institutions, award Pell Grants to students who are otherwise Pell-eligible except for being incarcerated in a federal or state institution. The experiment is expected to conclude in 2020. There are several issues policymakers might consider if Congress chooses to take up legislation to reinstate prisoners' eligibility for Pell Grants, including the following: The Pell Grant program is a need based program that provides funds to all that qualify. Thus, restoring Pell Grant eligibility to all federal and state prisoners will increase Pell Grant program costs. Should tax dollars be used to educate convicted offenders before they are released from prison? There are some prisoners who have been sentenced to death, whose sentences exceed their life expectancy, or who might be civilly committed indefinitely under sexually dangerous persons statutes after they have served their prison sentences. Should these prisoners be eligible to receive Pell Grants? Educational attainment is lower among incarcerated adults than non-incarcerated adults and even prisoners with high school diplomas or general education development (GED) certificates might need additional assistance to help them prepare for the rigors of postsecondary education. Is there a need for additional investment in remedial education or adult basic education for prisoners to help them prepare for postsecondary education classes? Under current law and regulation, to be eligible for a Pell Grant males who are subject to registration with the Selective Service System (SSS) must register or prove they were either not required by SSS to register or failed to register for an ED-qualifying reason. There is a higher incidence of not registering among men who have been incarcerated during some or all of the period between ages 18 to 25. Should this requirement be retained for incarcerated men, or should the process for proving exceptions be modified to facilitate Pell Grant eligibility for incarcerated men? There is a lack of rigorous evaluations that have isolated the effects postsecondary education has on recidivism, and little research on the best way to deliver postsecondary education in prisons. Should Congress take steps to promote data collection on the availability of, and participation in, postsecondary education to advance research on the effects of postsecondary education on recidivism? There can be barriers to providing educational programming in a correctional environment (e.g., lack of classroom space and trained instructors, limitations on internet access) regardless of Pell Grant receipt. Are there steps Congress could take to mitigate these barriers? A criminal history can be a barrier to securing employment in a variety of fields, either because some convicted offenders are prohibited from working in certain jobs due to a provision in law or regulation, or because employers are wary of hiring someone with a criminal history. Is there interest in undertaking any efforts to reduce the collateral consequences of a criminal history on post-release employment to allow the incarcerated student to fully realize the benefits of postsecondary education?