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The iconography of the Confederate states in the U.S. Civil War is a contested part of American historical memory. Confederate flags, statues, plaques, and similar memorials have been valued historical symbols for some Americans, but for others have symbolized oppression and discrimination. Further, Confederate symbols have sometimes been associated with violent confrontations and hate crimes in the United States, including in recent years. Recent prominent incidents in which Confederate symbols were invoked--in particular, the June 2015 shooting deaths of nine people in a historically black church in Charleston, SC, and violence at an August 2017 rally in Charlottesville, VA--have led to renewed consideration of the presence of Confederate symbols in public spaces. Some local and state governments have elected to remove Confederate statues, flags, and other symbols from places of public prominence. Congress is considering the role of Confederate symbols on federal lands and in federal programs. While no comprehensive inventory of such symbols exists, numerous federal agencies administer assets or fund activities in which Confederate memorials and references to Confederate history are present. The National Park Service (NPS, within the Department of the Interior), the Department of Veterans Affairs (VA), and the Department of the Army within the Department of Defense (DOD) all administer national cemeteries that sometimes display the Confederate flag. Many units of the National Park System are related to Civil War history and contain resources commemorating Confederate soldiers or actions. The Army has military installations named in honor of Confederate generals, and some Navy ships have historically been named after Confederate officers or battles. The U.S. Capitol complex contains works commemorating Confederate soldiers and officials, including statues in the National Statuary Hall Collection. Various federal agencies such as the General Services Administration and the Department of Transportation are connected with sites of Confederate commemoration, either on federal properties or through nonfederal activities that receive federal funding. The presence of Confederate symbols on federal lands, and at some nonfederal sites that receive federal funding, may raise multiple questions for Congress. How should differing views on the meaning of these symbols be addressed? Which symbols, if any, should be removed from federal sites, and which, if any, should be preserved for their historical or honorary significance? Should every tribute to a person who fought for the Confederacy be considered a Confederate symbol? Should federal agencies give additional attention to education and dialogue about the conflicted history of these symbols--including their role in Civil War history and in subsequent historical eras--or are current interpretive efforts adequate? How, if at all, should current practices of honoring the Confederate dead in national cemeteries be changed? To what extent, if any, should the presence of Confederate symbols at nonfederal sites affect federal funding for programs connected to these sites? This report focuses primarily on Confederate symbols administered by three federal entities--NPS, the VA, and DOD. Each of these entities manages multiple sites or programs that involve Confederate symbols. The report begins with a discussion of recent legislative proposals, and then discusses the agencies' current policies with respect to Confederate symbols, along with issues for Congress. Bills in recent Congresses have addressed Confederate symbols and their relation to federal lands and programs. The 115 th Congress is considering bills with varying provisions on Confederate commemorative works, names, and other symbols under federal jurisdiction. The 114 th Congress also considered several legislative proposals, but none were enacted in law. Of the pending proposals in the 115 th Congress, some might be relatively straightforward to implement, while others might give rise to questions about implementation. Depending on specific bill provisions, such questions could include what constitutes a Confederate symbol, how required agency actions toward Confederate symbols would be funded, whether or not a given display of a symbol would qualify as a historical or educational context, and how implementation would be affected by statutory requirements for historic preservation and other existing protections. In the 115 th Congress, H.R. 3660 , the No Federal Funding for Confederate Symbols Act, would prohibit the use of federal funds for the creation, maintenance, or display of any Confederate symbol on any federal property. The term "Confederate symbol" is defined to include Confederate battle flags, any symbols or signs that honor the Confederacy, and any monuments or statues that honor the Confederacy or its leaders or soldiers. The bill specifies that the funding prohibition would not apply if the Confederate symbol is in a museum or educational exhibit, or if the funds are being used to remove the symbol from the federal site. Additionally, H.R. 3660 would direct the Secretary of Defense to rename 10 military installations that are currently named for Confederate military leaders. H.R. 3658 , the Honoring Real Patriots Act of 2017, would require the Secretary of Defense to change the name of any military installation or other property under DOD jurisdiction that is currently named after any individual who took up arms against the United States during the American Civil War or any individual or entity that supported such efforts. H.R. 3779 would direct the Secretary of the Interior to develop a plan for the removal of the monument to Robert E. Lee at Antietam National Battlefield in Maryland. H.R. 3701 and S. 1772 would require the Architect of the Capitol to arrange for the removal from the National Statuary Hall Collection of statues of persons who voluntarily served the Confederate States of America. H.Res. 12 would express the sense of the House of Representatives that the United States can achieve a more perfect union through avoidance and abatement of government speech that promotes or displays symbols of racism, oppression, and intimidation. The resolution would express support for the Supreme Court's conclusion in Walker v. Sons of Confederate Veterans that messages on state-issued license plates constitute government speech that is not protected by the First Amendment. During House consideration of H.R. 3354 , the Interior, Environment, and Related Agencies appropriations bill for FY2018, a number of amendments were submitted regarding Confederate symbols. These amendments would have prohibited funds from being used to create, maintain, or otherwise finance Confederate symbols, each under varying circumstances. None of these amendments were made in order by the House Committee on Rules. In the 114 th Congress, amendments to the FY2016 and FY2017 House Interior, Environment, and Related Agencies appropriations bills would have addressed the display and sale of Confederate flags at NPS units, including NPS national cemeteries. H.Amdt. 592 to H.R. 2822 , the House Interior, Environment, and Related Agencies appropriations bill for FY2016, would have prohibited the use of funds in the bill to implement NPS policies that allow Confederate flags to be displayed at certain times in national cemeteries. An opposing amendment, H.Amdt. 651 , would have prohibited funds from being used to contravene NPS policies on Confederate flags. H.Amdt. 586 would have prohibited NPS from using funds to administer contracts with park partners that sell items in NPS gift shops displaying a Confederate flag as a stand-alone feature. H.Amdt. 606 would have prohibited funds from being used by NPS to purchase or display a Confederate flag at any of its sites, except in situations where the flag would provide historical context. None of these amendments were ultimately included in P.L. 114-113 , the Consolidated Appropriations Act for FY2016. Several similar amendments were submitted in the following year for H.R. 5538 , the Interior, Environment, and Related Agencies appropriations bill for FY2017, but were not made in order by the House Committee on Rules. Separately, an amendment to the FY2017 Military Construction and Veterans Affairs and Related Agencies appropriations bill addressed VA policies on display of the Confederate flag at its national cemeteries. H.Amdt. 1064 to H.R. 4974 would have prohibited funds in the bill from being used by the VA to implement its policy that permitted a Confederate flag to fly from a flagpole at certain times. The House of Representatives passed the bill as amended, but the Confederate flag provision was not included in the final omnibus appropriations legislation and did not become law. Another bill in the 114 th Congress, H.R. 3007 , would have prohibited the display of the Confederate battle flag in any VA national cemetery, but also was not enacted. H.R. 4909 , the House version of the National Defense Authorization Act for FY2017, included a provision to prohibit military departments from having Senior Reserve Officers' Training Corps units at educational institutions that displayed Confederate battle flags. The provision was included in the House-passed version of the bill but not in the enacted law, P.L. 114-328 . Also in the 114 th Congress, S. 1689 would have reduced the amounts available to a state under the federally funded National Highway Performance Program and Surface Transportation Program if the state issued a license plate containing the image of a flag of the Confederate States of America. H.Res. 341 and H.Res. 355 would have required the Speaker of the House to remove any state flag containing a portion of the Confederate battle flag from the House wing of the Capitol or any House office building, except when displayed in Member offices. H.Res. 344 would have expressed the sense of the House urging states to remove the Confederate battle flag from public locations, to discontinue the use of the flag in government speech contexts (such as on license plates), and to remove depictions of the Confederate flag from their state flags, and urging businesses to discontinue selling Confederate battle flags and related merchandise. H.Res. 342 contained provisions similar to those that were later introduced as H.Res. 12 in the 115 th Congress (see above). NPS manages over 70 units of the National Park System related to Civil War history, some of which contain works commemorating Confederate soldiers or actions. Additionally, NPS administers 14 national cemeteries that, under agency policy, may display the Confederate flag at certain times of year. The agency also provides education and interpretation related to Civil War history and the Confederate states. Park gift shops operated by concessioners sometimes sell books or other items that display Confederate symbols. Further, NPS is connected with historic preservation of some nonfederal Confederate memorials through its assistance to nonfederal sites such as national heritage areas, national historic landmarks, and nonfederal properties on the National Register of Historic Places. In the wake of recent incidents, these aspects of the NPS portfolio have come under scrutiny. NPS has no comprehensive inventory of commemorative works at park sites--such as statues, plaques, and similar memorials--that relate to Confederate history. Confederate commemorative works are found at numerous NPS battlefields and other Civil War-related park units. Many of these works (such as the monument shown in Figure 1 ) are listed on, or are eligible for listing on, the National Register of Historic Places, and thus are afforded certain protections under the National Historic Preservation Act (NHPA). In particular, Section 106 of the NHPA requires agencies to undertake consultations before taking actions that may adversely affect these listed or eligible historic properties, and Section 110(f) of the act provides similar, but stronger, protections for historic properties that have been designated as national historic landmarks. Some Confederate commemorative works in parks are not eligible for historic property designations, for example because they were constructed relatively recently. NPS policies govern the establishment and removal of commemorative works in national park units (except in the District of Columbia, where the Commemorative Works Act applies). Under NPS policy, new commemorative works in park units must be authorized by Congress or approved by the NPS Director. In Civil War parks, the policies preclude approval unless a work is specifically authorized by Congress or "would commemorate groups that were not allowed to be recognized during the commemorative period." Many Confederate commemorative works currently in NPS units would not have been subject to the NPS policies at the time of their establishment, because they were erected prior to NPS acquisition of the land. Concerning removal of commemorative works from NPS units, the agency's policies state the following: Many commemorative works have existed in the parks long enough to qualify as historic features. A key aspect of their historical interest is that they reflect the knowledge, attitudes, and tastes of the persons who designed and placed them. These works and their inscriptions will not be altered, relocated, obscured, or removed, even when they are deemed inaccurate or incompatible with prevailing present-day values. Any exceptions from this policy require specific approval by the Director. NPS could face a number of constraints in considering removal of a Confederate commemorative work, depending on specific circumstances. Some commemorative works were established pursuant to acts of Congress, and thus could not be removed administratively by NPS. In other cases, such as those where the works existed prior to a park's establishment, requirements in park-establishing legislation that NPS preserve the park unit's resources, as well as historic property protections under the NHPA if a commemorative work is eligible for listing on the National Register of Historic Places, could constrain the agency's options for removal. Broadly, NPS's mission under its Organic Act is to "conserve the scenery and the natural and historic objects and the wild life" in park units and to provide for their use "in such manner and by such means as will leave them unimpaired for the enjoyment of future generations." This fundamental mission could be seen as being at odds with potential administrative actions to remove existing works from park units. NPS could thus conclude that congressional legislation would be required to authorize the removal of particular works. Press reports following the August 2017 incidents in Charlottesville quoted NPS as stating that the agency "is committed to safeguarding these memorials while simultaneously educating visitors holistically and objectively about the actions, motivations, and causes of the soldiers and states they commemorate." In addition to structures such as monuments and memorials, some national park units have flown Confederate flags in various contexts, such as in battle reenactments. Prior to June 2015, NPS did not have a specific policy regarding the display of the Confederate flag outside of national cemeteries. After the Charleston, SC, shooting in 2015, then-NPS Director Jonathan Jarvis stated the following in a policy memorandum: Confederate flags shall not be flown [NPS emphasis] in units of the national park system and related sites with the exception of specific circumstances where the flags provide historical context, for instance to signify troop location or movement or as part of a historical reenactment or living history program. All superintendents and program managers should evaluate how Confederate flags are used in interpretive and educational media, programs, and historical landscapes and remove the flags where appropriate. This policy remains in effect unless rescinded or amended. NPS administers 14 national cemeteries, mainly related to the Civil War. NPS cemeteries contain graves of both Union and Confederate soldiers. Under NPS policies, they are administered "to preserve the historic character, uniqueness, and solemn nature of both the cemeteries and the historical parks of which they are a part." NPS policies address the display of Confederate flags at the graves of Confederate soldiers in NPS national cemeteries. The policies allow the Confederate flag to be displayed in some national cemeteries on two days of the year. If a state observes a Confederate Memorial Day, NPS cemeteries in the state may permit a sponsoring group to decorate the graves of Confederate veterans with small Confederate flags. Additionally, such flags may also be displayed on the nationally observed Memorial Day, to accompany the U.S. flag on the graves of Confederate veterans. In both cases, a sponsoring group must provide and place the flags, and remove them as soon as possible after the end of the observance, all at no cost to the federal government. At no time may a Confederate flag be flown on an NPS cemetery flagpole. Following the June 2015 shootings in Charleston, House Members addressed the display of Confederate flags at NPS cemeteries in proposed amendments to Interior appropriations bills for both FY2016 and FY2017. The amendments are described in the " Recent Legislation " section of this report. Some NPS units have shops operated by concessioners, cooperating associations, or other partners, which sell items related to the themes and features of the park. Following the June 2015 shootings in Charleston, both NPS and Congress addressed the sale of Confederate-themed items in NPS shops, particularly items displaying the Confederate flag. NPS asked its concessioners and other partners to voluntarily end sales of items that "depict a Confederate flag as a stand-alone feature, especially items that are wearable and displayable." NPS specified that "books, DVDs, and other educational and interpretive media where the Confederate flag image is depicted in its historical context may remain as sales items as long as the image cannot be physically detached." During consideration of FY2016 and FY2017 Interior appropriations, House Members introduced amendments concerning sales of Confederate-themed items in NPS facilities. See the " Recent Legislation " section for more information. NPS's responsibilities include assisting states, localities, and private entities with heritage and historic preservation efforts. NPS provides financial and technical assistance to congressionally designated national heritage areas , which consist primarily of nonfederal lands in which conservation efforts are coordinated by state, local, and private entities. Some heritage areas encompass sites with commemorative works and symbols related to the Confederacy. NPS also administers national historic landmark designations and the National Register of Historic Places. Through these programs, the Secretary of the Interior confers historic preservation designations primarily on nonfederal sites. The designations provide certain protections to the properties and make them eligible for preservation grants and technical preservation assistance. Some nonfederal sites commemorating the Confederacy have been listed on the National Register of Historic Places, and some have been designated as national historic landmarks. In debates about removing Confederate symbols at the state and local levels, these NPS-designated sites are sometimes involved. For example, the Monument Avenue Historic District in Richmond, VA, which contains a series of monuments to Confederate officers, is a national historic landmark district that has been the subject of debate. As discussed above, National Register properties and national historic landmarks have some protections under Sections 106 and 110 of the NHPA. However, the designations do not prohibit nonfederal landowners from altering or removing their properties. Only if federal funding or licensing were required for such actions would the NHPA protections be invoked. Members of Congress have been divided on the appropriate role of Confederate symbols in the National Park System. Some legislation has sought to withhold funding for the maintenance of any Confederate symbols in national park units, other legislation to withhold funding for certain NPS uses of Confederate symbols outside of a historic context, other legislation to remove particular Confederate symbols, and still other legislation to maintain the status quo in terms of these symbols' presence in the park system. Also divisive has been the question of the periodic display of Confederate flags on headstones in NPS national cemeteries. Proposals concerning Confederate symbols at NPS sites arise in the context of the agency's mission to preserve its historic and cultural resources unimpaired for future generations. Absent congressional authorization, NPS's preservation mandates could constrain the agency from taking administrative actions desired by some, such as removing Confederate commemorative works from NPS units. Under both the Obama and Trump Administrations, NPS has expressed that some Confederate symbols in park units are required to be preserved under NPS statutes and can be framed and interpreted appropriately through educational activities. At the same time, the Obama Administration took steps to discourage or end some other uses of Confederate symbols--in particular the use of the Confederate flag in a "stand-alone" context. This policy has remained in place under the Trump Administration. If Congress desired to remove Confederate commemorative works in the National Park System, another consideration would be how to fund the removals. NPS, which faces a sizable backlog of deferred maintenance, has stated that it generally lacks funds to dispose of unneeded or unwanted assets. The Department of Veterans Affairs (VA) administers 135 national cemeteries and 33 soldier's lots and memorial areas in private cemeteries through the National Cemetery Administration (NCA). All cemeteries administered by the NCA are "considered national shrines as a tribute to our gallant dead." The first national cemeteries were developed during the Civil War and were administered by the military. Over time, the federal government created new national cemeteries and took control of cemeteries that previously had been administered privately or by the states. The NCA was created in 1973 when all national cemeteries then administered by the Army, with the exception of Arlington National Cemetery and Soldier's Home National Cemetery in Washington, DC, were transferred to the VA. Numerous national cemeteries and lots contain the remains of former Confederate soldiers and sailors, including those who died while being held prisoner by the United States or in federal hospitals during the Civil War. Under current law, however, persons whose only military service was in the Confederate army or navy are not eligible for interment in national cemeteries. The NCA is authorized to provide grants to state, territorial, or tribal governments to assist with the establishment of state veterans' cemeteries. These grants may be used only for establishing, expanding, or improving cemeteries and cannot be used for land acquisition or regular operating expenses. State veterans' cemeteries that receive federal grants must adhere to federal law regarding eligibility for interment, but may add additional restrictions on eligibility such as residency requirements. Thus, since Confederate veterans are not eligible for interment in national cemeteries, they are also not eligible for interment in state veterans' cemeteries that receive federal grants. Federal law permits the VA to accept monuments and memorials donated by private entities and to maintain these monuments and memorials in national cemeteries, including those dedicated to individuals or groups. The VA website identifies 34 monuments and memorials in national cemeteries that explicitly honor Confederate soldiers, sailors, political leaders, or veterans. Some of these monuments and memorials predate federal control of the cemeteries where they are located. For example, one of the Confederate monuments at Point Lookout Confederate Cemetery in Maryland was erected before the state transferred control of that cemetery to the federal government. Other monuments and memorials were more recently established, such as the Confederate monument erected by the United Daughters of the Confederacy and the Sons of Confederate Veterans in 2005 at Camp Butler National Cemetery in Illinois. Table 1 provides a list of national cemeteries with Confederate monuments and memorials and the dates, if available, of their establishment. Veterans interred in national cemeteries, or in state or private cemeteries, are generally eligible for headstones or grave markers provided at no cost by the VA. For Confederate veterans, government headstones or grave markers may be provided only if the grave is currently unmarked. The person requesting a headstone for a Confederate veteran may select a standard VA headstone, which includes identifying information about the veteran and his or her service and an emblem of belief corresponding to the veteran's faith, or a special Confederate headstone that includes the Southern Cross of Honor as shown in Figure 2 . The Southern Cross of Honor was created by the United Daughters of the Confederacy in 1898 and is the only emblem, other than an emblem of belief or an emblem signifying receipt of the Medal of Honor, that may be included on a government headstone or grave marker. Similar to NPS policy, VA policy allows for small flags of the former Confederate States of America (Confederate flags) to be placed at individual gravesites of Confederate veterans, with or without a U.S. flag, on Memorial Day and on Confederate Memorial Day in states that have designated a Confederate Memorial Day. In states without a Confederate Memorial Day, another date may be selected by the cemetery administrator. The VA does not provide the Confederate flags. The display is allowed only at national cemeteries where Confederate soldiers and sailors are buried. Any display of a Confederate flag must be requested by a sponsoring historical or service organization, which must provide the flags. The sponsoring organization must also place and remove the flags at no cost to the government. The VA also permits the family members of a deceased veteran to display a Confederate flag during an interment, funeral, or memorial service at a national cemetery in accordance with federal law, which permits the display of "any religious or other symbols chosen by the family." In 2016, the House of Representatives agreed to an amendment to the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2017, that would have prohibited the VA from implementing its policy that permitted a Confederate flag to fly from a flagpole, subordinate to the U.S. flag, at national cemeteries with Confederate veterans buried in mass graves on the same days that small graveside Confederate flags were permitted. The House of Representatives passed the bill as amended, but the Confederate flag provision was not included in the final omnibus appropriations legislation and did not become law. On August 12, 2016, the VA announced that the agency was amending its policy such that a Confederate flag may no longer fly from a fixed flagpole at any national cemetery at any time. The current controversy over the display of Confederate symbols on public lands and supported with federal funds affects the VA, its national cemeteries, and current law and policy regarding the provision of headstones for Confederate gravesites. The desire to remove Confederate symbols is balanced against federal policy that permits existing Confederate graves in national cemeteries to remain undisturbed and permits Confederate monuments and memorials in national cemeteries and the use of a Confederate symbol on government headstones. Legislation such as H.R. 3660 , which references Confederate symbols, raises questions about how existing headstones, monuments, and memorials would be treated within the context of maintaining national cemeteries as "national shrines," as well as whether or not future headstones issued by the VA for unmarked Confederate graves should include the Southern Cross of Honor. According to the Department of Defense (DOD), a servicemember's right of expression should be preserved to the maximum extent possible in accordance with the constitutional and statutory provisions of Title 10 of the U.S. Code , and consistent with good order and discipline and the national security. The Defense Department does not explicitly prohibit the display of the Confederate flag. However, if a commander determines that the display of the Confederate flag or Confederate symbols is detrimental to the good order and discipline of the unit, then the commander can ban such displays. Currently, the Navy is the only military service that has an overall policy concerning the Confederate flag. NSTCINST 5000.1F, Naval Service Training Command Policy Statement Regarding the Confederate Battle Flag , August 29, 2017 (Enclosure 7), states the following: 1. It is critical that all Naval Service Training Command (NSTC) Sailors, Marines, and civilians, as well as the general public, trust that NSTC is committed to providing an environment of equal opportunity (EO) and maintaining an ethnically-diverse workforce. To promote a positive EO environment, Command leaders must avoid associating the Navy with symbols that will undermine our message that NSTC is dedicated to providing an environment free of discrimination or harassment. 2. Reasonable minds differ on what the Confederate battle flag signifies. Some Americans see it as a symbol of racism and hatred, others view it as a symbol of Southern pride and heritage, while yet others consider it an outright political message. When Command leaders associate their unit with the Confederate battle flag, such as by displaying the Confederate battle flag or presenting an award that conspicuously emphasizes the Confederate battle flag, they link the Navy with the meanings that people associate with that symbol--good and bad. Command Leaders should not connect the Navy to the Confederate battle flag in a way that undermines the Navy's message of inclusiveness. However, not all displays of the Confederate battle flag will result in such inferences. A cased Confederate battle flag displayed alongside other Civil War artifacts in a Navy museum is unlikely to be viewed as a partisan statement by the Navy. Command leaders must use good sense in deciding which uses will not undermine our positive EO message. 3. While the First Amendment does not limit which messages the Navy as an organization chooses to convey, it does limit Navy regulation of individual expression rights. Therefore, Command leaders must preserve the free expression rights of NSTC Sailors, Marines, and civilians to the maximum extent possible in accordance with the Constitution and statutory provisions. That said, no Command leader should be indifferent to conduct that, if allowed to proceed unchecked, would destroy the effectiveness of a unit. Command leaders must use calm and prudent judgment when balancing these interests. Some military recruits with Confederate flag tattoos have been barred from joining the military on the basis of policies prohibiting certain types of tattoos. The Army, Navy, Air Force, and Marine Corps all have policies that prohibit tattoos that are injurious to good order and discipline. There is no explicit prohibition against the Confederate flag and symbols in tattoos. However, the Navy does have a general policy regarding the display of the Confederate flag (see above). Army Regulation (AR) 670-1, Uniform and Insignia Wear and Appearance of Army Uniforms and Insignia , prohibits soldiers from having any extremist, indecent, sexist, or racist tattoos or markings anywhere on their body. The Army has no specific prohibitions concerning the Confederate flag or symbols. Naval Personnel Command (NAVPERS) Instruction 15665I, General Uniform Regulations , Chapter 2, Grooming Standards, Article 2201.7 states the following: Tattoos/body art/brands located anywhere on the body that are prejudicial to good order, discipline, and morale or are of a nature to bring discredit upon the naval service are prohibited. For example, tattoos/body art/brands that are obscene, sexually explicit, and or advocate discrimination based on sex, race, religion, ethnic, sexual orientation or national origin are prohibited. In addition, tattoos/body art/brands that symbolize affiliation with gangs, supremacist or extremist groups, or advocate illegal drug use are prohibited. Marine Corps Bulletin 1020, Marine Corps Tattoo Policy , states, "Tattoos located anywhere on the body that are prejudicial to good order and discipline, or are of a nature to bring discredit upon the naval service, are prohibited. Examples include, but are not limited to, tattoos that are drug-related, gang-related, extremist, obscene or indecent, sexist, or racist." There is no specific prohibition for the Confederate flag, but some recruits with Confederate flag tattoos have reportedly been barred in the past for violating the Marine Corps' tattoo policy. Air Force Instruction (AFI) 36-2903, Dr ess and Personal Appearance of Air Force Personnel, Chapter 3.4.1, states, "Tattoos/brands/body markings anywhere on the body that are obscene, commonly associated with gangs, extremist, and/or supremacist organizations, or that advocate sexual, racial, ethnic, or religious discrimination are prohibited in and out of uniform." There is no explicit prohibition against the Confederate flag. For more information, see CRS Report R44321, Diversity, Inclusion, and Equal Opportunity in the Armed Services: Background and Issues for Congress . Arlington National Cemetery is under the jurisdiction of the U.S. Army. The Army policy states in Department of the Army (DA) Pamphlet 290-5, Administration, Operation, and Maintenance of Army Cemeteries , that on Memorial Day, or on the day when Confederate Memorial Day is observed, a small Confederate flag of a size not to exceed that of the U.S. flag may be placed on Confederate graves at private expense. Individuals or groups desiring to place these flags must agree in writing to absolve the federal government from any responsibility for loss or damage to the flags. Confederate flags must be removed at private expense on the first workday following Memorial Day or the day observed as Confederate Memorial Day. On June 6, 1900, Congress authorized $2,500 for a section of Arlington National Cemetery to be set aside for the burial of Confederate dead. Section 16 was reserved for Confederate graves, and among the 482 persons buried there are 46 officers, 351 enlisted men, 58 wives, 15 southern civilians, and 12 unknowns. To further honor the Confederate dead at Arlington, the United Daughters of the Confederacy petitioned to erect a monument that was approved by then-Secretary of War William Howard Taft on March 4, 1906, and sculpted by Moses Ezekiel (see Figure 3 and Figure 4 ). President Woodrow Wilson unveiled the memorial on June 4, 1914. Currently there are 10 major Army installations in southern states named after Confederate military leaders and no such installations for the other military departments. For more information on these installations and the naming policy and procedures for each military department, see CRS Insight IN10756, Confederate Names and Military Installations . The Department of the Army has no formal administrative process for renaming military installations. Following the 2015 shooting in Charleston, SC, then-Army Chief of Public Affairs Brigadier General Malcolm Frost said, "Every Army installation is named for a soldier who holds a place in our military history. Accordingly, these historic names represent individuals, not causes or ideologies." Legislation has been introduced in the 115 th Congress to rename the bases: H.R. 3658 , Honoring Real Patriots Act of 2017, would require the Secretary of Defense to rename any military property "that is currently named after any individual who took up arms against the United States during the American Civil War or any individual or entity that supported such efforts." H.R. 3660 would also direct that the bases be renamed and would prohibit the use of federal funds for maintenance of Confederate symbols, including on military installations. Proponents of renaming the bases contend that there are noteworthy national military leaders from other conflicts who demonstrated selfless service and sacrifice, including Medal of Honor recipients, who would be more appropriate for such an honor. Opponents of renaming these installations cite the bureaucracy of creating a new review process and the difficulty of satisfying the various viewpoints over which names (if any) would be selected as subjects of contention. In sum, Congress faces multiple questions and proposals concerning Confederate symbols on federal lands and in federally funded programs. Legislation in the 115 th Congress would address Confederate symbols in different ways. Proposals range from those concerned with individual Confederate symbols to those that would broadly affect all Confederate symbols on federal lands. In some cases, questions could arise about how the proposals would be implemented from a logistical and financial standpoint, and how they would interact with existing authorities. | In the wake of violent incidents in which symbols of the Civil War Confederacy have played a role, Congress is considering the relationship of Confederate symbols to federal lands and programs. A number of federal agencies administer assets or fund activities in which Confederate memorials and references to Confederate history are present. This report focuses on three federal entities--the National Park Service (NPS), the Department of Veterans Affairs (VA), and the Department of Defense (DOD)--that manage multiple sites or programs involving Confederate symbols. The report discusses the agencies' policies concerning Confederate symbols, recent legislative proposals, and issues for Congress. NPS manages over 70 units of the National Park System related to Civil War history, some of which contain works commemorating Confederate soldiers or actions. NPS also administers national cemeteries that display the Confederate flag at certain times. Further, the agency is connected with some state and local Confederate memorials through its historic preservation assistance to nonfederal sites. NPS manages its Confederate-related assets in the context of its statutory mission to preserve historic and cultural resources unimpaired for future generations. NPS engages in interpretation and education about these symbols. Through its National Cemetery Administration, the VA administers 135 national cemeteries, many of which contain the remains of Confederate soldiers. The VA also provides grants to assist with the establishment of state veterans' cemeteries. Confederate graves in VA cemeteries may have a special headstone that includes the Southern Cross of Honor, and may display the Confederate flag at certain times. The VA website also identifies 34 monuments and memorials in national cemeteries that explicitly honor Confederate soldiers or officials. Management takes place in the context of the VA's mandate to maintain national cemeteries as "national shrines." Within DOD, the Army administers 10 major installations named after Confederate military leaders; there are no such installations for the other military departments. The Army also has jurisdiction over Arlington National Cemetery, which contains a section for Confederate graves and a monument to Confederate dead. More broadly, the military services have considered Confederate symbols in the context of policies for good order and discipline within units. Only the Navy has an overall policy on the display of the Confederate flag. The presence of Confederate symbols in federal lands and programs may raise multiple questions for Congress. Confederate flags, statues, plaques, and similar memorials have been valued historical symbols for some Americans, but for others have symbolized oppression and discrimination. How should differing views on the meaning of these symbols be addressed? What constitutes a Confederate symbol, and should some or all of these symbols be removed from federal sites, or alternatively, preserved for their historical or honorary significance? Are current interpretive efforts adequate to convey the history of these symbols, or should federal agencies offer additional education and dialogue about their role in Civil War history and in subsequent historical eras? How, if at all, should current practices of honoring the Confederate dead in national cemeteries be changed? To what extent, if any, should the presence of Confederate symbols at nonfederal sites affect federal funding for programs connected to these sites? Recent legislative proposals, including H.R. 3658, H.R. 3660, H.R. 3701/S. 1772, H.R. 3779, and H.Res. 12 in the 115th Congress, would address these issues in different ways. They range from bills concerned with individual Confederate symbols to those that would broadly affect all Confederate symbols on federal lands. In some cases, questions could arise about how the proposals would be implemented from a logistical and financial standpoint, and how they would interact with existing authorities. | 8,047 | 825 |
Congressional oversight refers to the review, monitoring, and supervision of federal agencies, programs, activities, and policy implementation. Congress exercises this power largely through its standing committee system. However, oversight, which dates to the earliest days of the Republic, also occurs in a wide variety of congressional activities and contexts. These include authorization, appropriations, investigative, and legislative hearings by standing committees; specialized investigations by select committees; and reviews and studies by congressional support agencies and staff. Congress's oversight authority derives from its "implied" powers in the Constitution, public laws, and House and Senate rules. It is an integral part of the American system of checks and balances. Underlying the legislature's ability to oversee the executive branch are democratic principles as well as practical purposes. John Stuart Mill, the British Utilitarian philosopher, insisted that oversight was the key feature of a meaningful representative body: "The proper office of a representative assembly is to watch and control the government." As a young scholar and future President, Woodrow Wilson--in his 1885 treatise, Congressional Government --equated oversight with lawmaking, which was usually seen as the supreme function of a legislature. He wrote, "Quite as important as legislation is vigilant oversight of administration." The philosophical underpinning for oversight is the Constitution's system of checks and balances among the legislative, executive, and judicial branches. James Madison, known as the "Father of the Constitution," described the system in Federalist No. 51 as establishing "subordinate distributions of power, where the constant aim is to divide and arrange the several offices in such a manner that each may be a check on the other." Oversight, as an outgrowth of this principle, ideally serves a number of overlapping objectives and purposes: improve the efficiency, economy, and effectiveness of governmental operations; evaluate programs and performance; detect and prevent poor administration, waste, abuse, arbitrary and capricious behavior, or illegal and unconstitutional conduct; protect civil liberties and constitutional rights; inform the general public and ensure that executive policies reflect the public interest; gather information to develop new legislative proposals or to amend existing statutes; ensure administrative compliance with legislative intent; and prevent executive encroachment on legislative authority and prerogatives. In sum, oversight is a way for Congress to check on, and check, the executive branch. Although the Constitution grants no formal, express authority to oversee or investigate the executive or program administration, oversight is implied in Congress's impressive array of enumerated powers. The legislature is authorized to appropriate funds; raise and support armies; provide for and maintain a navy; declare war; provide for organizing and calling forth the national guard; regulate interstate and foreign commerce; establish post offices and post roads; advise and consent on treaties and presidential nominations (Senate); and impeach (House) and try (Senate) the President, Vice President, and civil officers for treason, bribery, or other high crimes and misdemeanors. Reinforcing these powers is Congress's broad authority "to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof." The authority to oversee derives from these constitutional powers. Congress could not carry them out reasonably or responsibly without knowing what the executive is doing; how programs are being administered, by whom, and at what cost; and whether officials are obeying the law and complying with legislative intent. The Supreme Court has legitimated Congress's investigative power, subject to constitutional safeguards for civil liberties. In 1927, the Court found that, in investigating the administration of the Department of Justice, Congress was considering a subject "on which legislation could be had or would be materially aided by the information which the investigation was calculated to elicit." The "necessary and proper" clause of the Constitution also allows Congress to enact laws that mandate oversight by its committees, grant relevant authority to itself and its support agencies, and impose specific obligations on the executive to report to or consult with Congress, and even seek its approval for specific actions. Broad oversight mandates exist for the legislature in several significant statutes. The Legislative Reorganization Act of 1946 (P.L. 79-601), for the first time, explicitly called for "legislative oversight" in public law. It directed House and Senate standing committees "to exercise continuous watchfulness" over programs and agencies under their jurisdiction; authorized professional staff for them; and enhanced the powers of the Comptroller General, the head of Congress's investigative and audit arm, the Government Accountability Office (GAO). The Legislative Reorganization Act of 1970 (P.L. 91-510) authorized each standing committee to "review and study, on a continuing basis, the application, administration and execution" of laws under its jurisdiction; increased the professional staff of committees; expanded the assistance provided by the Congressional Research Service; and strengthened the program evaluation responsibilities of GAO. The Congressional Budget Act of 1974 ( P.L. 93 - 344 ) allowed committees to conduct program evaluation themselves or contract out for it; strengthened GAO's role in acquiring fiscal, budgetary, and program-related information; and upgraded GAO's review capabilities. Besides these general powers, numerous statutes direct the executive to furnish information to or consult with Congress. For example, the Government Performance and Results Act of 1993 ( P.L. 103 - 62 ) requires agencies to consult with Congress on their strategic plans and report annually on performance plans, goals, and results. In fact, more than 2,000 reports are submitted each year to Congress by federal departments, agencies, commissions, bureaus, and offices. Inspectors general (IGs), for instance, report their findings about waste, fraud, and abuse, and their recommendations for corrective action, periodically to the agency head and Congress. The IGs are also instructed to issue special reports concerning particularly serious and flagrant problems immediately to the agency head, who transmits them unaltered to Congress within seven days. Inspectors general also communicate with Members, committees, and staff of Congress in other ways, including testimony at hearings, in-person meetings, and written and electronic communications. The Reports Consolidation Act of 2000 ( P.L. 106 - 531 ), moreover, instructs the IGs to identify and describe their agencies' most serious management and performance challenges and briefly assess progress in addressing them. This new requirement is to be part of a larger effort by individual agencies to consolidate their numerous reports on financial and performance management matters into a single annual report. The aim is to enhance coordination and efficiency within the agencies; improve the quality of relevant information; and provide it in a more meaningful and useful format for Congress, the President, and the public. In addition to these avenues, Congress creates commissions and establishes task forces to study and make recommendations for select policy areas that can also involve examination of executive operations and organizations. There is a long history behind executive reports to Congress. Indeed, one of the first laws of the First Congress--the 1789 Act to establish the Treasury Department (1 Stat. 66)--called upon the Secretary and the Treasurer to report directly to Congress on public expenditures and all accounts. The Secretary was also required "to make report, and give information to either branch of the legislature ... respecting all matters referred to him by the Senate or House of Representatives, or which shall appertain to his office." Separate from such reporting obligations, public employees may provide information to Congress on their own. In the early part of the 20 th century, Congress enacted legislation to overturn a "gag" rule, issued by the President, that prohibited employees from communicating directly with Congress (5 U.S.C. 7211 (1994)). Other "whistleblower" statutes, which have been extended specifically to cover personnel in the intelligence community ( P.L. 105 - 272 ), guarantee the right of government employees to petition or furnish information to Congress or a Member. Chamber rules also reinforce the oversight function. House and Senate rules, for instance, provide for "special oversight" or comprehensive policy oversight, respectively, for specified committees over matters that relate to their authorizing jurisdiction. House rules also direct each standing committee to require its subcommittees to conduct oversight or to establish an oversight subcommittee for this purpose. House rules also call for each committee to submit an oversight agenda, listing its prospective oversight topics for the ensuing Congress, to the House Committee on Oversight and Government Reform, which reports the oversight plans to the House, and the Committee on House Administration. The House Oversight and Government Reform Committee and the Senate Homeland Security and Governmental Affairs Committee, which have oversight jurisdiction over virtually the entire federal government, furthermore, are authorized to review and study the operation of government activities to determine their economy and efficiency and to submit recommendations based on GAO reports to the House and the Senate, respectively. In addition, the House Oversight and Government Reform Committee may conduct an investigation of any matter. For any investigation it does conduct, the committee shall provide its findings and recommendations to any other standing committee that has jurisdiction over the matter. Oversight occurs through a wide variety of congressional activities and avenues. Some of the most publicized are the comparatively rare investigations by select committees into major scandals or into executive branch operations gone awry. Cases in point are temporary select committee inquiries into: Homeland Security matters following the terrorist attacks on September 11, 2001; China's acquisition of U.S. nuclear weapons information, in 1999; the Iran-Contra affair, in 1987; intelligence agency abuses, in 1975-1976, and "Watergate," in 1973-1974. The precedent for this kind of oversight actually goes back two centuries: in 1792, a special House committee investigated the ignominious defeat of an Army force by confederated Indian tribes. By comparison to these select panel investigations, other congressional inquiries in recent Congresses--into intelligence information and its sharing among federal agencies prior to the 9/11 attacks, U.S. intelligence about weapons of mass destruction before the invasion of Iraq, Whitewater, access to Federal Bureau of Investigation files, and campaign financing--have relied for the most part on standing committees. The impeachment proceedings against President Clinton in 1998 in the House and in 1999 in the Senate also generated considerable oversight. It not only encompassed the President and the White House staff, but also extended to the office of independent counsel, prompted by concerns about its authority, jurisdiction, and expenditures. Although such highly visible endeavors are significant, they usually reflect only a small portion of Congress's total oversight effort. More routine and regular review, monitoring, and supervision occur in other congressional activities and contexts. Especially important are appropriations hearings on agency budgets as well as authorization hearings for existing programs. Separately, examinations of executive operations and the implementation of programs--by congressional staff, support agencies, and specially created commissions and task forces--provide additional oversight. Senate Rule XXII, paragraph 2. U.S. Senate, Committee on Rules and Administration, Senate Manual, Containing the Standing Rules, Orders, Laws, and Resolutions Affecting the Business of the United States Senate , S.Doc. 110-1, 110 th Congress, 2 nd session, prepared by Matthew McGowan under the direction of Howard Gantman, Staff Director (Washington: GPO, 2008), sec. 22.2. Joel D. Aberbach, Keeping Watchful Eye: The Politics of Congressional Oversight (Washington: Brookings Institution, 1990). [author name scrubbed], "Congressional Oversight of the Presidency," Annals , vol. 499, Sept. 1988, pp. 75-89. David R. Mayhew, Divided We Govern: Party Control, Lawmaking, and Investigations, 1946-1990 (New Haven: Yale University Press, 1991). [author name scrubbed], "Legislative Oversight," Congressional Procedure and the Policy Process (Washington: Congressional Quarterly Press, 2005), pp. 274-297. Arthur M. Schlesinger and Roger Bruns, eds., Congress Investigates: A Documented History, 1792-1974 , 5 vols. (New York: Chelsea House Publishers, 1975). Charles Tiefer, "Congressional Oversight of the Clinton Administration and Congressional Procedure," Administrative Law Review, vol. 50, Winter 1998, pp. 199-216. U.S. Congress, House Committee on House Administration, "Oversight," History of the House of Representatives, 1789-1994 , H.Doc. 103-324, 103 rd Congress, 2 nd session (Washington: GPO, 1994), pp. 233-266. U.S. General Accounting Office, Investigators' Guide to Sources of Information, GAO Report OSI-97-2 (Washington: 1997). CRS Report RL30240, Congressional Oversight Manual , by [author name scrubbed] et al. CRS Report R41079, Congressional Oversight: An Overview , by [author name scrubbed] CRS Report RL32525, Congressional Oversight of Intelligence: Current Structure and Alternatives , by [author name scrubbed] and [author name scrubbed] CRS Video Series, Congressional Oversight (2004), dealing with tools and techniques, avenues and approaches, and authorities and assistance; on seven videos (MM70003-MM70009), available by calling [phone number scrubbed]. | Congressional oversight of policy implementation and administration has occurred throughout the history of the United States government under the Constitution. Oversight--the review, monitoring, and supervision of operations and activities--takes a variety of forms and utilizes various techniques. These range from specialized investigations by select committees to annual appropriations hearings, and from informal communications between Members or congressional staff and executive personnel to the use of extra-congressional mechanisms, such as offices of inspector general and study commissions. Oversight, moreover, is supported by a variety of authorities--the Constitution, public law, and chamber and committee rules--and is an integral part of the system of checks and balances between the legislative and executive branches. This report will be updated as events require. | 3,028 | 165 |
This report discusses recent legislation and decisions by the Government Accountability Office (GAO) and the U.S. Court of Federal Claims regarding jurisdiction over orders issued under civilian agency contracts. On December 31, 2011, President Obama signed legislation that effectively overturned two recent decisions by GAO and the Court of Federal Claims finding that they have jurisdiction over protests challenging the issuance of task and delivery orders of any size under civilian agency contracts, even if these orders do not increase the scope, period, or maximum value of the underlying contract. Prior to these decisions, executive branch agencies and many commentators had construed the Federal Acquisition Streamlining Act (FASA) of 1994, as amended by the National Defense Authorization Act (NDAA) for FY2008, as authorizing only protests concerning the issuance of orders under civilian agency contracts that (1) increased the scope, period, or maximum value of the underlying contract or (2) were valued in excess of $10 million, as well as granting GAO temporary exclusive jurisdiction over protests involving the latter. However, GAO and the court rejected this interpretation, finding that what expired on May 27, 2011, were limitations on their jurisdiction imposed by FASA, as amended by the NDAA for FY2008. Thus, they concluded that they and, potentially, procuring agencies had jurisdiction over protests of orders of any size issued under the contracts of civilian agencies, regardless of whether these orders increased the scope, period, or maximum value of the underlying contract. Had they not been overturned by Congress, these decisions would have resulted in protests of orders under civilian agency contracts being treated differently than protests of similar orders under defense contracts, and could also have increased the number of bid protests. The decisions by GAO and the Court of Federal Claims arose from questions regarding the meaning of certain provisions of FASA and amendments made to it by the NDAA for FY2008 and the Ike Skelton NDAA for FY2011. For various reasons, including agencies' use of detailed specifications to restrict competition and difficulties procuring commercial items during the Gulf War, by the early to mid-1990s, many Members of Congress and commentators had become concerned that the federal procurement process was excessively cumbersome and time-consuming for both agencies and contractors. FASA represented Congress's first attempt to respond to these concerns "by greatly streamlining and simplifying [the federal government's] buying practices." FASA did so, in part, by explicitly recognizing "task and delivery order contracts," and by limiting contractors' ability to protest alleged improprieties in agencies' issuance of orders under task and delivery order (TO/DO) contracts, among other things. TO/DO contracts are contracts for services or goods, respectively, that do not "procure or specify a firm quantity of supplies (other than a minimum or maximum quantity)," but rather "provide[] for the issuance of orders for the delivery of supplies during the period of the contract." Because the time of delivery and the quantity of goods or services to be delivered are not specified (outside of stated maximums or minimums) in TO/DO contracts, such contracts are sometimes referred to as indefinite delivery/indefinite quantity (ID/IQ) contracts. TO/DO contracts are sometimes also described as single-award or multiple-award contracts, a designation based upon the number of firms--one or more than one, respectively--able to compete for task and delivery orders under the contract. Before FASA was enacted, disappointed bidders and offerors could generally protest agency conduct in the award, or proposed award, of federal contracts that was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law" before GAO, the federal courts, or procuring agencies. GAO, in particular, had found that it had jurisdiction over protests regarding the issuance of orders under TO/DO contracts. Use of TO/DO contracts can greatly simplify the procurement process for federal agencies because agencies can issue orders to contractors holding the underlying TO/DO contract without complying with the requirements of the Competition in Contracting Act (CICA) of 1984, among other things. This, in itself, can significantly reduce the time necessary for agencies to procure goods or services. However, FASA further simplified the procurement process for federal agencies by limiting the ability of bidders or offerors to protest alleged improprieties or illegalities in the issuance of orders under TO/DO contracts. In identical provisions codified in Titles 10 and 41 of the United States Code, FASA expressly prohibited protests challenging the issuance of orders except on certain narrow grounds: A protest is not authorized in connection with the issuance or proposed issuance of a task or delivery order except for a protest on the ground that the order increases the scope, period, or maximum value of the contract under which the order is issued. The provisions codified in Title 10 apply to the procurements of defense agencies, while those codified in Title 41 apply to the procurements of civilian agencies. By 2008, congressional and public concerns regarding federal procurement had shifted, largely because of alleged waste, fraud, and abuse in contracts supporting military, diplomatic, and reconstruction efforts in Iraq and Afghanistan. Rather than viewing the federal procurement process as too burdensome and time-consuming, as they did when FASA was enacted, some Members of Congress and commentators now believed that agencies had used their authority under FASA and similar laws to evade the spirit, if not the letter, of competition and other requirements. These concerns persisted notwithstanding a series of judicial and administrative decisions finding that GAO and the federal courts could exercise jurisdiction over certain protests involving the issuance of orders that did not increase the scope, period, or maximum value of the underlying contract. In fact, the Acquisition Advisory Panel, chartered under Section 1423 of the Services Acquisition Reform Act (SARA) of 2003, explicitly recommended that contractors be able to protest the issuance of "large" orders that do not increase the scope, period, or maximum value of the underlying contract. Congress responded, in part, to these concerns when it enacted the NDAA for FY2008. This act amended FASA to promote competition for orders under TO/DO contracts by (1) prohibiting agencies from using single-award TO/DO contracts valued in excess of $103 million (including options) unless certain conditions are met, and (2) specifying what constitutes a "fair opportunity to be considered" for orders valued in excess of $5 million. In addition, the NDAA for FY2008 also expanded protesters' ability to challenge alleged improprieties or illegalities in the issuance of orders. Specifically, the NDAA for FY2008 amended FASA to read as follows: A protest is not authorized in connection with the issuance or proposed issuance of a task or delivery order except for-- (A) a protest on the ground that the order increases the scope, period, or maximum value of the contract under which the order is issued; or (B) a protest of an order valued in excess of $10,000,000. The 2008 amendments further specified that GAO was to have exclusive jurisdiction over protests of orders valued in excess of $10 million that did not increase the scope, period, or maximum value of the underlying contract, and that This subsection shall be in effect for three years, beginning on the date that is 120 days after January 28, 2008. Many commentators interpreted the word "subsection" here to refer to the provisions regarding GAO's exclusive jurisdiction over protests of orders valued in excess of $10 million because these provisions were added, along with the sunset clause, in 2008. In addition, the legislative history of the 2008 amendments arguably indicated that Congress intended to temporarily authorize protests of "large" orders in order to gauge their effects on the procurement and protest processes before permanently authorizing such protests. Three years and 120 days after the enactment of the NDAA for FY2008 would have been May 27, 2011. However, before this date arrived, the 111 th Congress amended FASA's provisions regarding protests of orders issued under defense contracts to extend the sunset date and clarify that it applies only to GAO's exclusive jurisdiction over protests of "large" orders. Specifically, the Ike Skelton NDAA for FY2011 amended those provisions of FASA codified in Title 10 of the United States Code to read as follows: (1) A protest is not authorized in connection with the issuance or proposed issuance of a task or delivery order except for - (A) a protest on the ground that the order increases the scope, period, or maximum value of the contract under which the order is issued; or (B) a protest of an order valued in excess of $10,000,000. (2) Notwithstanding section 3556 of title 31, the Comptroller General of the United States shall have exclusive jurisdiction of a protest authorized under paragraph (1)(B). (3) Paragraph (1)(B) and paragraph (2) of this subsection shall not be in effect after September 30, 2016. The 111 th Congress did not make similar changes to the provisions of FASA codified in Title 41 of the United States Code governing protests of orders under civilian agency contracts. Thus, the provisions in Title 41 differed slightly from those in Title 10 at the time when GAO and the Court of Federal Claims issued their decisions. When their decisions were issued, subsection (B)(3) in Title 41 stated that " This subsection shall be in effect for three years, beginning on the date that is 120 days after January 28, 2008," not " Paragraph (1)(B) and paragraph (2) of this subsection shall not be in effect after September 30, 2016." In its June 14, 2011, decision in Technatomy Corporation , GAO found that it had jurisdiction over an order placed under a civilian agency contract that apparently did not expand the scope, period, or maximum value of the underlying contract. The Department of Defense (DOD), which had issued the challenged order under a General Services Administration (GSA) contract, argued that because Congress had not extended the sunset date as to the orders of civilian agencies, GAO's jurisdiction to hear protests concerning task and delivery orders valued in excess of $10 million issued under civilian agency contracts expired on May 27, 2011. GAO disagreed, because of the "plain meaning" of the relevant provisions of FASA. GAO found that the word "subsection" in 41 U.S.C. SS4106(f)(3) "unambiguously refers" to the entirety of subsection (f), which governs protests of civilian agency orders generally, not just subsection (f)(2), which grants GAO jurisdiction over protests of "large" orders. Based upon this interpretation of "subsection," GAO found that what expired in May 2011 were the limitations on its jurisdiction under FASA, as amended by the expansion of its jurisdiction under the NDAA for FY2008. Thus, it concluded that, because of the expiration of these limitations, its jurisdiction "revert[ed] to that originally provided in CICA," and it could hear protests concerning orders of any value under civilian agency contracts, regardless of whether the order increased the scope, period, or maximum value of the underlying contract. Subsequently, in its August 19, 2011, decision in Med Trends, Inc. v. United States , the Court of Federal Claims also found that it had jurisdiction over protests of orders of any value issued under civilian agency contracts. In so finding, the court rejected the government's argument that, "notwithstanding the clear language of the statute, the legislative history associated with the 2008 amendment makes clear that the grant of jurisdiction to GAO in 2008 was a short-term experiment." The court did so, in part, because it, like GAO, found that the word "subsection" referred to the entirety of FASA's provisions regarding protests of task and delivery orders issued under civilian agency contracts, not just those provisions regarding GAO's jurisdiction over "large" orders issued under civilian agency contracts. Because it viewed this statutory text as "unambiguous," the court accorded no weight to a 2007 conference report expressing the conferees' view that the expiration of GAO's jurisdiction over "large" orders would provide "Congress with an opportunity to review the implementation of the provision and make any necessary adjustments." It similarly declined to rely upon legislation introduced in the 112 th Congress and accompanying committee reports that purportedly evidenced Congress's intent that the sunset date apply only to GAO's exclusive jurisdiction over protests of orders valued in excess of $10 million. Had the 112 th Congress not enacted legislation extending the sunset date, these decisions would have resulted in protests of orders issued under civilian agency contracts being treated differently than protests of similar orders under defense contracts, and could also have increased the number of bid protests. The legislation also arguably resolves certain questions that had been raised about the authority of the Federal Acquisition Regulatory Council to promulgate an interim final regulation amending the Federal Acquisition Regulation (FAR) to provide that (i) No protest under Subpart 33.1 is authorized in connection with the issuance or proposed issuance of an order under a task-order contract or delivery-order contract, except for-- (A) A protest on the grounds that the order increases the scope, period, or maximum value of the contract; or (B) A protest of an order valued in excess of $10 million. Protests of orders in excess of $10 million may only be filed with the Government Accountability Office, in accordance with the procedures at 33.104. (ii) The authority to protest the placement of an order under this subpart expires on September 30, 2016, for DoD, NASA and the Coast Guard (10 U.S.C. 2304a(d) and 2304c(e)), and on May 27, 2011, for other agencies (41 U.S.C. 4103(d) and 4106(f)). Both the meaning of this provision and the FAR Council's authority to promulgate such a regulation could have been in doubt, particularly after the decision by the Court of Federal Claims. As amended, the regulation could have been construed to mean that neither protests of orders that allegedly increased the scope, period, or maximum value of the underlying contract, nor protests of orders valued in excess of $10 million, were authorized for civilian agency contracts. However, such an interpretation could potentially have been found not to be entitled to deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc . Under Chevron , courts generally defer to an agency's formal interpretation of a statute that the agency administers whenever the agency's interpretation is reasonable, and the statute has not removed the agency's discretion by compelling a particular disposition of the matter at issue. Agency interpretations are not granted such deference, though, when "Congress has directly spoken to the precise question at issue," and the agency's interpretation is at variance with the statutory language. The NDAA for FY2012 amended Title 41 of the United States Code so that it reads like Title 10: (1) A protest is not authorized in connection with the issuance or proposed issuance of a task or delivery order except for - (A) a protest on the ground that the order increases the scope, period, or maximum value of the contract under which the order is issued; or (B) a protest of an order valued in excess of $10,000,000. (2) Notwithstanding section 3556 of title 31, the Comptroller General of the United States shall have exclusive jurisdiction of a protest authorized under paragraph (1)(B). (3) Paragraph (1)(B) and paragraph (2) of this subsection shall not be in effect after September 30, 2016. Because of these amendments, and the amendments made to Title 10 in 2011, GAO and the Court of Federal Claims are unlikely to find that they have jurisdiction over orders that do not increase the scope, period, or maximum value of the underlying contracts after September 30, 2016, absent congressional action. However, because the provisions governing orders under civilian agency contracts are codified in a different section of the United States Code than those governing orders under defense agency contracts, it is possible that differences in the treatment of civilian and defense agency orders could again arise if Congress were to amend Title 10 without amending Title 41, or vice versa. | On December 31, 2011, President Obama signed the National Defense Authorization Act for FY2012. This act amends Title 41 of the United States Code to extend the Government Accountability Office's (GAO's) jurisdiction over protests involving "large" orders issued under civilian agency contracts and clarifies that protests of such orders may not be heard after September 30, 2016, if this jurisdiction is not reauthorized (P.L. 112-81, SS 813). Title 41's provisions regarding the protests of "large" orders previously had a May 27, 2011, sunset date. However, the language of these provisions was such that GAO and the U.S. Court of Federal Claims construed them to mean that they could hear protests of orders of any size issued under civilian agency contracts after May 27, 2011. These cases arose because of amendments that the Federal Acquisition Streamlining Act (FASA) of 1994 and the National Defense Authorization Act (NDAA) for FY2008 made to the Armed Services Procurement Act and the Federal Property and Administrative Services Act. Before FASA was enacted, GAO, the federal courts, and procuring agencies had jurisdiction over protests alleging that agency conduct in the issuance of orders under federal contracts was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. However, FASA limited this jurisdiction, barring all protests regarding the issuance of orders except those alleging that the order increased the scope, period, or maximum value of the underlying contract. Later, the NDAA for FY2008 amended FASA to expand the grounds upon which the issuance of orders could be protested, authorizing GAO to hear protests of orders valued in excess of $10 million that did not increase the scope, period, or maximum value of the underlying contract. The NDAA for FY2008 also included a sunset provision, specifying that this "subsection" expired on May 27, 2011. Executive branch agencies and many commentators construed this language to mean that GAO's jurisdiction over protests of "large" orders expired on May 27, 2011. However, GAO and, later, the Court of Federal Claims disagreed. First, in Technatomy Corporation, GAO relied upon the statute's "plain meaning" to find that "subsection" meant the entirety of FASA's provisions regarding protests of orders, as amended, and not just the amendments made to these provisions by the NDAA for FY2008. According to GAO, what expired on May 27, 2011, were the limitations on its jurisdiction over protests that do not increase the scope, period, or maximum value of the underlying contract, as amended by the expansion of its jurisdiction to include protests of "large" orders. Thus, it concluded that it may hear protests of orders of any size issued under civilian agency contracts, regardless of whether the protest alleges that the order increased the scope, period, or maximum value of the underlying contract. Later, in Med Trends, Inc. v. United States, the court similarly relied upon the "plain meaning" of FASA, as amended by the NDAA for FY2008. However, the court also explicitly rejected the government's argument that the legislative history of the NDAA for FY2008 supported construing "subsection" to mean only those provisions of FASA granting GAO jurisdiction over protests of orders valued in excess of $10 million. These decisions would have resulted in protests of orders under civilian agency contracts being treated differently than protests of similar orders under defense contracts, and could also have increased the number of bid protests. The 111th Congress (P.L. 111-383, SS 825) had previously amended Title 10 of the United States Code, which governs the procurements of defense agencies, with language identical to that in P.L. 112-81. | 3,530 | 834 |
The invasion of Normandy on June 6, 1944, was the largest air, land, and sea invasion ever undertaken, including over 5,000 ships, 10,000 airplanes, and over 150,000 American, British, Canadian, Free French, and Polish troops. There are no exact figures for the total number of D-Day participants nor exact casualty figures. Some historians estimate that more than 70,000 Americans and more than 80,000 combined British, Canadian, Free French, and Polish troops participated, including 23,000 men arriving by parachute and glider. According to estimates from the National D-Day Memorial Museum, the Allied forces suffered 9,758 casualties, of which 6,603 were Americans. The Jubilee of Liberty Medal was first awarded in June 1994 to American servicemen for their participation in the Battle of Normandy. The medals were minted at the request of the Regional Council of Normandy to be presented to veterans attending the 50 th anniversary of the D-Day landing on June 6, 1994. Eligible veterans included all who served in Normandy from June 6 to August 31, 1944, comprising land forces, off-shore supporting personnel, and airmen flying cover overhead. The only stipulation was that the medal be presented during an official ceremony, and the veteran be present to accept. On the front of the medal is inscribed, "Overlord 6 Juin 1944" on the upper part of the medal, with the flags of the allied nations and the names of the landing beaches completing the face of the medal. On the reverse side is the Torch of Freedom surrounded by the device of William the Conqueror 'Diex Aie' ("God is with us" in Norman French). Unfortunately, these medals are no longer being awarded by the French government. All medals to commemorate the 50 th anniversary ceremony on June 6, 1994, have been distributed by the French government. Additional medals for those veterans who were unable to attend the anniversary ceremony were later distributed through the Association Debarquement et Bataille de Normandie 1944 in France, which is now defunct. Some Members of Congress have awarded the Jubilee of Liberty Medals to U.S. veterans who were unable to attend the ceremony in France on June 6, 1994. These medals were obtained either from the Association Debarquement et Bataille de Normandie 1944 or from a commercial source. Commercially-minted Jubilee of Liberty Medals are being manufactured by Sims Enterprises, a private company in Kansas, that is selling these medals at a cost of $17 for each individual medal (includes shipping and handling ) or $13 each for orders of 10 or more medals (plus an additional charge for shipping). Please note: This company is not affiliated with either the French or U.S. governments. Veterans are asked to send copies not the originals of their service record for verification; copies will not be returned unless specifically requested along with the medals. For additional information, please contact Sims Enterprises, 617 Main Street, Newton, KS 67114; Tel: [phone number scrubbed]. The French government is no longer distributing the Jubilee of Liberty medals. Instead, the government of France is distributing a "Thank-You-America Certificate 1944-1945" for U.S. veterans. According to a letter sent in December 2000 by former Ambassador of France to the United States, His Excellency Francois Bujon de l'Estang, to then Secretary of Veterans Affairs Hershel W. Gober, the government of France is issuing a certificate to recognize the participation of American and allied soldiers who participated in the Normandy landing and subsequent battles leading to the liberation of France. Veterans who served on French territory and in French territorial waters and airspace, from June 6, 1944, to May 8, 1945, are still eligible. The certificate will not be issued posthumously. In agreement with the U.S. Secretary of Veterans Affairs, the French Consulates General and state veterans affairs offices, veterans service organizations, and veterans associations will identify eligible veterans, review and certify the applications, prepare the certificates, and organize the ceremonies to present the certificates. D-Day participants living in Delaware, the District of Columbia, Maryland, Ohio, Pennsylvania, Virginia, and West Virginia may obtain applications for certificates from the French embassy in Washington, DC, or directly from the Internet at http://www.ambafrance-us.org/news/statmnts/2000/ww2/index.asp . French Consulate/"Thank-You-America" 4101 Reservoir Road Washington, DC 20007 Tel: [phone number scrubbed] Fax: [phone number scrubbed] D-Day veterans living in other states may wish to contact the nearest French consulate listed below. The American Battle Monuments Commission's Web page on the Normandy Cemetery at http://www.abmc.gov/cemeteries/cemeteries/no.php has information on the cemetery and links on how to locate those interred at American World War II cemeteries overseas. The National D-Day Museum in New Orleans, Louisiana, at http://www.ddaymuseum.org provides historical information on events from D-Day as well as information on annual commemorative events. The website of the National D-Day Memorial in Bedford, Virginia, at http://www.dday.org includes information on the memorial, local events, and tours. The official website in English of the Comite Regional de Tourisme de Normandie lists various D-Day tours in the region as well as general tourist information at http://www.normandy-tourism.org/gb/16tours/index.html . The official site of the Western France Tourism Board offers information on tours and travel in the region by clicking on "Normandy" at http://www.westernfrancetouristboard.com . | This report details the Jubilee of Liberty Medal awarded to U.S. veterans by the French government to commemorate the 50 th anniversary of the invasion of Normandy by the Allied forces on June 6, 1994 (D-Day). These medals are no longer distributed by the French government. Included is information on how to obtain this medal from a commercial source and how U.S. veterans may obtain an official "Thank-You-America 1944-1945" certificate of participation from the French government. This report will be updated as needed. | 1,283 | 116 |
In the past several years, senior policymakers in both Congress and the executive branch have proposed various changes to the way in which officers in the armed forces are managed, most notably with respect to assignment and promotion. Supporters of these proposals typically deem them to be essential to building a force that can meet the challenges of emerging strategic threats, such as cyberwarfare, and to compete with the private sector for talented individuals. Some of these proposed changes would require changes to law, including provisions enacted by the Defense Officer Personnel Management Act (DOPMA) and the Goldwater-Nichols Act (GNA). This report provides an overview of selected concepts and statutory provisions that define and shape important aspects of active duty officer personnel management along with a set of questions that policymakers may wish to consider when discussing proposed changes to current law. The topics discussed below are often inter-related, such that adjusting the parameters of one can affect the operation of others. For example, reducing the number of authorized positions at a higher grade would likely result in slower promotion timing, decreased promotion opportunity, and greater number of mandatory separations under the "up or out" provisions or individuals deciding to leave military service due to perceived lack of upward mobility. Throughout this report, reference will be made to the grade or paygrade of an officer. Table 1 below provides a summary of the various grades in the Army, Navy, Air Force, and Marine Corps. As the Navy terms for its grades differ from the other services, this report will typically use paygrade or, if using grade, both terms separated by a slash. For example, the paygrade for an entry-level officer in all services is O-1, while the grade for such officers is ensign in the Navy and second lieutenant in the Army, Air Force, and Marine Corps. Thus, officers in this grade will be referred to in this report as either "O-1" or "second lieutenant/ensign." Title 10 United States Code, Sections 531-541. To join the military as an officer, an individual applies for an original appointment. For original appointments in grades of Captain or Lieutenant (Navy) and below, the appointment is made by the President alone. For original appointments made in the grades of Major/Lieutenant Commander through Colonel/Captain, the appointments are made by the President with the advice and consent of the Senate. When such an appointment is made, the individual receives a commission, a document which designates the individual as an officer of the federal government. There are four main commissioning categories: the service academies, the Reserve Officer Training Corps (ROTC), Officer Candidate School (OCS), and various direct commissioning programs. Although 10 U.S.C. 531 authorizes original appointments in grades up to Colonel/Captain, in practice original appointments are typically made in the grades of Second Lieutenant/Ensign. Original appointments to higher grades, known as lateral entry, are typically limited to professions where the military is primarily interested in the civilian skills of the individual. Some common examples include medical and dental officers, lawyers, and chaplains. In 2010, the Army announced a program to fill critical shortages by directly commissioning, as Captains, individuals with certain civilian skills. The specific areas of expertise included engineering, finance, intelligence, information operations, space operations, acquisition, civil affairs, and psychological operations. Prospective active duty officers must meet the requirements of 10 U.S.C. 532 for original appointments as "regular" commissioned officers. The requirements are: Must be a citizen of the United States; Must be able to complete 20 years of active commissioned service before age 62; Must be of good moral character; Must be physically qualified for active service; and Must have such other special qualifications as the Secretary of the military department concerned may prescribe by regulation. The statute does not define "good moral character" or "physically qualified for active service," but the Department of Defense provides more specific guidance in its internal regulations. Additionally, each of the military services has supplementary regulations concerning qualifications for appointment. Some examples of medical conditions that DOD considers disqualifying for an officer applicant are listed in Table 2 . Periodically, policymakers have looked at whether these accession requirements, particularly the physical qualifications, are too strict or too lenient. Typical areas of debate include the acceptable parameters for body fat, current use or past use of certain medications, past use of illegal drugs, and ability to perform certain physical tasks. One perspective holds that physical qualifications should be lower for those in more technical or supporting specialties (e.g., cyber, finance, human resources) than those in direct combat roles (e.g., infantry, special operations). Others argue that military officers, regardless of specialty, have inherent duties--such as leading subordinates, directing the use of weapons systems when needed, and deploying to austere locations--that require a common baseline of physical and psychological fitness. Increasing the opportunities for lateral entry into the officer corps has also been a topic of considerable discussion. For example, retired General Stanley McChrystal has advocated lateral entry for business executives as general officers, stating "I've dealt with a lot of chief executive officers who could walk in and be general officers in the military tomorrow. All we'd have to do is get them a uniform and a rank." Critics of lateral entry, particularly for direct warfighting occupations, argue that in-depth knowledge of military systems, tactics, and decision-making processes is critical for successful leadership of military units and effective employment of military capabilities. What are the inherent duties of military officers in expected operational environments; what do these imply regarding qualification standards for military officers? To what extent can lateral entry be used to address critical skill shortages without decreasing military effectiveness? Is lateral entry a viable option for direct warfighting specialties? Should physical qualification criteria vary based on the officer's specialty? If so, how much variation is acceptable, and in what areas? Could some of the physical qualifications for appointment be revised without harming military effectiveness? For example, with respect to body fat, could the permissible level immediately prior to appointment be increased, with the expectation or requirement that the officer meet a stricter standard at some point thereafter? Could they body fat standards be replaced by other measures of physical fitness? Should there be a greater acceptance of ongoing use of medication for certain chronic conditions? For example, might the regular or sporadic use of an asthma inhaler be acceptable? Generally, 10 U.S.C. 3013, 5013, 8013; for joint assignments, 10 U.S.C. 663. In general, the military services have broad authority to assign personnel as they deem appropriate. This authority derives from the broad authority of the service secretaries to "assign, detail, and prescribe the duties" of their servicemembers and civilian personnel. Typically, an officer's assignments follow a fairly structured progression, starting with initial training in a specific career field, and followed by a series of progressively more responsible duty assignments in that field. There may also be opportunities to work outside one's career field. At certain points in an officer's career, he or she is required to attend professional military education schools which further develop technical and leadership skills. However, there is a major statutory provision that controls the assignments of certain officers with joint training and experience. The Goldwater-Nichols Department of Defense Reorganization Act of 1986 (GNA) included provisions to improve integration between the military services, a concept known as "jointness." Among other things, GNA established a corps of "joint qualified officers." Joint qualified officers are those officers who are particularly trained in, and oriented toward, "joint matters." Section 663 of Title 10 requires the Secretary of Defense to ensure that joint qualified officers who graduate from certain schools within the National Defense University--the National War College, the Industrial College of the Armed Forces [the Dwight D. Eisenhower School for National Security and Resource Strategy], and the Joint Forces Staff College--be assigned to a "joint duty assignment" as their next assignment after graduation. This requirement can be waived by the Secretary of Defense on a case-by-case basis. The Secretary of Defense must also ensure that at least 50% of the other officers (non-joint qualified) who graduate from these three schools be assigned to a joint duty assignment as their first or second assignment after graduation. By law, these assignments are at least three years for officers in the ranks of Colonel/Captain and below, although the Secretary of Defense can waive this. Some argue that this requirement is essential to integrating the efforts of the military services, as it channels the most capable and ambitious officers into joint assignments, where they gain greater knowledge of other services' capabilities and the skills necessary to plan for and conduct joint operations. Others argue that this system is too rigid and that a broader array of assignments should qualify as joint. Is there evidence that current assignment policies have not adequately prepared officers to meet expectations? Will the assignments adequately prepare them for expected operational environments of the future? Does the situation require changes in statute or changes in DOD or service policy? What is the proper balance between assignments which (1) hone technical expertise, (2) provide for broadened perspectives, and (3) develop organizational leadership skills? How does this balance change over the course of an officer's career? Are military careers long enough to develop the skills needed for expected operational environments of the future? Are the substantial investments in officer education and training adequately linked to the value of subsequent assignments? On balance, does the benefit of joint duty assignments outweigh the opportunity costs of less skill development in other areas? Does current law and policy meet the needs of both the joint community and the services? Should the number of joint duty officers and the requirements for joint duty assignments be revised? Are there other areas besides joint duty that might be considered essential to the professional development of mid-grade and senior officers? For example, might duty with a reserve component be considered a required developmental assignment, either for all officers or for a segment of the officer corps? Title 10, Chapter 36 governs promotions; Title 10, Chapter 32 governs grade limitations; Title 10, Chapter 38 governs joint officer management. The officer promotion system is designed to be a competitive system that selects the best qualified for service at the next higher grade. Promotions take place within a grade-limited structure which caps the number of positions for each grade above captain/lieutenant. Officers are considered for promotion at specific times in their career and, due to fewer positions at the higher grades, there is a decreasing likelihood of promotion the further one progresses. Those officers who twice fail to be promoted to the next higher grade are normally separated, a statutory requirement known as "up or out." These concepts of the officer promotion system are explained in more detail below. While there are no direct grade limits in the number of positions for paygrades O-1 to O-3, there are such limits for all higher paygrades. That is, there are progressively fewer authorized positions in each subsequent paygrade after O-3. This results in a roughly pyramidal shape to the officer corps beyond O-3. See Table 3 for a summary of current officer strength levels by grade. This largely pyramidal structure exists in all military organizations, but the ratio of mid-grade and senior officers to the total officer corps can vary considerably between military organizations, both in comparison to other services and foreign nations, or within the same organization over time. There has been some contention over the appropriate ratio of officers to enlisted personnel for U.S. military organizations, where the proportion of officers has been gradually rising. One perspective on this trend is that it is related to the growth of joint organizations and the increased U.S. emphasis on coalition operations, which have created greater demand for officers to fill key staff roles. Another view is that the advanced technologies employed by the armed forces and the complexity of contemporary military operations require an officer corps composed of highly talented and technically knowledgeable individuals. Attracting and retaining such individuals, some argue, requires that there be more opportunity to rise to the higher levels of the officer corps; hence a higher ratio of mid-grade and senior officers to the total officer corps is necessary. On the other hand, some are wary of what they refer to as "grade creep," particularly given the additional costs associated with it. Another concern about higher ratios of officers in the force--particularly senior officers--revolves around whether it promotes a more bureaucratic approach to military decision-making. Table 4 summarizes the changing proportion of officers within the U.S. Armed Forces over the past 50 years. Chapter 32 of Title 10 provides the statutory framework for the maximum number of officers that can serve in each grade above captain/lieutenant. Within that chapter, 10 U.S.C. 523 provides a grade limitation table for officers in grades O-4 to O-6, setting limits based on the total size of a service's officer corps. For example, if the Air Force has 65,000 commissioned officers, 10 U.S.C. 523 limits the number of Air Force majors to 14,073 (21.65%), Air Force lieutenant colonels to 9,417 (14.49%), and Air Force colonels to 3,211 (4.94%). If the total size of the service's officer corps lies between two reference points in the table, the law requires "mathematical interpolation between the respective numbers" to provide the grade limit. Certain officers do not count against these limits, most notably medical and dental officers. Sections 525 and 526 of Title 10 provide grade limitations for officers in paygrades O-7 to O-10, both for service-specific positions and for "joint duty assignments." The grade limitations for these officers are numerical limits (e.g., 7 officers can be appointed to the grade of General in the Army, excluding certain joint and other designated positions). Promotion timing refers to the window of time in which an officer is considered for promotion to the next higher grade. The statutory minimums for "time in grade" before eligibility for promotion are detailed in 10 U.S.C. 619 (summarized in Table 5 ). For example, a second lieutenant/ensign must serve at least 18 months in that grade before being considered for promotion to first lieutenant/lieutenant junior grade, while a major/lieutenant commander must serve at least three years in that grade before being considered for promotion to lieutenant colonel/commander. As a practical matter, an officer's time in grade will typically be greater than the minimum specified in law, which is in keeping with the expected promotion timing guidelines described in the committee reports which accompanied the Defense Officer Personnel Management Act. These expectations are included under the heading "Expected Years of Service at Promotion" in Table 5 . Promotion opportunity refers to the percentage of officers in a given cohort who will normally be promoted to the next higher rank. For example, the expectation when DOPMA was passed was that about 80% of captains/lieutenants in a given cohort would be promoted to major/lieutenant commander. This percentage could vary in response to force structure demands. For example, it could increase if a service was expanding--say, during wartime--or decrease if it was undergoing a drawdown. Promotion opportunity is not specified in law, but guidelines were included in the House committee report which accompanied DOPMA. The expectations for promotion opportunity are included in Table 5 , along with the projected impact of death, disability, and promotion opportunity constraints on a given cohort of officers over the course of their career. Note that these cumulative promotion projections do not account for voluntary separations and retirements, so the actual proportion of an entry cohort which achieves a given rank may be lower than the figure provided. Officers are promoted from O-1 to O-2 if they are "fully qualified," which means they meet all the minimum requirements for promotion. Those who are not fully qualified are not selected for promotion. For promotion to O-3 and above, promotions are made on a best qualified basis. Under the best qualified system, one must be fully qualified to be selected for promotion, but being fully qualified is not necessarily sufficient for promotion. Instead, all the fully qualified officers are ranked by the selection board in order from most qualified to least qualified. Those who are ranked most highly are recommended for promotion until all promotion authorizations are filled. The remaining officers, though fully qualified (and sometimes well qualified) are not recommended for promotion. This is an intentional feature of DOPMA. As stated in the House Armed Services Committee report which accompanied the bill: The simple fact is that if the system is working right, it will, of necessity, result in passover for promotion of officers who are fully qualified to serve in the next-higher grade. This is because the function of the up-or-out system [discussed below] is to provide at each grade more officers who are qualified to serve in the next grade than the billets require. Thus the services will have selectivity and can pick the best from a selection of fully qualified officers. For over 70 years, military officers have been subject to a statutory "up or out" requirement. Officers in paygrade O-1 must be discharged within 18 months of being found not qualified for promotion. Officers in paygrade O-2 through O-4 who have "failed of selection for promotion to the next higher grade for the second time" are normally separated from military service. Those within two years of retirement eligibility are permitted to remain on active duty until retirement and others may be selectively continued, as described below. Officers in paygrades O-5 and above are subject to mandatory retirement if they are not promoted before reaching a specified number of years of commissioned service. The House Armed Services Committee considered this to be the "fundamental concept for the management of officer personnel" within DOPMA: As can be seen from the foregoing, the revised grade table, together with the selective continuation procedures and mandatory retirement and separation points in the bill, contemplates the continuation of the up-or-out system as the fundamental concept for the management of officer personnel. There is nothing new in this concept. It has been in effect for nearly 35 years and on the whole has served the country well. The system has given the armed forces what they never before had in peacetime--a youthful, vigorous, fully combat-ready officer corps. Selective continuation allows the services to allow certain officers to continue serving on active duty, even though they would normally be separated due to the requirements of "up or out". On a selective basis, officers in paygrades O-3 and O-4 who twice fail for promotion may be continued on active duty, if the service needs them and they are selected by a continuation board. Selectively continued O-3 officers may be allowed to stay on active duty until they complete 20 years of service, while selectively continued O-4s may be continued until they complete 24 years of service. Officers in paygrades O-5 and above may also be selectively continued rather than being subject to mandatory retirement for total years of commissioned service. Are there aspects of contemporary warfare which require revisions to the current grade structure of the armed forces? Should the grade limits be raised to allow for greater promotion opportunity and career progression for military officers, or certain categories of military officers? Or, conversely, are there more mid-grade and senior officers than are necessary? Should there be additional categories of officers exempt from the grade limits, as medical and dental officers are now? Could a guarantee of continuation be provided to officers in advance, to provide more flexibility in career progression without fear of being passed over? Do the anticipated personnel requirements of the future require military personnel, or can federal civilians or contractors fill some or most of these positions? For voluntary separation: Title 10, Chapters 367 (Army), 571 (Navy and Marine Corps), and 867 (Air Force) For involuntary separation: See Table 6 Separation refers to various actions which release the individual from active military service, and includes an officer's resignation, discharge, and retirement. Broadly speaking, separations are categorized as voluntary or mandatory, depending on whether they are initiated at the request of the officer or are imposed by the service in accordance with the statutory requirements. Officers are generally free to resign from the armed forces at any time after completion of their required service obligation, which is typically eight years, although some of this time can be served in a reserve component. Upon completion of 20 years of active service, officers are eligible for voluntary retirement. Under Title 10, there are several voluntary retirement authorities for officers, but the most commonly used are 10 U.S.C. 3911, 6323, and 8911 which specify that the President may retire an officer who has completed 20 years of active service, of which at least 10 were as a commissioned officer (the Secretary of Defense can authorize the service secretaries to reduce the years as a commissioned officer to 8 for retirements between January 7, 2011 and September 30, 2018). Although the statutory language is permissive--the President may approve such retirements, but is not required to--as a matter of practice such requests are routinely granted. Additionally, during the period of December 31, 2011 to December 31, 2018, the service secretaries may reduce the minimum length of service for voluntary retirement under these provisions from 20 to 15 years. There has been criticism of the general practice of allowing servicemembers to retire after 20 years of service on the grounds that it encourages individuals to leave the service at a time when their experience could be of great value to the services. Others note that this practice helps maintain a youthful and vigorous military, and that the structure and budget of the armed forces is not designed to sustain an abundance of relatively senior officers (typically, at twenty years of service, such officers are lieutenant colonels/commanders). There are a number of statutory mechanisms that mandate the separation of military officers under certain conditions. As discussed above, several of them stem from failure to advance to the next higher grade. Others occur upon reaching a specific age, in the event of serious disability, for substandard performance, and for force shaping purposes. These provisions are below summarized in Table 6 . Should the routine approval of voluntary retirement requests at 20 years of service be reconsidered? If so, should the voluntary retirement age be increased uniformly, or only for certain categories of officers (for example, those in less physically demanding career fields)? If longer careers are contemplated, should the grade structure and promotion system be changed to adapt to this new career pattern? Should there be greater flexibility to move from more physically demanding specialties to less demanding ones in order to facilitate continuation of service? | Congress and the executive branch are currently considering changes to the officer personnel management system. Some of these proposed changes would require changes to the laws, including provision enacted by the Defense Officer Personnel Management Act (DOPMA) and the Goldwater-Nichols Act (GNA). Contemporary debates over officer personnel management policy often revolve around the fundamental questions of "what type of officers do we need to win the next war?" and "what skills does the officer corps need to enable the military services to perform their missions?" These questions are implicitly oriented towards future events. Their answers are therefore somewhat speculative. Still, contemporary trends and military history can provide valuable insight. Additionally, a set of broader questions can help focus the analysis: What will be the key security interests and priorities of the United States in the future? What conflicts will likely arise in the pursuit of these interests? What opponents will we face in these conflicts? How will they fight? What military strategy will the United States employ to secure its interests? How will we fight? What knowledge, skills, and abilities must the officer corps possess to effectively carry out these roles and missions? How do we attract and retain individuals with the necessary potential for service as officers? How should the officer corps be prepared so it can effectively adapt to unforeseen crises and contingencies? Given limited resources, what are the most critical areas for improvement? Where should the nation accept risk? Policymakers often have divergent answers to these questions and thus come to different conclusions about the most appropriate officer personnel management policies. Examples of diverging views can be found in debates on the criteria for accepting or rejecting people for military service; required training and education over the course of a career; assignments to be emphasized; distribution of officers by grade; retention of experienced and talented individuals; and the criteria for selecting individuals for promotion and for separation. In the exercise of its constitutional authority over the armed forces, Congress has enacted an array of laws governing military officer personnel management and periodically changes these laws as it deems appropriate. This report provides an overview of selected concepts and statutory provisions that shape and define officer appointments, assignments, grade structure, promotions, and separations. It also provides a set of questions that policymakers may wish to consider when discussing proposed changes to current law. | 4,937 | 482 |
The Patient Protection and Affordable Care Act (ACA, P.L. 111-148 ) and the Reconciliation Act of 2010 ( P.L. 111-152 ) impose a fee on certain for-profit health insurers, starting in 2014. The aggregate ACA fee, to be collected by the Internal Revenue Service (IRS) across all affected insurers operating in the United States, is set at $8.0 billion in 2014. The fee will gradually rise to $14.3 billion in 2018, and will be indexed to the annual rate of U.S. premium growth thereafter ( Table 1 ). Under final IRS regulations, entities subject to the ACA fee generally include health insurance issuers such as an insurance company, insurance service, or insurance organization (foreign or domestic) that are required to have a state license and are subject to the laws of such jurisdictions that regulate health insurance. Covered entities may include health maintenance organizations, multiple employer welfare arrangements (MEWA) that are not fully insured, and entities offering Medicare Advantage (Part C) or Medicare prescription drug plans (Part D), or Medicaid managed care plans. The parent organization for a group of subsidiaries that offer health coverage generally would calculate the net premiums written of all its affected subsidiaries for the purpose of applying the fee. Certain types of health insurers or insurance arrangements are not subject to the fee. These generally include the following: Self-insured plans, in which an employer assumes the financial risk for providing health benefits to its employees. In 2010, about 60% of enrollees with work-based coverage were in self-insured plans. Voluntary employees' beneficiary associations (VEBAs) organized by entities other than employers, such as unions. Federal, state, or other governmental entities, including Indian tribal governments. Nonprofit entities incorporated under state law that receive more than 80% of their gross revenues from government programs that target low-income, elderly, or disabled populations (such as the State Children's Health Insurance Plan [CHIP], Medicare, and Medicaid). The nonprofits may not engage in substantial lobbying, nor engage in political campaign activities. Student health insurance coverage that educational institutions purchase through a separate, unrelated insurer. The insurer would be the covered entity for the purpose of applying the fee. Health insurance is outlined in the IRS rules as "benefits consisting of medical care (provided directly through insurance or reimbursement or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer." Health insurance includes limited-scope dental and vision benefits and retiree health insurance. Certain insurance benefits that are not considered health insurance for purposes of the fee include accident or disability insurance; liability coverage; workers' compensation benefits; automobile medical coverage; credit-only insurance; coverage for certain on-site medical clinics; coverage for a specific disease or illness; long-term nursing home, home health care, and community-based care, or any combination thereof; hospital indemnity or other fixed indemnity insurance; Medigap policies; some types of travel insurance; and some reinsurance. The ACA fee will be based on net health care premiums written by covered issuers during the year prior to the year that payment is due. IRS regulations define net health care premiums written as gross premiums from insurance sales (including reinsurance premiums written), reduced by ACA medical loss ratio rebates to enrollees, reinsurance ceded, and ceding commissions. (Ceded premiums are premiums paid by an insurer to a reinsurance firm for protection against defined market risks.) Each year the IRS would apportion the fee among affected insurers based on (1) their net premiums written in the previous calendar year as a share of total net premiums written by all covered insurers, and (2) their dollar value of business. Covered insurers are not subject to the fee on their first $25 million of net premiums written. The annual ACA fee would be imposed on 50% of net premiums above $25 million and up to $50 million, and 100% of net premiums in excess of $50 million. For example, the IRS would not take into account the first $37.5 million of net premiums written for a covered insurer with total net premiums above $50 million. No tax on first $25 million. Tax levied on 50% of premiums above $25 million and up to $50 million ($12.5 million). Taxable base on first $50 million is $12.5 million ($50 million - $25 million - $12.5 million). The proposed rules provide differing treatment for certain tax-exempt insurers such as public charities, social welfare organizations, high-risk health insurance pools, or consumer-operated-and-oriented plans (COOP). After applying the fee adjustments (see above) a covered insurer that is exempt from federal taxes would have the ACA fee applied to only 50% of its net premiums that are subject to the fee, so long as the premiums are attributable to the insurer's tax-exempt activity. The IRS would calculate each insurer's actual, annual fee/share of the premium tax based on the ratio of the insurer's net premiums written (after adjusting for the above disregards) as a share of the total net premiums written by all covered entities (after adjustment for the disregards). (See " Insurer Reporting Requirements .") Insurers would be required to report annual premium data to the IRS by April 15 of the following year. While entities with less than $25 million in net premiums written are not subject to the fee, they are still required to submit premium information. The IRS will determine the amount of each firm's net premiums written based on the annual reports, along with any other source of information the IRS has available. Insurers are to report the information on Form 8963, "Report of Health Insurance Provider Information." After reviewing the available financial information the IRS would notify each covered insurer or other entity of its: 1. Preliminary fee allocation. 2. Net premiums written for health insurance, both before and after IRS regulatory adjustments. 3. Aggregate net premiums written for U.S. health insurance from all covered entities. 4. Information regarding the process for correcting any errors in the IRS findings. Insurers would be required to review their preliminary fee calculation and, if they believe there are errors, to submit a correct form to the IRS in a timely fashion. The IRS would provide each covered entity with its preliminary fee calculation by June 15 each year. If an insurer believes that the IRS preliminary fee calculation contains errors, it must provide the IRS with a corrected report by July 15. The IRS would notify each covered entity of its final fee calculation on or before August 31 each fee year. The IRS would give each covered entity a final fee determination, based on the same criteria as the preliminary fee. The final fee may differ from the preliminary fee, however, based on any error correction, additional information uncovered during the review process, or a change in the calculation of overall net written premiums for the United States. Insurers must pay the final fee will by September 30 each year. Insurer information submitted on both original and corrected Forms 8963 is not confidential and will be open for public inspection or available upon request, according to the IRS. Insurers that fail to file required reports in a timely manner would face a penalty equal to $10,000 and the lesser of (1) an amount equal to $1,000 multiplied by the number of days the firm is out of compliance, or (2) the amount of the covered entity's fee for which the report was required. The penalty will be waived in cases where insurers can demonstrate reasonable cause for not reporting the information on time. Insurers would also face penalties for filing inaccurate information that understates net premiums written. The penalty will be equal to the excess of: 1. The amount of the annual fee the insurer would have paid had the premium data had been reported accurately, over 2. The amount of the annual fee imposed on the insurer, which was based on faulty reporting that understated the amount of net premiums written. Because the ACA premium fee is considered an excise tax by the IRS, the proposed regulations state that companies cannot deduct the fee from their annual taxes. While the federal ACA premium fee is new, states for many years have imposed premium taxes on insurance products. In 2012, states collected $16.7 billion in premium taxes on a broad range of insurance (including property and casualty, life, and health products). Insurers' ability to pass on the new ACA tax, in the form of higher premiums to consumers, will vary based on factors such as the degree of market competition or a firm's specific business strategy. Government programs such as Medicare and Medicaid that contract with private insurers to deliver health benefits consider an insurer's tax payments, along with other costs, when setting annual program reimbursement levels. The Congressional Budget Office (CBO) has estimated that insurers may pass on the ACA insurer fee to consumers in the form of "slightly" higher premiums for coverage. According to CBO, prior to the ACA's passage, because self-insured plans would largely be exempt from the fee, and because large firms are more likely to self-insure than small firms, the net result would be a smaller percentage increase in average premiums for large firms than for small firms and for nongroup coverage. The Joint Committee on Taxation has estimated that legislation to repeal Section 9010 of the ACA would result in a 2% to 2.5% reduction in the premium prices of insurance plans offered by the covered entities. The Joint Committee said it expected a very large portion of the fee to be passed on to purchasers of insurance in the form of higher premiums. The analysis found that eliminating the fee could reduce annual premiums for a family of four in 2016 by $350-$400. Some insurance companies have released estimates regarding the impact of the fee. For example, Blue Shield of California has forecast the impact of the 2014 insurer fee will equal about 2.3% of premium. Kaiser Permanente has told business clients the insurer fee will amount to roughly 0.65% of premium in 2014. Some insurance companies plan to increase premiums or have asked state regulators to include the impact of ACA costs, including the premium tax, in their annual rate requests. Horizon Blue Cross Blue Shield of New Jersey, for example, estimates that the tax will increase its costs by $125 million in 2014, spurring an increase in premiums. The company had $9.4 billion in revenues in 2012, with net income of $200 million. In addition, an April 2013 study by the actuary/consulting firm Milliman estimated that the fee would result in premium increases of 1.7% to 2.4% in 2014, rising to 2.0% to 2.9% in following years. The firm said that the fee gives nonprofit insurers a competitive advantage, because many nonprofits are exempted or are subject to a lower fee than the for-profit insurers' fees. Estimating exactly how the federal premium fee will affect the insurance industry, and existing government programs such as Medicare and Medicaid, is complicated by a number of factors, including a lack of detailed data on net premiums. The National Association of Insurance Commissioners (NAIC) has developed a system for uniform financial reporting by insurance companies. Currently, the NAIC collects premium data on direct premiums earned and written, rather than on net premiums written. As noted earlier, the ACA defines net premiums written as gross premiums from insurance sales, minus ACA MLR rebates, certain commissions, and premiums ceded to reinsurers. The difference between direct and net premium written is largely reinsurance activity. Any estimate of the distribution of the ACA fee based on direct premiums earned will most likely overestimate the size of the market subject to the ACA insurer tax. The NAIC will begin collecting data on net premiums written via future insurer financial statements. In addition, companies are to provide information to the IRS as part of their annual reporting requirements under the ACA. Existing NAIC data provide some general guidance regarding the possible, proportional breakdown of the insurance fees. In general, for-profit health insurers in the United States (excluding California) wrote about $295 billion in direct premiums in 2012. Comprehensive group and health policies accounted for more than half the total, with Medicare (MA and Part D) accounting for about 24% and Medicaid accounting for up to about 19%. One outstanding question is the potential impact of the premium fee on the Medicare and Medicaid health care programs. The premium tax does not apply to direct government programs, so does not apply to Medicaid and Medicare fee-for-service plans, where the government administers and pays for services. (See " Insurers Subject to the ACA Fee .") However, the federal government contracts with private insurers to offer Medicare Advantage and Medicare Part D insurance plans. In addition, a growing share of state-federal Medicaid insurance plans, mainly managed care plans, are offered by outside issuers, as are some CHIP plans. For-profit insurers are subject to the ACA premium fee on their Medicare and Medicaid business. (Nonprofit entities are exempt from the tax if they are incorporated under state law and receive more than 80% of gross revenues from government programs that target low-income, elderly, or disabled populations.) The share of the Medicare and Medicaid market held by private insurers is significant. For-profit companies served 71% of Medicare Advantage enrollees in 2011, with not-for-profit insurers accounting for about 29%. About 74% of Medicaid beneficiaries were in some kind of managed care plan in 2011, according to the Centers for Medicare & Medicaid Services. According to the CMS data and a 2010 survey by the Kaiser Commission on Medicaid and the Uninsured, more than half of Medicaid managed care enrollees are enrolled in managed care organizations on a risk-payment basis. Because the ACA premium tax will be factored into the rates that states pay insurers to offer managed care plans, insurance companies and others have warned that it could increase state and federal costs for the program. Government regulations could limit how much of the fee is passed on to Medicare beneficiaries. For example, Medicare Advantage plans each year are subject to a cap, or maximum increase, in total beneficiary costs. The premium fee is not a cost factor that will be used to adjust maximum beneficiary costs, which will effectively limit insurers' ability to pass on the fee. How much of the overall fee will be borne by outside insurers, and how much by the federal and state governments depends in part on how many states expand their Medicaid programs. Milliman in its April 2013 study estimated that under a status quo scenario, commercial plans would be responsible for about 61% of the fee over a 10-year period, with the Medicare paying 25% and Medicaid 14%. Under a nationwide full Medicaid expansion scenario, the Medicaid portion of the fee would increase by about 12%, with corresponding reductions to the share paid by commercial plans and Medicare. There are concerns about the potential for the ACA premium tax to increase costs to insurers, businesses, and consumers. The ACA premium tax is not occurring in isolation, however, but as part of the ACA's broad series of taxes and fees, and consumer and business insurance subsidies, and other health delivery reforms designed to expand the number of Americans with insurance and slow the rate of government and private market health care spending. The ultimate impact of the premium fee will depend on how these changes play out. Federal subsidies will mitigate the impact of higher premiums for some consumers. Under the ACA health exchanges must be established in every state by January 1, 2014, either by the state itself or the Secretary of Health and Human Services (Secretary). The exchanges will not be insurers, but will provide qualified individuals and small businesses with access to health plans offered by private insurers that meet set, federal standards. Individuals and small businesses that purchase health plans through the exchanges may qualify for federal subsidies and tax credits, which could reduce their costs and soften some of the impact of the ACA insurer tax. The CBO has estimated that 22 million people will purchase coverage through the exchanges once they are fully established in 2016, and that roughly 19 million (87%) will receive exchange subsidies. In addition, certain small employers are eligible for an ACA tax credit, provided they contribute a uniform percentage of at least 50% toward their employees' health insurance. By 2014, for-profit employers will be eligible for a maximum credit equal to 50% of the employer's contribution toward employee premiums, while nonprofit organizations will be eligible for a maximum credit of up to 35% of employer contributions. The maximum small business tax credit is available for two consecutive tax years, beginning with the first year the employer offers coverage through an exchange. In addition to premium and small business tax credits, the ACA requires increased regulation and oversight of insurance costs. The federal government will provide grants to states to review insurance rates, and will require health insurance companies to provide justifications for any proposed rate increases that the federal government determines to be unreasonable. Legislation has been introduced in Congress to repeal the ACA fee on health insurance providers, and to require fuller consumer reporting regarding the fee. The bills are in addition to other legislation to repeal the ACA. Among the bills that have been introduced are: H.R. 763 , To repeal the annual fee on health insurance providers enacted by the Patient Protection and Affordable Care Act by striking Section 9010. S. 603 , To repeal the annual fee on health insurance providers enacted by the Patient Protection and Affordable Care Act. H.R. 1558 , Section 104 of the bill would repeal Section 9010 of the ACA. S. 24 , Section 104 of the bill would repeal Section 9010 of the ACA. Related: H.R. 1205 , To require health plans to disclose in their annual summary of benefits ACA-imposed taxes and fees. S. 764 , To require health plans to disclose in their annual summary of benefits ACA-imposed taxes and fees. In addition to formal legislation, there has been debate regarding other, possible changes to the ACA insurer premium fee. A number of state governors caution that the premium fee will result in higher costs to states that offer fully capitated Medicaid managed care plans under contract with insurers. Federal regulations require that premiums paid to Medicaid managed care plans be "actuarially sound." To make that determination, state licensing entities consider insurers' costs, including health benefits, marketing and administrative expenses, and taxes. Because of cost-sharing limitations in Medicaid, the fees may not be passed on to enrollees. Instead, if premium rates go up, states and the federal government, which jointly fund Medicaid, could pay more to operate the program. The federal government will collect the insurer premium fee, but states will not have new, offsetting revenues to defray any new costs. The Republican Governors Association has asked Congress to exempt Medicaid and CHIP managed care plans from the insurance tax. Some analysts say that states will be able to negotiate with insurers to control premium costs, meaning that the full impact of the fee is unlikely to be passed along. The Association of American Medical Colleges has proposed using a portion of the premium tax to help fund U.S. graduate medical education. Health policy experts are concerned about the current size, specialty mix, and geographic distribution of the healthcare workforce. Some experts forecast a shortage of physicians, a situation that will be made more acute when millions of previously uninsured consumers obtain coverage under the ACA. Another outstanding issue involves tax treatment of ACA fees "recovered" by affected insurers. Some large health care providers have indicated that they plan to recoup the cost of these excise taxes by levying fees or raising insurance premiums on those enrolled in their plans. In other words, although the excise tax is levied on health insurance providers, the economic impact of the excise tax might be borne by consumers. Under current law, increased insurer fees and premiums that are imposed to compensate, at least in part, for the imposition of the excise tax will contribute to the health insurers' calculations of their gross income for tax purposes. Therefore, these fees will be subject to corporate income tax (just like ordinary revenues earned through the sales of products and services). A coalition of insurers has submitted comments to the IRS requesting that extra fees and higher premium costs be excluded from calculations of gross income. The insurers argue that they are effectively being "double-taxed": once through the ACA's fees/excise taxes, and next based on income earned from new fees and higher premiums instituted to offset any reduction in profits due to the tax. In the insurers' view, the fees should be interpreted by the IRS as a "recovery" for past excise taxes paid. Opponents could argue that such an exclusion would amount to a tax preference for health insurers, and would also reduce the amount of revenue expected to be raised through the ACA fee. The IRS in its proposed regulation asked for comments on the issue. | The Patient Protection and Affordable Care Act (P.L. 111-148) and the Reconciliation Act of 2010 (P.L. 111-152) impose an annual fee on certain for-profit health insurers, starting in 2014. The aggregate amount of the ACA fee, to be collected across all covered insurers, will be $8.0 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, and $14.3 billion in 2018. After 2018, the aggregate fee will be indexed to the overall rate of annual premium growth, as calculated by the Internal Revenue Service. The annual fee will be apportioned among health insurers, based on (1) their market share and (2) their dollar value of business. The fee applies to net health care premiums written, which are defined in regulations as gross premiums from insurance sales minus refunds to enrollees under the medical loss ratio provisions of the ACA, certain commissions, and premiums ceded to reinsurers. Ceded premiums are premiums that an insurer transfers to a reinsurer, as payment for protection against defined market risks. The ACA fee does not apply to the first $25 million of net premiums written by a covered insurer. The fee will be imposed on 50% of net premiums written above $25 million and up to $50 million, and 100% of net premiums in excess of $50 million. The regulations shield a higher level of net premiums from the fee for insurers that are exempt from federal taxes and are considered to be public charities, social welfare organizations, high-risk health insurance pools, or consumer-operated-and-oriented health plans (COOP). The ACA fee does not apply to entities that fully self-insure, government-run insurance programs, or nonprofit insurers incorporated under state law that receive more than 80% of their gross revenues from government programs that target low-income, elderly, or disabled populations (such as the State Children's Health Insurance Plan [CHIP], Medicare, and Medicaid). Some insurance issuers have informed shareholders and state insurance regulators that they intend to pass on the cost of the fee to businesses and enrollees in the form of higher premiums. Private insurers that contract with government organizations to provide Medicare and Medicaid health benefits will be subject to the fee, which could have implications for enrollee premiums and government payments to those plans. It is difficult to estimate the precise impact of the fee on the insurance industry, government programs, and consumers for several reasons, including a lack of public data on net premiums written. In addition, insurers' ability to pass on the fee will vary depending on competition in local markets, and their individual financial strategies. | 4,550 | 569 |
The Central States, Southeast and Southwest Areas Pension Plan (Central States) is a multiemployer defined benefit (DB) pension plan and is projected to become insolvent by 2026 and then will be unable to pay benefits. On September 26, 2015, Central States submitted an application to the U.S. Department of the Treasury to reduce benefits to two-thirds of the plan participants. Multiemployer pension plans are sponsored by two or more employers in the same industry and are maintained under collective bargaining agreements. Participants continue to accrue benefits while working for any participating employer. Multiemployer pension plans pool risk to minimize financial strain if one or more employers withdraw from the plan. However, in recent years, an increasing number of employers have left multiemployer pension plans, either voluntarily or through employer bankruptcy. As a result of withdrawals and declines in the value of plan assets (such as those that occurred during the 2008 financial market decline), there are insufficient funds in the plan from which to pay benefits to some participants who worked for employers that have withdrawn from the plan. Central States is one of the largest multiemployer DB pension plans and is the largest (by number of participants) among plans that may be eligible to reduce benefits as a result of the Multiemployer Pension Reform Act (MPRA), enacted as Division O in the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ). Table 1 contains information about the Central States plan from its most recent Form 5500 annual disclosure, which is a required disclosure that pension plans must file with the U.S. Department of Labor. A multiemployer DB pension plan is considered insolvent when it no longer has sufficient resources from which to pay any benefits to participants. Central States has indicated that it is likely to become insolvent by 2026. MPRA allows certain multiemployer plans that are expected to become insolvent to apply to Treasury for authorization to reduce benefits to participants in the plan, if the benefit reductions can restore the plan to solvency. The reductions may include both active participants (e.g., those still working) and those in pay status (e.g., those who are retired and receiving benefits from the plan). Prior to the passage of MPRA, under the anti-cutback provision in the Employee Retirement Income Security Act (ERISA, P.L. 93-406 ), pension plans generally did not have the authority to reduce participants' benefits. By reducing benefits to participants in the immediate term, the plan expects to avoid insolvency and therefore ensure that future retirees will be able to receive plan benefits. The Pension Benefit Guaranty Corporation (PBGC) was established by ERISA to insure participants in single-employer and multiemployer private-sector DB pension plans. PBGC indicated that in FY2015 it covered about 10.3 million participants in about 1,400 multiemployer DB pension plans. When a multiemployer DB pension plan becomes insolvent, PBGC provides financial assistance to the plan to pay participants' benefits. When a multiemployer plan receives financial assistance from PBGC, the plan must reduce participants' benefits to a maximum per participant benefit. The maximum benefit is $12,870 per year for an individual with 30 years of service in the plan. The benefit is lower for individuals with fewer than 30 years of service in the plan. However, if Central States (or another large multiemployer plan) were to become insolvent, PBGC would likely be unable to provide sufficient financial assistance to pay participants' maximum insured benefit. PBGC's multiemployer program receives funds from premiums paid by participating employers ($212 million in FY2015) and from the income from the investment of unused premium income ($68 million in FY2015). Premium revenue is held in a revolving fund, which is invested in Treasury securities. PBGC's multiemployer program does not receive any federal funding. If the amount of financial assistance exceeds premium revenue, PBGC would pay benefits from the revolving fund. If PBGC were to exhaust the funds in the revolving fund, PBGC would be able to provide financial assistance equal only to the amount of premium revenue. If a large plan such as Central States were to become insolvent, PBGC would only be able to pay financial assistance equal to the amount of its premium revenue. Participants in multiemployer plans that receive financial assistance from PBGC would not receive 100% of their promised benefits. In the event of PBGC's insolvency, financial assistance from Treasury is not assured. ERISA states that "the United States is not liable for any obligation or liability incurred by the corporation." As shown in Table 1 , Central States paid $2.8 billion in benefits in 2014. If PBGC were required to provide financial assistance to the Central States plan, it is likely that PBGC would quickly become insolvent. Participants in plans that receive financial assistance from PBGC would likely see their benefits greatly reduced. The coalition of multiemployer pension plan stakeholders that formulated the proposal to reduce participants' benefits assumed that Congress would not authorize financial assistance for PBGC. Table 2 summarizes the financial position of PBGC's multiemployer program. The value of PBGC's expected future assistance to Central States is included as a liability for PBGC. Under MPRA, only plans in critical and declining status may cut benefits. One criterion for a plan to be in critical status is that the plan's funding ratio must be less than 65%. A plan is in declining status if the plan actuary projects the plan will become insolvent within the current year or, depending on certain circumstances as specified in MPRA, within either the next 14 or 19 years. MPRA requires that plans demonstrate that benefit reductions are distributed equitably. It lists a number of factors that plans may, but are not required to, consider. These factors include the age and life expectancy of the participant; the length of time an individual has been receiving benefits; the type of benefit (such as early retirement, normal retirement, or survivor benefit); years to retirement for active employees; and the extent to which participants are reasonably likely to withdraw support for the plan, which could cause employers to withdraw from the plan. MPRA requires that benefit reductions be made only to the extent that the plan will be restored to solvency. It also requires that an individual's benefit be reduced to no less than 110% of the PBGC maximum guarantee. For example, with the maximum guarantee for an individual with 30 years of service in a plan being $12,870 per year, a participant whose benefit is suspended would have to receive a benefit of at least $14,157. The PBGC maximum guarantee is less than $12,870 for individuals with fewer than 30 years of service in a plan. In addition, disabled individuals and retirees aged 80 or older may not have their benefits reduced. The benefits of individuals between the ages of 75 and 80 may be reduced, but to a lesser extent than those younger than 75. A provision in MPRA requires plans that meet specific conditions to reduce benefits in a specified manner. This provision only applies to the Central States plan. The Central States application for benefit reductions lists three tiers of benefits. Tier 1 includes benefits for participants who worked for an employer that withdrew and failed to pay, in full, the required payments to exit the plan (known as withdrawal liability). Tier 2 includes all other benefits not attributable to either Tier 1 or Tier 3. Tier 3 includes benefits for individuals who worked for an employer that (1) withdrew from the plan, (2) fully paid its withdrawal liability, and (3) established a separate plan to provide benefits in an amount equal to benefits reduced as a result of the financial condition of the original plan. Tier 3 includes only benefits for participants who worked for United Parcel Service (UPS), are receiving benefits from the Central States plan, and for which the UPS plan would be required to offset any benefit reductions. Central States indicated that there are 100,377 Tier 1 participants, 322,560 Tier 2 participants, and 48,249 Tier 3 participants. The total amount of proposed benefit reductions will be $1.9 billion in Tier I; $7.1 billion in Tier 2; and $2.0 billion in Tier 3. Central States has also indicated that its proposed benefit reductions are equitable and in accordance with the provisions of MPRA. Table 3 summarizes the distribution of the proposed benefit reductions in Central States. About two-thirds of the participants in the plan are facing benefit reductions. Central States submitted its proposal to reduce participants' benefits on September 25, 2015. Treasury held a comment period on Central States' application from October 23, 2015, to December 7, 2015. On December 10, 2015, Treasury extended the deadline for comments until February 1, 2016. In addition, Treasury has been holding conference calls and hosting regional public meetings with affected participants. Treasury is currently evaluating Central States' application. Under MPRA, Treasury must approve or deny the application within 225 days of receipt, which is May 7, 2016. In general, the Secretary of the Treasury must approve the application for benefit suspensions if Central States' financial condition (such as the plan being in critical and declining status) and proposed benefit suspensions meet the criteria specified in MPRA (such as the benefit suspensions being equitably distributed and no benefit suspensions for participants aged 80 and older). MPRA requires the Treasury to accept the plan sponsor's determinations with respect to the criteria for the benefit suspensions and may reject the application [only] if the plan sponsor's determinations were "clearly erroneous." In general, Treasury is required to administer a vote of plan participants not later than 30 days after it approves an application for benefit reductions. Unless a majority of all plan participants and beneficiaries reject the proposal, benefit reductions would go into effect. If a majority of plan participants reject the proposal to reduce benefits, the plan sponsor may submit a new proposal to the Treasury to suspend benefits. Under MPRA, if Treasury determines that a plan is systematically important then Treasury may permit (1) the benefit suspensions to occur regardless of the participant vote or (2) the implementation of a modified plan of benefit suspensions to take effect, provided the modified plan would enable the pension plan to avoid insolvency. A systemically important plan is a plan that PBGC projects would require more than $1.0 billion in future financial assistance in the event of the plan's insolvency. At the end of FY2013, PBGC indicated the present value of future financial assistance to Central States to be $20.2 billion. Treasury would most likely determine that Central States is a systematically important plan. In the 114 th Congress, a number of bills have been introduced that would affect potentially insolvent multiemployer DB pension plans. H.R. 2844 / S. 1631 . Representative Marcy Kaptur and Senator Bernie Sanders introduced companion legislation, the Keep Our Pension Promises Act, on June 19, 2015, that would, among other provisions, repeal the benefit suspensions enacted in MPRA. H.R. 4029 / S. 2147 . Representative David Joyce on November 17, 2015, and Senator Rob Portman on October 7, 2015, introduced companion legislation, the Pension Accountability Act, that would (1) change the participant vote to approve a plan to reduce benefits from a majority of plan participants to a majority of participants who vote and (2) eliminate the ability of systematically important plans to implement benefit suspensions regardless of the outcome of the participant vote. | Under the Multiemployer Pension Reform Act (MPRA), enacted as Division O in the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235) on December 16, 2014, certain multiemployer defined benefit (DB) pension plans that are projected to become insolvent and therefore have insufficient funds from which to pay benefits may apply to the U.S. Department of the Treasury to reduce participants' benefits. The benefit reductions can apply to both retirees who are currently receiving benefits from a plan and current workers who have earned the right to future benefits. On September 25, 2015, the Central States, Southeast and Southwest Areas Pension Plan (Central States) applied to the Treasury to reduce benefits to plan participants in order to avoid becoming insolvent. At the end of 2014, Central States had almost 400,000 participants, of whom about 200,000 received $2.8 billion in benefits that year. The plan reported $18.7 billion in assets that was sufficient to pay 53% of promised benefits. In its application to reduce benefits, Central States projects that it will become insolvent in 2026. If Central States does not reduce participants' benefits and the plan becomes insolvent, then the Pension Benefit Guaranty Corporation (PBGC) would provide financial assistance to the plan. PBGC is an independent U.S. government agency that insures participants' benefits in private-sector DB pension plans. Multiemployer plans that receive financial assistance from PBGC are required to reduce participants' benefits to a maximum of $12,870 per year in 2016. However, the insolvency of Central States would likely result in the insolvency of PBGC, as PBGC would likely have insufficient resources from which to provide financial assistance to Central States to pay 100% of its guaranteed benefits. Treasury is not obligated to provide financial assistance if PBGC were to become insolvent. Under MPRA, participants' benefits in the Central States plan could be reduced to 110% of the PBGC maximum guarantee level. However, participants aged 80 and older, receiving a disability pension, or who are receiving a benefit that is already less than the PBGC maximum benefit would not receive any reduction in benefits. Central States' application for benefit reductions indicates that about two-thirds of participants would receive reductions in benefits. About 185,000 (almost 40%) participants would receive at least 30% or higher reductions in their benefits. Treasury is currently reviewing Central States' application and must approve or deny the application by May 7, 2016. If Central States' financial condition and proposed benefit suspensions meet the criteria specified in MPRA, then Treasury must approve the application for benefit reductions. The plan has proposed to begin implementing the benefit reductions beginning in July 2016. If Treasury approves a plan's application to reduce benefits, it must also obtain the approval of the plan's participants via a vote of plan participants. However, MPRA requires Treasury to designate certain plans as systematically important if a plan is projected to require $1 billion or more in financial assistance from PBGC. Plans that are labelled systematically important may implement benefit suspensions regardless of the outcome of the participant vote. Central States is likely a systematically important plan. Legislation has been introduced in the 114th Congress that would affect potentially insolvent multiemployer DB pension plans. H.R. 2844 and S. 1631, the Keep Our Pension Promises Act, would, among other provisions, repeal the benefit reductions enacted in MPRA. H.R. 4029 and S. 2147, the Pension Accountability Act, would change the criteria of the participant vote and would eliminate the ability of systematically important plans to implement benefit suspensions regardless of the participant vote. | 2,521 | 807 |
On January 18, 2017, the Secretary of Health and Human Services (HHS) published a final rule that amends the federal regulations responsible for safeguarding the privacy of patient records maintained by substance use disorder treatment programs across the country. These regulations, known simply as Part 2 after their location in the Code of Federal Regulations, were first promulgated in 1975 and had not been revised substantively since 1987. According to the HHS Substance Abuse and Mental Health Services Administration (SAMHSA), which administers Part 2, the changes in the final rule are intended "to better align [Part 2] with advances in the U.S. health care delivery system while retaining important privacy protections." The Part 2 law and implementing regulations were written at a time when treatment for substance use disorders was offered primarily by specialty providers. Some individuals with substance use disorders, however, were reluctant to seek treatment because they feared that disclosure of information about their condition might lead to prosecution, discrimination by health insurers, or loss of employment, housing, or child custody. The aim of Part 2 was to encourage these individuals to get the treatment they needed by establishing strong privacy protections. Today, the health care system is embracing new models for delivering services--including accountable care organizations (ACOs) and patient-centered health homes--that rely on sharing patient information to coordinate and integrate care. There is also a focus on measuring performance and patient outcomes. These efforts, in turn, depend on use of electronic health records (EHRs) and the development of a health information technology (HIT) infrastructure to support the exchange and use of digital health information. Under Part 2, the disclosure of substance use disorder treatment records requires a patient's written consent, unless the type of disclosure falls under one of a handful of specific statutory exceptions. For example, Part 2 generally requires consent to release information about a patient's substance use disorder history and treatment regimens to clinicians at another facility, except in the case of a medical emergency. This contrasts with the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule, which permits clinicians to share patient information for treatment and payment purposes. Health care providers have become increasingly frustrated with the restrictions that Part 2 places on their ability to share the medical records of patients with substance use disorders. They argue that Part 2 makes it difficult for addiction treatment providers and general medicine providers to exchange information and coordinate patient care. Consider a patient who receives counseling and medications at an alcohol or drug treatment program. The records for this care are protected under Part 2. If the patient also receives treatment (including addiction treatment) at a primary care facility, the records for the care at that location are HIPAA-protected. Whereas the primary care facility is permitted under HIPAA to share the patient's information with the Part 2-covered alcohol and drug treatment program and any other health care facility providing care, the alcohol and drug treatment program generally needs the patient's consent under Part 2 to release information to another health care facility. Integrated health systems that handle patient records from multiple providers must separate Part 2 data from other medical information and manage patient consent preferences for its use and disclosure. Some health information exchanges (HIEs) exclude Part 2 data altogether because of the difficulty and expense of segregating the data and managing consent. Researchers, too, have expressed concern about access to Part 2 data. They were especially critical of a decision by the HHS Centers for Medicare & Medicaid Services (CMS) in late 2013 to begin withholding from research data sets any Medicare or Medicaid reimbursement claim that included a substance use disorder diagnosis or procedure code. CMS took this action to comply with Part 2. While the regulations permit disclosures for research purposes, subject to certain conditions, only substance use disorder program directors are allowed to authorize such disclosures. Third-party payers that receive Part 2 data, including CMS, are subject to the general prohibition on redisclosing the information. Researchers complained that they were losing access to an important data source at a particularly challenging time, as the nation expands its efforts to combat the abuse of prescription opioids and heroin. SAMHSA launched its effort to revise Part 2 in response to these concerns. Its stated goal in developing the final rule was to ensure that individuals with substance use disorders are able to participate in, and benefit from, the new systems of care without compromising their privacy. This report summarizes the changes that the final rule made to the Part 2 regulations and describes stakeholders' reactions to these revisions. The report begins with an overview and comparison of Part 2 and the HIPAA Privacy Rule. It concludes with some discussion of new HIT standards and applications for data segmentation and consent management that support the exchange of Part 2 data. Part 2 is much narrower in scope than the more familiar HIPAA Privacy Rule, which provides a baseline of privacy protections for health information maintained by payers and providers of health care--including substance use disorder treatment programs subject to Part 2--across the entire health care system. Part 2 also permits significantly fewer uses and disclosures of patient information without consent. Table 1 compares key provisions of the Privacy Rule and Part 2. The HIPAA Privacy Rule applies to identifiable health information maintained by health plans, health care clearinghouses, and health care providers. It also applies to the business associates of these HIPAA-covered entities, with whom such protected health information (PHI) is shared. Business associates provide specific services (e.g., claims processing, data management) for covered entities to help them operate as businesses and meet their responsibilities to patients and beneficiaries. The Privacy Rule describes multiple circumstances under which covered entities may use or disclose PHI. For example, PHI may be used or disclosed for the purposes of treatment, payment, and other routine health care operations--including case management, care coordination, and outcomes evaluation--with few restrictions. The rule also permits the use or disclosure of PHI for other specified purposes not directly connected to the treatment of the individual, such as public health and research. Covered entities must obtain a patient's written authorization for any use or disclosure that is not expressly permitted or required under the Privacy Rule. By comparison, Part 2 applies specifically to federally assisted substance use disorder treatment programs. Most of the nation's alcohol and drug treatment programs are covered, comprising more than 12,000 hospitals, outpatient treatment centers, and residential treatment facilities. While Part 2 does not apply to general medical facilities or practices, it does cover specialized substance use disorder treatment units (and staff) within such facilities. Part 2 restricts the use or disclosure of any patient information that directly identifies a patient as an alcohol or drug abuser, or that links the patient to an alcohol or drug treatment program. Medical information that does not link the patient to current or past substance abuse, or identify the patient as a participant of a Part 2 program, is not subject to the Part 2 requirements. While such information is not afforded Part 2 protection, it remains covered under the HIPAA Privacy Rule. Under Part 2, patient-identifying information may not be disclosed without a patient's written consent except pursuant to certain specified conditions in the following circumstances: (1) medical emergencies, (2) research, (3) program audits and evaluations, and (4) pursuant to a court order authorizing disclosure. Any information disclosed with the patient's consent must include a statement that prohibits further disclosure of identifying information unless the consent expressly permits such redisclosure, or it is permitted by Part 2. Substance use disorder treatment programs typically are subject to both sets of regulations--Part 2 and the HIPAA Privacy Rule--unless there is a conflict between the two. In that case, the program must comply with the regulations that are more protective of patient privacy, which generally means following the requirements under Part 2. The major provisions in the final rule are summarized below. Although SAMHSA's primary goal was to modify Part 2 to facilitate the sharing of patients' Part 2 data with other providers participating in clinically integrated health care networks, the agency's rulemaking options were constrained by the underlying statutory language. The Part 2 law is prescriptive, which limits SAMHSA's ability to make significant changes through rulemaking. The law defines the types of entities and information subject to its protections. It requires patient consent to disclose protected information, except in a handful of specified circumstances, and it establishes a strict prohibition on redisclosure. By contrast, the HHS Secretary was given broad discretionary authority under HIPAA to develop--and periodically amend--the Privacy Rule. HIPAA instructed the Secretary to submit to Congress detailed recommendations on the privacy of individually identifiable health information, and to promulgate privacy standards based on the recommendations. The law provided few details on the scope of the recommendations other than specifying that they must address (1) patient rights, (2) procedures for exercising such rights, and (3) the uses and disclosures of patient information that should be permitted or required. The final rule modifies the Part 2 requirement that consent forms include the amount and kind of information to be disclosed. It specifies that the form must now include "an explicit description of the substance use disorder information that may be disclosed." According to SAMHSA, the types of information that could be specified include diagnostic information, medications, lab tests, history of substance use, employment information, social supports, and claims or encounter data. Patients may select "all my substance use disorder information" as long as the consent form includes more specific types of disclosures from which to choose. Part 2 traditionally has required patient consent forms to identify "the name or title of the individual or the name of the organization to which the disclosure is made." Under the final rule, more options are available. A patient can now list any of the following in the "to whom" section of the consent form: the name of an individual; the name of an entity (e.g., hospital, clinic, physician practice) that has a "treating provider relationship" with the patient; the name of an entity with which the patient does not have a treating provider relationship and which is a third-party payer; and/or the name of an entity with which the patient does not have a treating provider relationship and which is not a third-party payer (e.g., ACO, health information exchange, research institution), plus either the name(s) of specific individual participants; the name(s) of an entity participant(s) with which the patient has a treating provider relationship; or a general designation of individual or entity participants, or class of participants, with which the patient has a treating provider relationship (e.g., "all my past, present, and future treating providers"). Thus, a patient may now consent to disclose Part 2 data to an organization such as a health information exchange (HIE) that does not have a treating provider relationship with the patient, but which acts as an intermediary. Pursuant to the patient's general designation, the intermediary may further disclose the information, but only to providers that it can verify have a treating provider relationship with the patient. The final rule also creates the right to an accounting of disclosures. Patients who provide consent using the general designation are entitled, upon written request, to receive from the intermediary a list of entities to which their information has been disclosed within the past two years. The final rule modifies the written statement prohibiting redisclosure that accompanies Part 2 disclosures made with a patient's consent. The modified language states that the prohibition on redisclosure applies only to information that identifies, directly or indirectly, an individual as having or having had a substance use disorder. That includes not only clinical information, such as diagnoses, treatments, and referrals, but also the origin of the data (such as a treatment clinic) if it reveals that the individual has a substance use disorder. The final rule modifies the regulatory language so that it aligns with the statutory definition of medical emergency. The revised language states that patient-identifying information may be disclosed to medical personnel "to the extent necessary to meet a bona fide medical emergency in which the patient's prior informed consent cannot be obtained." The final rule continues to require a Part 2 program, immediately following disclosure, to document specific information related to the medical emergency. The final rule revises the existing security language by specifying that Part 2 programs and other lawful holders of patient-identifying information must adopt policies and procedures to protect both paper and electronic records "against unauthorized uses and disclosures" and "against reasonably anticipated threats or hazards" to the security of such information. The policies and procedures for electronic records must address creating, receiving, and transmitting such records; destroying records and sanitizing the electronic media on which such records are stored; and rendering patient identifying information nonidentifiable, among other things. The final rule eases the restrictions on disclosures for research purposes by allowing a Part 2 program or other lawful holder of Part 2 information --not just Part 2 program directors--to disclose the information to qualified researchers, provided the researchers (1) have obtained approval from an Institutional Review Board (IRB) or equivalent privacy board under the HIPAA Privacy Rule and/or the Common Rule; (2) agree to be fully bound by Part 2; and (3) if necessary, resist in judicial proceedings any efforts to obtain access to the data except as permitted under Part 2. The final rule also permits researchers using Part 2 data to link to data sets in federal and nonfederal data repositories, provided that the linkage has been reviewed and approved by an IRB. Part 2 permits the disclosure of patient-identifying information to certain qualified persons who are conducting a program audit or evaluation, provided that certain safeguards are met. The final rule revises and expands the existing language so that ACOs and other CMS-regulated entities are able to access Part 2 data to perform necessary audit and evaluation activities, including financial and quality assurance reviews. Part 2 permits the disclosure of patient-identifying information to a QSO, subject to a written agreement. The final rule adds population health management to the list of examples of services that may be provided by a QSO. SAMHSA defines population health management as "increasing desired health outcomes and conditions through monitoring and identifying individual patients within a group." It emphasizes that disclosures for population health management under a QSO agreement must be limited to the specific offices or units responsible for carrying out these activities. The agency does not consider care coordination or medical management to be population health management because they both include a patient treatment component. SAMHSA decided not to address electronic prescribing and state PDMPs in its Part 2 rulemaking. This is a notable omission given the potential importance of PDMPs in combatting the abuse and diversion of controlled prescription drugs such as opioid painkillers. PDMPs collect, monitor, and analyze prescribing and dispensing data submitted electronically by pharmacies and other drug dispensers. Because of the prohibition on redisclosure, a pharmacy that receives an e-prescription from a Part 2 program must obtain patient consent to transmit the information to a PDMP. Patient consent is also required for the PDMP to redisclose that information to others with access to the PDMP. While recognizing the importance of PDMPs, SAMHSA concluded that these issues are not yet ripe for rulemaking in part because pharmacy data systems currently do not have the ability to manage patient consent or segregate Part 2 data from other prescription information. SAMHSA also published a supplemental final rule in January 2018 that makes additional changes to Part 2 to permit third parties in lawful possession of Part 2 data to disclose the information to their contractors, subcontractors, and legal representatives. The agency finalized two sets of circumstances under which such disclosures would be permissible. First, if a patient consents to disclosure of his or her Part 2 records for payment and/or health care operations activities, the recipient of the information (i.e., lawful holder) is able to further disclose the information to its contractors, subcontractors, or legal representatives to carry out such activities on its behalf. Any entity that receives data from a lawful holder in this way would itself become a lawful holder and be subject to the Part 2 requirements. SAMHSA includes a list of permissible payment and health care operations activities, which is similar to the HIPAA Privacy Rule's definition of these terms, in the preamble of the rule to provide illustrative examples of these types of activities. Second, the final rule allows an individual and entity to whom Part 2 data are disclosed for a Medicare, Medicaid, or State Children's Health Insurance Program (CHIP) audit or evaluation to further disclose the information to its contractors, subcontractors, or legal representatives to carry out the audit or evaluation. Groups that advocate for the privacy of individuals with substance use disorders generally are satisfied with the final rule because it retains Part 2's confidentiality protections. But organizations that represent payers and providers of health care have criticized the final rule, claiming that on balance it does little to improve information sharing. The Legal Action Center, a nonprofit law and policy organization representing people with substance use disorders, HIV/AIDS, or criminal records, notes that while the final rule has introduced flexibility to the consent process by providing more options for designating the types of individuals and entities permitted to receive protected information, the core consent requirements under Part 2 remain intact and in other respects have been strengthened. The center applauds the new provision that allows patients to indicate on the consent form the specific types of information that may be disclosed. It also credits SAMHSA for not attempting to loosen the prohibition on redisclosure or to create any new exceptions to the consent requirement. The Partnership to Amend 42 C.F.R. Part 2 (the Partnership)--a coalition of national organizations representing health care payers and providers committed to aligning Part 2 with the HIPAA Privacy Rule--has been critical of the final rule. Though the Partnership acknowledges SAMHSA's efforts to broaden the consent options in an attempt to facilitate the use and disclosure of Part 2 data for research, population health management, and care coordination, it believes more needs to be done to enable Part 2 data to be shared. The Partnership recognizes, however, that SAMHSA's rulemaking options are limited by the underlying statute--as discussed earlier--and thus more fundamental changes to Part 2 may require new legislation to amend the law. Representatives of the behavioral health provider and medical informatics communities support the final rule's general consent provisions that permit disclosure of Part 2 data to intermediaries such as HIEs and ACOs. But they are critical of the language that will require such intermediaries to have the IT capability to (1) limit access to Part 2 data to providers involved in the patient's care (i.e., those with a "treating provider relationship") and (2) be able to track which providers have received Part 2 data so that an accounting of such disclosures within the past two years can be provided to the patient upon request. They argue that these requirements are administratively and technologically burdensome and provide little if any additional privacy protections. A provision in the 21 st Century Cures Act requires the HHS Secretary, not later than one year after first finalizing regulations to update Part 2, to convene stakeholders to determine the final rule's effects on patient care, health outcomes, and patient privacy. On January 31, 2018, SAMHSA held a listening session to implement this requirement. In tandem with its Part 2 rulemaking activities, SAMHSA has worked closely with federal and nonfederal partners to develop HIT standards and applications that support the use and disclosure of information protected by Part 2. These efforts are briefly described below. To facilitate the electronic exchange of Part 2 data, each patient's consent preferences specifying the type of information that may be shared, and the individuals or entities with whom the information may be shared, must be carefully managed. Patient consent has to travel with the data in order to control access. In addition, a mechanism is required for segregating the data in a medical record to capture a patient's preferences. Data segmentation allows a patient's record to be broken down into multiple categories, allowing certain protected data elements to be removed (redacted) if a patient has not consented to their disclosure. In recent years, SAMHSA has worked with the HHS Office of the National Coordinator for Health Information Technology (ONC) on its Data Segmentation for Privacy (DS4P) initiative. Through DS4P, federal and nonfederal stakeholders developed internationally accepted standards and guidelines for segmenting medical data and managing patient consent. Based on the DS4P standards, SAMHSA designed Consent2Share, an open-source online tool for data segmentation and consent management. Consent2Share integrates with existing EHR systems and HIE networks to manage the exchange of health information among providers. Consent2Share provides a patient portal where individuals can learn about and manage their consent options. They can complete and electronically sign consent forms if they wish to permit the disclosure of protected information, whether it is protected under Part 2 or applicable state health privacy laws. Using Consent2Share, patients can indicate the individuals and/or entities with whom they want to share information and select from a list of protected information the specific types of data that are allowed to be disclosed. Prior to the exchange of patient information, Consent2Share receives a patient's record from an EHR or HIE, confirms that the patient has consented to share information with the intended recipient, and applies the patient's consent choices--for example, redacting some or all of the Part 2 data unless the patient has consented to its disclosure--before sending the modified record to the recipient. In 2015, SAMHSA launched the OTP Service Continuity Pilot (SCP) project to implement electronic health information exchange among OTPs in a way that is compliant with Part 2 and state law and minimizes disruptions in treatment. It is critical that individuals receiving behavioral therapy and medications--methadone or buprenorphine--for their opioid addiction at an OTP have consistent, uninterrupted access to treatment. However, OTP patients may experience treatment disruptions when natural disasters or other unanticipated events temporarily close the OTP and force them to seek treatment at another facility. Patients also may have difficulty maintaining treatment continuity during vacations and business travel, or when they relocate. SAMHSA selected Arizona Health-e Connection (AzHeC), which operates the statewide HIE, to run the SCP project. AzHeC is working with three Arizona-based behavioral health organizations, each of which operates OTPs connected to the HIE. Under the SCP, AzHeC has successfully integrated Consent2Share with the Arizona HIE. This enables Consent2Share to apply patient consent preferences to clinical documents handled by the HIE. Each time a patient receives counseling and medication treatment at an OTP, the facility records dosing and other treatment information in the patient's electronic medical record and sends an updated clinical summary document to the HIE. If the patient visits a different OTP, he or she can log into Consent2Share and modify the consent settings, giving the facility access to treatment information. When the facility contacts the HIE to request a copy of the patient's clinical summary document, Consent2Share applies the patient's consent preferences to the document and redacts any data that the requesting provider is not allowed to see. | On January 18, 2017, the Secretary of Health and Human Services (HHS) published a final rule to amend the federal regulations known as "Part 2" that protect the privacy of patient records maintained by alcohol and drug treatment programs across the country. Part 2 was developed in the 1970s to allay the concerns of individuals with substance use disorders who were afraid to get treatment for fear that their medical information would be released, leading to discrimination and even prosecution. Health care providers participating in new health care delivery models such as accountable care organizations (ACOs), which rely on sharing medical information to coordinate and integrate patient care, complain that Part 2 restricts their ability to access important medical data. Disclosure of Part 2 Data Disclosure of Part 2-covered data generally requires a patient's written consent unless the type of disclosure falls under one of a handful of statutory exceptions. Consent is needed for a clinician to release patient information to another health care facility to improve the coordination of care. This requirement contrasts with the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule, which applies more broadly to medical information throughout the health care system, and which permits health care providers to share patient data with few restrictions. Alcohol and drug treatment programs typically are subject to both Part 2 and the Privacy Rule unless there is a conflict between the two. In that case, the program must comply with the regulations that are more protective of privacy, which generally means following Part 2. Changes in the Final Rule The final rule was developed by the HHS Substance Abuse and Mental Health Services Administration (SAMHSA). According to SAMHSA, the changes in the final rule are intended primarily to facilitate the sharing of Part 2 data among providers participating in clinically integrated health care networks that include addiction treatment programs. The final rule introduced flexibility to the Part 2 consent process. It provided patients with more options for designating the types of individuals and entities that may receive protected information. A patient may now consent to disclose Part 2 data to an organization such as an ACO or health information exchange (HIE) that does not have a direct treatment relationship with the patient, but which acts as an intermediary. The intermediary may then disclose the information to some or all of the providers who treat the patient, pursuant to the patient's consent preferences. Groups that advocate for the privacy of individuals with substance use disorders generally are satisfied with the final rule because it retains Part 2's core confidentiality protections. But the reaction of many health care provider organizations has been mixed. While applauding the changes that permit disclosure of Part 2 data to intermediaries such as ACOs and HIEs, providers are critical of other changes that they claim are administratively and technologically burdensome and provide little if any additional privacy protections. Exchange of Part 2 Data To facilitate the electronic exchange of Part 2 data, each patient's consent preferences specifying the type of information that may be shared, and the individuals or entities with whom the information may be shared, must be carefully managed. To control access, patient consent must travel with the data. In addition, the data in a medical record must be segregated to capture a patient's preferences. Data segmentation allows a patient's record to be separated into multiple categories, so that certain protected data elements can be removed (redacted) if a patient has not consented to their disclosure. SAMHSA has worked with its federal and nonfederal partners to develop Consent2Share, an online tool for data segmentation and consent management. Consent2Share integrates with electronic health record systems and HIEs to support the exchange of Part 2 and other sensitive health data. | 5,104 | 773 |
Congress enacted the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to improve portability and continuity of health insurance coverage. The HIPAA Privacy Rule, issued by HHS to implement section 264 of HIPAA (42 U.S.C. SS 1320d-2), regulates the use and disclosure of protected health information. On September 4, 2005, Health and Human Services Secretary Leavitt declared a federal public health emergency for Louisiana, Alabama, Mississippi, Florida, and Texas. To allow health care providers in affected areas to care for patients without violating requirements of HIPAA, Medicare, Medicaid, and the State Children's Health Insurance Program, the HHS Secretary waived certain provisions. Specifically with respect to the HIPAA Privacy Rule, the Secretary waived the imposition of sanctions and penalties arising from noncompliance with the following provisions: (1) requirements to obtain a patient's agreement to speak with family members or friends or to honor a patient's request to opt out of a facility directory (45 C.F.R.164.510); (2) the requirement to distribute a notice of privacy practices (45 C.F.R.164.520); and (3) the patient's right to request privacy restrictions or confidential communications (45 C.F.R.164.522). In the first Hurricane Katrina bulletin issued by HHS (HIPAA Privacy and Disclosures in Emergency Situations), the Department emphasized that the HIPAA Privacy Rule "allows patient information to be shared to assist in disaster relief efforts, and to assist patients in receiving the care they need." The bulletin states that under the rule, health care providers can share patient information to provide treatment and seek payment for health care services; to identify, locate, and notify family members, guardians, or anyone responsible for the individual's care of the individual's location, general condition, or death; with anyone as necessary to prevent or lessen a serious and imminent threat to the health and safety of a person or the public, consistent with applicable law and the provider's standards of ethical conduct. In addition, health care facilities maintaining a patient directory can tell people who call or ask about individuals whether the individual is at the facility, their location in the facility, and general condition. On September 9, HHS issued Hurricane Katrina Bulletin #2. Because the medical and prescription records of many evacuees were lost or inaccessible, and because health plans and health care providers were working with other industry segments to gather and provide this information, Bulletin #2 provides guidance on how the HIPAA Privacy Rule applies to these activities and describes the HHS Office for Civil Rights' enforcement approach in light of these emergency circumstances. Bulletin #2 discusses the use and disclosure of prescription and medical information by entities managing information on behalf of covered entities ("business associates"). In general, business associates are permitted to make disclosures "to the extent permitted by their business associate agreements with the covered entities, as provided in the Privacy Rule." The bulletin provides that covered entities or their business associates may provide health information on evacuees to another party for that party to manage the health information and share it as needed for providing health care to the evacuees. Where a covered entity provides protected health information to another for this purpose, the Privacy Rule requires the covered entity to enter into a business associate agreement with this party. If the business associate, rather than the covered entity itself, is providing this information to another party that is acting as its agent, the covered entity's business associate must enter into an agreement to protect health information with this party. Sample business associate agreement provisions are attached to the bulletin. On the subject of enforcement, HHS noted that Section 1176(b) of the Social Security Act provides the agency may not impose a civil money penalty where the failure to comply is based on reasonable cause and is not due to willful neglect, and the failure to comply is cured within a 30-day period. HHS noted its authority to extend the period within which a covered entity may cure the noncompliance "based on the nature and extent of the failure to comply." HHS, in determining whether reasonable cause exists for a covered entity's failure to meet requirements and in determining the period within which noncompliance must be cured, announced that it "will consider the emergency circumstances arising from Hurricane Katrina, along with good faith efforts by covered entities, its business associates and their agents, both to protect the privacy of health information and to appropriately execute the agreements required by the Privacy Rule as soon as practicable." Shortly after Hurricane Katrina, the federal government began a pilot test of KatrinaHealth.org , an electronic health record (EHR) online system, sharing prescription drug information for most of the hurricane evacuees with health care professionals. The launch of KatrinaHealth.org was possible in part because of plans already made and actions taken by the Administration, the Congress, foundations, and the private sector to implement electronic health records (EHRs) as part of the national health information infrastructure. President Bush and the Departments of Health and Human Services, Defense, and Veterans Affairs (HHS) have focused on the importance of transforming health care delivery through the improved use of health information technology (HIT). Philanthropies such as California Health Care Foundation, Robert Wood Johnson, the Markle Foundation, and others have provided funding, leadership, and expertise to this effort. In the private sector, the medical and nursing informatics, and the medical and nursing professional societies, have also been involved. Electronic health records are controversial among many privacy advocates and citizens who are concerned about information security and the potential for the exploitation of personal medical information by hackers, companies, or the government, and the sharing of health information without the patients' knowledge. Privacy advocates, in general, support the development of an interoperable national health information network built on the concepts of patient control, privacy, and participation. The Department of Health and Human Services has formed agreements with two organizations to plan and promote the widespread use of electronic health records in the Gulf Coast region as it rebuilds. The agreements supplement recently announced contracts to certify electronic health records, develop interoperability standards, evaluate variations among privacy and security requirements across the country, and create prototypes for a nationwide health information network. The Southern Governors Association will form the Gulf Coast Health Information Task Force, which will bring together local and national resources to help area health-care providers convert to electronic medical records. The Louisiana Department of Health and Hospitals will develop a prototype of health information sharing and electronic health record support that can be replicated in the region. The effort will not be connected with http://katrinahealth.org/ , which is not expected to be a long-term undertaking. On September 22, 2005, KatrinaHealth.org [ http://www.katrinahealth.org ], a secure online service, was launched to enable authorized healthcare providers to electronically access medication and dosage information for evacuees from Hurricane Katrina to renew prescriptions, prescribe new medications, and coordinate care. The website KatrinaHealth.org was available for a 90-day period. KatrinaHealth.org was a completely new, secure online service created in three weeks to help deliver quality care and avoid medical errors. The data contain records from 150 zip codes in areas hit by Katrina. At its launch, prescription drug records on over 800,000 people from the region could be searched by health care professionals. The information was compiled and made accessible by private companies, public agencies, and national organizations, including medical software companies; pharmacy benefit managers; chain pharmacies; local, state, and federal agencies; and a national foundation. The effort to create KatrinaHealth.org was facilitated by the Office of the National Coordinator for Health Information, Department of Health and Human Services. With the assistance of federal, state, and local governments, KatrinaHealth.org was operated by private organizations, such as the Markle Foundation. Under ordinary circumstances, HIPAA privacy rules would require formal, written "business associate agreements" among KatrinaHealth.org participants before they could exchange medical information. Reportedly, many of the participants had such agreements or were able to obtain them rapidly. In addition, HHS's second bulletin clarified that considering the emergency circumstances, organizations that did not comply with the business associate requirements would not be penalized as long as they showed good faith efforts to protect the privacy of health information and to appropriately execute the agreements required by the Privacy Rule as soon as practicable. The data or prescription information for KatrinaHealth.org was obtained from a variety of government and commercial sources. Sources include more than 150 private and public organizations' electronic databases from commercial pharmacies, government health insurance programs such as Medicaid, and private insurers such as Blue Cross and Blue Shield Association of America, and pharmacy benefits managers in the states affected by the storm. Key data and resources were contributed by the American Medical Association (AMA), Gold Standard, the Markle Foundation, RxHub and SureScripts. Data contributors also include the Medicaid programs of Louisiana and Mississippi; chain pharmacies (Albertsons, CVS, Kmart, Rite Aid, Target, Walgreens, Wal-Mart, Winn Dixie); and Pharmacy Benefit Managers (RxHub, Caremark, Express Scripts, Medco Health Solutions)). Federal agencies involved include the U.S. Departments of Commerce, Defense, Health and Human Services, Homeland Security, and Veterans Affairs. The information in KatrinaHealth.org did not exist in a central database, rather access was provided to a mix of data sets. Some of the information from chain pharmacies was aggregated while other available information was not. Licensed doctors and pharmacists, anywhere in the United States, treating evacuees from Louisiana, Mississippi, and Alabama, were eligible to use KatrinaHealth. Patients were not permitted access to the prescription information at the online site. Authorized clinicians and pharmacists using the system could view evacuees' prescription histories online, obtain available patient allergy information and other alerts, view drug interaction reports and alerts, see therapeutic duplication reports and alerts, and query clinical pharmacology drug information. The system was only accessible to authorized health care professionals and pharmacists, who provided treatment or supported the provision of treatment to evacuees. To ensure that only authorized physicians used KatrinaHealth.org, the AMA provided physician credentialing and authentication services. The AMA validated the identity of health care providers, a key step in ensuring patient confidentiality and security. The National Community Pharmacists Association (NCPA) authenticated and provided access for independent pharmacy owners. SureScripts provided these services for chain pharmacies on behalf of the National Association of Chain Drug Stores (NACDS). When treating an evacuee, an authorized user of KatrinaHealth.org was prompted to enter the evacuee's first name, last name, date of birth, pre-Katrina residence zip code and gender. If the evacuee's information was available in KatrinaHealth.org, the health provider would link to the following information: quantity and day supply; the pharmacy that filled the script (if available); the provider that wrote the script; and drug information, such as indication and dosage, administration and interactions. Tools to prevent unauthorized access, and audit logs of system access and records access were maintained and reviewed. The site provided "Read Only" access and information in the system could not be modified or other wise changed. The developers acknowledged that KatrinaHealth.org did not contain information on every Katrina evacuee from Louisiana, Mississippi, and Alabama; that the information on each evacuee's prescription history might be incomplete; and that the data might contain errors or omissions or duplication. Users of KatrinaHealth were encouraged to review the data with the patient. According to the developers, privacy and security concerns were central to the design of KatrinaHealth.org. Only authorized users could access the site. Highly sensitive personal information was filtered out to comply with state privacy laws. Medication information about certain sensitive health care conditions (HIV/AIDS, mental health issues, and substance abuse or chemical dependencies) was not available. Health privacy advocates argued that evacuees should have had the option to opt out of the site and that the site should not become permanent. In June 2006, The Markle Foundation released a report titled "Lessons From KatrinaHealth." The report provides recommendations to ensure that medical records can be accessed and prescriptions provided quickly in a future disaster. The recommendations include engaging in advance planning, taking advantage of existing resources, addressing system and electronic health record design issues, integrating emergency systems, creating systems that are simple to access, improving communication strategies, and overcoming policy barriers to working together. | Shortly after Hurricane Katrina, the federal government began a pilot test of KatrinaHealth.org, an online electronic health record (EHR) system that shared prescription drug information for hurricane evacuees with health care professionals. The website was available for a 90-day period. To allow health care providers in affected areas to care for patients without violating the Health Insurance Portability and Accountability Act (HIPAA), Health and Human Services (HHS) Secretary Leavitt waived certain provisions of the HIPAA Privacy Rule and issued guidance to clarify situations where the HIPAA privacy rule allows information sharing to assist in disaster relief efforts and with patient care. This report discusses HHS's waiver of certain provisions of the HIPAA privacy rule and guidance issued by HHS with respect to the use and disclosure of protected health information under the HIPAA Privacy Rule in response to Hurricane Katrina. It also briefly discusses the development of electronic health records (EHRs) and provides a brief overview of KatrinaHealth.org. This report will be updated. | 2,820 | 236 |
Traditionally accepted principles of international law state that the sovereign powers of a nation include the power to exclude alien persons and property. However, in most cases, so as to be mutually beneficial to commerce, nations usually do not fully exercise this power of exclusion. Sometimes a nation writes the restraints into its domestic law. For example, Clause XXX of the Magna Carta has the following provision: All merchants, if they were not openly prohibited before, shall have their safe and sure Conduct to depart out of England, to come into England, to tarry in, and go through England, as well by land as by water, to buy and sell without any manner of (evil tolts) by the old and rightful Customers, except in time of war; and if they be of a Land making War against Us, and be found in our Realm at the beginning of the wars, they shall be attached without harm of body or goods, until it be known unto Us, or our Chief Justice, how our Merchants be entered therein the Land making War against Us; and if our merchants be well entreated there, theirs shall be likewise with Us. Treaties and other forms of bilateral and multicultural agreements have also restricted foreign persons and property. For example, the Greek city-states formed agreements which allowed the reciprocal entry of and ownership of property of foreigners from other contracting states. The United States has through the years accepted both kinds of restraint. The American colonies were formed to realize profits for their English and Continental investors. After the War of Independence, the new government moved quickly to resolve the outstanding foreign claims so as to assure creditworthiness and to provide a favorable climate for foreign investment. The Jay Treaty, for example, stated that the new United States government would compensate the British for any property which had been seized or destroyed and for unpaid debts caused by the Revolution. In his Report on Manufactures in 1791, Alexander Hamilton urged the new nation to keep investment open to foreigners. It is not impossible that there may be persons disposed to look with a jealous eye on the introduction of foreign capital, as if it were an instrument to deprive our own citizens of the profits of our own industry; but, perhaps, there never could be a more unreasonable jealousy. Instead of being viewed as a rival, it ought to be considered as a most valuable auxiliary, conducing to put in motion a greater quantity of productive labor, and a greater portion of useful enterprise, than could exist without it. Hamilton's ideas prevailed. During the 18 th and 19 th centuries, foreign capital contributed enormously to the nation's development. As the nation grew, its roads, bridges, canals, banks, and finally railroads were largely financed by state bonds sold overseas. The Erie Canal, the first American canal to achieve commercial success, was made possible by the first state bonds to be quoted on the London market, in 1817. Europe was eager for investments such as these, and a group of Anglo-American banking houses were established in London--led by Baring Brothers--which specialized in American finance. They bought up entire issues for resale in England. In their eagerness for foreign capital, American states and private enterprises sent their agents to Europe. Generals and congressmen turned to bond selling.... By the middle of the 19 th century, foreigners held half of the federal and state and one-quarter of the municipal debts. The 1849 California Gold Rush sparked even more foreign investment. It is also interesting to note that American real estate was quite popular with foreign investors. Europeans acquired substantial holdings in such states as New York, Maine, Florida, West Virginia, and Iowa. The state of Texas granted an English company 3 million acres in payment for building the state capitol building in Austin. Some of the titled Europeans, including the German Baron von Richthofen and the British Earl of Dunraven, attempted to create baronial estates in the West. At the turn of the century, with the invention of the automobile and the increasing importance of oil, foreign oil companies, such as Royal Dutch Shell, began buying American properties. However, World War I made a drastic change in the influx of foreign capital into the United States. The creditor countries of Europe sold many of their American holdings in order to supply their wartime needs. In just a few years, the United States shifted from a debtor to a creditor nation, a position which it retained for a number of years. Throughout the nation's history, there has been criticism of foreign investment in the United States. When the first and second banks of the United States were created in 1791 and 1816, their organic statutes barred the election of aliens as directors. The Know-Nothing Party advocated discriminatory taxation of foreign capital as early as the 1850s. The Alien Land Law of 1887 prohibited aliens from owning land in federal territories. During the 20 th century Congress passed a number of statutes aimed at restricting foreign investment in certain industries such as shipping, aviation, and communications. Nevertheless, by the early 1970s foreign investment in the United States began to rise dramatically, and since then there has been frequent congressional debate as to whether there should be more restriction on investment by foreign citizens in American businesses. Federal constitutional provisions may be interpreted as legal validation of federal statutes restricting investments by foreigners; other constitutional provisions have to be adhered to by the states in imposing additional restrictions on foreign investment. The federal government is a government of limited powers. There is no express constitutional provision permitting the regulation of foreign investment in the United States. Thus, other federal powers mentioned in the Constitution must be looked at to justify such regulation. Three constitutional bases for such legislation are the federal powers over immigration and naturalization, the federal power to regulate interstate and foreign commerce, and the power to provide for the national defense. Congress has the exclusive power to establish naturalization and citizenship requirements and to admit and expel aliens. That the government of the United States, through the action of the legislative department, can exclude aliens from its territory is a proposition which we do not think open to controversy. Jurisdiction over its own territory to that extent is an incident of every independent nation. It is a part of its independence. If it could not exclude aliens, it would be to that extent subject to the control of another power.... The United States, in their relation to foreign countries and their subjects or citizens, are one nation, invested with powers which belong to independent nations, the exercise of which can be invoked for the maintenance of its absolute independence and security throughout its entire territory. Congress has also been held to have the power to regulate the conduct of alien residents and to prescribe the conditions for their admission and residency. Thus, it is arguable that Congress can condition entry and residency of an alien upon his or her not acquiring investments in the United States. Although this might be an extreme condition to apply, no federal case appears to suggest limits to Congress's ability to place substantive conditions upon entry and residency of aliens. Congress also has the exclusive power to "regulate Commerce with foreign Nations, and among the several States." The Commerce Clause would appear to give Congress the power to restrict the use of instrumentalities of interstate commerce to transact the sale or exchange of property to a foreign citizen or to the representative of a foreign citizen. Finally, Congress's power to "raise and support Armies" would also appear to be a constitutional basis for restricting foreign investment in the United States. If it is determined that foreign investments impair national preparedness in the event of an emergency, it appears that prohibition of foreign investments could on this basis be construed as constitutional. Further, it should be noted that the federal government has exclusive authority over foreign relations. In the case Zschernig v. Miller , the Supreme Court held unconstitutional an Oregon statute which provided for the escheat to the state of property which would otherwise pass to a nonresident alien unless the laws of the foreign nation had reciprocal rights for United States citizens. The Oregon statute required the local probate courts to inquire into: the type of governments that obtain in particular foreign nations--whether aliens under their law have enforceable rights, whether the so-called "rights" are merely dispensations turning upon the whim or caprice of government officials, whether the representation of consuls, ambassadors, and other representatives of foreign nations is credible or made in good faith, whether there is the actual administration in the particular foreign system of law any element of confiscation. The Court found the Oregon statute to be unconstitutional because it infringed upon the exclusively federal authority over foreign relations. On the other hand, it has been stated that: The imposition of any significant investment controls would likely violate both the spirit and the letter of more than forty bilateral treaties regulating trade and investment relations, many of which laws have been signed within the last ten years, as well as derogating our commitment to the OECD Code of Liberalization of Capital Movements. The treaties mentioned in the above quotation are Treaties of Friendship, Commerce, and Navigation which grant foreign countries the right to enter, trade, invest, or establish and operate businesses in the other signatory country. Thus, any foreign investment statute would need to take into account those Friendship, Commerce, and Navigation Treaties to which the United States is a signatory. Further, treaties such as the North American Free Trade Agreement (NAFTA) among the United States, Canada, and Mexico provide for foreign investment opportunities. Chapter 11 of NAFTA requires each party to "accord to investors of another Party treatment no less favorable than it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments." Other constitutional provisions may be interpreted to protect foreigners from certain acts of state and local governments. Because the Due Process and Equal Protection Clauses of the Fourteenth Amendment to the United States Constitution apply to persons instead of to citizens , these provisions guarantee that states cannot abridge the rights of foreign nationals within the United States. The Supreme Court has in the past voided state laws which establish classifications in government actions solely on the basis of citizenship. In doing so, the Court has stated that a classification based solely upon citizenship or nationality is inherently suspect and subject to strict scrutiny. For example, in Graham v. Richardson the Court held that state laws which denied welfare benefits to resident aliens who had not resided in the United States for a required number of years were unconstitutional because they deprived these persons of equal protection of the laws. Under traditional equal protection principles, a State retains broad discretion to classify as long as its classification has a reasonable basis [citations omitted]. This is so in "the area of economics and social welfare" [citations omitted]. But the Court's decisions have established that classifications based on alienage, like those based on nationality or race, are inherently suspect and subject to close judicial scrutiny. Aliens as a class are a prime example of a "discrete and insular" minority [citations omitted] for whom such heightened judicial solicitude is appropriate. Accordingly, it was said in Takahashi , 334 U.S. at 420, that "the power of a state to apply its laws exclusively to its alien inhabitants as a class is confined within narrow limits." As mentioned in the Takahashi case in the above quotation, a state must be careful in applying state laws exclusively to aliens. This case challenged a California statute which barred the issuance of commercial fishing licenses to persons ineligible for citizenship. The Supreme Court held that this statute violated the Fourteenth Amendment's Equal Protection Clause and the federal laws concerning citizenship. Citizenship has also been rejected as a legitimate classification concerning membership in a state bar, complete bans on employment of aliens in the state civil service system, and the granting of educational benefits to aliens. Yet, the Supreme Court has limited the application of these protections in other cases, one concerning a New York statute limiting appointment to the state police force to United States citizens, and another concerning a New York statute forbidding certification of a non-citizen as a public school teacher unless the person had evidenced intent to become a citizen. Therefore, there appears to be an exception to the general rule that a classification based on citizenship is subject to strict judicial scrutiny in situations where the classification relates to an essential governmental, political, or constitutional function. In such situations the less strict, rational basis test may be applied. From this discussion it may be concluded that state laws restricting investments by at least resident aliens may come under strict judicial scrutiny. Yet, it must be remembered that, in contrast to the states, the federal government has broad authority over naturalization and immigration. For reasons long recognized as valid, the responsibility for regulating the relationship between the United States and our alien visitors has been committed to the political branches of the Federal Government. Since decisions in these matters may implicate our relations with foreign powers, and since a wide variety of classifications must be defined in the light of changing political and economic circumstances, such decisions are frequently of a character appropriate to either the Legislature or the Executive than to the Judiciary. The Supreme Court has held, for example, that aliens can be denied Medicare coverage and that the federal government can deny a visa to a Marxist invited to speak on world communism. The power of Congress to exclude aliens from the United States and to prescribe the terms and conditions on which they enter is virtually absolute and is an attribute of the sovereignty of the United States. Four major federal statutes which have an impact upon foreign investment in the United States are information-gathering and disclosure statutes, instead of actual restriction statutes. One of these statutes is the International Investment and Trade in Services Survey Act of 1976. Congress intended this act: to provide clear and unambiguous authority for the President to collect information on international investment and United States foreign trade in services, whether directly or by affiliates, including related information necessary for assessing the impact of such investment and trade, to authorize the collection and use of information on direct investments owned or controlled directly or indirectly by foreign governments or persons, and to provide analyses of such information to the Congress, the executive agencies, and the general public. The President by executive order delegated responsibility under this act for studying direct investment to the Commerce Department and portfolio investment to the Treasury Department. The act directs the President to conduct a benchmark survey of foreign direct investment in the United States every five years. Amendments to the act in 1990 direct the President to publish for the use of the general public and federal agencies periodic information concerning foreign investment, including information on ownership by foreign governments of United States affiliates of business enterprises the ownership or control of which by foreign persons is more than 50% of the voting securities or other evidence of ownership of these enterprises, as well as business enterprises the ownership or control of which by foreign persons is 50% or less of the voting securities or other evidence of ownership of these enterprises. The 1990 Amendments also provide that the President may request a report from the Bureau of Economic Analysis (BEA) of the Department of Commerce of the best available information on the extent of foreign direct investment in a given industry. Another federal statute having an impact upon foreign investment in the United States is the Foreign Direct Investment and International Financial Data Improvements Act of 1990. The purpose of this act is: to allow the Department of Commerce's Bureau of Economic Analysis (BEA) access to information collected by the Bureau of the Census (Census). This access will improve the accuracy and analysis of BEA's reports to the public and to Congress on foreign direct investment in the United States. This act, among other requirements, adds chapter 10 to title 13 of the United States Code to provide that the Bureau of the Census shall exchange with the Bureau of Economic Analysis of the Department of Commerce any information that is collected under the census provisions and under the International Investment and Trade in Services Survey Act that pertains to a business enterprise operating in the United States if the Secretary of Commerce determines that the information is appropriate to augment and improve the quality of the data collected under the Survey Act. The Data Improvements Act of 1990 also requires that other reports be prepared by the Secretary of Commerce and the Comptroller General and submitted to congressional committees. The Bureau of the Census may provide business data to the Bureau of Economic Analysis and the Bureau of Labor Statistics (BLS) if the information is required for an authorized statistical purpose and the provision is the subject of a written agreement with that Designated Statistical Agency or its successors. The third of these information-gathering and disclosure statutes is the Agricultural Foreign Investment Disclosure Act of 1978. This act has the following two major requirements: (1) any foreign person who acquires or transfers any interest, other than a security interest, in agricultural land must submit a report to the Secretary of Agriculture not later than 90 days after the date of the acquisition or transfer; (2) any foreign person who holds any interest, other than a security interest, in agricultural land on the day before the effective date of this act must submit a report to the Secretary of Agriculture not later than 180 days after the effective date of the act. The fourth statute is also a disclosure statute. It is known as the Domestic and Foreign Investment Improved Disclosure Act of 1977 and is a requirement added to the Foreign Corrupt Practices Act of 1977. This provision amended Section 13(d) of the Securities Exchange Act of 1934 to require that anyone who acquires 5% or more of the equity securities of a company registered with the Securities and Exchange Commission must disclose certain specified information, including citizenship and residence. Hearings indicate that this statute is directed at foreign investors in order to improve the ability of the federal government to monitor foreign investment in the United States. All of the statutes discussed above are information-gathering and disclosure in nature. There are not across-the-board, blanket restrictions on foreign investment in the United States. Instead, over the years Congress has believed that certain industries which could affect national security should have limits on foreign investment. These industries include the maritime industry, the aircraft industry, banking, resources and power, and the various businesses which are parties to government contracts. Laws that have provisions concerning barriers to foreign investment in the maritime industry are dispersed throughout Title 46 of the United States Code. In the area of merchant shipping, there are restrictions on foreign ownership of ships which are eligible for documentation in the United States. Any vessel of at least five tons that is not registered under the laws of a foreign country is eligible for documentation if it is owned by: (1) a United States citizen; (2) an association, trust, joint venture, or other entity, all of whose members are United States citizens and that is capable of holding title to a vessel under the laws of the United States or of a state; (3) a partnership whose general partners are United States citizens and whose controlling interest is owned by United States citizens; (4) a corporation established under federal or state laws whose chief executive officer and chairman of its board of directors are United States citizens and no more of its directors are noncitizens than a minority of the number necessary to constitute a quorum; (5) the United States government; or (6) a state government. Statutory restrictions bar a considerable amount of foreign investment in the aircraft industry. It is unlawful for any person to operate any aircraft unless it is registered. An aircraft is eligible for registration only if it is: (1) not registered under the laws of a foreign country and is owned by a citizen of the United States, a citizen of a foreign country lawfully admitted for permanent residence in the United States, or a corporation not a citizen of the United States when the corporation is organized and doing business under the laws of the United States or a state and the aircraft is based and primarily used in the United States; or (2) an aircraft of the United States Government or a state, the District of Columbia, a territory or possession, or a political subdivision of a state, territory, or possession. A citizen of the United States is defined as: (a) an individual who is a citizen of the United States, (b) a partnership of which each member is a United States citizen, or (c) a corporation or association organized under the laws of the United States or of any state, the District of Columbia, territory, or possession of the United States, of which the president and two-thirds or more of the board of directors and other managing officers are United States citizens, which is under the actual control of United States citizens and in which at least 75% of the voting interest is owned or controlled by persons who are citizens of the United States. Foreign aircraft which are not a part of the armed forces of a foreign nation may be navigated in the United States by airmen holding certificates or licenses issued or rendered valid by the United States or by the nation in which the aircraft is registered if the foreign nation grants a similar privilege concerning United States aircraft. Aircraft operators may be subject to restrictions based on citizenship. It is unlawful for a person to operate an aircraft without an airman certificate. The Administrator of the Federal Aviation Administration may restrict or prohibit issuing an airman certificate to an alien or make issuing the certificate to an alien dependent upon a reciprocal agreement with the government of a foreign country. The Secretary of Transportation is authorized to provide insurance and reinsurance against loss or damage arising from the risk of operation of aircraft. Citizenship requirements may be important in obtaining this insurance. For example, some air cargoes may be insured only if they are owned by citizens or residents of the United States. All valuable mineral deposits in lands belonging to the United States that are open to exploration and purchase may be purchased by United States citizens and by those who have declared their intention to become United States citizens. Proof of citizenship may consist, in the case of an individual, of his affidavit; in the case of an association of unincorporated persons, of the affidavit of their authorized agent or upon information and belief; and in the case of a corporation organized under the laws of the United States, a state, or territory, by the filing of a certified copy of their charter or certificate of incorporation. Deposits of coal, phosphate, sodium, potassium, oil, oil shale, gilsonite, or gas and lands containing these deposits owned by the United States, including within national forests and in incorporated cities, towns, villages, and national parks and monuments, shall be subject to disposition in the approved manner to United States citizens, associations of United States citizens, or any corporation organized under United States, state, or territorial laws. Citizens of another country whose laws, customs, or regulations deny similar privileges to citizens or corporations of the United States shall not by stock ownership, stock holding, or stock control own any interest in any lease concerning these mineral lands. The leasing of oil, natural gas, and other mineral deposits is allowed in the submerged lands of the Continental Shelf. Regulations require that only United States citizens, resident aliens, domestic corporations, or associations of one or more of these groups may obtain these leases. Licenses for the construction, operation, or maintenance of facilities for the development, transmission, and utilization of power on land and water over which the federal government has control may be issued only to United States citizens and domestic corporations. A license for nuclear facilities cannot be acquired by a foreign citizen or by a corporation believed to be controlled by a foreign citizen or government. There appear to be few federal restrictions on the ownership of land by foreign individuals or by foreign corporations. However, such past acts as the Homestead Act required American citizenship in order to make claims on these lands. Today, the Desert Land Act requires citizenship or a declared intention of citizenship in order to make claims. Also, the Secretary of the Interior continues to require American citizenship or a declared intention of citizenship for authorizing permits for grazing on public lands, and, as discussed above, the Agricultural Foreign Investment Disclosure Act requires the disclosure to the Secretary of Agriculture by foreigners of agricultural land purchases in the United States. Further, public lands improved at the expense of funds from a reclamation project can be sold only to United States citizens. Federal statutes restrict foreign ownership and operation of mass communications media in the United States. Radio station licenses shall not be granted to or held by any foreign government or representative of a foreign government. No broadcast or common carrier or aeronautical en route or aeronautical fixed radio station license shall be granted to or held by any alien or the representative of any alien, any corporation organized under the laws of a foreign government, any corporation of which more than one-fifth of the capital stock is owned or voted by aliens or their representatives or by a foreign government or representative or by any corporation organized under the laws of a foreign country, or by any corporation directly or indirectly controlled by any other corporation of which any officer or more than one-fourth of the capital stock is owned or voted by aliens, their representatives, or by a foreign government or representative, or by any corporation organized under the laws of a foreign country if the public interest will be served by the refusal or revocation of the license. There does not appear to be a federal statute prohibiting the investment by foreign citizens in United States newspapers and magazines. However, the Foreign Agents Registration Act requires that agents of foreign principals must register with the Attorney General of the United States, that informational materials for or in the interests of a foreign principal must be labeled to show the relationship between the agent and the foreign principal, and that the agent must file two copies of the printed propaganda with the Justice Department. The statute defines foreign principal to include (1) foreign governments and foreign political parties; (2) persons outside the United States unless it is determined that the person is an individual and a citizen of and domiciled within the United States or that the person is not an individual and is organized under or created by the laws of the United States or a state and has its principal place of business within the United States; and (3) a business organized under the laws of or having its principal place of business in a foreign country. However, agent of a foreign principal does not include any news or press service or association which is a corporation organized under United States or state law or any newspaper, magazine, periodical, or other publication having on file with the United States Postal Service required information so long as it is at least 80% beneficially owned by United States citizens, its officers and directors are all United States citizens, and the news or service or association, newspaper, magazine, periodical, or other publication is not owned, controlled, subsidized, or financed and none of its policies is determined by a foreign principal or its agent. The Bank Holding Company Act (BHCA) regulates as a bank holding company (BHC) any company that controls a United States bank; i.e., a bank chartered by a state or the federal government to do banking in the United States (as distinguished from a foreign bank--a bank chartered by a foreign government and doing business in the United States pursuant to the terms of the International Banking Act of 1978 ). "Control" of a bank or BHC is defined in terms of: (1) acquiring a 25% share or more of any class of voting securities of a bank or a BHC; (2) controlling the election of a majority of the directors or trustees of the bank or BHC; or (3) having been determined by the Board of Governors of the Federal Reserve System (FRB) to be exercising a controlling influence over the management or policies of the bank or BHC. The BHCA is administered by the FRB, which must solicit the "views and recommendations" of the Comptroller of the Currency for national bank acquisitions and the appropriate state bank supervisor for state-chartered bank acquisitions. The BHCA presumes that "any company which owns, controls, or has power to vote less than 5 per centum of any class of voting securities of a given bank or [bank holding] company does not have control over that bank or company." Before any company may take any action which would cause that company to become a BHC or before any BHC may acquire a 5% share or more of the voting stock of any U.S. bank or BHC, it must seek approval from the FRB. FRB's implementing regulation makes this requirement applicable to "foreign banking organizations." The BHCA generally subjects BHCs to activity restrictions that essentially confine their portfolios to banking and financial services. Under the BHCA, subject to specified, limited exceptions, any company which controls a bank may engage only in banking or managing or controlling banks and subsidiaries; specified, limited non-banking activities; and activities that are financial in nature or incidental to such financial activity as determined by the FRB and the Secretary of the Treasury. Permissible banking activities are found in Section 4(k) of the BHCA. A list of permissible non-banking activities for BHCs is found at 12 C.F.R. Section 225.28. A further list of permissible non-banking activities for BHCs which have qualified as Financial Holding Companies under Section 4(l)(1) of the BHCA is found at 12 C.F.R. Section 225.86. In addition, the FRB has promulgated individual orders under the BHCA determining that particular activities are "so closely related to banking as to be a proper incident thereto." The BHCA's Section 2(h)(2) states that a foreign company that acquires stock of a U.S. bank or BHC is not subject to BHCA activities restrictions if: (1) it is organized as a bank holding company under foreign law and is principally engaged in the banking business outside of the United States. A further provision states that nothing in the preceding provision authorizes such a foreign company to hold more than 5% of the outstanding shares of any class of voting securities of a company engaged in banking, securities, insurance, or other financial activities, as defined by the Federal Reserve Board, in the United States. There is also authority for the Federal Reserve Board to provide a foreign company which acquires the stock of a U.S. bank or BHC an exemption from the activities restrictions if the Federal Reserve Board determines "by regulation or order ... under circumstances and subject to the conditions set forth in the regulation or order, [that] the exemption would not be substantially at variance with purposes of [the BHCA] ... and would be in the public interest." Corporations which are controlled or owned by foreign citizens can conduct business with the federal government on generally the same basis as domestic corporations which are owned completely by United States citizens. However, some federal statutes restrict purchases of products by federal agencies to those manufactured in the United States. For example, American materials may be required for public use. Only unmanufactured articles, materials, and supplies that have been mined or produced in the United states, and only manufactured articles, materials, and supplies that have been manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States, shall be acquired for public use unless the head of the department or independent establishment concerned determines their acquisition to be inconsistent with the public interest or their cost to be unreasonable. Every contract for the construction or repair of a public building or public work shall have a provision that the contractor or supplier shall use only unmanufactured articles or materials mined or produced in the United States. Some exceptions should be noted. For example, the Trade Agreements Act of 1979 gives the President the authority to waive application of foreign citizen restrictions on the products of our trading partners. However, this does not authorize the waiver of any small business or minority preference. No entity controlled by a foreign government is allowed to merge with, acquire, or take over a company engaged in interstate commerce in the United States which is performing a Department of Defense (DOD) contract or a Department of Energy (DOE) contract under a national security program that cannot be performed satisfactorily unless that company is given access to information in a proscribed category of information. Such a merger, acquisition or takeover is also not allowed to occur if the company engaged in interstate commerce in the United States was during the previous fiscal year awarded Department of Defense prime contracts in an aggregate amount exceeding $500 million or Department of Energy prime contracts under national security programs exceeding $500 million. This limitation shall not apply if the merger, acquisition, or takeover is not suspended or prohibited under the statutes carried out by the Committee on Foreign Investment in the United States, as discussed below. The Investment Company Act of 1940 requires registration with the Securities and Exchange Commission (SEC) of an investment company which does business in the United States. Only investment companies organized or created under the laws of the United States or a state are allowed to sell their own securities in interstate commerce in connection with a public offering unless the SEC finds that it is legally and practically feasible to enforce the federal securities laws against the investment company and that the exemption from registration is consistent with the public interest and the protection of investors. The Trust Indenture Act of 1939 prohibits the sale in interstate commerce of certain securities which have not been registered under the Securities Act of 1933 unless the securities have been issued under an indenture. There must be at least one or more trustees under the indenture, at least one of whom shall be a corporation organized and doing business under the laws of the United States, a state, territory, or the District of Columbia or a corporation or other person permitted to act as trustee by the SEC which is authorized to exercise corporate trust powers and is subject to supervision or examination by federal, state, territorial, or District of Columbia authority. The Committee on Foreign Investment in the United States (CFIUS) is a multi-member board headed by the Secretary of the Treasury. CFIUS may review any "covered transaction," defined as any merger, acquisition, or takeover by or with a foreign person which could result in foreign control of any person engaged in interstate commerce in the United States, for its possible impact upon national security. Factors to be considered in determining the impact upon national security are numerous and include domestic production needed for projected national defense requirements, the capability and capacity of domestic industries to meet national defense requirements, the control of domestic industries and commercial activity by foreign citizens as it affects the capability and capacity of the United States to meet the requirements of national security, and the potential effects of the proposed or pending transaction on United States international technological leadership in areas affecting United States national security. If the Committee determines that the acquiring party is an entity controlled by a foreign government, the Committee shall conduct an investigation of the transaction as a national security investigation. | Foreign investment in the United States is a matter of congressional concern. It is believed by some that the United States has an unusually liberal policy which allows foreigners to invest in virtually all American businesses and real estate and that these foreign investments undermine the American economy by making it vulnerable to foreign influence and domination. These critics argue that there is even foreign domination of some key defense-related industries and that the ability of the country to protect itself in a time of national emergency could greatly suffer. These critics further argue that extensive foreign investment in this country drives up prices which Americans have to pay for investments and, even more importantly, for houses and farmland in areas where there is a significant amount of foreign ownership. However, others argue that the United States should welcome foreign investment because the influx of foreign money contributes to the creation of jobs in this country. Some also believe that the United States should be a kind of sanctuary for foreign money because of the political and economic instability which characterizes much of the rest of the world. It is also argued that, in this age of globalization of the world's economy, United States restrictions on foreign investment will only impair this nation's economy and cause us to appear isolationist. This report takes a look at some of the major federal statutes which presently restrict investment by foreigners. The report first gives a brief history of foreign investment in the United States. It then reviews constitutional justifications and constitutional limitations which exist concerning federal statutory restrictions on foreign ownership of property. After that follows a discussion of some of the major federal statutes which limit foreign investment in the United States. Some of these statutes will be looked at in detail, but a detailed treatment of such other laws as the tax laws, the antitrust laws, and the immigration laws is beyond the scope of this report. The report will be updated as needed. | 7,611 | 395 |
Figure 1. Map of Costa RicaSource: Map Resources. Adapted by CRS Graphics. Costa Rica is a politically stable Central American country of 4.3 million people with a relatively well-developed economy. The country gained its independence from Spain in 1821 as a part of the Central American Union, and became a sovereign nation following the union's dissolution in 1838. Costa Rica has enjoyed continuous civilian democratic rule since the end of a 1948 civil war, the longest period of unbroken democracy in Latin America. The civil war led to the creation of a new constitution, the abolition of the military, and the foundation of one of the first welfare states in the region. Although Costa Rica pursued state-led development throughout much of the 20 th century, over the past several decades, it has implemented market-oriented economic policies designed to attract foreign direct investment (FDI), develop the country's export sector, and diversify what was once a predominantly agricultural economy. The World Bank now classifies Costa Rica as an upper-middle-income country with a 2008 per capita income of $6,060. Public fatigue with politics has grown in recent years as a result of corruption scandals that have implicated three former presidents from the two traditional ruling parties: Rafael Angel Calderon (1990-1994) and Miguel Angel Rodriguez (1998-2002) of the center-right Social Christian Unity Party (PUSC) and Jose Maria Figueres (1994-1998) of the traditionally center-left National Liberation Party (PLN). This disillusionment has contributed to a rise in voter abstention, from just 19% in 1994 to 35% in 2006. It has also contributed to a fragmentation of Costa Rica's political party system. The PUSC has collapsed and newer parties--such as the conservative Libertarian Movement (ML) and the center-left Citizen Action Party (PAC)--have grown considerably. Oscar Arias, a former president (1986-1990) and Nobel-laureate, was elected president in February 2006. Arias won 41% of the vote to narrowly defeat his closest rival, the PAC's Otton Solis, who had served as Minister for National Planning and Economic Policy during Arias' first administration. Throughout his term, President Arias has advanced so-called "third-way" policies, embracing his party's traditional support for social welfare programs while rejecting state-led development in favor of market-oriented economic policies. Arias also has pursued an active foreign policy. Although Arias' PLN is the largest of the nine parties represented in the unicameral National Assembly, it holds just 25 of the 57 seats, which has made cross-party alliances necessary to pass legislation. President Arias has maintained the market-friendly economic policies that Costa Rican administrations from both traditional governing parties have pursued since the 1980s. Between 2006 and 2008, economic growth averaged 6.5%, fueled in large part by export growth and increased investment. Export earnings grew over 36% between 2005 and 2008 to $9.7 billion while FDI grew over 134% to $2 billion during the same time period. Much of the FDI has been invested in high technology sectors, often located in free trade zones. High-tech products--such as integrated circuits and medical equipment--now account for 45% of Costa Rican exports. Arias also has pursued a number of free trade agreements (FTAs) during his current term. He won ratification of CAFTA-DR through a national referendum in 2007 and secured its implementation in January 2009 despite strong opposition from the PAC and labor unions. Additionally, he concluded an agreement with Panama, has completed FTA negotiations with China and Singapore, and is engaged in ongoing FTA talks with the European Union along with the other member nations of the Central American Integration System (SICA). Arias has sought to complement Costa Rica's considerable economic growth with moderate social welfare programs. He has doubled welfare pensions, created new centers for primary healthcare services, and increased education funding. President Arias also introduced Avancemos , a conditional cash transfer program that provides monthly stipends to the families of 140,000 poor students as long as the children remain in school and receive annual medical care. Avancemos is modeled after successful social protection programs that have been implemented elsewhere in Latin America, such as Oportunidades in Mexico and Bolsa Familia in Brazil, and is designed to alleviate poverty in the near-term while fostering long-term reductions in the poverty rate through increased educational attainment. Costa Rica now invests the equivalent of 17.3% of its gross domestic product (GDP) in public health, education, and social welfare, the highest percentage of any nation in Central America and the fifth highest in all of Latin America. These social investments, combined with substantial economic growth, have provided Costa Rica's citizens with a relatively high standard of living. According to the United Nations' 2009 Human Development Report, Costa Rica has the highest level of human development in Central America with a life expectancy at birth of 79 years and an adult literacy rate of 96%. Economic and social conditions have deteriorated recently, however, as a result of the global financial crisis and U.S. recession. The Costa Rican economy grew by just 2.6% in 2008 and experienced its first contraction in 27 years in 2009. GDP contracted by 1.3% as investment, export demand, and tourism declined. Likewise, the poverty rate climbed nearly two points over the course of 2008 and 2009 to 18.5%, and unemployment increased almost three points in 2009 alone to 7.8%. President Arias has sought to counter the economic downturn with a $2.5 billion (8% of GDP) economic stimulus and social protection plan known as Plan Escudo . Among other provisions, the plan recapitalizes state banks, provides support to small and medium-sized enterprises, increases labor flexibility, invests in infrastructure projects, provides grants to workers in the worst-affected sectors, and increases the number of students eligible for the Avancemos program. The majority of Plan Escudo is financed through new loans from international financial institutions. Analysts assert that Costa Rica's economy showed signs of recovery in late 2009, and expect the country to rebound in 2010 with GDP growth of 3.3%. President Arias has pursued an active foreign policy throughout his term. He established diplomatic ties with China in 2007, ending Costa Rica's 60-year relationship with Taiwan. Arias also established formal ties with the Palestinians, recognizing Palestine as an independent state in February 2008. Costa Rica had previously moved its embassy in Israel from Jerusalem to Tel Aviv. In March 2009, Arias reestablished diplomatic relations with Cuba, 48 years after Costa Rica suspended ties with the nation. Costa Rica was one of the last countries in Latin America to reestablish ties with Cuba. Arias also has sought to reassume the leadership role that he held in Latin America during his first administration when he received the Nobel Peace Prize (1987) for his efforts to end the conflicts in Central America. Following the June 2009 ouster of Honduran President Manuel Zelaya, Arias offered to mediate between the parties involved. The so-called "San Jose Accord" that Arias proposed provided the framework for several rounds of negotiations to end the political crisis in Honduras, though it ultimately failed to restore Zelaya to office. Arias has seized on the Honduran crisis to reiterate his long-held belief that Latin America possesses a dangerous combination of powerful militaries and fragile democracies. He maintains that countries in the region should focus their resources on economic development and democratic institutions rather than military expenditures. Elections for the presidency and all 57 seats in the unicameral National Assembly were held in Costa Rica on February 7, 2010. Former Vice President and Minister of Justice Laura Chinchilla (2006-2008) of the ruling PLN was elected president with 46.9% of the vote, well above the 40% needed to avoid a second-round runoff. Chinchilla easily defeated her closest competitors Otton Solis of the center-left PAC and Otto Guevara of the right-wing ML, who took 25.1% and 20.9% of the vote, respectively. In legislative elections, Chinchilla's PLN won a plurality with 23 seats. The PAC will be the principal opposition party with 12 seats, followed by the ML with 9 seats, the PUSC with 6 seats, and several smaller parties with a combined 7 seats. According to many analysts, Chinchilla benefitted the fragmentation of Costa Rica's political party system. They assert that Costa Ricans view the PLN as the country's only credible governing party due to the PUSC's effective collapse as a result of corruption scandals, the PAC's lack of direction after failing to block CAFTA-DR, and the ML's recent history outside the mainstream of Costa Rican politics. Consequently, Chinchilla won by over 20 points despite a considerable decline in public support for the Arias Administration and late polling that showed Guevara forcing Chinchilla into a close second-round runoff vote. Chinchilla is closely tied to President Arias' centrist faction of the PLN and is expected to largely continue the Arias Administration's policies. She will likely maintain Costa Rica's market-oriented economic policies, pushing for ratification of pending free trade agreements with China and Singapore, while strengthening the country's social welfare programs. Throughout much of the electoral campaign, Chinchilla focused on improving public security. Among other policies, she proposed increasing the size of the police force, improving protection and support for victims and witnesses, and increasing government security spending by as much as 50% (currently 0.6% of GDP). Moreover, analysts expect Chinchilla to implement policies designed to meet President Arias' goal of making Costa Rica carbon neutral by 2021 and take socially conservative stands on issues such as abortion, homosexual marriage, and church-state relations. Costa Rica's unicameral National Assembly will present Chinchilla with considerable challenges in implementing her policy agenda. Chinchilla's PLN will control just 23 of the 57 seats, making cross-party alliances necessary to pass any legislation. The PLN will likely form ad hoc alliances with varying parties dependent on the issue. Even if Chinchilla and the PLN are able to cobble together a working majority, however, a group of 10 members of the National Assembly may appeal the constitutionality of any bill to the Supreme Court and significantly slow legislative progress. Successive Costa Rican administrations have sought to address extensive deforestation and environmental degradation that resulted from decades of logging and agricultural expansion. The country's strong conservation system and innovative policies have done much to restore Costa Rica's environment and ecotourism has provided a significant source of economic growth. Costa Rica's efforts also have led many observers to recognize it as a world leader in environmental protection and have enabled the country to play an outsized role in the formulation of global environmental policies. Despite these accomplishments, some maintain that there are a number of environmental problems that must still be addressed by the country. Although observers have long admired the country's tropical forests, it is only relatively recently that Costa Rica has placed much emphasis on environmental protection. Approximately 75% of Costa Rican territory was forest covered in the 1940s, however, just 21% remained covered in 1987 as a result of logging and agricultural expansion. Alarmed at the pace of deforestation and the extent of environmental degradation, the Costa Rican government began implementing a variety of conservation programs. Among these programs is the National System of Conservation Areas (SINAC), which was founded in the 1960s but has been significantly expanded in recent decades. SINAC now provides formal protection for over 26% of Costa Rica's land and 16.5% of its waters. Costa Rica has built upon the success of SINAC with a number of innovative environmental protection policies. Since 1997, Costa Rica has imposed a 3.5% "carbon tax" on fossil fuels. A portion of the funds generated by the tax are directed to the so-called "Payment for Environmental Services" (PSA) program, which pays private property owners to practice sustainable development and forest conservation. Some 11% of Costa Rica's national territory is protected by the program. Costa Rica also imposes a tax on water pollution to penalize homes and businesses that dump sewage, agricultural chemicals, and other pollutants into waterways. In 2009, the government expected the water pollution tax to generate some $8 million, which was to be used to improve the water treatment system, monitor pollution, and promote environmentally-friendly practices. Moreover, Costa Rica generates 76% of its energy from hydro, geo-thermal, and wind power, and President Arias has opposed exploitation of the country's discovered oil reserves in order to maintain incentives to further develop alternative energies. The country's environmental policies have been relatively successful, both in ecological and economic terms. Costa Rica has experienced a substantial increase in forest conservation and reforestation. Since 1997, the percentage of the nation covered by forest has expanded an average of 0.66% annually, and over 50% of Costa Rican territory now falls under forest cover. This has provided crucial habitat, as Costa Rica is home to a disproportionately high percentage of the earth's biological diversity with 5% of the planet's plant and animal species. Environmental protection has also been a significant source of economic growth for Costa Rica, which is now one of the world's premier destinations for ecotourism. More than one million people visit Costa Rica's environmental attractions each year, generating $1.1 billion in foreign exchange. Costa Rica's domestic success has allowed it to play an outsized role in formulating global environmental policies. In the lead up to the 2009 United Nations Climate Change Conference in Copenhagen, Denmark, President Arias asserted that developed nations, which "achieved their development poisoning the environment," should be most responsible for reducing global greenhouse gasses. He proposed that such countries cut their carbon emissions by 45%. Arias also pushed for technological exchange, financial assistance for mitigation and adaptation programs, and "debt-for-nature" swaps. Nonetheless, Arias has asserted that developing nations must reduce their green house gas emissions as well. In 2008, Costa Rica announced its intention to become carbon-neutral by 2021, the first developing nation to make such a pledge. Additionally, Costa Rica has sought to export its successful environmental policies--such as the PSA program--to other developing nations. Despite its considerable achievements and global recognition, some observers assert there are still a number of environmental problems that Costa Rica must address. According to a recent SINAC study, Costa Rica lacks adequate protection for coastal and marine biological diversity. The study of 35 sites of ecological importance found that less than 10% of the areas examined are currently protected. Another recent study, conducted by the country's state universities with support from private and public institutions, highlighted a number of other environmental problems in Costa Rica, including continued water pollution, overexploitation of marine resources, and a notable decline in the rate of reforestation. The U.N. Ozone Secretariat has also highlighted environmental shortcomings in Costa Rica, noting that the country has led Latin America in per capita importation of ozone depleting substances since 2004. Relations between the United States and Costa Rica traditionally have been strong as a result of common commitments to democracy, free trade, and human rights. U.S. intervention in Central America during the 1980s, however, slightly strained the relationship. President Arias responded to the various conflicts in the region by crafting a peace plan during his first administration, which excluded the involvement of extra-regional powers. As a result of his efforts, Arias was awarded the Nobel Peace Prize in 1987. U.S. policy in Iraq also strained relations between Costa Rica and the United States. Although then President Pacheco (2002-2006) supported the U.S. invasion, Costa Rica's Constitutional Court ruled that listing the country as a member of the "coalition of the willing" violated the country's constitutionally mandated neutrality. President Arias has questioned the priorities of the United States for spending substantial funds in Iraq while allocating comparatively little to assist allies in Central America. Current relations between the United States and Costa Rica could be characterized as friendly. Costa Rica finally implemented CAFTA-DR in January 2009. The agreement will likely strengthen Costa-Rica's already significant trade relationship with the United States. Vice President Biden visited Costa Rica during his first trip to Central America, leading the Arias Administration to describe the meeting as "a clear recognition of the trajectory of Costa Rica as the United States' strategic partner in the region." Additionally, President Arias criticized the anti-Americanism of some of his fellow Latin American leaders at the Fifth Summit of the Americas, and the United States strongly supported President Arias' role as mediator in the political crisis in Honduras. For more than a decade, Costa Rica has not been a large recipient of U.S. assistance as a result of its relatively high level of development; however, this is likely to change somewhat as a result of the "Merida Initiative" and its successor program, the Central America Regional Security Initiative (CARSI). The Peace Corps has been operating in Costa Rica since 1963 and generally has been the largest source of U.S. assistance to the country since the U.S. Agency for International Development mission closed in 1996. In recent years, Costa Rica has also received U.S. assistance through the "International Narcotics Control and Law Enforcement" (INCLE), "International Military Education and Training" (IMET), and "Foreign Military Financing" (FMF) accounts. Costa Rica received $364,000 in regular U.S. assistance in FY2009 and is scheduled to receive an estimated $705,000 in FY2010. The Obama Administration has requested $750,000 for Costa Rica for FY2011. In 2007, Costa Rica signed one of the largest ever debt-for-nature swaps with the U.S. government. Authorized by the Tropical Forest Conservation Act of 1998 ( P.L. 105-214 ), the agreement reduced Costa Rica's debt payments by $26 million over 16 years. In exchange, the Costa Rican Central Bank agreed to use the funds to support grants to non-governmental organizations and other groups committed to protecting and restoring the country's tropical forests. In order to fund the agreement, the U.S. government contributed $12.6 million and Conservation International and the Nature Conservancy contributed a combined donation of more than $2.5 million. Costa Rica historically has not experienced significant problems as a result of the regional drug trade, however, crime and violence have surged in recent years as Colombian and Mexican cartels have increased their operations throughout Central America. Costa Rica's murder rate nearly doubled between 2004 and 2008, from 6 per 100,000 to 11 per 100,000 residents. Although Costa Rica's murder rate remains significantly lower than those of the "northern triangle" countries of Guatemala, El Salvador, and Honduras, the surge in organized crime has presented the Costa Rican government with a considerable security challenge. In October 2007, the United States and Mexico announced the Merida Initiative, a multi-year proposal to provide U.S. assistance to Mexico and Central America aimed at combating drug trafficking and organized crime. Congress appropriated some $165 million for Central America under the Merida Initiative--a portion of which was to go to Costa Rica--through the FY2008 Supplemental Appropriations Act ( P.L. 110-252 ) and the F2009 Omnibus Appropriations Act ( P.L. 111-8 ). The FY2010 Consolidated Appropriations Act ( P.L. 111-117 ) split Central America from the Merida Initiative, and appropriated $83 million under a new Central America Regional Security Initiative (CARSI). The Obama Administration has requested $100 million for CARSI in FY2011. Costa Rica received an initial $1.1 million in Merida/CARSI funds in June 2009, after Costa Rica and the United States signed a letter of agreement implementing the initiative. The initial funds were to be used to finance the Central American Fingerprint Exchange, improved policing and equipment, improved prison management, maritime interdiction support, border assistance and inspection equipment, and a number of regional training programs. President Arias has praised the security initiative as a "step in the right direction," but maintains that the U.S. funding of the program in Central America--and Costa Rica in particular--is "insufficient." Although Costa Rica has no military, it receives IMET assistance to train its public security forces. These funds have been used to improve the counterdrug, rule of law, and military operations capabilities of the Costa Rican Coast Guard and law enforcement services. Costa Rica was prohibited from receiving IMET assistance in FY2004, FY2005, and FY2006 as a result of its refusal to sign an Article 98 agreement exempting U.S. personnel from the jurisdiction of the International Criminal Court. In October 2006, President Bush waived FY2006 IMET restrictions for a number of countries--including Costa Rica--and signed the John Warner National Defense Authorization Act for Fiscal Year 2007 into law ( P.L. 109-364 ), a provision of which ended Article 98 sanctions on IMET funds. Costa Rica began receiving IMET funds again in FY2007. In January 2009, Security Minister Janina del Vecchio revealed that Costa Rica would once again send police officers to the Western Hemisphere Institute for Security Cooperation (WHINSEC, formerly known as the School of the Americas) in Fort Benning, GA. The decision to resume training came just a year and a half after President Arias, following a meeting with opponents of WHINSEC, announced that Costa Rica would withdraw its students from the school. WHINSEC, which has trained tens of thousands of military and police personnel from throughout Latin America--including 2,600 Costa Ricans, has been criticized for the human rights abuses committed by some of its graduates. Supporters of the school maintain that WHINSEC emphasizes democratic values and respect for human rights, develops camaraderie between U.S. military officers and military and police personnel from other countries in the hemisphere, and is crucial to developing military partners capable of effective combined operations. A provision of the Omnibus Appropriations Act of 2009 ( P.L. 111-8 ) directs the Department of State to provide a report of the names, ranks, countries of origin, and years of attendance of all students and instructors at WHINSEC for fiscal years 2005, 2006, and 2007. The Latin American Military Training Review Act ( H.R. 2567 , McGovern), which was introduced in the House in May 2009, would suspend all operations at WHINSEC, establish a joint congressional task force to assess the types of training that are appropriate to provide Latin American militaries, and establish a commission to investigate activities at WHINSEC and its predecessor. In August 2004, the United States Trade Representative (USTR) and the trade ministers from the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua signed the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). CAFTA-DR liberalizes trade in goods, services, government procurement, intellectual property, and investment, immediately providing duty-free status to a number of commercial and farm goods while phasing out tariffs on other trade over five to twenty years. Prior to the agreement, the countries of Central America all had tariff-free access to the U.S. market on approximately three-quarters of their products through the Caribbean Basin Trade Partnership Act ( P.L. 106-200 , Title II). The CAFTA-DR agreement makes the arrangement permanent and reciprocal. Although CAFTA-DR is a regional agreement under which all parties are subject to the same obligations and commitments, each country defines its own market access schedule with the United States. Following the August 2004 signature of CAFTA-DR, the agreement had to be approved by the legislatures of all of the countries involved. In Costa Rica, a qualified congressional majority (38 of 57 legislators) was needed to ratify the agreement. Although Costa Rican leaders across the political spectrum support liberalized trade, there has been intense internal debate concerning the benefits of CAFTA-DR. While the Arias Administration was able to create a cross-party alliance of 38 deputies, the PAC opponents of the agreement were able to block ratification through various delaying tactics. In order to avoid missing the ratification deadline, President Arias asked the TSE for a binding referendum on CAFTA-DR. The referendum was held in October 2007 and reflected the polarization of the issue among the Costa Rican electorate. Trade unions, students, a variety of social movements, and the PAC opposed the ratification of CAFTA-DR, while business groups and each of the other major political parties were in favor of the agreement. The referendum campaign was often contentious. Just two weeks before the vote, Arias' Second Vice President was forced to resign after authoring a memorandum recommending that the Administration link the anti-CAFTA-DR forces to Presidents Castro of Cuba and Chavez of Venezuela and play up the possible consequences of a failed referendum. Then, days before the referendum, Costa Rican media published statements by members of the Bush Administration saying it was unlikely that the United States would renegotiate the agreement or maintain the unilateral trade preferences Costa Rica received under the Caribbean Basin Initiative should the country vote against CAFTA-DR. In the end, 51.6% of Costa Ricans voted in favor of CAFTA-DR while 48.4% voted against the agreement. Referendum turnout was just over 60%, well above the 40% minimum necessary for it to be binding. After the approval of CAFTA-DR by referendum, the Costa Rican legislature still had to pass 13 laws in order to implement the agreement. These included a variety of intellectual property law reforms, an opening of the insurance and telecommunications sectors, reform of the criminal code, an anti-corruption law, and a law protecting agents of foreign firms. Costa Rica's consensus-seeking tradition and the ability of PAC legislators to challenge the constitutionality of the proposed legislation in the Constitutional Chamber slowed the implementation of CAFTA-DR significantly. As of the original February 2008 deadline for implementation, Costa Rica had only passed five of the necessary reforms. Then, prior to the extended deadline of October 2008, the Constitutional Chamber ruled that the intellectual property legislation was unconstitutional as a result of the Arias Administration's failure to meet with indigenous and tribal groups about the bill before sending it to the legislature. After obtaining a second extension, Costa Rica passed all of the necessary reforms and implemented CAFTA-DR on January 1, 2009. Prior to the implementation of CAFTA-DR, the United States was already Costa Rica's largest trading partner as the destination of about 36% of Costa Rican exports and the origin of about 38% of its imports. Despite the global financial crisis and U.S. recession, U.S. trade with Costa Rica increased by over 7% in 2009. U.S. exports to Costa Rica amounted to about $4.7 billion and U.S. imports from Costa Rica amounted to about $5.6 billion. Electrical and heavy machinery and oil accounted for the majority of the exports while machinery parts, medical instruments, and fruit accounted for the majority of the imports. | Costa Rica is a politically stable Central American nation with a relatively well-developed economy. Former president (1986-1990) and Nobel-laureate Oscar Arias of the historically center-left National Liberation Party was elected President in 2006. Throughout his term, Arias has advanced so-called "third-way" policies, embracing his party's traditional support for social welfare programs while rejecting state-led development in favor of market-oriented economic policies. Considerable economic growth and social protection programs have provided Costa Rica's citizens with a relatively high standard of living, however, conditions have deteriorated recently as a result of the global financial crisis and U.S. recession. Although Costa Rica's economy contracted and poverty increased in 2009, analysts believe President Arias' ambitious fiscal stimulus and social protection plan and improving global economic conditions should aid recovery in 2010. On February 7, 2010, former Vice President Laura Chinchilla (2006-2008) of the ruling National Liberation Party was elected president, easily defeating her competitors. Chinchilla, who is closely tied to President Arias and the centrist faction of her party, will be Costa Rica's first female president. Throughout the campaign, Chinchilla pledged to maintain the Arias Administration's economic and social welfare policies while improving public security. She will need to form cross-party alliances to implement her policy agenda, however, as her party will lack a majority in Costa Rica's unicameral National Assembly. Chinchilla and the new legislature are scheduled to take office in May 2010. Successive Costa Rican administrations have sought to address extensive deforestation and environmental degradation that resulted from decades of logging and agricultural expansion. The country's strong conservation system and innovative policies have done much to restore Costa Rica's environment and ecotourism has provided a significant source of economic growth. Costa Rica's efforts also have led many observers to recognize it as a world leader in environmental protection and have enabled the country to play an outsized role in the formulation of global environmental policies. Nonetheless, some maintain that a number of environmental problems in Costa Rica remain unaddressed. The United States and Costa Rica have long enjoyed close relations as a result of the countries' shared commitments to strengthening democracy, improving human rights, and advancing free trade. The countries have also maintained strong commercial ties, which are likely to become even more extensive as a result of President Arias' efforts to secure ratification and implementation of CAFTA-DR. On April 28, 2009, the House of Representatives passed H.Res. 76 (Burton), which mourns the loss of life in Costa Rica and Guatemala that resulted from natural disasters that occurred in January 2009. The resolution also expresses the senses of the House, that the U.S. government should continue providing technical assistance relating to disaster preparedness to Central American governments. This report examines recent political and economic developments in Costa Rica as well as issues in U.S.-Costa Rica relations. For additional information, see CRS Report RL31870, The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), by [author name scrubbed] and CRS Report R40135, Merida Initiative for Mexico and Central America: Funding and Policy Issues, by [author name scrubbed]. | 6,131 | 729 |
In 2002, the Medical Device User Fee and Modernization Act (MDUFMA, also called MDUFA I) gave the Food and Drug Administration (FDA) the authority to collect fees from the medical device industry. User fees and annual discretionary appropriations from Congress fund the review of medical devices by the FDA. Medical devices are a wide range of products that are used to diagnose, treat, monitor, or prevent a disease or condition in a patient. FDA describes medical devices as ranging "from simple tongue depressors and bedpans to complex programmable pacemakers with micro-chip technology and laser surgical devices." Medical devices also include in vitro diagnostic products, reagents, test kits, and certain electronic radiation-emitting products with medical applications, such as diagnostic ultrasound products, x-ray machines, and medical lasers. Manufacturers of moderate and high risk medical devices must obtain FDA approval or clearance before marketing their device in the United States. The Center for Devices and Radiological Health (CDRH) has primary responsibility within FDA for medical device premarket review. The primary purpose of user fees is to support the FDA's medical device premarket review program and to help reduce the time it takes the agency to review and make decisions on marketing applications. Between 1983 and 2002, multiple government reports indicated that FDA had insufficient resources for its medical devices premarket review program. Lengthy review times affect the industry, which waits to market its products, and patients, who wait to use these products. The user fee law provides revenue for FDA. In exchange for the fees, FDA and industry negotiate performance goals for the premarket review of medical devices. The medical device user fee program was modeled after the Prescription Drug User Fee Act (PDUFA). Like the prescription drug and animal drug user fee programs, the medical device user fee program has been authorized in five-year increments. FDA's medical device user fee authorities were last reauthorized through September 30, 2017, by the Medical Device User Fee Amendments of 2012 (MDUFA III). MDUFA III was enacted as Title II of Food and Drug Administration Safety and Innovation Act (FDASIA, P.L. 112-144 ), which became law on July 9, 2012. FDASIA also reauthorized PDUFA, created new user fee programs for generic and biosimilar drug approvals, and modified FDA authority to regulate medical products. Because of the importance of user fees to FDA's budget, PDUFA and MDUFA are considered to be "must pass" legislation, and Congress has in the past included language to address a range of other concerns. For example, MDUFA III included provisions about the extent to which FDA can delegate activities to third parties (inspections and the review of premarket notifications); the establishment of registration requirements (timing and electronic submission); a unique device identification system; and reporting requirements for devices linked to serious injuries or deaths. This report describes current law regarding medical device user fees and the impact of MDUFA on FDA review time of various medical device applications and the agency's medical device program budget. Appendix A and Appendix B provide historical details on the evolution of fees and performance goals from MDUFA I through MDUFA III. Appendix C provides a list of acronyms used in this report. The Medical Device Amendments of 1976 ( P.L. 94-295 ) was the first major legislation passed to address the premarket review of medical devices. Congress first authorized user fees to support the FDA's medical device premarket review program in 2002, 10 years after Congress had provided the authority for prescription drug user fees via PDUFA. For prescription drugs, the manufacturer must pay a fee for each new drug application (NDA) that is submitted to FDA for premarket review. In contrast, most medical devices listed with FDA are exempt from premarket review and do not pay a user fee (see Figure 1 ). Of the unique devices that are listed by manufacturers with FDA in FY2016, about 63% were exempt from premarket review; the remainder entered the market via the 510(k) process (35%), the premarket approval (PMA) process (1%), or via other means, such as the humanitarian device exemption (see " FDA Premarket Review of Medical Devices " and " Exemptions and Discounted Fees "). Premarket review and payment of the associated fee is required for about a third of the medical devices listed with FDA. FDA classifies devices based on their risk to the patient: low-risk devices are Class I, medium-risk are Class II, and high-risk are Class III. Low-risk medical devices (Class I) and a very small number of moderate-risk (Class II) medical devices are exempt from premarket review. In general, for moderate-risk and high-risk medical devices, there are two pathways that manufacturers can use to bring such devices to market with FDA's permission. One pathway consists of conducting clinical studies, then submitting a premarket approval (PMA) application with evidence providing reasonable assurance that the device is safe and effective. The PMA process is generally used for novel and high-risk devices and, if successful, it results in a type of FDA permission called approval . In FY2015, 95% of PMAs accepted for filing were approved by FDA. Another pathway involves submitting a premarket notification, also known as a 510(k) after the section in the FFDCA that authorized this type of notification. With the 510(k), the manufacturer demonstrates that the device is substantially equivalent to a device already on the market (a predicate device) that does not require a PMA. Substantial equivalence is determined by comparing the performance characteristics of a new device with those of a predicate device. The 510(k) process is unique to medical devices and, if successful, results in FDA clearance . According to FDA data, 85% of 510(k)s accepted for review in FY2015 were determined to be substantially equivalent. The standard for clearance of a 510(k) is substantial equivalence with a predicate device. Premarket review by FDA--both PMA and 510(k)--requires the payment of a user fee. FDA typically evaluates more than 4,000 510(k) notifications and about 40 original PMA applications each year. Fees collected under MDUFA III in FY2015 funded 35% of the MDUFA program total costs in FY2015. In addition to premarket review fees, there are also fees for when a manufacturer requests approval of a significant change in the design or performance of a device approved via the PMA pathway; these are called PMA supplements. Examples of PMA supplements include a Panel-Track Supplement , when it is necessary for FDA to evaluate significant clinical data in order to make a decision on approval, and a 180-Day PMA Supplement , if a manufacturer requests approval of a change in an approved device that does not require FDA to evaluate new clinical data or requires limited clinical data. The original 2002 user fee law had only authorized FDA to collect fees for premarket review, such as for PMA applications, PMA supplements, or 510(k) notifications. The 2007 reauthorization--MDUFA II--added two types of annual fees in order to generate a more stable revenue stream for the agency. According to FDA, there were fluctuations in the number of applications submitted from year to year, and fee revenues repeatedly fell short of expectations. MDUFA II added establishment registration fees , paid annually by most device establishments registered with FDA, and product fees , paid annually for high-risk (Class III) devices for which periodic reporting is required. MDUFA II also added two application fees--the 30-Day Notice and 513(g) application--and substantially lowered all existing application fee amounts (see Table A -1 ). A 30-Day Notice is used by a manufacturer to request modifications in manufacturing procedures and a 513(g) application is used by a manufacturer to request information on the classification of a device. Other than the establishment fee, the amount of each type of user fee is set as a percentage of the PMA fee, also called the base fee . The law sets both the base fee amount for each fiscal year, and the percentage of the base fee that constitutes most other fees. Under MDUFA III, the 510(k) fee was changed from 1.84% of the PMA fee to 2% of the PMA fee. MDUFA III changed the PMA fee amount to $248,000 in FY2013 rising to $263,180 in FY2016 and $268,443 in FY2017 (prior to inflation adjustment) (see Table A -1 ). The amount of the establishment registration fee was changed under MDUFA III to $2,575 in FY2013 rising to $3,872 in FY2016 and FY2017 (prior to inflation adjustment) (see Table A -1 ). MDUFA III also changed the definition of "establishment subject to a registration fee"; according to FDA, this would increase the number of establishments paying the fee from 16,000 to 22,000. Under MDUFA III, total fee revenue was set at $97,722,301 for FY2013 rising to $130,184,348 for FY2017. The total fees authorized to be collected over the five-year period FY2013 through FY2017 is $595 million. MDUFA III adjusts the total revenue amounts by a specified inflation adjustment, similar to the adjustment made under PDUFA, and the base fee amount is adjusted as needed on a uniform proportional basis to generate the inflation-adjusted total revenue amount. After the base fee amounts are adjusted for inflation, the establishment fee amount is further adjusted as necessary so that the total fee collections for the fiscal year generates the total adjusted revenue amount. The new adjusted fee amounts are published in the Federal Register 60 days before the start of each fiscal year along with the rationale for adjusting the fee amounts. The MDUFA IV proposal would change the 510(k) fee from 2.0% of the PMA fee to 3.4% of the PMA fee. MDUFA IV would change the PMA fee amount to $294,000 in FY201, rising to $329,000 in FY2022 (prior to inflation adjustment). The amount of the establishment registration fee would be changed under MDUFA IV to $4,375 in FY2018, rising to $4,978 in FY2022 (prior to inflation adjustment). The total fee revenue under the MDUFA IV proposal is $183,280,756 for FY2018, rising to $213,687,660 for FY2022. The total fees that would be authorized to be collected over the five-year period FY2018 through FY2022 would be $999.5 million plus inflation adjustments. Certain types of medical devices and medical device manufacturers or sponsors are exempt from paying fees, and small businesses pay a reduced rate. Humanitarian Device Exemption (HDE) applications are exempt from user fees, other than establishment fees. An HDE exempts devices that meet certain criteria from the effectiveness requirements of premarket approval. Devices intended solely for pediatric use are exempt from fees other than establishment fees. If an applicant obtains an exemption under this provision, and later submits a supplement for adult use, that supplement is subject to the fee then in effect for an original PMA. State and federal government entities are exempt from certain fees such as PMA, PMA supplement, 510(k), and establishment registration unless the device is to be distributed commercially. Indian tribes are exempt from having to pay establishment registration fees, unless the device is to be distributed commercially. Other than an establishment fee, the FDA cannot charge manufacturers a fee for premarket applications for biologics licenses and licenses for biosimilar or interchangeable products if products are licensed exclusively for further manufacturing use. Under a program authorized by Congress, FDA accredits third parties, allowing them to conduct the initial review of 510(k)s for the purpose of classifying certain devices. The purpose is to improve the efficiency and timeliness of FDA's 510(k) process. No FDA fee is assessed for 510(k) submissions reviewed by accredited third parties, although the third parties charge manufacturers a fee for their services. Under MDUFA III, FDA worked with interested parties to improve the third-party review program; work on improving the third-party review program would continue under the MDUFA IV proposal. In MDUFA II, Congress amended the process of qualifying for small business user fee discounts in response to frustrations expressed by domestic and foreign companies that had difficulties with the requirements. Small businesses--those with gross receipts below a certain amount--pay reduced user fees and have some fees waived altogether. These fee reductions and exemptions are of interest because many device companies are small businesses. Whether a device company is considered a small business eligible for fee reductions or waivers depends on the particular fee. Small businesses reporting under $30 million in gross receipts or sales are exempt from fees for their first PMA. Proof of receipts may consist of IRS tax documents or qualifying documentation from a foreign government. Companies with annual gross sales or receipts of $100 million or less pay at a rate of 50% of the 510(k) user fee, 30-day notice, request for classification information, and 25% of most other user fees. Small businesses must pay the full amount of the establishment fees. MDUFA III included a provision that allows FDA to grant a waiver or reduce fees for a PMA or establishment fee "if the waiver is in the interest of public health." According to the FDA presentation at the March 28, 2012, public meeting, the fee waiver is intended for laboratory developed test (LDT) manufacturers. The provision will sunset at the end of MDUFA III. As part of the MDUFA IV commitment letter, FDA will begin reviewing LDTs. The agency stated at the November 2, 2016, public meeting that it will review LDTs "no less favorably than any other devices in which MDUFA performance goals apply." The MDUFA IV proposal would reduce the fee paid by small businesses from 50% of the standard fee to 25% of the standard fee. MDUFA IV would establish a fee to be collected for de novo classification requests at 30% of the PMA fee, and de novo requests submitted by a small business are eligible for a reduced fee, 25% of the standard fee. A key element of FDA user fee laws--MDUFA and PDUFA--is that the user fees are to supplement congressional appropriations, not replace them. The law includes a condition, sometimes called a trigger, to enforce that goal. FDA may collect and use MDUFA fees only if annual discretionary appropriations for the activities involved in the premarket review of medical devices and for FDA activities overall remain at a level at least equal (adjusted for inflation) to an amount specified in the law. The MDUFA IV proposal updates the appropriation trigger "to provide assurance that user fees will be additive to budget authority appropriations." Over time, Congress has changed PDUFA to allow user fee revenue to be used for FDA activities related to not only premarket review but also the review of postmarket safety information associated with a drug. In contrast, MDUFA revenue can be used only for activities associated with FDA premarket review of PMAs, 510(k)s, and PMA supplements. The law states that fees "shall only be available to defray increases in the costs of resources allocated for the process for the review of device applications ." Importantly, the MDUFA IV proposal would include support for postmarket surveillance of medical devices: "funding will also improve the collection of real-world evidence from different sources across the medical device lifecycle, such as registries, electronic health records, and other digital sources." User fee revenues collected under MDUFA IV will be used to support the National Evaluation System for health Technology (NEST). FDA states that NEST "will help improve the quality of real-world evidence that health care providers and patients can use to make better informed treatment decisions and strike the right balance between assuring safety and fostering device innovation and patient access." MDUFA II added FFDCA Section 738A regarding required reports. Updated by MDUFA III, this section requires the Secretary to submit annual fiscal and performance reports for the next five fiscal years (FY2013 thru FY2017) to the Senate Committee on Health, Education, Labor, and Pensions, and the House Committee on Energy and Commerce. Fiscal reports address the implementation of FDA's authority to collect medical device user fees, as well as FDA's use of the fees. Performance reports address FDA's progress toward and future plans for achieving the fee-related performance goals identified in the agreement with industry. MDUFA III included a provision, for the three years following enactment, regarding streamlined hiring of FDA employees who would support the review of medical devices. Under the MDUFA III agreement, user fees will be used to "reduce the ratio of review staff to front line supervisors in the pre-market review program." FDA will enhance and supplement scientific review capacity by hiring reviewers and using external experts to assist with device application review. Using the streamlined hiring authority, FDA will work with industry to benchmark best practices for employee retention via financial and non-financial means. User fees will supplement (1) management training; (2) MDUFA III training for all staff; (3) Reviewer Certification Program for new CDRH reviewers; and (4) specialized training to provide continuous learning for all staff. FDA will improve its IT system to allow real-time status information on submissions. Under MDUFA III, FDA was required to hire a consultant to perform a two phase assessment of the medical device review process; Booz Allen Hamilton was chosen as the consultant. The first phase of the assessment focused on the identification of best practices and process improvements. A preliminary report published in December 2013 made four priority recommendations that were likely to have a significant impact on review time. A final report, released to the public in June 2014, detailed additional recommendations for improvements in the review process as well as other areas. In December 2014 CDRH published a final Plan of Action to address each of the Phase 1 recommendations. The consultant was required to evaluate FDA's implementation of the Plan of Action and publish a report no later than February 1, 2016; the report was published by the deadline. An independent assessment also will be conducted under MDUFA IV. In phase I, the contractor will evaluate the implementation of the MDUFA III independent assessment recommendations and publish a report. In phase II, the independent assessment will evaluate the medical device premarket review program to identify efficiencies; evaluate the premarket review infrastructure and allocation of FTEs; assess the alignment of resource needs with training and expertise of hires; identify and share best practices across branches; and assess the new MDUFA IV programs, such as NEST. One objective of the MDUFA agreement is focused on FDA's commitment to completing the review of the various medical device submissions--such as PMA reviews and 510(k) notifications--within specified time frames in exchange for an industry fee to support the review activity. Performance goals are specified for each type of submission for each fiscal year. Many of the programs and initiatives outlined in the MDUFA agreement are intended to reduce the average total time to decision for PMAs and 510(k)s. FDA and applicants share the responsibility for achieving these goals, which are shown for MDUFA III and the MDUFA IV proposal in Table 1 . Under MDUFA II and MDUFA III, FDA meets with industry on a quarterly basis to present data and discuss progress in meeting performance goals. These quarterly performance reports are posted on the FDA website. The quarterly meetings and reports would be continued under the MDUFA IV proposal. The amount of time it takes FDA to reach a review decision to clear a 510(k) notification or approve a PMA application is a measure of how well the agency is meeting the goals defined in the MDUFA agreement between FDA and the medical device industry. The time it takes to review a medical device--total review time--is composed of the time FDA handles the application--FDA time--plus the amount of time the device sponsor or submitter takes to respond to requests by FDA for additional information about the device. Figure 2 shows that the total amount of time a device is in the 510(k) review process has decreased from a peak in FY2010. The amount of time a 510(k) submission spends in FDA's hands has remained fairly stable; time in the submitter's hands peaked in FY2010 and has slowly declined. FDA reviewers frequently need to ask for additional information--called an AI Letter--from 510(k) device sponsors due to the incomplete or poor quality of the original submission. In FY2010, 77% of 510(k) sponsors received an AI letter on the first FDA review cycle. In FY2016, 76% received an AI letter on the first FDA review cycle. According to FDA, these quality issues have involved "the device description, meaning the sponsor either did not provide sufficient information about the device to determine what it was developed to do, or the device description was inconsistent throughout the submission." The device sponsor may not provide a complete response to the AI letter, in which case the FDA will send a second AI letter. In FY2010, 35% of 510(k)s received an AI letter in the second FDA review cycle. In FY2016, 6% received an AI letter in the second FDA review cycle. The AI letter allows the device sponsor the opportunity to respond and although this increases time to final decision, it allows the submission the opportunity for the product to be cleared. The alternative is for FDA to reject the 510(k) submission. Figure 3 provides information on the amount of time FDA spends reviewing PMAs. It shows that the average total days for PMA application review has been decreasing since FY2009 (except for a single year spike in FY2013). However, for PMAs and 510(k)s, the final two to three cohort years are still open and average review time will increase; this will impact whether the shared goals shown in Table 1 are met. FDA reviewers frequently need to ask for additional information--called an AI Letter--from PMA device sponsors due to the incomplete or poor quality of the original PMA application. In FY2010, 86% of PMA sponsors received an AI letter on the first FDA review cycle. In FY2016, 87% received an AI letter on the first FDA review cycle. Figure 4 and Table 2 present the total amount spent on the FDA MDUFA program for FY2005 through FY2015. Figure 4 shows the contribution of medical device user fees collected from industry, as well as appropriations provided by Congress. Table 2 also provides dollar amounts and percentages derived from the two sources. All user fees (as enacted) account for 42% of FDA's total FY2016 program level. User fees are an increasing proportion of FDA's device-related budget. In FY2005, medical device user fees accounted for 15% of the MDUFA program total costs, compared with 35% in FY2015 as shown in Figure 4 and Table 2 . In contrast, user fees covered 71% of PDUFA program total costs in FY2015. The FDA provides information on the amount of MDUFA fees collected each fiscal year and how the fees are spent in an annual financial report. MDUFA II added FFDCA Section 738A, which outlines the reauthorization process. FFDCA Section 738A directs the FDA to develop a reauthorization proposal for the following five fiscal years in consultation with specified congressional committees, scientific and academic experts, health care professionals, patient and consumer advocacy groups, and the regulated industry. Prior to negotiations with industry, FDA is required to request public input, hold a public meeting, provide a 30-day comment period, and publish public comments on the agency's website. During negotiations with industry, FDA must hold monthly discussions with patient and consumer advocacy groups to receive their suggestions and discuss their views on the reauthorization. After negotiations with industry are completed, FDA is required to present the recommendations to certain congressional committees, publish the recommendations in the Federal Register , provide a 30-day public comment period, hold another public meeting to receive views from stakeholders, and revise the recommendations as necessary. Minutes of all negotiation meetings between FDA and industry are required to be posted on the FDA website. For MDUFA IV, FDA held an initial public meeting on July 13, 2015. The negotiation process between FDA and industry began on September 9, 2015; minutes of all 13 meetings with industry are available on the FDA website. According to FDA, the MDUFA IV negotiations involved the same four industry trade associations that participated in the MDUFA III negotiations: the Advanced Medical Technology Association (AdvaMed), the Medical Device Manufacturers Association (MDMA), the Medical Imaging and Technology Alliance (MITA), and the American Clinical Laboratory Association (ACLA). Monthly meetings with nonindustry stakeholders, such as health care professional associations and patient and consumer advocacy groups, began on September 15, 2015, and minutes of all 11 meetings are also posted on the FDA website. According to FDA, regular participants at these meetings included the National Health Council, Pew Charitable Trusts, the American College of Cardiology, the National Alliance on Mental Illness, FasterCures, the National Organization for Rare Disorders, the Alliance for Aging Research, JDRF (formerly the Juvenile Diabetes Research Foundation), and the National Center for Health Research. FDA stated that these groups were primarily interested in establishing NEST and further incorporation of patient's perspectives into the FDA medical device review process. On August 22, 2016, FDA announced that it had reached an agreement in principle with the medical device industry and laboratory community on proposed recommendations for the reauthorization of the medical device user fee program. Under the draft agreement, FDA would be authorized to collect $999.5 million in user fees plus inflation adjustments over the five-year period, FY2018 through FY2022. The amount is a 68% increase over the previous MDUFA III agreement, which was $595 million. In addition to supporting the premarket review of medical devices, the "funding will also improve the collection of real-world evidence from different sources across the medical device lifecycle, such as registries, electronic health records, and other digital sources." User fee revenues collected under MDUFA IV would be used to support the National Evaluation System for health Technology (NEST). The MDUFA IV package is posted on the FDA website and consists of proposed changes to statutory language and an agreement on FDA performance goals and procedures. A public meeting to discuss the recommendations for reauthorization of MDUFA was held on November 2, 2016; materials from this meeting are posted on FDA's website. Appendix A. Medical Device User Fees Appendix B. MDUFA III Performance Goals Appendix C. Acronyms Used in This Report | The Food and Drug Administration (FDA) is responsible for regulating medical devices. Medical devices are a wide range of products that are used to diagnose, treat, monitor, or prevent a disease or condition in a patient. A medical device company must obtain FDA's prior approval or clearance before marketing many medical devices in the United States. The Center for Devices and Radiological Health (CDRH) within FDA is primarily responsible for medical device review and regulation. CDRH activities are funded through a combination of annual discretionary appropriations from Congress and user fees collected from device manufacturers. Congress first gave FDA the authority to collect user fees from medical device companies in the Medical Device User Fee and Modernization Act of 2002 (P.L. 107-250). Congress last reauthorized medical device user fees for a five-year period (FY2013-FY2017) via the Medical Device User Fee Amendments of 2012 (MDUFA III, Title II of Food and Drug Administration Safety and Innovation Act, FDASIA, P.L. 112-144). The primary purpose of the user fee program is to reduce the time necessary to review and make decisions on medical product marketing applications. Lengthy review times affect the industry, which waits to market its products, and patients, who wait to use these products. Under MDUFA III, FDA was authorized to collect $595 million from industry from FY2013 through FY2017. In exchange for the fees, FDA and industry negotiated performance goals for the premarket review of medical devices. The Federal Food, Drug, and Cosmetic Act (FFDCA) requires premarket review for moderate- and high-risk devices. There are two main paths that manufacturers can use to bring such devices to market. One path consists of conducting clinical studies and submitting a premarket approval (PMA) application that includes evidence providing reasonable assurance that the device is safe and effective. The other path involves submitting a 510(k) notification demonstrating that the device is substantially equivalent to a device already on the market (a predicate device) that does not require a PMA. The 510(k) process results in FDA clearance and tends to be less costly and less time-consuming than the PMA path. Substantial equivalence is determined by comparing the performance characteristics of a new device with those of a predicate device. Demonstrating substantial equivalence does not usually require submitting clinical data demonstrating safety and effectiveness. In FY2015, FDA approved 95% of PMAs accepted for review and 85% of 510(k)s accepted for review were determined to be substantially equivalent. In September 2015, the agency began a series of negotiation sessions with industry on the MDUFA IV reauthorization agreement. On August 22, 2016, FDA announced it had reached an agreement in principle with industry on proposed recommendations for the reauthorization. Under the draft agreement, FDA would be authorized to collect $999.5 million in user fees plus inflation adjustments over the five-year period starting in October 2017. The MDUFA IV draft and final commitment letters and proposed statutory changes are posted on the FDA website. A public meeting to discuss the proposed recommendations for reauthorization of MDUFA was held on November 2, 2016, and the final agreement between agency and industry has been submitted to Congress. Since medical device user fees were first collected in FY2003, they have comprised an increasing proportion of the MDUFA program. In FY2006, medical device user fees accounted for 16% of the MDUFA program total costs, compared with 35% in FY2015. All user fees (as enacted) accounted for 42% of FDA's total FY2016 program level. Over the years, concerns raised about user fees have prompted Congress to consider issues such as which agency activities could use the fees, how user fees can be kept from supplanting federal funding, and which companies should qualify as small businesses and pay a reduced fee. | 5,868 | 847 |
A free trade agreement is an agreement involving two or more trading partners under which tariffs and trade barriers are reduced or eliminated. Today, the United States has free trade agreements with 17 countries, including nations in Asia, the Middle East, South and Central America, and Africa. Historically, these agreements have been treated as congressional-executive agreements rather than treaties. That is, reciprocal trade agreements are traditionally approved and implemented by a majority vote of each house rather than approved by a two-thirds vote in the Senate before being submitted to both houses of Congress for implementation. In a succession of statutes, Congress has authorized the President to negotiate and enter agreements reducing tariff and nontariff barriers for limited periods, while permitting trade agreements negotiated under this authority to enter into force for the United States once they are approved by both houses and other statutory conditions are met. The most recent of these statutes is the Bipartisan Trade Promotion Authority Act of 2002 (Trade Act of 2002) in which Congress authorized the President to enter into trade agreements before July 1, 2007 so long as the agreements satisfied certain conditions and were subject to congressional review. Pursuant to that authority, the Executive entered into several trade agreements, including the U.S.-South Korea Free Trade Agreement (KORUS FTA), which was signed by officials for the two countries on June 30, 2007. The KORUS FTA is one of three agreements that were negotiated under the terms of the Trade Act of 2002 but have yet to be submitted to Congress for approval and implementation. Under section 2105 of the Trade Act of 2002, the KORUS FTA will enter into force for the United States "if (and only if)" the four conditions stated in section 2105(a) of the statute are satisfied. Broadly described, these four requirements are as follows: the President, at least 90 calendar days before entering the trade agreement, notifies Congress of the President's intention to enter into the agreement; the President, within 60 days after entering into the agreement, submits to Congress a description of the changes to U.S. law that the President considers required to bring the United States into compliance with the agreements; the President submits to Congress a copy of the final legal text of the agreement, a draft of the implementing bill, a statement of administrative action, and certain supporting information; and the implementing bill is enacted into law. Once the implementing bill is introduced in Congress, it must meet additional statutory requirements to be considered under the expedited ("fast track") procedures. Trade agreements are not the only type of measure to traditionally receive consideration under the expedited legislative procedure often referred to as "fast track." One of the purposes of these expedited procedures in the trade area is to prevent the legislation from being blocked by filibuster or amended to an extent that forces the two countries to reenter negotiations. The authority to apply fast track procedures to legislation approving and implementing a free trade agreement often goes by the name "Trade Promotion Authority" (TPA), a label that reflects the title of the Trade Act of 2002. As signed on June 30, 2007, the KORUS FTA was entered into before the July 1, 2007 deadline. Therefore, assuming that its implementing bill satisfies the remaining statutory requirements, it will be eligible for consideration under the fast track procedures. However, the bill's eligibility for TPA may be complicated by the inclusion of the recently negotiated changes to the agreement. In the summer of 2010, the Obama Administration announced plans to reengage in talks with South Korea over aspects of the KORUS FTA, particularly its provisions involving market access for U.S. autos. These talks concluded on December 3, 2010 when the two sides agreed to make certain additions and modifications to the 2007 agreement. The media has referred to these changes collectively as a "supplementary agreement" or "supplementary deal" to the KORUS FTA. The "supplementary deal," which was signed on February 10, 2011, is memorialized by an "exchange of side letters" and two "agreed minutes." It modifies a portion of both U.S. and South Korean commitments under the 2007 agreement and adopts new obligations for both parties. For example, the "supplementary deal" modifies three of the 2007 time frames for the elimination of U.S. duties on certain automotive goods and, for some goods, sets a different deadline for elimination. In the "exchange of letters," the United States and South Korea also agreed to establish a special auto safeguard mechanism for unexpected import surges of motor vehicles. Other U.S. commitments contained in the exchange of letters include, inter alia : preclude any prevention or undue delay of a motor vehicle's placement on the U.S. market on the ground that it incorporates a new, as yet unregulated, technology or feature absent scientific or technical information demonstrating that the technology or feature creates a risk for human health, safety, or the environment; provide a year-long grace period between the date a technical regulation or conformity assessment procedure is published and the date on which compliance with the measure becomes mandatory; periodically conduct post-implementation reviews of the effectiveness of its significant regulations affecting motor vehicles; and resolve matters related to South Korea's publication of "new" fuel economy or motor vehicle emissions based taxation measures through "cooperation and consultations," rather than through dispute settlement. In the "agreed minutes," the United States promised to increase the L-visa validity period for intracompany transferees t o five years for nationals of South Korea, and South Korea promised to deem certain U.S. motor vehicle imports in compliance with its new automobile fuel economy and greenhouse gas emissions regulation. Unlike the exchange of letters, the agreed minutes are framed in hortatory, rather than mandatory, language, do not expressly mention dispute settlement, and segregate each party's commitments into two freestanding documents. While the parties' intention determines whether an agreement is internationally binding, these differences suggest that the United States and South Korea intended for the exchange of letters, but not the agreed minutes, to encompass binding commitments. In turn, if the agreed minutes were intended to be political, rather than internationally binding, commitments, they may not require congressional approval. Moreover, the United States can already fulfill its promise to increase the L-visa validity period for South Korean nationals without changing U.S. law. Trade agreements are traditionally treated as congressional-executive agreements rather than treaties, which means they are approved and implemented by a majority vote of each house. In general, trade agreements are formally presented to Congress as part of an implementing bill. Each implementing bill sets two tasks before Congress. First, for the agreement to "enter into force"--that is, constitute binding international commitments--for the United States, it must receive congressional approval. Second, for those commitments to have legal effect domestically, Congress must "implement" them by repealing or amending relevant U.S. law or enacting new statutory authorities to ensure U.S. compliance with the agreement. On occasion, Congress has approved an international trade agreement without including an express approval provision in the legislation that otherwise implements--or appropriates funds for U.S. participation in--the agreement. However, statutory grants of TPA typically condition a trade agreement's eligibility for fast track consideration on, inter alia , the implementing bill's inclusion of an express approval provision in addition to provisions implementing the agreement. As a result of the newly negotiated changes to the KORUS FTA, two questions arise. First, can any or all of these changes enter into force for the United States without congressional approval? In order to do so, the changes would need to be treated as a type of agreement into which the Executive can constitutionally enter the United States without obtaining congressional consent--that is, an executive agreement or a voluntary agreement that does not bind the United States under international law. Second, can the "supplementary agreement" carry the force of law domestically absent congressional action? To do this, the changes must be treated as self-executing. A self-executing agreement requires no changes to the U.S. Code to become enforceable in a U.S. court by private parties or capable of being performed by U.S. agencies, and therefore it does not need to be submitted to Congress for implementation. Ultimately, if, in its entirety, the "supplementary agreement" constitutes a self-executing executive agreement, the 2010 changes may have no implications for the fast track consideration of the KORUS FTA because they would not be included in the implementing bill. The Executive and Congress will decide whether to treat these changes as part of an executive and/or self-executing agreement, and their decision is unlikely to be disturbed by a U.S. court. Accordingly, this report is primarily focused on the fast track eligibility of an implementing bill for the KORUS FTA that either treats the 2010 changes as part of the agreement that was "entered into" in 2007 or effectively includes them in the provisions implementing the 2007 agreement. Fast track procedures ensure timely committee and floor action on a particular piece of legislation. In the context of trade agreements, these expedited procedures are used to prevent an implementing bill from being blocked by filibuster or amended to an extent that forces the two countries to reenter negotiations. Fast track procedures also prevent the use of procedural delaying tactics, including tactics available to congressional leadership to stall or prevent congressional consideration of legislation to which they are opposed. An implementing bill that is statutorily authorized for fast track consideration may be referred to as having "Trade Promotion Authority" (TPA), a label that reflects the title of the Trade Act of 2002. That act mandates that legislation approving and implementing a free trade agreement that is entitled to consideration under the fast track procedures receive an up-or-down vote in Congress without amendment and with limited debate. However, the Trade Act of 2002 conditions a bill's eligibility for fast track consideration on its satisfaction of certain statutory requirements. In particular, the President must submit the implementing bill to Congress, and the implementing bill must contain three components: a provision approving a trade agreement "entered into" in conformity with the Trade Act of 2002; a provision approving a statement of administrative action, if any, proposed to implement that agreement; and if changes to U.S. law are required to implement the trade agreement, provisions "repealing or amending existing laws or providing new statutory authority" that are "necessary or appropriate to implement" the agreement. In light of the 2010 changes to the KORUS FTA, questions have arisen over whether legislation containing those changes will meet these requirements for fast track consideration. Two requirements that may have negative implications for the fast track consideration of the KORUS FTA and its implementing bill are: (1) the requirement that the bill approve an agreement that was "entered into" before the July 1, 2007 deadline for fast track consideration; and (2) the requirement that any bill provisions repealing, amending, or enacting U.S. law be "necessary or appropriate" for the implementation of the 2007 agreement. As mentioned above, an implementing bill is entitled to receive fast track consideration only if, inter alia , it includes a provision approving a trade agreement that was "entered into" in conformity with the Trade Act of 2002. The phrase "entered into" has generally been understood to mean "signed," but not necessarily "implemented," by the parties. Furthermore, to be in conformity with the Trade Act of 2002, that agreement must have been "entered into" before July 1, 2007. The 2010 changes to the KORUS FTA were not "entered into" before the deadline for fast track procedures authorized by the Trade Act of 2002. However, the Trade Act of 2002 seems to draw a distinction between the agreement that was signed--which must be the one being approved by Congress--and the "final legal text" of that agreement--which is the one that the President must submit to Congress with the implementing bill. This distinction suggests that the text of the agreement that was signed and the agreement that is submitted to Congress for approval need not be identical, and, in turn, some changes may be made to the original agreement without disqualifying the implementing bill from fast track consideration. It is difficult to predict whether Members are likely to view the 2010 changes as falling within this category of acceptable changes to a trade agreement. The question may hinge on whether those changes are intended to "enter into force" for the United States, and, if so, whether they can "enter into force" absent congressional action. In other words, it could depend on whether some or all of the terms of the "supplementary deal" can be treated by Congress as a nonbinding agreement, an executive agreement, or as an agreement than can otherwise become binding for the United States absent congressional approval. Assuming an intent to be bound by the 2010 changes, the "supplementary deal" could qualify as an executive agreement if it was entered into under either (1) an earlier agreement that received congressional approval, either prospectively or retroactively; or (2) the President's sole constitutional authority. Although the Constitution is understood to vest the President with the authority to conduct foreign relations and, as part of that, negotiate international agreements, it is unclear whether--and to what extent--these powers might encompass some degree of executive authority related to foreign commerce. Congress, on the other hand, has express constitutional authority to (1) "lay and collect taxes, duties, imposts, and excises;" (2) "regulate commerce with foreign nations;" and (3) "make all laws which shall be necessary and proper" to carry out these specific powers. Accordingly, it seems unlikely that the "supplementary deal" could qualify as an executive agreement on the grounds that the President has the sole constitutional authority to enter into it. However, to the extent that the 2010 changes primarily clarify the text, by, for example, setting a time frame for meeting a tariff elimination deadline that was contained in the 2007 agreement, the "supplementary deal" may well be amenable to treatment as an executive agreement--particularly if the original 2007 trade agreement receives congressional approval. If, on the other hand, the implementing bill approves substantively new U.S. commitments--particularly those that fall within the scope of one of Congress's explicit constitutional powers--that were agreed to after the original text was signed, the bill could be deemed ineligible for fast track procedures because these changes could not be treated as an executive agreement. Therefore, provisions of the "supplementary deal" that represent fundamentally new U.S. obligations (e.g., new or earlier tariff elimination deadlines) or require the enactment of new U.S. laws (e.g., new trade remedies) may warrant close scrutiny to assess the Executive's authority to commit the United States to those terms. There is historical precedent for treating supplemental agreements to a trade agreement as executive agreements when the supplemental agreements were signed after the expiration of TPA. The George H. W. Bush Administration signed the North American Free Trade Agreement (NAFTA) on September 18, 1992. In doing so, NAFTA was "entered into" before the legislative authority for its fast track status, the Omnibus Trade and Competitiveness Act of 1988 (Trade Act of 1988, P.L. 100-418 , 102 Stat. 1107), expired on June 1, 1993. However, having indicated during his campaign that he would not sign legislation implementing NAFTA until new "supplemental agreements" on labor and the environment had been negotiated, President Clinton commenced side agreement negotiations with Mexico and Canada after the 1992 signing of NAFTA. Ultimately, two side agreements, the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC), were signed by officials for the United States, Mexico, and Canada on September 14, 1993, more than three months after the expiration of TPA. The United States Trade Representative (USTR) released a letter stating that these supplemental agreements were not "trade agreements for purposes of fast track procedures" and referred to the NAAEC and NAALC as executive agreements instead. In accordance with this view, the President submitted these supplemental agreements to Congress in simultaneity with the text of NAFTA but only to inform congressional consideration of the implementing bill. The President did not seek--and did not receive--congressional approval of the two agreements. Instead, the provision of the implementing bill that approved NAFTA stated that Congress approved the agreement that was "entered into on December 17, 1992." Although the Executive's characterization of the NAFTA side agreements was ultimately successful, it did not go unchallenged in the Senate. In particular, the late Senator Ted Stevens expressed strong concerns that, by considering the implementing bill under the fast track procedures, Congress was permitting the Executive to usurp unconstitutionally broad authority to enter into and participate in international agreements. He said: We are setting a precedent--at the request of the Executive--giving the Executive broad, broad authority to negotiate nontrade agreements under protections of the fast track procedure. As I remember my constitutional history, the Framers of our Constitution had deep fears of a runaway Executive, an Executive that might go off and make agreements with foreign nationals, foreign governments, contrary to the best interests of our people. However, the President did not leave the side agreements out of the implementing bill entirely, which may have lessened the persuasiveness of Senator Stevens's argument for some Members. Specifically, the NAFTA implementing bill included a provision authorizing U.S. participation in the supplemental agreements. Although Senator Stevens disapproved of that provision as well, Congress enacted the bill in its entirety, which may permit a characterization of the NAAEC and NAALC as having received congressional approval after all. The treatment of NAFTA's side agreements may illustrate how Congress and the Executive have approached substantive changes to a trade agreement that were negotiated after the expiration of TPA. However, the KORUS FTA may also provide the President with even greater authority than NAFTA did to commit the United States to a changed version of the underlying trade agreement without obtaining congressional approval. The KORUS FTA expressly permits its parties to modify the agreement without abiding by their "applicable [domestic] legal procedures." NAFTA does not include this language. Consequently, NAFTA could not be altered without Congress's approval even after the text of NAFTA was approved and implemented by Congress. To a limited extent, the opposite is true of the KORUS FTA, which states that officials of both parties may, by consensus, "make modifications to the commitments." This difference has two possible implications for the modification of the KORUS FTA. First, the United States and Korea may be able to bring the 2010 changes into force without congressional approval as soon as the agreement that was "entered into" in 2007 enters into force. The second implication is that because the 2010 changes can enter into force without congressional action once the 2007 agreement enters into force, the Executive may seek to characterize the 2010 "supplementary deal" as an executive agreement authorized by congressional approval of earlier agreement. However, this characterization of the agreement would not be controlling for the purposes of the fast track procedures. As described below, if a Member objects to considering the KORUS FTA implementing bill under the fast track procedures, the bill's eligibility for TPA will be determined under the chamber's procedural rules and not by the Executive Branch. The second condition that the KORUS FTA implementing bill must satisfy in order to be entitled to fast track consideration is the Trade Act of 2002's requirement that provisions in the bill that repeal, amend, or enact U.S. law must be "necessary or appropriate" to implement the 2007 agreement. The legislative history of the Trade Act of 2002 suggests that the phrase "necessary or appropriate" should be strictly interpreted and, perhaps, more strictly interpreted than it was in the past. However, some perceive Congress's treatment of trade agreements under earlier TPA statutes as precedent for an "open-ended" construction of the "necessary or appropriate" phrase. When other trade agreements have been modified after they were signed, some Members of Congress have questioned whether the modifications are "necessary or appropriate" and therefore warrant treatment under the same fast track procedures as the rest of the implementing bill. For example, the definition of "necessary or appropriate" was discussed during the floor debates on the NAFTA implementing bill. As mentioned above, although the Clinton Administration did not seek congressional approval of the NAFTA side agreements in the implementing bill, it did include a provision in the bill seeking congressional authority to "participate" in the agreements. On the floor, some Members suggested this authorization of U.S. participation in the side agreements was not "necessary or appropriate" to the implementation of the original NAFTA and therefore was not eligible for fast track consideration. Perhaps the most vociferous advocate of this view was Senator Ted Stevens, who argued: The "necessary and appropriate" language is only involved if changes in existing law or new statutory authority are required to implement such trade agreements. There is no authority whatsoever in the law to include separate executive agreements in this legislation. And they should not be here ... There is no legal authority for these side agreements to be before the Congress under the fast-track procedures. Senator Baucus sought to rebut Senator Stevens's arguments on the grounds that the President has broad constitutional authority to execute agreements and the "fast track statutory authority gives the President the ability to negotiate agreements and provisions appropriate to trade laws," a much broader term. The debate illustrates different opinions as to which adjective in the Trade Act of 2002's "necessary or appropriate" clause carries greater weight. Because the NAFTA implementing bill was ultimately enacted, one could argue that its passage set a precedent for broad interpretations, like the one offered by Senator Baucus, of the "necessary or appropriate" clause. This view would support the position that even if the KORUS FTA includes provisions implementing the 2010 changes, the bill is nevertheless eligible for fast track consideration under the terms of the Trade Act of 2002. Although legislative procedure is most often dictated by the standing rules of the House and Senate, Congress generally enacts fast track procedures into law instead of amending either body's standing rules. However, the statutory grant of TPA to a trade agreement's implementing bill remains "an exercise of the rulemaking power of the House of Representatives and the Senate, respectively." Accordingly, Congress retains the same authority over TPA as it has over other rules of legislative procedure, and each chamber may waive, suspend, or repeal fast track authority for legislation implementing the KORUS FTA. The Trade Act of 2002 authorizes either chamber to pass a resolution making the fast track procedures inapplicable to an implementing bill on the grounds that either the Executive failed to follow certain procedures or the agreement "fail[s] to make progress in achieving the purposes, policies, priorities, and objectives" specified by the Trade Act of 2002. Most likely, the Senate and House parliamentarians will be consulted about the KORUS FTA implementing bill before it is introduced in either chamber. If an implementing bill is introduced and a Member is concerned that it is not entitled to receive fast track consideration, the Member may raise an objection. At that point, the bill's eligibility for fast track status will be resolved under the chamber's procedural rules. In the House, the presiding officer will rule on the availability of fast track procedures for the implementing bill with the guidance of the House parliamentarian. A similar procedure would be followed in the Senate if a Member there raised a point of order. In principle, a decision on the availability of the fast track procedures could be appealed to the full body. Ultimately, a chamber's decision as to whether the implementing bill qualifies for fast track consideration will be made independently of any decision reached in the other chamber. In the context of the NAFTA implementing bill, Senator Stevens strenuously argued against the bill's eligibility for fast track consideration, but he did not raise a point of order. Instead, he proposed an amendment to strike the language in the NAFTA implementing bill that authorized U.S. participation in the NAAEC and NAALC. The amendment could not be considered, however, because amendments are not permitted for bills considered under the fast track procedures. As a result, it appears that neither the House nor the Senate was asked to formally determine the NAFTA implementing bill's eligibility for fast track consideration. If a Member in either chamber raises an objection to the fast track consideration of the KORUS FTA and the bill is deemed ineligible for TPA under the Trade Act of 2002, then the bill will be considered under the regular procedures of that chamber. Under these procedures, the bill, like other pieces of legislation, might not be brought up for a vote or it might be amended. In addition, the chamber could grant fast track authority to the bill even though it was deemed ineligible under the terms of the Trade Act of 2002. Although some believe that political hurdles will prevent a trade agreement's implementing bill from being passed without the fast track procedures, implementing legislation for the U.S.-Jordan Free Trade Agreement was enacted under regular procedures after fast track authorities added in the Omnibus Trade and Competitiveness Act of 1988 expired. On the other hand, Congress may have treated the Jordan agreement with unusual deference because of Jordan's unique geopolitical role in the Middle East peace process at that time. It is difficult to predict whether Congress would feel that diplomatic reasons warrant affording the KORUS FTA similarly deferential treatment. In order for the KORUS FTA to enter into force for the United States, Congress must consent to it--either by implementing the agreement or enacting an express statement of congressional approval. Moreover, for the commitments contained in the KORUS FTA to have legal effect domestically, Congress must implement the agreement--that is, repeal or amend current U.S. law or enact new statutory authority as is "necessary or appropriate." The KORUS FTA implementing bill, which is expected to develop out of consultations between the Executive and Congress, will be designed to achieve these goals. Once the bill is formally submitted to Congress, it will be entitled to fast track consideration if it satisfies the requirements of the Trade Act of 2002. In particular, the implementing bill must: (1) approve the agreement that was "entered into" in 2007; and (2) include provisions enacting, amending, or repealing existing U.S. laws to the extent "necessary or appropriate" for the implementation of the agreement that was "entered into" in 2007. It is difficult to predict whether Congress will view the inclusion of changes made by the 2010 "supplementary deal" in the implementing bill as disqualifying the bill from fast track consideration. Because the "supplementary deal" was agreed upon several years after the expiration of TPA, including it in its entirety in the implementing bill could present two problems for the bill's eligibility for consideration under the fast track procedures. First, the implementing bill could be disqualified from fast track consideration on the grounds that it approves an agreement that was not entered into in conformity with the Trade Act of 2002. Second, the bill could be disqualified from fast track consideration because it effects changes to U.S. law that are not "necessary or appropriate" for the implementation of the KORUS FTA that was entered into in 2007. However, the enactment of the NAFTA implementing bill provides historical precedent for fast track consideration--and, ultimately, congressional approval and implementation--of a free trade agreement that was modified after the expiration of TPA. In that case, the two NAFTA side agreements were characterized as executive agreements, and, accordingly, the implementing bill did not express congressional approval of them. Some Members disapproved of this approach, arguing that by not approving the side agreements Congress gave the Executive unconstitutionally broad authority to enter into international agreements. The NAFTA implementing bill did, however, include a provision authorizing U.S. participation in those side agreements. Some Members protested this move as well, arguing that the authorization was not "necessary or appropriate" for the implementation of the original NAFTA, but Congress passed the implementing bill in its entirety. As a result, the NAFTA implementing bill is often characterized as both approving and implementing the two NAFTA side agreements. Although Members expressed concern about the use of the fast track procedures to consider the NAFTA implementing bill, no Member formally challenged the bill's eligibility for fast track consideration. To challenge the use of the fast track procedures in the consideration of the KORUS FTA implementing bill, a Member must raise an objection. At that point, the bill's eligibility for fast track consideration will be resolved by the chamber in which the objection was raised. If one of the chambers deems the KORUS FTA implementing bill ineligible for fast track consideration under the Trade Act of 2002, then it will be considered under the regular procedures of that chamber. In addition, Congress retains substantial authority over whether to grant fast track consideration to the KORUS FTA implementing bill. Each chamber may waive, suspend, or repeal fast track authority for legislation implementing the KORUS FTA. Each chamber may also pass a resolution making the fast track procedures inapplicable to an implementing bill if the measure is deemed procedurally or substantively deficient under the terms of the Trade Act of 2002. | On June 30, 2007, U.S. and South Korean officials signed the Korea Free Trade Agreement (KORUS FTA) for their respective countries. It is one of three free trade agreements currently awaiting submission to Congress for approval and implementing legislation. In June 2010, the Obama Administration announced plans to seek Congress's approval for the KORUS FTA after first engaging in talks with South Korea over U.S. concerns with the agreement as signed, particularly over its provisions involving market access for U.S. autos. The results of these talks are memorialized in three February 10, 2011, documents, which have been collectively referred to as the "supplemental agreement" or "supplementary deal" to the 2007 KORUS FTA. The Executive, in consultation with Congress, is expected to draft legislation approving and implementing the KORUS FTA and submit the resulting "implementing bill" to Congress during the first session of the 112th Congress. This legislation will be entitled to consideration in Congress under expedited ("fast track") legislative procedures if it satisfies the requirements of the Bipartisan Trade Promotion Authority Act of 2002 (Trade Act of 2002). In particular, the implementing bill must: (1) approve the agreement "entered into" in 2007; and (2) include provisions enacting, amending, or repealing existing U.S. laws only to the extent that the provisions are "necessary or appropriate" for the implementation of the agreement "entered into" in 2007. Each chamber of Congress, acting independently of the other, has the authority to determine for itself whether the KORUS FTA implementing bill conforms with these requirements. To the extent either the House or the Senate finds that the bill satisfies the terms of the Trade Act of 2002, the bill will be entitled to receive an up-or-down vote without amendment and with limited debate in that chamber. It is difficult to predict with certainty how the 2010 changes might affect Congress's decision to consider the KORUS FTA implementing bill under the fast track procedures. However, the effect of side agreements on the fast track eligibility of the implementing legislation for the North American Free Trade Agreement (NAFTA) may be instructive. In that case, the Executive concluded supplemental agreements to the trade agreement after the agreement was signed and trade promotion authority had expired. These agreements were treated as executive agreements, circumventing the need for their express approval by Congress, but the implementing bill nevertheless authorized U.S. participation in the two agreements. Arguably, the NAFTA supplemental agreements may be characterized as having received congressional approval. Although Members expressed concern about the use of the fast track procedures to consider the NAFTA implementing bill, no Member formally challenged the bill's eligibility for fast track consideration. To challenge the use of the fast track procedures to consider the KORUS FTA implementing bill, a Member must raise an objection. The bill's eligibility for fast track consideration will then be resolved by the chamber in which the objection was raised. Either chamber may also decide, as an exercise of its rulemaking power, to waive, suspend, or repeal its grant of fast track authority. If the KORUS FTA implementing bill is deemed ineligible for--or otherwise denied--fast track consideration, the bill, in its entirety, may be considered under the regular procedures of each chamber. Under these procedures, the bill, like other pieces of legislation, might not be brought up for a vote or might be passed with amendments. The Jordan Free Trade Agreement was statutorily implemented under regular procedures. | 6,572 | 763 |
Congress approved legislation in 1972 to adjust Social Security benefits for inflation automatically (P.L. 92-336). However, the formula for calculating the new cost-of-living adjustment (COLA) was flawed. Although intended to provide inflation adjustments only to people already receiving benefits, each increase for current beneficiaries also raised the initial benefits of future beneficiaries. The formula assumed that wages would continue to rise faster than prices, as they had in the past. However, the high inflation and unemployment in the 1970s resulted in higher-than-intended increases for beneficiaries affected by the new formula, and lower-than-expected revenues for Social Security. If the erroneous formula had not been changed, future beneficiaries could have received initial benefits that exceeded their pre-retirement earnings--higher than Congress intended and higher than payroll taxes could finance. As part of the 1977 Amendments ( P.L. 95-216 ), Congress corrected the error in the benefit formula in the 1972 Amendments by creating a new formula in which initial benefit levels are indexed to wages, then increased by inflation after the initial year. Without the 1977 Amendments, the system would have become insolvent within five years. The correction to the benefit formula resulted in different treatment for all Social Security beneficiaries depending on year of birth, as described in the following section. The erroneous benefit formula created by the 1972 Amendments affected people who turned 62 in 1972 or later--that is, individuals born in 1910 and later. This is because the formula used to calculate Social Security retirement benefits is based on the year an individual reaches the earliest age of eligibility, which is age 62. When the error in the benefit formula was corrected in the 1977 Amendments, benefits for people who were already eligible for retirement benefits were left unchanged. As a result, beneficiaries born between 1910 and 1916--the seven years prior to the notch--were allowed to receive unintentional windfall benefits for the rest of their lives. The 1977 Amendments corrected the error in the Social Security benefit formula, starting with individuals born in 1917. As a result, the benefits of people who were born during the notch years are lower than those of the beneficiaries who came just before them. To ease the transition to the new, corrected formula, Congress phased in the change for people born from 1917 through 1921--the notch babies. For many who retired during in this phase-in period, however, the transition formula did not lessen the differential between their benefits and the windfall benefits received by people born in earlier cohorts. Figure 1 shows inflation-adjusted initial monthly benefit amounts for average wage earners born from 1900 to 1965. The notch babies' birth years are shown in yellow. The term "notch" originated from graphs such as this one, where the lines representing the benefit levels of notch babies dip below the lines representing the benefit levels of individuals born immediately before and soon after. Many notch babies actually receive higher real benefits than people who were born after they were, all else equal. For example, people born in 1917 receive higher average monthly benefits than people born in 1922 (the first year the correct formula was fully phased in). As shown in Figure 1 , an average wage earner born in 1917 would receive a monthly benefit of $1,166 (in 2007 dollars), while an average wage earner born in 1922 would receive a monthly benefit of $1,080. In addition, most notch babies have significantly higher replacement rates than people born after they were, all else equal. A replacement rate is one way of measuring the adequacy of a person's post-retirement income; it is a comparison between a person's income before and after retirement. This report calculates replacement rates in the same way as the Social Security Administration (SSA) actuaries, which is to show the proportion of beneficiaries' average indexed earnings replaced by their initial Social Security benefits. In 2007, the estimated replacement rate for an average wage earner retiring at age 65 was 40%. In drafting the 1972 Amendments, Congress intended to maintain replacement rates at roughly 40%, but the double-indexing error caused replacement rates to rise above 50% before the error was fixed, as shown in Figure 2 below. The notch babies' replacement rates are higher than most beneficiaries born after they were--particularly in comparison to current and future beneficiaries, whose replacement rates are declining as the full retirement age increases. Benefits for people born in 1922 and later are calculated using the new, corrected formula established by the 1977 Amendments. This formula is currently being used to calculate the annual initial retirement benefit. In 1992, Congress voted to establish a 12-member commission to study the notch issue. The Commission on the Social Security "Notch" Issue released its report on December 31, 1994. Its principal conclusion was that the "benefits paid to those in the 'Notch' years are equitable, and no remedial legislation is in order." Its report states that "the uneven treatment between those in the 'Notch' years and those just before them was magnified by the decision of Congress to fully grandfather" people born before 1917 under the old law. It further states that "in retrospect" Congress "probably should have" limited the benefits of those whose benefits were calculated using the erroneous formula in the 1972 Amendments, but that it was too late to do so given their advanced age. Among advocacy groups, support for legislation to increase benefits for notch babies has been limited. The lead proponent of such legislation is the TREA Senior Citizens League (TSCL). Some Members have complained that TSCL has misled seniors about the issue in mailings that solicit money. A few veterans' groups and grassroots notch groups also have supported notch legislation. Most other organizations representing older Americans, led by AARP, have opposed notch legislation. The AFL-CIO, the National Association of Manufacturers, and the National Taxpayers Union also have come out in opposition, as did the Carter, Reagan, and George H. W. Bush Administrations. The Clinton Administration, the George W. Bush Administration, and, to date, the Obama Administration have taken no position. One lesson from the experience of the notch babies is that almost any change to Social Security benefits can create a notch. Whenever benefits increase or decrease at some specific point along a continuum--most commonly a point defined by date of birth, income, or assets--a notch or "cliff" can result at the point on the continuum where the benefits rise or fall. For example, if benefits are increased for everyone born before (or after) a certain date, a downward notch in benefits will occur for beneficiaries whose date of birth is after (or before) that date. Notches are quite common in means-tested programs, such as Supplemental Security Income (SSI), in which benefits are conditioned on having income or assets under a certain threshold. For example if an aged or disabled person who lives alone has no other income and has assets of less than $2,000, he or she is eligible for a federal SSI benefit of $674 per month in 2011. If he or she has assets of $2,001, then the individual is ineligible for benefits in that month. An alternative to creating a "notch" or "cliff" in benefits would be to phase in the change in benefits over a range, whether it be a range of birth years, a range of income, or a range of assets. The disadvantages of phasing in changes in benefit levels over a range of birth years, income or assets, are that it can target the desired change less precisely and can sometimes raise the total cost of the program. Take, for example, a hypothetical proposal to reduce the deficit of the Social Security trust funds by reducing the benefits of all old-age beneficiaries born after 1969 by 10%. This would create a notch based on one's date of birth. Other things being equal, two retired workers with identical career average earnings who were born one day apart on December 31, 1969 and January 1, 1970, respectively, would have benefits that would differ by 10%. Another alternative would be to phase in the change over a range of birth years. This would replace the notch with a slope. Depending on the specifics of the phase-in, the approach could result in total expenditures that are higher or lower. For example, if the reduction were phased in at the rate of one percentage point per year, beginning with a 1% reduction for those born after December 31, 1960, a 2% reduction for those born after December 31, 1961, etc., there would be no notch, and savings would be greater than under the original proposal. On the other hand, the reduction could be phased in at 1% per year beginning with those born after December 31, 1969. This, too, would eliminate the notch, but total savings would be less than under the original proposal. In summary, a notch or cliff in benefits is a common consequence of conditioning the amount of benefits (or taxes) on an individual's location along a continuum based on date of birth, income, or assets. Notches can be eliminated by phasing in the change in benefits or taxes, but only at the cost of either targeting the change in benefits or taxes less precisely or spending more or less than would occur with a notch or cliff. Over the years, many bills have been introduced in Congress to increase benefits for notch babies, but there has been little legislative action on them. In past Congresses, various attempts were made to gain support for discharge petitions to force the House Ways and Means Committee to report out a bill, but the sponsors were unable to get enough signatures. Notch legislation, however, did reach the Senate floor a number of times. | Some Social Security beneficiaries who were born from 1917 to 1921--the so-called notch babies--believe they are not receiving fair Social Security benefits. (The Social Security Administration (SSA) and a 1994 commission on the notch issue define the notch period as 1917 to 1921, though some advocates define the period as 1917 to 1926.) The notch issue resulted from legislative changes to Social Security during the 1970s. The 1972 Amendments to the Social Security Act first established cost-of-living adjustments (COLAs) for Social Security. This change was intended to adjust benefits for inflation automatically, but an error caused benefits to rise substantially faster than inflation. Congress corrected the error in the 1977 Amendments. However, benefits for those born from 1910 to 1916 were calculated using the flawed formula, giving them unintended windfall benefits. The notch babies, born from 1917 to 1921, became eligible for benefits during the period in which the corrected formula was phased in. For many who retired during in this phase-in period, however, the transition formula did not lessen the differential between their benefits and the windfall benefits received by people born in earlier cohorts. Some notch babies feel it is unfair that their benefits are lower than those received by the older individuals who received the windfall, and also that the transition formula did not do enough to make up the difference. A number of legislative attempts have been made over the years to give notch babies additional benefits, but none have been successful. A congressionally mandated commission studied the issue and concluded in its 1994 report that "benefits paid to those in the 'Notch' years are equitable, and no remedial legislation is in order." Any future change to the Social Security benefit formula has the potential to create a notch. This is an important consideration as lawmakers consider changes to ensure long-term system solvency. | 2,113 | 395 |
Private individuals and firms, often called "contractors" and "subcontractors," have transported mail between postal facilities since at least 1792 (1 Stat. 233), and according to the U.S. Postal Service (USPS), contractors have delivered mail to homes and businesses since 1900. Today, contractors transport mail between postal facilities via land, air, water, and rail. One type of land (i.e., "surface") mail transportation contract is the "highway contract route" (HCR). HCR contracts come in three subtypes. "Transportation" contracts have private "suppliers" transport mail between postal facilities. "Combination" contracts require suppliers to make a small number of mail deliveries in the course of transporting mail between the USPS's facilities. "Contract delivery service" (CDS) contracts compensate suppliers for collecting and delivering mail in rural areas. This latter subtype of contract became the focus of controversy in 2007. The National Association of Letter Carriers (NALC), the union for mail delivery persons, and the USPS signed a collective bargaining agreement in autumn 2006. The agreement covered a wide range of compensation and workplace matters. It included two memoranda of understanding (MOUs) concerning contracting letter carrier work. The MOUs established a six-month moratorium on any new contracting of mail carrier work in post offices employing city carriers. They also pledged the NALC and USPS to create a joint USPS-NALC committee to review existing policies and practices concerning the contracting out of mail delivery. The Committee shall seek to develop a meaningful evolutionary approach to the issue of subcontracting, taking into account the legitimate interests of the parties and relevant public policy considerations. The National Rural Letter Carriers Association (NRLCA), which represents rural delivery persons, also reached a collective bargaining agreement with the USPS in 2006. Its Article 32 carries the following language on the use of contractors to deliver mail: The Employer will give advance notification to the Union at the national level when subcontracting which will have a significant impact on bargaining unit work is being considered and will meet to consider the Union's views on minimizing such impact. No final decision on whether or not such work will be contracted out will be made until the matter is discussed with the Union [....]No expansion of the Employer's current national policy on the use of contract service in lieu of rural carriers will be made except through the provisions of this Article, which are intended to be controlling. The parties recognize that individual problems in this area may be made the subject of a grievance. In 2007, representatives of both NALC and NRLCA alleged that the USPS was expanding its use of CDS carriers. William Young, then-president of the NALC, called upon Congress to "stop the cancer of contracting out before it spreads." Members of the NALC picketed the USPS's national headquarters and post offices in Florida and New Jersey. The USPS denied the unions' accusation, and argued that contract mail delivery was "not new." The USPS also stated that its contracts with the postal unions recognize the USPS's authority to use contractors. Nevertheless, the USPS further noted that "cost pressures, competition, and a changing marketplace demand cost-effective options from the Postal Service." Subsequently, a 2008 Government Accountability Office (GAO) study found that the average annual cost of delivery by a city carrier was nearly twice that of a CDS carrier. Some Members of the 110 th Congress expressed concern about the USPS's practice of hiring contractors to collect and deliver mail. On March 28, 2007, Representative Albio Sires introduced H.Res. 282 , which expressed "the sense of the House of Representatives that the United States Postal Service should discontinue the practice of contracting out mail delivery services." H.Res. 282 was referred to the House Committee on Oversight and Government Reform (HCOGR) and was cosponsored by 256 Members. Not quite two months later, Senator Tom Harkin introduced S. 1457 on May 23, 2007. The bill would have forbidden the USPS from entering "into any contract ... with any motor carrier or other person for the delivery of mail on any route with 1 or more families per mile." The bill would have permitted all existing CDS contracts to remain in effect and to be renewed. S. 1457 was referred to the Senate Committee on Homeland Security and Governmental Affairs and had 38 cosponsors. The HCOGR's Subcommittee on Federal Workforce, Postal Service, and the District of Columbia considered the issue at April and July hearings. Both the NALC and the NRLCA said that contractors should not be trusted to deliver the mail. Three Members present at the July hearing spoke of contractors delivering mail in suburban and city locations, including the Bronx of New York. The NALC stated that private employers--unlike the USPS--are not required to give preference to veterans in hiring. The USPS testified that it was not replacing career carriers with contractors, and that it assigned only new delivery routes to contractors. John Potter, then-Postmaster General, declared that the USPS had "made a commitment for the life of this agreement [with the NALC] not to contract out any city delivery in big cities" and to work with both unions on the use of contractors in suburban and rural areas. The use of contractors to deliver mail also was discussed at a Senate hearing. After lengthy negotiations, the NALC and the USPS signed an MOU in October 2008. This agreement extended through the life of the collective bargaining agreement the moratorium against new CDS contracts in post offices employing city carriers. Additionally, the MOU required any new deliveries to be assigned according to geographic boundaries agreed upon by the NALC, NRLCA, and USPS. That same year, the NRLCA and the USPS worked out their differences over the use of private mail delivery contractors via the grievance process set forth in the NRLCA-USPS collective bargaining agreement. In November 2010, the NRLCA-USPS collective bargaining agreement expired. A year later, the NALC-USPS contract expired. Whether the mail contracting MOUs remain in force is unclear. The USPS and the two unions had negotiations and entered mediation. Unable to settle their differences, the parties went to binding arbitration. The USPS and the NRLCA completed binding arbitration in July 2012. The previous collective bargaining agreement's language regarding the hiring of private contractors to deliver mail was not altered, leaving it unclear whether the USPS and NRLCA have come to a working agreement on this particular issue. The USPS and the NALC entered binding arbitration in June 2012. Arbitration of the USPS-NALC agreement likely will be completed in the coming months. The Postal Reorganization Act of 1970 (PRA; P.L. 91-375; 84 Stat. 725) replaced the U.S. Post Office Department with the USPS, an independent establishment of the executive branch (39 U.S.C. 201). The PRA requires the USPS to "maintain an efficient system of collection, sorting, and delivery of the mail nationwide" (39 U.S.C. 403(b)(1)). To this end, the PRA provides the USPS with considerable discretion over its operations. 39 U.S.C. 5005 authorizes the USPS to "obtain mail transportation service ... by contract from any person or carrier for surface and water transportation under such terms and conditions as it deems appropriate." Additionally, Congress provided the USPS with the authorities to (1) "enter into and perform contracts" (39 U.S.C. 401); (2) "provide for the collection, handling, transportation, delivery, forwarding, returning, and holding of mail" (39 U.S.C. 404(a)(1)); and (3) "establish mail routes and authorize mail transportation service thereon" (39 U.S.C. 5203(a)). However, the PRA also carries provisions relating to USPS employee compensation. For one, the PRA sets a compensation and benefits floor: It shall be the policy of the Postal Service to maintain compensation and benefits for all officers and employees on a standard of comparability to the compensation and benefits paid for comparable levels of work in the private sector of the economy (39 U.S.C. 1003(a)). Additionally, letter carriers are civil servants and, under the PRA, are entitled to wages established through contracts collectively bargained by the USPS and postal unions (39 U.S.C. 1001(b) and 39 U.S.C. 1201 et seq.). The NALC has contended that the USPS's use of CDS carriers instead of USPS mail carriers "violates the spirit of the nation's basic postal law." Using contractors, the union has said, circumvents the collective bargaining process and opens the door for the USPS to replace all career mail carriers with contractors. Hence, the PRA's provisions regarding the USPS's authority to contract and operate an "efficient" system of mail may be at tension with the statute's provision on USPS employee compensation. Between 1998 and 2012, the number of carrier routes served by CDS carriers increased from 5,424 to 9,991, or 84.2% ( Table 1 ). Similarly, over the past 15 years the number of delivery points served by CDS carriers has increased from 1,828,257 to 2,680,140, or 46.6% ( Table 3 ). However, throughout this period, the USPS career city and rural carriers delivered mail on the vast majority of postal carrier routes--not less than 95.6% ( Table 2 ). City and rural carriers also have served at least 98% of the nation's delivery points ( Table 4 ). Thus, although the USPS has increased its use of CDS carriers to deliver mail, these contractors serve on 4.4% of all routes and deliver mail at 2% of all delivery points. Additionally, the data show a shift between the portions of the total routes and deliveries handled by city and rural letter carriers. The percentage of routes served by rural carriers has grown from 26.5% to 32.4%, while the percentage of routes served by city carriers has declined from 71.2% to 63.2%. Additionally, the percentage of delivery points served by rural carriers has increased from 25.4% to 30.7%; whereas the percentage of delivery points served by city carriers has decreased from 73.0% to 67.3%. Current postal law requires the USPS to operate an "efficient" system of mail and provides the USPS with various authorities to achieve this objective. However, the law also sets a pay and compensation floor for USPS employees and requires the USPS to collectively bargain with its employees. These aspects of postal law come into conflict in the matter of the USPS using private persons or firms to deliver mail. The data above indicate that the USPS has increased its use of contractors over the past 15 years. Yet, the data also indicate that contractors serve only a very small percentage of carrier routes and deliver to very few homes and businesses. Whether the use of private persons and firms to deliver mail will arise as an issue of interest to Congress is unclear. The USPS, NALC, and NRLCA may settle the matter through arbitration and ensuing memoranda of understanding. In the event that the use of contractors cannot be settled through the parties themselves, there are at least two broad perspectives that might be taken on the situation. First, it might be argued that Congress should take no action. Historically, Congress has not enacted specific policies concerning the extent of the USPS's use of contractors to deliver mail. It has left the matter to be decided by the Postal Service and its letter carrier unions through collective bargaining and the grievance process. Congress may continue this practice, reasoning that the USPS has legitimate grounds to pursue cost-savings via the use of contractors. Indeed, it might be further contended that the use of contractors to deliver mail is in keeping with long-time USPS practices. Contractors have been used to collect, transport, sort, and deliver mail; and machines built by private firms do much of the mail sorting work once performed by USPS employees. Letter carriage would not appear to be an inherently governmental function under current procurement policy, so the USPS should be free to outsource this work as it deems proper. Second and alternately, Congress may choose to intervene, viewing the issue as involving an unintended conflict arising out of two national policies--USPS operational efficiency and the rights of unionized, federal employees. From this perspective, it could be argued that the USPS is supposed to be a self-supporting agency; but that does not necessitate that the USPS should be permitted to outsource however much postal work it chooses. It might be further argued that there is a positive societal benefit in the federal government hiring individuals (often minorities and veterans) and compensating them well. Thus, Congress might either ban the practice of using contractors to deliver mail (or perform other mail-movement activities); or it could limit the amount of mail delivery work performed by contractors--perhaps by capping the percentage of routes served by non-USPS employees. Were Congress either to ban or limit the use of contractors, it might wish to consider helping the USPS recoup any lost savings by providing it with additional authorities to increase its revenues or decrease its operating costs. | Recently, the U.S. Postal Service (USPS) has been in negotiations with the National Association of Letter Carriers (NALC) and National Rural Letter Carriers Association (NRLCA). One issue that may or may not be settled is the Postal Service's use of non-USPS employees (i.e., contractors) to deliver mail. If the parties cannot come to a satisfactory arrangement, Congress may be approached to consider the matter. Contractors have delivered mail to homes and businesses since 1900. Controversy over this practice arose in 2007 when the NALC alleged that the USPS had expanded the use of contractors into city areas at the expense of unionized membership. Congress held hearings on the matter, and legislation was introduced in both houses. The USPS and NALC came to a memorandum of understanding (MOU) in October 2008 to govern the practice, which appeared to quell the controversy. However, the issue was reopened when USPS's collective bargaining agreements with the NRLCA and the NALC expired in 2010 and 2011, respectively. At present, it is unclear whether the parties have come to mutually agreeable arrangements concerning the use of contactors to deliver mail. By law, the USPS is obliged to provide for an "efficient" system of mail delivery. Federal statute provides the USPS with considerable freedom to enter into contracts with private parties. Wage-earning contractors cost less to employ than wage- and benefits-earning USPS employees. However, federal law also requires the USPS to collectively bargain its employees' compensation. Thus, a conflict arises between these competing legal imperatives when the USPS employs a contractor to perform work that was or could be performed by a postal employee. The USPS has increased its use of contractors in recent years, but USPS employees continue to serve 98% of all U.S. homes and businesses. This report will be updated as developments warrant. | 2,939 | 420 |
This report briefly summarizes the history of FutureGen, discusses why it has gained interest and support from some Members of Congress and the Administration while remaining in initial stages of development, and offers some policy considerations on barriers that challenge its further development as a model for a CCS program. A timeline history of FutureGen is found at the end of this report. FutureGen is a clean-coal technology program managed through a public-private partnership between the U.S. Department of Energy (DOE) and the FutureGen 2.0 Industrial Alliance. The FutureGen program as originally conceived in 2003 by the George W. Bush Administration had the intent of constructing a net zero-emission fossil-fueled power plant with carbon capture and sequestration (CCS) technology. CCS is a process envisioned to capture carbon dioxide (CO 2 )--a greenhouse gas associated with climate change--emitted from burning fossil fuels and store it in deep underground geologic formations, thus preventing its release into the atmosphere. If widely deployed in the United States, CCS could decrease the amount of U.S.-emitted CO 2 . In 2008, DOE withdrew from the FutureGen partnership, citing rising costs of construction as its reason. Subsequently, DOE restructured the FutureGen program to instead develop two or three demonstration projects at different power plants around the country. In 2010, the Obama administration announced another change to the program with the introduction of FutureGen 2.0, which would retrofit an existing fossil fuel power plant in Illinois with CCS technology. The FutureGen project was originally conceived as a cost-share between the federal government, which would cover 76% of the cost, and the private sector, which would provide the remaining 24%. Between FY2004 and FY2008, Congress appropriated $174 million to the original FutureGen project. DOE obligated $44 million and expended $42 million between FY2005 and FY2010 toward the original project. Under the Obama Administration, Congress appropriated almost $1 billion in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) for FutureGen 2.0. Furthermore, DOE has obligated nearly $60 million but has expended $2 million from regular appropriations to FutureGen 2.0 since FY2010. Together with the approximately $74 million expended on the project from ARRA funding (discussed below), total expenditures for FutureGen since its conception were between $110 and $120 million as of early 2014. The FutureGen Industrial Alliance estimated the total cost of the FutureGen 2.0 program to be nearly $1.3 billion, with $730 million used toward retrofitting and repowering Ameren Corporation's power plant in Meredosia, Illinois, and $550 million used for the construction of a CO 2 pipeline, storage site, and training and research center. In 2011, they estimated that the project would create approximately 1,000 construction jobs and another 1,000 jobs for suppliers across the state. A 2013 report from the University of Illinois predicted that the project could create an average of 620 permanent jobs for 20 years and approximately $12 billion of business volume by 2037 for the state of Illinois. Current scientific research associates an increase in atmospheric GHGs (in particular CO 2 , methane, and nitrous oxides), which trap heat in the earth's atmosphere, with the potential for changing the Earth's climate. The increase in the atmospheric concentration of CO 2 in the 20 th and 21 st centuries is due almost entirely to human activities. If successful, FutureGen 2.0 would demonstrate a technology that, if widely deployed, could capture a significant fraction of U.S. CO 2 emissions for geologic sequestration. DOE's Office of Fossil Energy directs three major CCS programs: the Clean Coal Power Initiative (CCPI), Industrial Carbon Capture and Storage (ICCS), and FutureGen 2.0. Through its CCPI program, DOE partners with industry leaders in a cost-share arrangement to develop new CCS technologies for power plant utilities in order to reduce greenhouse gas emissions by boosting plant efficiencies and capturing CO 2 . Of the six projects selected under the most recent funding for CCPI (Round 3), three have withdrawn, citing concerns over costs and regulations. DOE's share for the three active projects is $1.0 billion of a total $6.1 billion, approximately 17%. DOE is also partnering with industry for 31 projects in the ICCS program, which supports R&D in a non-utility large-scale industrial CCS program and a program to support beneficial CO 2 use. The combined total DOE share for all the ICCS projects is $1.422 billion of a total $2.0 billion, approximately 70%. FutureGen 2.0 is DOE's most comprehensive CCS demonstration project, combining all three aspects of CCS technology: capturing and separating CO 2 from other gases, compressing and transporting CO 2 to the sequestration site, and injecting CO 2 in geologic formations. In October 2010, FutureGen 2.0 developers began working on Phase 1 of the project with the Pre-Front End Engineering Design (Pre-FEED) report, which included plant design, estimated project cost, and basis for applying for National Environmental Policy Act (NEPA) review and other state and local permits. The report showed that the estimated price for FutureGen 2.0 had increased from $1.3 billion to $1.65 billion. Subsequently, cost reduction measures were identified and implemented, including establishing the plant gross output at 168 MW (the steam turbine is nominally rated at 200 MW), and using a combination of 60% Illinois coal and 40% Powder River Basin (PRB) coal to reduce sulfur and chlorine emissions. Also, in late 2011 Ameren announced it was closing its power plant in Meredosia, Illinois, and discontinuing its cooperative agreement with DOE. Following that announcement, the project was redesigned to reflect that the Alliance would take control of the capture process as well as the transportation and storage site. The Alliance is currently negotiating the purchase of parts of the Meredosia Energy Center from Ameren to continue with project development. Figure 1 shows the location of the town of Meredosia, Illinois, the proposed pipeline route, and the proposed carbon sequestration site where the captured CO 2 would be injected underground and stored. Throughout the summer and fall of 2012, the project continued to confront rising cost estimates, as well as challenges in negotiating a long-term power purchasing agreement with the state of Illinois. However, the project has achieved several milestones since 2012 that could favor its future progress. In late December 2012, the Illinois Commerce Commission voted 3-2 to approve a power procurement plan for the state that requires utilities to purchase all the electricity generated by the FutureGen 2.0 facility for 20 years. That decision cleared a major hurdle for FutureGen 2.0, and the decision allows Commonwealth Edison and Ameren Illinois to collect costs for the project from the state's alternative retail electric suppliers. Opposition to the power procurement proposal stemmed primarily from those opposed to its potential to raise costs for retail customers. In February 2013, DOE approved the start of Phase 2 of the project, which includes final permitting and design activities that precede a decision to begin construction. The project faced delays while it was being redesigned following the release of the Pre-FEED report; however, the FEED activities resulted in a 70%-90% design completion for the project, which is better than the industry standard of about 25%, according to the FutureGen 2.0 Industrial Alliance. On October 25, 2013, DOE issued the final environmental impact statement (EIS) for FutureGen 2.0. The proposed action in the EIS is for DOE to provide funding of approximately $1 billion to the FutureGen 2.0 Industrial Alliance to support the completion of Phase 2--preliminary and final design for the project--followed by construction and commissioning (Phase 3) and operations (Phase 4). On November 30, 2013, EPA published a notice of availability in the Federal Register , and on January 16, 2014, DOE issued a favorable record of decision (ROD), as part of the NEPA process. Issuance of the ROD clears the last hurdle in the NEPA process, and reportedly allows the FutureGen 2.0 Industrial Alliance to move forward pending approval of a permit to install the CO 2 injection wells and meeting financial requirements." After more than 10 years and two restructuring efforts since FutureGen's inception, the project is still in its early development stages. Although the FutureGen 2.0 Industrial Alliance completed drilling a characterization well at the storage site in Morgan County, IL, and installed a service rig over the well for further geologic analysis, issues with the power plant itself have not yet been resolved. Among the remaining challenges are securing private sector funding to meet increasing costs, purchasing the Meredosia power plant from Ameren, obtaining permission from the DOE to retrofit the plant, performing the retrofit, and then meeting the goal of 90% capture of CO 2 . In addition, the Alliance is awaiting approval for a Class VI well permit for the injection and sequestration wells. Increasing projected costs have posed significant problems for FutureGen's development since 2003. Confronted with increasing projected costs in 2008, DOE under the George W. Bush Administration first restructured FutureGen, then postponed the program when cost projections rose from $950 million to $1.8 billion. When Secretary of Energy Steven Chu announced the new FutureGen 2.0 in 2010, the cost was estimated at $1.3 billion, with the DOE covering 80% of costs and industry partners contributing the remaining 20% of the total. Initially, FutureGen 2.0 was to be implemented through two separate cooperative agreements, with approximately $590 million of ARRA funds allocated to Ameren Corporation to retrofit a power plant and approximately $459 million of ARRA funds to the FutureGen 2.0 Industrial Alliance to implement a pipeline and regional CO 2 storage reservoir project. According to the FutureGen 2.0 Industrial Alliance, total capital costs for the FutureGen 2.0 project are estimated to be $1.65 billion. The Alliance is expected to cover the additional cost beyond the original cost estimate for FutureGen 2.0. Rising costs of construction may continue to be a challenge to the project's development. Some projections for FutureGen predict construction on the power plant, pipeline, and storage facility will conclude by 2017. A looming question is whether the FutureGen 2.0 Alliance will have sufficient time to expend the nearly $995 million of ARRA funding appropriated by Congress for the project before it expires on September 30, 2015. As of October 2013, the FutureGen 2.0 Alliance has expended about $73.97 million, or about 7.4%, of the total $994,729,000 appropriated under ARRA. Once construction begins, the rate of spending will undoubtedly increase. Now that the DOE ROD has been issued, it is likely that construction will begin sometime in spring or early summer of 2014. But even if construction began as early as March 2014, the project would need to spend approximately $921 million over 19 months, or about $48 million per month until the end of September 2015 to exhaust all the ARRA funding. According to the investigatory work of one industry observer, using documents obtained from DOE under a Freedom of Information Act request, DOE would grant the Alliance the flexibility to accelerate the cost-share and expend the ARRA-provided funding to cover capital costs before using private funds from the Alliance to cover its portion of the cost-share. According to the report, DOE would require an increased level of oversight over the project to safeguard the public investment in the project. Further, DOE would have the ability to suspend or terminate funding if the project failed to demonstrate sufficient progress. The partnership between the federal government and the private sector in funding and developing FutureGen has been marked by a series of setbacks and challenges. Some critics of the public-private partnership attribute the project's decade-long stasis to a lack of incentives for industry leaders to invest seriously in clean coal technologies. A report released by the Massachusetts Institute of Technology in 2007 stated that government investment and leadership in carbon capture technologies are necessary: "Given the technical uncertainty and the current absence of a carbon charge, there is no economic incentive for private firms to undertake such projects." Since the MIT report was published, Congress has appropriated nearly $7 billion in CCS research and development (R&D), including FutureGen; however, Congress has not enacted any form of a "carbon charge," through either a cap-and-trade system or a carbon tax. Ameren Corporation, which partnered with DOE to retrofit its power plant in Meredosia, IL, for FutureGen 2.0, discontinued operations at the Meredosia Energy Center where the plant is located, stating that it would not be able to afford the costs to comply with air pollution rules issued in July 2011 by the EPA to reduce sulfur dioxide and nitrogen oxide. In addition to the FutureGen project, DOE partnered with industry for six other commercial-scale CCS projects through its Clean Coal Power Initiative (CCPI) program. The 2010 DOE Strategic Plan report predicted that at least five of DOE's major CCS projects would become operational by 2016. Since the report was released, three of the six industry partners of CCPI projects have pulled out of agreements with DOE. The departure of several industry leaders from contracts with DOE demonstrates the volatility of the public-private partnership model. On September 20, 2013, the U.S. Environmental Protection Agency (EPA) re-proposed a standard that would limit emissions of carbon dioxide (CO 2 ) from new fossil-fueled power plants. As re-proposed, the rule would limit emissions to no more than 1,100 pounds per megawatt-hour of production from new coal-fired power plants and between 1,000 and 1,100 pounds per megawatt-hour (depending on size of the plant) for new natural gas-fired plants. EPA proposed the standard under Section 111 of the Clean Air Act. According to EPA, new natural gas-fired stationary power plants should be able to meet the proposed standard without additional cost and the need for add-on control technology. However, new coal-fired plants would be able to meet the standard only by installing carbon capture and sequestration (CCS) technology to capture about 40% of the CO 2 they typically produce. The proposed standard allows for a seven-year compliance period for coal-fired plants but would demand a more stringent standard for those plants that limits CO 2 emissions to an average of 1,000-1,050 pounds per megawatt-hour. On January 8, 2014, EPA published the re-proposed rule in the Federal Register . Publishing in the Federal Register triggers the start of a 60-day public comment period: comments will be accepted until March 10, 2014. The initial 2012 proposal generated more than 2.5 million comments, which prompted, in part, the September 20, 2013, re-proposal. Promulgation of the final rule could be expected sometime after the public comment period ends and EPA evaluates the comments. The re-proposed rule would address only new power plants. However, Section 111 of the Clean Air Act requires that EPA develop standards for greenhouse gas emissions for existing plants whenever it promulgates standards for new power plants. In his June 25, 2013, memorandum, President Obama directed the EPA to issue proposed standards for existing plants by June 1, 2014, and to issue final rules a year later. Given the pending EPA rule, congressional interest in the future of coal as a domestic energy source appears directly linked to the future of CCS. The history of CCS research, development, and deployment (RD&D) at DOE and the pathway of its signature program--FutureGen--invite questions about whether DOE-funded RD&D will enable widespread deployment of CCS in the United States within the next decade. When EPA first proposed a new rule regulating GHG emissions from power plants that would likely require CCS, Congress considered legislation to block the new regulations. For example, the Subcommittee on Energy and Power of the House Science, Space, and Technology Committee held a hearing on June 19, 2012, where opponents of the new rule, including FutureGen Alliance Chairman Steven E. Winberg, criticized the regulations: "In effect, EPA's rule will eliminate any new coal for years to come because EPA is requiring new coal-fueled power plants to meet a natural gas equivalent CO 2 standard, before CCS technology is commercially available." Following the September 20, 2013, re-proposal of the rule, the debate has been mixed as to whether the rule would spur development and deployment of CCS for new coal-fired power plants or have the opposite effect. Multiple analyses indicate that there will be retirements of U.S. coal-fired capacity; however, virtually all analyses agree that coal will continue to play a substantial role in electricity generation for decades. How many retirements would take place and the role of EPA regulations in causing them are matters of dispute. Since the September 2013 re-proposal, the argument over the rule has focused, in part, on whether CCS is the best system of emissions reduction (BSER) for coal plants and whether it has been "adequately demonstrated" as such, as required under the Clean Air Act. In its re-proposed rule, EPA cites the "existence and apparent ongoing viability" of several ongoing CCS demonstration projects as examples that justify a separate determination of BSER for coal-fired plants and integrated gasification combined-cycle plants. (The second BSER determination is for gas-fired power plants.) The EPA noted that these projects had reached advanced stages of construction and development, "which suggests that proposing a separate standard for coal-fired units is appropriate." FutureGen 2.0 was not included as one of the projects used to justify the proposed rule, despite its 10-year long history and more than $1 billion in committed federal support. Its omission from the EPA re-proposed rule further reinforces FutureGen's status as a CCS project in the early stages of development. The huge increase in the U.S. domestic supply of natural gas, due largely to the exploitation of unconventional shale gas reservoirs through the use of hydraulic fracturing, has also led to a shift to natural gas for electricity production. The shift appears to be largely due to the cheaper and increasingly abundant fuel--natural gas--compared to coal for electricity production. The EPA re-proposed rule, discussed above, noted that "power companies often choose the lowest cost form of generation when determining what type of new generation to build. Based on [Energy Information Administration] modeling and utility [Integrated Resource Plans], there appears to be a general acceptance that the lowest cost form of new power generation is [natural gas combined-cycle]." Cheap gas, due to the rapid increase in the domestic natural gas supply as an alternative to coal, in combination with regulations that curtail CO 2 emissions, may lead electricity producers to invest in natural gas-fired plants, which emit approximately half the amount of CO 2 per unit of electricity produced compared to coal-fired plants. Regulations and abundant cheap gas may raise questions about the rationale for CCS demonstration projects like FutureGen. Alternatively, and despite increasingly abundant domestic natural gas supplies, EPA regulations could provide the necessary incentives for the industry to accelerate CCS development and deployment for coal-fired power plants. As part of its re-proposed ruling, EPA cites technology as one of four factors that it considers in making a BSER determination. Specifically, EPA stated that it "considers whether the system promotes the implementation and further development of technology," in this case referring to CCS technology. It appears that EPA asserts that its rule would likely promote CCS development and deployment rather than hinder it. Those arguing against the re-proposed rule do so on the basis that CCS technology has not been adequately demonstrated, and that it violates provisions in P.L. 109-58 , the Energy Policy Act of 2005, that prohibit EPA from setting a performance standard based on the use of technology from certain DOE-funded projects, such as the three projects cited in the EPA re-proposal, among other reasons. On January 9, 2014, Representative Whitfield and 62 cosponsors introduced H.R. 3826 , the Electricity Security and Affordability Act, which would essentially impose a number of requirements to be met before EPA could issue greenhouse gas emission regulations under Section 111 of the Clean Air Act, such as the EPA re-proposed rule discussed above. On January 14, 2014, the Energy and Power subcommittee, House Energy and Commerce committee, voted to report the bill. Much of the discussion during the bill's markup centered on whether CCS was an adequately demonstrated technology to meet the requirements of the Clean Air Act. Congressional consideration of CCS has focused on balancing competing national interests, such as fostering low-cost domestic sources of energy like coal versus reducing greenhouse gas (GHG) emissions in the atmosphere. Legislative proposals during the 109 th and 110 th Congresses focused on advancing carbon capture technologies that reduce CO 2 emissions to mitigate GHG-induced global warming. Congress began appropriating funds specifically for FutureGen beginning in 2005. Previously, DOE had allocated funds under its Clean Coal Power Initiative (CCPI) program. With the American Recovery and Reinvestment Act of 2009, Congress appropriated approximately $1 billion for the FutureGen 2.0 project. The revival of FutureGen under the Obama Administration as FutureGen 2.0 has sparked increased scrutiny of the future of integrated CCS technology on a commercially viable scale. FutureGen was originally proposed to demonstrate the feasibility of using CCS technology to mitigate CO 2 emissions into the atmosphere. Among the challenges that continue to influence the development of FutureGen 2.0 are rising costs of construction, ongoing issues with project development, lack of incentives for investment from the private sector, and time constraints on project development. Despite congressional and Obama Administration commitments to the FutureGen 2.0 project, particularly the $1.0 billion appropriation from ARRA, questions remain as to whether or not FutureGen 2.0 will succeed. The Congressional Budget Office (CBO) published a report in June 2012 stating that the success of CCS technology depends on reducing technical costs, ensuring the effectiveness of CCS, and adopting policies that provide incentives for industry to pursue the high-cost demonstration technologies. The report explained that if regulations, tax credits, or policies such as carbon taxation or cap-and-trade that increase the price of electricity from conventional power plants are adopted, then CCS technology may become competitive enough for private sector investment. Even then, industry may choose to forgo coal-fueled plants for natural gas or other sources that emit less CO 2 compared to coal, according to CBO. The timeline that follows shows a chronology of the history of FutureGen since 2003. | More than a decade after the George W. Bush Administration announced its signature clean coal power initiative--FutureGen--the program is still in early development. Since its inception in 2003, FutureGen has undergone changes in scope and design. As initially conceived, FutureGen would have been the world's first coal-fired power plant to integrate carbon capture and sequestration (CCS) with integrated gasification combined cycle (IGCC) technologies. FutureGen would have captured and stored carbon dioxide (CO2) emissions from coal combustion in deep underground saline formations and produced hydrogen for electricity generation and fuel cell research. Increasing costs of development, among other considerations, caused the Bush Administration to discontinue the project in 2008. In 2010, under the Obama Administration, the project was restructured as FutureGen 2.0: a coal-fired power plant that would integrate oxy-combustion technology to capture CO2. FutureGen 2.0 is the U.S. Department of Energy's (DOE) most comprehensive CCS demonstration project, combining all three aspects of CCS technology: capturing and separating CO2 from other gases, compressing and transporting CO2 to the sequestration site, and injecting CO2 in geologic formations for permanent storage. Congressional interest in CCS technology centers on balancing the competing national interests of fostering low-cost, domestic sources of energy like coal against mitigating the effects of CO2 emissions in the atmosphere. FutureGen 2.0 would address these interests by demonstrating CCS technology as commercially viable. Among the challenges to the development of FutureGen 2.0 are rising costs of production, ongoing issues with project development, lack of incentives for investment from the private sector, and time constraints. Further, FutureGen's development would need to include securing private sector funding to meet increasing costs, purchasing the power plant for the project, obtaining permission from DOE to retrofit the plant, performing the retrofit, and then meeting the goal of 90% capture of CO2. The FutureGen project was conceived as a public-private partnership between industry and DOE with agreements for cost-share and cooperation on development, demonstration, and deployment of CCS technology. The public-private partnership has been criticized for leading to setbacks in FutureGen's development, since the private sector lacks incentives to invest in costly CCS technology. Regulations, tax credits, or policies such as carbon taxation or cap-and-trade that increase the price of electricity from conventional power plants may be necessary to make CCS technology competitive enough for private sector investment. Even then, industry may choose to forgo coal-fired plants for other sources of energy that emit less CO2, such as natural gas. However, Congress signaled its support for FutureGen 2.0 via the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) by appropriating almost $1 billion for the project. ARRA funding will expire on September 30, 2015, and it remains a question whether the project will expend all of its federal funding before that deadline. A proposed rule by the Environmental Protection Agency (EPA) to limit CO2 emissions from new fossil-fuel power plants may provide some incentive for industry to invest in CCS technology. The debate has been mixed as to whether the rule would spur development and deployment of CCS for new coal-fired power plants or have the opposite effect. Multiple analyses indicate that there will be retirements of U.S. coal-fired capacity; however, virtually all analyses agree that coal will continue to play a substantial role in electricity generation for decades. The rapid increase in the domestic natural gas supply as an alternative to coal, in combination with regulations that curtail CO2 emissions, may lead electricity producers to invest in natural gas-fired plants, which emit approximately half the amount of CO2 per unit of electricity produced compared to coal-fired plants. | 4,989 | 826 |
To be legally obscene, and therefore unprotected by the First Amendment, pornography must, at a minimum, "depict or describe patently offensive 'hard core' sexual conduct." The Supreme Court has created the three-part Miller test to determine whether a work is obscene. The Miller test asks (a) whether the "average person applying contemporary community standards" would find that the work, taken as a whole, appeals to the prurient interest; (b) whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable state law; and (c) whether the work, taken as a whole, lacks serious literary, artistic, political, or scientific value. In Pope v. Illinois , the Supreme Court clarified that "the first and second prongs of the Miller test--appeal to prurient interest and patent offensiveness--are issues of fact for the jury to determine applying contemporary community standards." However, as for the third prong, "[t]he proper inquiry is not whether an ordinary member of any given community would find serious literary, artistic, political, or scientific value in allegedly obscene material, but whether a reasonable person would find such value in the material, taken as a whole." In Brockett v. Spokane Arcades , the Supreme Court held that material is not obscene if it "provoke[s] only normal, healthy sexual desires." To be obscene it must appeal to "a shameful or morbid interest in nudity, sex, or excretion." The Communications Decency Act of 1996 ( P.L. 104 - 104 , SS 507) expanded the law prohibiting interstate commerce in obscenity (18 U.S.C. SSSS 1462, 1465) to apply to the use of an "interactive computer service" for that purpose. It defined "interactive computer service" to include "a service or system that provides access to the Internet." 47 U.S.C. SS 230(e)(2). These provisions were not affected by the Supreme Court's decision in Reno v. ACLU declaring unconstitutional two provisions of the CDA that would have restricted indecency on the Internet. In Reno , the Court noted, in dictum, that "the 'community standards' criterion as applied to the Internet means that any communication available to a nationwide audience will be judged by the standards of the community most likely to be offended by the message." This suggested that, at least with respect to material on the Internet, the Court might replace the community standards criterion, except perhaps in the case of Internet services where the defendant makes a communication available only to subscribers and can thereby restrict the communities in which he makes a posting accessible. Subsequently, however, the Court held that the use of community standards does not by itself render a statute banning "harmful to minors" material on the Internet unconstitutional. Child pornography is material "that visually depict[s] sexual conduct by children below a specified age." It is unprotected by the First Amendment even when it is not obscene (i.e., child pornography need not meet the Miller test to be banned). The reason that child pornography is unprotected is that it "is intrinsically related to the sexual abuse of children.... Indeed, there is no serious contention that the legislature was unjustified in believing that it is difficult, if not impossible, to halt the exploitation of children by pursuing only those who produce the photographs and movies." Federal law bans interstate commerce (including by computer) in child pornography (18 U.S.C. SSSS 2252, 2252A), defines "child pornography" as "any visual depiction" of "sexually explicit conduct" involving a minor, and defines "sexually explicit conduct" to include not only various sex acts but also the "lascivious exhibition of the genitals or pubic area of any person." 18 U.S.C. SS 2256. In 1994, Congress amended the child pornography statute to provide that "lascivious exhibition of the genitals or pubic area of any person" "is not limited to nude exhibitions or exhibitions in which the outlines of those areas were discernible through clothing." 18 U.S.C. SS 2252 note. Then, in the Child Pornography Prevention Act of 1996 (CPPA), Congress enacted a definition of "child pornography" that included visual depictions that appear to be of a minor, even if no minor was actually used. 18 U.S.C. SS 2256(8). The statute thus banned visual depictions using adult actors who appear to be minors, as well as computer graphics and drawings or paintings done without any models. In Ashcroft v. Free Speech Coalition , the Supreme Court declared the CPPA unconstitutional to the extent that it prohibited pictures that were not produced with actual minors. Child pornography, to be unprotected by the First Amendment, must either be obscene or depict actual children engaged in sexual activity (including "lascivious" poses), or actual children whose images have been "morphed" to make it appear that the children are engaged in sexual activity. The Court observed in Ashcroft that statutes that prohibit child pornography that use real children are constitutional because they target "[t]he production of the work, not the content." The CPPA, by contrast, targeted the content, not the means of production. The government's rationales for the CPPA included that "[p]edophiles might use the materials to encourage children to participate in sexual activity" and might "whet their own sexual appetites" with it, "thereby increasing ... the sexual abuse and exploitation of actual children." The Court found these rationales inadequate because the government "cannot constitutionally premise legislation on the desirability of controlling a person's private thoughts" and "may not prohibit speech because it increases the chance an unlawful act will be committed 'at some indefinite future time.'" The government also argued that the existence of "virtual" child pornography "can make it harder to prosecute pornographers who do use real minors," because, "[a]s imaging technology improves ... it becomes more difficult to prove that a particular picture was produced using actual children." This rationale, the Court found, "turns the First Amendment upside down. The Government may not suppress lawful speech as a means to suppress unlawful speech." In response to Ashcroft , Congress enacted Title V of the PROTECT Act, P.L. 108 - 21 (2003), which prohibits any "digital image, computer image, or computer-generated image that is, or is indistinguishable from, that of a minor engaging in sexually explicit conduct." It also prohibits "a visual depiction of any kind, including a drawing, cartoon, sculpture, or painting, that ... depicts a minor engaging in sexually explicit conduct," and is obscene or lacks serious literary, artistic, political, or scientific value. It also makes it a crime to advertise, promote, present, distribute, or solicit any material in a manner that reflects the belief, or that is intended to cause another to believe, that the material is child pornography that is obscene or that depicts an actual minor. The Adam Walsh Child Protection and Safety Act of 2006 ( P.L. 109 - 248 ) amended 18 U.S.C. SS 2257, which requires by producers of material that depicts actual sexually explicit conduct to keep records of every performers' name and date of birth; it also enacted 18 U.S.C. SS 2257A, which requires essentially the same thing with respect to simulated sexual conduct. The Effective Child Pornography Prosecution Act of 2007 ( P.L. 110 - 358 , Title I) and the Enhancing the Effective Prosecution of Child Pornography Act of 2007 ( P.L. 110 - 358 , Title II) expanded existing law by, among other things, making it applicable to intrastate child pornography violations that affect interstate or foreign commerce. P.L. 110 - 358 was signed into law on October 8, 2008. The Federal Communications Commission defines "indecent" material as material that "describe[s] or depict[s] sexual or excretory organs or activities" in terms "patently offensive as measured by contemporary community standards for the broadcast media." Indecent material is protected by the First Amendment unless it constitutes obscenity or child pornography. Except on broadcast radio and television, indecent material that is protected by the First Amendment may be restricted by the government only "to promote a compelling interest" and only by "the least restrictive means to further the articulated interest." The Supreme Court has "recognized that there is a compelling interest in protecting the physical and psychological well-being of minors. This interest extends to shielding minors from the influence of literature that is not obscene by adult standards." There are federal statutes in effect that limit, but do not ban, indecent material transmitted via telephone, broadcast media, and cable television. There are also many state statutes that ban the distribution to minors of material that is "harmful to minors." Material that is "harmful to minors" under these statutes tends to be defined more narrowly than material that is "indecent," in that material that is "harmful to minors" is generally limited to material of a sexual nature that has no serious value for minors. The Supreme Court has upheld New York's "harmful to minors" statute. In 1997, the Supreme Court declared unconstitutional two provisions of the Communications Decency Act of 1996 that would have prohibited indecent communications, by telephone, fax, or e-mail, to minors, and would have prohibited use of an "interactive computer service" to display indecent material "in a manner available to a person under 18 years of age." This latter prohibition would have banned indecency from public (i.e., non-subscription) websites. The CDA was succeeded by the Child Online Protection Act (COPA), P.L. 105 - 277 (1998), which differs from the CDA in two main respects: (1) it prohibits communication to minors only of "material that is harmful to minors," rather than material that is indecent, and (2) it applies only to communications for commercial purposes on publicly accessible websites. "Material that is harmful to minors" is defined as material that (A) is prurient, as determined by community standards, (B) "depicts, describes, or represents, in a manner patently offensive with respect to minors," sexual acts or a lewd exhibition of the genitals or post-pubescent female breast, and (C) "lacks serious literary, artistic, political, or scientific value for minors." COPA never took effect because, in 2007, a federal district court found it unconstitutional and issued a permanent injunction against its enforcement; in 2008, the U.S. Court of Appeals affirmed, finding that COPA "does not employ the least restrictive alternative to advance the Government's compelling interest" and is also vague and overbroad. In 2009, the Supreme Court declined to review the case. In 2003, at the Golden Globe Awards, the singer Bono, in response to winning an award, said, "this is really, really f[***]ing brilliant." The FCC found the word to be indecent, even when used as a modifier, because, "given the core meaning of the 'F-Word,' any use of that word or a variation, in any context, inherently has a sexual connotation." The question arises whether this ruling is consistent with the First Amendment, in light of the fact that the Supreme Court has left open the question whether broadcasting an occasional expletive would justify a sanction. In 2006, the FCC took action against four other television broadcasts that contained fleeting expletives, but on June 4, 2007, the U.S. Court of Appeals for the Second Circuit found "that the FCC's new policy regarding 'fleeting expletives' is arbitrary and capricious under the Administrative Procedure Act." The Supreme Court, however, reversed, finding that the FCC's explanation of its decision was adequate; it left open the question whether censorship of fleeting expletives violates the First Amendment. In 2008, the U.S. Court of Appeals for the Third Circuit overturned the FCC's fine against CBS broadcasting station affiliates for broadcasting Janet Jackson's exposure of her breast for nine-sixteenths of a second during a SuperBowl halftime show. The court found that the FCC had acted arbitrarily and capriciously in finding the incident indecent; the court did not address the First Amendment question. The Supreme Court, later, vacated and remanded the Third Circuit's decision in light of its ruling in Fox Television Stations, Inc. v. FCC , discussed above. CIPA restricts access to obscenity, child pornography, and material that is "harmful to minors," and so is discussed here separately. CIPA amended three federal statutes to provide that a school or library may not use funds it receives under these statutes to purchase computers used to access the Internet, or to pay the direct costs of accessing the Internet, and may not receive universal service discounts, unless the school or library enforces a policy to block or filter minors' Internet access to images that are obscene, child pornography, or harmful to minors; and enforces a policy to block or filter adults' Internet access to visual depictions that are obscene or child pornography. It provides, however, that filters may be disabled "for bona fide research or other lawful purposes." In 2003, the Supreme Court held CIPA constitutional. A plurality opinion acknowledged "the tendency of filtering software to 'overblock'--that is, to erroneously block access to constitutionally protected speech that falls outside the categories that software users intend to block." It found, however, that, "[a]ssuming that such erroneous blocking presents constitutional difficulties, any such concerns are dispelled by the ease with which patrons may have the filtering software disabled." The plurality also found that CIPA does not deny a benefit to libraries that do not agree to use filters; rather, the statute "simply insist[s] that public funds be spent for the purposes for which they were authorized." | The First Amendment provides that "Congress shall make no law ... abridging the freedom of speech, or of the press." The First Amendment applies to pornography, in general. Pornography, here, is used to refer to any words or pictures of a sexual nature. There are two types of pornography to which the First Amendment does not apply, however. They are obscenity and child pornography. Because these are not protected by the First Amendment, they may be, and have been, made illegal. Pornography and "indecent" material that are protected by the First Amendment may nevertheless be restricted in order to limit minors' access to them. | 3,337 | 145 |
RS21353 -- New Partnership for Africa's Development (NEPAD) Updated April 30, 2003 The New Partnership for Africa's Development (NEPAD), described as a multi-sector sustainable development policy framework, was collectively formulatedand promoted by leading African heads of state. It was endorsed and adopted in mid-2001 by the Organization ofAfrican Unity (OAU), founded in 1963 duringthe decolonization era, and later also endorsed by the African Union, which in July 2002 superseded the OAU. (1) NEPAD seeks to reduce poverty and increaseeconomic growth across Africa, in part by improving the policy-making and implementation capacities of Africanstates. It has won the support of many Africanleaders and regional inter-governmental organizations, and has been generally well-received by leaders ofinternational multilateral organizations and the Groupof Eight (G-8). NEPAD is based on a policy blueprint, the New African Initiative (NAI), which merged severalearlier continental economic development plans. Objectives. NEPAD seeks to spur economic growth and improvesocio-economic development across Africaby increasing capital flows to Africa in the form of private sector investment, development assistance, debt relief,and broadened market access for Africanexports. A key NEPAD aim is improving the institutional, regulatory, and planning capabilities of African statesto allow them to achieve gains both asindividual entities and as economically integrated sub-regional groupings. NEPAD seeks to increase democraticdecision making, transparency, andaccountability in governance; improve economic policy-making and public sector management; and increaseinvestments in infrastructure. Other goals includeexpanding access to social services and education; eradicating poverty; and promoting peace, security, and humanrights. Sectoral investment targets includeagriculture, energy, environment, physical and communications infrastructure, and institutional efforts to increaseeconomic diversification and trade. Economic Integration. NEPAD endeavors both to strengthen linkages among African countries, and todeepen and accelerate Africa's economic and political integration with other world regions. A key aim is to ensurethat Africa surmounts what one NEPAD textasserts is the significant degree of Africa's marginalization in the face of increasingly interconnected global tradeand markets. At the same time, NEPAD seeksto buffer Africa from the perceived negative effects of "globalization" on public health, local industries, theenvironment, and public safety. Some NEPAD critics assert that increased African economic integration with global markets may yield significant unanticipated problems, such as increasedexternal pressure to adhere to trade rules and regulatory frameworks defined by market forces and policy makersoutside of Africa. Some critics fear that rates ofnatural resource extraction in Africa, possibly accompanied by increased rates of environmental degradation, maygrow. They also argue that as greaterintegration takes place, Africa's relative lack of industrial capacity will prevent it from taking advantage of potentialearnings opportunities generated byvalue-added secondary processing of export commodities, which typically takes place in importing countries. Criticsalso maintain that weak prices for manykey African exports may make it vulnerable to exploitation by powerful global economic actors, while global labormarkets may drain Africa of much of itseducated work force. Governance and Reform. NEPAD aims at promoting good governance, democratization, and public sectorreforms as primary means of attracting greater foreign investment, political support, and aid flows to Africa. Themain NEPAD document posits these ends asnecessary pre-requisites for socio-economic policy success, long-term political stability, and social justice. It callsfor market-oriented economic and governancereforms that substantially mirror those advocated by multi-lateral lenders and western donor governments. NEPADrequires, however, that these policies beimplemented and monitored by African states themselves -- not by foreign actors. A new NEPAD institution, theAfrican Peer Review Mechanism (APRM,discussed below), has been described as a primary means of implementing NEPAD's governance goals. Organizational Structure and Linkages. NEPAD, a term used interchangeably to refer both to the keyNEPAD policy document and to the governments and organizations that support it, is a major policy vehicle forAfrican Union (AU). The AU assumed theOAU's organizational apparatus and affirmed many of its decisions, including OAU's adoption of NEPAD as a keypolicy framework. The annual AU summitof heads of state is the supreme NEPAD decision-making body. Subsidiary to it is the NEPAD ImplementationCommittee, which must annually report to theAU summit. The AU Chairman and Secretary-General are ex-officio members of the Implementation Committee,and the AU Secretariat will participate in itsmeetings. The final OAU heads of state summit enlarged the Implementation Committee in July 2002 from fifteento twenty members by adding to it anadditional representative from each of five AU sub-regions. Subsidiary to the Implementation Committee is theNEPAD Steering Committee. It coordinatesNEPAD's relations with multilateral lenders, bilateral donors, and with international and regional multilateralbodies. The Steering Committee is supported by aNEPAD Secretariat that supervises NEPAD marketing, communication, finance and administrative functions andoversees NEPAD program initiatives onsocio-economic development, market access, infrastructure development, and governance. NEPAD includes a private component, the NEPAD Business Group, which is made up of twelve business councils, chambers of commerce, and relatedorganizations. The group will disseminate information and coordinate relations between NEPAD and private firmsthat support its aims, with a particular focuson trade and investment opportunities in Africa. The U.S. Corporate Council on Africa (CCA), a coalition of over170 U.S. companies with Africa-relatedbusiness interests and a NEPAD Business Group member, plans to act "as a major source of support in the UnitedStates" for NEPAD. (2) Financing. NEPAD is primarily a framework for coordinating policy-making by sub-regional economicdevelopment bodies and specialized functional agencies, particularly as regards cross-border initiatives. Fewreferences to specific amounts required for thefinancing of NEPAD goals or sector-focused projects appear within NEPAD texts. The primary NEPAD policydocument, however, anticipates that to achieve"the goal of reducing by half the proportion of Africans living in poverty by the year 2015, Africa needs to fill anannual resource gap of 12% of its GDP, or $64billion." It also calls for an annual $10 billion increase in funding for public health. (3) Meeting such goals, it asserts, "will require increased domestic savings[and] improvements in the public revenue collection systems." It also states that "the bulk of the needed resourceswill have to be obtained from outside thecontinent... [in the form of] debt reduction and overseas development assistance (ODA) as complementary externalresources required in the short to mediumterm." Private capital flows are described by the document as a longer-term concern. Some analysts have criticizedthe lack of specific cost projections and thegeneral nature of many statements in the document, asserting that it contains few measurable, explicit benchmarksby which to judge the success of itsimplementation. Defining the Goals of NEPAD. The NEPAD Implementation Committee was enlarged in July 2002, in partto broaden and diversify the base of support for NEPAD, and to accommodate leaders who had not played key rolesin its formation. A key figure in this regardwas Libyan leader Muammar al-Qadhafi. He has long advocated greater African integration, but has alsoemphasized a need for broad African politicalautonomy. He has rejected donor-imposed conditions on development assistance and has opposed close politicalties between Africa and the industrializedworld. Al-Qadhafi largely initiated the OAU reform process that led to the AU's formation, but he criticized theheavily NEPAD-oriented policy agenda that theAU adopted, calling NEPAD a project of the "former colonisers and racists." (4) Several other African leaders have echoed these sentiments. Efforts to bridgethedifferences between al-Qadhafi and advocates of NEPAD, in particular President Mbeki of South Africa, appearto have been successful, albeit broadly in favorof the South African agenda. Libya has indicated its acceptance of NEPAD and the APRM, and has joined theNEPAD Implementation Committee. Some commentators view NEPAD as a state-centric, elite-generated framework created with little input from political opposition parties or civil society.Although many civic activists see much hope in NEPAD, some warn that NEPAD may fail without greater publicengagement in its implementation -- acriticism publicly recognized by leading NEPAD architects, such as President Mbeki. African Peer Review Mechanism. Under the APRM, signatory states will monitor one anothers' adherenceto the collective, economic and corporate governance goals, codes, and standards contained in the NEPAD Declaration on Democracy, Political, Economic andCorporate Governance . APRM participation is voluntary, and African leaders emphasize that it will functionby providing a positive incentive structure forlong-term, incremental political reform and regime transformation. They stress that the APRM is not intended asa punitive instrument or as a mechanismthrough which APRM member states would condemn or sanction their peers. Despite such assurances, someNEPAD critics believe that implementation of theAPRM will eventually cause NEPAD to become subject to donor demands for externally defined economic andpolitical reforms, imposed as conditions on aid.The effectiveness and intent of the APRM was questioned by many observers after South African President ThaboMbeki made statements that appeared tofundamentally redefine the purpose and scope of the APRM. He reportedly suggested that the APRM would assessstates' economic performance but not theirgovernance or human rights records. His remarks were seen by some observers as having the potential tosignificantly undermine donor support for NEPAD.However, a March 2003 NEPAD document, the African Peer Review Mechanism Organization andProcesses , which lays out an APRM organizational andprocedural structure, makes specific reference to APRM assessments "on matters relating to human rights,democracy and political governance," which will beconducted by a range of specialized AU organs. (5) TheAPRM will become operational after one-fifth of AU members join the Mechanism. Implementation Activities. Current NEPAD implementation activities center on creating the organizationalstructures, mechanisms, and procedures through which NEPAD will operate and coordinate policy with the AfricanUnion. The U.N. Economic Commissionfor Africa and the African Development Bank have been appointed as technical coordinating institutions forNEPAD. A second major focus of activity is onpublic outreach efforts targeted at diverse multi-lateral forums and the publics of African countries. Several NEPADImplementation Committee meetings havebeen held to refine NEPAD priorities and set program guidelines, and there have been workshops to coordinate theroles within NEPAD of key regionaleconomic communities (6) and multi-lateral Africanfinancial institutions. Several conferences have been held focusing on private sector, scholarly, and civilsociety contributions to NEPAD. A series of NEPAD sector-focused program assessments reports have beenundertaken were considered by the 6th NEPADHeads of State Implementation Summit in March 2003. Current NEPAD news and documentation can be accessedonline; see http://www.nepad.org . Officials of donor governments and the international financial institutions have expressed general support for NEPAD and indicated that they may provideassistance for it. The broad thrust of NEPAD, but not explicitly the $64 billion in increased capital flows thatNEPAD envisions as deriving mainly fromoutside the continent, was endorsed in principle by the G-8 Group summit in Kananaskis, Canada in June 2002. Intheir G8 Africa Action Plan , which containsa range of detailed but non-binding commitments to Africa that largely mirror NEPAD goals, G-8 heads of statedeclared that they would: establish enhanced partnerships with African countries whose performance reflects the NEPAD commitments ...onthe basis of measured results. This will lead us to focus our efforts on countries that demonstrate a political andfinancial commitment to good governance andthe rule of law, investing in their people, and pursuing policies that spur economic growth and alleviate poverty.We will match their commitment with acommitment on our own part to promote peace and security in Africa, to boost expertise and capacity, to encouragetrade and direct growth-oriented investment,and to provide more effective official development assistance ... [while recognizing] that the prime responsibilityfor Africa's future lies with Africaitself. Some analysts see prospects of exponentially increased capital flows to Africa as unrealistic and interpret the $64 billion figure as a bargaining target, not a setNEPAD requirement. Such views are reflected in a G-8 Kananaskis summit statement entitled Building a NewPartnership for Africa's Development: A NewPartnership , which qualifies the G-8 response to NEPAD. It states: The G8 Africa Action Plan is a political response to a political initiative; it is not a pledging document. G8 Leadersnonetheless recognized that additional resources are needed to help give effect to the NEPAD. In the ActionPlan , they indicated that half of the new [overseas]development assistance they had announced at Monterrey could go to Africa if the NEPAD is implemented. Thiswould amount to US$6 billion per year forAfrica by 2006, in addition to existing development assistance and to the much larger private-sector financial flowsthat both the NEPAD and G8 Africa ActionPlan seek to encourage by creating the conditions necessary to increase trade and investment. Despite the important role expected to be played by external financing, leading NEPAD advocates assert strongly that NEPAD is an African-initiated endeavor,that must -- for reasons of sustainability, legitimacy, and in order to build local capacities for long-term self-reliance-- remain fully controlled by Africans.They reject the explicit linking of policy conditions by outside actors in exchange for financing related to NEPAD.Several donor governments, however,including the United States, have stressed that if the AU fails to implement political reform-related aspects ofNEPAD early in its development, investment inAfrica and external support for NEPAD may be undercut. Bush Administration. The Bush Administration has welcomed NEPAD as an ambitious, African-initiatedpolicy framework, but has not offered specific assistance in support of NEPAD. Instead, Administration officialsassert that the United States is alreadypursuing development assistance and supporting policy reforms in Africa by providing substantial assistance underexisting and forthcoming U.S. assistanceprograms. Congressional Reception. Congressional reactions to NEPAD have been mixed. On March 20, 2003,Representative Meeks introduced H.Res. 155 , which proposes sense of the House language urging thePresident to encourage support for NEPADand associated investment and economic development goals. Other members have offered more qualified views ofNEPAD. On September 18, 2002, during ahearing on NEPAD before the Subcommittee on Africa of the House Committee on International Relations,Subcommittee Chairman Edward Royce stated that NEPAD is particularly relevant in light of the Bush Administration's Millennium Challenge Account (MCA), adeveloping initiative that seeks to direct added development aid to countries committed to political and economicreform. We need to better understand howthese two initiatives complement one another, but also how they differ from past development aid plans andapproaches. Calls for greater development aid,whether from Africa or here at home, must confront the fact that hundreds of billions of dollars of such aid has beenspent in Africa, much producing fewresults... While I have always had doubts about big economic and social plans and their bureaucracies, I certainlyhope NEPAD meets itsgoals... (7) Some congressional and Administration policymakers have warned that future U.S. support for NEPAD may not materialize unless African leaders undertakedemonstrable, concrete actions to actively confront and hold to account undemocratic AU/NEPAD member states.Some have specifically cited what they viewas the reluctance of African leaders to criticize the government of Zimbabwe for what U.S. officials see as anextensive record of violent political oppressionand human rights abuses. (8) | The New Partnership for Africa's Development (NEPAD), described by its proponentsas a multi-sector, sustainabledevelopment policy framework, seeks to reduce poverty, increase economic growth, and improve socio-economicdevelopment prospects across Africa. MajorNEPAD aims are to attract greater investment and development aid to Africa, reduce the continent's debt levels, andbroaden global market access for Africanexports. NEPAD emphasizes increased democratization, political accountability, and transparency in governancein African states as primary means ofachieving its goals. NEPAD is a key policy vehicle of the African Union (AU), which succeeded the Organizationof African Unity (OAU) in July 2002; seeCRS Report RS21332, The African Union. H.Res. 155, introduced in March 2003, urges U.S.and international support for NEPAD. This reportwill be updated as events warrant. | 3,740 | 201 |
Social Security Disability Insurance (SSDI) is a federal social insurance program that provides monthly cash benefits to non-elderly disabled workers and their eligible dependents provided the worker paid into the system for a sufficient number of years and is determined to be unable to perform substantial work because of a qualifying disability. In the past three decades, the total number of disabled-worker beneficiaries continually increased from 2.7 million in 1985 to 9.0 million in 2014 and then started to decline to approximately 8.7 million in December 2017. The size of the beneficiary population has a strong impact on SSDI expenditures and thus the solvency of the program's trust fund. Multiple factors have contributed to the change in the number of SSDI beneficiaries over time. Understanding the importance of each competing factor helps inform predictions of SSDI solvency status and analysis of related legislation. This report analyzes the relative importance of factors affecting SSDI benefit receipts and terminations over the past 30 years. Figure 1 shows that between 1985 and 2017 the total number of disabled-worker beneficiaries continually increased before 2014 and has declined for the last three years. The number of Social Security disabled-worker beneficiaries has experienced different growth rates in the last three decades. The disability rolls increased relatively slowly between 1985 and 1989 and then went through two faster-growing periods, 1989-1997 and 2000-2010. The number of disabled-worker beneficiaries grew slowly again after 2010 and has declined since 2014. Among disabled workers, the proportion of female beneficiaries increased from 33% in 1985 to nearly 50% in 2017. The number of disabled-worker beneficiaries in current payment status increases with new disability awards and declines with benefit terminations. In general, to qualify for SSDI, workers must be (1) insured in the event of disability, (2) statutorily disabled, and (3) younger than Social Security's full retirement age (FRA), which is 65-67, depending on the year of birth. A disabled worker's SSDI benefits are terminated when they (1) die, (2) attain FRA (the age at which unreduced Social Security retired-worker benefits are first payable), (3) medically improve (i.e., no longer meet the statutory definition of disability), or (4) return to work. The main reason for the decline in the number of SSDI beneficiaries is the decrease in disability benefit awards, which dropped down below the number of terminations starting in 2014 (see Figure 2 ). The number of new awards to disabled workers in the SSDI program grew from approximately 416,100 in 1985 to more than 1 million in 2010. However, this trend was reversed in 2011, with a gradual decline in new disability awards to approximately 716,000 in 2017. From 1985 to 2017, the number of disabled-worker beneficiaries whose benefits were terminated rose from 340,000 to 859,000, which was higher than the number of new disability awards in the recent three years. Multiple factors may have contributed to the trends in SSDI benefit receipts and terminations. The following sections examine the effects of different factors and discuss the relative importance of competing factors at different time periods. Several factors may affect the change in the number of SSDI disabled-worker beneficiaries, including changes in demographic characteristics of the insured population, changes in employment and compensation, and changes in program rules and implementation. This section discusses the impact of those factors on SSDI benefit awards and terminations, as well as the roles they have played over time. The number of SSDI disabled-worker beneficiaries depends in part on the size of the working-age population who are disability insured--the workers who have paid into the Social Security system for a sufficient number of years. From 1985 to 2017, the SSDI insured population grew from 109 million to 155 million at an average rate of about 1.6% per year during 1985-2007 and 0.4% per year in the more recent 10 years. Two factors--increased eligibility among female workers and the aging of the workforce--may play important roles in the relatively faster growth in the insured population between 1985 and 2007. However, because the share of women in the workforce was no longer increasing and the baby boom generation (people born between 1946 and 1964) was aging out of the disability insurance program, the growth in the insured population slowed after 2007. Starting in 2003, the increase in full retirement age, combined with the aging of the baby boomer generation, also contributed to the growth of the disability-insured population. Some studies have shown that increased eligibility for the SSDI program and the rising incidence of disability among women played an important role in disability benefit receipt during the 1980s and the 1990s. Some experts attribute the increase in beneficiaries to increased labor force participation of women, which resulted in more women becoming potentially eligible for SSDI. Between 1985 and 2005, the proportion of women who participated in the labor force increased from 54% to 60%, and the proportion of women who were insured for disability increased from 49% to 59% (see Figure 3 ). During this period, the female proportion of disabled worker beneficiaries increased from 33% to 46% (see Figure 1 ). The SSDI incidence rate--the ratio of new disability awards to the number of disability insured who are not already receiving benefits (i.e., disability-exposed population)--increased substantially for women, from 2.97 per 1,000 disability-insured women in 1985 to 5.89 in 2005 (see Table 1 ). During the same time, the incidence rate for men has been relatively steady after adjusting for the population age distribution and the business cycle. The difference between SSDI incidence rates for men and women became negligible in and after 2005 (see Table 1 ). In 1984, approximately 1 1/2 non-elderly males were receiving SSDI for every non-elderly female. By 2008, this ratio was close to parity. The effect of female labor force participation on the growth in SSDI enrollment diminished after 2010. The female labor force participation rate remained relatively stable for 10 years between 2000 and 2010 and then started to go down after the conclusion of the Great Recession in 2010 (see Figure 3 ). The share of women among disabled-worker beneficiaries and the share of women in the workforce both stabilized around 46% after 2005. The incidence rate for women peaked in 2010 and then declined to 4.7 in 2017. Some argue that those developments have contributed to slower growth in SSDI enrollment in recent years. Another factor that contributes to the trends in SSDI enrollment is the aging of the workforce. The aging of the baby boom generation (people born between 1946 and 1964) has an effect on the composition of the overall working-age population. Some argue that as baby boomers reached their peak disability-claiming years (usually considered between age 50 and FRA), the number of disability beneficiaries rose, and as baby boomers convert from disability benefits to retirement benefits and are replaced by lower-birth-rate cohorts in the peak disability-receiving ages, the disability enrollment rates will likely fall. The baby boom generation reached the age of 50 between 1996 and 2014, during which time the share of disabled workers between age 50 and FRA increased from 56% to 73%. As the baby boomers continue to reach their FRA between 2012 and 2031, there is expected to be a growing proportion of disabled workers who terminate disability benefits due to the attainment of FRA. Since 2000, between 7% and 10% of disabled worker beneficiaries have been terminated from the SSDI rolls each year. The overall number of disabled worker terminations increased from 460,351 to 859,020 between 2000 and 2017 (an increase of 87%), while the number of disabled workers who attained FRA more than doubled during this period (from 212,948 to 494,651). Before 2012, the proportion of disabled workers terminated due to attainment of FRA stayed relatively constant at approximately 50%. However, starting in 2012, the proportion gradually rose, reaching approximately 58% at the end of 2017 (see Figure 4 ). Statistics from the Social Security Administration (SSA) show that the share of new disability insurance awardees who are between age 50 and FRA started to decline in 2017. In addition to the reason of attaining FRA, there was a declining proportion of disabled workers who terminated benefits due to death, medical improvement (i.e., no longer meeting the statutory definition of disability ), or returning to work. Among these terminations, death accounted for about one-third of the overall terminations, with the proportion decreasing from 36.7% in 2000 to 29.3% in 2017, and medical improvement and returning to work accounted for approximately 10% of all the terminations between 2010 and 2017. The aging of the population also impacts the incidence rate (i.e., the ratio of new awards to the disability-exposed population) of the SSDI program. The left graph of Figure 5 shows the gross and age-sex-adjusted incidence rate from 1985 to 2017. The gross incidence rate is unadjusted, which was affected by the changing age-sex distribution of the disability-exposed population, while the age-sex-adjusted incidence rate assumes that the age and the sex distributions of the population were constant at its 2000 level. The age-sex-adjusted incidence rate was higher than the gross incidence rate between 1985 and 2000 as the baby boom generation swelled the size of the younger-age population, whose disability incidence is generally lower than that in older populations. After 2000, the age-sex-adjusted rate was lower than the gross rate as the baby boom generation moved into an age range where disability incidence peaks. SSA projects that the gross incidence rate will generally decline as the baby boom generation moves above the FRA and the lower-birth-rate cohorts of the 1970s enter prime disability ages (50 to FRA). The right graph of Figure 5 shows the age-sex-unemployment-adjusted incidence rate from 1985 to 2017, which is the predicted age-sex-adjusted incidence rate, under the counterfactual assumption that unemployment rates were constant at the 1985-2017 mean value of 6.02% for the entire period. Compared with the age-sex-adjusted incidence rate, the age-sex-unemployment-adjusted incidence rate appeared to be relatively stable after 1992. The effect of business cycles on the disability incidence rate will be discussed in the section " Business Cycle and Unemployment Rate ." Under the scheduled increases enacted by Social Security Amendments of 1983 ( P.L. 98-21 ), the FRA increases gradually from 65 to 67 for workers born in 1938 or later. Between 2003 and 2009, the FRA gradually increased in two-month increments until it reached 66 for workers born between 1943 and 1954, and then between 2020 and 2027, it will gradually increase again until it reaches 67 for workers born in 1960 and later. Raising the FRA increased the size of the SSDI program. From 2002 (the year prior to the FRA increase) to 2017, the number of new awards for workers ages 65-FRA increased from 750 to 6,136, and the share of SSDI beneficiaries who were ages 65-FRA increased from 1% to 11%. In December 2017, there were about 495,600 disabled workers between ages 65 and FRA. In addition, the rise in the FRA increased the value of SSDI cash benefits relative to early retirement benefits. When a worker claims benefits before the FRA, there is an actuarial reduction in monthly benefits. The earliest a worker can claim retirement benefits is age 62. For a worker with an FRA of 65, claiming benefits at 62 results in a 20% reduction in the monthly benefit. The reduction rises to 25% if the FRA is 66 and will be 30% for a FRA of 67. Since SSDI benefits are approximately the same as full retirement benefits, the SSDI program has become relatively more attractive for the later birth cohorts whose FRA--and penalty for early retirement benefits--is larger. Although some studies suggest that an increase in the value of disability benefits relative to early retirement benefits induces more individuals to apply for SSDI benefits, researchers are divided over whether such individuals are actually awarded benefits. In summary, many researchers show that demographic changes account for the bulk of the SSDI program's growth. Although results may differ in the measure of time period and calculation methods, most analysis suggests that more than half of the growth in SSDI enrollment before 2014 stems from factors of a growing share of working women eligible for DI, an aging population, and the increase in Social Security's full retirement age. The opportunity of employment and the relative value of compensation over disability benefits may also contribute to the change in SSDI enrollment. In deciding whether to apply for SSDI benefits, workers typically compare the value of SSDI benefits (cash payments, health coverage, and the amount of leisure and family time) with their opportunities for work and compensation. This section discusses how employment opportunities and the earnings and benefits associated with working are likely to affect SSDI benefit receipts. Figure 6 displays the number of SSDI applications (left axis) and the national unemployment rate (right axis) for each year between 1985 and 2017. The shaded areas mark the three economic recessions that took place July 1990-March 1991, March 2001-November 2001 and December 2007-June 2009 as dated by the National Bureau of Economic Research. In all three cases, SSDI applications rose during the recession and peaked after the official end of the recession. One explanation for these business cycle effects is that they are driven by conditional disability applicants--those who would prefer to remain in the labor force but would apply for SSDI benefits if they lost their present jobs. When opportunities for employment are plentiful, some people who could qualify for disability insurance benefits find working more attractive, and when employment opportunities are scarce, some of those people apply to the SSDI program instead of looking for work. Some studies find that SSDI applications during recessions have higher past earnings and more recent work experience than those during other time periods. Researchers also find that the percentage of claims that are allowed drops under conditions of high unemployment. Despite the higher number of denials among disability insurance applications, the incidence rates (both gross and age-sex-adjusted) generally increase during and after economic recessions (see the left graph of Figure 5 ). The right graph of Figure 5 displays the predicted incidence rate under the assumption that unemployment rates were constant at 6.02% for the entire period, the mean value between 1985 and 2017. Compared with the fluctuation in the gross and age-sex-adjusted incidence rates, the relatively stable unemployment-adjusted incidence rate after 1990 indicates that business cycles are likely to explain some of the trends in the SSDI enrollment. Some studies show that average preapplication earnings of disability insurance applicants have been declining over time relative to nonapplicants. A possible reason might be that more low-wage earners are incentivized to apply for SSDI since the value of disability insurance benefits relative to earnings has been steadily rising for low-wage workers. The initial amount of SSDI benefits is tied to the growth in average national earnings, which are growing faster than earnings for low-wage workers. Historical data show that the cumulative growth in real wages from 1979 to 2017 was 34.3% for the 90 th percentile (high-wage earners), 6.1% for the 50 th percentile (middle-wage earners), but 1.2% for the 10 th percentile (low-wage earners). One possible reason for people to apply for the disability insurance program might be the availability of Medicare to participants in SSDI (after a two-year waiting period). Some studies show that Medicare availability has encouraged some people to apply for disability insurance benefits, because many people with disabilities did not have access to health insurance coverage otherwise. Beginning in 2014, the Affordable Care Act (ACA) provided more options for people with disabilities to obtain insurance. By enabling access to private health insurance and expanding access to subsidized public health insurance, the ACA may alter disability claiming decisions. The effect of the ACA on SSDI enrollment is not yet clear. Some researchers find that people who have an alternative source of health insurance coverage (from a spouse's employer or retiree coverage) are more likely to apply for SSDI benefits. They argue that the Medicare's two-year waiting period for SSDI beneficiaries may deter disability applications from workers who have health insurance through their jobs but no alternative source of health coverage after leaving work. The availability of the ACA improves coverage options for those with disabilities, which may cause the number of disability applications to rise. In addition, by providing greater access to health care, the ACA may make it easier for people to obtain the documentation necessary to prove they have a disability, thus resulting in more people applying for disability insurance or an increase in the acceptance rate. Others suggest that by creating good health insurance opportunities, the ACA may lower the value of the disability program, causing fewer people to apply for disability and more SSDI beneficiaries to return to work. Although the actual effect of the ACA on disability applications is hard to examine due to the short length of time since implementation, some studies using state-level data show that disability applications are likely to decrease with the introduction of the ACA. Researchers suggest that the ACA, with reasonable health care costs through the income-adjusted premium, may reduce dependency on health insurance coverage (i.e., Medicare) for some disabled-worker beneficiaries and allow them to return to work, thus reducing the number of people receiving disability benefits. Some analytical results also indicate that the ACA may cause SSDI recipients to be healthier, which has the potential to lower the likelihood that people become disabled while at work and increase their likelihood of exiting the disability rolls. Some of the observed trends in SSDI enrollment were the result of changes in policies. This section examines how changes in eligibility criteria for disability determination and continuing disability reviews (CDRs) affected SSDI benefit awards and terminations. In 1984, the Disability Benefits Reform Act ( P.L. 98-460 ) expanded the ways in which a person could medically qualify for disability insurance benefits. Some researchers argue that, under this legislation, the SSA relaxed its screening rules of mental disorders and placed more weight on applicants' reported pain and discomfort. Applicants were able to qualify on the basis of the combined effect of multiple medical conditions, each of which might not have met the criteria if considered alone. Some studies claim that these changes made it easier for some applicants to qualify for benefits due to certain difficult-to-verify impairments, such as back pain or depression. One study shows that eligibility standards expanded significantly after the 1984 legislation but have been relatively stable since the early 1990s. The age-sex-unemployment-adjusted incidence rate increased from 4.1% in 1985 to approximately 5.6% in the early 1990s, and there has been no increase since then (see the right graph in Figure 5 ). After controlling for the effect of rising incidence among women and the aging of the workforce, analysis shows that the 1984 legislative reform still contributed a significant proportion of the increase in the incidence rate from 1985 to the early 1990s. The 1984 act has resulted in some compositional changes in the SSDI beneficiary population. First, the change in eligibility criteria has contributed to a shift in the types of disabilities for which beneficiaries qualify. The share of disabled-worker beneficiaries with mental disorders or musculoskeletal system and connective tissue disorders (typically back pain or arthritis) has increased from 30% of newly awarded disabled workers in 1983 (the year before the legislation was enacted) to 52% in 2004 and remained around this level for more than 10 years from 2005 to 2016. Researchers argue that in conjunction with labor market developments that increased the incentive for low-wage workers to apply for benefits, these new program rules likely led to an increase in disability receipts, although the extent of the increase is unclear. Second, because mental disorders may have an early onset and low age-specific mortality, SSDI beneficiaries with those diagnoses are likely to experience relatively long durations on the program. The proportion of disabled workers who died in 1983 was 4.9%; 2.9% died in 2017. Although it is conceivable that medical progress has reduced mortality for a wide range of conditions, researchers claim that it seems likely that a portion of the decline in mortality rates among SSDI recipients is the result of a change in the composition of the beneficiary population. Third, incidence rates at younger ages have increased relative to rates at older ages. Table 1 shows that the difference between the incidence rates of disabled workers below and above age 50 became smaller over time. One possible explanation is that young disabled workers are more likely to be on the rolls due to mental disorders, which tend to have an early onset. Some statistical results show that successive birth cohorts have been increasingly entering SSDI at younger ages, and, combined with a declining mortality rate, the average duration of disability benefit receipts has lengthened. These phenomena are likely to result in a further increase in SSDI rolls and program spending. Continuing disability reviews (CDRs) are periodic reviews conducted by SSA to determine whether SSDI beneficiaries continue to meet the definition of disability under the Social Security Act. Disabled beneficiaries whose medical conditions are determined to no longer be disabling are generally terminated from the SSDI rolls. Due to the high number of initial disability applications since 2003, SSA dedicated resources to processing initial applications rather than conducting CDRs. As a result, SSA has had a backlog of full medical CDRs since FY2002. Between 2003 and 2009, the backlog increased to about 1.5 million full medical CDRs. With increased program integrity funding from FY2014 to FY2018, SSA has increased the number of full medical CDRs completed, and the backlog decreased to about 64,000 cases at the end of FY2017. SSA completed all available CDRs, eliminating the backlog, by the end of FY2018. This is a possible reason that the number of disabled workers who no longer meet the medical requirement in 2017 was more than 150% higher than in 2014. The recovery rate (medical improvement and return to work) was 18.2 per 1,000 beneficiaries for 2017 and projected to go down to 11.0 per 1,000 beneficiaries with the elimination of the backlog. The total allowance rate is the proportion of SSDI claimants who are ultimately allowed benefits (excluding applicants disqualified for nonmedical reasons--that is, technical denials). The initial disability determination is made by the Disability Determination Services. Individuals who are dissatisfied with SSA's initial determination may request a further review, an appeals process that is generally composed of three levels: (1) reconsideration of the case by a reviewer who did not participate in the initial determination, (2) a hearing before an administrative law judge (ALJ), and (3) a request for review by the Appeals Council. Figure 7 shows the final outcome of disabled-worker applications from 1992 to 2016. The allowance rate at all adjudicative levels (the initial determination and the appeals process) reached a peak of 62% in 2001 and then declined steadily to 48% in 2016. Considered separately, the allowance rate for disabled-worker applicants at the initial determination level decreased from 40% to 33% between 2001 and 2016, the allowance rate at the reconsideration level declined from 13% to 9%, and the allowance rate at the hearing level or above declined from 73% to 46% during the same time period. Thus far, it is unclear what causes the decline in the total allowance rate among disabled-worker applications. Some researchers claim that the total allowance rate is generally countercyclical: SSDI applications increase when the unemployment rate rises but the allowance rate generally falls after one to two years of recession, likely because a larger share of the applications filed during a recession is motivated by financial hardship. Those researchers suggest that the decline in allowance rates since 2001, and particularly after 2009, is attributable to fluctuations in the unemployment rate. Some others believe that the persistent low total allowance rates would indicate a "regime shift" in the SSDI determination process, and they also show that more recent cohorts of ALJs at the hearing level have lower allowance rates than did earlier ALJ cohorts with the same level of experience. The number of SSDI beneficiaries has experienced large growth in the past 30 years, but the trend was reversed starting in 2014. The decline in SSDI rolls was driven by two forces: the decrease in new disability awards since 2011 and the continuous increase in the termination of disability benefits. Based on the previous discussion, this section summarizes the possible causes of the recent decline in SSDI enrollment. Since 2010, new awards to disabled workers have decreased every year, dropping from 1 million to 762,100 in 2017. Although there has been no definitive cause identified, four factors may explain some of the decline in disability awards. 1. Avai lability of j obs . The unemployment rate was as high as 9.6% in 2010 and then gradually decreased every year to about 4.35% in 2017. The opportunities for employment make working more attractive than disability benefits for people who could qualify for SSDI. If the unemployment rate were kept at 6.02%--the average level between 1985 and 2017--the age-sex-adjusted incidence rate would have been 3.5% (0.35 per 1,000 disability-exposed population) higher in 2016. Thus about 50,000 more disabled-worker benefits would have been awarded in that year. 2. Aging of lower-birth-rate cohorts . The lower-birth-rate cohorts (people born after 1964) started to enter peak disability-claiming years (usually considered ages 50 to FRA) in 2015, replacing the larger baby boom population. This transition would likely reduce the size of the insured population who are ages 50 and above, as well as the number of disability applications. As the baby boomers reached age 50 between 1996 and 2014, the growth rate of the insured population ages 50 to FRA has been consistently around 5% from 1997 to 2008. The growth rate started to decrease in 2009, dropped down below 1% in 2014, and became negative (no growth) in 2018. 3. Availability of the Affordable Care Act (ACA) . The ACA expanded health insurance opportunities beginning in 2014. The availability of health insurance under the ACA may lower the incentive to use SSDI as a means of access to Medicare, thus reducing the number of disability applications. The nationwide effect of the ACA on disability benefit receipt is still unclear. 4. Decline in the allowance rate . The total allowance rate at all adjudicative levels declined from 62% in 2001 to 48% in 2016. While this decline may in part reflect the impact of the Great Recession (since SSDI allowance rates typically fall during an economic downturn), the Social Security Advisory Board Technical Panel suspects that the declining initial allowance rate may be a result of the change in the SSDI adjudication process. In addition to the factors contributing to a decline in SSDI applications and awards, some others may have the opposite effect of pushing disability benefit receipt upward. Some of those factors may include the increase in the FRA, the growth in applications from low-wage workers, and higher incidence rates among young applicants resulting from an expansion of SSDI eligibility rules. But the effect of those factors was smaller than the ones that decreased new SSDI awards between 2011 and 2017. The number of benefit terminations among disabled workers has been increasing from 2001 to 2017 (see Figure 2 ), and the share of total disabled-worker beneficiaries who terminated benefits also increased from 8% to almost 10%. The following factors are likely to contribute to the increase in disability terminations. Baby boomers reached FRA . As the relatively large baby boomer population reaches its FRA (gradually increased from 65 to 66) between 2012 and 2031, there is expected to be a growing proportion of disabled workers who terminate disability benefits due to the attainment of FRA. As shown in the previous section, the proportion of terminations that were due to attainment of FRA was about 50% before 2012, but the ratio gradually increased to nearly 60% in 2017. The potential increase in the number of terminations may slow down due to the scheduled increase in the FRA from 66 to 67 between 2020 and 2027, which will result in fewer disabled workers exiting the SSDI program due to the attainment of FRA. Efforts in CDRs . With increased program integrity funding in recent years, SSA has increased the number of full medical CDRs completed, and the backlog was reduced to about 64,000 cases at the end of FY2017. Between 2013 and 2017, about 147,000 benefits were terminated after CDRs. The effect of CDRs on SSDI terminations will become relatively smaller, as the SSA eliminated the backlog by the end of FY2018. Availability of the ACA . The prevalence of the ACA after 2014 is likely to cause some SSDI recipients to return to work for two reasons. First, the ACA may reduce beneficiary reliance on SSDI as a path to Medicare access. Second, the ACA may improve the health conditions of disabled-worker beneficiaries. The actual magnitude of the effect awaits further analysis. Some factors may work in the opposite direction to decrease disability terminations. Examples include the scheduled further increase in FRA from 66 to 67 and the declining mortality rate among disabled-worker beneficiaries. | The Social Security Disability Insurance (SSDI) program pays cash benefits to non-elderly workers and their dependents provided that the workers have paid into the Social Security system for a sufficient number of years and are determined to be unable to continue performing substantial work because of a qualifying disability. The total number of disabled-worker beneficiaries was approximately 2.7 million in 1985, peaked at approximately 9.0 million in 2014, and then declined over the last three years by nearly 0.3 million. In December 2017, 8.7 million disabled workers received SSDI benefits. Multiple factors have contributed to the growth in the SSDI enrollment between 1985 and 2014. Some of the main factors are (1) the increased eligibility and rising disability incidence among women, (2) the attainment of peak disability-claiming years (between age 50 and full retirement age) among baby boomers (people born between 1946 and 1964), (3) the increase in full retirement age (FRA) from 65 to 66, (4) fewer job opportunities during economic recessions, and (5) the legislative reform that expanded the eligibility standard in SSDI. Some factors may have prolonged effects on SSDI benefit receipt. For example, the increase in the FRA from 65 to 66 has resulted in a larger proportion of SSDI beneficiaries who are ages 65 and older, and this proportion is likely to increase further as the FRA increases from 66 to 67 between 2020 and 2027. Another example is the consequence of the expansion in the eligibility criteria, which has resulted in more than half of the disabled-worker beneficiaries being enrolled into the program based on mental disorders or musculoskeletal disorders (typically back pain or arthritis). This trend is likely to persist in the future. However, some of the effects on the growth in SSDI enrollment are likely to diminish over time. For example, the rise in labor force participation among women resulted in more women becoming eligible for SSDI benefits during the 1980s and the 1990s, but its positive effect on SSDI rolls became smaller as the female labor force participation rate stabilized and the disability incidence rate of women approached that of men. In addition, some factors may have started to work in opposite directions. One example is the change in age distribution of the population. As the baby boomers reach their FRA (gradually increased from 65 to 66) between 2012 and 2031, there is expected to be a growing proportion of disabled workers who terminate disability benefits due to the attainment of FRA. About the same time, the lower-birth-rate cohorts (people born after 1964) started to enter peak disability-claiming years in 2015, which would likely reduce the size of the insured population between age 50 and the FRA and, consequently, result in a lower number of disability applications. Another example is the availability of more jobs during the post-Great Recession period. The increasing opportunity in employment may have made working more attractive than disability benefits for people who could qualify for SSDI, thus reducing the disability applications and awards after 2010. These factors are likely to contribute to a decline in the number of disabled-worker beneficiaries. In addition to the change in the population age distribution and the availability of jobs in the market, some other factors may also be acting to decrease SSDI rolls in the recent three years. These factors are likely to include the prevalence of the Affordable Care Act (ACA) and the decline in the allowance rate (i.e., the share of applicants who are awarded disability benefits). The nationwide effects of the ACA on disability benefit receipt and the cause of the decreasing allowance rate are as yet unclear. | 6,313 | 753 |
This report provides an overview of the Family Educational Rights and Privacy Act (FERPA), as well as a discussion of several court cases that have clarified the statute's requirements. Under FERPA, educational agencies and institutions that receive federal funds must provide parents with access to the educational records of their children. Access must be provided within a reasonable time, but no later than forty-five days after a request to access education records has been made. In addition, the statute provides parents with an opportunity to challenge the content of their children's education records in order to ensure that the records are not inaccurate, misleading, or otherwise in violation of a student's privacy rights. Under the statute, education records are defined to include those records, files, documents, and other materials that contain information directly related to a student and that are maintained by an educational agency or institution or by a person acting for such agency or institution. Education records may also include videotape and products of other media. However, education records do not include any of the following: (1) records of educational personnel that are in the sole possession of the maker and not accessible to anyone other than a substitute; (2) records maintained by a law enforcement unit of an educational agency or institution for purposes of law enforcement; (3) employment records; or (4) medical records for students who are age eighteen or older. The parents of a student may exercise rights granted by FERPA until the student reaches the age of eighteen or attends an institution of postsecondary education. At that point, the rights defined by FERPA are transferred from the parents to the student. However, FERPA provides that certain types of information shall not be available to students in institutions of postsecondary education. Such students shall not have access to their parents' financial records. Letters and statements of recommendation submitted prior to the enactment of FERPA must also remain confidential if the letters are not used for other purposes. Finally, recommendations regarding admission to any educational agency or institution, employment application, and the receipt of an honor must remain confidential if the student has signed a waiver of his right of access. In addition to requirements regarding access to educational records, FERPA prohibits educational agencies or institutions that receive federal funds from having a policy or practice of releasing the education records of a student without the written consent of his parents. In addition, each educational agency or institution must maintain a record that identifies those individuals, agencies, or organizations that have requested or obtained access to a student's education records. It is important to note that consent is not required for the release of education records to certain individuals and organizations. These exceptions to FERPA's general prohibition against nonconsensual disclosure of educational records are described in detail below, as are controversial 2011 regulations that, among other things, permit educational agencies and institutions to disclose personally identifiable information to third parties under limited circumstances. Under FERPA, education records may be released without consent to certain school or government officials, including the following: school officials with a legitimate educational interest in the records; school officials at a school to which a student intends to transfer, as long as the parents are notified of the transfer; authorized representatives of the Comptroller General of the United States, the Secretary of Education, or state educational authorities in connection with an audit and evaluation of federally supported education programs or in connection with the enforcement of federal requirements that relate to such programs; authorized representatives of the Attorney General for law enforcement purposes; in connection with a student's application for, or receipt of, financial aid; state and local officials pursuant to a state statute that requires disclosure concerning the juvenile justice system and the system's ability to effectively serve the student whose records are released; and persons designated in a federal grand jury subpoena or any other subpoena issued for a law enforcement purpose. In addition, a new exception was added in 2013 to allow nonconsensual disclosure to a caseworker or other state, local, or tribal child welfare agency official with legal responsibility for the care or protection of the student. Education records may also be released without consent to certain third parties other than school or government officials. For example, education records may also be released to accrediting organizations to carry out their accrediting functions, and to the parents of a dependent student. Organizations conducting studies for the purpose of developing, validating, or administering predictive tests, administering student aid programs, and improving instruction may also access education records. However, such studies must be conducted in a manner that does not reveal the personal identification of students and their parents, and the education records must be destroyed when they are no longer needed. In 2001, the definition of "education records" and the requirements related to the release of such records was the subject of review in a Supreme Court case, Owasso Independent School District v. Falvo , that considered whether peer grading and the practice of calling out grades in class resulted in an impermissible release of education records. The plaintiff argued that the grades on student-graded assignments were education records maintained by students acting for an educational institution and that students should not be allowed to call out the grades they recorded in class because education records may not be released without consent. The school district, on the other hand, maintained that FERPA's definition of "education records" covered only institutional records or materials maintained in a permanent file, such as final course grades, standardized test scores, attendance records, and similar information, but not student homework or classroom work. Ultimately, the Court concluded that the grades on peer-graded student assignments were not education records, identifying two statutory explanations for its decision. First, the Court determined that student assignments are not "maintained" within the meaning of FERPA's definition of "education records" because neither the teacher nor the students maintain the grades of a recently corrected assignment in a manner that reflected a common understanding of when something is "maintained." As the Court observed, the word "maintain" suggests records that "will be kept in a filing cabinet in a records room at the school or on a permanent secure database.... " Second, the Court concluded that student graders are not "person[s] acting for" an educational institution for purposes of FERPA's definition of "education records." The Court found that the phrase "acting for" does not suggest students, but rather connotes agents of the school, such as teachers, administrators, and other school employees. Moreover, the Court maintained that correcting a classmate's work could be viewed as being part of an assignment: "It is a way to teach material again in a new context, and it helps show students how to assist and respect fellow pupils." The Court did not interpret FERPA to prohibit such educational techniques, and noted that the logical consequences of finding peer-graded assignments to be education records would seem unbounded. Absent prior notice from a parent, an educational agency or institution may release directory information without consent. FERPA defines directory information to include the following: "the student's name, address, telephone listing, date and place of birth, major field of study, participation in officially recognized activities and sports, weight and height of members of athletic teams, dates of attendance, degrees and awards received, and the most recent previous educational agency or institution attended by the student." An agency or institution compiling directory information must give public notice of the categories of information it has designated as "directory information," and must allow a reasonable period of time after the issuance of such notice to permit a parent to inform the agency or institution that parental consent must be given before the release of any or all of the directory information. In 2011, the Department of Education (ED) issued new regulations that expanded the definition of directory information to include a student identification number displayed on a student identification card or badge. Under the new regulations, parents may not opt out or otherwise prevent an educational agency or institution from requiring students to wear badges or cards that are designated as directory information. Under another important exception to the general prohibition against nonconsensual release of educational records, such records may be released in connection with an emergency if the records are necessary to protect the health or safety of the student or other persons. In the wake of the shootings at Virginia Tech, there have been several attempts to clarify FERPA's health or safety exception. For example, under amendments to the Higher Education Act made in 2008, ED is required to provide guidance clarifying rules regarding disclosure when a "student poses a significant risk of harm to himself or herself or to others, including a significant risk of suicide, homicide, or assault." Such guidance must clarify that institutions that disclose such information in good faith are not liable for the disclosure. In addition, ED issued regulations that contain similar clarifications regarding disclosure requirements in the event of a threat to health or safety. FERPA does not restrict postsecondary institutions from disclosing certain information about student misconduct and from identifying student drug and alcohol violations. For example, a postsecondary institution may disclose to an alleged victim of any crime of violence or nonforcible sex offense the final results of any disciplinary proceeding conducted by the institution against the alleged perpetrator. Likewise, an institution may disclose to anyone the final results of any disciplinary proceeding conducted against a student who is an alleged perpetrator of any crime of violence or nonforcible sex offense if the institution determines as a result of the proceeding that the student committed a violation of the institution's rules or policies with respect to such crime or offense. It is important to note that amendments made to the Higher Education Act in 2008 essentially override FERPA's optional disclosure rule by requiring institutions of higher education to disclose to the alleged victim of any crime of violence or a nonforcible sex offense the results of any disciplinary proceeding conducted by the institution against a student who is the alleged perpetrator of such a crime or offense. If the alleged victim is deceased as a result of such crime or offense, the next of kin of such victim shall be treated as the alleged victim for purposes of disclosure. In addition, FERPA permits a postsecondary institution to disclose to a parent or legal guardian of a student information regarding any violation of any federal, state, or local law, or any rule or policy of the institution, governing the use or possession of alcohol or a controlled substance. However, disclosure is permitted only when the student is under the age of twenty-one and the institution determines that the student committed a disciplinary violation with respect to the use or possession of alcohol or a controlled substance. In 2001, FERPA was amended to allow the Attorney General (AG) or certain employees designated by the AG to seek access to education records that are relevant to an authorized investigation or prosecution of a terrorism-related offense or an act of domestic or international terrorism. These records may be disseminated and used as evidence in an administrative or judicial proceeding. To obtain access to the records, the AG or his designee must submit a written application to a court for an order requiring an educational agency or institution to release the records. The application must certify that there are specific facts that give reason to believe that the education records are likely to contain relevant information, and the court shall issue the order if it finds that the application includes this certification. Education records disclosed pursuant to a court order are not subject to FERPA's requirement that educational agencies and institutions maintain records identifying entities that have requested or obtained access to a student's education records. In 2011, ED issued a final rule amending the FERPA regulations. Designed to allow increased data sharing, the rule was intended, in part, to facilitate the development of statewide longitudinal data systems (SLDS). According to ED, "Improved access to data will facilitate States' ability to evaluate education programs, to ensure limited resources are invested effectively, to build upon what works and discard what does not, to increase accountability and transparency, and to contribute to a culture of innovation and continuous improvement in education." The new regulations make a number of changes, including, but not limited to permitting educational agencies and institutions to disclose personally identifiable information to authorized third parties for purposes of conducting audits or evaluations of federal- or state-supported education programs or enforcing compliance with federal requirements related to such programs; allowing student identification numbers to be designated as directory information for purposes of display on a student identification card or badge; and adding new enforcement mechanisms for violations of the act. The changes regarding release of personally identifiable information and directory information have proved to be somewhat controversial. Indeed, privacy advocates have raised concerns, noting that the changes may pose increased risks to student privacy, and one organization--the Electronic Privacy Information Center (EPIC)--filed a lawsuit alleging that the regulations exceed the agency's statutory authority and are contrary to existing law. Although the lawsuit was recently dismissed for procedural reasons, other legal challenges to the rules may emerge in the future. Under FERPA, educational agencies and institutions found to have a policy of denying parental access to a student's education records or releasing a student's education records without written consent may be denied federal funds. The Secretary of Education is authorized to deal with violations of the act and to establish or designate a review board for investigating and adjudicating FERPA violations. The Family Policy Compliance Office (FPCO), which acts as a review board, permits students and parents who suspect a violation to file individual written complaints. If a violation is found after investigation, the FPCO will notify the complainant and the educational agency or institution of its findings and identify the specific steps that the agency or institution must take to comply with FERPA. If the agency or institution fails to comply within a reasonable period of time, the Secretary may either withhold further payments under any applicable program, issue a complaint to compel compliance through a cease-and-desist order, or terminate eligibility to receive funding. In Gonzaga University v. Doe , the Court considered whether a student could enforce the provisions of FERPA by suing an institution for damages under 42 U.S.C. Section 1983, which provides a remedy for violations of federally conferred rights. The respondent, a former student at Gonzaga, planned to teach in the Washington state public school system after graduation. Washington required new teachers to obtain an affidavit of good moral character from a dean of their graduating college or university, but the respondent was denied such an affidavit after Gonzaga's teacher certification specialist informed the state agency responsible for teacher certification of allegations involving sexual misconduct by the respondent. The respondent sued Gonzaga, alleging a violation of section 1983 for the impermissible release of personal information to an unauthorized person under FERPA. The Court found that FERPA creates no personal rights that may be enforced under section 1983. The Court noted that unless Congress expresses an unambiguous intent to confer individual rights, federal funding provisions, like those included in FERPA, provide no basis for private enforcement under section 1983. The respondent had argued that as long as Congress intended for a statute to "benefit" putative plaintiffs, the statute could be found to confer rights enforceable under section 1983. The Court disagreed: "it is the rights, not the broader or vaguer 'benefits' or 'interests,' that may be enforced under the authority of that section." The Court also observed that FERPA's nondisclosure provisions had an aggregate focus and were not concerned with the needs of any particular person. By having such a focus, the provisions could not be understood to give rise to individual rights. | The Family Educational Rights and Privacy Act (FERPA) of 1974 guarantees parental access to student education records, while limiting the disclosure of those records to third parties. The act, sometimes referred to as the Buckley Amendment, was designed to address parents' growing concerns over privacy and the belief that parents should have the right to learn about the information schools were using to make decisions concerning their children. No substantial legislative changes have been made to FERPA since 2001, but in 2011, the Department of Education (ED) issued controversial new regulations that, among other things, permit educational agencies and institutions to disclose personally identifiable information to third parties for purposes of conducting audits or evaluations of federal- or state-supported education programs. These regulations are discussed below, as is a recently dismissed lawsuit challenging ED's new rules. | 3,434 | 168 |
In recent years, a number of observers have suggested that United States Special Operations Command (SOCOM) is generally more effective at acquisitions than the U.S. military departments, in part because of the perception that SOCOM has unique acquisition authorities. This report describes SOCOM's acquisition authorities for unclassified acquisition programs and compares these authorities to those granted to the military departments. It also compares the military departments' and SOCOM's chains of command, and the scope of acquisition activity and program oversight for those organizations. Finally, the report explores whether SOCOM has unique characteristics that influence how it conducts acquisition. The Goldwater-Nichols Department of Defense Reorganization Act of 1986 ( P.L. 99-433 ) reorganized DOD's command and control structure, in part by establishing the current construct and authorities of combatant commands. There are 10 combatant commands: 6 geographic and 4 functional commands. SOCOM possesses unique acquisition authorities when compared with other combatant commands. SOCOM was established and granted its own acquisition responsibilities in the Fiscal Year (FY) 1987 National Defense Authorization Act (NDAA) ( P.L. 99-661 ). SOCOM was the first combatant command endowed with acquisition authority and its own budget line for training and equipping its forces. The FY2016 NDAA ( P.L. 114-92 ) granted limited acquisition authority to the U.S. Cyber Command, making CYBERCOM the second command to have current independent acquisition authority. However, SOCOM's acquisition authority is more expansive. Title 10 U.S.C. Section 164(c) grants SOCOM authority to validate and establish priorities for requirements; ensure combat readiness; develop and acquire special operations-peculiar equipment and acquire special operations-peculiar material, supplies, and services; and ensure the interoperability of equipment and forces. These authorities are applicable only to "special operations-peculiar items." If SOCOM wants to acquire a weapon system that is not special operations specific, the acquisition must be executed through one of the military departments. The military services are responsible for funding certain types of SOCOM training, service-common equipment, and professional services. For example, the Air Force provides SOCOM with C-130s and the Army provides the ammunition for service-common weapons to include the M4. SOCOM, in turn, can modify these systems to special operations-specific requirements. Pursuant to statute (10 U.S.C. 167), SOCOM has an Acquisition Executive who has the authority to negotiate memoranda of agreement with the military departments to carry out the acquisition of equipment, material, and supplies; supervise the acquisition of equipment, material, supplies, and services; represent the command in discussions with the military departments regarding acquisition programs for which the command is a customer; and work with the military departments to ensure that the command is appropriately represented in any joint working group or integrated product team regarding acquisition programs for which the command is a customer. These statutory authorities enable SOCOM to manage and oversee its acquisition programs, to negotiate with the military departments for systems to be provided to SOCOM, and to have input into military department acquisitions when SOCOM will be one of the customers of the acquisition program. Special Operations Force Acquisition, Technology and Logistics (SOF AT&L) is the organization within SOCOM that leads internal major procurement efforts. The SOCOM Commander is directly responsible for all portions of the command and the Acquisition Executive (AE) reports directly to the Commander. Falling under the AE are the Program Executive Offices (PEOs) and Directorates. This direct chain of command allows for rapid communication on purpose, intent, and decisionmaking (see Figure 1 ). The structure's design is similar to that of the other services, which also follow a Secretary/Commander-AE-PEO-PM structure (see Appendix B ). One difference is that in the services, the Service Acquisition Executive reports to the Service Secretary, whereas in SOCOM the AE reports to the Commander. Internal to SOCOM, the Commander generally delegates acquisition decision authority to the Acquisition Executive. The Acquisition Executive in turn generally further delegates the majority of Milestone Decision Authority (MDA) to the PEOs. SOCOM officials have asserted that this delegation enables more rapid decisionmaking and accelerates the acquisition process. The method SOCOM uses for acquisitions is similar to the acquisition processes used by the military services: they share the same general statutory and regulatory framework; training and education opportunities (i.e., access to Defense Acquisition University and National Defense University); and DOD oversight regime. However, there are also significant differences, many of which relate to the size and scope of SOCOM and its authorities. Table 1 summarizes select similarities and differences. SOCOM's statutory acquisition authorities are more limited than those of the military departments. SOCOM acquisition authority is restricted to Special Operations-specific items, while the military services have the authority to acquire any necessary goods and services. When SOCOM does exercise its authority, it adheres to the same oversight and documentation requirements as the services. As James Smith, the current SOCOM Acquisition Executive, reportedly stated: We are absolutely subject to all of the same oversight and policy as the rest of DOD. Our workforce operates professionally within the same DOD 5000 directives, the same Federal Acquisition Regulation and the same Financial Management Regulation. I think it's important to understand that.... Give credit to our acquisition workforce for the results they achieve, and you might dismiss using USSOCOM as a benchmark for how to do acquisition under the assumption that we're somehow "different." In some instances, SOCOM may in fact have fewer acquisition authorities and flexibilities than the military departments, as in cases where statute specifically provides acquisition authorities to the military departments. For example, 10 U.S.C. 2216 established a Defense Modernization Account and granted authority for its use to the Secretary of Defense and the Secretaries of the military departments. Additionally, the FY2017 NDAA ( P.L. 114-328 , SS2447d) granted a new reprogramming authority, referred to as a special transfer authority , to the Secretaries of the military departments in an effort to expedite the selection of prototype projects for production and rapid fielding. The FY2018 NDAA ( P.L. 115-91 , SS809) required the Secretary of Defense to submit a report on the acquisition authorities available to the military departments that are not available to SOCOM, and to "determine the feasibility and advisability of providing such authorities to the Commander of the United States Special Operations Command." The regulations governing acquisition are found in the Federal Acquisition Regulation (FAR) and the Defense Acquisition Regulations Supplement (DFARS). The DFARS provides DOD-specific regulations that government acquisition officials--and those contractors doing business with DOD--must follow in the procurement process for goods and services. SOCOM is not referenced or discussed in the FAR; the DFARS includes a brief definitional reference to SOCOM, defining it as a defense agency for the purposes of the DFARS. Each military service and many DOD components also have their own acquisition regulatory supplement that provides unique acquisition guidance. For example, the Army maintains the Army Federal Acquisition Regulation Supplements (AFARS) and the Defense Logistics Agency (DLA) maintains the DLA Directive. SOCOM has its own supplement to the DFARS, known as the SOCOM Federal Acquisition Regulation Supplement (SOFARS). SOFARS Part 5601.101 defines the supplemental regulation's purpose as "provid[ing] the minimum essential implementation of the Federal Acquisition Regulation (FAR), and DOD FAR Supplement (DFARS)." SOCOM has also issued USSOCOM Directive 70-1, which seeks to set forth an overarching construct for acquisition, within the constraints of the FAR, DFAR, and SOFARS. There are no unique authorities granting SOCOM exemptions or waivers from acquisition requirements. The Office of the Secretary of Defense's issuances establishing policy, defining authorities, and assigning responsibility for acquisitions across all military services and defense agencies include The Defense Acquisition System (DOD Directive 5000.01), Operation of the Defense Acquisition System (DOD Instruction 5000.02), and Defense Acquisition of Services (DOD Instruction 5000.74). As such, SOCOM acquisition personnel are bound by and act with the same freedoms and restrictions as the military services and defense agencies. For example, all large DOD acquisition programs are given an Acquisition Category (ACAT) designation based on dollar figures and program scope. These designations determine the level of oversight required for the program. SOCOM and the military departments adhere to the same oversight standards and dollar threshold for categorizing programs. (For more information on program categories and dollar thresholds, see Table A-1 .) According to officials, SOCOM has a total of six programs that exceed the category II dollar thresholds. Currently, the Silent Knight Radar program, which is developing a SOF-common terrain following/terrain avoidance radar system for use in SOF fixed wing and rotary wing aircraft, is one of SOCOM's largest with a total estimated procurement cost through FY2023 of at $391.7 million. FY2017 actual procurement funding budget for the program was $34 million. In comparison, the military services have numerous major programs with significantly higher procurement appropriations. The Navy's 2017 appropriation for the Virginia Class submarine program ($5.39 billion) is 250% larger than SOCOM's entire FY2017 procurement appropriation ($2.08 billion). In FY2017, the SOCOM procurement appropriation was 1.5% of DOD's total procurement appropriation of $132.2 billion. See Table 2 for a comparison of the largest programs in the military services to that of SOCOM. The different size and scope of the acquisition efforts result in SOCOM having a substantially smaller acquisition workforce than the services. SOCOM's acquisition workforce consists of approximately 500 civilian and military personnel, less than 1% of the total DOD acquisition workforce of 156,000. A number of analysts and government officials have argued that SOCOM benefits from its size relative to the military services. The current SOCOM Acquisition Executive also reiterated this point when he reportedly stated that "[SOCOM's] ability to move relatively fast is a function of scale." When compared to the military services, SOCOM can be seen to operate like a small business. Many analysts argue that small businesses and organizations can be more nimble, more innovative, and more adaptable than large enterprises. As Sir Richard Branson, founder of the Virgin Group, reportedly stated, "Small businesses are nimble and bold and can often teach much larger companies a thing or two about innovations that can change entire industries." A number of analysts also argue that small organizations can be more effective in communication, innovation and redesign, customer service, and risk-taking; while others point out that small organizations can be more agile and less bureaucratic. A 2004 congressional report identified SOCOM's unique size, culture, and close proximity to the warfighter as factors that can contribute to more effective acquisitions. According to the congressional report: The successful use of the Special Operations Command acquisition authority below the acquisition category (ACAT) 1 level illustrates the transformation benefits of having a joint buyer, close to the user, maintain a streamlined acquisition process to deliver low dollar threshold systems rapidly to the warfighter. In discussing the SOCOM acquisition culture and the benefits of a flatter organization, a number of current and former SOCOM officials have stated that the lack of bureaucratic overhead allows the organization to identify emerging issues, modify programs that are underway, or, in certain cases, divest from programs more rapidly. This point has been highlighted by James "Hondo" Geurts, current Assistant Secretary of the Navy for Research, Development, and Acquisition (and former SOCOM Acquisition Executive). Another factor that potentially enables SOCOM's culture of innovation and risk-taking in its acquisition programs is its general ability to execute programs below statutory and regulatory dollar figures that require more rigorous oversight. Because SOCOM programs have lower dollar thresholds, its programs do not generally receive the same level of scrutiny brought to bear on the more expensive and higher-profile programs of the military services. For example, the Nunn-McCurdy Act (10 U.S.C. SS2433) requires DOD to report to Congress when an MDAP experiences cost overruns of 15% or more. There are currently more than 150 MDAPs in DOD; many of these programs have a larger budget in a single year than SOCOM's entire procurement budget for FY2017. If SOCOM's current CAT II program (Silent Knight Radar) experienced 100% cost growth (from approximately $391 million to $782 million), it would still not require a Nunn-McCurdy notification to Congress. In comparison, the cost growth associated with the procurement of the CVN-78 Gerald R. Ford aircraft carrier ($1.4 billion) was approximately 70% of SOCOM's entire FY2017 procurement budget ($2.0 billion). Some analysts believe that these lower dollar thresholds allow SOCOM to operate below the radar, thus enabling a more nimble acquisition process and a culture that promotes "failing fast." Despite these perceived organizational advantages, SOCOM has experienced challenges in executing its acquisition programs. The Advanced SEAL Delivery System Program, intended to develop a covert submersible insertion vehicle, was documented by both the Government Accountability Office and RAND as experiencing considerable cost, schedule, and performance issues before finally being cancelled in 2009. This program illustrates observers' argument that it is not only the ability to succeed faster, but also to fail faster and adapt requirements or acquisition strategies faster, that gives SOCOM the ability to execute acquisitions more efficiently and effectively. Additionally, SOCOM's statutory restriction to procure strictly SOF-peculiar equipment, modifications, and services enables a more focused, operations-oriented acquisition culture. In a National Defense interview, James Smith reportedly stated the following: Our direct relationship to USSOCOM for the acquisition of only services and equipment that are unique to special operations gives us three primary advantages. First, USSOCOM is a combatant command with an extremely relevant ongoing mission. We're fully co-located and integrated with the staff here. We have a firsthand understanding of priorities and urgency that gives us a different appreciation for schedule emphasis. It's not a cliche to say that our operators will often accept the "80 percent" solution if we can get that solution into the fight sooner. The services, on the other hand, have a much broader acquisition mandate, including the acquisition of business systems, weapon procurement programs that must be integrated into joint operations, extensive logistic contracts, large- and small-scale platforms, and substantially more complex systems with multiple technologies and capabilities. This broader acquisition portfolio requires the services to manage acquisition programs across domains, using multiple acquisition processes, and to use different acquisition competencies. SOCOM benefits from being a smaller organization with a more focused mission set and limited scope of acquisition authorities. Other SOCOM attributes, such as delegating more decisionmaking to lower levels and promoting a more risk-taking culture, may be transferable to the services. A number of current senior acquisition officials in the military services recently served in SOCOM and appear to be promoting more delegation of authority and cultural risk-taking in the services, including General Paul Ostrowksi, formerly a SOCOM PEO and currently the Principal Military Deputy to the Assistant Secretary of the Army (Acquisition, Logistics and Technology), and James Guerts, formerly the SOCOM Acquisition Executive and currently the Assistant Secretary of the Navy (Research, Development and Acquisition). One potential issue for Congress may include the following: To what extent do current acquisition-related laws and regulations promote or inhibit a more efficient, less bureaucratic, and more balanced approach to risk in acquisitions? In some instances SOCOM has fewer acquisition authorities than the military departments. This occurs where legislation grants acquisition authorities or flexibilities to the military departments. The definition of military departments, codified in 50 U.S.C. 3004, does not include SOCOM. As a result, SOCOM may not receive new acquisition authorities provided by Congress and must work through the Secretary of Defense to obtain these authorities or seek a legislative change, potentially resulting in lost opportunities for SOCOM in its acquisition efforts. Potential associated issues for Congress may include the following: Based on the DOD report on acquisition authorities required in the 2018 NDAA, should additional acquisition authorities should be granted to SOCOM? Should the definition of military departments as they relate to acquisitions be modified to include SOCOM? Appendix A. Appendix B. Comparison of Chains of Command | United States Special Operations Command (SOCOM) is the Unified Combatant Command responsible for training, doctrine, and equipping all special operations forces of the Army, Air Force, Marine Corps and Navy. SOCOM has been granted acquisition authority by Congress to procure special operations forces-peculiar equipment and services. There is a perception among some observers and officials that SOCOM possesses unique acquisition authorities that allow it to operate faster and more efficiently than the military departments. SOCOM possesses unique acquisition authorities when compared with other combatant commands. However, SOCOM is generally held to the same statutory and regulatory acquisition requirements as the military departments and, in some instances, has less acquisition authority. There are no unique authorities granting SOCOM exemptions or waivers from acquisition requirements. But when it comes to acquisition, SOCOM is different than the military services. SOCOM's acquisition performance is influenced by the size of the organization, focus of its acquisitions (which are limited to special operations-specific goods and services), and smaller size of its programs in terms of both scope of development and dollars. The current SOCOM Acquisition Executive reiterated these points when he reportedly stated that "[SOCOM's] ability to move relatively fast is a function of scale." These factors allow SOCOM to maintain the majority of its procurement programs at Category III levels, thereby reducing the oversight and bureaucratic burden, and allowing critical Milestone Decision Authority to remain at lower levels within the Command. As a result, some observers have argued that the SOCOM acquisition process is often capable of executing faster (and failing faster), maintaining closer communication between leadership and users, being more nimble, and fostering a culture willing to assume more risk. | 3,634 | 367 |
This report provides an overview of the major issues which have been raised recently in the Senate and in the press concerning the constitutionality of a Senate filibuster (i.e., extended debate) of a judicial nomination. The Senate cloture rule (Rule XXII, par. 2) requires a super-majority vote to terminate a filibuster. The Appointments Clause of the Constitution, which provides that the President is to "nominate, and by and with the Advice and Consent of the Senate, ... appoint" judges, does not impose a super-majority requirement for Senate confirmation. Since it has the effect of requiring a super-majority vote on a nomination, because it usually requires the votes of 60 Senators to end a filibuster, it has been argued that a filibuster of a judicial nomination is unconstitutional. In the absence of (1) any constitutional provision specifically governing Senate debate and (2) any judicial ruling directly on point, and given the division of scholarly opinion, this report will examine the issues but will not attempt a definitive resolution of them. The framers of the Constitution were committed to majority rule as a general principle. However, no provision of the Constitution expressly requires that the Senate and the House act by majority vote in enacting legislation or in exercising their other constitutional powers. There is a provision specifying that "a majority of each [House] shall constitute a quorum to do business." There are also a few provisions dictating that the Senate or House muster a two-thirds extraordinary majority to transact certain business of an exceptional nature. Although there is no constitutional provision requiring that the Senate act by majority vote in instances not governed by one of the provisions mandating an extraordinary majority, "the Senate operates under 'a majority rule' to transact business--a majority of the Senators voting, a quorum being present--with the exceptions set forth in the Constitution and the rules of the Senate." The Supreme Court has found that "the general rule of all parliamentary bodies is that, when a quorum is present, the act of a majority of the quorum is the act of the body," except when there is a specific constitutional limitation. However, the Court has also found that the Constitution, history, and judicial precedents do not require that a majority prevail on all issues. Does the commitment of the framers to majority rule as a general principle, the fact that the Senate usually operates pursuant to majority rule, and the enumeration in the Constitution of certain extraordinary majority voting requirements mean that any exception to majority rule other than the enumerated ones is unconstitutional? Is there any constitutional defense to be offered for a Senate filibuster? Article I, Section 5, clause 2, of the Constitution authorizes "each House [to] determine the rules of its proceedings.... " The rule-making power has been construed broadly by the courts. It has been argued that the rule-making power and historical practice are the foundation for the filibuster, and that Article I, Section 5, permits the Senate to adopt procedures unless they conflict with a constitutional prohibition. Supporters of the filibuster have contended that Senate rules are not in conflict with the Constitution because the rules require 60 votes to end debate on a nomination, not to confirm a nominee, and that therefore the Senate rules are not unconstitutional because they are not at odds with the few constitutional provisions in which the framers specified a particular type of majority. Opponents of the filibuster have claimed that Senate rules violate the constitutional principle of majority rule and in effect impose an extraordinary majority requirement for confirmation of nominees that is at odds with the Appointments Clause. Several factors have the effect of entrenching the filibuster. First, Senate Rule XXII, par. 2 (the cloture rule) applies, inter alia , to amendments to the Senate rules. (A vote of three fifths of the entire Senate is usually required to invoke cloture. A vote of two thirds of the Senators present and voting is required to invoke cloture on a measure or motion to amend the Senate rules.) Second, Senate Rule V, par. 2, provides that "the rules of the Senate shall continue from one Congress to the next Congress unless they are changed as provided in these rules." And third, because the Senate is a continuing body, its rules "are not newly adopted with each new session of Congress." Because the cloture rule may be applied to debate on a proposal to change the filibuster rule, it has been argued that the filibuster rule unconstitutionally interferes with the right of a majority to exercise the constitutional rulemaking authority by majority vote. However, supporters of the filibuster have contended that "there is no constitutional directive against entrenchment," and that the reference to "each House" in the rule-making clause (Article I, Section 5), authorizing each House to "determine the rules of its proceedings," means the House and Senate separately (not the Congress), and does not mean that one session of the Senate is barred from binding the next session. The entrenchment issue has given rise to a suggested scenario under which a simple majority might vote in favor of an amendment to the filibuster rule, a point of order might be raised asserting that a majority vote is sufficient to cut off debate on the amendment and to pass it (because the two-thirds requirement is unconstitutional), the matter would be referred by the Vice President to the Senate, and the point of order would be sustained by a simple majority of the Senate. A judicial appeal might ensue. Senators have considered changing Senate rules or practice by invoking the "constitutional" or "nuclear" option, terms that refer to various types of proceedings. This option was a focal point of a recent bipartisan agreement. The filibuster of a judicial nomination raises constitutional issues, particularly separation of powers ones, not posed by the filibuster of legislation. These issues should be considered in light of the pertinent language of the Constitution and the intent of the Framers. The Appointments Clause provides that the President "shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law.... " There are three stages in presidential appointments by the President with the advice and consent of the Senate. First, the President nominates the candidate. Second, the President and the Senate appoint the individual. And third, the President commissions the officer. It is noted that the Appointments Clause is in Article II of the Constitution, which sets forth the powers of the President. The power of appointment is one of the executive powers of government. "... [T]he power of appointment by the Executive is restricted in its exercise by the provision that the Senate, a part of the legislative branch of the Government, may check the action of the Executive by rejecting the officers he selects." The language of the Appointments Clause is ambiguous. It does not specify procedures or time limits applicable in confirmation proceedings, and it does not require that the Senate take a final vote on a nomination. "There is little evidence indicating the exact meaning of 'advice and consent' intended by the Framers.... Records of the constitutional debates reveal that the Framers, after lengthy discussions, settled on a judicial selection process that would involve both the Senate and the President. This important governmental function, like many others, was divided among coequal branches to protect against the concentration of power in one branch." The Senate's role of advice and consent was intended as a safeguard against executive abuses of the appointment power. Citing the language of the Appointments Clause and the intent of the Framers, supporters and critics of filibusters of judicial nominations disagree about the relative roles of the President and the Senate in regard to judicial appointments, about whether the Senate has a duty to dispose of the President's judicial nominations in a timely fashion, and about whether a majority of Senators has a constitutional right to vote on a nomination. If the Senate filibusters a judicial nomination, the President has "countervailing powers," including the ability to make a recess appointment, which does not require Senate confirmation but which is only temporary, expiring at the end of the next session of Congress. Because recess appointments deny the Senate the opportunity to consider the appointees, they raise separation of powers questions about the roles of the President and the Senate in the appointments process. Special issues are raised by recess appointments of Article III judges. The independence of such judges is generally guaranteed by their life tenure. However, "a recess appointee lacks life tenure.... As a result, such an appointee is in theory subject to greater political pressure than a judge whose nomination has been confirmed." The constitutionality of the filibuster has been challenged in court, and such litigation raises justiciability issues. In a number of cases, the courts have shown a reluctance to interpret the rules of either House or to review challenges to the application of such rules. However, the case law is not entirely consistent, and it has been suggested that a court will be more likely to reach the merits if a rule has an impact on parties outside the legislative sphere. Standing and the political question doctrine would be the primary justiciability issues raised by a court challenge to the filibuster rule. Standing is a threshold procedural question which turns not on the merits of the plaintiff's complaint but rather on whether he has a legal right to a judicial determination of the issues he raises. To satisfy constitutional standing requirements, "'[a] plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief.'" It has been suggested that those who might have standing to challenge the rule would include a judicial nominee not confirmed because of a filibuster; the President; and Senators who are part of a majority in favor of a nomination, but who cannot obtain the necessary votes to invoke cloture or to change the filibuster rule, who might allege a dilution of their voting strength. A nominee might have suffered a personal injury, caused by a filibuster, which might be remedied if the filibuster were declared unconstitutional. The standing of the President and of Senators raises more difficult questions than does the standing of a nominee. In Raines v. Byrd , the Court reviewed historical practice and concluded that constitutional disputes between the branches have generally not been resolved by the judiciary in cases brought by Members of Congress or presidents. Because the constitutionality of the filibuster is an issue in contention between the branches, the courts, applying Raines , might not accord standing to Senators or President Bush. Other issues, under Raines , arise in regard to the standing of Senators. Under Raines , to challenge executive branch action or the constitutionality of a public law, a Member must assert a personal injury or an institutional injury amounting to nullification of a particular vote. In regard to the filibuster dispute, it is questionable whether a Senator has suffered either a personal injury or an institutional one that has the effect of nullifying a particular vote. Under Raines , the availability of some means of legislative redress precludes a finding of nullification, and a court might find that the possibility of amending the filibuster rule is a means of legislative redress, even though a proposed amendment to the rule could itself be the subject of a filibuster. Judicial review is not available where the matter is considered to be a political question within the province of the executive or legislative branch. "Prominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of the issue to a coordinate political department; ... or the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government.... " The rule-making clause (Article I, Section 5, clause 2) is a textual commitment of authority to each House to make and interpret its own rules of proceedings. Notwithstanding this textual commitment, the political question doctrine will not preclude judicial review where there is a constitutional limitation imposed on the exercise of the authority at issue by the political branch. It might be argued that the political question doctrine bars judicial review of the constitutionality of the filibuster rule because the rulemaking clause permits the Senate to make its own rules, and the Constitution does not expressly limit debate. On the other hand, it might be argued that the political question doctrine does not preclude judicial review because the exercise of the rulemaking power is restricted since the entrenchment of the filibuster may be at odds with "constitutional principles limiting the ability of one Congress to bind another." The question of the constitutionality of the Senate filibuster of a judicial nomination has divided scholars and has not been addressed directly in any court ruling. The constitutionality of the filibuster of a judicial nomination turns on an assessment of whether the Senate's power to make rules governing its own proceedings is broad enough to apply the filibuster rule to nominations. Supporters and critics of the filibuster of judicial nominations disagree about the relative roles of the President and the Senate in regard to judicial appointments, about whether the Senate has a duty to dispose of the President's judicial nominations in a timely fashion, and about whether a simple majority of Senators has a constitutional right to proceed to a vote on a nomination. The constitutionality of the filibuster might be challenged in court, but it is uncertain whether such an action would be justiciable. | The Senate cloture rule requires a super-majority vote to terminate a filibuster (i.e., extended debate). The Appointments Clause of the Constitution, which provides that the President is to "nominate, and by and with the Advice and Consent of the Senate, ... appoint" judges, does not impose a super-majority requirement for Senate confirmation. Critics of the Senate filibuster argue that a filibuster of a judicial nomination is unconstitutional in that it effectively requires a super-majority vote for confirmation, although the Appointments Clause does not require such a super-majority vote. It has been argued that the Senate's constitutional power to determine the rules of its proceedings, as well as historical practice, provide the foundation for the filibuster. The question of the constitutionality of the filibuster of a judicial nomination turns on an assessment of whether the Senate's power to make rules governing its own proceedings is broad enough to apply the filibuster rule to nominations. Several factors have the effect of entrenching the filibuster (i.e., making it possible to filibuster a proposed amendment to the rules). Supporters and critics of the filibuster of judicial nominations disagree about the relative roles of the President and the Senate in regard to judicial appointments, about whether the Senate has a duty to dispose of the President's judicial nominations in a timely fashion, and about whether a simple majority of Senators has a constitutional right to proceed to a vote on a nomination. The constitutionality of the filibuster might be challenged in court, but it is uncertain whether such an action would be justiciable (i.e., appropriate for judicial resolution). Standing and the political question doctrine would be the primary justiciability issues raised by a court challenge to the filibuster rule. (Note: This report was originally written by [author name scrubbed], Legislative Attorney.) | 3,168 | 457 |
Increasingly, the federal government uses technology to facilitate and support the federal procurement (or acquisition) process. Primary beneficiaries of this shift to online procurement systems (i.e., websites and databases) are the government's acquisition workforce and prospective and incumbent government contractors. Web-based procurement systems are essential for completing certain processes and fulfilling various requirements including, for example, publicizing contracting opportunities, helping to ensure that the government only does business with responsible contractors, capturing subcontracting information, and collecting and maintaining contract award data. Possible benefits conferred by the suite of acquisition systems include enhanced efficiency, improved access to information, mitigation of the administrative burden shared by federal employees and contractors, and the timely collection of accurate data. The government's reliance on web-based systems is not surprising for yet another reason: the magnitude of government procurement. Beginning with FY2008, the federal government has spent over $500 billion and conducted at least 5.7 million contract actions each fiscal year through FY2012. During the same time period, federal agencies dealt with at least 154,000 contractors each fiscal year. This figure does not include entities that competed for, but were not awarded, any government contract. Congressional interest in the executive branch's procurement systems (and, more broadly, government procurement) is fueled by a combination of its responsibilities. As the keeper of the federal purse and the body responsible for oversight of the executive branch, Congress takes a keen interest in how federal agencies spend the funds appropriated to them and, generally, how well the acquisition process works. While congressional oversight of government procurement includes overseeing web-based acquisition systems, these systems also serve as resources for congressional oversight efforts as well as legislative activities. Additionally, some online procurement systems may be useful when crafting responses to constituents who have commented on, or requested assistance related to, government procurement. Relatedly, Congress has demonstrated an ongoing interest in promoting the transparency of government spending data, including contract award information, for citizens and other interested parties. This report begins with an overview of major online procurement systems that support certain acquisition processes, or contain data about agencies' procurements. This section includes a table that provides basic information about each system and that may serve as a reference guide. The next section of the report then examines several issues and topics, including data quality, the System for Award Management (SAM), and the posting of contracts online. Major web-based, executive branch procurement systems are the focus of this report. This report does not include any agency-specific websites or databases. Additionally, it does not include all of the governmentwide online systems associated with government procurement, such as the Small Business Administration's Subcontracting Opportunities Directory and SUB-Net, or the RFP-EZ pilot program. Generally, only executive branch agencies are subject to the applicable statutes, regulations, policies, or guidelines that govern the use of the procurement systems covered in this report. Although individual legislative branch or judicial branch agencies might be permitted to use these systems, they are not necessarily required to do so. The past two decades have seen the federal government take "increasing advantage of technology to improve the efficiency and effectiveness of the acquisition lifecycle, from performing market research to recording contractor performance information." Initially, most online acquisition systems were established for the purpose of facilitating and improving the procurement process. Contracting officers, and other members of the government's acquisition workforce, post solicitations (and other documents, such as sources sought notices) on the Federal Business Opportunities (FedBizOpps) website. In turn, FedBizOpps is a resource for would-be government contractors seeking opportunities to sell their goods or services to the government. The System for Award Management streamlines the registration process for prospective and current contractors while providing a single repository of information for agency personnel to use, for example, to confirm business size, review contractors' certifications, and pay contractors. To aid in ensuring that the government does business only with responsible contractors, agency personnel also use SAM to determine whether a contractor is presently suspended or debarred, and query the Federal Awardee Performance Information and Integrity System (FAPIIS). Contracting officers submit performance information to the Past Performance Information Retrieval System (PPIRS) and, in turn, use information stored in the system when evaluating a contractor's past performance. Some web-based acquisition systems may primarily serve other purposes and other users. Congressional staff and agency personnel may find the contract award data available on the Federal Procurement Data System-Next Generation (FPDS-NG) website useful when developing, or implementing, policy. A push for transparency led to the passage of the Federal Funding Accountability and Transparency Act of 2006 (FFATA, P.L. 109-282 ). FFATA mandated the development of a user-friendly system comprising a variety of government spending data, including procurement data. Another effort aimed at enhancing transparency involves FAPIIS. Subsequent to the establishment of FAPIIS, legislation was enacted which made the contents of this system, except for past performance data, accessible to the public. Table 1 contains information regarding 11 web-based acquisition systems and a related Department of Labor system. The table reflects the current status of the General Services Administration's effort to consolidate eight procurement websites, plus the Catalog for Federal Domestic Assistance (CFDA), into one integrated system, SAM. Three websites--Central Contractor Registration (CCR, which includes Federal Agency Registration (FedReg)), Excluded Parties List System (EPLS), and Online Representations and Certifications Application (ORCA)--migrated to SAM in July 2012. None of the three is listed separately in Table 1 . Each of the five remaining procurement systems slated to migrate to SAM at later dates has its own entry in the table. These websites are the Electronic Subcontracting Reporting System (eSRS), FedBizOpps, FPDS-NG, PPIRS, and Wage Determinations Online (WDOL). Additional information about SAM is provided below. Over the years, questions have been raised regarding the accuracy, completeness, and timeliness of the contract award data available from FPDS and its successor, FPDS-NG. FPDS was established in February 1978, and by fall 1982 the Government Accountability Office (GAO) had published three reports that documented deficiencies in the completion and accuracy of data submitted by federal agencies. A decade later, during preparations for the transition from FPDS to FPDS-NG, GAO reported to the Director of OMB in late 2003 that FPDS data were "inaccurate and incomplete." During the transition, agencies were asked to "review their data and identify and correct any deficiencies" before they transferred the data to FPDS-NG and certify "the accuracy and completeness" of their FY2004 data. Yet, in 2005, GAO shared its concerns with the OMB Director regarding the "[t]imeliness and accuracy of data" and "[e]ase of use and access to data" in FPDS-NG. In its 2007 report, the Acquisition Advisory Panel (AAP) catalogued several problems with FPDS-NG, including inaccurate data, unclear instructions, the system's failure to capture certain data, and validation rules that did not function as intended. An April 2008 review of "complex service acquisitions" by GAO revealed that "the FPDS-NG field identifying major programs was typically blank." Other GAO studies revealed difficulties in identifying interagency contracts in FPDS-NG because of the way they were coded, and reported that "some contracts were incorrectly coded as T&M [time and material] contracts while others were incorrectly coded as having acquired commercial services." Reports of procurement data problems have been met by efforts to ensure the data are accurate and complete, and reported in a timely manner. Most recently, the Administrations of George W. Bush and Barack Obama have provided guidance to agencies regarding data submitted to FPDS-NG. The latest guidance, which was issued by the Office of Federal Procurement Policy (OFPP) in 2011, complements and expands upon FAR 4.604. Under FAR 4.604(a), an agency's senior procurement executive "is responsible for developing and monitoring a process to ensure timely and accurate reporting of contractual actions to FPDS [FPDS-NG]." Additionally, the chief acquisition officer of the agency "must submit to the General Services Administration (GSA), in accordance with FPDS [FPDS-NG] guidance, within 120 days after the end of each fiscal year, an annual certification of whether, and to what degree, agency CAR [contract action report] data for the preceding fiscal year is complete and accurate." OFPP's 2011 memorandum provides instructions, sampling methodologies, and templates for agencies to use in calculating and reporting the accuracy and completeness of data submitted to FPDS-NG. Agencies are required to compute the accuracy of 25 "key data elements," including date signed, extent competed, type of set aside, and place of manufacture. Governmentwide, the four-year average (FY2008-FY2011) for completeness was 98.3% and for sample accuracy 94.0%. Data were not provided for individual agencies, and these are the most recent data available. OFPP also stated in its memorandum that, in conjunction with GSA, it would carry out the following activities as part of its "sustained efforts to improve procurement data quality throughout the year": "continue the interagency working group on data quality, focusing on emerging issues, challenges, solutions, guidance, and process improvements;" "revitalize the [online] community of practice ... to collect tools and agency best practices for improving data quality and host focused discussions on key issues; and" "collaborate with the Federal Acquisition Institute and the Defense Acquisition University to review and improve related workforce training and development and to develop a better understanding of how procurement data are used throughout the acquisition process." Additionally, policies, system limitations, and regulations can be sources of seemingly inaccurate, or incomplete, data; lead to unusual, or anomalous, results; or hamper transparency. Examples include the following: FPDS-NG does not contain classified data, or information about purchases for "petroleum or petroleum products ordered against a Defense Logistics Agency Indefinite Delivery Contract." DOD's procurement data are not available immediately through FPDS-NG; the data are "subject to a 90-day delay." When registering in SAM, a business may choose to identify itself as, for example, a woman owned business or minority owned business. Independent verification of these designations is not required, which leaves open the question of the accuracy of this type of information. Data in FPDS-NG are identified, or organized, as data elements, and, over the years, data elements have been added, deleted, or revised. It is possible that the inclusion of a recently added data element, or one that is scheduled to be removed, in a user's search could affect the results. For example, conducting a search for FY2007 procurement data that includes a data element added to FPDS-NG in FY2010 might yield anomalous results. Regarding transparency, some might argue that it is hampered by regulations that permit the use of a generic Data Universal Numbering System (DUNS) number. Generally, an entity is required to have a unique DUNS when registering in SAM. Under certain circumstances, an entity may use an authorized generic DUNS number (e.g., 123456787, which is identified as "Miscellaneous Foreign Awardees"), which precludes identification of the contractor. As mentioned above, an initiative is underway to consolidate eight procurement websites, and the Catalog of Federal Domestic Assistance, into one system. The eight procurement websites are Central Contractor Registration, Electronic Subcontract Reporting System, Excluded Parties List System, Federal Business Opportunities, Federal Procurement Data System-Next Generation, Online Representations and Certifications Application, Past Performance Information Retrieval System, and Wage Determinations OnLine.gov. When discussing SAM, these websites are referred to as "legacy systems." The history of SAM begins with the Integrated Acquisition Environment (IAE). Established by OMB in 2001 and housed within GSA, IAE "was initiated to integrate, standardize, and streamline some of the many different acquisition data systems used throughout the government." The development and implementation of web-based acquisition systems occurred independently and, accordingly, without an overarching, comprehensive plan, as the federal government shifted from paper-based systems to web-based systems for its procurement processes. The mix of government procurement systems also included "unique data systems" that had been developed by some agencies for their own use. IAE's initial strategy was to "adopt, adapt, acquire," which involved adopting existing data systems that had been developed by federal agencies (e.g., DOD's CCR), adapting existing systems (e.g., transforming FPDS into FPDS-NG), and acquiring systems to fulfill unmet needs (e.g., ORCA). Although IAE improved the acquisition systems it inherited, questions remained regarding, among other things, the efficiency, responsiveness, and coherence of the existing systems. Testifying at a congressional hearing in fall 2009, the Federal Chief Information Officer (CIO) described the problems associated with the multiple procurement systems. Each of the eight IAE systems was originally developed independently, used different software, and operated on different hardware platforms run by different contractors. In this complex and stove-piped environment, it was difficult to respond to policy or technology changes in a timely manner. Specific issues, or problems, included separate logins, which are "inefficient and confusing"; overlapping data, which is "inefficient and creates opportunity for error"; no single or uniform level of service, which could subject users to varying levels of service; and multiple vendors hosting the systems, which is "more expensive than consolidated hosting." At the same hearing where he described the problems with the existing acquisition systems, the Federal CIO stated that consolidating the eight systems into "an integrated platform for procurement" would improve data quality, simplify access to procurement data, and improve the usability of the procurement systems. The effort to develop an integrated platform began in February 2010 when GSA awarded a contract to IBM US Federal to consolidate nine systems (eight procurement systems plus the CFDA) into SAM. Table 2 shows how SAM will be organized when completed. The first phase, launched in July 2012 after a two-month delay, saw the entity management functions--CCR (including Federal Agency Registration), EPLS, and ORCA--migrate to SAM. However, several news articles reported that problems with SAM prompted GSA to shut down the system for several days, until August 6, 2012. GSA also contacted the contractor responsible for SAM, summarizing, in a notice of concern, the problems encountered by users. The overall performance issues and functionality defects that materialized with the initial release of SAM Phase 1 on July 28, 2012, have prevented a majority of users from performing a variety of award management process with SAM Phase 1. The performance issues and defects continue to impact end to end award management processes within the system, forcing users to rely on emergency system workarounds. Concerns about the operability of SAM also prompted GSA to re-establish temporarily its Excluded Parties List System website in fall 2012. Contracting officers use EPLS to determine whether prospective contractors have been excluded from receiving government contracts. DOD responded to SAM performance issues by issuing a class deviation from registration requirements and annual representations and certifications requirements for contractors. The Defense Department's memorandum noted that "SAM has experienced performance issues that have affected the timely processing of awards," and added that GSA had been working aggressively to resolve the issues promptly. Reportedly, the Administrator of OFPP stated, in September 2012, that "'GSA has a lot of thinking to do before they implement future phases of SAM.... OFPP is working hand-in-hand with them and CIO [U.S. Chief Information Officer] Steve VanRoekel, and other users such as DOD, to make sure the system moves forward in the right direction.'" Several months after Phase 1 was implemented, GSA shifted management responsibility for SAM from its Office of Government-wide Policy to the agency's Federal Acquisition Service (FAS) and the Office of the Chief Information Officer. Specifically, the Acting FAS Commissioner and the Deputy CIO have taken over management of SAM. The same announcement noted that the Acting Administrator of General Services has "called for the development, reporting and monitoring of key metrics around the SAM implementation." While performance problems were not apparent publicly until implementation had begun, budget and schedule problems were identified earlier. In March 2012, GAO reported that the project has been plagued by cost increases, funding shortages, and schedule delays. Failure to "adequately execute the SAM hosting strategy as initially planned" and increased "demand for help desk services" contributed to higher development costs. GAO estimated that the cost of SAM-related contracts increased from $96.0 million (initial contract award amounts) to $181.1 million (GAO estimate). The increase in cost was due mostly to "higher than expected hosting costs." While costs have been increasing, "the program also did not receive funding increases it requested." GSA's response has been to modify and delay the schedule, and defer payments or revise contract requirements. GAO recommended that GSA "[r]eassess the SAM business case to compare the costs and benefits of various alternatives," and, if it makes sense to continue the project, then "reevaluate the hosting strategy" and "take steps to ensure that the SAM development contract payments are more closely aligned with the program schedule and delivery of capabilities." Public access to procurement information and data, which is often couched in terms of transparency, has grown over the years. Some procurement processes, such as the posting of solicitations, have moved online, and statutory requirements and policies have led to the creation of procurement data systems, such as USAspending.gov. Transparency can yield significant benefits, such as contributing to an informed citizenry, enhancing policy planning and decisionmaking, and fostering accountability. Access to online systems and procurement information and data, however, does not necessarily equate to comprehension. Without sufficient knowledge of government procurement and expertise in using the government's online acquisition systems, users may face challenges identifying which system(s) can be used meet their needs; understanding the capabilities and limitations of the different systems; determining how to access, or find, the data or information they seek; and understanding how to analyze and interpret the data or information they obtain. The following examples demonstrate situations users might encounter. The dollar amounts associated with some contract actions in FPDS-NG (and, relatedly, USAspending.gov) are either negative or zero. A negative dollar amount represents a deobligation and a dollar amount of zero represents an administrative action. The Federal Awardee Performance Information and Integrity System may contain information for a particular contractor that covers a five-year period. However, "some of that information may not be relevant to a determination of present responsibility" for the contractor, including "a prior administrative action such as debarment or suspension that has expired or otherwise been resolved." Moreover, a contractor's Certification Regarding Responsibility Matters only covers three years, not five years. For certain types of businesses, such as minority-owned and woman-owned, a business owner self-certifies that the business belongs in a particular group. A business owner's interpretation of a particular designation might differ from a user's interpretation. Thus, a user who is unaware self-certification is permitted for certain types of businesses might obtain incorrect data. FPDS-NG is a dynamic system in that data elements (e.g., type of contract, date signed, and vendor name) may be added, merged, or eliminated. For that reason, some searches could yield potentially inaccurate results. Presently, the federal government does not have a database of contracts awarded by federal agencies. (FPDS-NG includes discrete information, in data fields (data elements), about contract awards.) Since June 2003, at least two separate executive branch initiatives have explored the possibility of posting contracts online, and at least one bill, if enacted, would have led to posting contracts online. The General Services Administration led the initial executive branch effort, posting a notice in the Federal Register in 2003. The stated goal of the initiative was to increase transparency and "further the [Bush] Administration's global vision of a citizen-centric E-Government" while the notice sought comments that could aid in implementing a pilot. GSA noted that any proprietary information would be redacted from a contract before it would be posted. Whereas some respondents supported the proposal, suggesting that implementation would increase visibility of and transparency in federal procurement, others stated that existing information sources, policies, and regulations were sufficient. Working through its Integrated Acquisition Environment, GSA established a working group, which consisted of representatives from several federal agencies, to examine the feasibility, challenges, and anticipated benefits of posting federal contracts online. The project was named Contract Award Documents Online (CADO). The CADO working group considered how the Freedom of Information Act (FOIA) process might integrate with, or affect, making contracts publicly available as a matter of course, because agencies use the FOIA process when responding to most requests for copies of contracts. The CADO working group identified the following challenges: "CADO removes the FOIA staff from the process, exposing Agencies to legal challenges by minimizing active FOIA participation in the document release process." "Proactive posting to the public increases the potential for inadvertently releasing sensitive information." "Agency Staff limitations--CADO would require drastic increases in administrative and technical staff to maintain and operate proactive systems in both the vendor and government communities." "Lack of current federal regulation or policy guiding agencies and contractors in the procedures and processes of obtaining contract award documents outside of the current FOIA process." Anticipated benefits of making contracts publicly available include "[i]ncreased transparency of contract award documents ... [p]otential reduction in the number of FOIA requests ... [and] [r]educed cost of operations and maintenance of manual response systems in each agency." The CADO working group concluded, however, "that there is insufficient data supporting a Business Case to recommend the design, development and implementation of a centralized federal system to present contract award data online." More recently, DOD, GSA, and NASA issued an advance notice of proposed rulemaking regarding posting contracts online. Anticipating that, in the future, a requirement to post contracts, task orders, and delivery orders online might be established, in 2010 the Civilian Agency Acquisition Council (CAAC) and Defense Acquisition Regulations Council (DAR Council) solicited comments with the goal of learning how to post contracts "without compromising contractors' proprietary and confidential commercial or financial information." Additionally, the councils sought suggestions that would "facilitate uniform, consistent processing methods that are fair and equitable as well as cost effective and efficient, while at the same time simplifying access to acquisitions once posted." In responding to a particular set of comments elicited by the advance notice of proposed rulemaking, the CAAC and DAR Council identified several issues they believed warranted consideration prior to implementing a scheme for the posting of contracts online. Any contract-posting initiative must give consideration to the cost involved (in technology and software as well as the time of contractor and Government employees) and the risks associated with posting this information (e.g., lawsuits against the Government for inadvertently releasing information that could be damaging to national security and/or the competitive positions of companies doing business with the Government). DOD, GSA, and NASA advocate a judicious approach to establishing contract-posting requirements, one that will appropriately conserve resources and identify information that should be protected from general release to the public. Our assessment is that any contract posting requirement, at a minimum, should involve ... a high dollar threshold [regarding the value of a contract], a requirement for only the successful offeror to redact the contract and/or proposal that will be posted, and an incentive for the successful offeror to do so. Necessary protections for information and personnel involve, at a minimum, a FOIA analysis, which is time consuming and requires senior analysts and attorneys. DOD, GSA, and NASA are concerned, too, that the on-going efforts to identify protections essential for safeguarding unclassified information are not yet sufficiently mature that such efforts can be bypassed to establish a contract-posting requirement prior to guidance on unclassified information. To avoid inadvertent disclosures, the Government would be required to review contractor-redacted documents before such items are posted to a public Web site. The contract or contractor's proposal may contain information that requires protection beyond trade secrets or proprietary information. Offering the following rationale, DOD, GSA, and NASA withdrew the advance notice of proposed rulemaking. [A]t this time ... [we] do not plan to amend the FAR because some of the existing acquisition systems ... provide certain information on Government contracts that is readily available to the public, and most of the content of a contract solicitation or contract action not already available on one of the [government] acquisition systems ... is either standard FAR terms and conditions ... agency specific terms and conditions ... or sensitive information that may be releasable under FOIA. Congress also has shown interest in making procurement documents, including contracts, available to the public. If enacted, S. 3077 (110 th Congress) would have required that "the request for proposals, the announcement of the award, the contract, and the scope of work to be performed" for all "contracts, subcontracts, purchase orders, task orders, lease agreements and assignments, and delivery orders" be posted on the website required by the Federal Funding Accountability and Transparency Act (FFATA) of 2006. Neither this bill, nor its companion bill, H.R. 6411 , was enacted. During the 113 th Congress, a bill was introduced that, if enacted, would require executive branch agencies to make public records available on the Internet at no charge." Whether S. 549 would apply to government contracts probably would depend, at a minimum, on the interpretations of public record and record , and any regulations that would be promulgated to implement this bill. The term public record , as defined in S. 549 , "means any record, regardless of form or format, that an agency discloses, publishes, disseminates, or makes available to the public." The bill's definition of record "includes contracts entered into by persons working as agents of the Federal Government, including records in the possession of Government contractors." The DATA Act--which is the title of two similar bills, H.R. 2061 and S. 994 , that were introduced during the 113 th Congress--would amend the Federal Funding Accountability and Transparency Act (FFATA; P.L. 109-282 ; 31 U.S.C. SS5101 note). If the DATA Act (i.e., either bill) is enacted, responsibility for the operation of the website established pursuant to FFATA, USAspending.gov, would shift from the Director of OMB to the Secretary of the Treasury. Generally, the DATA Act would require, among other things, the following: The Treasury Secretary, in consultation with the heads of OMB, GSA, and other federal agencies, to establish governmentwide "financial data standards for Federal funds"; The Director of OMB to lead an effort to consolidate financial reporting requirements for recipients of federal awards; and The Recovery Accountability and Transparency Board, in consultation with the Secretary of the Treasury and the head of OMB, to establish a pilot program for recipients of federal funds that meet certain conditions. The pilot program would involve reporting financial data related to receipt of federal funds. Neither bill would establish a procurement database. A key distinction between the thrust of the DATA Act and the purpose of most procurement databases is that the former focuses on spending data and using it as a tool to detect fraud, waste, or abuse while the latter facilitate the acquisition process. Possible implications for FPDS-NG involve the connection between it and USAspending.gov. FPDS-NG is the source of the prime contracting procurement data available through USAspending.gov. The implications of a requirement to develop and implement financial data standards for FPDS-NG. Web-based systems increasingly have become embedded in the federal government's acquisition process, providing the means for collecting, storing, searching, or disseminating a variety of data and other information to the acquisition workforce and other interested parties. Many of the systems were designed to facilitate the acquisition process; some of them also promote transparency. Recognizing the potential benefits of integrating certain online procurement systems (and the Catalog for Federal Domestic Assistance), GSA has undertaken an effort to consolidate nine systems into the System for Award Management. It remains to be seen whether efforts to disclose additional procurement information (such as posting contracts online), or to present procurement data in a new portal, or format (such as proposed in the DATA Act), come to fruition. No matter the source of information or data, though, some would argue that access does not necessarily confer comprehension, which may require some knowledge of government procurement. | Increasingly, the federal government uses technology to facilitate and support the federal acquisition process. Primary beneficiaries of this shift to online systems (websites and databases) are the government's acquisition workforce and prospective and incumbent government contractors. The suite of web-based systems supports contracting officers' efforts to ensure the government contracts only with responsible parties, is essential to the dissemination of information regarding contracting opportunities, and facilitates interagency contracting. From the contractor perspective, the government's online systems streamline the processes involved in fulfilling various administrative requirements, provide access to possible contracting opportunities, and are potential resources for market research. Congressional interest in the government's online procurement systems, and, relatedly, the federal acquisition process, flows from the institution's responsibilities involving government spending and oversight of executive branch operations. Congress monitors how well the federal acquisition process works, which includes several web-based systems, and also uses data and information available from some of the systems as resources for its oversight activities. The federal government's major, governmentwide web-based acquisition systems include Acquisition Central, Electronic Subcontracting Reporting System (eSRS), Federal Business Opportunities (FedBizOpps), Federal Funding Accountability and Transparency Act (FFATA) Portal (this system is known as the "FFATA Portal"), Federal Procurement Data System-Next Generation (FPDS-NG), Federal Awardee Performance and Integrity Information System (FAPIIS), FFATA Sub-Award Reporting System (FSRS), Interagency Contract Directory (ICD), Past Performance Information Retrieval System (PPIRS), System for Award Management (SAM), USAspending.gov, and Wage Determinations On-line (WDOL). Interest in the federal government's online acquisition systems is reflected in a variety of issues and topics. Over the years, questions have been raised regarding the accuracy, completeness, and timeliness of the contract award data available from FPDS and its successor, FPDS-NG. Recent efforts to remedy these problems include guidance issued by the Office of Federal Procurement Policy (OFPP) in 2011, which provides instructions for calculating and reporting the accuracy and completeness of data submitted to FPDS-NG. The most recent information available regarding FPDS-NG data shows that, governmentwide, the four-year average (FY2008-FY2011) for completeness was 98.3% and for sample accuracy 94.0%. Another significant topic involving the government's web-based acquisition systems was the launch of the System for Award Management in 2012. The following three systems became part of SAM in July 2012: Central Contractor Registration (CCR, which includes Federal Agency Registration (FedReg)), Excluded Parties List System (EPLS), and Online Representations and Certifications Application (ORCA). When completed, SAM will also include five other online procurement systems, plus the Catalog of Federal Domestic Assistance (CFDA). A variety of issues and problems, including separate logins, overlapping data, the absence of a single, uniform level of service, and multiple vendors hosting the systems, prompted interest in developing an integrated system. Although this report does not focus on transparency, several issues discussed here are related to transparency. First, while the Federal Business Opportunities (FedBizOpps) website and FPDS-NG provide information about executive branch agencies' procurements, a database of federal agencies' contracts does not exist. In 2003, GSA established a working group to examine the feasibility, challenges, and anticipated benefits of posting federal contracts online. Ultimately, the working group concluded there were insufficient data to support recommending the establishment of a central system for posting contracts online. In 2010, the Department of Defense (DOD), GSA, and the National Aeronautics and Space Administration (NASA) issued an advance notice of proposed rulemaking (ANPR) regarding posting contracts online. Comments submitted in response to the notice identified several challenges, and the matter was concluded when the agencies withdrew the ANPR. Second, transparency does not necessarily equate to comprehension. Generally, variation exists among the users of government procurement systems regarding their knowledge of government procurement and procurement data. Third, during the 113th Congress, two similar bills (H.R. 2061 and S. 994) with the same name (Digital Accountability and Transparency Act, or DATA Act) were introduced, either of which would enhance transparency of spending data, including certain procurement data. If either bill is enacted, it might have implications for FPDS-NG. | 6,496 | 985 |
The legislation contains extensive changes to Medicare's FFS program, including paymentincreases and, in certain instances, decreases; development of competitive acquisition programs;implementation or refinement of other prospective payment systems (notably, the development ofan end-stage renal disease (ESRD) basic payment system); expansion of covered preventive benefits;establishment of demonstration programs; and required studies. The anticipated financial impactof these changes on any individual provider, physician, or supplier will vary depending on manyfactors, such as the unique characteristics of the individual or entity participating in Medicare as wellas the number and type of services provided to the Medicare beneficiaries they serve. Selectedhighlights of the FFS payment provisions and those establishing preventive care benefits anddemonstration programs will be briefly described. Selected Rural Provider Provisions. Generally, Medicare payments to certain rural providers are expected to increase; many of the rural provisions will benefit urban providers as well. CBO estimates that the rural provisions in TitleIV of the bill will increase Medicare's direct spending by $9.3 billion from 2004 through 2008 andby $19.9 billion from 2004 though 2013. It should be noted that other provider payment provisionsin H.R. 1 can impact rural providers, but their effect on Medicare payments to ruralproviders has not been specifically identified. Hospitals in rural areas and those in small urban areas will receive a permanent 1.6% increase to Medicare's base rate or per discharge payment; the payment limit for rural andsmall urban hospitals that qualify for disproportionate share hospital (DSH) adjustment will increasefrom 5.25% to 12%; hospitals in low-wage areas (those with wage index values below 1) willreceive additional payments through a decrease from 71% to 62% in the labor-related portion of thebase payment rate; and small rural hospitals with less than 50 beds will receive cost reimbursementfor outpatient clinical laboratory tests. In addition, rural hospitals with less than 100 beds will beprotected from payment declines associated with the hospital outpatient prospective payment system(OPPS) for an additional 2 years; these OPPS hold harmless provisions will be extended to solecommunity hospitals for services from 2004 through 2006. CBO estimates that these provisions willincrease direct Medicare spending by $15.6 billion over the 10-year period. Critical access hospitals (CAHs) will have their bed limit increased from15to 25; there will be no restriction on the number of these beds that can be used for acute care servicesat any one time. CAHs will be able to establish distinct part rehabilitation and psychiatric units ofup to 10 beds that will not be included in the CAH bed count. Cost reimbursement of CAH serviceswill increase to 101% of reasonable costs, starting January 1, 2004. Periodic interim payments forCAHs will be authorized. State authority to waive the 35-mile requirement for new entities toqualify as a CAH will be eliminated as of January 1, 2006. CBO estimates that these provisions willincrease direct Medicare spending by $900 million over the 10-year period. Physicians in newly established scarcity areas will receive a 5% increase inMedicare payments. Physicians in certain low-cost areas with geographic adjustment factors below1 will receive payment increases so as to increase this factor to 1, starting in 2004 through 2006. CBO estimates that these provisions will increase direct Medicare spending by $1.7 billion over the10-year period. Practitioners in rural health clinics and federally qualified health centers willbe able to bill separately for services provided to beneficiaries in skilled nursing facilities. CBOestimates that these provisions will increase direct Medicare spending by $100 million over the10-year period. Home health providers in rural areas will receive a 5% increase in Medicarepayments for one year beginning April 1, 2004. CBO estimates that this one-year increase willincrease direct Medicare spending by $100 million over the 10-year period. Selected Acute Hospital Provisions. Generally, Medicare payments to hospitals will increase under the conference report. Specifically, Acute hospitals paid under the inpatient prospective payment system (IPPS) will receive the full increase in the market basket (MB) index as an update in 2004. From 2005through 2007, hospitals that submit data on specified quality indicators will receive the MB as anupdate; those hospitals that do not submit such data will receive the MB minus 0.4 percentage pointsfor the year in question. CBO expects that this provision will reduce direct spending 0.2 billion from2004 through 2008. Teaching hospitals will receive an increase in their indirect medical educationadjustment from 2004 through 2006 that CBO projects will increase spending by $400 million. A one-time, geographic reclassification process to increase hospitals' wageindex values for 3 years that is expected to increase payments by $900 million from 2004 through2008 is established. Low volume hospitals with fewer than 800 discharges that are 25 road milesaway from similar hospitals may qualify for up to a 25% increase in Medicare payments for anexpected cost of $100 million from 2004-2013. Changes in payment methods for covered prescription drugs provided inoutpatient hospital departments is expected to increase payments by $700 million from FY2004through FY2008. A redistribution of unused resident positions will increase both direct andindirect graduate medical education spending by an anticipated $200 million from FY2004 thoughtFY2008 and by $600 million from FY2004 through FY2013. Certain teaching hospitals with high per resident payments will not receive apayment increase from FY2004 through FY2013; this provision was scored by CBO as a reductionin Medicare spending of $500 million from FY2004 through FY2008 and $1.3 billion from FY2004through FY2013. For 18 months from the date of enactment, physicians will not be able to referMedicare patients to specialty hospitals in which they have an investment interest. This provisionwill not apply to hospitals that are in operation or under development before November 18, 2003. Both MedPAC and HHS are to complete required studies on specialty hospitals within 15 monthsof enactment. Selected Physician Provisions. The impact of the legislation on Medicare's spending for physician spending is difficult to determine. Although physicians will receive a 1.5% update in 2004 and 2005 which is expected toincrease spending by $2.8 billion from FY2004 through FY2007; subsequently, from FY2008through FY2012, the provision is expected to result in a decline of $2.8 billion in Medicarespending. Over the 10 year period from 2004 through 2013, CBO expects the update provisions toincrease Medicare spending by $200 million. Medicare's payments for some practice expenses, particularly the administration of covered drugs, will increase starting in 2004. A transitional adjustment to the drug administration paymentsof 32% in 2004 and 3% in 2005 is also established. These payment increases are expected to becounterbalanced by a decrease in Medicare's payments for covered outpatient drugs provided in adoctor's office. Medicare's payment for covered outpatient drugs furnished incident to a physician's service will change during 2004 as follows: Many covered outpatient drugs furnished in 2004 will be reimbursed at 85% of the average wholesale price (AWP). Certain of these drugs may be paid as low as 80% of theAWP (in effect as of April 1, 2003). Blood clotting factors and other blood products, drugs or biologicals (drugproducts) that were not available for payment by April 1, 2003, covered vaccinations, drug productsfurnished in during 2004 in connection with renal dialysis services, drugs provided through covereddurable medical equipment will be paid at a higher rate during 2004. The decline in payments for covered outpatient drugs in 2004 can only be implemented concurrently with the increased payments for the administration of the drugs. Starting in 2005, Medicare's payment for many covered outpatient drugs will be based on average sales price methodology, that uses different pricing and cost data, depending on theprescription drug. Generally, multiple source drugs will be paid 106% of the average sales price;single source drugs will be paid 106% of the lower of the average sales price or the wholesaleacquisition costs, unless the widely available market price or the average manufacturer price forthose drugs exceeds a certain threshold. Starting in 2006, physicians will have the option ofobtaining covered Part B drugs from selected entities awarded contracts for competitively biddabledrug products under a newly established competitive acquisition program. Selected Provisions Affecting Other Providers and Practitioners. The follow provisions affecting other providers and practitioners are included in the legislation: Ambulatory Surgical Centers. Payments to ambulatory surgical centers (ASCs) are expected to be lower by $800 million from FY2004 throughFY2008 and by $3.1 billion from FY2004 through FY2013 as a result of the legislation. ASCs willreceive an update of the consumer price index for all urban consumers (CPI-U) minus 3.0 percentagepoints starting April 1, 2004 and will receive a O percent update for services provided startingOctober 1, 2004 through December 31, 2009. Therapy Caps. Application of the caps on outpatient therapy services provided by non-hospital providers is suspended from the date of enactment and forthe remainder of 2003, in 2004 and 2005. CBO estimates that the therapy cap moratorium willincrease direct Medicare spending by $700 million over the 10-year period. Durable Medical Equipment (DME). Competitive bidding for DME will be phased-in beginning in 2007 in 10 of the largest metropolitan statisticalareas and may be phased in first for the highest cost and highest volume items and services. Theupdate for most DME items and services and for prosthetics and orthotics is 0 in 2004, 2005, 2006,2007, and 2008. For 2005, payment for certain items, oxygen and oxygen equipment, standardwheelchairs, nebulizers, diabetic lancets and testing strips, hospital beds and air mattresses will bereduced by an amount calculated using 2002 payment amounts and the median price paid by theFederal Employees Health Benefit Program. (2) Beginning January 1, 2009, items and servicesincluded in the competitive acquisition program will be paid as determined under that program andthe Secretary can use this information to adjust the payment amounts for DME, off-the-shelforthotics, and other items and services that are supplied in an area that is not a competitiveacquisition area. Class III items (devices that sustain or support life, are implanted, or presentpotential unreasonable risk, e.g., implantable infusion pumps and heart valve replacements, and aresubject to premarket approval, the most stringent regulatory control) receive the full increase in theconsumer price index for all urban consumers (CPI-U) in 2004, 2005, 2006 , 2008 and subsequentyears. The Secretary will determine the update in 2007. CBO scored the DME provisions of thebill as reducing spending by $6.8 billion over the 10-year period. Home Health. Home health agency payments are increased by the full market basket percentage for the last quarter of 2003 (October, November, andDecember) and for the first quarter of 2004 (January, February, and March). The update for theremainder of 2004 and for 2005 and 2006 is the home health market basket percentage increaseminus 0.8 percentage points. CBO estimates that this provision will reduce direct Medicarespending by $6.5 billion over the 10-year period. The legislation suspends the requirement thathome health agencies must collect the Outcome and Assessment Information Set (OASIS) data onprivate pay (non-Medicare, non-Medicaid) until the Secretary reports to Congress and publishes finalregulations regarding the collection and use of OASIS. Selected Fee-for Service Demonstration Projects. The legislation establishes numerous demonstration projects for the Medicare program. Several demonstrations address aspects of disease management for beneficiaries with chronic conditions. Chronic Care Improvement under Fee-For-Service. The legislation requires the Secretary to establish and implement chronic care improvementprograms under fee-for-service Medicare to improve clinical quality and beneficiary satisfaction andachieve spending targets specified by the Secretary for Medicare for beneficiaries with certainchronic health conditions. Participation by beneficiaries is voluntary. The contractors are requiredto assume financial risk for performance under the contract. CBO has estimated that thisdemonstration will increase direct Medicare spending by $500 million over the 10-year period. Chronically Ill Beneficiary Research, Demonstration. The legislation requires the Secretary to develop a plan to improve quality of care and to reduce thecost of care for chronically ill Medicare beneficiaries within 6 months after enactment. The plan isrequired to use existing data and identify data gaps, develop research initiatives, and proposeintervention demonstration programs to provide better health care for chronically ill Medicarebeneficiaries. The Secretary is required to implement the plan no later than 2 years after enactment. Coverage of Certain Drugs and Biologicals Demonstration. The Secretary is required to conduct a 2-year demonstrationwhere payment is made for certain drugs and biologicals that are currently provided as "incident to"a physician's services under Part B. The demonstration is required to provide for cost-sharing in thesame manner as applies under Part D of Medicare. The demonstration is required to begin within90 days of enactment and is limited to 50,000 Medicare beneficiaries in sites selected by theSecretary. Homebound Demonstration. The Secretary is required to conduct a 2-year demonstration project where beneficiaries with chronic conditions would bedeemed to be homebound in order to receive home health services under Medicare. Adult Day Care. The Secretary is required to establish a demonstration where beneficiaries could receive adult day care services as a substitute for a portion of home health services otherwise provided in a beneficiary's home. Expansion of Covered Benefits. The legislation contains a number of provisions that expand coverage beginning January 1, 2005, including the following: Initial Physical Examination. Medicare coverage of an initial preventive physical examination is authorized for those individuals whose Medicarecoverage begins on or after January 1, 2005. CBO estimates that this provision will increase directMedicare spending by $1.7 billion over the 10-year period. Cardiovascular Screening Blood Tests. Medicare coverage of cardiovascular screening blood tests is authorized. CBO estimates that this provisionwill increase direct Medicare spending by $300 million over the 10-year period. Diabetes Screening Tests. Diabetes screening tests furnished to an individual at risk for diabetes for the purpose of early detection of diabetes areincluded as a covered medical service. In this instance, diabetes screening tests include fastingplasma glucose tests as well as other tests and modifications to those tests deemed appropriate bythe Secretary. CBO estimates that this provision will increase direct Medicare spending less than$50 million over the 10-year period. Screening and Diagnostic Mammography. Screening mammography and diagnostic mammography will be excluded from OPPS and paid separately. CBO estimates that this provision will increase direct Medicare spending by $200 million over the10-year period. Intravenous Immune Globulin. The bill includes intravenous immune globulin for the treatment in the home of primary immune deficiency diseasesas a covered medical service under Medicare. CBO estimates that this provision will increase directMedicare spending by $100 million over the 10-year period. The bill contains two provisions which change the beneficiary premiums and deductibles. Income-Relating the Part B Premium. The legislation increases the monthly Part B premiums for higher income enrollees beginning in 2007. Beneficiaries whose modified adjusted gross income exceed $80,000 and couples filingjoint returns whose modified adjusted gross income exceeds $160,000 will be subject to higherpremium amounts. The increase will be calculated on a sliding scale basis and will be phased-inover a five-year period. The highest category on the sliding scale is for beneficiaries whose modifiedadjusted gross income is more than $200,000 ($400,000 for a couple filing jointly). Those amountsare increased beginning in 2007 by the percentage change in the consumer price index. CBOestimates that direct Medicare spending will be reduced by $13.3 billion over the 10-year period2004 through 2013. Indexing the Part B Deductible. The Medicare Part B deductible will remain $100 through 2004, increase to $110 for 2005, and in subsequent years the deductible will be increased by the same percentage as the Part B premiumincrease. Specifically, the annual percentage increase in the monthly actuarial value of benefitspayable from the Federal Supplementary Medical Insurance Trust Fund will be used as the index. Title X of the legislation makes some changes to Medicaid and other programs. Omitted fromthe agreement were two provisions contained in S. 1 , including a provision to amendthe Age Discrimination in Employment Act of 1967 to allow an employee benefit plan to offerdifferent benefits to their Medicare eligible employees than to their non-Medicare eligibleemployees, and a provision to allow states to cover certain lawfully residing aliens under theMedicaid program. CBO estimates the Medicaid and other provisions included in the bill to increase direct spending by $5.7 billion between FY2004 and FY2013. The following general points can be madeabout the Medicaid and Miscellaneous provisions included in Title X of the bill: The legislation temporarily increases states' disproportionate share hospital (DSH) allotments to erase the decline in these Medicaid amounts that occurred after a special rulefor their calculation expired. The legislation includes several other Medicaid provisions, including raisingthe floor on DSH allotments for "extremely low DSH states," providing DSH allotment adjustmentsimpacting Hawaii and/or Tennessee, increasing reporting requirements for DSH hospitals, andexempting prices of drugs provided to certain safety net hospitals from Medicaid's best price drugprogram. Miscellaneous provisions in Title X of the legislation include funding federalreimbursement of emergency health services furnished to undocumented aliens, and fundingadministrative start-up costs for Medicare reform, various research projects, work groups andinfrastructure improvement programs for the health care system. This report contains a detailed side-by-side comparison of the relevant provisions of the legislation, S. 1 , as passed the Senate, and H.R. 1 , as passed the House. Certain of the provisions can be found in one or more of the sections. For example, the home healthhomebound demonstration (section 702) is listed in the home health section and the demonstrationprojects section. Also included in this side-by-side, are provision that were included in the Houseand/or Senate bill which were dropped in conference. Hospital Services. Allied Health and Graduate Medical Education Payments. Skilled Nursing Facility (SNF) and Hospice Services. Other Part A Provisions. Physician and Practitioner Services. Hospital Outpatient Department (HOPD), Ambulatory Surgery Center (ASC), and Clinic Services. Covered Part B Outpatient Drugs (Not Provided by a HOPD). Covered Drugs and Services at a Dialysis Facility. Durable Medical Equipment (DME) and Related Outpatient Drugs. Ambulance Services. Other Part B Services and Provisions. Home Health Services. Chronic Care Improvement. Medicare Secondary Payor (MSP). Other Medicare A and B Provisions. Medicare Demonstration Projects and Studies. | On November 22, the House of Representatives voted 220 to 215 to approve the conference report on H.R. 1 , the Medicare Prescription Drug, Improvement, and Modernization Actof 2003. The Senate, on November 24, voted 54 to 44 to approve the conference report. Earlier, theconferees of the Medicare prescription drug and modernization legislation announced an agreementon November 16 and the legislative text was released November 20. The legislative language canbe downloaded from the House Committee on Ways and Means website at: http://waysandmeans.house.gov . The bill was signed into law by the President on December 8,2003. As well as establishing a prescription drug benefit for Medicare beneficiaries, the legislation contains provisions that involving significant payment increases, payment reductions, an expansionof covered benefits, new demonstration projects and new beneficiary cost-sharing provisions for thetraditional Medicare fee-for-service (FFS) program. The bill includes a measure that would requirecongressional consideration of legislation if general revenue funding for the entire Medicare programexceeds 45%. Provisions affecting the State Childrens' Health Insurance Program (SCHIP) andMedicaid programs are included in the legislation as well. Earlier this year, under Congress' FY2004 budget resolution, $400 billion was reserved for Medicare modernization, creation of a prescription drug benefit, and, in the Senate, to promotegeographic equity payment. The Congressional Budget Office (CBO) has estimated that thelegislation for H.R. 1 would increase direct (or mandatory) spending by $394.3 billionfrom FY2004 through FY2013. Prescription drug spending is estimated at $409.8 billion over the10-year period and Medicare Advantage spending at $14.2 billion. Overall, the fee-for-serviceprovisions which change traditional Medicare are estimated to save $21.5 billion over the 10-yearperiod and adjusting the Part B premium to beneficiaries' income is estimated to save $13.3 billionover the period. Some fee-for-service provisions will increase spending over this 10-year periodincluding the provisions affecting hospitals and physician. Other fee-for-service provisions areprojected to save money over the period including those affecting durable medical equipment,clinical laboratories and home health agencies. The CBO estimate is available on the CBO websiteat ftp://ftp.cbo.gov/48xx/doc4808/11-20-MedicareLetter.pdf . | 4,129 | 522 |
In the 113 th Congress, Members have introduced multiple bills that include provisions that would directly or indirectly address climate change. This report describes and compares the bills and provisions that directly address climate change, as opposed to those that primarily address other issues (e.g., energy efficiency) but could have ancillary impacts on climate. In some cases, it is difficult to distinguish between direct and indirect climate change bills, because a specific bill or action may seek to achieve multiple objectives. This report focuses on legislative actions--including comprehensive bills with individual climate change titles, sections, or provisions--that explicitly address climate change issues. The provisions in these bills fall into six general categories: 1. carbon price (i.e., tax or fee) on greenhouse (GHG) emissions; 2. other mechanisms intended to encourage mitigation of GHG emissions (e.g., sequestration of emissions); 3. research on climate change-related issues; 4. adaptation activities related to expected climate change impacts; 5. support for international climate change-related activities; and 6. action that limits or prohibits climate change-related authorities, efforts, or considerations. Table 1 lists the proposals in the 113 th Congress by these six broad categories. These categories are not mutually exclusive, and several bills address more than one of the above categories. Other reviews of the same legislation may identify a different list of bills with different categorization. Table 2 provides a brief summary about each bill, including the primary sponsor, short title, major actions, and key climate change-related provisions. As of the date of this report, one bill-- S. 332 (Sanders)--would attach a price to GHG emissions. Table 3 compares that carbon price proposal with selected state and international programs. In addition, Representative Waxman and Senator Whitehouse offered a carbon tax "discussion draft" on March 12, 2013. | In the 113th Congress, Members have introduced multiple bills that include provisions that would directly or indirectly address climate change-related issues. In some cases, it is difficult to distinguish between direct and indirect climate change bills, because a specific bill or action may seek to achieve multiple objectives. The bills listed in this report include provisions that directly address climate change, as opposed to those that primarily address other issues (e.g., energy efficiency) but could have ancillary impacts on climate. Observations about the climate change-related proposals in the 113th Congress include the following: a large number of the identified bills include provisions to encourage or require climate change adaptation activities; a considerable number of proposals include provisions to prohibit federal agencies, particularly the Environmental Protection Agency (EPA), from taking action to require greenhouse gas (GHG) emission reductions; and as of the date of this report, one bill (S. 332) would attach a price to GHG emissions. As of the date of this report, the President has signed one bill into law (P.L. 113-79) that includes climate change-related provisions. Among other provisions, this act (often referred to as the "Farm Bill") reauthorizes the Office of International Forestry through FY2018 and directs the Secretary of Agriculture to revise the strategic plan for forestry inventory to include information on renewable biomass supplies and carbon stocks. In addition, the House has passed three bills: H.R. 367 (passed on August 2, 2013) would require any rule that implements or provides for the imposition or collection of a carbon tax to be submitted to Congress for an affirmative vote and presentment to the President before the regulation could take effect; H.R. 2641 (passed on March 6, 2014) would prohibit a lead agency from using the social cost of carbon in an environmental review or decision-making process; and H.R. 3826 (passed on March 6, 2014) would prohibit EPA from issuing a rule that would establish GHG performance standards at electric generators unless specific conditions are met. | 401 | 451 |
The 114 th Congress opened with the introduction of a number of proposals that address human trafficking, particularly sex trafficking. Among them were proposals to amend existing federal criminal law, which would expand the coverage of federal sex trafficking laws; amend bail provisions; raise the limits on supervised release; authorize more extensive wiretapping; and adjust the application of federal forfeiture and restitution laws. The legislation includes the following: Justice for Victims of Trafficking Act ( H.R. 181 ) (Representative Poe) (House passed); Justice for Victims of Trafficking Act ( S. 178 ) (Senator Cornyn) ( P.L. 114-22 ); Justice for Victims of Trafficking Act ( H.R. 296 ) (Representative Poe); Stop Advertising Victims of Exploitation Act (SAVE Act) ( H.R. 285 ) (Representative Wagner) (House passed); Stop Advertising Victims of Exploitation Act (SAVE Act) ( S. 572 ) (Senator Kirk); Combat Human Trafficking Act ( H.R. 1201 ) (Representative Granger); Combat Human Trafficking Act ( S. 140 ) (Senator Feinstein); Human Trafficking Fraud Enforcement Act ( H.R. 1311 ) (Representative Carolyn B. Maloney); Military Sex Offender Reporting Act ( S. 409 ) (Senator Burr); and Military Track Register and Alert Communities Act (Military TRAC Act) ( H.R. 956 ) (Representative Speier). The legislation would amend federal substantive law in three areas: commercial sex trafficking (18 U.S.C. 1591); the Mann Act, which outlaws transportation and travel for unlawful sexual purposes; and federal tax crimes. All but the tax crime proposal appears in P.L. 114-22 . The proposals would amend SS1591 to (1) confirm the coverage of the customers of a commercial sex trafficking enterprise; (2) outlaw advertising of a commercial sex trafficking enterprise; (3) clarify the government's burden of proof with regard to the age of the victim; and (4) enlarge the permissible term of supervised release for commercial sex trafficking conspirators. Prior to amendment, SS1591 outlawed commercial sex trafficking. More precisely, it outlawed: knowingly recruiting, enticing, harboring, transporting, providing, obtaining, or maintaining another individual knowing or with reckless disregard of the fact that the individual will be used to engage commercial sexual activity either as a child or virtue of the use of fraud or coercion when the activity occurs in or affects interstate or foreign commerce, or occurs within the special maritime or territorial jurisdiction of the United States. It continues to outlaw separately profiting from such a venture. Offenders face the prospect of life imprisonment with a mandatory minimum term of not less than 15 years (not less than 10 years if the victim is between the ages of 14 and 18). The same penalties apply to anyone who attempts to violate the provisions of SS1591. There were suggestions to expand SS1591 to cover advertisers and to more explicitly cover the customers of a commercial sex trafficking scheme. At first glance, SS1591 did not appear to cover the customers of a sex trafficking enterprise. Moreover, in the absence of a specific provision, mere customers ordinarily are not considered either co-conspirators or accessories before the fact in a prostitution ring. Nevertheless, the U.S. Court of Appeals for the Eighth Circuit found that the language of SS1591(a) applied to the case of two customers caught in a law enforcement "sting" who attempted to purchase the services of what they believed were child prostitutes. "The ordinary and natural meaning of 'obtains' and the other terms Congress selected in drafting section 1591 are broad enough to encompass the actions of both suppliers and purchasers of commercial sex acts," the court declared. S. 178 (Senator Cornyn), H.R. 181 (Representative Poe), and a number of other bills would explicitly confirm this construction by amending SS1591(a) to read, in part, "Whoever knowingly ... recruits, entices, harbors, transports, provides, obtains, maintains, or patronizes, or solicits by any means any person ..." (language of the proposed amendment in italics). P.L. 114-22 adopts the proposal. The same bills often amend the "knowledge of age" element in SS1591(c) to reflect the clarifying amendment with respect to the customers of a commercial sex trafficking venture. The law already absolved the government of the obligation to prove that the defendant knew the victim was a child, if it could show that the defendant had an opportunity to "observe" the victim. The proposal, and now P.L. 114-22 , makes it clear that the government remains absolved regardless of whether the defendant is a consumer or purveyor of a child's sexual commercial services, provided the defendant had an opportunity to observe the child: "In a prosecution under subsection (a)(1) in which the defendant had a reasonable opportunity to observe the person so recruited, enticed, harbored, transported, provided, obtained, maintained, patronized, or solicited the Government need not prove that the defendant knew , or recklessly disregarded the fact , that the person had not attained the age of 18 years," (language of the proposed amendment in italics). Section 1591 consists of two offenses: commercial sex trafficking and profiting from commercial sex trafficking. A few bills, S. 178 (Senator Cornyn), H.R. 285 (Representative Wagner), and S. 572 (Senator Kirk), for example, suggested amending SS1591(a)(1) to outlaw knowingly advertising a person, knowing the victim would be used for prostitution. Even before amendment, however, there was some evidence that advertising might constitute a crime under either offense. Aiding and abetting would have provided the key to prosecution in both instances. Anyone who aids and abets the commission of a federal crime by another merits the same punishment as the individual who actually commits the crime. Liability for aiding and abetting requires that a defendant embrace the crime of another and consciously do something to contribute to its success. Anyone who knowingly advertised the availability of child prostitutes might have faced charges of aiding and abetting a commercial sex trafficking offense. An advertiser who profited from such activity might face charges under the profiteering prong of SS1591. Yet SS1591 might have presented a technical obstacle. One of SS1591's distinctive features was that its action elements--recruiting, harboring, transporting, providing, obtaining--were activities that might be associated with aiding and abetting the operation of a prostitution enterprise. Section 1591, read literally then, did not outlaw operating a prostitution business; it outlawed the steps leading up to or associated with operating a prostitution business--recruiting, harboring, transporting, etc. Strictly construed, advertising in aid of recruitment, harboring, transporting, or one of the other action elements might have qualified as aiding and abetting a violation of SS1591, while advertising the availability of a prostitute might not have. Nevertheless, at least one court suggested that SS1591 did outlaw operating a prostitution business, at least for purposes of aiding and abetting liability, and thus by implication advertising might have constituted aiding and abetting a violation of the section: Pringler first argues that the evidence is insufficient to support his conviction for aiding and abetting the sex trafficking of a minor [in violation of Section 1591].... We disagree. The record is not devoid of evidence to support the jury's verdict and show Pringler's integral role in the criminal venture. Pringler took the money that Norman and B.L. earned from their prostitution and used some of it to pay for hotel rooms where the women met their patrons. Pringler bought the laptop Norman and B.L. used to advertise their services. He drove Norman and B.L. to "outcall" appointments, and he took photographs of Norman, which he had planned for use in advertisements. P.L. 114-22 resolves the uncertainty by adding advertising to the prostitution-assisting element of the commercial sex trafficking offense. The offense now reads in pertinent part: Whoever knowingly- (1) in or affecting interstate or foreign commerce, or within the special maritime and territorial jurisdiction of the United States, recruits, entices, harbors, transports, provides, obtains, advertises, or maintains by any means a person; ... knowing, or ... in reckless disregard of the fact, that means of force, threats of force, fraud, coercion described in subsection (e)(2), or any combination of such means will be used to cause the person to engage in a commercial sex act, or that the person has not attained the age of 18 years and will be caused to engage in a commercial sex act, shall be punished as provided in subsection (b) [language added by the amendment in italics]. After amendment, the knowledge element of SS1591's trafficking and profiteering offenses are slight different. Advertising traffickers are liable if they knew of or recklessly disregarded the victim's status. Advertising profiteers are liable only if they knew of the victim's status: Whoever knowingly- (1) in or affecting interstate or foreign commerce, or within the special maritime and territorial jurisdiction of the United States, recruits ... advertises ... ; or (2) benefits, financially or by receiving anything of value, from participation in a venture which has engaged in an act described in violation of paragraph (1), knowing, or , except where, in an offense under paragraph (2), the act constituting the violation of paragraph (1) is advertising , in reckless disregard of the fact, that means of force, threats of force, fraud, coercion described in subsection (e)(2), or any combination of such means will be used to cause the person to engage in a commercial sex act, or that the person has not attained the age of 18 years and will be caused to engage in a commercial sex act, shall be punished as provided in subsection (b) [language added by the amendment in italics]. Knowledge is obviously a more demanding standard than reckless disregard, but the dividing line between the two is not always easily discerned, in part because of the doctrine of willful blindness. The doctrine describes the circumstances under which a jury may be instructed by the court that it may infer knowledge on the part of a defendant. Worded variously, the doctrine applies where evidence indicates that the defendant sought to avoid the guilty knowledge. Since the element was worded in the alternative--knowing or in reckless disregard of the fact--the courts have rarely distinguished the two. One possible interpretation comes from comparable wording in an immigration offense which outlaws transporting an alien knowing or acting in reckless disregard of the fact that the alien is in this country illegally: "To act with reckless disregard of the fact means to be aware of but consciously and carelessly ignore facts and circumstances clearly indicating that the person transported was an alien who had entered or remained in the United States illegally." The courts refer to a similar unreasonable indifference standard when speaking of the veracity required for the issuance of a warrant. Defendants sentenced to prison for federal crimes are also sentenced to a term of supervised release. Supervised release is comparable to parole. It requires a defendant upon his release from prison to honor certain conditions--such as a curfew, employment requirements and restrictions, limits on computer use, drug testing, travel restrictions, or reporting requirements--all under the watchful eye of a probation officer. As a general rule, the court may impose a term of supervised release of no more than five years. For several crimes involving sexual misconduct--commercial sex trafficking, for example--the term must be at least five years and may run for the lifetime of the defendant. S. 178 and a number of other bills heralded the provision in P.L. 114-22 , with a proposal to add conspiracy to engage in commercial sex trafficking to the list of offenses punishable by this not-less-than-five-years-nor-more-than-life term of supervised release. Section 1595 establishes a cause of action for victims of human trafficking. The cause of action is subject to a 10-year statute of limitations. S. 178 would extend the statute of limitations in cases in which the victim is a child. Under those circumstances, the statute of limitations is 10 years after the child reaches the age of 18 years of age. P.L. 114-22 adopts the same position. P.L. 114-22 extends the reach of a number of the Mann Act's prohibitions to encompass activities involving child pornography. Section 2423(b) of the Mann Act outlaws travel in U.S. interstate or foreign travel with intent to engage in "illicit sexual conduct." Section 2423(c) prohibits U.S. citizens or U.S. permanent resident aliens from engaging in illicit sexual conduct overseas. Section 2423(d) outlaws commercially facilitating overseas travel in order to engage in illicit sexual conduct. Each of the offenses is punishable by imprisonment for not more than 30 years, and the same punishment attaches to any attempt or conspiracy to commit any of the three. Prior to the enactment of P.L. 114-22 , SS2423 defined "illicit sexual conduct" as either (1) conduct that would be sexual abuse of a child if committed in U.S. maritime or territorial jurisdiction or (2) commercial sex trafficking of a child. P.L. 114-22 adds production of child pornography as an alternative third definition. Thus, it is a federal crime (1) under SS2423(b) to travel in U.S. interstate or foreign travel with the intent to produce child pornography; or (2) under SS2423(c) for a U.S. citizen or permanent resident alien to produce child pornography overseas; or (3) under SS2423(d) to commercially facilitate overseas travel in order to produce child pornography. Defendants previously enjoyed an affirmative defense in "illicit sexual activity" cases involving commercial sex trafficking, if they could establish by a preponderance of the evidence that they reasonably believed that the victim was over 18 years of age. P.L. 114-22 limits the defense to cases in which the defendant establishes the reasonableness of his belief by clear and convincing evidence. The difference between preponderance of the evidence and clear and convincing is the difference between more likely than not and highly probable. The final Mann Act amendment involves prosecutors. Section 2421 outlaws transporting another in interstate or foreign commerce for purposes of prostitution or other unlawful sexual activity. Section 303 of P.L. 114-22 instructs the Attorney General to honor the request of a state attorney general to cross-designate a state prosecutor to handle a SS2421 prosecution or to explain in detail why the request has not been honored. The designated state prosecutor--or prosecutors, should the Attorney General receive requests from both the state from which, and the state into which, the victim was transported--presumably operates under the direction of the U.S. Attorney. P.L. 114-22 's Mann Act amendments reflect the position taken in the earlier bills. The Internal Revenue Code makes taxable income from any source lawful or unlawful. H.R. 1311 (Representative Carolyn B. Maloney) would increase the penalties associated with various tax offenses committed by sex traffickers, and would direct the creation of an office of tax law enforcement to invest tax offenses committed by sex traffickers. The enhanced enforcement would be focused on tax offenses relating to crimes proscribed in: 18 U.S.C. 1351 (foreign labor contracting fraud); 18 U.S.C. 1589 (forced labor); 18 U.S.C. 1590 (peonage, slavery, involuntary servitude, or forced labor trafficking); 18 U.S.C. 1591(a) (commercial sex trafficking); 18 U.S.C. 1952 (Travel Act); 18 U.S.C. 2421 (transporting an individual for unlawful sexual purposes); 18 U.S.C. 2422 (coercing or enticing travel for unlawful sexual purposes); 18 U.S.C. 2423(a) (transporting a child for unlawful sexual purposes); 18 U.S.C. 2423(d) (trafficking in travel to engage in unlawful sex with a child); 18 U.S.C. 2423(e) (attempting or conspiring to transport a child or to travel and engage in unlawful sex with a child); 8 U.S.C. 1328 (importing aliens for immoral purposes); and state or territorial laws prohibiting promotion of prostitution or commercial sex acts. Among other offenses, the Internal Revenue Code outlaws (1) attempting to evade or defeat a federal tax; (2) willfully failing to file a return; and (3) making false statements in a tax matter. H.R. 1311 would increase the maximum terms of imprisonment and the maximum fines for each of these offenses when one or more of the designated sex trafficking offenses generated the income involved: H.R. 1311 would also expand liability for those who provide their employees with false W2 forms and other required forms. Existing law limits employer liability for furnishing employees with a false statement to the misdemeanor provisions of SS7204 and SS6674. H.R. 1311 would add SS7201 and SS7203, which would increase potential liability for providing false statements to employees to imprisonment for not more than 10 years, where the misconduct involved income generated by one or more of the sex trafficking offenses. H.R. 1311 would direct the Secretary of the Treasury to create an Internal Revenue Service office specifically for the investigation and prosecution of designated sex trafficking-related tax offenses. The bill anticipates that the office would work cooperatively with the Justice Department's Child Exploitation and Obscenity Section and the Federal Bureau of Investigation's Innocence Lost National Initiative. The bill would authorize an appropriation of $4 million for FY2016 supplemented with an appropriation equal to the amounts collected as a consequence of its activities. It would also make sex trafficking victims eligible for the whistleblower/informant rewards, which can top out at 30% of the amounts collected as a consequence of their disclosures. Section 3771 provides victims of federal crimes and victims of crime under the District of Columbia Code with certain rights, including the right to confer with the prosecutor and to be heard at public proceedings concerning pleas and sentencing in the case. The rights are reinforced by a right to notice from federal officials of available services. Victims may appeal a failure to honor their rights by seeking a writ of mandamus, and the appellate court must decide the matter within three days (72 hours), or in the case of a stay or continuance within five days. Most often, mandamus is an extraordinary remedy awarded only on rare occasions and only if at least three prerequisites can be satisfied. "First, the party seeking issuance of the writ must have no other adequate means to attain the relief he desires.... Second, the petitioner must satisfy the burden of showing that his right to issuance of the writ is clear and indisputable. Third, even if the first two prerequisites have been met, the issuing court, in the exercise of its discretion, must be satisfied that the writ is appropriate under the circumstances." The federal appellate courts, however, cannot agree on whether this stringent traditional mandamus standard or the usual appellate standard (abuse of discretion or legal error) should apply in Crime Victims' Rights Act appeals. P.L. 114-22 resolves the dispute in favor of the less demanding abuse of discretion or legal error standard used for most appeals. It allows the parties to extend the three-day deadline for the appellate court to take up the petition for a writ of mandamus, but not the five-day limitation on stays or continuances in appellate mandamus cases concerning victims' rights. Finally, P.L. 114-22 creates two new additional rights--the right to timely notice of a plea bargain or deferred prosecution agreement and the right to be informed of the rights under the Crime Victims' Rights Act and the benefits under the Victims' Rights and Restitution Act. The House committee report indicates that the amendment was designed to "clarif[y] Congress' intent that crime victims be notified of plea agreements or deferred prosecution agreements, including those that may take place prior to a formal charge." Here, too, in its victims' rights treatment, P.L. 114-22 follows the path laid out in earlier bills. Federal criminal convictions come with a special assessment ranging from $5 to $100 for individuals and from $25 to $400 for organizations, depending on the seriousness of the offense. Receipts are deposited in the Crime Victims Fund and used for victims' assistance and compensation. P.L. 114-22 establishes a second Fund, the Domestic Trafficking Victims Fund, and second special assessment, this one for $5,000 directed to the Fund for the assistance and compensation of victims of trafficking and sexual abuse. The assessment is imposed on those convicted offenses under: 18 U.S.C. ch. 77 (peonage, slavery, and human trafficking); 18 U.S.C. ch. 109A (sexual abuse in U.S. special maritime and territorial jurisdiction); 18 U.S.C. ch. 110 (child pornography); 18 U.S.C. ch. 177 (interstate or foreign transportation for unlawful sexual purposes); or 8 U.S.C. 1324 (smuggling aliens other than immediate family members). The Fund is to receive two types of transfers. The first is to be a transfer from the general fund of the Treasury in amounts equal to those collected from these assessments. These transferred amounts are to be appropriate and made available to the Attorney General, in coordination with the Secretary of Health and Human Services, through FY2019 for the services and benefits (other than health care services and benefits) under: 42 U.S.C. 14044c (grants for enhanced state and local anti-trafficking enforcement); 42 U.S.C. 13002(b)(grants for child advocacy centers); 22 U.S.C. 7105(b)(2)(grants to state, tribes, and local governments to enhance trafficking; victims' services); and 22 U.S.C. 7105(f)(assistance for U.S. victims of severe forms of trafficking). The second transfer is to be from appropriations under the Patient Protection and Affordable Care Act, as amended, in amounts equal to those generated by the special assessments, but not less than $5 million or more than $30 million per fiscal year. The amounts are also to be available to the Attorney General, in coordination with the Secretary of Health and Human Services, for health care services under: 42 U.S.C. 14044a (grants for trafficking victims' assistance programs); 42 U.S.C. 14044b (residential treatment for victims of child trafficking); 42 U.S.C. 14044c (grants for enhanced state and local anti-trafficking enforcement); 42 U.S.C. 13002(b)(grants for child advocacy centers); 22 U.S.C. 7105(b)(2)(grants to state, tribes, and local governments to enhance trafficking; victims' services); and 22 U.S.C. 7105(f)(assistance for U.S. victims of severe forms of trafficking). Forfeiture is the confiscation of property based on its proximity to a criminal offense. Confiscation may be accomplished either as a consequence of the property owner's conviction (criminal forfeiture) or in a civil proceeding conducted against the property in rem (civil forfeiture). In either case, the proceeds from most federal forfeitures are deposited either in the Justice Department's Asset Forfeiture Fund or the Department of the Treasury's Forfeiture Fund, and are available for law enforcement purposes. The forfeiture-triggering relationship between property and confiscation varies from one crime to another. Forfeitures relating to financial crimes sometimes apply to property "involved in" the offense. For example, property "involved in" a money laundering transaction is subject to confiscation. In the case of human trafficking, property that constitutes the proceeds from, that was used, or that was intended for use, to commit or facilitate, a trafficking offense is subject to criminal and civil forfeiture. As S. 178 and H.R. 296 suggested, P.L. 114-22 makes property "involved in" or proceeds "traceable to" a trafficking offense subject to criminal and civil forfeiture as well. Defendants convicted of human trafficking offenses must be ordered to pay victim restitution. As a general rule, the Attorney General may transfer forfeited property to pay victim restitution. S. 178 and H.R. 296 proposed, and P.L. 114-22 requires, such a transfer, without reducing or mitigating the defendant's restitution obligations. Subject to annual appropriations, the Attorney General may use the Justice Department Asset Forfeiture Fund for informants' fees in drug and money laundering cases. The Secretary of the Treasury enjoys comparable authority with respect to the Treasury Fund, although apparently without the need for annual appropriations. P.L. 114-22 , as S. 178 and H.R. 296 proposed, expands the authority to include access to the Justice Department Fund for informants' fees in human trafficking cases, and to the Department of the Treasury Fund for informants' fees paid by Immigration and Customs Enforcement in human trafficking cases. Existing federal law states that an individual charged with a federal offense should be released on his own recognizance, unless the magistrate is convinced that certain conditions must be imposed to insure individual or community safety or to insure the appearance of the accused at subsequent judicial proceedings. The government may seek pretrial detention of an accused charged with a crime of violence, a federal crime of terrorism, or with commercial sex trafficking. H.R. 296 , S. 178 , and ultimately P.L. 114-22 amended the definition of "a crime of violence" for these purposes to include any of the human trafficking offenses. In the investigation of certain serious federal and state crimes, the Electronic Communications Privacy Act, sometimes referred to in part as Title III, authorizes federal and state law enforcement officials to engage in court-supervised surreptitious interception of telephone, face-to-face, or electronic communications. The list of these federal crimes includes commercial sex trafficking (18 U.S.C. 1591), but not the other offenses outlawed in the slavery, peonage, and forced labor chapter of the federal criminal code. The list of state crimes includes murder, robbery, kidnaping, etc., but not prostitution or human trafficking. P.L. 114-22 , as proposed in S. 178 and H.R. 181 , permits federal court-ordered interceptions in connection with investigations involving peonage (18 U.S.C. 1581 (peonage), 1584 (involuntary servitude), 1589 (forced labor), and 1592 (trafficking-related document misconduct)). It also permits state prosecutors to engage in state court-supervised interceptions in cases of human trafficking, child pornography production, and child sexual exploitation to the extent that state law permits. The federal Sex Offender Registration and Notification Act (SORNA), as the name implies, requires individuals convicted of a federal, state, tribal, foreign, or military sex offense to register with, and continue to provide current information to, state or tribal authorities (jurisdictions) in any location in which they live, work, or attend school. The reporting obligations apply to those convicted of qualifying sex offenses either before or after the enactment of SORNA. SORNA accomplishes its notification goal through the creation of a system which affords public online access to state and tribal registration information. The system allows the public to determine either where a particular sex offender lives, works, and attends school, or the names and location of sex offenders who live, work, or attend school within a particular area. SORNA requires jurisdictions to satisfy minimum standards for the information they collect and maintain. Section 114 of SORNA requires registrants to provide (1) their name and any alias; their Social Security number; (2) their place of residence; (3) the name and address of their employer; (4) the name and address of any school they are attending; (5) the description and license plate number of any vehicle they own or operate; and (6) any other information the Attorney General requires. Section 114 requires jurisdictions to include within their registries (1) a physical description of the offender; (2) the text of the statute defining the crime which requires the offender to register; (3) the offender's criminal history; (4) a current photograph of the offender; (5) a set of the offender's fingerprints; (6) a sample of the offender's DNA; (7) a copy of the offender's driver's license or other identification card; and (8) any other information the Attorney General requires. As previously proposed in S. 178 (Senator Cornyn), S. 409 (Senator Burr), and H.R. 956 (Representative Speier), P.L. 114-22 directs the Secretary of Defense to provide the Attorney General with information described in SS114 relating to military sex offenders whom SORNA requires to register with state or tribal authorities. The requirement would presumably apply to those convicted of registration-requiring offenses both before and after the enactment of SORNA. H.R. 956 (Representative Speier) would further amend SORNA to increase the role of the Department of Defense (DOD) by establishing a separate sex offender registry. Military sex offenders, who are obligated to maintain current registration information with state or tribal authorities any place where they live, work, or attend school, would also be required to register with the Secretary of Defense upon their release from custody or entry into the United States. The proposal makes no explicit provision for military sex offenders convicted prior to the enactment of SORNA. SORNA requires states and certain tribes to maintain a jurisdiction-wide sex offender registry that meets SORNA requirements. H.R. 956 would impose the same obligation on the Secretary of Defense, but without the fiscal sanctions which attend a state's failure to comply. In addition to the demand to register where they live, work, or attend school, sex offenders being released from custody must also register with the jurisdiction in which they were convicted. H.R. 956 would require military sex offenders to register upon release in addition with the Secretary of Defense. H.R. 956 , like S. 178 and S. 409 , would require the Secretary of Defense to include the same information within his registry regarding a recently released sex offender that states and tribes are required to capture: physical description of the sex offender; text of the law proscribing the conduct for which the sex offender was convicted; the sex offender's criminal history; fingerprints, a DNA sample, and a photograph of the sex offender; a copy of the offender's driver's license or other official identification of the sex offender; and any additional information required by the Attorney General. The Secretary would have to make this information publicly available online, and would be required to report the information to the Attorney General, appropriate law enforcement, and educational, public housing, social service officials, as well as assorted related public and private entities. The Attorney General would be required to include the information in the national registry and to forward updated information received from various jurisdictions relating to a military sex offender to the Secretary of Defense. The national registry would be required to include military sex offender information available on the Secretary's website. SORNA mandates that "appropriate officials" and "appropriate law enforcement agencies" take action when a sex offender fails to comply with the requirements of a state or tribal registry. H.R. 956 would establish a comparable command for action when a military sex offender fails to comply with the requirements of the DOD registry. It is unclear whether the amendment is intended to expand the terms "appropriate official" and "appropriate law enforcement agencies" to encompass DOD officials and law enforcement agencies, giving them authority over discharged military sex offenders over whom they would otherwise have no jurisdiction. SORNA obligates the Attorney General to develop and support the computer software necessary for jurisdictions to comply with SORNA's standards. H.R. 956 would enlarge the obligation to enable establishment and maintenance of a DOD registry. Finally, H.R. 956 would require military sex offenders entering the United States to register with the Secretary of Defense. | Existing federal law outlaws sex trafficking and provides a variety of mechanisms to prevent it and to assist its victims. Members have offered a number of proposals during the 114th Congress to bolster those efforts. Several clarify, expand, or supplement existing federal criminal law. For instance, Senator Cornyn's S. 178, which was packaged with Representative Poe's H.R. 181 and several proposals and enacted as the Justice for Victims of Trafficking Act of 2015 (P.L. 114-22), confirms that federal commercial sex trafficking prohibitions apply to the customers of such enterprises. P.L. 114-22 also constricts the defense of those who engage in illicit sexual activities with children. In addition, it affords state and federal law enforcement officials greater access to court-supervised electronic surveillance in trafficking cases. It expands victims' statutory rights and removes stringent limits on appellate enforcement of those rights. As suggested in S. 178, Senator Kirk's S. 572, and Representative Wagner's H.R. 285, P.L. 114-22 brings culpable advertisers within the reach of the federal law which proscribes commercial sex trafficking. P.L. 114-22 lengthens the permissible term of supervised release for those convicted of plotting to engage in commercial sex trafficking, language reminiscent of Senator Feinstein's S. 140, Representative Poe's H.R. 296, and Representative Granger's H.R. 1201. S. 178 and Senator Burr's S. 409 proposed requiring Department of Defense (DOD) officials to provide the Attorney General with information relating to military sex offenders required to register under the federal Sex Offender Registration and Notification Act (SORNA). P.L. 114-22 requires them to do so. Representative Speier's H.R. 956 would establish a separate DOD sex offender registry. Representative Carolyn B. Maloney's H.R. 1311 would increase the penalties for tax evasion by sex traffickers and call for the establishment of a dedicated office within the Internal Revenue Service to investigate and prosecute tax-avoiding sex traffickers. See also CRS Report R44064, Justice for Victims of Trafficking Act: A Legal Analysis of the Criminal Provisions of P.L. 114-22, by [author name scrubbed]. | 7,681 | 542 |
The U.S. poultry industry is experiencing a severe outbreak of highly-pathogenic avian influenza (HPAI). As of June 17, 2015, the U.S. Department of Agriculture's (USDA's) Animal and Plant Health Inspection Service (APHIS) reported 223 cases of HPAI in domestic flocks in 15 states. (In this context, a "case" is an affected premise.) More than 48 million chickens, turkeys, and other poultry have been euthanized to stem the spread of the disease. Cases have been caused by several highly pathogenic H5 avian influenza (AI) strains that result in substantial mortality in domestic poultry. Turkey and egg-laying hen farms in Minnesota and Iowa have been hardest hit. Commercial broiler farms have not been affected to date. According to the Centers for Disease Control and Prevention (CDC), no infections in humans have been associated with the current HPAI outbreak, and CDC considers the public health risk to be low. Prior HPAI outbreaks in the United States occurred in 1924, 1983, and 2004. The 1924 and 2004 outbreaks were quickly contained. To control the 1983 outbreak, 17 million birds were euthanized in the U.S. northeast. Outbreaks of low pathogenic avian influenza (LPAI) are more frequent, but result in minor illness in poultry. Nonetheless, efforts are made to also eliminate LPAI outbreaks, because LPAI strains could potentially mutate to become more pathogenic. Established U.S. animal health policy is to eliminate the AI virus (both HPAI and LPAI strains), when it is found, through depopulation (i.e., euthanasia and disposal) of affected poultry. APHIS, state, and local animal health officials euthanize poultry, clean and disinfect premises and equipment, and then test for elimination of the virus to ensure that farms can be safely restocked. USDA indemnifies poultry owners and pays for cleaning, disinfecting, and testing. This process is time consuming, and poultry producers lose significant income as barns and laying houses are out of production for several months. The poultry export sector is also faced with numerous bans on shipments of U.S products. With loss of production, consumers see higher retail prices. The current HPAI outbreak was discovered in December 2014 in backyard flocks in the Pacific Northwest, and in two commercial turkey and chicken flocks in California. It is thought to have been introduced from Eurasia by wild birds migrating along the Pacific flyway and has continued to move eastward to and along the Central and Mississippi flyways (see Figure 1 ). It is primarily infecting flocks of egg-laying hens in Iowa and turkeys in Minnesota, with cases in several other states (see Figure 2 ). In addition to cases in domestic flocks, outbreak strains of HPAI have been found in free-ranging and captive wild birds in Washington, Oregon, Idaho, Montana, California, Nevada, Utah, New Mexico, Wyoming, Kansas, Missouri, Kentucky, Michigan, and Wisconsin. In June 2015, APHIS issued a report on the epidemiology of the outbreak. Although its studies showed that wild birds probably introduced the virus into U.S. poultry flocks, APHIS said that lapses in biosecurity practices--such as movement of vehicles, equipment, and persons from infected to uninfected farms--contributed to the continued spread of the virus. APHIS also raised concern about possible airborne spread of the AI virus. In general, colder temperatures favor transmission of influenza viruses, and cooler temperatures in the spring of 2015 could have extended the spread of HPAI. With the start of summer, the rate of new cases slowed. The last reported new case was in Iowa on June 17, 2015. Despite this, USDA said it is preparing for the possibility that HPAI could resurge in the fall as migratory birds fly south for the winter. With all flyways likely involved, HPAI could be introduced into large poultry production areas in the southeastern United States that have not been affected so far. In June 2015, APHIS updated interagency surveillance plans for migratory birds--a collaboration of APHIS, the U.S. Fish and Wildlife Service, the U.S. Geological Survey, state and local governments, and the private sector--with the goal of early detection and monitoring of HPAI before it again threatens domestic poultry flocks. From December 2014 through June 17, 2015, there were 223 cases of HPAI in domestic flocks in 15 states (see Table 1 ). Of the 48 million birds euthanized to control this outbreak, the vast majority were chickens, specifically egg-laying hens (38.4 million). In Iowa, more than 25 million egg-laying hens and 5 million pullets (young chickens that have not entered the egg-laying flock) were euthanized. Nearly 7.8 million turkeys were euthanized, with the majority (4.8 million) on Minnesota farms. Iowa turkey farms have had 1.5 million euthanized birds. In addition to the cases in commercial operations, 20 cases in 11 states involved backyard flocks, affecting about 10,000 birds. Most of these cases were classified as mixed poultry, which may include quail, guinea fowl, ducks, geese, and pheasants. Established U.S. animal health policy is to eliminate the AI virus through depopulation of poultry where the virus is found. In order to achieve this, the Animal Health Protection Act (AHPA; 7 U.S.C. SS8301 et seq.) authorizes USDA to take extraordinary measures, such as seizing, restricting movement, or euthanizing animals to protect the health of animals. USDA has established a five-step process that federal and state responders use to address HPAI: 1. Quarantine--restrict movement of poultry and poultry-moving equipment into and out of the control area; 2. Eradicate--humanely euthanize affected flocks; 3. Monitor region--test wild and domestic birds in a broad area around the outbreak; 4. Disinfect--kill the virus in the affected flock locations and operations; and 5. Test--confirm the poultry farm is AI virus-free. APHIS, in cooperation with state and local animal health officials, euthanize poultry, disinfect and clean poultry premises and equipment, and then test for the virus to ensure poultry farms can be safely repopulated. Poultry owners are indemnified for euthanized poultry, and APHIS pays for cleaning and disinfecting, and testing. Once laboratory tests indicate a presumptive positive for HPAI, the poultry producer must develop a flock plan. The flock plan establishes the steps that will be taken to eliminate the virus, and to clean and disinfect the premises in order to be able to resume business. The flock plan must be signed by the producer, a state animal health official, and APHIS. After the flock plan is in place, APHIS prepares an appraisal document for indemnity. Under the authority of the AHPA (7 U.S.C. SS8306(d)), USDA compensates producers for birds that must be euthanized. Payment is based on the "fair market" value as determined by USDA appraisers. Based on the inventory, age, and intended use of birds, APHIS prepares an appraisal calculated on available prices, costs, and bird productivity. The indemnity is usually for 100% of the appraised value. APHIS also pays for the disposition of birds and for destruction of infected materials. Producers are neither compensated for birds that die prior to the confirmation of HPAI, nor for lost income from barns and hen houses being idle. If the producers elect to perform some of the tasks involved in eliminating HPAI, they must sign a compliance agreement with APHIS that identifies who is responsible for what tasks, and what it is expected to cost. Some producers may choose this option in order to keep their workers employed through the outbreak crisis. Each state develops HPAI response plans that account for specific environmental and resource requirements in each state. APHIS works with the states and poultry producers to identify which of the options works best given the conditions at the premises--flock size, space, depopulation method--and meet state and local requirements. Usually euthanized birds may be disposed of through composting, landfills, burial, and incineration. It takes around 30 days for bird carcasses that are composted to be cleared as virus free. In general, repopulation of barns or hen houses may not begin for at least 21 days (the incubation period for the AI virus) after barns and hen houses are cleaned and disinfected, and environmental testing of the premises is completed. The actual number of days may vary for each case. Also, the area around the premises to be restocked must be assessed for risk of the premises becoming infected again. Producers must have written approval from APHIS and state officials to restock a facility. As a condition for restocking, producers are required to follow surveillance, movement, and biosecurity requirements. If a farm restocks without the approval of APHIS and state officials, APHIS will not indemnify the producer should the restocked flock become infected again. Restocking will vary by the type of operation affected by the outbreak. Egg-laying hen operations will phase restocking to reestablish variable hen ages in the flock. The age variability allows for even, year-round egg production. This phased restocking could take 18 months or more to accomplish before the producer will reestablish a normal income flow. A turkey operation, on the other hand, will restock the barn with birds of similar age that will be market-ready at about the same time. An HPAI outbreak results in a significant income disruption for the producers, which existing indemnities address only in part. As deadly as they are in poultry, most HPAI strains are not easily transmissible to humans. However, influenza viruses mutate and transfer genes with notable frequency, and public health officials track H5 avian influenza strains for signs of increased risk of human infection. According to the Centers for Disease Control and Prevention (CDC), no infections in humans have been associated with the ongoing HPAI outbreak, and CDC considers the public health risk to be low. However, human infections with other AI strains have occurred, most often in persons, such as poultry workers, who have had close contact with infected birds. With the possibility of bird-to-person infection, CDC's National Institute for Occupational Safety and Health (NIOSH) and the Department of Labor's Occupational Safety and Health Administration (OSHA) advise all farm workers and responders to the outbreak to wear proper protective clothing, practice good hand washing and showering practices, and participate in health monitoring programs for a period of time after exposure to infected poultry. In addition to guidance for poultry workers, CDC has developed guidance for health officials and providers for monitoring, diagnosis, and treatment of infections in humans. According to CDC testimony before the Senate Homeland Security and Governmental Affairs Committee, the agency has also issued guidance to state preparedness officials to allow the use of federally subsidized antiviral medications stockpiled at the state level, and instructions for requesting supplies from the Strategic National Stockpile if needed. In addition, CDC has developed an HPAI virus strain that could be used to produce a vaccine for use in humans, if needed. In the event of an animal health emergency, USDA has the authority to request additional funds from the Commodity Credit Corporation (CCC) as necessary, and the Office of Management and Budget (OMB) may make an apportionment to provide money to contain and eliminate an animal disease. APHIS noted in its FY2016 budget document that an AI outbreak similar to the 1980s outbreak could cost in excess of $1 billion for control and indirect costs to the poultry industry. The Senate and House Agriculture Committees, in a recent letter to OMB, expressed concern about the need for adequate funding and encouraged USDA to pursue whatever funding is necessary. USDA has received approval to use additional funds for HPAI from the CCC of nearly $700 million. As of July 7, 2015, APHIS has committed over $500 million to help producers control the spread of HPAI, including $190 million for indemnity payments. Separately, the ongoing annual appropriation to APHIS for avian health has been about $52 million in recent years. According to USDA, the avian health program includes AI prevention and control activities; avian health and management studies; disease threat planning and response for the livestock, poultry, and zoological industries; comprehensive poultry disease surveillance (including wildlife surveillance); and zoonotic disease prevention and response. The National Poultry Improvement Plan (NPIP), a cooperative federal-state-industry program focused on AI surveillance, is funded through the avian health appropriation. On July 8, 2015, the House Committee on Appropriations marked up the FY2016 agriculture appropriations bill ( H.R. 3049 ), which includes $55 million for avian health, $3 million more than appropriated for FY2015. The House bill also includes an additional $5 million, on top of a base of $7 million, for the APHIS portion of funding for the National Animal Health Laboratory Network (NAHLN). APHIS has been utilizing funds apportioned from CCC to reimburse the NAHLN for HPAI testing. On July 16, 2015, the Senate Committee on Appropriations marked up the FY2016 agriculture appropriations bill ( S. 1800 ), which would provide APHIS with $52 million for avian health, unchanged from FY2015. The House and Senate Appropriations Committee reports ( H.Rept. 114-205 and S.Rept. 114-82 ) accompanying the FY2016 agriculture appropriations bills also would direct USDA to use its existing authority to transfer funds from CCC as needed to address the HPAI outbreak. The cost of the HPAI outbreak to the poultry industry is high. The direct losses from euthanized turkeys and egg-laying hens are estimated at nearly $1.6 billion, $530 million for turkeys and $1.04 billion for laying hens. These estimates do not cover such activities as clean-up and restocking, or future lost production. Other sectors of the economy, such as feed and trucking, have suffered losses from lost business with the poultry industry, and egg shortages have caused higher prices for food processors and consumers in retail markets. The economy-wide impact to date is estimated at $3.3 billion. The nearly 7.8 million turkeys euthanized during the outbreak amounts to about 3% of the turkeys produced in the United States in 2014. In February 2015, before HPAI began infecting turkey flocks, USDA forecasted that turkey meat production would rise 6% in 2015. As a result of HPAI, USDA expects 2015 production to be more than 3% lower than in 2014. With decreased supplies, USDA raised its forecast for national wholesale turkey prices for 2015. Recovery from the HPAI outbreak is also expected to slow turkey production into 2016. USDA reports that fewer poults (young turkeys) are being placed on feed for growout through May. Turkey operations affected by HPAI in early March did not come back online until June because of the time needed to clean, disinfect, and test to ensure farms are free of the HPAI virus. The potential for Thanksgiving supply disruptions may be relatively small because the industry has had time to prepare. According to agricultural economists from the University of Illinois, stock building of whole turkeys held in cold storage typically starts in December and continues through the summer. USDA cold storage data shows that supplies of whole turkey at the end of May 2015 were 3% higher than a year ago. On June 22, 2015, USDA reported that there were 341 million egg-laying hens on U.S. farms during May, down 5% from a year earlier. Hardest hit has been Iowa, where the number of laying hens was down 26% from a year earlier. Hens euthanized because of HPAI account for 11% of the total U.S. egg-laying flock. USDA forecasts 2015 egg production to decline 4% in 2015, and its benchmark New York Grade A large egg price is forecast to be 19% higher than in 2014. Wholesale egg prices increased significantly in May, topping out at nearly $2.50 per dozen in early June. Prices retreated some by the end of June and leveled off during July (see Figure 3 ). Many of the egg farms infected with HPAI in Iowa supplied breaking eggs (used to produce eggs in liquid form) to food manufacturers, particularly the baking sector. When supplies of breaking eggs tightened, the price of table eggs sold in retail or the food service sectors increased. Food manufacturers began to bid up the price of eggs to pull supplies away from the table egg market and into the breaking market. Reportedly, H.E.B., a Texas grocery chain, limited the number of eggs that could be purchased in its stores in order to prevent commercial buyers from emptying retail supplies. Imports of eggs and egg products are limited. In order to address tight egg supplies, on June 1, 2015, the USDA's Food Safety and Inspection Service (FSIS) certified that five establishments in the Netherlands would be eligible to ship pasteurized egg products to the United States. Canada is also eligible to ship egg products to the United States. Because HPAI has not hit major commercial broiler-producing areas, the primary impact of HPAI on the broiler sector has been in the trade arena (see " Trade Implications " below). Broiler meat production is expected to increase 5% in 2015. With a slowdown in broiler meat exports, USDA's cold storage data at the end of May 2015 shows a 21% increase in broiler meat stocks compared with a year ago. Lower exports and higher stocks have pushed down broiler meat prices. For the week ending July 10, 2015, wholesale broiler prices were 12% lower than a year earlier. In 2014, the United States exported to global markets over 4 million metric tons of poultry meat, valued at $5.5 billion (see Table 2 ). The vast majority of exports was broiler meat ($4.1 billion), followed by turkey ($767 million) and other poultry meat ($671 million). In addition, the United States exported $637 million worth of eggs and egg products in 2014. In 2014, the United States exported 19% of its broiler meat production, 14% of turkey output, and 5% of eggs. For 2015, USDA forecasts broiler meat exports to be more than 6% lower than in 2014, turkey exports 26% lower, and egg exports nearly 8% lower. Data for 2015 U.S. poultry exports are available for the January-May period. Broiler meat exports are 9% lower compared with the same period a year ago. Turkey exports are 17% lower, but egg exports are up 11% because of strong shipments to Mexico. Since the HPAI findings in December 2014, 18 trading partners have imposed bans on all shipments for U.S. poultry and products, and 38 trading partners have imposed partial, or regional, bans on shipments from states or parts of states experiencing cases (see Figure 4 ). China, Russia, and South Korea, 3 of the top 10 destinations for U.S. poultry meat in 2014, have banned all imports of U.S. poultry. Based on World Organization for Animal Health (OIE) avian influenza guidelines, regional, or compartmental, bans are acceptable for handling concerns with disease and effects on trade. If USDA decides to implement a vaccine strategy to address an HPAI outbreak should it occur later this year, the U.S. poultry industry could experience increased disruptions in trade. Some trading partners have already told APHIS that if the United States adopts a vaccination strategy for HPAI, they will halt all trade until risk assessments of the U.S. strategy can be evaluated (see " Vaccine Use Policy "). On July 7, 2015, the Senate Committee on Agriculture, Nutrition and Forestry held a hearing on the HPAI outbreak and its impact on the poultry sector, and on July 8, 2015, the Senate Homeland Security and Governmental Affairs Committee held a hearing reviewing the threat of avian influenza to animal and public health. The hearings covered the experiences and lessons learned from containing and eliminating the current outbreak, and touched on issues to be addressed for the future. It is believed that an HPAI outbreak is likely to occur again in the fall when wild birds begin their migrations through the four flyways. This may likely result in more spread of AI, possibly in the poultry-producing eastern and southeastern regions untouched during the current outbreak. In response to questions from the Agriculture Committee, APHIS stated that it is preparing for the worst-case scenario this fall and defined this as 500 HPAI cases spread through 20 major poultry producing states, infecting turkey, laying hen, and broiler premises. The following sections discuss several issues that were raised during the hearings and are expected to be the focus of preparations for another potential outbreak in the fall/winter: vaccine use, biosecurity, timeliness, indemnification, and stakeholder communications. The World Organization for Animal Health (OIE) recommends that poultry flocks be depopulated to eliminate the AI virus. The OIE recognizes, however, that some countries may choose vaccination as part of their HPAI containment and elimination strategy. OIE states that: Culling may be complemented by a vaccination policy for poultry in a high-risk area. Vaccination aims to protect the susceptible population of birds from potential infection thereby reducing the incidence or the severity of disease. Vaccination strategies can effectively be used as an emergency effort in the face of an outbreak or as a routine measure in an endemic area. Careful consideration must be given prior to implementing a vaccination policy and requires that the recommendations from the World Organisation for Animal Health (OIE) on vaccination and vaccines are closely followed. Any decision to use vaccination must include an exit strategy. Vaccination is often considered a last resort in HPAI control. Among other concerns, it can mask continued transmission of the disease, making it more difficult for animal health officials to understand, and trade partners to trust, a country's status. Accordingly, OIE recommends that a country plan to adopt vaccination for HPAI control includes a plan to transition back to the preferred culling approach, without vaccination, once it has achieved control through vaccination. USDA has not approved a vaccine for HPAI. According to USDA, current AI vaccines are only effective about 60% of the time in chickens. Effectiveness in turkeys is still being evaluated. The Southeast Poultry Research Lab (SEPRL), part of USDA's Agricultural Research Service (ARS), develops and evaluates AI vaccines. According to testimony by Dr. David Swayne of SEPRL before the Senate Agriculture Committee, for the next several months the lab will be working on vaccines and vaccination protocols for use in the fall. The challenge for vaccine development is finding one that will be effective against circulating H5 strains, recognizing that the strains change over time. The experience of countries using vaccines for H5N1 strains (99% of H5N1 vaccines are used in China, Egypt, Vietnam, and Indonesia) shows that vaccines fail, effectiveness diminishes over time, and resistance develops. The decision to adopt a vaccine strategy is made by USDA and not state animal health officials. APHIS expects that an effective vaccine could be developed by fall to late fall. The use of vaccines negatively affects exports of poultry products. According to APHIS, some trading partners have stated that if the United States adopts a vaccination policy, they would immediately ban shipments of U.S. poultry products. The trading partners would conduct risk assessments of U.S. vaccination policy before allowing shipments to resume. APHIS is already engaging with other countries to mitigate impacts on trade if the USDA changes its policy. In order to address the trade issue, SEPRL is engaged in research to distinguish whether immunity in a bird is due to infection or vaccination. This concept has been demonstrated experimentally but is less successful in the field. The poultry industry is divided over whether or not vaccines should be used to fight HPAI outbreaks. The United Egg Producers (UEP) position is one of caution about vaccine use, in part due to trade issues, and also because the three-vaccine regime in a laying hen would mean increased contact with the birds in the houses. Handling hens during production could cause a decrease in egg output. Other witnesses from the turkey and egg sectors were ready to adopt vaccines as a tool to use against HPAI. USDA's June 2015 epidemiological report identified pathways for the transmission of HPAI. Besides wild birds shedding the AI virus, APHIS found that HPAI may have been spread through lax biosecurity measures. These include sharing of equipment and employees between infected and non-infected farms, the inadequate cleaning of vehicles moving between farms, and the presence of rodents or small wild birds inside poultry barns. APHIS also found that environmental factors could play a role as the HPAI virus was found in air samples that could be transmitted by wind to other farms. Scrupulous biosecurity practices may not fully protect against AI. The poultry industry increased biosecurity after the 1980s HPAI outbreak. Other regulations, such as the Food and Drug Administration's Egg Safety Rule , require egg producers to implement certain biosecurity measures. But as the UEP witness pointed out in testimony, his farm, one of the largest egg farms in Iowa, received a perfect score on a USDA biosecurity audit two months before being infected with HPAI. Biosecurity has often been thought of in terms of farm biosecurity. Biosecurity at the barn or hen house level for operations with multiple facilities may be more effective for an HPAI outbreak. For example, this could mean restricting movement between barns or hen houses on the same farm, requiring different clothing for each, and boosting disinfection measures for equipment shared between each barn. Producers may need to consider adding filtration systems in barns and hen houses because of potential airborne contamination. Poultry groups such as the National Turkey Federation and the U.S. Poultry and Egg Association recommend that producers reevaluate their biosecurity programs to prepare for future outbreaks. APHIS will be holding a meeting at the end of July in Iowa to discuss biosecurity issues with state veterinary officials and the poultry industry. Depopulating AI infected birds as quickly as possible is critical to halting the spread of the virus. Poultry producers have been concerned that it took too long between HPAI confirmation and the start and completion of depopulation. APHIS recognizes this concern and is seeking alternatives that could speed the process. APHIS has suggested that shutting off ventilation in barns and laying houses and turning up the heat would humanely euthanize the flocks. This could speed up the depopulation process and save time getting foaming or CO 2 equipment for depopulation in place. APHIS is working with the poultry industry and the American Veterinary Medical Association on the viability of such an approach. After depopulation, the disposal of dead birds is a considerable challenge for poultry producers. Many of the dead birds were composted, which, once tested to be free of virus, may be used on fields. In Iowa there was concern about moving euthanized poultry to landfills because of fear of virus contamination through feathers, dust, or on vehicles. States and the poultry industry are expected to reassess and implement disposal plans to manage a potential fall outbreak. Egg producers have expressed concern that APHIS, in calculating indemnity payments, is not capturing the true value of future egg production from lost layers. According to the regulations (9 C.F.R. SS53.3(b)) that govern HPAI appraisals for indemnity payments, "The appraisal of animals shall be based on the fair market value and shall be determined by the meat, egg production, dairy or breeding value of such animals." Regulations for low pathogenic avian influenza (LPAI) outbreaks are in a different section (9 C.F.R. SS56.4(a)) than the HPAI regulations and address future production. The LPAI regulations specifically state that, "For laying hens, the appraised value should include the hen's projected future egg production." Egg industry groups have been in contact with APHIS and have made proposals for changing the indemnity formulas. In addition, indemnity regulations require payment to owners of poultry, but many poultry producers are contract growers and not the owners of the birds. This raises concerns about whether some producers are being adequately indemnified. LPAI regulations (9 SSC.F.R. 56.8(a)) specifically address the contract issue by setting a formula for splitting the indemnity payment between the contractor and the grower. The regulations for HPAI do not include such a provision. Besides indemnity payments, witnesses suggested that poultry producers need other options, such as insurance policies, to cover losses from an outbreak. The 2014 farm bill ( P.L. 113-79 ) directed USDA's Federal Crop Insurance Corporation to conduct a study to determine the feasibility of insuring poultry producers for a catastrophic event. The study was to be submitted to the Senate and House Agriculture Committees one year after the farm bill was enacted (February 2014), but it has not been submitted yet. Some poultry producers believe that communication between APHIS and producers was a problem, at least in the early stages of the outbreak. As APHIS rotates personnel assignments, farms worked with different APHIS employees at different stages, and some producers said this was frustrating and contributed to slowing the containment and elimination process. Also, some producers believed that some APHIS contractors (APHIS has employed 3,000) were not well trained and provided incorrect information. APHIS indicated that it plans to address communication issues in the future by assigning one APHIS employee to work with each producer dealing with an outbreak from the start to finish of the process. Also, APHIS plans to embed an APHIS employee with each contractor team. | The U.S. poultry industry is experiencing a severe outbreak of highly-pathogenic avian influenza (HPAI). The U.S. Department of Agriculture's (USDA's) Animal and Plant Health Inspection Service (APHIS) has reported 223 cases of HPAI in domestic flocks in 15 states. With the start of summer, the finding of new cases slowed. The last reported new case was in Iowa on June 17, 2015. More than 48 million chickens, turkeys, and other poultry have been euthanized to stem the spread of the disease. Cases have been caused by several highly pathogenic H5 avian influenza (AI) strains that result in substantial mortality in domestic poultry. Turkey and egg-laying hen farms in Minnesota and Iowa have been hardest hit. Commercial broiler farms have not been affected to date. According to the Centers for Disease Control and Prevention (CDC), no infections in humans have been associated with the HPAI outbreak, and the public health risk is low. Under the Animal Health Protection Act (AHPA; 7 U.S.C. SS8301 et seq.), APHIS, in cooperation with state and local animal health officials, has the authority to take extraordinary measures, such as seizing, restricting movement, or euthanizing animals to protect the health of animals. During the current outbreak, APHIS has paid to euthanize poultry, clean and disinfect poultry premises and equipment, and then test for the AI virus to ensure poultry farms can be safely repopulated. USDA has indemnified poultry owners for euthanized poultry. USDA has received approval to use nearly $700 million in additional funds from the Commodity Credit Corporation (CCC) to address HPAI. As of July 7, 2015, APHIS has committed over $500 million of the $700 million to help producers control the spread of HPAI, including $190 million for indemnity payments. The agency is committed to covering cleaning and disinfecting costs on affected farms. The cost of the HPAI outbreak to the poultry industry is high. The value of turkey and laying hen losses is estimated at nearly $1.6 billion. Economy-wide losses are estimated at $3.3 billion. Since the HPAI outbreak in December 2014, 18 U.S. trading partners have imposed bans on all shipments of U.S. poultry and products, and 38 trading partners have imposed partial, or regional, bans on shipments from states or parts of states with HPAI cases. China, Russia, and South Korea, 3 of the top 10 destinations for U.S. poultry meat in 2014, have banned all imports of U.S. poultry. It is believed that an HPAI outbreak is likely to occur again in the fall when wild birds begin their migrations through the four flyways. This may result in more spread of AI, possibly in the poultry-producing eastern and southeastern regions untouched by the current outbreak. APHIS and the poultry industry are taking lessons from the current outbreak to prepare for the fall. USDA is developing a vaccine to be available for manufacture if the agency decides to adopt a vaccination policy to manage any future outbreak. APHIS and the poultry industry are reassessing biosecurity, indemnity payment formulas, and other measures that aim to improve the containment and elimination process. | 6,713 | 716 |
C ongress has attempted to address the problem of suicide among veterans through legislation and oversight hearings, both on prevention of veteran suicide specifically and on veteran mental health more broadly. A task as challenging as preventing suicide requires collaboration among federal agencies, state and local governments, other organizations, communities, and individuals. This report, however, focuses on activities of the Veterans Health Administration (VHA) within the Department of Veterans Affairs (VA). The VHA's approach to suicide prevention is based in part on the National Strategy for Suicide Prevention, which involves multiple federal departments, including the VA, Defense (DOD), and Education (ED), as well as several agencies within Health and Human Services (HHS). While this CRS report focuses on suicide prevention efforts of the VHA, activities of other entities are discussed as they relate to VHA activities. This CRS report begins with a brief overview of the public health framework for suicide prevention, which forms the basis for both the National Strategy for Suicide Prevention and the VHA's approach to suicide prevention. The three subsequent parts of the report correspond to the three major components of the public health framework: (1) suicide surveillance, (2) suicide risk factors and protective factors, and (3) suicide prevention interventions. The final section addresses potential issues for Congress, and the Appendix summarizes provisions of public laws addressing suicide prevention among veterans. Prevention of suicide can be approached in two ways, which are not mutually exclusive. The public health approach intervenes with populations (e.g., distributing educational materials about mental illness and mental health services), whereas the clinical approach intervenes with individuals (e.g., prescribing antidepressant medication to a person diagnosed with depression). The individual focus of the clinical approach limits its reach to those who access the health care system; clinical interventions are necessary but not sufficient. The population-based public health approach is considered essential to address the broader problem of suicide among all veterans, including those who may not currently be in contact with the health care system. Both the National Strategy for Suicide Prevention and the VHA's approach to suicide prevention are based on a public health framework. As illustrated in Figure 1 , the framework has three major components: (1) surveillance, (2) risk and protective factors, and (3) prevention interventions. Suicide surveillance involves collecting data on completed (i.e., fatal) suicides in order to define the scope of the problem. Data collected in surveillance can be used to identify risk factors (i.e., characteristics associated with higher suicide risk) and protective factors (i.e., characteristics associated with lower suicide risk). Suicide prevention interventions aim to reduce risk factors and/or enhance protective factors that have been identified; interventions may target high-risk groups or individuals, identified based on known risk factors. No nationwide surveillance system exists for suicide among all veterans. Surveillance, or systematic collection of data on completed (i.e., fatal) suicides, is essential to define the scope of the problem (i.e., the suicide rate among veterans), to identify characteristics associated with higher or lower risk of suicide, and to track changes in the suicide rate and evaluate suicide prevention interventions. In order to evaluate interventions, suicide surveillance must measure the same thing, in the same way, repeatedly over time. In the case of veteran suicide, surveillance requires identifying both who is a veteran and who has died by suicide. The VHA collects detailed information about suicides (and suicide attempts) among veterans that are known to VHA facilities through the Behavioral Health Autopsy Program (BHAP), which will eventually collect information in four phases. The VHA has already implemented the two phases: standardized chart reviews and interviews with family members. The third and fourth phases involve interviewing the last clinician to see the veteran and locating public records that might indicate stressors (e.g., bankruptcy or divorce). A Government Accountability Office (GAO) evaluation found that some BHAP reports were not submitted, some included inaccurate information, and some were incomplete. VHA facilities had interpreted BHAP instructions differently, and no officials were reviewing BHAP reports for accuracy or completeness. Resolving the problems the GAO identified with BHAP would result in better information about suicides among veterans that are known to VHA facilities; however, information collected solely by the VHA would still exclude suicides among other veterans (i.e., those who are not known to the VHA). Of more than 21 million veterans estimated to live in the United States, fewer than 10 million are enrolled to receive health care from the VHA. The VA also has records of veterans who receive other benefits (e.g., home loans), regardless of whether they are enrolled in VHA health care, but does not have records of all veterans. The VA is working with the DOD to identify suicides among all veterans, including those who do not interact with the VA. Information about deaths--including whether a death resulted from intentional self-harm (i.e., suicide)--is collected in death certificates by state, territorial, and local governments. The resulting data may not be comparable across jurisdictions. The Centers for Disease Control and Prevention (CDC) aggregates death certificate data into the National Death Index (NDI), which can then be combined with data about who is a veteran. The lag between a suicide event and identification of the decedent as a veteran may be years; this delays the availability of crucial information. Timely reporting of death certificates was identified as a core issue in a 2010 progress report on the National Strategy for Suicide Prevention. The VHA conducts veteran-specific research that builds on research among the general population to identify characteristics associated with higher rates of suicide (i.e., risk factors) and lower rates of suicide (i.e., protective factors). Identifying risk and protective factors is essential in order to design effective interventions aimed at lowering overall risk of suicide by reducing risk factors and/or increasing protective factors. Knowing what the risk factors are also helps in identifying at-risk groups or individuals so that interventions can be delivered to the people who need them most. Table 1 provides examples of risk and protective factors among the general population. Within HHS, both the CDC and the National Institute of Mental Health (NIMH) disseminate research on suicide risk and protective factors within the general population. Also, the Substance Abuse and Mental Health Services Administration (SAMHSA) collects data on suicide attempts and related behavior. It should be noted that risk factors for attempted suicide may differ from risk factors for completed suicide; for example, women have a higher rate of attempted suicide, but men have a higher rate of completed suicide. Despite a large number of risk and protective factors identified by researchers, it is not yet possible to predict who will attempt or complete suicide. The inability to identify individuals most in need of interventions is one of the reasons a public health approach--with a focus on population-level interventions--is necessary for effective suicide prevention. Veteran-specific research on suicide risk and protective factors is necessary because the veteran population differs from the non-veteran population on a variety of characteristics (e.g., gender distribution), some of which may also be associated with suicide risk. Research has explored whether combat exposure is associated with risk of suicide (with mixed results). Veterans who are enrolled with the VHA may differ from non-enrolled veterans, as well. Within the VHA, research on suicide risk and protective factors is supported by three research components: the Office of Research and Development (ORD), a Center of Excellence (COE) in suicide prevention, and a Mental Illness Research, Education, and Clinical Center (MIRECC) on suicide prevention. Administratively, both the COE and the MIRECC (as well as other centers) fall under the Mental Health Strategic Healthcare Group, which is separate from ORD. In general, the ORD funds intramural research (including mental health research) by individual VHA investigators. The ORD's Health Services Research and Development Service supports research into suicide risk factors and protective factors. For example, the VHA conducted a study of suicide risk among veterans with depression (a known risk factor in the general population, as well as among veterans). Another study examined characteristics associated with suicide risk among patients seen in VHA primary care, to help identify factors that primary care providers may be able to use to detect suicide risk. These studies, and others like them, can help the VHA identify veterans at high risk of suicide, so that interventions can be targeted to them. The COE at Canandaigua, NY, conducts research on risk and protective factors, in addition to other suicide prevention activities. Established in August 2007 at the direction of Congress, the COE has the mission of developing and studying evidence-based public health approaches to prevention of veteran suicide, with the goal of reducing morbidity and mortality associated with suicide in the veteran population. In pursuit of its mission, the Epidemiology and Interventions Research Core within the COE collects and analyzes data on suicide risk and protective factors (as well as other topics) among both veterans who use VHA services and those who do not. The MIRECCs, also established at the direction of Congress, conduct research on a range of mental health-related topics, including suicide risk factors and protective factors. Specifically, the MIRECC of the VA Rocky Mountain Network pursues the goal of reducing suicidality in the veteran population, by conducting research on potential contributions of cognitive and neurobiological factors, among other activities. For example, one study assesses the relationship (if any) between suicidal ideation and thinking under stress. Other MIRECCs may also conduct research related to suicide, in the course of pursuing their other goals. Suicide prevention interventions aim to reduce risk factors and/or enhance protective factors, thereby lowering the risk of suicide. They may address entire populations (e.g., all veterans), at-risk subgroups (e.g., veterans diagnosed with a mental disorder), or high-risk individuals (e.g., veterans with recent suicide attempts). Interventions are refined in a three-stage cycle. The first stage is to develop and pilot test interventions on a small scale to ensure that they are safe, ethical, feasible, efficacious (i.e., they work under ideal conditions), and effective (i.e., they work under real-world conditions). If interventions are successful in the first stage, the second stage is to implement them on a larger scale. The third stage is to evaluate interventions that have been implemented on a larger scale, to verify their effectiveness and determine for whom they are most effective. The three stages can then be repeated to refine interventions, either to improve their effectiveness or to adjust them for use with a different population (e.g., applying an intervention developed for male veterans to a population of female veterans). Within the VHA, the same research components that study risk and protective factors research evaluate interventions: ORD, COE, and MIRECC. Both small-scale testing and large-scale evaluation are integral to suicide prevention interventions; however, rigorous research on effectiveness is difficult and lacking for most interventions, both within and outside the VHA. Easy access to care is a protective factor against suicide, and recent laws have included provisions aimed at increasing veterans' access to VHA-provided or VHA-funded care (not limited to mental health care). The Veterans Access, Choice, and Accountability Act of 2014 ( P.L. 113-146 , as amended) aims to increase access to care by requiring the VHA to authorize reimbursement for non-VHA care under certain circumstances. More recently, the Clay Hunt Suicide Prevention for American Veterans Act ( P.L. 114-2 ) included a one-year extension of the existing five-year post-discharge period of enhanced enrollment in VHA health care for certain veterans. The Congressional Budget Office (CBO) estimates that this provision will result in the enrollment of about 4,600 veterans, including 1,400 who would not otherwise be able to enroll. VHA policy requires that emergency mental health care be available 24 hours per day through emergency rooms at VA facilities or local, non-VA hospitals; that new patients referred for mental health services receive an initial assessment within 24 hours and a full evaluation appointment within 14 days; and that follow-up appointments for established patients be scheduled within 30 days. The extent to which these policies are implemented in practice has been questioned in congressional testimony, news media, and survey responses from both providers and patients. Other efforts to increase access to mental health care focus on known barriers such as lack of understanding or awareness of mental health care, stigma associated with mental illness, concerns about VHA care, and challenges in scheduling appointments. The VHA provides information to help increase awareness of mental health care services, reduce the stigma associated with seeking care, and correct misconceptions about VHA care. Some mental health and substance use evaluation and treatment services have been integrated into other treatment settings, which both increases the convenience and reduces the stigma associated with seeking care. The VHA is required to conduct a three-year pilot program using outreach programs and peer support networks to assist recently discharged veterans in accessing VHA mental health services. Some types of screening are supported by evidence that they reduce the likelihood of suicide. The U.S. Preventive Services Task Force (USPSTF), which makes evidence-based recommendations about screenings and other clinical preventive services, recommends depression screening in primary care settings "when appropriate systems are in place to ensure adequate diagnosis, treatment, and follow-up." That is, the recommendation to use screenings is contingent upon the availability of further evaluation, treatment, and follow-up care. Without such systems in place, screening would serve little purpose. VHA policy requires screening for a variety of risk factors, including but not limited to depression, posttraumatic stress disorder (PTSD), and alcohol abuse. Those who screen positive are evaluated further and offered treatment if found to have a mental health problem. Positive screens for PTSD or depression, in particular, are followed by a suicide risk assessment. For individuals identified as having mental illness, clinical interventions may be indicated regardless of specific risk of suicide. Clinical interventions may include pharmacotherapy, psychotherapy, or both. The VA and the DOD have jointly developed clinical practice guidelines for treatment of some conditions, to help clinicians select treatments that research has shown to be effective (i.e., evidence-based treatments). A 2011 evaluation of VHA mental health care finds that treatment in the VHA is generally better than in other systems on a variety of measures, but still has room for improvement. In particular, the evaluation finds that evidence-based treatments, while widely available, are not usually provided. Researchers based this finding on a review of medical records, which showed that prescriptions for medication were often not filled for as long as recommended and that psychotherapy, as documented, was often not delivered according to evidence-based guidelines. Additionally, the evaluation found that assessment of veterans' symptoms is lacking, both at the beginning of treatment and during treatment (to track progress). Another third-party evaluation of the VHA's mental health care system is underway, to be completed by the end of FY2017. Third-party evaluations of VHA mental health care and suicide prevention programs are now required annually, with the first to be completed by the end of FY2018. Per department policy, every VA Medical Center has at least one suicide prevention coordinator, whose responsibilities include (among other things) tracking patients who have been identified as at high risk for suicide. The VHA's computerized patient record system enables clinicians to flag high-risk patients, and policy requires that safety plans be developed for them. A safety plan is a written document developed jointly by a patient and a clinician that identifies strategies for coping in a crisis (e.g., recognizing warning signs and contacting family members, friends, or mental health providers). Outside the VHA, the use of suicide prevention coordinators has not been widely adopted, although some components of the program (e.g., safety plans) are widely used. The suicide prevention coordinator program has been identified as a practice worth emulating by a DOD task force on suicide prevention. Suicide hotlines are telephone numbers individuals can call for help in crisis situations (e.g., at the moment they are considering suicide). Hotlines are generally toll-free and available around the clock. The Veterans Crisis Line is a joint effort of the VHA and SAMHSA. The main line (1-800-273-8255) is the National Suicide Prevention Lifeline, operated by SAMHSA. Veterans (or others calling with concerns about veterans) may select option 1 to be directed to the VHA's Veterans Crisis Line, answered by staff at the COE in Canandaigua, NY. Callers may remain anonymous or disclose their identities in order to allow the COE staff to access their VA medical records during the call. The Veterans Crisis Line is supplemented by an online chat service ( http://www.VeteransCrisisLine.net/chat ) and support via text messaging (text 838255). The Veterans Crisis Line has answered nearly 2 million calls since it began in 2007, has engaged in more than 250,000 chats since it added the chat service in 2009, and has responded to more than 44,000 texts since it added the text-messaging service in 2011. The evidence base for suicide hotlines is not sufficient to determine their effectiveness in reducing suicide rates, due to the difficulties inherent in conducting such evaluations. The confidentiality of suicide hotlines renders follow-up with each individual caller impossible (except in cases when a caller voluntarily discloses his or her identity). Moreover, national hotlines, such as those operated by SAMHSA and the VHA, serve a large geographic area. A range of other interventions may be in place in localities within the hotline's reach, such that any change in the suicide rate may not be attributable to the hotline. In February 2016, the VA Office of Inspector General released a report about an inspection conducted in response to complaints about the Veterans Crisis Line. Among the complaints substantiated by the VA Office of Inspector General, some calls that were routed to backup crisis centers were answered by voicemail. The routing of calls from SAMHSA's National Suicide Prevention Lifeline to VA's Veterans Crisis Line and from VA's Veterans Crisis Line to backup crisis centers is handled by a contractor, Link2Health Solutions, Inc. The Executive Director of VHA's Office of Mental Health Services and Operations concurred with all seven recommendations made by the VA Office of Inspector General. The VHA offers suicide prevention education and outreach to staff, patients, and surrounding communities. All VHA health care providers are required to complete web-based training on suicide risk and intervention and to pass a post-test. VHA Suicide Prevention Coordinators are required to conduct outreach activities in their local communities. The VHA has co-sponsored (with the Department of Defense) conferences on suicide prevention to educate clinicians and has sponsored Suicide Prevention Days to raise awareness. As of 2014, the three most common means of completing suicide among the general population are firearms (50%), suffocation (27%), and poisoning (16%). Evidence supports restricting access to lethal means (e.g., firearms, gas, drugs) as a way to reduce suicide rates. In some cases, means restriction may delay a suicide attempt long enough that the impulse passes, which may require only several minutes. In other cases, an individual may attempt suicide using a different method that is less lethal (e.g., drugs rather than firearms). The VHA has a gun safety program (as both a child safety initiative and a suicide prevention initiative), which includes distribution of free gun locks and dissemination of gun safety information. The VHA also conducts research on blister packaging medications as a potential way to reduce the incidence of medication overdoses. The VHA has received both praise and criticism for its suicide prevention efforts and mental health services more generally. A 2010 progress report on an earlier version (2001) of the National Strategy for Suicide Prevention praises VHA's suicide prevention practices and recommends disseminating them to the rest of the health care system, describing the VHA as "one of the most vibrant forces in the U.S. suicide prevention movement, implementing multiple levels of innovation and state of the art interventions, backed up by a robust evaluation and research capacity." In contrast, some congressional testimony has criticized VHA's suicide prevention efforts for inadequacies, such as barriers to accessing care and lack of evidence-based treatments for those who do access care. A 2011 evaluation of VHA mental health services captures both sides of the argument, finding that VHA mental health care is generally at least as good as that of other health care systems, but that it "often does not meet implicit VA expectations." Potential issues for Congress and related recommendations by outside organizations fall into three categories: improving the timeliness and accuracy of surveillance data, building the evidence base, and increasing access to evidence-based mental health care. Challenges in suicide surveillance include timeliness of data, consistent classification of deaths as suicides, and accuracy of information. Addressing these challenges requires the involvement of entities other than VHA. Recommendations related to the timeliness of suicide surveillance data include ensuring that the CDC's ability to compile national death data expeditiously is not limited by a lack of resources; coordinating the annual analysis of veteran suicide data among VA, DOD, and HHS; and establishing "reasonable time requirements for states to provide death data to the CDC." It should be noted that states, territories, and cities voluntarily share vital statistics with the CDC, so offering incentives for timely data might be more feasible than imposing requirements. It is widely believed that inconsistent reporting of suicides across jurisdictions, as well as underreporting of suicides in general, limits the effectiveness of surveillance efforts. Classification of a death as a suicide requires a determination that the death is both self-inflicted and intentional. Determining the decedent's intent is difficult, and coroners or medical examiners may feel pressure not to classify a death as suicide, due to the stigma associated with suicide. Suicides may be underreported when the manner of death is misclassified as "undetermined" or "accidental" (e.g., poisonings or single-vehicle crashes). Additionally, each jurisdiction (state, territory, or city) has its own requirements for investigating deaths, leading to variability across jurisdictions. The GAO recommends that the VA implement processes to improve the completeness, accuracy, and consistency of data reported through the VHA's Behavioral Health Autopsy Program (BHAP) system. Beyond that, the VA must rely on outside data sources (e.g., the DOD) to identify decedents as veterans if they are not enrolled with the agency. Developing an adequate evidence base is necessary both to identify risk and protective factors and to develop and disseminate effective interventions. Recommendations include increased information sharing, collaboration, and dialogue across areas of public health, among government agencies, and between congressional committees. Suicide prevention tends to operate in its own silo, even though suicide has some of the same risk and protective factors as other public health problems. Increased collaboration and dialogue between suicide prevention and other areas of public health "will help prevent the field from endlessly recreating wheels and spreading the limited funds too broadly to make a sustainable difference." If agencies (federal, state, or local) engage in ongoing collaboration and dialogue, sharing evaluations of existing interventions and research into new interventions, they may prevent unnecessary duplication of effort and help build the evidence base more quickly. (Note that replication of studies is an integral part of the research process, so a distinction may be made between appropriate and unnecessary duplication of effort.) Specific recommendations include sharing research findings among the VA, DOD, and HHS and fast-tracking all phases of the intervention cycle (designing and pilot testing interventions, implementing interventions, and evaluating interventions), as well as the dissemination of the knowledge gained in each phase. Some have also recommended that the House and Senate Committees on Veterans' Affairs initiate discussions with the House and Senate Armed Services Committees to develop provisions addressing veteran suicide in the National Defense Authorization Act. Providing timely access to high-quality mental health care has been a challenge for the VHA. The Veterans Access, Choice, and Accountability Act of 2014 ( P.L. 113-146 , as amended) aims to increase access for veterans seeking VHA care (not limited to mental health care). Among other things, the act establishes the Veterans Choice Program, which requires the VHA to authorize reimbursement for non-VHA care under specified conditions. One such condition occurs when a qualified veteran is unable to schedule an appointment within the VHA's wait-time goals. In accordance with the act, the VHA has established a wait-time goal "to furnish care within 30 days of either the date that an appointment is deemed clinically appropriate by a VA health care provider, or if no such clinical determination has been made, the date a veteran prefers to be seen." Access to VHA mental health care is determined in part by the availability of providers. Pursuant to P.L. 113-146 , the VA Office of Inspector General (OIG) identified five occupations with the largest shortages: medical officer (i.e., physician), nurse, physician assistant, physical therapist, and psychologist. The OIG report does not specify physician specialties (e.g., psychiatrists). A shortage of psychologists might be mitigated by hiring other providers with similar scopes of practice (i.e., social workers, mental health counselors, and marriage and family therapists); however, the VHA may also have shortages among those occupations as the OIG report lists only the top five. The VHA has both long-standing and recently established mechanisms available to improve recruitment and retention of providers (e.g., educational debt repayment programs). The Clay Hunt Suicide Prevention for American Veterans Act ( P.L. 114-2 ) aims to expand access to care by extending the existing period of enhanced enrollment, requiring a pilot program to conduct community outreach, requiring a pilot program to repay the education loans of qualified psychiatrists, and authorizing collaboration with nonprofit mental health organizations. When veterans gain access to care--within or outside the VHA--they may not always receive high-quality care. While the VHA has made progress in disseminating knowledge about evidence-based treatment (e.g., through clinical practice guidelines developed jointly with DOD), that does not guarantee implementation of such treatments. A 2011 evaluation of VHA mental health care finds room for improvement in the use of evidence-based treatments. Another third-party evaluation of the VHA's mental health care system is underway (to be completed by the end of FY2017), and independent evaluations of VHA mental health care and suicide prevention programs are required annually (with the first to be completed by the end of FY2018). A 2014 report by the RAND Corporation indicates that only 13% of evaluated mental health providers (not limited to VHA providers) met study criteria for readiness to provide veteran-friendly, high-quality care. Providers working within the VHA or a military setting were more likely than others to meet the criteria, which may raise questions for some about increasing the use of non-VHA care. The report recommends conducting better assessments of civilian provider capacity, assessing the impact of trainings in cultural competency on provider capacity, expanding access to effective trainings in selected evidence-based approaches, and facilitating providers' use of evidence-based approaches. Since Operations Enduring Freedom and Iraqi Freedom began, five public laws have addressed VHA suicide prevention efforts. Relevant provisions of each are summarized below. Joshua Omvig Veterans Suicide Prevention Act The Joshua Omvig Veterans Suicide Prevention Act ( P.L. 110-110 ), enacted in 2007, required the VA Secretary to develop and implement a comprehensive suicide prevention program, and to report to Congress on the program. The Congressional Budget Office (CBO) estimated that implementing the Joshua Omvig Veterans Suicide Prevention Act would have "little, if any, cost," because the VA already had implemented or was planning to implement each of the specific requirements. The textbox below lists the required elements and additional authorized elements of the comprehensive suicide prevention program. National Defense Authorization Act for Fiscal Year 2008 Section 1611 of the National Defense Authorization Act for Fiscal Year 2008 ( P.L. 110-181 ) directed the VA and DOD Secretaries to jointly develop a comprehensive care and transition policy for servicemembers recovering from serious injuries or illnesses related to their military service. The law specified that the policy must address (among other things) the training and skills of health care professionals, recovery coordinators, and case managers, to ensure that they are able to detect and report early warning signs of suicidal thoughts or behaviors, along with other behavioral health concerns. The law further specified that the policy must include tracking the notifications made by recovery care coordinators, medical care case managers, and non-medical care managers to health care professionals regarding suicidal thoughts or behaviors, along with other behavioral health concerns. A 2009 Government Accountability Office report indicates that DOD and VA have developed the relevant policies. Veterans' Benefits Improvement Act of 2008 Section 809 of the Veterans' Benefits Improvement Act of 2008 ( P.L. 110-389 ) grants the VA Secretary authority to advertise in the media for various purposes, including suicide prevention. Since enactment the VA has promoted the Veterans Crisis Line, for example, by placing advertisements on city buses and releasing public service announcements. Caregivers and Veterans Omnibus Health Services Act of 2010 Section 403 of the Caregivers and Veterans Omnibus Health Services Act of 2010 ( P.L. 111-163 ) requires the VA Secretary to conduct a study to determine the total number of veteran suicides (not limited to veterans using VA services) between January 1, 1999, and May 5, 2010 (i.e., the date of enactment). The in-progress study, dubbed the State Mortality Data Project, is described in a VA report published in February 2013. At the same time, the VA released a response to the report, which indicated (among other things) that a follow-up report was to be issued in May 2013. In January 2014, the VA released an update that includes some information about suicides among veterans who do not use VA health care services in 23 states. A full accounting of suicides among all veterans in all states has yet to be publicly released. Clay Hunt Suicide Prevention for American Veterans Act Enacted on February 12, 2015, the Clay Hunt Suicide Prevention for American Veterans Act ( P.L. 114-2 ) has eight sections, including the short title (Section 1). Section 2 requires the VA Secretary to have an independent entity conduct annual evaluations of VHA mental health care and suicide prevention programs, with the first evaluation to be completed by the end of FY2018. Section 3 requires the VA Secretary to maintain a website with up-to-date information about VHA mental health care services. Section 4 requires the VA Secretary to undertake a three-year pilot program to repay the education loans of at least 10 eligible psychiatrists (or psychiatric residents in their final year of training) in exchange for two or more years of obligated service. Section 5 requires the VA Secretary to undertake a three-year pilot program to conduct community outreach in at least 5 of the VHA's 21 Veterans Integrated Service Networks (geographic regions). Section 6 authorizes the VA Secretary to collaborate with nonprofit mental health organizations and requires the VA Secretary to appoint a Director of Suicide Prevention Coordination to manage such efforts. Section 7 extends by one year (beginning on the date of enactment) the existing five-year post-discharge period of enhanced enrollment in VHA health care for certain veterans. Section 8 prohibits new appropriations to carry out the act. The CBO estimated that implementing the act would cost $24 million over six years (2015-2020). | This report focuses on suicide prevention activities of the Veterans Health Administration (VHA) within the Department of Veterans Affairs (VA). The VHA's approach to suicide prevention is based on a public health framework, which has three major components: (1) surveillance, (2) risk and protective factors, and (3) interventions. Surveillance, or systematic collection of data on completed (i.e., fatal) suicides, is essential to define the scope of the problem (i.e., the suicide rate among veterans), identify characteristics associated with higher or lower risk of suicide, and track changes in the suicide rate. No nationwide surveillance system exists for suicide among all veterans. Information about deaths (including suicides) is collected in death certificates by state, territorial, and local governments. Death certificate data are aggregated into the National Death Index, which can be combined with data about who is a veteran to identify veteran suicides. The VHA collects detailed information about suicides among veterans that are known to VHA facilities; however, the majority of veterans are not enrolled in VHA health care, so other sources of information (e.g., Department of Defense data) are necessary to identify veterans. Information collected in surveillance is used to identify suicide risk factors (i.e., characteristics associated with higher rates of suicide) and protective factors (i.e., characteristics associated with lower rates of suicide). This is essential in order to design interventions that reduce risk factors and/or increase protective factors, thus lowering overall risk of suicide. Risk factors are also helpful in identifying at-risk groups or individuals so that interventions can be delivered to the people who need them most. Within the VHA, this research is supported by the Office of Research and Development; a Center of Excellence in suicide prevention; and a Mental Illness Research, Education, and Clinical Center on suicide prevention. The intervention cycle includes three stages: (1) design and test interventions, (2) implement interventions, and (3) evaluate interventions. The research components mentioned above have roles in small-scale pilot testing and large-scale evaluations of interventions. VHA suicide prevention interventions include easy access to care, screening and treatment, suicide prevention coordinators, suicide hotline, education and outreach, and limited access to lethal means. The VHA has received both praise and criticism for its suicide prevention efforts and mental health services more generally. A 2010 progress report on the National Strategy for Suicide Prevention describes the VHA as "one of the most vibrant forces in the U.S. suicide prevention movement, implementing multiple levels of innovation and state of the art interventions, backed up by a robust evaluation and research capacity." In contrast, some have testified before Congress that VHA's suicide prevention efforts have inadequacies, such as barriers to accessing care and lack of evidence-based treatments for those who do access care. A 2011 evaluation of VHA mental health services captures both sides of the argument, finding that VHA mental health care is generally at least as good as that of other health care systems, but that it "often does not meet implicit VA expectations." An independent evaluation of VA mental health services is underway. Potential issues for Congress and related recommendations by outside organizations fall into three categories: improving the timeliness and accuracy of surveillance data, building the evidence base, and increasing access to evidence-based mental health care. Public laws addressing suicide prevention among veterans are described in the Appendix. | 6,990 | 716 |
T he renewable electricity production tax credit (PTC) expired on January 1, 2018, for nonwind facilities. Thus, under current law, the credit is not available for nonwind projects that begin construction after December 31, 2017. Under current law, wind facilities that begin construction before the end of 2019 may qualify for the PTC. However, the PTC for wind started phasing down in 2017. Whether the PTC should be extended, modified, or remain expired is an issue that may be considered in the 116 th Congress. Legislation enacted during the first session of the 114 th Congress, the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), extended the PTC for wind for five years (with a phase down starting in 2017). Legislation enacted during the second session of the 115 th Congress, the Bipartisan Budget Agreement of 2018 (BBA18; P.L. 115-123 ), retroactively extended the PTC for nonwind technologies for tax year 2017. This report provides a brief overview of the renewable electricity PTC. The first section of the report describes the credit. The second section provides a legislative history. The third section presents data on PTC claims and discusses the revenue consequences of the credit. The fourth section briefly considers some of the economic and policy considerations related to the credit. The report concludes by briefly noting policy options related to the PTC. The renewable electricity PTC is a per-kilowatt-hour tax (kWh) credit for electricity generated using qualified energy resources. To qualify for the credit, the electricity must be sold by the taxpayer to an unrelated person. The credit can be claimed for a 10-year period once a qualifying facility is placed in service. The maximum credit amount for 2013, 2014, 2015, and 2016 was 2.3 cents per kWh. The maximum credit amount for 2017 and 2018 is 2.4 cents per kWh. The maximum credit rate, set at 1.5 cents per kWh in statute, is adjusted annually for inflation. Wind (before applying the 2017-2019 phaseout rates), closed-loop biomass, and geothermal energy technologies qualify for the maximum credit amount (see Table 1 ). Other technologies, including open-loop biomass, small irrigation power, municipal solid waste, qualified hydropower, and marine and hydrokinetic energy facilities, qualify for a reduced credit amount, where the amount of the credit is reduced by one-half (see Table 1 ). Under current law, nonwind facilities for which construction began before January 1, 2018, may qualify for the PTC. For wind facilities, the credit is available for facilities for which construction begins before January 1, 2020. However, for facilities that begin construction during 2017, the credit is reduced by 20%. The credit is reduced by 40% for facilities that begin construction in 2018, and reduced by 60% for facilities that begin construction in 2019. Before 2013, the PTC expiration date was a placed-in-service deadline, meaning that the electricity-producing property had to be ready and available for use before the credit's expiration date. The amount that may be claimed for the PTC is set to phase out once the market price of electricity exceeds threshold levels. Since being enacted, market prices of electricity have never exceeded the threshold level and the PTC has not been phased out, nor is the PTC likely to be phased out under current law. In the past, the ability to claim the PTC was also, in some cases, limited by the corporate alternative minimum tax (AMT). Before 2018, the PTC was available for taxpayers subject to the AMT for the first four years of the credit. While the PTC could not be claimed against the corporate AMT, unused credits could be carried forward to offset future regular tax liability. While few firms were subject to the corporate AMT, this limitation may have been significant for those affected. The corporate AMT was eliminated as part of the 2017 tax revision ( P.L. 115-97 ). From 2009 through 2017, PTC-eligible taxpayers had the option of claiming the 30% energy investment tax credit (ITC) in lieu of the PTC. Property that was placed in service during 2009, 2010, or 2011, or which was placed under construction in one of these years, also had the option of claiming an American Recovery and Reinvestment Act (ARRA) Section 1603 grant in lieu of tax benefits. There are also production tax credits for Indian coal and refined coal. Indian coal production facilities must have been placed in service before January 1, 2009, for coal produced before January 1, 2016, to receive credits. There is no placed-in-service limitation for coal produced and sold after December 31, 2015. Under current law, credits are not available for coal produced after 2017. The base rate for Indian coal is $2.00 per ton, but with the inflation adjustment the credit was $2.4 in 2017. For refined coal, the base credit amount is $4.375 per ton, and the 2018 credit with the inflation adjustment is $7.307 per ton. Refined coal facilities must have been placed in service before January 1, 2012, to qualify for credits. Refined coal facilities that were placed in service before this deadline may still be receiving credits, as the credit was allowed for production over a 10-year period. The PTC was first enacted in 1992 as part of the Energy Policy Act of 1992 (EPACT92; P.L. 102-486 ). Since 1999, the PTC has been extended 11 times (see Table 2 ). In many instances, the PTC lapsed before being reinstated. When first enacted as part of the EPACT92, the PTC was available for electricity generated using wind or closed-loop biomass systems. The credit was initially set to expire on June 30, 1999. In addition to extending the PTC through December 31, 2001, the Ticket to Work and Work Incentives Improvement Act of 1999 ( P.L. 106-170 ) added poultry waste as a qualifying technology. The PTC was again extended, through December 31, 2003, as part of the Job Creation and Worker Assistance Act ( P.L. 107-147 ). The Working Families Tax Relief Act of 2004 ( P.L. 108-311 ) included provisions extending the PTC through December 31, 2005. Legislation enacted later in the 108 th Congress substantially modified the PTC. The American Jobs Creation Act of 2004 (AJCA; P.L. 108-357 ) added new qualifying resources, including open-loop biomass (including agricultural livestock waste), geothermal energy, solar energy, small irrigation power, and municipal solid waste (landfill gas and trash combustion facilities). Instead of being able to claim the PTC for the first 10 years of production, these new qualifying resources were limited to a five-year PTC period. Further, open-loop biomass, small irrigation power, and municipal solid waste facilities had their credit amount reduced by one-half. The AJCA also introduced a PTC for refined coal, with a rate of $4.375 per ton (indexed for inflation after 1992), available for qualifying facilities placed in service before January 1, 2009. The PTC was extended twice during the 109 th Congress. The Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ) extended the PTC for all facilities except solar energy and refined coal for two years, through 2007. EPACT05 also added two new qualifying resources: hydropower and Indian coal. Hydropower was added as a half-credit qualifying resource. Indian coal could qualify for a credit over a seven-year period, with the credit amount set at $1.50 per ton for the first four years, and $2.00 per ton for the last three years, adjusted for inflation. EPACT05 also extended the credit period from 5 years to 10 years for all qualifying facilities (other than Indian coal) placed in service after August 8, 2005. The Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ) extended the PTC for one year, through 2008, for all qualifying facilities other than solar, refined coal, and Indian coal. The PTC was again extended and modified as part of the Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343 ). The PTC for wind and refined coal was extended for one year, through 2009, while the PTC for closed-loop biomass, open-loop biomass, geothermal energy, small irrigation power, municipal solid waste, and qualified hydropower was extended for two years, through 2010. Marine and hydrokinetic renewable energy were also added by EESA as qualifying resources. A new credit for steel industry fuel was also introduced. This credit was set at $2.00 per barrel-of-oil equivalent (adjusted for inflation with 1992 as the base year). For facilities that were producing steel industry fuel on or before October 1, 2008, the credit was available for fuel produced and sold between October 1, 2008, and January 1, 2010. For facilities placed in service after October 1, 2008, the credit was available for one year after the placed-in-service date or through December 31, 2009, whichever was later. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ) provided a longer-term extension of the PTC, extending the PTC for wind through 2012 and the PTC for other renewable energy technologies through 2013. Provisions enacted in ARRA also allowed PTC-eligible taxpayers to elect to receive a 30% investment tax credit (ITC) in lieu of the PTC. ARRA also introduced the Section 1603 grant program, which allowed PTC- and ITC-eligible taxpayers to receive a one-time payment from the Treasury in lieu of tax credits. Under ARRA, the Section 1603 grant program was available for property placed in service or for which construction started in 2009 or 2010. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended the Section 1603 grant program for one year, through 2011. The PTC for wind, which was scheduled to expire at the end of 2012, was extended for one year, through 2013, as part of the American Taxpayer Relief Act (ATRA; P.L. 112-240 ). In addition to extending the PTC for wind, provisions in ATRA changed the credit expiration date from a placed-in-service deadline to a construction start date for all qualifying electricity-producing technologies. The PTC, as well as the ITC in lieu of PTC option, was retroactively extended through 2014 as part of the Tax Increase Prevention Act of 2014 ( P.L. 113-295 ). The Protecting Americans from Tax Hikes (PATH) Act of 2015, enacted as Division Q of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), extended the PTC expiration date for nonwind facilities for two years, through the end of 2016. The ITC in lieu of PTC option was also extended through 2016. For Indian coal facilities, the production credit was extended for two years, through 2016. Additionally, for Indian coal facilities, the placed-in-service limitation was removed, allowing the credit for production at facilities placed in service after December 31, 2008, to qualify. As part of Division P of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), the PTC for wind was extended through 2019. The credit was extended at current rates through 2016. For wind facilities beginning construction in 2017, the credit is reduced by 20%. The credit is reduced by 40% for facilities beginning construction in 2018, and reduced by 60% for facilities beginning construction in 2019. The PTCs for nonwind technologies and the PTC for Indian coal expired at the end of 2016, but were retroactively extended for tax year 2017 in the Bipartisan Budget Act of 2018 (BBA18; P.L. 115-123 ). Absent further legislative action, the PTC for nonwind technologies and the PTC for Indian coal will not be available for facilities the construction of which begins after December 31, 2017. Estimates of the cost, or foregone revenue, associated with tax expenditure provisions can be found in the Joint Committee on Taxation (JCT) annual tax expenditure tables. Because JCT's figures are estimates, they may differ from actual amounts of tax credit claims. Between 2018 and 2022, estimated revenue losses associated with the PTC are $25.8 billion (see Table 3 ). Most of these revenue losses, $24.0 billion, are due to the PTC for wind energy. An estimated $0.8 billion is for PTCs for electricity produced using geothermal, $0.5 billion for PTCs for electricity generated using open-loop biomass, $0.3 billion for PTCs for electricity generated using municipal solid waste, and $0.1 billion for PTCs for electricity generated using qualified hydropower. Over the same five-year period, the estimated revenue losses associated with the production credits for refined coal and Indian coal are $0.1 billion each. JCT's tax expenditure estimates are based on current law. A policy that further extends the PTC would increase these tax expenditure estimates. Information on PTC claims by corporations is available from the IRS through the 2013 filing year. For 2013, 230 corporate taxpayers claimed the PTC (see Table 4 ). Most of the credits claimed were for production of renewable electricity, with only a few claims being made for refined coal, Indian coal, or steel industry fuel. In total, for 2013, taxpayers claimed PTCs of $2.8 billion. Because the PTC is paid out for 10 years, most PTCs awarded in any given year are the result of previous-year investments. Some taxpayers may not be able to use all of their tax credits to offset taxable income in a given tax year. In this case, taxpayers may carry forward unused credits to offset tax liability in a future tax year. In 2010, nearly $1.2 billion in PTCs were carried forward from previous tax years. The IRS data on PTC claims highlight the effect that policy actions taken in response to the economic downturn had on renewable energy tax credit claims. While the number of taxpayers claiming the PTC increased between 2008 and 2009, this number decreased after 2009. With the Section 1603 grant option available, fewer taxpayers claimed the PTC. While Section 1603 grants were available in lieu of the PTC, $15.5 billion in grants was claimed for technologies that otherwise would have been PTC-eligible. This amount is not directly comparable to the costs of the PTC because Section 1603 grants were a one-time payment, while projects can claim the PTC for 10 years of production. The effect of the economic downturn can also be seen in data on tax credit carry forwards. The amount of PTCs being carried forward more than doubled between 2008 and 2009, then doubled again between 2009 and 2010. During the economic downturn, taxpayers had less net income to offset with tax credits. Further, weakness in tax equity markets made it harder for renewable energy project developers to establish partnerships to monetize tax credits. Other available estimates provide information on the cost of a long-term PTC extension. The Congressional Budget Office (CBO) estimates that a permanent PTC (or a PTC extended through the budget horizon) for nonwind technologies would reduce revenues by $1.4 billion between 2019 and 2028. Extending the Indian Coal Production Credit would reduce revenues by $0.4 billion between 2019 and 2028. Extending the wind construction start date through the end of the budget window, beyond 2019, would reduce federal revenues by an estimated $6.9 billion between 2018 and 2027. The PTC was enacted in 1992 to promote the "development and utilization of certain renewable energy sources." The 1999 sunset was included to provide an "opportunity to assess the effectiveness of the credit." When the PTC was extended as part of a "tax extenders" package in 1999, Congress noted that the PTC had been important to the development of environmentally friendly renewable power, and extended the credit to promote further development of wind (and other) resources. Recent extensions of the PTC reflect a belief that the tax incentives contribute to the development of renewable energy infrastructure, which advances environmental and energy policy goals. Research suggests that the PTC has driven investment and contributed to growth in the wind industry. While further extension of the PTC may lead to further investment and growth in wind infrastructure, this potential is limited in the case of short-term extensions. Further, retroactive extensions provide what are often characterized as windfall benefits, rewarding taxpayers that made investments absent tax incentives. While the PTC has contributed to increased use of renewable electricity resources, research on its contribution to reducing greenhouse gas emissions is mixed. In a 2013 report, the National Academy of Sciences estimated that removing tax credits for renewable electricity would result in a small (0.3%) increase in power-sector emissions. In an evaluation of the renewable energy tax credit extensions enacted in P.L. 114-113 , the National Renewable Energy Laboratory concluded that the recent extensions of tax credits for wind and solar contribute to reduced emissions, particularly if natural gas prices are low. A common rationale for government intervention in energy markets is the presence of "externalities," which result in "market failures." Pollution resulting from the production and consumption of energy creates a negative externality, as the costs of pollution are borne by society as a whole, not just energy producers and consumers. Because producers and consumers of polluting energy resources do not bear the full cost of their production (or consumption) choices, too much energy is produced (or consumed), resulting in a market outcome that is economically inefficient. Tax subsidies for clean energy resources are one policy option for addressing the inefficiencies and market failures in the energy sector. Here, the subsidies approach is not the most efficient way to achieve the policy objective. Subsidies reduce the average cost of energy, encouraging energy consumption, countering energy conservation initiatives, and offsetting emissions reductions. Additionally, tax subsidies do not necessarily provide a comparable incentive for all emissions reduction alternatives, and may favor more costly reductions over less costly ones. Finally, tax subsidies also reduce tax revenues. To the extent that these subsidies are financed by distortionary taxes on other economic activities, they reduce economic efficiency. A more direct and economically efficient approach to addressing pollution and environmental concerns in the energy sector would be a direct tax on pollution or emissions, such as a carbon tax. This option would generate revenues that could be used to offset other distortionary taxes, achieve distributional goals, or reduce the deficit. A carbon tax approach would also be "technology neutral," not requiring Congress to select which technologies to subsidize. Tax incentives are also not the most efficient mechanism for delivering federal financial support directly to renewable energy developers and investors. Stand-alone projects often have limited tax liability. Thus, project developers often seek outside investors to "monetize" tax benefits using "tax-equity" financing arrangements. The use of tax equity investors, often major financial institutions, reduces the amount of federal financial support for renewable energy that is delivered directly to the renewable energy sector. Tax incentives that reward production, as opposed to investment, are likely to lead to more renewable electricity per dollar of federal subsidy. Another consideration is the interaction of the PTC with other policies designed to support the development of renewable electricity resources. More than half of U.S. states currently have renewable portfolio standards (RPS) policies in place. Subsidies for renewable energy at the federal level, including the PTC, reduce the cost of complying with state-level RPS mandates. Without legislative action, the PTC is not available to nonwind projects that began construction after December 31, 2017, or wind projects that begin construction after December 31, 2019. One option is to allow the PTC to expire as scheduled. Under this option, projects that meet specified construction start dates would receive the PTC for the first 10 years of qualified production. Another option would be to provide a temporary extension of the PTC. With this option, the construction start date deadline could be extended by a set number of years. With the enactment of P.L. 114-113 , the expiration date for the PTC for wind is different than the expiration date for the PTC for other technologies. Thus, Congress may choose to extend the PTC for nonwind technologies. The extension could be made retroactive for 2018. If the PTC for nonwind technologies were extended, the phaseout that currently applies to wind could be applied to other technologies. Another alternative would be to extend the PTC for nonwind technologies, and remove the phaseout for wind, such that all PTC-eligible technologies qualified for the PTC at the same rate. In 2014, House Ways and Means Committee Chairman Dave Camp proposed a form of PTC phaseout as part his tax reform proposal introduced in the 113 th Congress, the Tax Reform Act of 2014 ( H.R. 1 ). Under this proposal, the PTC inflation adjustment factor would have been eliminated. This would reduce the value of the PTC for renewable electricity to 1.5 cents per kWh, for all PTC-eligible properties still within the 10-year eligibility window. Thus, facilities that had received a 2.3 cent per kWh PTC in 2014, and were still within their 10-year PTC window in 2015, would have seen the value of the PTC fall to 1.5 cents per kWh for 2015 and beyond. Under Chairman Camp's proposal, the PTC would have been fully repealed after 2024. Because the value of the PTC would be reduced for existing facilities, the JCT estimates that this proposal would have raised $9.6 billion in additional federal revenues between 2014 and 2023, relative to current law at the time. A similar proposal was introduced in the 114 th Congress as the PTC Elimination Act ( H.R. 1901 ). President Obama's FY2017 budget proposed a permanent extension of the PTC. Additionally, under President Obama's proposal, the PTC would be made refundable, solar facilities would be added as qualifying property, and the credit would be modified such that renewable electricity consumed by the producer could qualify for tax credits. Solar property that currently qualifies for the residential energy efficient property credit would also be eligible for the PTC. Additionally, the investment tax credit (ITC) for renewable energy would be made permanent. In analysis of President Obama's FY2017 budget, the JCT estimated that making permanent the PTC and ITC, along with these other changes, would cost $19.8 billion between 2016 and 2026. | The renewable electricity production tax credit (PTC) is a per-kilowatt-hour (kWh) tax credit for electricity generated using qualified energy resources. For nonwind technologies, the credit expired at the end of 2017, so that only projects that began construction before the end of 2017 qualify for tax credits. After 2016, the PTC for wind remains available, at reduced rates, for wind facilities that begin construction before the end of 2019. Since the PTC is available for the first 10 years of production at a qualified facility, PTCs will continue to be claimed after the PTC's stated expiration date. Whether the PTC should be extended, modified, or allowed to expire as scheduled is an issue Congress may choose to consider. Most recently, the PTC for nonwind technologies was retroactively extended for tax year 2017 as part of the Bipartisan Budget Act of 2018 (BBA18; P.L. 115-123). The PTC for wind was last extended in the Consolidated Appropriations Act, 2016 (P.L. 114-113). This legislation had extended the PTC for two years, through 2016, for all eligible technologies. Additionally, the PTC for wind was extended an additional three years, through 2019, but at reduced credit rates for wind facilities beginning construction in 2017, 2018, or 2019. The PTC for wind and closed-loop biomass was first enacted in 1992. When first enacted, the PTC was scheduled to expire on July 1, 1999. Since 1999, the PTC has been extended 11 times. On several occasions, the PTC was allowed to lapse before being retroactively extended. In addition to being extended, the PTC has also been expanded over time to include additional qualifying resources. In 2017, closed-loop biomass, and geothermal technologies qualified for the full credit amount of 2.4 cents per kWh. Other technologies (open-loop biomass, small irrigation power, municipal solid waste, qualified hydropower, marine, and hydrokinetic) qualified for a half-credit amount, or 1.2 cents per kWh in 2017. Wind facilities starting construction in 2017 qualified for 80% of the full credit amount. Credit amounts are adjusted annually for inflation. The Joint Committee on Taxation (JCT) estimates that in 2018, foregone revenues (or "tax expenditures") for the PTC were $4.8 billion. Between 2018 and 2022, under current law, tax expenditures for the renewable electricity PTC are estimated to be $25.8 billion. Extensions or modification of the PTC could increase or decrease the estimated tax expenditures associated with this provision. The PTC has been important to the growth and development of renewable electricity resources, particularly wind. Tax incentives for renewables, however, may not be the most economically efficient way to correct for distortions in energy markets or to deliver federal financial support to the renewable energy sector. Tax subsidies reduce the average cost of electricity, increasing demand for electricity overall, countering energy-efficiency and emissions-reduction objectives. Subsidies delivered as nonrefundable tax incentives often require those wishing to use the credit find "tax-equity" partners to provide equity investments in exchange for tax credits. The use of tax equity reduced the amount of the incentive that flows directly to the renewable energy sector. There are a number of policy options that might be considered related to the PTC. For example, the PTC could be allowed to expire as scheduled. Alternatively, the PTC could be temporarily extended. The extension could apply only to nonwind technologies. If the PTC is retroactively extended for nonwind technologies, the phaseout that currently applies to wind could be applied to nonwind PTC-eligible technologies. Another option would be to remove the phaseout that applies to wind starting in 2017. Other forms of PTC phaseout have been proposed in recent years, including elimination of the inflation adjustment factor. Another option would be to make the PTC a permanent feature of the tax code. | 4,851 | 835 |
RS21234 -- The Bill Emerson Humanitarian Trust: Background and Current Issues Updated April 17, 2003 The Africa Seeds of Hope Act of 1998 amended Title III of the Agricultural Act of 1980 by replacing the Food Security Commodity Reserve (FSCR) and itspredecessor, the Food Security Wheat Reserve (FSWR), with the Bill Emerson Trust. (1) The purpose of the Trust is "solely to meet emergency humanitarianfood needs in developing countries..."(Section 302, 7 U.S.C. 1736f-1). The legislation authorizes the Trust to holdup to 4 million metric tons of wheat, corn,sorghum and rice. Taking into account previously unreplenished releases from the Trust and 4 recent releases ofcommodities for use in Africa and Iraq,approximately 1.1 million metric tons of wheat remain in the Trust. The Africa Seeds of Hope Act allows the Trustto hold funds as well as commodities, butno funds have ever been held. Uses. The statute authorizes two uses for the Trust. First, the Secretary of Agriculture has authority torelease up to 500,000 metric tons of eligible commodities for urgent humanitarian relief in the case of unanticipatedfood needs in developing countries and torelease an additional 500,000 metric tons of eligible commodities that could have been, but were not, released inprevious years. Second, the Secretary hasauthority to release commodities from the reserve when she determines that U.S. domestic supplies are so limitedthat commodities cannot be made availablefor regular programming in P.L. 480 foreign food aid programs. (2) Exchange of Commodities. A commodity in the Trust may be exchanged for another U.S. commodity ofequal value. In FY2002, wheat released from the Trust was sold and the proceeds used to purchase corn, vegetableoil, and dry beans for distribution insouthern Africa. Reimbursement. Commodities in the Emerson Trust are held as assets of the Commodity Credit Corporation(CCC). (3) When commodities are released from theTrust, the CCC incurs a loss (the value of the assets it no longer holds.) The Trust is subsequentlyreimbursed for the commodities released with a transfer of funds from P.L. 480. The 1998 Act provides that theCCC be reimbursed by P.L. 480 for thecommodity costs of a release for unanticipated needs based on the lesser of 1) the actual costs incurred or 2) theexport market price as determined by theSecretary at the time of the release. Reimbursement to the CCC for the cost of ocean freight and other non-commodity costs occurs through the regular USDAappropriations process in which USDA requests budget authority to cover these costs in annual budget submissions. Reimbursement for a release ofcommodities for unanticipated needs can be made from past, current, or subsequent unobligated P.L. 480 funds. Commodities released for use in P.L. 480programs when supplies are short are paid for from current fiscal year P.L. 480 funds. Replenishment. Current law does not require replenishment of commodities released from the Trust, butdoes provide for ways to do it. The Secretary of Agriculture may acquire commodities through purchases fromproducers or in the market, if the Secretarydetermines that such purchases will not unduly disrupt the market. Funds for such purchases must be authorizedin an appropriation act. The Secretary mayalso replenish the Trust by designation to the Trust of commodities already owned by the CCC. Origins of the Trust. During the 1970's, Congress debated the creation of either a permanentgovernment-held stock of grain or a fund to promote global food security. Advocates of a grain reserve argued thatit would provide a buffer to the vagaries ofagricultural production, ensuring grain availability, regardless of domestic supply conditions, in case of urgent need. They argued, in addition, that a reservewould serve as a surplus disposal mechanism in times of excess production, thereby strengthening farm prices. Supporters of a fund, on the other hand,contended that dollar resources would provide more flexibility in meeting urgent needs, and that factors other thanfood shortages, such as transportation or highcommodity costs, were more likely to impede the delivery of food to needy people in emergency situations. Areserve of funds also would not have thepotential price-depressing effect that a release of commodities could have. Events overtook this debate in 1979 when the Soviet Union invaded Afghanistan, prompting the CarterAdministration to embargo all U.S. grain shipments tothe USSR. To prevent loss of revenue to exporters and adverse impacts on domestic commodity prices which mighthave resulted from the embargo, the CCCoffered to purchase from U.S. suppliers grain previously committed to the Soviet Union. Through this process theCCC acquired 4 million metric tons ofwheat, with which to establish a grain reserve. The Food Security Wheat Reserve Act of 1980 (Title III of P.L.96-494 ) codified this move as a means of guaranteeing a supply of wheat in times of tight supplies or unanticipated need. The Act allowed wheat from thereserve to be used in the P.L. 480 program ifwheat were unavailable through normal channels. The 1980 Act also authorized the release of up to 300,000 metrictons to meet urgent humanitarian need inforeign countries without consideration of domestic supply conditions or additional congressional appropriations. The 1996 farm bill ( P.L. 104-127 ) transformed the wheat reserve into the FSCR which was still a reserve of upto 4 million metric tons, but included corn,sorghum, and rice in the reserve along with wheat. The criteria which would trigger release of stocks from theFSCR were the same as for the predecessorwheat reserve -- unanticipated urgent humanitarian need or short domestic supplies. The 1996 legislation increasedfrom 300,000 tons to 500,000 tons theamount of commodities that could be released through the P.L. 480 Title II donations program each fiscal year tomeet unanticipated needs without regard to thedomestic supply situation. Further, the 1996 Act allowed the release of up to an additional 500,000 tons of eligiblecommodities that could have been released,but were not, in previous years for use under Title II of P.L. 480 to provide urgent humanitarian relief.Reimbursement requirements remained the same as in theearlier statute. While the 1980 Act required that the reserve be replenished 18 months after stocks had beenreleased, the 1996 Act omitted a deadline by whichthe reserve must be replenished. The 2002 farm bill ( P.L. 107-171 ) contains the current legislative authority for the Emerson Trust as established in the 1998 Africa Seeds of Hope Act. P.L.107-171 extends the Trust through FY2007. Use of the Reserve: 1980-1996. Wheat from the reserve was used on six occasions from its establishment in1980 through fiscal year 1996 -- three times to meet P.L. 480 commitments when supplies were short and threetimes to meet unanticipated emergency needs.(See Table 1.) Although corn, sorghum, and rice are eligible commodities for the reserve (since 1996), only wheathas been held. In 1984, President Reagan ordered the release of 300,000 tons of wheat to meet emergency food needs in Ethiopia and other Sub-Saharan African countriesduring the famine of the mid-1980's. In October 1988, 1.5 million tons were authorized to meet P.L. 480programming requirements because the U.S. droughtof 1988 had reduced commercial wheat supplies. Supply conditions continued to worsen through that fiscal yearand, in September 1989, President Bushauthorized the release of an additional 2 million metric tons of wheat to satisfy P.L. 480 program commitments. In May 1991, 300,000 tons of wheat from thereserve were made available to meet disaster relief needs expected to be large as a result of the Iraqi Kurdish refugeecrisis and ongoing food emergencies inSub-Saharan Africa. However, a total of 59,000 metric tons was programmed for use. On July 19, 1994, PresidentClinton authorized the release of up to300,000 tons of wheat for emergency assistance to the Caucasus region of the former Soviet Union. On January22, 1996, the President delegated to theSecretary of Agriculture authority to release up to 1.5 million tons of wheat from the reserve for use in the P.L. 480program because of the limited availabilityof wheat in commercial markets. Of the amount authorized, a total of 1,280,779 tons was programmed for use inP.L.480. Table 1. Using the FSWR: A Brief History The "Short Supply" Determination. Section 401 of P.L. 480 provides that the Secretary of Agriculture makea determination of the agricultural commodities and quantities available for use in food aid programs. The sectionfurther provides that no commodity shall bemade available to P.L. 480 programs if so doing would reduce the domestic supply of the commodity below whatis needed to meet domestic requirements andto provide adequate carryover. As an example, USDA, in FY1996, estimated that 1.8 million metric tons of wheat and wheat products would be available for P.L. 480 from domestic supplies. However as the marketing year progressed, USDA revised its initial determination, based on its assessment that thesize of the wheat crop would be lower thanexpected and that commercial export demand would be strong. In January of 1996, wheat prices rose to $4.83 perbushel. Stocks for the 1996 wheat marketingyear were estimated at 452 million bushels, with a stocks-to-use ratio of just under 20% percent. The USDA'srevised supply and demand assessment concludedthat only 300,000 metric tons of wheat would be available from domestic supplies and led the Secretary to requestpresidential authority to release up to 1.5million metric tons of wheat from the FSWR during FY1996 for P.L. 480 programming. Use of the Trust: 2002 and 2003. The Secretary of Agriculture announced releases from the Trust of 275,000tons of wheat on June 10, 2002 and 300,000 tons of wheat on August 28, 2002. The wheat from the reserve wasexchanged for an equal value of corn, beansand vegetable oil for use in humanitarian relief in southern Africa. In FY2003, the Secretary has announcedreleases of 200,000 tons for emergency food needsin the Horn of Africa and 600,000 tons for emergency needs in Iraq. Of the 600,000 tons released for Iraq, 200,000will be made immediately available and400,000 tons will be made available as needed. A portion of the wheat released was to have been exchanged forrice. However, concerns about the potentialprice-depressing effect of selling wheat and a provision of the wartime supplemental appropriations act prohibitingexchanges in FY2003 precluded such sales.With these announced releases, an estimated 1.1 million metric tons remain in the Trust. Experience with Reimbursement and Replenishment. The first release from the Trust in FY1985 of 300,000metric tons of wheat to meet unanticipated need was reimbursed with $45 million of unobligated FY1987 P.L. 480Title I and Title II appropriations. Reimbursement was based on the export price of wheat at the time the commodities were released, that is inFY1985. In FY1991, the reserve was used again tomeet urgent humanitarian need and was reimbursed from Title I appropriations unobligated at the end of FY1991. The reserve was tapped again in FY1994 tomeet unanticipated need. The CCC was reimbursed $28 million, consisting of $15.4 million in prior yearunobligated balances in the Title I credit account, $2.3million in unobligated FY1995 funds in the Title I credit account, and $10.3 million in prior year unobligatedbalances in the Title I ocean freight differentialaccount. When commodities were released for reasons of short supply, current year P.L. 480 appropriations wereused to reimburse the CCC for the wheatreleased. Of the two ways to replenish the Trust after commodities have been released, i.e., purchase or designation of stocks already in CCC inventories, only the latterhas been used until now. Following the first release of wheat from the reserve in FY1985, an equivalent quantityof wheat owned by the CCC was designatedby the Secretary as replenishment for the wheat sent to Sub-Saharan Africa in the preceding year. Policy at this timewas essentially to replace any drawdown ofthe reserve immediately by available CCC inventory. This was possible because CCC held large stocks of wheat,and with such a large inventory, USDAofficials felt no need to identify wheat in the reserve separately from other CCC-owned stocks. In 1988, however, CCC changed its policy regarding a separate designation of wheat for the FSWR and entered into long-term contracts with commercialwarehousemen with the contracts specifically designating the wheat as part of the reserve. The long-term contractssaved annual storage costs because CCCwas able to negotiate lower storage terms. In 1990, USDA announced that the CCC would designate alluncommitted CCC-owned wheat to the Food SecurityWheat Reserve. At that time, 60 million bushels of wheat remained in the reserve because of releases for shortsupply in 1988 and 1989. CCC designatedenough wheat for the reserve to restore it to its full 147 million bushels or 4 million metric ton maximum by March1991. The reserve was not replenished forits drawdown in 1994. The 1996 release also was not replenished. With respect to releases from the Trust in FY2002 and FY2003, the Emergency Wartime Supplemental Appropriations Act of 2003 ( P.L. 108-11 , H.R. 1559 ) provides $69 million to acquire a quantity of commodities for use in administering the Trust. This appropriation will enable the firstreplenishment of the Trust since 1990 and the first time that Congress has appropriated funds for that purpose. Because of large needs for humanitarian foodaid in Africa and Iraq in FY2003, reimbursement of the Trust is likely to be postponed to subsequent fiscal years. | The Bill Emerson Humanitarian Trust is becoming a critical component of the U.S.response to humanitarian foodemergencies in Africa, Iraq, and elsewhere. The Trust, as presently constituted, was enacted in the 1998 AfricaSeeds of Hope Act (P.L. 105-385). It replacedthe Food Security Commodity Reserve established in 1996 and its predecessor the Food Security Wheat Reserveof 1980. The Trust is a reserve of up to 4million metric tons of wheat, corn, sorghum and rice that can be used to help fulfill P.L. 480 food aid commitmentsto developing countries under twoconditions: (1) to meet unanticipated emergency needs in developing countries, or (2) when U.S. domestic suppliesare short. The Trust can also hold funds. Administration proposals to reduce food aid's reliance on surplus commodities and anticipated demand foremergency food aid have focused renewed attentionon the Emerson Trust, which has been used four times in FY2002 and FY2003 to meet unanticipated food needsin Africa and Iraq. About 1.1 million metrictons of wheat remain in the Trust. As the Trust is drawn down, reimbursement and replenishment of the Trust forcommodities released become importantissues. This report will be updated as developments occur. | 3,174 | 284 |
On June 26, 2006, the Supreme Court agreed to review Commonwealth of Massachusetts v. EPA , setting the stage for the Court's first pronouncements in a global warming case. In the decision below, the D.C. Circuit rejected a challenge to EPA's denial of a rulemaking petition under the Clean Air Act (CAA). The denied petition, filed by numerous states and environmental groups, requested EPA to impose limits on four pollutants emitted by new motor vehicles, owing to the alleged contributions of those emissions to global warming. In resolving the case, the Court might address, among other things, Article III standing doctrine; whether the CAA reaches the global warming impacts of motor vehicle emissions; and the latitude allowed an agency to inject policy considerations into its decisions when the governing statute makes no mention of them. In 1999, some 20 non-profit groups petitioned EPA to regulate emissions of "greenhouse gasses" (GHGs)--specifically, CO2, methane, nitrous oxide, and hydrofluorocarbons--from new motor vehicles. The petition cited the agency's alleged mandatory duty to do so under CAA section 202(a)(1), which directs the EPA Administrator to prescribe emission standards for "any air pollutant" from new motor vehicles "which, in his judgment cause[s], or contribute[s] to air pollution which may reasonably be anticipated to endanger public health or welfare." Petitioners argued that the GHGs above are "air pollutants" within the meaning of the CAA, citing the EPA General Counsel's opinion to that effect from 1998. In addition, they contended, EPA already has made findings that GHGs from motor vehicles "may reasonably be anticipated to endanger public health and welfare," a standard that does not require complete certainty. Further, the CAA's definition of "welfare" includes effects on "weather" and "climate." Thus, they concluded, EPA not only may, but must , regulate GHG emissions from new motor vehicles under section 202(a)(1). In 2003, after receiving almost 50,000 comments, EPA denied the petition. Much of its rationale followed a new EPA General Counsel opinion, issued the same day, reversing the 1998 General Counsel opinion by denying that GHGs are "air pollutants" under the CAA. In support of non-coverage, the new opinion made arguments drawing on both the CAA and other sources. As for CAA-based arguments, the new opinion points out that although three provisions in the 1990 CAA amendments expressly touch on global warming, none of them authorizes regulation; instead they seek to learn more about the problem. Moreover, the CAA contains a separate program explicitly addressing stratospheric ozone depletion, showing that Congress understands the need for specifically tailored solutions to global atmospheric issues such as global warming, rather than leaving such issues to the general regulatory structure in the CAA. As for arguments based outside the CAA, the new opinion contends that various congressional enactments from 1978 to 1990 reveal a Congress interested in developing a foundation for considering whether future legislative action on global warming was warranted. Also, the conclusion of the 1998 General Counsel memorandum that GHGs are "air pollutants" under the CAA was rendered prior to a key Supreme Court decision in 2000. That decision, FDA v. Brown & Williamson Tobacco Corp ., held that when Congress makes facially broad grants of authority to agencies, they must be interpreted in light of the statute's purpose, structure, and history. This decision suggests, argued the new opinion, that the CAA should not be read to delegate an authority of such profound economic significance as the power to address global warming in so cryptic a fashion as CAA section 202. Beyond the above issues of CAA authority, EPA disagreed as a matter of Bush Administration policy with the mandatory-standards approach urged by petitioners. Not surprisingly, EPA, in rejecting the petition, endorsed President Bush' non-regulatory approach to global warming. EPA's denial of the section 202 petition in 2003 was challenged in the D.C. Circuit by twelve states (CA, CT, IL, MA, ME, NJ, NM, NY, OR, RI, VT, WA), three cities (New York, Baltimore, and Washington, D.C.), two U.S. territories (American Samoa and Northern Mariana Islands), and several environmental groups. Opposing the suit, besides EPA, were ten state intervenors (AK, ID, KS, MI, ND, NE, OH, SD, TX, UT), plus several automobile- and truck-related trade groups. In Commonwealth of Massachusetts v. EPA , in July 2005, a split panel rejected the challenge. The two judges supporting rejection, however, did so for different reasons. Judge Randolph, author of the lead opinion, bypassed the standing issue and assumed arguendo that EPA has CAA authority to regulate GHG emissions. He then proceeded to resolve whether EPA properly exercised its discretion in choosing not to wield that authority. As to this discretion issue, recall that CAA section 202(a)(1) directs the EPA Administrator to prescribe standards for any motor vehicle emissions that " in his judgment " cause harmful air pollution. Judge Randolph read "in his judgment" broadly to allow EPA consideration of not only "scientific uncertainty" about the effects of GHGs but also "policy considerations" that justified not regulating. Thus, EPA in his view was entitled to rely, as it did, on such factors as the existence of efforts to promote fuel cell and hybrid vehicles, and the fact that new motor vehicles are but one of many sources of GHG emissions, making regulation of vehicle GHG emissions an inefficient piecemeal approach to global warming. He concluded that EPA had properly exercised its 202(a)(1) discretion in denying the petition for rulemaking. By contrast, Judge Sentelle, the other judge supporting rejection of the petition, did not shy away from the standing question. Finding that petitioners had not suffered the requisite injury required for standing, he endorsed rejection of the petition. Finally, Judge Tatel in dissent asserted that at least one petitioner had standing. Massachusetts, he said, had shown the possibility of harm from global-warming-caused rising sea levels. On the merits, he held first that EPA has authority under section 202(a)(1) to regulate GHG emissions, noting the section's coverage of " any air pollutant." Second, he concluded that EPA's 202(a)(1) discretion does not extend to policy considerations, as Judge Randolph held, but relates exclusively to whether the emissions cause harmful air pollution. That being so, he concluded that EPA had not presented a lawful explanation of its decision not to regulate and would have remanded the petition denial to the agency. Judge Tatel, joined by Judge Rogers, also dissented from the court's later rejection (4-3) of the petitioners' request for rehearing en banc. On June 26, 2006, the Supreme Court agreed to hear the case. To divine how the Supreme Court might decide the case, one should start with the petition for certiorari's statement of the questions presented by the case and EPA's version of the questions presented in its brief in opposition. The standing issue. Standing is a ubiquitous threshold issue in global warming litigation, given the difficulty faced by plaintiffs in showing that their specific injuries were caused by the particular actions of the defendants in the case. Commonwealth of Massachusetts fits the mold. Petitioners, EPA argues, cannot establish two of the three elements of Article III standing: causation and redressability. As to causation, EPA describes petitioners' declarations as saying only that GHGs emitted from many different sources all over the world cause global warming. However, it points out, to have standing, petitioners must assert that the subject matter of this case--emissions of GHGs from new motor vehicles in the U.S.--causes or meaningfully contributes to their injuries. As to redressability, EPA argues that petitioners' declarations do not establish that a mere reduction in the specified GHGs will be sufficient to eliminate or reduce the injury they will suffer. The petitioners do not include standing among the questions presented and thus do not address it. The CAA authority issue. Should the Court get past the standing issue, the opening question on the merits goes to EPA authority: did Congress in section 202(a)(1) empower EPA to regulate new motor vehicle emissions based on their global warming effects? Petitioners argue that the CAA text could hardly be plainer. Section 202(a)(1), they note, requires EPA to promulgate emission standards for "any air pollutant" that causes endangerment. And the CAA definition of "air pollutant" as any "physical" or "chemical" substance that enters the ambient air surely includes GHGs. Finally, there is nothing special, petitioners assert, about the kind of harm GHGs produce that places them beyond the CAA, since section 202(a)(1) is triggered by endangerment of "welfare," a term defined by the act to include effects on "climate." The EPA General Counsel memorandum's effort to avoid this obvious textual mandate on the basis of FDA v. Brown & Williamson Tobacco Corp , petitioners say, misreads that decision. In response, EPA notes that the authority question was not addressed by the majority judges below (nor by any other court) and that the Supreme Court rarely addresses an issue without the benefit of lower court explication. Thus, the agency contends, the Court should resolve this case on either standing grounds or the "in his judgment" issue (below). If the Court reaches the authority question, EPA maintains, Brown & Williamson counsels that the CAA be read as a whole, and doing so shows that the act does not confer authority on EPA to regulate emissions for the purpose of reducing global warming. The "in his judgment"/policy considerations issue. This question asks whether, as Judge Randolph found below, EPA may decline to issue the emission standards here for policy reasons not enumerated in CAA section 202(a)(1). Petitioners, of course, argue to the contrary. The "in his judgment" phrase in 202(a)(1), they say, refers only to the EPA Administrator's judgment whether public health or welfare may reasonably be anticipated to be endangered by the pollution--not to the many other considerations, many of a policy nature, that EPA cited in rejecting the petition to the agency. Section 202(a)(1)'s narrow focus is made all the more clear, argue petitioners, by the contrast with other provisions in section 202 that do mention factors other than endangerment of public health or welfare. "By allowing EPA to import into section 202(a)(1) policy factors not mentioned there," argue petitioners, "the appeals court has sanctioned a large-scale ... shift of power from Congress ... to the agency." In response, EPA's brief stressed one particular reason the agency had cited for rejecting the rulemaking petition: the assertedly uncertain state of the scientific record on global warming and EPA's desire to have the benefit of ongoing research. Surely, EPA's brief argues, the "in his judgment" phrase in section 202(a)(1) allows EPA to consider those factors in deciding whether to make an endangerment finding. EPA also points out the particular deference that courts owe agencies as to their decisions whether to grant rulemaking petitions. The federal brief, however, contains little discussion of the several policy factors on which the EPA General Counsel memorandum and Judge Randolph relied, and that, arguably, is the nub of the issue. The D.C. Circuit's decision in Commonwealth of Massachusetts was an unusual one for the Supreme Court to accept, given that few of the factors that have traditionally interested the Court in hearing a case are present. There is no split in the circuits, and the decision has little precedent value in that no rationale commanded the support of a majority of the D.C. Circuit judges. To be sure, however, cases presenting issues of unusual importance, as Commonwealth of Massachusetts assuredly does, are more likely to be accepted. Given that the Court has accepted the case, the three issues above suggest some ways the Court could rule. First, it could find that the petitioners lack standing. Environmental interests and standing doctrine have long had a tumultuous relationship in the Supreme Court, and the nature of global warming exacerbates the difficulties. As in the acid rain and toxic-exposure cases of decades ago, global warming is said to be caused by multiple actors (millions of GHG emitters around the globe) whose actions, possibly combined with natural phenomena, intermix in complex ways to cause adverse effects after a very long time. Linking a particular cause and a particular effect in this context may be quite difficult. Certainly Justice Scalia, the leader of the Court's efforts to narrow standing in a series of 1990s decisions, would be inclined to rule against the Commonwealth of Massachusetts petitioners on standing grounds. Alternatively, the Supreme Court might use the case to clarify when a court may, as Judge Randolph did, bypass its general edict that jurisdictional issues such as standing be addressed first, in order to decide the case on an easy merits issue. If the standing hurdle is surmounted, petitioners' case still could fall on either of the statutory issues raised in the briefs: whether "any air pollutant" includes emissions regulated on the basis of their global warming effects and whether "in his judgment" allows EPA considerations of factors other than those going to whether the pollutant endangers public health or welfare. In addition, there is an issue, sometimes raised in administrative law cases, whether the EPA Administrator has a mandatory duty to issue the "judgment" that triggers section 202(a)(1) regulation once he comes into possession of data allowing him to make it. Because this issue has not been raised by the parties, one suspects the Supreme Court will not address it. In sum, there are multiple ways the Court could resolve Commonwealth of Massachusetts or remand to the D.C. Circuit for that court to resolve. It is highly unlikely that the litigation will result in a direct judicial order to EPA to regulate new-motor-vehicle GHG emissions; at most, if petitioners win, one or another court will require additional determinations by the agency. Should regulation of motor-vehicle GHG emissions be the ultimate result, however, it would increase the pressure on EPA to regulate the GHG emissions of stationary sources (powerplants and factories) as well. A decision by the Supreme Court is expected by June 2007. | On June 26, 2006, the Supreme Court agreed to review Commonwealth of Massachusetts v. EPA, a global warming-related case. In the decision below, the D.C. Circuit rejected 2-1 a challenge to EPA's denial of a petition under the Clean Air Act requesting the agency to limit four pollutants emitted by new motor vehicles, owing to their alleged contribution to global warming. In resolving the case, the Court might address, among other things, Article III standing doctrine; whether the Clean Air Act reaches the global warming impacts of motor vehicle emissions; and the latitude allowed an agency to inject policy considerations into its decisions when the governing statute makes no mention of them. It is unlikely, even should petitioners in the Supreme Court gain a favorable ruling, that the case will result in a direct order by the Court that EPA regulate the global warming impacts of auto emissions. | 3,359 | 196 |
Since 1870, numerous proposals have been introduced in Congress to establish permanent federal holidays. Eleven have thus far become law. Although these patriotic celebrations are frequently referred to as "national holidays," legally they are only applicable to federal employees and the District of Columbia. Neither Congress nor the President has asserted the authority to declare a "national holiday" that would be binding on the 50 states, as each state individually determines its legal holidays. Creating a holiday for federal employees does, however, affect each state in a variety of ways, including the delivery of mail and conduct of business with federal agencies. Federal holidays have been created for a number of reasons. In several instances, Congress created federal holidays after a sizeable number of states created state holidays. In other instances, Congress took the lead. Additionally, each holiday was designed to emphasize a particular aspect of American heritage or to celebrate an event in American history. In 1870, when Congress passed the first federal holiday law, the federal government employed approximately 5,300 workers in Washington, DC, and another approximately 50,600 around the country. The distinction between federal employees working in the District of Columbia and those elsewhere proved important because the initial holiday act only applied to the federal workforce in Washington, DC. Federal employees in other parts of the country did not receive holiday benefits until at least 1885, as federal holidays were initially interpreted as only applying to federal workers in the District of Columbia. For more information on applicability of federal holidays to federal employees, see " Federal Holidays and Employee Pay " below. On June 28, 1870, the first federal holidays were established for federal employees in the District of Columbia. Apparently drafted in response to a memorial drafted by local "bankers and business men," the June 28 act provided that New Year's Day, Independence Day, Christmas Day, and "any day appointed or recommended by the President of the United States as a day of public fasting or thanksgiving [were] to be holidays within the District [of Columbia]." This legislation was drafted "to correspond with similar laws of States around the District," and "in every State of the Union." In January 1879, Congress added George Washington's Birthday to the list of holidays observed in the District of Columbia. The principal intent of the law was to make February 22 "a bank holiday." In summarizing the bill, Representative Burton Cook explained Congress's intent in creating a bank holiday. ... and for all purposes of presenting for payment or acceptance or the maturity and protect and giving notice of the dishonor of bills of exchange, bank checks, promissory notes, and other negotiable commercial paper shall be treated and considered as is the first day of the week, commonly called Sunday; and that all notes, drafts, checks, or other commercial or negotiable paper falling due or maturing on either of said holidays shall be deemed as having matured the day previously. Enactment of the Uniform Monday Holiday Act in 1968 shifted the commemoration of Washington's Birthday from February 22 to the third Monday in February. Contrary to popular belief, neither the Uniform Monday Holiday Act, nor any subsequent action by Congress or the President, mandated that the name of the holiday observed by federal employees in February be changed from Washington's Birthday to Presidents Day. The " Uniform Monday Holiday Act " is examined in detail later in this report. In 1888, Decoration Day (now Memorial Day) became a holiday for federal workers in the District of Columbia. Decoration Day was likely created primarily because a sizable number of federal employees were also members of the Grand Army of the Republic, an organization of Union Civil War veterans who desired to participate in Memorial Day ceremonies honoring those who had died in the conflict. Their absence from work meant the loss of a day's wages. Some Members of Congress felt that federal employees should be "allowed this day as a holiday with pay, so that they might not suffer loss of wages by reason of joining in paying their respects to the memory of those who died in the service of their country." With the passage of the " Uniform Monday Holiday Act " in 1968, the observance of Memorial Day was permanently changed from May 30 to the last Monday in May. In 1894, Labor Day became a federal holiday. Created to honor the country's labor, the holiday stood in contrast to previous federal holidays designed to commemorate traditional celebrations (e.g., Christmas and New Year's), patriotic celebrations, war, or individuals. In its report on the legislation, the House Committee on Labor stated, "[t]he use of national holidays is to emphasize some great event or principle in the minds of the people by giving them a day of rest and recreation, a day of enjoyment, in commemoration of it." By honoring labor with a holiday, the committee report suggested, the nation will assure "that the nobility of labor [will] be maintained. So long as the laboring man can feel that he holds an honorable as well as a useful place in the body politic, so long will he be a loyal and faithful citizen." With time, the committee felt, the celebration of Labor Day as a national holiday on the first Monday in September would "naturally lead to an honorable emulation among the different crafts beneficial to them and to the whole public." It would also "tend to increase the feeling of common brotherhood among men in all crafts and callings, and at the same time kindle an honorable desire in each craft to surpass the rest." A reasonable amount of rest and recreation makes a workman "more useful as a craftsman." Providing further support for its position, the committee pointed out that 23 states already recognized Labor Day as a legal holiday. In 1938, Armistice Day was declared a federal holiday, and November 11, the date on which hostilities ceased, was chosen to commemorate the close of World War I. During the House debate preceding passage of this legislation, one Representative suggested that Armistice Day would "not be devoted to the exaltation of glories achieved in war but, rather, to an emphasis upon those blessings which are associated with the peacetime activities of mankind." Making Armistice Day a "national peace holiday" was a proposal that, according to one Representative, had the "enthusiastic approval" of all of the societies representing World War I veterans. In 1938, Armistice Day was already a holiday in 48 states. Although it was recognized that Congress did not have the authority "to fix a national holiday within the different States," enactment of this bill, one Senator stated, would bring the federal government "into harmony with sentiment in the United States." By 1954, however, the United States had been involved in two other military engagements: World War II and the Korean War. Instead of creating additional federal holidays to commemorate each war, Congress felt it would be better to commemorate the sacrifices of all American veterans on a single day. On June 1, 1954, the name of Armistice Day was officially changed to Veterans Day. This legislation did not establish a new holiday. Rather, it broadened the "significance of an existing holiday in order that a grateful nation, on a day dedicated to the cause of world peace, may pay homage to all of its veterans." In 1968, with the passage of the "Law," Veterans Day was designated as one of five holidays that would henceforth be celebrated on a Monday and the date was changed from November 11 to the fourth Monday in October. In 1975, Congress returned Veterans Day to November 11 after it became apparent that "veterans' organizations opposed the change, and 46 states either never changed the original observation date or returned the official observance to November 11." In the event that November 11 falls on a Saturday, the federal holiday is observed on the preceding Friday. For a holiday that falls on a Sunday, the federal holiday is observed on the following Monday. The evolution of Thanksgiving Day as a federal holiday developed differently than other holidays. On Thursday, November 26, 1789, President George Washington issued the first proclamation calling for "a day of public thanksgiving and prayer." Six years later, President Washington called for a second day of thanksgiving on Thursday, February 19, 1795. Not until 1863, however, did the nation begin to observe the occasion annually. That year, President Abraham Lincoln issued a thanksgiving proclamation inviting "my fellow-citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next as a day of thanksgiving and praise for our beneficent Father who dwelleth [sic] in the heavens." During the next three quarters of a century, each President, by proclamation, established the exact date for the celebration each year, either on the last Thursday in November or the first Thursday in December, with one exception. Between 1869 and 1939, the tradition of celebrating Thanksgiving on the last Thursday in November or the first Thursday in December was generally followed. That year, President Franklin D. Roosevelt proclaimed the third Thursday in November as Thanksgiving Day. By moving Thanksgiving up a week, Roosevelt "hoped to aid retail business by producing a longer Christmas shopping season." Although Roosevelt's decision was greeted enthusiastically by the business community, others, including a sizable portion of the public and a large number of state officials, protested against changing the long-standing American tradition of celebrating Thanksgiving on the fourth Thursday in November. Despite this criticism, Roosevelt repeated his action in 1940. By May 1941, however, the Administration concluded that the experiment of advancing the observance date had not worked. On December 26, 1941, President Roosevelt signed a joint resolution to settle the dispute and permanently established Thanksgiving Day as a federal holiday to be observed on the fourth Thursday in November. The intent of the joint resolution was to "stabilize the date so that there [would] be no confusion at any time in the future." President Roosevelt upon signing the resolution announced "that the reasons for which the change was made do not justify a continued change in the date." On January 11, 1957, Inauguration Day became a permanent federal holiday in the Washington, DC, metropolitan area. Signed by President Dwight D. Eisenhower, the law established the new holiday and also provided that whenever Inauguration Day fell on a Sunday, the following day would be considered a federal holiday. For several previous observances of the event, "inaugurations arrangements [had] been made for the Federal employees to be given a holiday in order that they [might] observe the historic and important activities associated with the inauguration." With the passage of this statute, the necessity of acting upon this matter for each inauguration was eliminated. In 1968, Columbus Day was made a federal holiday. Several reasons were offered for creating Columbus Day at the federal level. Among the most prominent was that observance was already an established holiday in 45 states. By also commemorating Columbus's voyage to the New World, Congress believed that the nation would be honoring the courage and determination which enabled generations of immigrants from many nations to find freedom and opportunity in America. Such a holiday would, according to a Senate report, also provide "an annual reaffirmation by the American people of their faith in the future, a declaration of willingness to face with confidence the imponderables of unknown tomorrows." In November 1983, President Ronald Reagan signed legislation creating a federal holiday commemorating Dr. Martin Luther King Jr.'s birthday. President Reagan's signing of the legislation creating the holiday ended a 15-year debate over a national holiday honoring the civil rights leader. In remarks at the White House Rose Garden signing ceremony, President Reagan saluted the slain civil rights leader as a man who "stirred our nation to the very depths of its soul." Proposals to honor Dr. King's memory by designating his January 15 birthday as a federal holiday were first introduced following his 1968 assassination. The House of Representatives came close to approving one of these bills in November 1979, when, under suspension of the rules, it voted 252-133 for a bill designating January 15 a federal holiday. That action, however, fell four votes short of the necessary two-thirds majority required for passage under suspension of the rules. Following a growing public campaign to honor Dr. King, on August 2, 1983, the House revisited the issue, passing legislation making the third Monday in January a federal holiday in his honor, starting in 1986. Following a lengthy debate, the Senate passed the bill on October 19. Two weeks later, President Reagan signed it into law. In June 1968, Congress approved the Uniform Monday Holiday Act. The "Monday Holiday Law" "provide[d] for uniform annual observances of certain legal public holidays on Mondays, and established a legal public holiday in honor of Christopher Columbus." Prior to the passage of this legislation, Washington's Birthday was observed on February 22, Memorial Day on May 30, and Veterans Day on November 11. The act changed the dates of these holidays to the third Monday in February, the last Monday in May, and the fourth Monday in October, respectively. Columbus Day was also designated as a Monday holiday, to be celebrated on the second Monday in October. By calling for the observance of these four holidays on a Monday, Congress felt there would be "substantial benefits to both the spiritual and economic life of the Nation." In addition, the House and Senate reports cited that the holidays would afford increased opportunities for families to be together, especially those families of which various members were separated by great distances; enable Americans to enjoy a wider range of recreational activities, since they would be afforded more time for travel; provide increased opportunities for pilgrimages [sic] to the historic sites connected with our holidays, thereby increasing participation in commemoration of historical events; afford greater opportunity for leisure at home so that Americans would be able to enjoy fuller participation in hobbies as well as educational and cultural activities; and stimulate greater industrial and commercial production by reducing employee absenteeism and enabling work weeks to be free from interruptions in the form of midweek holidays. In April 1968, the House Judiciary Committee reported that the Monday Holiday bill proposal was "responsive to the needs and desires of a great majority" of Americans. According to the House committee report, public opinion polls conducted in connection with the proposal indicated that "almost 93 percent of the persons polled supported the concept of uniform Monday holiday legislation, while a little more than 7 percent were opposed." Although there is no indication in the authorizing statutes (or accompanying floor debate) for either the 1870 and 1879 acts that any federal employees were to be paid for such holidays, an analysis of holiday legislation subsequently signed by President Rutherford B. Hayes in April 1880 seems to support such a conclusion. The 1880 legislation was prompted by a grievance filed by a group of employees who had been denied holiday pay for the previous New Year's Day while other federal workers had been paid. The House committee which favorably reported the bill that would become the law signed by President Hayes, stressed that while there were no existing laws requiring such payment, this group of employees, "in the committee's opinion, should be placed upon an equality in this regard" with those of other government departments. The committee went on to point out that, on the "question of legal holidays," the Revised Statutes of the United States were silent, but those relating to the District of Columbia were very precise on the issue. The implication was that the other federal employees in the District had already been paid for the holiday. In August 1903, Acting Attorney General James C. McReynolds issued an opinion that substantiated the reasoning applied by the House Committee on Printing. McReynolds indicated that, for "many years" prior to 1870, it was "customary to close the Executive Departments of the Government at Washington" on five holidays--New Year's Day, George Washington's Birthday, Independence Day, Thanksgiving Day, and Christmas Day--that had been "declared to be such by District laws." This practice, McReynolds reasoned, "must have been known to the Congress, and it must have been that those days were declared public holidays only by laws applicable to the District." As a consequence, McReynolds concluded that Congress intended with the 1870 and 1879 statutes "to designate all days made holidays by any law in effect within the District of Columbia" to be such for employees of the federal government as well. This was done even though Congress, as late as the turn of the century, had yet to enact legislation "absolutely requiring that the Executive Departments of the Government to be closed [sic] and the clerks and other employees therein to be released from work on such days." In 1885, Congress approved additional legislation making the five holidays thus far approved also applicable to per diem employees of the government "on duty at Washington, or elsewhere in the United States." This act, apparently for the first time, extended at least limited holiday benefits to all federal employees. For other holidays, the decision to pay federal workers was made at various times. For example, in 1870, Thanksgiving Day became a paid holiday for at least a portion of the federal workforce, after Congress gave the President power to designate a day of thanksgiving, which was to be a holiday within the District of Columbia. In recent Congresses, legislation has been introduced to create a new federal holiday or add celebrations to existing holidays. On several occasions, resolutions have been introduced in the House to express support for the creation of "Cesar E. Chavez Day." The proposed holiday would celebrate Chavez's life and recognize "the example he set by never wavering in his commitment to education, civic responsibility, and nonviolence." Another example of a proposal to create a new federal holiday is contained in H.R. 108 (112 th Congress). Introduced in January 2011 by Representative John Conyers, the bill, among other items, would establish the "Tuesday next after the first Monday" in November in even numbered years as "election day." To date, the bill has been jointly referred to the House Committee on the Judiciary, the House Committee on Oversight and Government Reform, and the House Administration Committee. No further action has been taken. Similarly, in the 112 th Congress, Representative John Yarmuth introduced H.J.Res. 97 , a proposed constitutional amendment that would set a "legal public holiday for the purposes of voting in regularly scheduled general elections for Federal office." The joint resolution was referred to the House Judiciary Committee and no further action has been taken. In addition to introducing legislation to create new federal holidays, legislation has been introduced to add to existing holidays. For example, in the 110 th Congress, H.R. 856 would have added Susan B. Anthony to the list of individuals celebrated on the "third Monday in February," or George Washington's Birthday. H.R. 856 was referred to the House Committee on Oversight and Government Reform and no additional action was taken. | The United States has established by law the following 11 permanent federal holidays, listed in the order they appear in the calendar: New Year's Day, Martin Luther King Jr.'s Birthday, Inauguration Day (every four years following a presidential election), George Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. Although frequently called public or national holidays, these celebrations are only legally applicable to federal employees and the District of Columbia, as the states individually decide their own legal holidays. The first four congressionally designated federal holidays were created in 1870, when Congress granted paid time off to federal workers in the District of Columbia for New Year's Day, Independence Day, Thanksgiving Day, and Christmas Day. In 1880, George Washington's Birthday was included. In 1885, Congress extended holiday coverage for some holidays to all federal employees. Although Thanksgiving Day was included in the first holiday bill of 1870, it was not until 1941 that Congress specifically designated the fourth Thursday of November as the official date. Since 1888, Congress has added six federal holidays, creating Decoration Day (now Memorial Day) in 1888, Labor Day in 1894, Armistice Day (now Veterans Day) in 1938, Inauguration Day in 1957 (quadrennially and only celebrated in the District of Columbia), Columbus Day in 1968, and Martin Luther King Jr.'s Birthday in 1983. In 1954, Armistice Day was broadened to honor Americans who fought in World War II and the Korean conflict, and the name of the holiday was changed to Veterans Day. In 1968, the Uniform Monday Holiday Act was enacted to "provide for uniform annual observances" of Washington's Birthday, Memorial Day, and Veterans Day. Additionally, the Monday Holiday Law established Columbus Day to be celebrated on the second Monday in October. In 1975, Veterans Day celebrations were returned to November 11 by Congress. | 4,201 | 412 |
Congress established the Federal Election Commission (FEC) via the 1974 Federal Election Campaign Act (FECA) amendments. The six-member independent regulatory agency is responsible for civil enforcement of the nation's campaign finance law. The Commission also administers public financing of presidential campaigns (applicable to participating candidates) and presidential nominating conventions. In addition to enforcement and regulatory duties, the FEC conducts a variety of outreach and educational activities. Under FECA, no more than three Commissioners may be affiliated with the same political party. In practice, the Commission has been divided equally among Democrats and Republicans. Affirmative votes from at least four commissioners are required to (among other duties): make, amend, or repeal rules, issue advisory opinions (AOs), and approve enforcement actions. (For the purposes of this report, enforcement actions can include finding "reason to believe" FECA has been violated, which can prompt an enforcement investigation. ) Matters without at least four votes for or against an action can have the effect of leaving questions of law, regulation, or enforcement unresolved, as some view the issues in question as having been neither approved nor rejected. Throughout its history, the Commission has been criticized for failing to reach at least a four-vote consensus on some key policy and enforcement issues, resulting in what are commonly termed deadlocked votes. The issue of deadlocked votes has received renewed attention since late June 2008, when most of the current Commissioners took office (see Table 1 ), and following a six-month loss of the agency's policymaking quorum. Some deadlocked votes among current (and previous) Commissioners were marked by controversy and apparently staunch, public disagreement. For example, two enforcement cases--one involving the 527 organization the November Fund and another involving Arjinderpal Sekhon, a former congressional candidate--featured an exchange of sharply worded "statements of reasons" articulating Commissioners' justifications for their votes. In the November Fund case, which focused on whether the organization should have registered with the Commission as a political committee, a deadlock resulted in the Commission rejecting an already-signed conciliation agreement. In the Sekhon case, a deadlock forced the Commission to refund a civil-penalty check that had already been submitted. Amid deadlocks in these and other cases, some Members of Congress, media organizations, and interest groups began to comment on what was characterized as the "increasingly public and acrimonious" nature of deadlocked votes. In August 2009, citing deadlocks and other issues, Senators Feingold and McCain introduced legislation ( S. 1648 ) to restructure the agency. Deadlocks also reportedly motivated congressional concern about FEC nominations. Although the topic of deadlocked votes arises frequently, empirical analyses of the phenomenon are rare. Those that exist rely on older data. Nonetheless, it is clear that deadlocked votes are sometimes controversial and are a regular topic of interest among those who monitor the Commission. What is less clear, however, is whether deadlocks are common or whether deadlocks fall along party lines. Both points are commonly cited (although often without quantitative data) in anecdotal accounts. This report addresses those questions by exploring deadlocks in rulemakings, enforcement matters, and AOs during the current Commission's first year in office--from July 2008 through June 2009. In doing so, the report presents data on how many issues--and which ones--resulted in deadlocked votes. Matters (rulemakings, enforcement actions, or advisory opinions (AOs)) voted on by the Commission are the unit of analysis. As such, the quantitative analysis that follows is based on the number of rulemakings, enforcement actions, and AOs the Commission considered during the period--not the number of individual votes that occurred on each issue. Although this report examines deadlocks that can occur during rulemakings, enforcement matters, and AOs, it is not intended to provide an exhaustive account of Commission operations, procedures, or processes. As such, detailed discussion of Commissioners' deliberations, the FEC enforcement process, or other issues that might be relevant for the broader context in which some deadlocks arise is beyond the scope of this report. The following analysis is based on data provided by the FEC and on other publicly available FEC documentation. Although certain matters remain outside the public record (e.g., votes on negotiations over civil-penalty amounts), the data presented here account for all publicly available deadlocks that occurred during the year under review. The analysis also provides an overview of the policy or legal issues considered in each of those deadlocks. The data show that although deadlocks occurred throughout the year, they occurred in a minority of the matters the Commission considered. Those issues on which deadlocks occurred, however, featured strong disagreement among Commissioners and reflected apparently unsettled positions on some major policy questions, such as: political committee status, when particular activities triggered filing requirements or other regulation, and questions related to investigations and other enforcement matters. In addition, the deadlocks that did occur always fell along partisan lines. If Congress chooses to examine FEC deadlocked votes, a variety of perspectives and options could be relevant, as discussed at the end of this report. This report discusses substantive deadlocks (or simply deadlocks ). As used here, the term means votes that precluded the Commission from reaching a consensus about how to proceed on a rulemaking, enforcement action, or AO. This includes 3-3 tie votes and 2-2, 2-3, 3-2 split votes that had the same effect as a tie (i.e., cases in which at least one Commissioner recused or otherwise did not vote). Substantive deadlocks are rarely the final vote on a matter, as the Commission usually votes to close the file after a substantive deadlock has occurred. In the cases explored here, however, the deadlocked vote essentially halted substantive Commission action on the matters in question. During the first year of the current Commission, no substantive deadlocks occurred on rulemaking issues. During the period, the FEC held votes on four rulemakings: reporting bundled campaign contributions, extension of the Administrative Fine Program (AFP), repealing increased contribution limits following the Supreme Court's invalidation of the so-called Millionaire's amendment, and adjusting certain penalties for inflation. Although the FEC was able to reach agreement on these four issues, the lack of deadlocks does not necessarily indicate that no conflicts exist on rulemakings. In fact, only one of the four rulemakings (the bundling regulations) approved during the period was controversial. Other rulemaking matters remain open--perhaps because consensus has not been reached. In short, it might be expected that no deadlocks occurred on rulemakings given that Commissioners appear to value consensus surrounding rulemakings and might, therefore, postpone formal consideration of proposed rules until at least a four-vote majority can be attained. As the data in Table 2 and Figure 1 show, evaluating the frequency of substantive deadlocks depends on what segment of the data is analyzed. FEC enforcement actions are handled through three mechanisms: the Administrative Fine Program (AFP), alternative dispute resolution (ADR), and matters under review (MURs). It is perhaps unsurprising that no substantive deadlocks occurred in AFP cases, which are limited to comparatively simple matters involving late filings. Similarly, although ADR cases can involve a variety of issues, the program is designed to facilitate negotiation that leads to relatively speedy resolution on fairly simple cases. Both the administrative fine and ADR programs typically involve cases that can be closed with little controversy and without the complexity and potential litigation involved in some MURs. By contrast, MURs can be complex and cumbersome. They may entail lengthy investigations or audits, protracted negotiations between the Commission and respondents, substantial civil penalties, or litigation--although the pace can vary depending on individual circumstances. Votes on each of those elements (where applicable)--and others--can generate deadlocks if the questions under consideration are controversial. Unlike ADR and AFP matters, MURs are also likely to involve cases in which facts or substantial questions or law or policy are in dispute. Substantive deadlocks occurred in approximately 13% of publicly available MURs closed between July 2008 and June 2009. Substantive deadlocks occurred in about 6% of cases during the period if the data are combined to include action on MURs, AFP, and ADR cases. Advisory opinions (AOs) allow requesters to ask the Commission for guidance about how campaign finance law applies to a specific situation. Typically, requesters use AOs to determine whether a planned campaign activity is permissible. The degree to which AOs are controversial can vary substantially depending on the request and complexity of the issues involved. As Table 3 shows, substantive deadlocks affected 5 of 29 (17.2%) AOs considered during the period. In three of those cases, however, the Commission was able to reach sufficient agreement to issue partial guidance. It is unclear whether substantive deadlocks occurred because of party affiliation, but every deadlock during the review period involved party-line votes. As noted previously, Commissioners Bauerly, Walther, and Weintraub are widely regarded as Democratic appointees; Commissioners Hunter, McGahn, and Petersen are widely regarded as Republican appointees. Notes accompanying the FEC data and a review of the individual vote certifications make clear that in every instance in which a deadlock occurred--whether on MURs or AOs--Democratic and Republican Commissioners voted in partisan blocs (although not every Commissioner voted in every case). In addition, in each case of a deadlocked vote in a MUR, Democratic votes would have resulted in additional enforcement action, while Republican votes would not. In most cases, this meant that Democratic Commissioners "voted to approve" Office of General Counsel (OGC) enforcement recommendations, while Republican Commissioners voted against those recommendations. In some cases, however, Democratic Commissioners voted to pursue additional enforcement despite OGC recommendations to the contrary. As noted previously, especially in complex matters, the Commission can hold multiple votes on various issues associated with particular cases. In enforcement matters, for example, the Commission might vote on whether to: proceed with an investigation, accept factual and legal analyses, accept proposed conciliation agreements, etc. Motions, made by Commissioners, determine exactly what the Commission is considering during individual votes. For example, in the American Future Fund case (MUR 5988), the Commission deadlocked 3-3 on a motion containing six elements, including finding "reason to believe" that multiple provisions of FECA and FEC regulations had been violated, approving a factual and legal analysis, and other issues. Deadlocks on AOs were also typically complicated; in some cases, disagreement occurred over competing drafts or amendments. Exploring the intricacies of individual motions and votes is beyond the scope of this report. It is clear, however, that deadlocks are not confined to a single policy issue. Table 4 provides an overview of the 24 MURs in which substantive deadlocks occurred; Table 5 does so for the five AOs. (Multiple MURs listed on one line in Table 4 indicate that the Commission handled those issues as a single matter.) As the tables show, deadlocks occurred throughout the year and involved a variety of respondents and issues. Deadlocks affected MURs on a variety of campaign spending issues and political committee status (e.g., whether groups regulated primarily under Sections 527 or 501(c) of the Internal Revenue Code (IRC) should have registered with the Commission as political committees), and other issues. The AOs in question also concerned various issues, particularly questions related to how campaign funds could be raised or spent. Because most cases involved multiple elements, the information in the tables is provided for illustrative purposes, but is not intended to provide a detailed overview of each case. In addition, in some cases, deadlocks appear to have had more to do with whether an investigation should proceed or whether a penalty was appropriate than with the substance of the policy or legal issue in the MUR or AO. Therefore, although the tables note the major policy or legal issues affected by deadlocks, those issues were not necessarily the cause of the deadlocked vote that halted Commission action. As Congress determines whether oversight or other action regarding deadlocked votes is necessary, a threshold issue may be to consider whether deadlocks represent a public policy concern and if so, how. On one hand, occasional deadlocks could be expected given the complexity (and sometimes controversy) embodied in federal campaign finance law and regulation. Also, Congress appears to have anticipated that the Commission might be unable to reach consensus in some controversial cases, and perhaps even intended for deadlocks to occur. According to one analysis, "In order to ensure that the Commission would not become a vehicle for partisan purposes, the Congress created an unusual conflict within the FEC." Commenting on the four-vote requirement, former Commissioner Scott E. Thomas and his executive assistant, Jeffrey H. Bowman, continued, "These provisions were specifically designed to ensure that formal action on a matter before the Commission could go forward only on the affirmative vote of a mixed majority of Commission members." In addition, deadlocks might even be viewed as positive, particularly if enforcement actions being considered are perceived as unwarranted or excessive. On the other hand, substantive deadlocks mean that the Commission has been unable to reach consensus about some element of law or regulation. Even if the Commission is in agreement about a particular element of law or regulation generally, deadlocks can signal disagreement about how law and regulation apply to particular circumstances. As a result, at least in specific instances, substantive deadlocks prevent campaign finance law from being enforced or preclude those seeking guidance from clearly knowing whether their planned activities will run afoul of the law. Indeed, in the cases discussed above, the Commission was unable to reach consensus on major questions of campaign finance law and policy, such as: political committee status, determining civil penalties, and whether particular activities trigger reporting or other requirements under FECA. In addition, there is some evidence that deadlocks may be on the rise. For example, although external examinations of deadlocks are rare, a recent scholarly study found that between 1996 and 2004, deadlocks on MURs occurred in 4.6% of cases--well below the 13.1% figure reported here for 2008-2009. If deadlocks are, in fact, on the rise over time (a question that would require additional data to assess), Congress may wish to examine the Commission's long-term ability to reach consensus and to consider whether that ability enhances or inhibits campaign finance regulation. As the data show, during the current Commission's first year, substantive deadlocks occurred in about 13% of votes in MURs and less than 6% of all enforcement actions when combining MURs with ADR and AFP cases. By extension, the Commission did not deadlock in almost 87% of MURs and 94% of enforcement actions overall. Therefore, if Congress determined that action were warranted only if deadlocks occupied a sizable portion of Commission business (e.g., a large plurality or majority), the quantitative data could be interpreted to suggest that congressional action is not needed--at least based on the time frame examined here. In addition, despite some deadlocks on key issues, during the same period the Commission was able to reach consensus on a wide variety of other cases--including some that were also potentially controversial. Congress may wish to explore FEC deadlocks through oversight--either with or without other legislative action. On a related note, the Senate could also choose to examine deadlocks as part of its advice and consent responsibilities surrounding FEC nominees. Oversight would provide an opportunity to learn more about how and why deadlocks occur, and to assess whether additional congressional action or internal reform, such as changes in Commission enforcement procedures or practices, is needed. Oversight has the potential advantage of addressing deadlocks without necessarily inviting the stalemate that often accompanies campaign finance legislation. Oversight would also permit Congress to determine whether a recent procedural change at the Commission has any affect on deadlocked votes. Specifically, in July 2009, the Commission announced a pilot program to permit AO requesters to appear before the Commission to answer questions about the requests. This initiative is designed to address the "frustrat[ing]" situation in which requesters or their attorneys were in the audience during open meetings at which AOs were considered, but were not permitted to answer questions Commissioners raised. If the pilot program provides greater clarity about specific facts surrounding AOs, the potential for deadlocks might be reduced--at least in cases in which deadlocks occur because of uncertainty or misimpression. Oversight alone, however, would not necessarily reduce the number of deadlocks or otherwise change agency practices or behavior. At least two broad legislative options are open to Congress. First, Congress could restructure the Commission in an effort to avoid deadlocks. In August 2009, Senators Feingold and McCain introduced S. 1648 , a bill that would replace the six-member FEC with a three-member Federal Election Administration (FEA). Similar legislation has been introduced since 2003. Restructuring the FEC in any form that eliminated an even number of Commissioners could reduce or eliminate the potential for deadlocks. Revamping the agency, however, would entail reforms well beyond addressing the comparatively narrow topic of deadlocked votes. In addition, a legislative overhaul of the agency is likely to be controversial. Particularly in recent Congresses, even arguably modest efforts to change campaign finance law have typically been seen as potential legislative vehicles for those wishing to pursue broad policy reform. No major campaign finance legislation has been enacted since the 2002 Bipartisan Campaign Reform Act (BCRA). This context suggests that efforts to revamp the FEC may be difficult. On the other hand, the cyclical nature of support for campaign finance reform legislation suggests that changing the Commission--or pursuing other major policy goals--could be accomplished provided sufficient demand exists within Congress or perhaps the broader public sphere. Second, Congress could pursue legislation to clarify those issues on which deadlocks have occurred. Overall, deadlocks appear not to be isolated to particular policy or legal issues. The political committee issue provides a prominent example. By providing clearer guidance to the Commission, legislation to clarify when 527s and 501(c) organizations must register as political committees might reduce the potential for deadlocked enforcement. Nonetheless, pursuing legislative clarity on controversial issues might not be practically attainable in all circumstances. For example, partially because of the controversy surrounding the political committee issue, legislation concerning 527s has not been enacted in recent Congresses. In addition, legislating individual policy issues would not necessarily address the fact that the Commission deadlocked on a variety of issues, which suggests that structural reform could be more expedient route to curtailing deadlocked votes. The data presented above suggest that substantive deadlocks occurred throughout the current Commission's first year in office, but Commissioners reached consensus far more frequently than not. Between July 2008 and June 2009, substantive deadlocks occurred in about 13% of MURs and about 17% of AOs. No deadlocks occurred on rulemakings. Nonetheless, substantial disagreement occurred on some issues. Deadlocks always occurred in partisan blocs, and the tone of debate surrounding deadlocks received prominent attention in Congress and the media. A variety of options are available to Congress if it chooses to address the deadlocks issue, ranging from maintaining the status quo to clarifying those areas of the law on which deadlocks occur or restructuring the agency. | In the mid-1970s, Congress designed the Federal Election Commission (FEC) to be a bipartisan independent regulatory agency. The agency's structure is intended to guard against partisan enforcement of campaign finance law. Consequently, the six-member Commission has been evenly divided among Democrats and Republicans. The Federal Election Campaign Act (FECA) also requires that the Commission muster at least four votes to exercise core functions--meaning that no measure can advance without at least some bipartisan support. Perhaps because of that structure, however, the Commission has been criticized for sometimes failing to achieve consensus on key policy issues, resulting in what are typically termed deadlocked votes, in which matters of law or regulation may be left unresolved. In August 2009, citing deadlocks and other issues, Senators Feingold and McCain introduced legislation (S. 1648) to restructure the agency. Although the topic of deadlocked votes arises frequently, empirical analyses of the phenomenon are rare. Those that exist focus on older data. Accordingly, this report asks whether deadlocks are as common as popular wisdom suggests and whether deadlocks fall along party lines. Both points are commonly cited (although often without quantitative data) in anecdotal accounts. The report addresses those questions by providing an overview of deadlocks in rulemakings, enforcement matters, and advisory opinions (AOs) during the current Commission's first year in office--from July 2008 through June 2009--when concern over deadlocks has most recently reemerged. Although this report examines deadlocks that can occur during rulemakings, enforcement matters, and AOs, it is not intended to provide an exhaustive account of Commission operations, procedures, or processes. The data show that deadlocks occurred throughout the current Commission's first year in office, but they affected a minority of the matters considered. Specifically, deadlocks occurred in about 13% of matters under review (MURs) and in about 17% of AOs. No deadlocks occurred on rulemakings. Those issues on which deadlocks occurred, however, featured staunch disagreement among Commissioners and reflected apparently unsettled positions on some major policy questions. In addition, when deadlocks occurred, Commissioners always voted in partisan blocs. Deadlocked votes can be interpreted from various perspectives, which may influence whether Congress decides to maintain the status quo or pursue oversight or legislative action. This report will be updated periodically to reflect new data or as developments warrant. | 4,395 | 542 |
Nearly 105,000 horses were slaughtered for human food in 2006, all in two foreign-owned Texas plants and a third foreign plant in Illinois, according to the U.S. Department of Agriculture (USDA). Virtually all the meat was for export, the largest markets being France, Belgium, Switzerland, Italy, Japan, and Mexico. The United States exported more than 17,000 metric tons of horse meat valued at about $65 million in 2006. Most of these horses were raised for other purposes, like riding. Dealers collected them for the plants from auctions, boarding facilities, and elsewhere. Although U.S. horse slaughter had been rising since 2002--before a series of court actions closed the three plants in 2007--it remained below levels of the 1980s, when more than 300,000 were processed annually in at least 16 U.S. plants. Although U.S. slaughter has ended for the present, advocates continue to support federal legislation to ban it permanently. They--and those who have opposed a permanent ban--also express concern about the shipment of more U.S. horses to Canada and Mexico, where plants can still slaughter them for food. Outside of recent appropriations measures (see below), federal laws neither ban the use of equines for food nor set on-farm care standards. Protection usually has been subject to varying state and local laws. Some of these laws may set care standards, although more are likely to be anti-cruelty measures. However, U.S. horse slaughter plants were long subject to the Federal Meat Inspection Act (FMIA) of 1906, as amended (21 U.S.C. 601 et seq.), which requires USDA to inspect all cattle, sheep, swine, goats, and equines slaughtered and processed into products for human food. This act, administered by USDA's Food Safety and Inspection Service (FSIS), aims to ensure that meat and meat products from these animals are safe, wholesome, and properly labeled. FSIS safety inspection is mandatory, and most costs must be covered by appropriated funds, except for overtime and holiday periods. Meat inspectors also are charged with enforcing the Humane Methods of Slaughter Act (7 U.S.C. 1901 et seq.), which requires that livestock (but not poultry) be rendered unconscious prior to slaughter. Plants also can request that graders from USDA's Agricultural Marketing Service (AMS) be placed in their plants to assign official grades to their products based on quality traits and yield. Plants pay user fees for this inspection service, which is voluntary and conducted under authority of the Agricultural Marketing Act (AMA) of 1946 as amended (7 U.S.C. SSSS1621 et seq.). The 1946 AMA is also the authority FSIS uses to provide voluntary food safety inspections of animals and products not specifically covered by either the Federal Meat Inspection Act or the Poultry Products Inspection Act. Horses often had to be shipped long distances to reach the few U.S. plants that, until 2007, were slaughtering them. Horse advocates and animal welfare groups gained passage of language in the 1996 farm bill ( P.L. 104-127 , Title IX-A, Commercial Transportation of Equine for Slaughter, 7 U.S.C. note) that authorized the Secretary of Agriculture to issue guidelines for regulating such transport, subject to available appropriations. USDA's Animal and Plant Health Inspection Service (APHIS) developed the guidelines with the cooperation of horse groups, and they became effective on February 5, 2002. APHIS has amended its regulations regarding the commercial transportation of equines to slaughter. In particular, the amended regulations (9 C.F.R. Part 88) will extend the humane treatment regulations for horses bound for slaughter, but delivered first to an assembly point, feedlot, or stockyard. The new regulations, effective October 7, 2011, also banned the use of double-deck trailers when equines are transported directly to slaughter houses. Several states have laws aimed at preventing the slaughter of horses for human food. A federal lawsuit filed by the owners of the two Texas slaughter plants, Beltex Corporation and Dallas Crown, Inc., sought to clarify that the Texas state law banning the sale of horsemeat, first passed in 1949, was not enforceable and that they should not be prosecuted. The U.S. District Court for the Northern District of Texas in Fort Worth had earlier agreed with the plants' owners that the law had been repealed, was preempted by the FMIA, and violated the dormant Commerce Clause of the U.S. Constitution. However, on January 19, 2007, a panel of the U.S. Court of Appeals for the Fifth Circuit rejected all three arguments, declaring the Texas law to be in force and clearing the way for the state attorney general to prosecute the plant owners if they continued to operate. The two plants have ceased slaughtering horses for human food. The Illinois legislature in May 2007 passed a law banning horse slaughter. The Illinois plant (owned by Cavel International) was able to operate until September 2007, when the U.S. Court of Appeals for the Seventh Circuit ruled that the state law does not violate the interstate and foreign commerce clauses of the U.S. Constitution. The plant appealed to the U.S. Supreme Court, which in June 2008 declined to hear the case. Several states (e.g., South Dakota, North Dakota, Tennessee, Missouri, Idaho), however, are considering establishing horse processing facilities since the federal legislation was enacted. Legislation to permit investor-owned equine processing facilities in Montana went into effect in May 2009. In Nebraska, a bill was introduced in 2011 to create a state meat inspection program that could sidestep mandates of the FMIA. The Oklahoma legislature passed two bills in February 3013 that would allow horse slaughter, but still continue a ban on the sale of horsemeat for consumption in the state. During debate on USDA's FY2006 appropriation ( H.R. 2744 ), the House on June 8, 2005, approved, 269 to 158, an amendment by Representative Sweeney to prohibit funds provided in the measure to pay for the ante-mortem inspection of horses under the meat inspection act. On September 20, 2005, the Senate adopted an identical floor amendment by Senator Ensign, by a 69 to 28 vote. The final conference report ( H.Rept. 109-255 ), signed as P.L. 109-97 on November 10, 2005, retained this amendment, but delayed the effective date for 120 days. Because the FMIA has long required FSIS inspection of equines (like other designated livestock species) before the meat may enter commerce, the amendment's supporters presumed that the plants could no longer process them for human food. However, the final House-Senate report stated: "It is the understanding of the conferees that the Department is obliged under existing statutes to provide for the inspection of meat intended for human consumption (domestic and exported). The conferees recognize that the funding limitation in SS794 prohibits the use of appropriations only for payment of salaries or expenses of personnel to inspect horses." Subsequently, the three plants, on November 23, 2005, petitioned USDA for voluntary ante-mortem inspection under the 1946 AMA, with the ante-mortem portion funded by user fees. The plants and other horse slaughter supporters noted that the relatively narrow wording of the Sweeney-Ensign language only prohibited use of funds for ante-mortem horse inspection under the FMIA, not for other, post-slaughter inspection activities. They also cited the conference report language, which stated that USDA still was obliged to conduct inspections. On February 8, 2006, USDA cited the AMA authority to publish such an interim rule. FSIS amended existing regulations that apply to "exotic species" (bison, deer, etc.), adding a new subpart that applied to horses starting March 10, 2006. Under the rule, USDA used many of the same FMIA guidelines for ante-mortem horse inspection. Also, post-mortem horse inspection could continue under the FMIA, using appropriated funds. Congressional supporters of the original Sweeney/Ensign amendment objected to the rule, declaring that it circumvented their clear intent to halt horse slaughter. The version of the FY2008 USDA appropriation ( H.R. 3161 , SS738) passed by the House in late July 2007 continued the prohibition against using appropriated funds to inspect horses prior to slaughter for human food. Furthermore, the measure prohibited the USDA-FSIS rule (see above) that provided for the collection of user fees as well. The committee-reported Senate version ( S. 1859 ) did not include the ban. In lieu of a freestanding FY2008 bill, Congress included USDA funding as Division A of the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ). This consolidated act (SS741) included the House language to ban both appropriated funds and user fees for horse inspection (although, as noted, slaughter at the three plants already had been halted by the courts and by state law). The Omnibus Appropriations Act, 2009 ( P.L. 111-8 ), which includes USDA funding as Division A, continued this prohibition (at SS739), as does the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2010 ( P.L. 111-80 ). The recently enacted continuing resolution for FY2013 ( H.R. 933 ) continues the policy of P.L. 112-55 , the FY2012 appropriations bill, by permitting FSIS to inspect horse slaughtering facilities through FY2013. The Safeguard American Food Exports (SAFE) Act ( S. 541 / H.R. 1094 ) was also introduced in the 113 th Congress. The bill would amend the Federal Food, Drug, and Cosmetic Act to prohibit the sale or transport of equines and equine parts in interstate or foreign commerce for human consumption. The House bill was referred on March 12, 2013, to the both the Committee on Energy and Commerce and the Committee on Agriculture. The Senate bill was referred on the same day to the Committee on Health, Education, Labor, and Pensions. Companion bills entitled the American Horse Slaughter Prevention Act of 2011 ( S. 1176 / H.R. 2966 ) were introduced by Senator Landrieu and Representative Burton in June and September 2011, respectively. The bills would have amended the Horse Protection Act of 1970 (P.L. 91-540) to prohibit shipping, transporting, possessing, purchasing, selling, or donating horses and other equines to be slaughtered for human consumption. A general provision in the House-passed FY2012 Agriculture appropriations bill ( H.R. 2112 , SS739) would have continued to prohibit any funds to pay salaries or expenses of Food Safety Inspection Service personnel to inspect horse meat. The general provision stated that no funds could be used to pay salaries and expenses of personnel to (1) inspect horses under Section 3 of the Federal Meat Inspection Act (21 U.S.C. 603); (2) inspect horses under Section 903 of the Federal Agriculture Improvement and Reform Act of 1996 ( P.L. 104-127 ); or (3) implement or enforce Section 352.19 of Title 9, Code of Federal Regulations. This general provision was not included in the Senate-passed version of H.R. 2112 , nor was it included in the final bill ( P.L. 112-55 ). Without this provision, FSIS can again inspect horse meat. USDA stated that, although the limitation on FSIS inspection had been lifted, there were still significant regulatory obstacles to resurrecting horse slaughter in the United States. For example, any processing facility has to obtain a federal grant of inspection, conduct a hazard analysis, and develop a Hazard Analysis and Critical Control Points (HACCP) plan prior to the processing of any horses for human consumption. A facility in New Mexico--Valley Meats, Inc.--was granted a permit by USDA on June 28, 2013, to begin horse slaughter. USDA has stated that it would grant similar operating permits to plants in Iowa and Missouri in early July 2013. The New Mexico plant had sued USDA in February 2013, accusing it of intentionally delaying the approval process. Both the House ( H.R. 2410 ) and Senate ( S. 1244 ) 2014 Agriculture appropriations bills would again prohibit FSIS from inspecting horses under the Federal Meat Inspection Act. The Administration and USDA have also requested that the ban on horse slaughter continue. As discussed above, the provision had been included in Agriculture appropriations bills since 2008. Its absence in P.L. 112-55 may have reflected a June 2011 Government Accountability Office report that recommended action on the unintended consequences of ending horse slaughter in 2007. The report provided evidence of a rise in state and local investigations for horse neglect and more abandoned horses since 2007. Some opponents of the horse slaughter ban, including the American Veterinary Medical Association, argued that humane slaughter in the United States is preferable to less regulated slaughter in Mexican abattoirs, or more humane than abandoning unwanted horses to starve because owners can no longer afford to feed and care for the animals. A group of horse owners in New Mexico (the New Mexico Horse Council) had sent a letter to the governor in support of the facility that was granted an operating permit. The letter argued that humane slaughter is preferable to abandonment, starvation, or long-distance transport to slaughter facilities in other countries. The New Mexico administration has opposed horse slaughter and had called on USDA to deny the petition. H.R. 503 , introduced by House Judiciary Committee Chairman Conyers, and S. 727 , introduced by Senator Landrieu, were companion bills to amend the criminal portion (Title 18) of the U.S. Code to make it illegal to knowingly possess, ship, transport, purchase, sell, deliver, or receive any horse, horseflesh, or carcass intended for human consumption. Violators would have been subject to fines or up to three years in prison. (A different measure, H.R. 305 , would have prohibited the transportation of horses in double-decker trailers, subjecting violators to civil penalties of between $100 and $500 for each horse involved). H.R. 503 and S. 727 were referred to the House Subcommittee on Crime, Terrorism, and Homeland Security and the Senate Committee on the Judiciary, respectively, where no further action was taken in the 111 th Congress. H.R. 305 was reported by the House Committee on Transportation ( H.Rept. 111-645 ) and placed on the Union Calendar, but no further action was taken. The Conyers bill had been introduced into the 110 th Congress as H.R. 6598 . The Judiciary Committee held a hearing on H.R. 6598 on July 31, 2008, and ordered the bill to be favorably reported ( H.Rept. 110-901 ) on September 23, 2008. Full House action did not occur. (The Kirk bill banning the movement of horses in double-decker trailers was H.R. 6278 in this Congress.) Also in the 110 th Congress, companion bills to prohibit permanently the movement and slaughter of horses for human food were introduced by Representative Schakowsky and Senator Landrieu ( H.R. 503 , S. 311 ). These measures would have amended the Horse Protection Act (15 U.S.C. SS1821 et seq.), which currently makes it a crime to exhibit or transport for the purpose of exhibition any "sore" horse (i.e., one whose feet have been injured to alter its gait). The Schakowsky and Landrieu bills would have prohibited the "shipping, transporting, moving, delivering, receiving, possessing, purchasing, selling, or donation of any horse or other equine to be slaughtered for human consumption." The bills would have permitted USDA to detain for examination and evidence any horse for which it has probable cause that the animal will be slaughtered for food. Violators would have been subject to specified criminal and civil penalties and prison terms. The bills would have increased authorized appropriations for administering the act from $500,000 to $5 million annually. The Senate Commerce Committee ordered the bill to be favorably reported ( S.Rept. 110-229 ) on April 25, 2007; full Senate action did not occur. In the 109 th Congress, the full House had approved H.R. 503 by a 263-146 vote on September 7, 2006, turning aside opposition, and major changes made earlier, by the House Agriculture Committee. Senate action on S. 1915 did not occur. In the 108 th Congress, proposed bills ( H.R. 857 and S. 2352 ) to halt horse slaughter differed in detail from the more recent measures. For example, these earlier bills did not amend the Horse Protection Act. H.R. 857 and S. 2352 also explicitly would have required officials to work with animal welfare societies and animal control departments to place confiscated horses temporarily with a nonprofit animal rescue facility, required the owner of a confiscated horse to post a bond sufficient to provide for 60 days of care, and required the Secretary to make grants to specified rescue facilities willing to accept confiscated horses. A somewhat related issue revolves around provisions of the Wild Free-Roaming Horses and Burros Act of 1971 (16 U.S.C. SS1331 et seq.), which seeks to protect wild horses and burros on federal lands. At issue has been whether, and under what conditions, such horses could be acquired and eventually sold for slaughter. While not concerned with horse slaughter, a bill was introduced in the 112 th Congress that directed the Secretary of the Interior to enter into agreements to manage free-roaming wild horses in and around the Curritick National Wildlife Refuge in North Carolina ( H.R. 306 / S. 3448 , Corolla Wild Horses Protection Act). The bill was referred to the Committee on Environment and Public Works and no further action was taken. The bill was reintroduced in the 113 th Congress as H.R. 126 . As noted above, the American Horse Slaughter Prevention Act of 2011 ( H.R. 2966 / S. 1176 ) would have prohibited the slaughter of other equines as well as horses. An explanation of wild horse and burro management can be found in CRS Report RL34690, Wild Horses and Burros: Issues and Proposals , by [author name scrubbed]. The foods that humans find acceptable to eat, at least under normal conditions, are for the most part culturally determined. The consumption of "bush meat" in some African societies, bird nests and shark fins in China, canines in parts of Indonesia and Korea, and kangaroo in Australia are practices that seem foreign to most North American residents, but may be normative among many groups in those societies. The same is generally true for how horse meat is regarded in the United States, while France, Belgium, and Italy, among other countries, consider horse meat a normal item of consumption. Most U.S. and Canadian consumers today view horses as performance and companion animals rather than food animals. Horse protection and animal welfare groups contend that Americans overwhelmingly favor an end to horse slaughter for human food, a practice such groups have called cruel and unnecessary. According to these groups, horses are transported long distances often in deplorable conditions in poorly equipped trucks and trailers, where they are exposed to bad weather and often inadequate rest, food, and water. However, a veterinary journal article counters: "Market demand for horsemeat for human consumption is almost certain to continue and may grow in the foreseeable future. It is therefore proper and necessary that we continue to work with national and international groups to provide humane care for horses intended for slaughter and maintain as much consensus and practicality on these issues as possible." The American Veterinary Medical Association (AVMA) and the American Association of Equine Practitioners actively opposed H.R. 503 . The AVMA opposed the bill because it did not provide for the care of unwanted horses, or provide funding for the care and placement of horses seized by the government in accordance with H.R. 503 . One concern expressed by opponents of a ban on horse slaughter is that "rescued" horses are more likely to become neglected and abused by owners who lack the knowledge, financial resources, and/or interest to care for them. At the same time, the existing U.S. horse infrastructure cannot absorb the large numbers of animals that would be confiscated or otherwise diverted from slaughter as a result of a slaughter prohibition, opponents of such a ban believe. The American Horse Protection Association (AHPA) is opposed to the slaughter of horses for food but did not endorse the slaughter ban bills in the 108 th Congress. AHPA, which maintains a list of U.S. and foreign horse sanctuaries, had observed that not all sanctuaries may have the means or business skills to take in large numbers of horses, and that no nationwide standard-setting or oversight system exists for them. A Texas rescue group stated: "Some equine rescues are large organizations with a system of checks that keep everyone honest. Others may be small one or two person operations. There are no national oversight organizations that can verify the honesty of a nonprofit equine rescue." The National Horse Protection Coalition (NHPC) asserted that sanctuary associations have accreditation programs and "strict guidelines," and that state and local animal welfare laws exist to ensure humane animal care. Others counter that such guidelines, if they exist, have not been endorsed or overseen by any nationally recognized authority, and that most state and local laws are anti-cruelty measures, not proactive care standards. Some, including the Humane Society of the United States (HSUS), have observed that equine shelters are less well-established than cat and dog shelters, which often are associated with local governments and humane societies. Citing the "extreme costs" and staff time needed to shelter horses, HSUS warned of needing to be aware of "distinctions between sheltering horses and sheltering other companion animals." The American Association of Equine Practitioners estimated that the cost of a horse's basic care approximates $1,825 annually, exclusive of veterinary and farrier care. A more recent study estimated the annual cost of caring for an unwanted horse at $2,340. NHPC has argued: "Not every horse currently going to slaughter will be rescued by one of these non-profit organizations, but many horses will be kept longer, will be sold directly to a new owner ... or will be humanely euthanized by a licensed veterinarian," among other alternatives. Euthanasia methods--primarily chemical injection and in some emergency situations, gunshots--are considered by the NHPC and others to be more humane than slaughter, which generally involves stunning with a captive bolt to make the animal unconscious before it is killed and bled. Euthanasia averages from $50 to $150 per horse, a "tiny fraction of the cost of keeping a horse as a companion or work animal," NHPC has stated in response to arguments about the high expense of dealing with a horse diverted from slaughter. Opponents of a slaughter ban contend that disposing of many additional horses each year could create environmental problems, such as soil and groundwater contamination. Ban supporters counter that hundreds of thousands of U.S. horses die naturally or are euthanized each year, and are now safely disposed of. Many are not buried but sent to rendering plants, where their remains are used in industrial products and animal feeds. Renderers already handle millions of cattle and hogs that die before slaughter; another 90,000 horses easily could be absorbed into the existing system, ban supporters maintain. One issue has been whether the unwanted horses that had been sent to U.S. packing plants are now simply moving into Canada and Mexico to be slaughtered there--and if so, what if anything should be done to halt the practice. According to USDA, the United States in 2006 exported nearly 26,000 live horses to Canada and more than 19,000 to Mexico. In 2007, the year all three U.S. slaughter plants closed, 47,000 U.S. horses went to Canada and 45,000 to Mexico. In 2008, Canada and Mexico imported approximately 77,000 and 69,000 U.S. horses, respectively. In 2010, nearly 138,000 were transported to Mexico and Canada for slaughter. The American Veterinary Medical Association, which generally has opposed the slaughter ban legislation, has asserted that the majority of these horses have been slaughtered for food in those countries, and otherwise would have been transported and slaughtered in the United States under close U.S. regulatory oversight and humane conditions. Supporters of legislation to ban horse slaughter argue that one intention of bills such as H.R. 503 and S. 727 in the 111 th Congress was to prevent such exports, by prohibiting the possession, shipment, transport, purchase, sale, delivery, or reception of a horse "with the intent that it is to be slaughtered for human consumption." Critics have countered that enforcement and oversight are problematic once horses leave the country. In a June 2011 report, the Government Accountability Office (GAO) provided evidence of a rise in state and local investigations for horse neglect and more abandoned horses since 2007. California, Texas, and Florida also reported more horses abandoned on private or state land since 2007. Certain animal welfare organizations, however, questioned the relation of ending slaughter to these problems. The GAO report also noted that with the cessation of domestic horse slaughter, USDA now lacks the staff and resources at the borders and foreign slaughtering facilities that it once had in domestic facilities to help identify problems with shipping paperwork or the condition of horses before they are slaughtered. | In 2006, two Texas plants and one in Illinois slaughtered nearly 105,000 horses for human food, mainly for European and Asian consumers. In 2007, court action effectively closed the Texas plants, and a ban in Illinois closed the plant in that state. However, U.S. horses continue to be shipped to Mexico and Canada for slaughter. Several states have explored opening horse slaughtering facilities, and Oklahoma enacted to lift the state's 50-year-old ban on processing horsemeat. Animal welfare activists and advocates for horses have continued to press Congress for a federal ban. The Prevention of Equine Cruelty Act of 2009 (H.R. 503/S. 727) in the 111th Congress would have made it a crime to knowingly possess, ship, transport, sell, deliver, or receive any horse, carcass, or horse flesh intended for human consumption. No further action on the bills was taken. Companion bills entitled the American Horse Slaughter Prevention Act of 2011 (S. 1176 and H.R. 2966) were introduced in the 112th Congress. The bills would have amended the Horse Protection Act (P.L. 91-540) to prohibit shipping, transporting, possessing, purchasing, selling, or donating horses and other equines to be slaughtered for human consumption. No further action was taken on these bills. A general provision in the House-passed FY2012 Agriculture appropriations bill (H.R. 2112, SS739) would have continued to prohibit funds to pay salaries or expenses of Food Safety Inspection Service personnel to inspect horses under the Federal Meat Inspection Act (21 U.S.C. 603). This provision was not included in the Senate-passed version of H.R. 2112 or in the final bill (P.L. 112-55). Although an amendment by Senator Landrieu to the FY2013 continuing resolution (H.R. 933) would have prohibited FSIS inspection, the CR continues the policy of P.L. 112-55, permitting FSIS to inspect horse meat through FY2013. On June 28, 2013, a facility in Roswell, New Mexico--Valley Meats, Inc.--became the first horse processing plant approved by USDA since 2007. USDA has indicated that they would grant similar permits to companies in Iowa and Missouri in early July 2013. The New Mexico plant had sued USDA in February 2013, accusing it of intentionally delaying the approval process. Both the House (H.R. 2410) and Senate (S. 1244) 2014 Agriculture appropriations bills would again prohibit FSIS from inspecting horses under the Federal Meat Inspection Act. The Administration and USDA have also requested that the ban on horse slaughter continue. The provision prohibiting FSIS inspection had been included in Agriculture appropriations bills since 2008. The ban does not prohibit the transport of U.S. horses to Canada or Mexico for slaughter. The ban's absence in the FY2012 appropriations bill may have reflected a June 2011 Government Accountability Office report that recommended action on the unintended consequences of ending horse slaughter in 2007. That report provided evidence of a rise in state and local investigations for horse neglect and more abandoned horses since 2007. Some opponents of the horse slaughter ban, including the American Veterinary Medical Association, have argued that humane slaughter in the United States is preferable to less-regulated slaughter in Mexican abattoirs, and more humane than abandoning unwanted horses to starve because owners can no longer afford to feed and care for the animals. Animal welfare groups have countered the argument that large numbers of unwanted horses are being abandoned. Recent news from the EU that horse meat was found in various processed foods has raised the profile of the horse slaughter issue in the United States. The Safeguard American Food Exports (SAFE) Act (S. 541/H.R. 1094) was introduced in the 113th Congress. The bill would amend the Federal Food, Drug, and Cosmetic Act to prohibit the sale or transport of equines and equine parts in interstate or foreign commerce for human consumption. The House bill was referred to the both the Committee on Energy and Commerce and the Committee on Agriculture. The Senate bill was referred to the Committee on Health, Education, Labor, and Pensions. | 5,769 | 918 |
Coupled with increasing concerns about the environment, the magnitude of federal spending on contracts has prompted numerous questions from Members of Congress and the public about the role of environmental considerations in federal procurement. These include: to what extent do agencies consider environmental factors when procuring goods or services? What legal authorities presently require or allow agencies to take environmental factors into account when acquiring goods or services? How are existing provisions authorizing agencies to consider environmental factors implemented? This report provides an overview, answering these and related questions. It does not address green building initiatives, energy-savings performance contracts, policy documents, agency-specific laws, or environmental laws of general applicability that effectively shape the products available for purchase. Beginning with President Obama's 2009 Executive Order on "Federal Leadership in Environmental, Energy, and Economic Performance," the Obama Administration has taken steps to promote consideration of environmental factors in federal procurement. Recently, for example, the General Services Administration (GSA) reported on plans to incorporate consideration of greenhouse gas emissions inventories into federal procurement decisions, and the Federal Acquisition Regulation was amended to require that contractors report on their purchases of biobased products under service and construction contracts. Certain such initiatives have prompted controversy, however. Some Members of Congress sought to restrict the Department of Defense's purchase of biofuels as part of the National Defense Authorization Act for FY2013, and some commentators have objected to GSA's use of the Leadership in Energy and Environmental Design (LEED) rating system for buildings. Fundamentally, federal procurement involves agencies acquiring the goods and services they need to carry out their missions. The vision for federal acquisition, as presented in the FAR, is "to deliver on a timely basis the best value product or service to the customer, while maintaining the public's trust and fulfilling public policy objectives." Environmental objectives have historically constituted one of the "public policy objectives" to be furthered by federal procurement, and environmental interests were among the "competing interests" in the federal procurement system. However, they were arguably one among many, sometimes competing, policy objectives until the May 2011 amendments to the FAR articulated a "sustainable acquisition policy," which generally requires that agencies shall advance sustainable acquisition by ensuring that 95 percent of new contract actions for the supply of products and for the acquisition of services (including construction) require that the products are-- (1) Energy-efficient (ENERGY STAR®️ or Federal Energy Management Program (FEMP)-designated); (2) Water-efficient; (3) Biobased; (4) Environmentally preferable (e.g., EPEAT-registered, or non-toxic or less toxic alternatives); (5) Non-ozone depleting; or (6) Made with recovered materials. While many of the products to be purchased under this policy (e.g., energy-efficient, biobased) were previously "preferred" in federal procurements, as discussed below, the policy could be said to create increased impetus for their purchase by requiring federal agencies to ensure that 95% of their new "contract actions" entail the acquisition of such products. However, even with the May 2011 amendments to the FAR, agencies would generally not be required to purchase energy-efficient, water-efficient, biobased, environmentally preferable, non-ozone depleting, or recovered-content products in any specific procurement. Rather, they are to ensure that 95% of their new contract actions generally involve such products. It is also important to note that the May amendments generally rely upon, rather than expand, existing legal authorities (discussed below) requiring or permitting agencies to prefer certain products based upon their environmental attributes. In addition, the amendments do not purport to address which "sustainable" product agencies should purchase when two or more different products--each of which agencies purportedly "must" purchase because of its environmental attributes--could meet agency requirements. Moreover, as agencies implement the requirement that 95% of their new contract actions entail the purchase of energy-efficient and similar products, questions could arise about the relationship between the sustainable acquisition policy and other long-standing federal procurement policies. For example, some small businesses that participated in a pilot project to reduce greenhouse gas emissions in the federal supply chain have reported being concerned that they might appear less "environmentally friendly" to contracting officers than competitors that travel shorter distances or can afford more fuel-efficient vehicles. Various legal authorities currently require or allow contracting officers to take environmental considerations into account when procuring goods or services. These authorities can be broadly divided into three categories: (1) "attribute-focused" authorities, generally requiring agencies to avoid or acquire products based on their environmental attributes (e.g., ozone-depleting substances, recovered content); (2) general contracting authorities, allowing agencies to purchase goods with certain environmental attributes when they have bona fide requirements for such goods; and (3) responsibility-related authorities, which require agencies to avoid certain dealings with contractors that have been debarred from government contracting for violations of the Clean Air Act or Clean Water Act. Numerous statutes, regulations, and executive orders enacted or issued since the mid-1970s authorize agencies to "prefer" certain products because of their environmental attributes. This generally means that agencies must purchase products with these attributes instead of competing products that lack them. However, the exact nature of the preference varies by product, as discussed below and illustrated in Table 1 and the Appendix . Because the attribute-focused authorities developed over time and through the actions of different branches of the federal government, they arguably do not represent a holistic framework for or ensure consistency in agencies' treatment of products or vendors on environmental grounds. A number of products are eligible for various preferences in federal procurement, discussed below, because of their environmental attributes. In some cases, the products and their attributes are defined fairly narrowly (e.g., plastic ring carriers, electric motors of 1 to 500 horsepower, solar hot water heaters), although generally not so narrowly as to be identified by brand name. These preferences are typically not incorporated in the FAR, which thus serves as only a partial guide to the products preferred because of their environmental attributes. In other cases, products and attributes are defined more broadly (e.g., biobased products, recovered-content products, etc.). These broader preferences are generally incorporated in Part 23 of the FAR. Many of these preferred products have their own definitions for purposes of federal procurement, as illustrated in the Glossary below. These definitions do not necessarily correspond to everyday or environmentalists' usage of these terms. Moreover, certain attributes which are currently widely discussed in environmental contexts (i.e., "green") are not presently defined for purposes of federal procurement and are not among the attributes in terms of which current preferences are stated. Some commentators have suggested that "green" products could be preferred under the existing authorities pertaining to "environmentally preferable products," which is probably the case in most circumstances. However, it is important to be clear that, absent changes in the law, any preferences given to such products are based on their being "environmentally preferable products," not "green products." The exact nature of the preference(s) given to products based upon their environmental attributes varies by product, but agencies could be required or encouraged to purchase products with the desired environmental attributes instead of competing products that lack these attributes; avoid or minimize purchases of products with certain attributes; draft specifications for goods or services so as to maximize the purchase and use of products with certain environmental attributes; develop "affirmative procurement plans" to maximize the acquisition of products with certain environmental attributes; insert clauses regarding the provision or use of designated products into certain service or construction contracts; use certain environmental considerations as evaluation factors when considering bids or offers; meet goals for the procurement of certain types of products; or report agencies' performance in acquiring preferred products to executive branch authorities, Congress or congressional committees, or the public. In a few cases, agencies are also required to use contract terms that obligate contractors to certify that they have provided designated products, or disclose information about certain environmental impacts of designated products. Table 1 illustrates which preferences generally apply to the major categories of preferred products included in the Glossary. These preferences are seldom absolute, however, not even when agencies are "required" to purchase products with certain attributes. There are several reasons for this. First, the requirements themselves are generally either conditional or subject to exemptions that allow agencies to purchase products without the desired attributes in certain circumstances. Any preferences that agencies give to alternatives to ozone-depleting substances must be "cost-effective," for example, while there are exemptions allowing agencies to purchase products that do not contain biobased content if biobased products cannot be acquired competitively within a reasonable time frame or do not meet reasonable performance standards. Agencies may also exempt certain procurements related to intelligence, law enforcement, or national security activities from the sustainable acquisition requirements under certain circumstances. Second, certain preferences apply only to procurements conducted in particular places, or whose price exceeds certain thresholds. Prior to the May 2011 amendments to the FAR, such preferences generally applied only to contracts for goods and service contracts involving the supply of goods or contractor operation of government-owned facilities. However, both the May 2011 amendments to the FAR and Executive Order 13514 arguably place increased emphasis on environmental considerations in the acquisition of services. Among other things, the May 2011 amendments to the FAR require that [t]he contracting officer shall (1) [s]pecify the [Environmental Management System] EMS directives with which the contractor must comply; and (2) [e]nsure contractor compliance to the same extent as the agency would be required to comply, if the agency operated the facilities and vehicles. While the FAR only requires agencies to incorporate the clause implementing these requirements in contracts for contractor operation of government-owned or -leased facilities or vehicles, certain provisions of Executive Order 13514 have broader applicability. These provisions allow reductions in greenhouse gas emissions resulting from changes in contractors' manufacturing processes, utility or delivery services, modes of transportation, or supply chain activities to count toward agencies' goals for reducing such emissions, and have been implemented in a way which suggests that agencies will take environmental considerations into account when contracting for services. However, their doing so would appear to entail the use of evaluation factors permissible under the general contracting authorities, discussed below, rather than the attribute-focused authorities discussed here. The Appendix provides an overview of the purchase requirements pertaining to the categories of products listed in Table 1 , including any conditions or limitations on these requirements or product-specific exemptions thereto. Such attribute-focused authorities generally would not unconstitutionally deprive vendors of competing products of due process or equal protection in violation of the U.S. Constitution. Because contractors lack property rights in prospective government contracts, they generally are not deprived of due process when the government opts to buy goods and services other than those they provide. Similarly, because distinctions between vendors based on the environmental attributes of their products do not involve "suspect classifications," such as race or sex, or the exercise of fundamental rights, a court would probably not find that vendors whose products lack the desired environmental attributes are denied equal protection. Absent a suspect classification or fundamental right, a party challenging a government program on equal protection grounds must show that the program is not rationally related to a legitimate government objective by "negativ[ing] every conceivable basis which might support" the program. Such challenges frequently fail because rational basis review is a deferential standard of review and "serves to invalidate only 'wholly arbitrary acts.'" Regulations or executive orders that mandate certain forms of preferential treatment for products or vendors based on environmental considerations could, however, potentially violate both procurement integrity regulations and the Competition in Contracting Act (CICA) of 1984. Subpart 3.1 of the FAR requires that "Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation , with complete impartiality and with preferential treatment for none." CICA is arguably even more stringent, requiring that contracts be awarded through "full and open competition" unless (1) a small business set-aside is used; (2) one of seven circumstances exist that permit other than full and open competition (e.g., sole-source, urgent and compelling need); (3) the simplified procedures for "small purchases" (generally, less than $150,000) are used; or (4) agencies use procedures "otherwise expressly authorized by statute ." Thus, while Subpart 3.1 of the FAR would permit "preferential treatment" under the authority of a regulation, CICA would generally prohibit such treatment if it resulted in other than "full and open competition." These two provisions, taken together, could effectively require that certain proposed "preferences" for products or vendors based on environmental considerations originate in statute (e.g., set-asides and, potentially, price evaluation preferences). Among the major attribute-based preferences, the only one not currently based in statute is that for environmentally preferable products. However, where such products are involved, agencies must "[e]mploy acquisition strategies that ... maximize the utilization of environmentally preferable products and services (based on EPA-issued guidance)" and require contractors operating or providing support services at government-owned facilities to establish "program[s] to promote cost-effective waste reduction in all operations and facilities covered by th[e] contract." These types of preferences are unlikely to violate Subpart 3.1 or CICA because they do not favor certain products or vendors in the source selection process and, thereby, impermissibly restrict competition. In addition to the attribute-specific authorities, there are also general contracting authorities that would allow agencies to purchase products based on environmental considerations in certain circumstances. While CICA would arguably not allow agencies to prefer certain products or vendors across the board without statutory authority, it provides explicit statutory authority for agencies to define their requirements based on their needs. Thus, if there were a situation where an agency required a product with specific environmental attributes, the agency could generally draft its solicitation so as to obtain that product because CICA provides them with explicit statutory authority to do so. Agencies' specifications articulate their requirements to prospective contractors and form the basis upon which agencies select contractors. Only bids or offers that conform to agency specifications or statements of work are deemed "responsive" and could form the basis for the award of a government contract. Although requirements tied to environmental attributes could potentially be used in procurements conducted by sealed bidding or negotiated procurement, there are other aspects of negotiated procurement that some commentators have suggested could be more congenial to consideration of environmental attributes. While agencies using sealed bidding award contracts on the basis of price alone (i.e., to the lowest-priced qualified responsible bidder), agencies conducting negotiated procurements use agency-determined evaluation factors in selecting the contractor. Certain uses of evaluation factors based on environmental considerations have been upheld by the Government Accountability Office (GAO) in bid protests. In Sunshine Kids Service Supply Company , for example, the GAO upheld an agency's award of a contract based, in part, on consideration of the vendors' "environmental stewardship," while in Future Solutions, Inc. , it upheld a similar award based, in part, on consideration of the vendors' recycling programs for toners and cartridges; use of green delivery vehicles; and implementation of environmental management systems. However, although agencies' use of evaluation factors tied to environmental considerations has been generally upheld, agencies are subject to certain limitations in the use of such factors, the most significant of which is arguably that evaluation factors must "represent [a] key [area] of importance and emphasis ... and [s]upport meaningful comparison and discrimination between and among competing proposals." In other words, any evaluation factors based on environmental considerations would have to be related to the goods or services being acquired. Additionally, agencies must also generally consider price or cost, past performance, and the quality of the product or service as evaluation factors in every procurement. This means that any environmental factors would be one among many--possibly competing--factors on the basis of which the award is made. Similarly, while some commentators have suggested that the focus on "best value" in negotiated procurements would result in de facto preferences for products with desirable environmental attributes, such commentators may confuse "best value" as the goal of all federal procurements and "best value" as a synonym for the cost/technical tradeoff process involved in negotiated procurements. "Best value" is the goal of all federal procurements, but there is no special legal authority for implementing this goal independent of existing statues and regulations, of which only the attribute-focused statutes would authorize agencies to prefer products or vendors based on environmental considerations. "Best value" is also the desired result of the cost-technical tradeoff process in negotiated procurements, but the use of this process is subject to all the limitations discussed above (e.g., evaluation factors must represent a key area of importance and emphasis). This makes it unlikely that the reportedly lower life cycle costs of environmentally sound products would necessarily result in the selection of such products in all or even most procurements. While agencies do not have authority to prefer certain contractors over others based on environmental considerations, they are required to avoid dealings with environmentally irresponsible contractors in certain circumstances. Agencies are prohibited by statute from contracting with vendors who have been debarred from federal contracts by the Administrator of the Environmental Protection Agency (EPA) for certain violations of the Clean Air and Clean Water Acts. Such debarments are mandatory for specified violations; last until the EPA Administrator certifies the condition is corrected; and can be waived only if the President determines that doing so is in the "paramount interests of the United States" and notifies Congress. However, these debarments apply only to the vendors' operations at the facility at which the violations occurred. This means that vendors with multiple facilities are not excluded from all federal contracts. There could also potentially be circumstances in which a particular contractor who is not debarred from federal contracting is found to be nonresponsible for purposes of the award of a federal contract because of environmental considerations. Federal law requires that agencies determine that prospective contractors are "responsible" before awarding any contract. This determination is based on a number of factors, including the contractors having the necessary technical skills and facilities to perform the contract, or the ability to obtain them. Certain contractors could conceivably be found nonresponsible for certain contracts because of environmental considerations under these factors. However, because responsibility determinations must be made on the basis of the most recent information available, vendors who have remedied previous environmental problems could not repeatedly be found nonresponsible on the basis of these problems. Implementation of the attribute-specific and general authorities that could allow agencies to prefer certain products or vendors based on environmental considerations involves two components: identification of prospective products and contractors, and implementation of various purchasing methods. In the case of the attribute-specific authorities, contracting officers generally rely on third-party designations of eligible (or ineligible) products, rather than making their own determinations of which products qualify on a case-by-case basis. In fact, the statutes and executive orders providing such authority often require both that (1) one agency, with appropriate technical expertise, designate eligible products and (2) other agencies purchase these products. Where recovered-content products are involved, for example, the EPA designates eligible products, while the U.S. Department of Agriculture designates biobased products. When relying on the general contracting authorities, program managers or other program personnel identify their requirements and communicate these requirements to the contracting officer, who incorporates them into a solicitation. Parties excluded from government contracting because of violations of the Clean Air and Clean Water Acts, among other things, are listed in the Excluded Parties List System (EPLS). Responsibility determinations are made on a case-by-case basis by contracting officers considering information included in the Federal Awardee Performance and Integrity Information (FAPIIS), as well as information submitted by the prospective contractor and from other sources. When purchasing products or services under either the attribute-focused or general contracting authorities, agencies rely on the same vehicles or methods generally available for their use in purchasing goods or services. This includes (1) bilateral contracts; (2) the Federal Supply Schedules; and (3) government-wide commercial purchase cards. When determining which of these options to use, contracting officers consider various factors, such as the nature or type of the agency's requirements (i.e., goods or services, or both); the anticipated cost (or price); and the complexity of the procurement. Probably the best-known procurement vehicle is the bilateral contract, which "means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them." Contracts are the end result of a process that begins when agencies identify their requirements and craft solicitations to procure goods or services meeting these requirements. Solicitations identify, or describe, what agencies want to buy and also include applicable information, instructions, or guidance related to, for example, packaging and marking, inspection and acceptance, contract administration, special contract requirements, applicable contract clauses, representations and certifications, and evaluation factors for award. As discussed earlier, these factors may include ones that address environmental considerations and attributes. For example, an agency that uses the tradeoff source selection method for a specific procurement could include environmental considerations as a non-cost, or non-price, evaluation factor provided that they have a bona fide need for goods or services with specific environmental attributes. Another option available to agencies procuring goods or services with desirable environmental attributes involves the General Services Administration's (GSA's) Federal Supply Schedules. A schedule is an online "catalogue" that contains goods or services offered by multiple vendors. Each schedule focuses on a particular category of goods and services, and GSA has established and maintains over 40 schedules, covering things such as "advertising and integrated marketing solutions" (Schedule 541) and "professional engineering services" (Schedule 871). Federal agencies can use GSA's online shopping and ordering system, GSA Advantage!®️, to procure goods and services off the Schedules. Several special buying programs are listed on this Web page, including "Environmental," which leads to a separate Web page ("Go Environmental with GSA Advantage!®️"). This Web page enables prospective buyers to identify the type of product or service they plan to purchase and then select one or more environmentally based criteria or filters. Among the 14 criteria listed are biobased, Energy Star®️ compliant, and EPEAT. However, GSA leaves it up to vendors to determine and identify, as applicable, the environmental attributes of the products or services they provide. GSA notes that, for some products, "vendors denote whether the product meets the specifications and determine which symbols [environmental criteria] to display." Elsewhere on its website, GSA offers the following caveat regarding vendors' claims about environmental attributes: To assist customers' [agencies'] efforts in complying with the requirements of environmental laws and Executive Orders (considering price, availability, and performance requirements), Schedule contractors have been requested (where possible and/or feasible) to identify items that: Have recycled content (e.g., EPA-designated items with specific content requirements); Are energy and/or water saving (e.g., Energy Star); [or] Have reduced pollutants (e.g., low volatile organic compounds (VOCs) and chromate-free). Note : Customers should review contractor literature and contact the contractor directly to obtain complete information regarding environmental claims. Moreover, recent court decisions suggest that vendors' misrepresentation of their products on GSA Advantage!®️ is not sufficient for liability under the False Claims Act absent government purchases of the misrepresented products through the site. Agency personnel authorized to make "micro-purchases" can also use government purchase cards, which are similar to credit cards, to purchase so-called green products or services. A micro-purchase is "an acquisition of supplies or services using simplified acquisition procedures [e.g., a purchase card], the aggregate amount of which does not exceed the micro-purchase threshold," which is generally $3,000. When using a government-wide commercial purchase card, agency personnel may generally buy any commercially available supply or service not prohibited by either federal or agency-specific procurement regulations. However, the May 2011 amendments to the FAR expressly provide that federal environmental policies pertaining to energy, water efficiency, and renewable energy extend to all acquisitions, including those at or below the micro-purchase threshold and made with government-wide commercial purchase cards: The Government's policy is to acquire supplies and services that promote a clean energy economy that increases our Nation's energy security, safeguards the health of our environment, and reduces greenhouse gas emissions from direct and indirect Federal activities. To implement this policy, Federal acquisitions will foster markets for sustainable technologies, products, and services. This policy extends to all acquisitions, including those below the simplified acquisition threshold and those at or below the micro-purchase threshold (including those made with a Government purchase card) . In procurements not covered by the May 2011 amendments, though, agency personnel could retain substantial discretion in determining what to purchase. Personnel could thus select goods or services based on their environment attributes, although they would not necessarily be required to do so. | Coupled with increasing concerns about the environment, the magnitude of federal spending on contracts has prompted questions from Members of Congress and the public about the role of environmental considerations in federal procurement. These include: to what extent do agencies consider environmental factors when procuring goods or services? What legal authorities presently require or allow agencies to take environmental factors into account when acquiring goods or services? How are existing provisions authorizing agencies to consider environmental factors implemented? This report provides an overview, answering these and related questions. The federal procurement system is designed "to deliver on a timely basis the best value product or service to the customer, while maintaining the public's trust and fulfilling public policy objectives." Environmental objectives can generally be among the public policy objectives that factor into federal procurement. However, they are not necessarily the most significant objectives overall or in any specific procurement. There are numerous other objectives (e.g., obtaining high quality goods and services at low prices, promoting American manufacturing, protecting small businesses, fostering affirmative action) that can also factor into procurement decisions. The relationship and prioritization among these different objectives is not always clear. Various legal authorities currently require or allow contracting officers to take environmental considerations into account when procuring goods and services. These authorities can be broadly divided into three categories: (1) "attribute-focused" authorities, generally requiring agencies to avoid or acquire products based on their environmental attributes (e.g., ozone-depleting substances, recovered content); (2) general contracting authorities, allowing agencies to purchase goods with certain environmental attributes when they have bona fide requirements for such goods; and (3) responsibility-related authorities, which require agencies to avoid certain dealings with contractors that have been debarred for violations of the Clean Air or Clean Water Acts. "Attribute-focused" authorities arguably do not deprive vendors of ineligible products of due process or equal protection in violation of the U.S. Constitution. However, certain preferences for products with desired environmental attributes, or vendors of such products, could potentially violate procurement integrity regulations and the Competition in Contracting Act if not based in statute. Use of evaluation factors based on environmental considerations is possible in negotiated procurements, but subject to certain conditions, and the reportedly lower lifecycle costs of "green" products do not, per se, mean that their acquisition is justified on a "best value" basis. Agencies generally implement these authorities by relying on third-party designations of products with specific environmental attributes and using standard purchasing methods, including bilateral contracts, the Federal Supply Schedules, and government-wide commercial purchase cards. Beginning with President Obama's 2009 Executive Order on "Federal Leadership in Environmental, Energy, and Economic Performance," the Obama Administration has taken steps to promote consideration of environmental factors in federal procurement. Recently, for example, the General Services Administration (GSA) reported on plans to incorporate consideration of greenhouse gas emissions inventories into federal procurement decisions, and the Federal Acquisition Regulation was amended to require that contractors report on their purchases of biobased products under service and construction contracts. Certain such initiatives have prompted controversy, however. Some Members of Congress sought to restrict the Department of Defense's purchase of biofuels as part of the National Defense Authorization Act for FY2013, and some commentators have objected to GSA's use of the LEED rating system for buildings. | 5,585 | 718 |
When a Senator introduces a bill or joint resolution, the measure is usually referred to committee, pursuant to provisions of Senate Rules XIV, XVII, and XXV. When the House informs the Senate that it has passed a bill or joint resolution that was introduced in the House, and the Senate receives the measure, the measure is also usually referred to a Senate committee. (Senate rules contain procedures for processing concurrent and simple resolutions (Rule XIV, paragraph 6), treaties (Rule XXX), and nominations (Rule XXXI), which are not covered in this report.) Senate Rule XIV, paragraph 2 requires that bills and resolutions have three readings before passage, and that they be read twice before being referred to committee. (The "third reading" occurs before a vote on final passage.) Although a Senator may demand (under paragraph 2) that the readings occur on three different legislative days, bills and joint resolutions may be read twice on the same day "for reference" (referral) if there is no objection (under paragraph 3). Most bills and resolutions are read twice and referred to committee on the same day that they are introduced by a Senator or received from the House. The Senate may, however, use provisions of Senate Rule XIV to bypass referral of a bill or joint resolution to a Senate committee in order to have the measure placed directly on the Senate Calendar of Business. The calendar's General Orders section lists measures eligible for Senate floor consideration. Broadly, the two purposes of preventing the referral of a bill or joint resolution to a committee and placing it directly on the calendar are (1) to facilitate the full Senate's opportunity to consider the measure; or (2) to bypass a committee's potential inaction or, to the measure's sponsor, potential hostile action. Although placing a bill or joint resolution directly on the calendar does not guarantee that the full Senate will ever consider it, the measure is available for floor consideration and certain procedural steps, such as committee reporting or discharging a committee from a bill's consideration, and procedural requirements, such as the two-day availability of a committee report, may be obviated. In this report, the terms bill ( s ) or measure ( s ) refer to bills and joint resolutions. Senate Rule XIV, paragraph 4, states: "... every bill and joint resolution introduced on leave, and every bill and joint resolution of the House of Representatives which shall have received a first and second reading without being referred to a committee, shall, if objection be made to further proceeding thereon, be placed on the Calendar ." ( Emphasis added .) Therefore, through objection, a bill or joint resolution after two readings is prevented from being referred to committee and is placed directly on the calendar. It is usually the majority leader (or another Senator in his stead), acting on his own or at the request of any other Senator, who objects to "further proceeding"--committee referral--on a measure. For example, this procedure was used to place S. 1035 directly on the calendar. On April 21, 2015, the presiding officer recognized Majority Leader McConnell for this colloquy with the chair: Mr. McCONNELL. Mr. President, I understand that there is a bill at the desk, and I ask for its first reading. The PRESIDING OFFICER. The clerk will read the bill by title for the first time. The senior assistant legislative clerk read as follows: A bill ( S. 1035 ) to extend authority relating to roving surveillance, access to business records, and individual terrorists as agents of foreign powers under the Foreign Intelligence Surveillance Act of 1978 and for other purposes. Mr. McCONNELL. I now ask for a second reading and, in order to place the bill on the calendar under the provisions of rule XIV, I object to my own request. The PRESIDING OFFICER. Objection having been heard, the bill will be read for the second time on the next legislative day. In the next edition of the Senate's Calendar of Business on April 22, this action was recorded in the section Bills and Joint Resolutions Read the First Time. The measure was pending at the desk (of the presiding officer). Since objection had been heard to the second reading, the presiding officer recognized Majority Leader McConnell the next legislative day, April 22: Mr. McCONNELL. Mr. President, I understand there is a bill at the desk due for a second reading. The PRESIDING OFFICER. The clerk will read the bill by title for the second time. The legislative clerk read as follows: A bill ( S. 1035 ) to extend authority relating to roving surveillance, access to business records, and individual terrorists as agents of foreign powers under the Foreign Intelligence Surveillance Act of 1978 and for other purposes. Mr. McCONNELL. In order to place the bill on the calendar under the provisions of rule XIV, I object to further proceedings. The PRESIDENT pro tempore. Objection having been heard, the bill will be placed on the calendar. S. 1035 had received its second reading, but there was objection to further proceeding on referral of the bill to committee. The presiding officer, under Rule XIV, ordered that the bill be placed on the Senate Calendar. In the calendar beginning April 23, S. 1035 appeared as Calendar Order No. 60 in the section General Orders, with other measures eligible for floor consideration. This same procedure is followed to have House-passed bills and joint resolutions placed directly on the Senate Calendar. Bills and joint resolutions are also sometimes placed on the calendar by unanimous consent. (For a fuller examination of the Senate's use of the Rule XIV procedure and other procedures and actions to bypass committees, and also both to bypass committees and pass legislation, see CRS Report RS22299, Bypassing Senate Committees: Rule XIV and Unanimous Consent , by Michael L. Koempel.) | When a Senator introduces a bill or joint resolution, or a House-passed bill or joint resolution is received in the Senate from the House, the measure is often referred to committee, pursuant to provisions of Senate Rules XIV, XVII, and XXV. The Senate may, however, use provisions of Senate Rule XIV to bypass referral of a bill or joint resolution to a Senate committee, and have the measure placed directly on the Senate Calendar of Business. Although placing a bill or joint resolution directly on the calendar does not guarantee that the full Senate will ever consider it, the measure is available for floor consideration and certain procedural steps or requirements may be obviated. Such procedural steps include committee reporting or discharging a committee from a bill's consideration, and such procedural requirements include the two-day availability of a committee report. Senate rules contain procedures for processing concurrent and simple resolutions, treaties, and nominations, which are not covered in this report. A Senator may also offer a germane, relevant, or nongermane amendment to a measure pending on the Senate floor, in addition to or instead of introducing a bill or joint resolution. Amendments are also not covered in this report. This report will not be updated again in the 115th Congress unless Senate procedures change. For a fuller examination of the Senate's use of the Rule XIV procedure and other procedures and actions to bypass committees, and also both to bypass committees and pass legislation, see CRS Report RS22299, Bypassing Senate Committees: Rule XIV and Unanimous Consent, by Michael L. Koempel. | 1,356 | 368 |
The Economic Espionage Act (EEA) outlaws two forms of trade secret theft: theft for the benefit of a foreign entity (economic espionage) and theft for pecuniary gain (theft of trade secrets). Under either proscription, its reach extends to theft from electronic storage. Individual offenders face imprisonment for up to 15 years for economic espionage and up to 10 years for trade secret theft. Individuals also may incur fines of up to $250,000 or twice the loss or gain associated with the offense for trade secret theft. For economic espionage, they face fines of up $5 million or twice the loss or gain. Organizations are fined more severely. They can be fined up $5 million, twice the loss or gain associated with the offense, or three times the value of the stolen trade secret, for trade secret theft. For economic espionage, the fines of organizations jump to a maximum of the greater of $10 million, three times the value of the trade secret, or twice the gain or loss associated with the offense. A court may assess the same sanctions for attempt or conspiracy to commit either offense, or for aiding or abetting the completed commission of the either offense. A sentencing court must order the defendants to pay victim restitution, and the government may confiscate any property that is derived from or used to facilitate either offense. The government may seek to enjoin violations, and, by virtue of amendments in the Defend Trade Secrets Act of 2016, victims may be entitled to sue for double damages, equitable relief, and attorneys' fees. Conduct that violates the EEA's proscriptions may also violate other federal prohibitions, however. Some, like the Computer Fraud and Abuse Act, in addition to imposing criminal penalties, likewise authorize victims to sue for damages and other forms of relief under some circumstances. Elements, Attempt and Conspiracy: The trade secrets prohibition is the more complicated of the EAA's two criminal offenses. It condemns: - Whoever - with intent to convert - a trade secret - related to or including in a product or service used in or intended for use in interstate commerce or foreign commerce - to the economic benefit of anyone other than the owner thereof - intending or knowing that the offense will injure the owner of that trade secret - knowingly (a) steals..., (b) without authorization copies, ... downloads, uploads, alters, destroys, ... transmits, ... sends, ... or conveys such information; [or] receives, buys, or possesses such information, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; or Whoever attempts or conspires to do so. Whoever : The term "whoever" encompasses both individuals and organizations. Thus, individuals and organizations may be guilty of the theft of trade secrets. Subsection 1832(b) confirms this intent by establishing a special fine for "organizations" who commit the offense. For purposes of the federal criminal code, an "organization" is any "person other than an individual." The Dictionary Act supplies examples of the type of entities that may qualify as "persons"--"the words 'person' and 'whoever' include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals." With Intent to Convert : Conversion is a common law concept which is defined as "[t]he wrongful possession or disposition of another's property as if it were one's own; an act or series of acts of willful interference, without lawful justification, with any item of property in a manner inconsistent with another's right, whereby that other person is deprived of the use and possession of the property." This "intent to steal" element, coupled with the subsequent knowledge and "intent to injure" elements, would seem to ensure that a person will not be convicted of theft for the merely inadvertent or otherwise innocent acquisition of a trade secret. Trade Secret : An EEA trade secret is any information that "(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) ... derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public." An owner for these purposes is one "in whom or in which rightful legal or equitable title to, or license in, the trade secret is reposed." Whether an owner has taken reasonable measures to ensure the secrecy of his trade information will depend upon the circumstances of the case. Such measures would ordinarily include limiting access to the information and notifying employees of its confidential nature. Inclusion within the definition of "trade secret" of the instruction that the owner take "reasonable measures" to secure the confidentiality of the information does not render the statute unconstitutionally vague as applied to a defendant whose conduct clearly falls within the statute's proscription. Construction of the "known or readily ascertainable" element of the secrecy definition is more perplexing. On its face, the EEA suggests that information is secret if it is unknown or undiscoverable by the general public, even if it might be known or discoverable within the industry in which the information is relevant. Congress, however, may have intended a more narrow interpretation of "secret," that is, the information is secret only if it is not known to or reasonably ascertainable either by the general public or within the industry in which the information has value. The EEA's definition of "trade secret" is "based largely on the definition of that term in the Uniform Trade Secrets Act." The EEA definition initially referred to information known to or readily ascertainable by the "public." The Uniform Trade Secrets Act (UTSA) definition, however, refers not to the public but to information known to or readily ascertainable by "other persons who can obtain economic value from its disclosure or use." The Defend Trade Secrets Act replaced the original definition with the UTSA language. Product in Commerce : The trade secret must have an interstate or foreign commerce nexus. More specifically, it must be one "that is related to a product or service used in or intended for use in" such commerce. Congress settled upon this phrase after an appellate court held that earlier language covered only theft of a trade secret related to a product that was, or was intended to be, sold or otherwise placed in the stream of commerce. Economic Benefit of Another : Someone other than the trade secret's owner must be the intended beneficiary of the theft or destruction. The thief may be, but need not be, the intended beneficiary. Moreover, a close reading of the statute argues for the proposition that no economic benefit need actually accrue; economic benefit need only be intended. Yet if no economic benefit is intended, there is no violation. Intent to Injure : The government must prove that the defendant intended to injure the trade secret's owner or that he knew the owner would be injured. However, it need not show actual injury. The section "does not require the government to prove malice or evil intent, but merely that the actor knew or was aware to a practical certainty that his conduct would cause some disadvantage to the rightful owner." Again, the element addresses the defendant's state of mind, not reality. Nothing in the statute's language demands that the government prove actual injury. Knowingly : The last of the section's three mens rea requirements demands that the defendant be aware that he is stealing, downloading, or receiving a stolen trade secret. There is some dispute over whether this requires the prosecution to prove that the defendant knew that he was stealing, downloading, or receiving proprietary information or that he knew that he was stealing, downloading, or receiving a trade secret . Stealing and the Like : A person may be guilty of the theft of a trade secret only if he "knowingly" steals a trade secret, replicates a trade secret, destroys or alters a trade secret, or receives a stolen trade secret. Each of the alternative means of deprivation is cast in a separate subsection. The first subsection covers not only stealing a trade secret, but also concealing it or acquiring it by fraud. Trade secrets are information and thus can be simultaneously held by an owner and a thief. As a result, the second subsection covers situations where the owner is not necessarily deprived of the information, but is denied control over access to it. It proscribes unauthorized copying, downloading, uploading, or otherwise conveying the information. It also outlaws alteration or destruction of a trade secret. The Justice Department has argued that this second means of misappropriation includes instances where a faithless employee, former employee, or cyber intruder commits the trade secret to memory and subsequently acts in manner necessary to satisfy the other elements of the offense. It makes the point with some trepidation, however: This is not to say, however, that any piece of business information that can be memorized is a trade secret. As noted, the EEA does not apply to individuals who seek to capitalize on their lawfully developed knowledge, skill, or abilities. When the actions of a former employee are unclear and evidence of theft has not been discovered, it may be advisable for a company to pursue its civil remedies and make another criminal referral if additional evidence of theft is developed. Where available, tangible evidence of theft or copying is helpful in all cases to overcome the potential problem of prosecuting the defendant's "mental recollections" and a defense that "great minds think alike." The third subsection outlaws the knowing receipt of stolen trade secret information. Conviction requires proof that a trade secret was stolen or converted in violation of one of the other subsections and that the defendant knew it. Attempt : Defendants who attempt to steal a trade secret face the same penalties as those who succeed. Attempt consists of intent to commit the offense and a substantial step toward the attainment of that goal. This would indicate that the information which the defendant seeks to steal need not be a trade secret, as long as he believes it is. Conspiracy : Defendants who conspire to steal a trade secret also face the same penalties as those who commit the substantive offense. "In order to find a defendant guilty of conspiracy, the prosecution must prove.... that the defendant possessed both the intent to agree and the intent to commit the substantive offense. In addition, the government must prove that at least one conspirator committed an overt act, that is, took an affirmative step toward achieving the conspiracy's purpose." It is no defense that circumstances, unbeknownst to conspirators, render success of the scheme unattainable, as for example when the defendants plotted to steal information that was not in fact a trade secret. Consequences : Individual offenders face imprisonment for up to 10 years and fines of up to $250,000. The court may fine an organization up to $5 million upon conviction. Both individuals and organizations face a higher maximum fine if twice the gain or loss associated with the offense exceeds the statutory maximum (i.e., $250,000/$5 million). A sentencing court must also order the defendant to pay restitution to the victims of the offense. Property derived from, or used to facilitate, commission of the offense may be subject to confiscation under either civil or criminal forfeiture procedures. The Attorney General may sue for injunctive relief, and owners for damages, equitable relief, and attorneys' fees. Finally, the offense is a RICO predicate offense and consequently a money laundering predicate offense. The EEA's economic espionage and theft of trade secret offenses share many of the same elements. There are four principal differences. The theft of a trade secret must involve the intent to benefit someone other than the owner. It must involve an intent to injure the owner. And, it must involve a trade secret "that is related to or included in a product that is produced for or placed in interstate or foreign commerce." Economic espionage, on the other hand, must involve an intent to benefit a foreign entity or at least involve the knowledge that the offense will have that result. It does not require an intent to injure the owner. And, it applies to any trade secret, notwithstanding the absence of any connection to interstate or foreign commerce. Finally, economic espionage is punished more severely. The maximum term of imprisonment is 15 years rather than 10 years, and the maximum fine for individuals is $5 million rather than $250,000. For organizations, the maximum fine is the greater of $10 million or three times the value of the trade secret rather than $5 million. As in the case of stealing trade secrets, the maximum permissible fine may be higher if twice the amount of the gain or loss associated with the offense exceeds the otherwise applicable statutory maximum. And the crime is likewise a RICO and consequently a money laundering predicate offense. Section 1831 condemns: - Whoever - intending or knowing the offense will benefit - a foreign government, a foreign instrumentality, or a foreign agent - knowingly - (a) steals ... (b) without authorization copies ... downloads, uploads, alters, destroys, ... transmits, ... sends, ... conveys a trade secret; [or] (c) receives, buys, or possesses a trade secret, - knowing the same to have been stolen or appropriated, obtained, or converted without authorization; or Whoever attempts or conspires to do so. Foreign Beneficiary : A casual reader might conclude that any foreign entity would satisfy Section 1831's foreign beneficiary element. Section 1839's definition of foreign agent and foreign instrumentality, however, makes it clear that an entity can only qualify if it has a substantial connection to a foreign government. The definition of foreign instrumentality refers to foreign governmental control or domination. The description of a foreign agent leaves no doubt that the individual or entity must be the agent of a foreign government. The theft of a trade secret demands an intent to confer an economic benefit. Economic espionage is not so confined. Here, "benefit means not only economic benefit but also reputational, strategic, or tactical benefit." Moreover, unlike the theft offense, economic espionage may occur whether the defendant intends the benefit or is merely aware that it will follow as a consequence of his action. As in the case of trade secret theft, however, the benefit need not be realized; it is enough that defendant intended to confer it. Protective Orders : It would be self-defeating to disclose a victim's trade secrets in the course of the prosecution of a thief. Consequently, the EEA authorizes the trial court to issue orders to protect the confidentiality of trade secrets during the course of a prosecution and permits the government to appeal its failure to do so. The government may not appeal an order to reveal information it has already disclosed to the defendant. Nevertheless, in such instances, appellate review of a district court's disclosure order may be available through a writ of mandamus. Extraterritoriality : The Supreme Court has said on a number of occasions that "[i]t is a longstanding principle of American law 'that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.'" With this in mind, Congress specifically identified the circumstances under which it intended the economic espionage and theft of trade secrets provisions to apply overseas. Either offense may be prosecuted as long as the offender is a U.S. national or an act in furtherance of the offense is committed within this country. The legislative history indicates that these are the only circumstances under which violations abroad may be prosecuted. This may mean that foreign conspirators may not be charged unless some overt act in furtherance of the scheme occurs in the United States. It may also preclude prosecution when trial would have been possible in the absence of an express provision. For example, in the absence of the limiting provision, the courts would likely conclude that Congress intended to allow prosecution of overseas offenses of foreign nationals that have an impact within the United States. Prosecutorial Discretion : For five years after passage of the Economic Espionage Act, neither economic espionage nor trade secret violations of its provisions could be prosecuted without the approval of senior Justice Department officials. Prosecutors must still secure approval before bringing charges of economic espionage, but approval is no longer necessary for the prosecution of theft of trade secret charges. For some time, the EEA authorized the Attorney General to bring a civil action to enjoin violations of its provisions, but it did not authorize a corresponding private cause of action. The Defend Trade Secrets Act created a private cause of action. Private Cause of Action : The EEA now provides that "[a]n owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce." Not just anyone who suffers damage as the result of trade secret misappropriation; "owners" may sue. EEA, however, defines the term "owners" to include licensees. The trade secrets protected by civil suit are the same as those protected by the criminal proscriptions. The definition of the action that gives rise to liability--"misappropriation"--is taken from the Uniform Trade Secrets Act. The term encompasses acquiring, disclosing, or using a trade secret taken from its owner by scurrilous ("improper") means. Pre-trial Seizure : Perhaps EEA's most distinctive feature is its pre-trial seizure procedure. It allows an owner who alleges that his trade secret has been appropriated to apply to the court for an ex parte order seizing the purported trade secret. The procedure is replete with restrictions on its use, some reminiscent of the limitations on a temporary restraining order (TRO) in federal civil actions: inadequacy of alternatives; a threat of immediate and irreparable harm; a likelihood of success on the merits; and a favorable balance of harms. Yet, the procedure is confined to instances where a TRO is insufficient. "The ex parte seizure provision is expected to be used in instances in which a defendant is seeking to flee the country or planning to disclose the trade secret to a third party immediately or is otherwise not amendable to the enforcement of the court's orders." The party from whom the trade secret is seized is entitled to a hearing within seven days, at which the owner of the trade secret bears the burden justifying the seizure order. Anyone injured by a "wrongful or excessive" seizure may sue for the relief described in the Trademark Act; that is, for "damages for lost profits, cost of materials, loss of good will, and punitive damages in instances where the seizure was sought in bad faith, and, unless the court finds extenuating circumstances, to recover a reasonable attorney's fee," and, in the discretion of the court, prejudgment interest. Damages and Equitable Relief : Relying heavily on the UTSA, EEA empowers district courts to award an aggrieved owner equitable relief; damages; and in case of willful and malicious misappropriation, double damages and attorneys' fees. The court may also award attorneys' fees to a party who prevails against a bad faith claim of misappropriation. An action for the misappropriation must be brought within three years of when it is discovered or would have been discovered with the exercise of reasonable diligence. Section 1837 states that the chapter 90 applies to conduct occurring outside the United States if "the offender" is a U.S. national or an act in furtherance of the offense is committed within the United States. Section 1836 is found in chapter 90. It would therefore appear that Section 1836 applies to conduct occurring outside the United States if the offender is a U.S. national or an act in furtherance of the offense is committed within the United States. In the absence of a Section 1837-like statement of congressional intent, the Supreme Court has shown a great reluctance to recognize private causes of action based on conduct abroad. Whether the concerns evidenced there influence future extraterritorial application of Section 1836's civil remedies remains to be seen. | Stealing a trade secret is a federal crime when the information relates to a product in interstate or foreign commerce, 18 U.S.C. 1832 (theft of trade secrets), or when the intended beneficiary is a foreign power, 18 U.S.C. 1831 (economic espionage). Section 1832 requires that the thief be aware that the misappropriation will injure the secret's owner to the benefit of someone else. Section 1831 requires only that the thief intend to benefit a foreign government or one of its instrumentalities. Offenders face lengthy prison terms as well as heavy fines, and they must pay restitution. Moreover, property derived from the offense or used to facilitate its commission is subject to confiscation. The sections reach violations occurring overseas, if the offender is a United States national or if an act in furtherance of the crime is committed within the United States. Depending on the circumstances, misconduct captured in the two sections may be prosecuted under other federal statutes as well. A defendant charged with stealing trade secrets is often indictable under the Computer Fraud and Abuse Act, the National Stolen Property Act, and/or the federal wire fraud statute. One indicted on economic espionage charges may often be charged with acting as an unregistered foreign agent and on occasion with disclosing classified information or under the general espionage statutes. Finally, by virtue of the Defend Trade Secrets Act (P.L. 114-153), Section 1831 and 1832 are predicate offenses for purposes of the federal racketeering and money laundering statutes. P.L. 114-153 (S. 1890) dramatically increased EEA civil enforcement options when it authorized private causes of action for the victims of trade secret misappropriation. In addition, the EEA now permits pre-trial seizure orders in some circumstances, counterbalanced with sanctions for erroneous seizures. This report is an abridged version, without the footnotes or attribution, of CRS Report R42681, Stealing Trade Secrets and Economic Espionage: An Overview of the Economic Espionage Act. | 4,628 | 496 |
The Patent Act of 1952, codified in Title 35 of the United States Code, defines current patent law. According to section 101, one who "invents or discovers any new and useful process, machine, manufacture, or any composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title." To be patentable, an invention must be useful, novel, and nonobvious. The requirement of usefulness, or utility, is satisfied if the invention is operable and provides a tangible benefit. To be judged novel, the invention must not be fully anticipated by a prior patent, publication, or other knowledge within the public domain. A nonobvious invention must not have been readily within the ordinary skills of a competent artisan at the time the invention was made. The invention must be fully described. Once the United States Patent and Trademark Office (USPTO) issues a patent, the owner enjoys the right to exclude others from making, using, selling, offering to sell, or importing into the United States the patented invention. Generally, the term of a patent is 20 years from the date the application was filed. In the process of obtaining a patent, the information associated with the patent is published and made available to the public. In a June 2013 decision, the Supreme Court of the United States ruled in Association for Molecular Pathology v. Myriad Genetics, Inc. , that genomic DNA was ineligible for patenting under 35 U.S.C. SS101 because of the "product of nature" doctrine. Products of nature (preexisting substances found in the wild) may not be patented, per se . However, the courts have also determined that such a product of nature may be patentable if significant artificial changes are made. By purifying, isolating, or otherwise altering a naturally occurring product, an inventor may obtain a patent on the product in its altered form. Adopting the view that isolated and purified genomic DNA satisfied this exception to the "product of nature" doctrine, the USPTO issued over 50,000 patents relating at least in part to DNA. However, some experts believed that the decision to patent human genes misconstrued the "product of nature" principle. In their view, the fact that scientists have isolated a gene is a "technicality" that did not allow genes to be patented. The Supreme Court decision in Myriad reflects this latter position. The litigation commenced on May 12, 2009, when the Association for Molecular Pathology and 19 other plaintiffs, including individual physicians, patients, and researchers, filed a lawsuit against the USPTO, Myriad Genetics, Inc., and the Directors of the University of Utah Research Foundation. The plaintiffs challenged several patents owned by Myriad that claim isolated human genes known as BRCA1 and BRCA2. Certain alterations or mutations in these genes are associated with a predisposition to breast and ovarian cancers. Due to its intellectual property rights, Myriad was the sole commercial provider of genetic testing related to breast and ovarian cancer associated with the BRCA1 and BRCA2 genes. The plaintiffs asserted that Myriad's gene patent claims were invalid because, in their view, human genes are naturally occurring products that do not constitute patentable subject matter. The U.S. District Court for the Southern District of New York sided with the plaintiffs and held that Myriad's gene patent claims were invalid under 35 U.S.C. SS101. Judge Sweet reasoned that Myriad's claimed isolated DNA was not "markedly different from native DNA as it exists in nature" and therefore could not be patented. Following an appeal, the Federal Circuit reversed this holding. The Court of Appeals reasoned that "isolated" DNA is not merely "purified" DNA--rather, it has been "manipulated chemically so as to produce a molecule that is markedly different from that which exists in the body." Under this reasoning, human genes consist of patentable subject matter. The Supreme Court subsequently agreed to hear the Myriad case but did not issue a ruling in the matter. Rather, on March 26, 2012, the Court vacated the judgment and remanded the matter back to the Federal Circuit with instructions to reconsider the appeal. The Federal Circuit responded by once again holding that both isolated DNA and cDNA were patent eligible. The Supreme Court then granted certiorari . Justice Thomas, writing for the Court, initially observed that Myriad had neither created nor altered the generic information encoded in the BRCA1 and BRCA2 genes. Rather, Myriad had discovered the precise location and genetic sequence of those genes. According to Justice Thomas, then, "Myriad did not create anything. To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention." The Supreme Court also was unimpressed that Myriad claimed DNA that had been isolated from the human genome through the severing of chemical bonds, with a non-naturally occurring molecule as a result. According to Justice Thomas, "Myriad's claims are simply not expressed in terms of chemical composition, nor do they rely in any way on the chemical changes that result from the isolation of a particular section of DNA." The Court took a more favorable view of cDNA, however. Observing that "cDNA retains the naturally occurring exons of DNA, but it is distinct from the DNA from which it was derived," Justice Thomas concluded that cDNA did not constitute a "product of nature" and therefore could be patented. Justice Thomas also found it important to note what the Myriad opinion did not implicate. The case involved neither an innovative method of manipulating genes while searching for the BRCA1 and BRCA2 genes, the Court explained, nor new applications of knowledge about those genes. The Court also indicated that it had not considered the patentability of DNA in which the order of the naturally occurring nucleotides has been altered. Instead, the Court "merely [held] that genes and the information they encode are not patent eligible under SS101 simply because they have been isolated from the surrounding genetic material." The opinion of Justice Thomas was joined in full by seven of his colleagues. Justice Scalia contributed a one-paragraph concurring opinion that joined the judgment of the Court and all of its opinion except those portions "going into fine details of molecular biology." Justice Scalia found himself "unable to affirm those details on my own knowledge or even my own belief." This shortcoming did not prevent him from concluding that isolated genomic DNA was identical to its natural state, however, while cDNA could be patented because it was a synthetic creation not found in nature. Shortly after the Supreme Court issued its ruling, Myriad Genetics, Inc. and other plaintiffs commenced patent infringement litigation against certain genetic testing service providers. Although the Supreme Court invalidated Myriad's claims on genomic DNA, Myriad asserted claims toward other genetic technologies. These claims recite in part, among other subject matter, a "method for detecting a germline alteration in a BRCA1 gene," an "isolated DNA coding for a BRCA1 polypeptide," a "method for screening germline of a human subject for an alteration of a BRCA1 gene," and a "pair of single-stranded DNA primers." This litigation may provide further guidance as to the patentability of gene-related inventions in the wake of the Supreme Court's decision. The Myriad holding is expected to make it difficult for inventors to protect early, gene-related discoveries through the patent system. In particular, how the courts will apply the decision to other biologic products, including antisense DNA, microRNA, nucleic acids, proteins, and stem cells remains to be seen. However, the Supreme Court appears to approve of patent claims drawn to chemical modifications of naturally occurring substances, particularly if that modification endows the substance with a new property. For example, even slightly altered genes would appear to comprise patentable subject matter. As the USPTO explained in a memorandum released hours after the Myriad case issued: As of today, naturally occurring nucleic acids are not patent eligible merely because they have been isolated. Examiners should now reject product claims drawn solely to naturally occurring nucleic acids or fragments thereof, whether isolated or not, as being ineligible subject matter under 35 U.S.C. SS101. Claims clearly limited to non-naturally-occurring nucleic acids, such as a cDNA or a nucleic acid in which the order of the naturally occurring nucleotides has been altered (e.g., a man-made variant sequence), remain eligible. Other claims, including method claims, that involve naturally occurring nucleic acids may give rise to eligibility issues and should be examined under the existing guidance ... Firms that employ cDNA to develop novel therapeutic proteins stand to benefit from the Myriad case. Still, one wonders if the Court neglected to recall its earlier holding in Mayo v. Prometheus that that conventional or obvious pre-solution activity does not transform an unpatentable law of nature into a patent-eligible application of such law. cDNA is derived from DNA and is identical to DNA except that the non-coding regions have been removed--a choice dictated by natural laws and not the inventor. Further, the production of cDNA is reportedly well-understood and routine. Arguably, then, no scientific distinction pertinent to patent eligibility exists between genomic DNA and cDNA. Under Myriad , however, DNA is not patentable subject matter but cDNA may be patented. Gene patents have been subject to a longstanding debate. Although the Supreme Court declared that genomic DNA may not be patented, it held that cDNA fulfills the requirements of 35 U.S.C. SS101. In addition, the USPTO has issued other sorts of gene-related inventions, including those relating to genetic screening methods, polypeptides, DNA primers, and other technologies. As a result, the debate on gene patents potentially remains active. Some of its main contours are outlined below. An often held belief is that gene patents permit outsiders ownership of another person's genetic makeup, often without their knowledge or consent. This concern led to complaints that patients no longer control their own bodies and doctors are being constrained from testing for various diseases. Professor Lori Andrews argues that patents hinder access to testing procedures because "gene-patent holders can control any use of 'their' gene; they can prevent a doctor from testing a patient's blood for a specific genetic mutation and can stop anyone from doing research to improve a genetic test or to develop a gene therapy based on that gene." This perceived constraint on research and testing options is an issue to opponents of gene patents. According to Dr. Debra Leonard, patents on "specific genetic information limits the medical use of the information and impedes or prevents widespread research on the disease, the traditional pathway by which medical knowledge is advanced and shared." However, other experts disagree. As noted by Dr. Jorge Goldstein and Attorney Elina Golod, the courts have consistently "taken the position that a person does not own any tissues or cells once they are outside the person's body." Attorneys Lee Bendekgey and Dr. Diana Hamlet-Cox found no evidence of patients unable to utilize existing genetic tests because of patents. Instead, they maintain, it is a financial issue associated with the cost of health care and/or an issue of profits for the doctor or clinical geneticist wishing to administer tests patented by other inventors. Similarly, Professor Iain Cockburn found "there is little quantitative evidence thus far of a negative impact of patents on scientific research activity.... " From his perspective, the disclosure obligations of the patent system may better serve the objective of encouraging the diffusion of knowledge and raising social returns than the chief legal alternative, trade secret protection. Actual experience and cited studies suggest that companies which do not control the results of their investments--either through ownership of patent title, exclusive license, or pricing decisions--tend to be less likely to engage in related R&D. Patents can provide an economic incentive for companies to pursue further development and commercialization. Studies indicate that research funding accounts for approximately one-quarter of the costs associated with bringing a new product to market. According to The Economist , "A dollar's worth of academic invention or discover requires upwards of $10,000 of private capital to bring [it] to market." Patent ownership is seen as a way to encourage the additional, and often substantial investment necessary for new goods and services, particularly in the case of small business. In an academic setting, the possession of title to inventions is expected to provide motivation for the university to license the technology to the private sector for commercialization in anticipation of royalty payments. While various analyses indicate that the value of patents differs across industries and between firms of different maturation levels within a sector, the pharmaceutical industry perceives patents as critical to protecting innovation. Several studies over the years have demonstrated the important role patents play in the pharmaceutical sector. Of the 18 major manufacturing industries analyzed by Richard Levin and his colleagues, only drug companies rated product patents the most effective means of ensuring that firms can capture the profits associated with their innovations. Later research by Professor Wesley Cohen et.al demonstrated that patents were considered the most effective method to protect inventions in the drug industry, particularly when biotechnology is included. A recent paper by several professors at the Berkeley School of Law, University of California, found that there were "substantial differences between the health-related sectors (biotechnology and medical devices), in which patents are more commonly used and considered important, and the software and Internet fields, in which patents are reported to be less useful." These studies reinforce earlier work by the late Professor Edwin Mansfield that indicated 65% of pharmaceutical inventions would not have been brought to market without patent protection in contrast to the 8% of innovations made in other industries. Patents may be particularly important in the pharmaceutical sector because of the relative ease of replicating the finished product. Imitation costs vary among industries. For example, while it is expensive, complicated, and time consuming to duplicate an airplane, it is relatively simple to chemically analyze a pill and reproduce it. The degree to which industry perceives patents as effective has been characterized as "positively correlated with the increase in duplication costs and time associated with patents." Other commentators note that patents are particularly important in this sector because of the relative ease of replicating the finished product. Costs associated with imitating a product "are extremely low relative to the innovator's costs for discovering and developing a new compound." Early research in this area by Mansfield indicated that, in certain industries, patents significantly raise the costs incurred by nonpatent holders wishing to use the idea or invent around the patent--an estimated 40% in the pharmaceutical sector, 30% for major new chemical products, and 25% for typical chemical goods--and are thus viewed as significant. However, in other industries, patents have much smaller impact on the costs associated with imitation (e.g., in the 7%-15% range for electronics), and may be considered less successful in protecting resource investments. Opponents of gene patents argue that they restrain additional research because "there are no alternatives to a patented gene in diagnosis, treatment, and research," and owners require licensing fees. However, despite what some experts claim to be a negative result of financial considerations in the biomedical research community, others maintain that, at most, gene patents "prevent the doctors and clinical geneticists from performing these tests for profit, or in a way that competes with the patent holder, without reimbursement to the inventors of those tests." Some analysts assert that certain patents, particularly those on research tools in biotechnology, hinder the innovation process. Professors Rebecca Eisenberg and Richard Nelson state that ownership of research tools may "impose significant transaction costs" that result in delayed innovation and possible future litigation. They argue that patents also can stand in the way of research by others: Broad claims on early discoveries that are fundamental to emerging fields of knowledge are particularly worrisome in light of the great value, demonstrated time and again in the history of science and technology, of having many independent minds at work trying to advance a field. Public science has flourished by permitting scientists to challenge and build upon the work of rivals. Professor Arti Rai argues that "the most important research tools are fundamental research platforms that open up new and uncharted areas of investigation" that need further development by researchers in the field. While acknowledging that patent protection on research tools has stimulated private investment in biotechnology and the development of new products and processes, Eisenberg writes that: Patents on research tools threaten to restrict access to discoveries that, according to the firm beliefs of scientists trained in the tradition of open science, are likely to have the greatest social value if they are widely disseminated to researchers who are taking different approaches to different problems. Other commentators dispute these assertions. F. Scott Kieff, then a member of the visiting faculty at Northwestern University School of Law, maintains that there was no such "norm" regarding open scientific access as opposed to intellectual property protection in the basic biological science community. He notes that "experience shows that patents on inputs generally do not prevent the production of outputs" and that the availability of intellectual property protection has expanded the resources available in the biotechnology community and led to its success. Bendekgey and Hamlet-Cox agree that there is no evidence that gene patents have caused a decrease in research as a whole in the biomedical arena or in gene therapies. A study by Professors John Walsh, Ashish Arora, and Wesley Cohen found little evidence that work has been curtailed due to intellectual property issues associated with research tools. Scientists are able to continue research by "licensing, inventing around patents, going offshore, the development and use of public databases and research tools, court challenges, and simply using the technology without a license (i.e., infringement)." According to the authors, private sector owners of patents permitted such infringement in academia (with the exception of those associated with diagnostic tests in clinical trials) "partly because it can increase the value of the patented technology." A later analysis by Professors Walsh, Cohen, and Charlene Cho concluded that patents do not have a "substantial" impact upon basic biomedical research and that "none of [their] random sample of academics reported stopping a research project due to another's patent on a research input, and only about 1% of the random sample of academics reported experiencing a delay or modification in their research due to patents." However, obtaining "tangible" research inputs (e.g., actual materials) appear to be more difficult because of competition, cost, and time issues. Congress has exhibited a strong and ongoing interest in facilitating the development of new, innovative pharmaceuticals for the marketplace while reducing the cost of drugs to consumers. To date, the U.S. system of research, development, and commercialization has had a clear impact on the pharmaceutical and biotechnology industries. Policies pertaining to funding for research and development (R&D), intellectual property protection, and cooperative ventures have played an important role in the economic success of these sectors. A critical component of many of these federal efforts concerns patents. Patent ownership can provide an economic incentive for companies to take the results of research and make the often substantial investment necessary to bring new goods and services to the marketplace. The grant of a patent provides the inventor with a mechanism to capture the returns to his invention through exclusive rights on its practice for a limited time. In the pharmaceutical industry, patents are perceived as particularly important to innovation due, in part, to the ease of duplicating the invention. Now with the decision in Myriad , it remains to be seen what the effect may be on research and development in this area and on innovation in the health care arena. | In the past, the U.S. courts upheld gene patents that met the criteria of patentability defined by the Patent Act. However, the practice of awarding patents on genes came under scrutiny by some scientists, legal scholars, politicians, and other experts. In June 2013, the Supreme Court ruled in Association for Molecular Pathology v. Myriad Genetics, Inc. that genomic DNA was ineligible for patenting under 35 U.S.C. SS101 due to the "product of nature" doctrine. However, the Court adopted the view that cDNA could be patented. The Myriad holding attempts to provide inventors and firms with incentives to conduct R&D while recognizing that patent proprietors might obtain too much control over medical practice and future research. | 4,438 | 166 |
The William Wilberforce Trafficking Victims Protection Reauthorization Act of 2007 ( H.R. 3887 ), passed by the House on December 4, 2007, continues and reenforces the anti-trafficking efforts that began with Trafficking Victims Protection Act of 2000. That legislation sought to protect women and children, the most common victims of both international and domestic trafficking, with a series of diplomatic, immigration, and law enforcement initiatives. H.R. 3887 follows in its path. This report is limited to the bill's law enforcement initiatives or more precisely its proposals to amend federal criminal law. Neither the 2000 legislation nor H.R. 3887 write on a complete blank slate. Federal criminal law has long condemned both involuntary servitude as well as interstate and foreign transportation of individuals for illicit sexual purposes. The involuntary servitude offenses, now found in chapter 77 of Title 18 of the United States Code, date from the nineteenth century. The transportation-for-sexual-purposes offenses, now housed in chapter 117 of that title, originated in the Mann Act in the early twentieth century. As did its predecessors, H.R. 3387 works in the area where the two overlap. Representative Lantos introduced H.R. 3887 on October 17, 2007, for himself and several other Members. The House Committee on Foreign Affairs reported an amended version of the bill on November 6, 2007. A further revised version passed under suspension of the rules on December 4, 2007. When the bill reached the Senate its criminal law proposals included newly assigned sex trafficking offenses, a sex tourism offense, a coerced services offense, obstruction of justice offenses, an importation of prostitutes offense, a false statement offense, and provisions for civil liability, victim assistance, forfeiture, extraterritorial jurisdiction, Justice Department reorganization, and a model state statute. Section 221, among other things, offers two new sex trafficking offenses. One, aggravated sex trafficking (proposed 18 U.S.C. 2429), would replace 18 U.S.C. 1591, but without the requirement that the defendant charged with persuasion, enticement, transportation, etc. of a child must be shown to have known that the child was underage. The other, sex trafficking (proposed 18 U.S.C. 2430), expands federal jurisdiction to reach persuasion, inducement, or enticement to engage in unlawful prostitution when it occurs in or affects interstate or foreign commerce, without regard to the age of the beguiled or the absence of coercion, fraud, or force. Proposed 18 U.S.C. 2429 would condemn: (a) Whoever knowingly- (1) in or affecting interstate or foreign commerce, or within the special maritime and territorial jurisdiction of the United States, recruits, entices, harbors, transports, provides, or obtains by any means a person; or (2) benefits, financially or by receiving anything of value, from participation in a venture which has engaged in an act described in violation of paragraph (1), knowing that force, fraud, or coercion will be used to cause the person to engage in a commercial sex act, or, in the case of the person has not attained the age of 18 years, that the person will be caused to engage in a commercial sex act, shall be punished as provided in subsection (b). (b) The punishment for an offense under this section is- (1) if the offense was effected by force, fraud, or coercion or if the person recruited, enticed, harbored, transported, provided, or obtained had not attained the age of 14 years at the time of such offense, by a fine under this title and imprisonment for any term of years not less than 15 or for life, or both; or (2) if the offense was not so effected, and the person recruited, enticed, harbored, transported, provided, or obtained had attained the age of 14 years but had not attained the age of 18 years at the time of such offense, by a fine under this title and imprisonment for not less than 10 years or for life. The proposal is essentially the same as 18 U.S.C. 1591, but for knowledge of the minority of a juvenile victim upon which Section 1591 insists. The proposal contains the same definitions of "commercial sex act," "coercion," and "venture" as its predecessor. However, it does contain technical amendments relating to a corresponding civil cause of action and mandatory restitution, made necessary by the transfer of the section from the chapter on involuntary servitude 18 U.S.C. ch. 77 to the Mann Act (18 U.S.C. ch. 117). Proposed 18 U.S.C. 2430 would represent an expansion of federal authority to punish sex trafficking if the offense occurs in or affected interstate or foreign commerce. It features a more expansive jurisdictional base than 18 U.S.C. 1591, and thus bears some resemblance to 18 U.S.C. 2422. Today, three federal statutory provisions outlaw inducing another to commit an act of prostitution: 18 U.S.C. 1591, 2422(a), 2422(b). They differ most notably in their jurisdictional elements. Subsection 2422(a) proscribes knowingly persuading, inducing, or enticing another individual of any age to engage in prostitution or other criminal sexual activity - when the persuasion, inducement or the like occurs within any U.S. territory or possession or when the individual is persuaded, induced, etc. to travel in interstate or foreign commerce to so engage. Subsection 2422(b) proscribes knowingly persuading, inducing, enticing, or coercing a child under 18 years of age to engage in prostitution or some other criminal sexual activity - when the persuasion, inducement or the like occurs within the special maritime or territorial jurisdiction of the U.S. or when the mails or some medium of interstate or foreign commerce are used to persuade, induce, etc. Section 1591 proscribes knowingly recruiting, enticing, harboring, transporting, providing or obtaining by any means another individual to engage in a commercial sex act with the knowledge that the individual is a child under the age of 18 or that force, fraud or coercion will be used to cause them to engage in the sex act - when the recruitment, enticement, etc. occurs within the special maritime and territorial of the U.S. or when in occurs in or affecting interstate or foreign commerce. Proposed Section 2430 would provide that: Whoever, knowingly, in or affecting interstate or foreign commerce, within the special maritime and territorial jurisdiction of the United States, or in any territory or possession of the United States, persuades, induces, or entices any individual to engage in prostitution for which any person can be charged with an offense, or attempts to do so, shall be fined under this title or imprisoned not more than 10 years, or both. The proposed section would match the jurisdiction reach of Section 1591 and its proposed replacement Section 2429 (in or affecting interstate or foreign commerce, etc.), but unlike those sections, Section 2430 would cover attempted violations. It would also cover persuasion, inducement or enticement to commit consensual acts of prostitution involving only adults (i.e., unlike Section 1591 and proposed Section 2429, it would not require that the offense involve either a child under the age of 18 or the use of fraud, force, or coercion as a means of persuasion, inducement or enticement). Some of the apparent expansion, however, would merely duplicate the proscriptions of subsections 2422(a) and (b). Both proposed Section 2430 and subsection 2422(a) would cover persuasion, inducement or enticement of another individual regardless of age to engage in unlawful prostitution or attempts to do so. Subsection 2422(a), however, requires persuasion, inducement, enticement or coercion to travel in interstate or foreign commerce. Proposed Section 2430, on the other hand, does not mention coercion and permits prosecution when the persuasion, inducement or enticement occurs in or affects interstate or foreign commerce. Subsection 2422(b) features a jurisdictional element somewhere between the two (i.e., persuasion, inducement, enticement, or coercion, transmitted using the mail or some facility of interstate or foreign commerce), but it only applies when a child under 18 years of age is so persuaded, induced , enticed, or coerced or when there is an attempt to do so. As a consequence, proposed Section 2430 would prohibit persuasion, inducement or enticement of an adult to engage in a commercial sex act when it would affect interstate commerce. Such conduct is only a federal crime now if actual interstate or foreign travel is involved. The expansion could be significant, since in other contexts the courts have often held that the prosecution need show no more than a de minimis impact on interstate or foreign commerce to satisfy the "affects commerce" standard. Subsection 221(b) proposes amendments to 18 U.S.C. 1592 (seizure of another's passport and immigration documents trafficking purposes) that also would duplicate and enlarge without repeal or amendment the coverage of 18 U.S.C. 1589 (forced labor). In its current form, Section 1592 proscribes the knowing destruction, concealment, or possession of another person's passport or similar documentation, either (1) in the course of a trafficking offense, or (2) with the intent to commit a trafficking offense, or (3) to unlawfully restrict the travel of a trafficking victim. Section 1589 prohibits providing or obtaining labor or services through physical violence, the threat of physical violence, or abuse or threatened abuse of the law. The proposed amendment to Section 1592 recasts its components in three areas. First, it streamlines the document-seizure prohibition: Whoever knowingly, with intent to obtain or maintain the labor or services of a person or to obtain or maintain a person for use in a commercial sex act (as defined in section 2429)- (1) destroys, conceals, removes, confiscates, or possesses any actual or purported passport or other immigration document, or any other actual or purported government identification document, of another person to prevent or restrict or to attempt to prevent or restrict, without authority, the person's ability to move or travel; [or] ... shall be fined under this title or imprisonment nor more than 5 years, or both. Second, like Section 1589, it outlaws obtaining labor or services through an abuse of authority or legal process. Unlike Section 1589 which only applies to forced labor, it outlaws such abuse when used to obtain either labor or commercial sex acts: Whoever knowingly, with intent to obtain or maintain the labor or services of a person or to obtain or maintain a person for use in a commercial sex act (as defined in section 2429) - * * * (2) acts or fails to act, or threatens to do so, under color of official right; (3) blackmails another person; or ... shall be fined under this title or imprisonment nor more than 5 years, or both. Third, like Section 1589, it outlaws obtaining labor or services using a threat of harm. Unlike Section 1589, it specifies financial harm rather than physical harm, and it reaches threats to secure either labor or commercial sex acts: Whoever knowingly, with intent to obtain or maintain the labor or services of a person or to obtain or maintain a person for use in a commercial sex act (as defined in section 2429) - * * * (4) causes or exploits financial harm or a fear of financial harm on the part of that person shall be fined under this title or imprisonment nor more than 5 years, or both. Subsection 221(g) would create a new federal offense, arranging sex tourism, proposed 18 U.S.C. 2431. The new section would outlaw knowingly (and for profit) arranging, inducing, or procuring an individual's travel in foreign commerce in order to permit the individual to engage in a commercial sex act, or attempting to so arrange, induce or procure, proposed 18 U.S.C. 2431(a). Violations would be punishable by imprisonment for not more than 10 years, but not more than 30 years if the commercial sex act involved a child under the age of 18, proposed 18 U.S.C. 2432(a), (b). Under existing law, it is a federal crime for an American to travel in foreign commerce for the purpose of engaging in a commercial sex act with a child, 18 U.S.C. 2423(b), (f). It is also a federal crime to arrange, induce, procure, or facilitate such travel if done for profit, 18 U.S.C. 2423(d). Both offenses are punishable by imprisonment for not more than 30 years, 18 U.S.C. 2423(b),(d). It is not a federal crime for an American to travel in foreign commerce for the purpose of engaging in a commercial sex act with an adult. And it is not a federal crime for an American to attempt to travel in foreign commerce for the purpose of engaging in a commercial sex act with a child. Subsection 221(g) would replicate existing law except to the extent that it would prohibit (1) arranging, inducing or procuring - for profit - the foreign travel of an American to engage in a commercial sex act even though the underlying travel for such purpose is not itself a federal crime, (2) attempting to arrange, induce, or procure for profit such travel, or (3) attempting to arrange, induce, or procure - for profit - the foreign travel of an American to engage in a commercial sex act with a child. Criminalizing an attempt to induce others to engage in innocent conduct (e.g., foreign travel for the purpose of engaging in a lawful commercial sex act with an adult) even when done for profit, may raise First Amendment implications. Subsection 221(h) would call upon the Sentencing Commission to consider any appropriate adjustments in the Sentencing Guidelines to reflect the creation of the offenses established in subsections 221(f)(sex trafficking) and 221(g)(sex tourism). Subsection 221(e) would amend the federal witness tampering and retaliation provisions of 18 U.S.C. 1512 and 1513 to prohibit the use of physical force, threats, corrupt persuasion, or deception to prevent another from disclosing information concerning a federal employment-related visa, labor or employment law, relating to aliens, or retaliating against another for his having done so, or attempting to so tamper or retaliate. By operation of the existing penalty restructure in Sections 1512 and 1513, offenders would face imprisonment for not more than 20 years for the use or attempted use of physical force to tamper and not more than 10 years in all other instances, 18 U.S.C. 1512(a)(3)(B), (b), 1513(b). Under existing law, it is a federal crime punishable by imprisonment for not more than 20 years to obstruct enforcement of the peonage prohibition, 18 U.S.C. 1581. The general federal witness tampering statute, among other things, proscribes the use of physical force, threats, intimidation or corrupt persuasion in order to prevent a witness from informing federal law enforcement officials of information relating to the commission of a federal crime, 18 U.S.C. 1512(a)(2)(C), (b)(3). The witness retaliation statute, among other things, proscribes retaliating against a witness for providing information relating to the commission of a federal crime to federal law enforcement officials, 18 U.S.C. 1513(b)(2). Unlike the proposed amendment, 1512 and 1513 do not outlaw obstruction or retaliation relating to the investigation of noncriminal alien employment violations. Subparagraph 202(g)(6)(D) of Section 202 would establish a cause of action including reasonable attorneys' fees for the victims of the proposed obstruction of justice offenses to be proscribed in 18 U.S.C. 1512(A)(2)(D), 1512(b)(4), or 1513(B)(3). Federal law calls for the confiscation of property derived from, or used to facilitate the commission of, a substantial number of federal crimes. Confiscation comes in two forms: criminal forfeiture and civil forfeiture. Both are triggered by the commission of an underlying offense. Civil forfeiture involves a civil procedure in which the property is treated as the offender and under which confiscation is ordered if the government establishes the required statutory nexus between the property and the confiscation-trigger offense. Confiscation does not require the conviction of the property owner or anyone else. Subsection 1594(c) calls for the civil forfeiture of property used to facilitate or derived from a violation of the peonage, trafficking chapter, 18 U.S.C. 1581-1595. Criminal forfeiture occurs as a consequence of the property owner's conviction for the confiscation-trigger offense and results only in his interest in the property. Subsection 1594(b) calls for the criminal forfeiture of the facilitating and derivative property of a defendant convicted of an offense proscribed in the peonage and trafficking chapter, 18 U.S.C. 1581-1595. As a general rule, the proceeds from confiscated property are deposited in the Department of Justice Asset Forfeiture Fund or the Treasury Department Forfeiture Fund and set aside for law enforcement purposes. Some statutes permit the Attorney General or the Secretary of the Treasury to grant petitions for remission or restoration of confiscated property or the proceeds from the sale of confiscated property. Relief in civil forfeiture cases is ordinarily confined to property owners innocent of any involvement in the confiscation-trigger offense, although Justice Department regulations authorize petitions by innocent victims with no present ownership interest in the forfeited property. Relief in criminal forfeiture cases is also available where the claimant has an innocent property interest independent of, and superior to, that of the convicted defendant. Subsection 221(c) would amend 1594 to require the Attorney General to return to victims property seized or confiscated under the involuntary servitude and trafficking chapter, 18 U.S.C. 1581-1595. It would amend 18 U.S.C. 1594 further to permit the Attorney General to return property confiscated under other laws to trafficking victims. The proposal would further amend 18 U.S.C. 1593 in a manner that may contemplate a sort of share-in-the enterprise concept. It seems to envision not the return of the proceeds from commercial sex acts to the specific exploited victims who earned them, but a sharing among the exploited sex workers of the confiscated proceeds of the enterprise. As a general rule, restoration or remission is only possible where the claimant has or had a legally recognized interest in the confiscated property and where the claimant played no part in the offense which gave rise to the forfeiture. The proposed amendments appear designed to overcome the second limitation; they permit victims to recover notwithstanding their participation in the confiscation-triggering offense. The courts, however, may find in the use of the terms "restoration and remission" an intent to continue in place the ownership requirement. Under the proposals, exploited victims might be thought entitled to no more than the return of property that can be shown to once have been theirs. It seems possible that rather than permitting victims to recover property confiscated from them because of violations of the peonage and trafficking laws, drafters intended to require or permit victim restitution to be paid out of forfeited assets of their oppressors. The proposed amendments might prove inadequate for that purpose. Subsection 221(d) would enlarge the civil cause of action available to victims of violations of the involuntary servitude and trafficking provisions, 18 U.S.C. 1581-1595. It would also provide an explicit 10-year statute of limitations within which such suits would have to be filed, proposed 18 U.S.C. 1595(c). Under existing law, victims have a cause of action for violations of 18 U.S.C. 1589 (forced labor), 1590 (peonage-related trafficking), 1591(sex trafficking of children or by force, fraud or coercion), 18 U.S.C. 1595. Subsection 221(d) would amend Section 1595 to include other offenses in chapter 77, i.e., peonage (18 U.S.C. 1581) enticement into slavery (18 U.S.C. 1583) sale into involuntary servitude (18 U.S.C. 1584) unlawful compelled service (proposed 18 U.S.C. 1592) Existing law supplies no explicit statute of limitations for a cause of action under Section 1595. The statute of limitations for the criminal prosecution of most of the offenses under chapter 77 is 10 years, 18 U.S.C. 3298. The statute of limitations of the civil cause of action established for various federal sex offenses under 18 U.S.C. 2255 is six years, 18 U.S.C. 2255(b). Where Congress has failed to provide a statute of limitations for a federal cause of action, the courts will resort to the most analogous state or federal civil statute of limitations. Paragraph 214(b)(1) of Section 214 would amend the Victims of Crime Act of 1984 (42 U.S.C. 10601 et seq.) by adding a new Section 1404F (42 U.S.C. 10603f). The Crime Victims Fund finances victim compensation and assistance grants using the fines imposed for violation of federal criminal law, 18 U.S.C. 10601(b), although Congress has capped the amount annually available from the fund. The new section would trump any coverage limitations based on the characteristics of the victim of the crime to be compensated or assisted. It would define "victim," "crime victim" and "victim of crime" for purposes of the federal crime victims compensation and assistance grants and related activities to include individuals "exploited or otherwise victimized" by a violation of 8 U.S.C. 1328 (importation of an alien for prostitution or other immoral purposes) or of any of the prohibitions in 18 U.S.C. ch. 117 (transportation of illegal sexual purposes including proposed and enlarged 18 U.S.C. 2430) or comparable offenses under state law - without any expressed regard for the victim's age, gender, consent, culpability, or participation in commercial sexual activity. Section 222 would establish extraterritorial jurisdiction over various peonage and trafficking offenses when the offender or the victim is an American or when the offender is in the United States, proposed 18 U.S.C. 1596. The offenses involved are: 18 U.S.C. 1581 (peonage) 18 U.S.C. 1583 (enticement into slavery) 18 U.S.C. 1584 (sale into involuntary servitude) 18 U.S.C. 1589 (force labor) 18 U.S.C. 1590 (human trafficking) 18 U.S.C. 2429 (aggravated sex trafficking) Criminal jurisdiction is usually territorial. The law of the place determines what is criminal and how crimes may be punished. There are some circumstances, however, under which extraterritorial jurisdiction exists. In the case of federal law, there are some circumstances under which federal crimes committed overseas may be prosecuted in federal court. In large measure, those circumstances are either found in statute or presumed from the context of the statute, if consistent with related principles of international law. For example, when a statute proscribes the theft of federal property, it is presumed that Congress intends the prohibition to apply regardless of where the property may be stolen. The courts have generally considered overseas application of federal criminal law consistent with international law when either the offender or the victim is American. Extraterritorial jurisdiction may also be considered consistent with international law when the overseas conduct has an impact within the United States, or when the criminal prohibition is enacted to implement a treaty or similar international obligation or with respect to a crime that is contrary to the law of nations, i.e., that is abhorrent under the laws of all countries. Section 222 provides a statement of extraterritorial jurisdiction in some instances when it seems likely that federal courts would assume it even in the absence of such an explicit provision. For instance, Section 222 (proposed 18 U.S.C. 1596) would permit prosecution of an overseas violation of proposed 18 U.S.C. 2429 (aggravated sex trafficking) when the victim is an American or when the offender is an American or when the offender is later found or brought to the United States. However, the elements of proposed Section 2429 limit the circumstances under which the offense can be committed overseas, because it outlaws misconduct only when committed within the special maritime or territorial jurisdiction of the United States or in or affecting the interstate or foreign commerce of the United States. Offenses committed in or affecting interstate commerce or within the special maritime and territorial jurisdiction of the United States are by definition not committed overseas. Offenses committed in or affect the foreign commerce of the United States may occur overseas, but international law principles have been said to recognize extraterritorial application when a crime has an impact in this country. On the other hand, the application of proposed Section 1596 might prove more problematic when the only contact with the United States or its nationals or interests is the fact the offender is found or has been brought to the United States. Federal prosecution under 18 U.S.C. 1589 (forced labor) might be problematic, for example, when the misconduct occurs entirely within another country and neither the offender nor any of the victims of the offense are Americans. Subsection 223(a) would streamline Section 278 of the Immigration and Nationality Act (8 U.S.C. 1328) with little change in substance. Under the proposed amendment, Section 278 would provide: (a) Generally - Whoever, for the purpose of prostitution or for any other sexual activity for which any person can be changed with a criminal offense - (1) knowingly imports or attempts to import any alien; or (2) knowing or in reckless disregard of the fact that an individual is an alien who lacks lawful authority to come to, enter, or reside in the United States, knowingly holds, keeps, maintains, supports, employs, or harbors the individual in any place in the United States, including any building or any means or transportation, attempts to do so, shall be fined under title 18, United States Code, or imprisoned not more than 10 years, or both. (b) Special Evidentiary Rule - In all prosecutions under this section, the testimony of a husband or wife shall be admissible and competent evidence against each other. The proposal would omit the venue language now found in the section that permits prosecution in any district into which the alien is imported. The existing provision duplicates the otherwise available venue options under which prosecution is possible in any district through or into which an imported person moves. Subsection 234(a) renames the Justice Department's Child Exploitation and Obscenity Section and expands the responsibilities of the Innocence Lost Task Forces to include sex trafficking (proposed 18 U.S.C. 2430) offenses involving sexually exploited adults. The Section would become known as the Sexual Exploitation and Obscenity Section. The Child Exploitation and Obscenity Section now prosecutes offenses involving federal obscenity, child pornography, interstate trafficking for sexual purposes, international sexual child abuse, and international parental kidnapping. In 2003, the Section together with the Federal Bureau of Investigation (FBI) and the National Center for Missing & Exploited Children started an Innocence Lost Initiative in 2003. The proposed amendment would greatly expand the Section's jurisdiction, given the accompanying expansion of federal jurisdiction occasioned by proposed Section 2430 which would outlaw trafficking in commercial sexual activity occurring in or affecting interstate or foreign commerce regardless of age or willingness of the individual trafficked. The creation of divisions and sections within the Department of Justice, their jurisdictional assignments, and other matters of internal organization within the Department are ordinarily matters internal to the Department. However, Congress may address, and in the past has addressed, such matters in statute. Subsection 202(g) would require those who recruit foreign workers to disclose various specifics regarding the circumstances and conditions of employment to recruits. Paragraph 202(g)(3) would proscribe knowingly making a material false or misleading statement in such disclosures and would declare that, "The disclosure required by this section is a document concerning the proper administration of a matter within the jurisdiction of a department or agency of the United States for the purposes of Section 1519 of title 18, United States Code." Section 1519 of Title 18, United States Code, proscribes the knowing falsification of records with the intent to impede, obstruct, or influence the proper administration of any matter within the jurisdiction of any department or agency of the United States. Violations are punishable by imprisonment for not more than 20 years. In the absence of a reference to Section 1519, the proposed offense would instead be subject to the general false statement statute, 18 U.S.C. 1001, which makes violations punishable by imprisonment by not more than 8 years if the offense relates to an offense under 18 U.S.C. 1591 (sex trafficking of children or by force, fraud or coercion); or 18 U.S.C. ch. 109A (sexual abuse), ch. 110 (sexual exploitation of children), or ch. 117 (transportation for illegal sexual activities). The Justice Department drafted a Model State Anti-Trafficking Criminal Statute in 2004. The Model includes suggested language of state criminal laws relating to trafficking in persons, involuntary servitude, sexual servitude of a minor and trafficking in persons for forced labor or services. A number of states have adopted comparable statutes. Section 224 would direct the Attorney General to provide a similar model reflecting the misconduct proscribed in 18 U.S.C. chs. 77 (involuntary servitude) and 117 (Mann Act) as those chapters would be amended by H.R. 3887 . It would also instruct the Attorney General to post the model on the Department's website, distribute it to the states, assist the states in its implementation, and report annually to House and Senate Judiciary Committees and the House Foreign Affairs Committee as well as the Senate Foreign Relations Committee on the results of such efforts. | The criminal law proposals found in H.R. 3887 as it passed the House include newly assigned sex trafficking offenses, a sex tourism offense, a coerced services offense, obstruction of justice offenses, an importation of prostitutes offense, a false statement offense, and provisions for civil liability, victim assistance, forfeiture, extraterritorial jurisdiction, Justice Department reorganization, and a model state statute. H.R. 3887's new sex trafficking offense would expand federal jurisdiction to reach persuasion, inducement, or enticement to engage in unlawful prostitution when it occurs in or affects interstate or foreign commerce, even in the absence of a child victim or of coercion, fraud, or force. Its amended version of 18 U.S.C. 1592 (seizure of documents in aid of trafficking) would outlaw the use of financial coercion to gain control of an individual's labor or sexual services. Its new sex tourism offense would cover arranging or attempt to arrange sex tours even when the underlying travel is not itself a federal crime. The bill also prohibits various obstructions of justice and false statements committed in connection with the employment of foreign workers. Procedurally, H.R. 3887 would enlarge the civil cause of action available to victims of violations of the involuntary servitude and trafficking provisions under an explicit 10-year statute of limitations. It would expand the availability of Crime Victim Fund programs for the benefit of the victims of sex trafficking. It would rename the Justice Department's Child Exploitation and Obscenity Section and expand the responsibilities of the Innocence Lost Task Forces to include sex trafficking offenses involving sexually exploited adults. This report is available in an abridged version - stripped of its footnotes, and most of its citations to authority as CRS Report RS22789, William Wilberforce Trafficking Victims Protection Reauthorization Act of 2007 (H.R. 3887 as Passed by the House): Criminal Provisions in Short, by [author name scrubbed]. | 7,134 | 490 |
Along with the United States, Germany is widely considered one of Israel's closest allies. Germany's commitment to Israel's sovereignty and security has historically been the strongest influence on its policy in the Middle East and a key factor in its cooperation with the United States in the region. However, debate surrounding Israel's August 2006 request for German ground troop participation in a United Nations (U.N.) mission on the Israeli-Lebanese border, increasing German advocacy for a more proactive European Union (EU) role in the Middle East, and shifting perceptions of Israel in the German public have brought attention to what many consider a changing role for Germany. Indeed, the October 2006 deployment of a German naval contingent off the Lebanese coast marks the first time German troops have been stationed so close to Israeli soil, and German leaders have announced their intention to work toward reviving European and international engagement in the Israeli-Palestinian peace process during Germany's EU presidency in the first half of 2007. Given Germany's long-standing support of Israel and close ties to the United States, Israeli and Bush administration officials have generally welcomed the idea of increased German engagement in the Middle East. For some analysts, Germany's leading role in the EU and consistent commitment both to Israel and U.S. involvement in the peace process suggest that Germany will become an ever-more important partner for Israel and the United States. On the other hand, the presence of German troops in Lebanon, growing public opposition to Israeli policies and Germany's commitment to a common European approach prompt others to emphasize an increasing potential for divergence between German policy on the one hand and Israeli and U.S. policies on the other. The Federal Republic of Germany (West Germany) and Israel established formal diplomatic relations in May 1965. However, German policy towards Israel during the preceding 13 years, beginning with the Luxembourg Reparations Agreement of 1952, set the tone for what continues to be widely considered a special relationship. After taking office in 1949, West Germany's first Chancellor, Konrad Adenauer, pursued a foreign policy rooted in the belief that the legitimacy of the young German state depended largely on its willingness to atone for atrocities perpetrated by the National Socialist (Nazi) regime of Adolf Hitler. Accordingly, his policies were motivated by a perceived moral obligation to support the Jewish state. The cornerstone, enshrined in the Luxembourg Agreement, was a long-term commitment to provide unprecedented financial reparations to the state of Israel and restitution and compensation to individual victims of Nazi persecution. In the Luxembourg Agreement, West Germany agreed to pay 3 billion Deutschmark ($715 million) to the state of Israel and 4.5 million DM ($110 million) to Jewish organizations represented by the Conference on Jewish Material Claims Against Germany (Claims Conference), which were helping resettle Jews outside of Israel. Germany subsequently enacted legislation mandating direct compensation to individual victims of Nazi crimes. The German government continues to make payments to individuals, mostly by way of pension contributions, and estimates that some 40%, or over 25 billion Euros (approximately $32.5 billion), of German reparations and compensation have gone to the state of Israel or individuals living in Israel. In 1992, two years after German unification, the government expanded its compensation laws to include individuals previously denied compensation by the former German Democratic Republic (East Germany). According to historians, while the United States supported the idea of German reparations, American officials were unwilling to impose additional financial burdens on the young German state so soon after World War II and urged Israel to negotiate directly with Germany. Indeed, reparations to Israel were neither required by the international community nor wholeheartedly endorsed by the German and Israeli people. Most agree that German support for Israel arose largely due to the individual efforts of Adenauer and Israeli Prime Minister David Ben-Gurion. Beginning in 1957, the two leaders enhanced relations by establishing military ties, avoiding considerable domestic and international opposition by keeping arms shipments secret. In 1964, German newspaper reports exposed arms shipments to Israel, setting off crises both within and between Germany, Israel and the Arab world. Ultimately, West Germany suspended the shipments. However, both to make up for this loss and to address increasing public and political pressure, Adenauer offered to establish formal diplomatic relations with Israel in March 1965. Until this point, he had resisted renewing an initial 1952 offer of diplomatic ties, fearing retaliation from the Arab world. The decades following the 1965 establishment of diplomatic relations were marked largely by a German desire to be seen as a neutral actor in the Middle East, providing balanced, rather than special support to Israel. Simultaneously, and away from the public eye, successive German leaders sought to fulfill a greater moral commitment to Israel, as had been initiated in Adenauer's policies. Publicly, however, leaders tended to speak increasingly of German neutrality and, beginning in the 1970s, avoided pressure to take sides in conflicts involving Israel by advocating common European Economic Community (EEC) positions. Although Germany opposed a 1956 U.S.-supported U.N. initiative to impose sanctions on Israel following the Suez crisis, Germany did not openly support Israel in the 1967 war and resisted calls to come to Israel's aid during the early stages of the 1973 Yom-Kippur War, at least publicly claiming neutrality in the conflict. After the ensuing Arab oil embargo, German policy increasingly reflected its dependence on Arab states, both as a destination for German exports and, more importantly, as the source of 85% of German oil. Nonetheless, Germany appears to have successfully maintained its strong relations with Israel by providing substantial economic assistance, continuing to nurture defense and intelligence cooperation and by working to soften or even oppose EEC positions. After having claimed neutrality during the Yom-Kippur War, it was revealed that Germany had been allowing the United States to use its Bremerhaven port to resupply Israel. Although Germany supported a 1973 EEC resolution urging Israel to retreat to pre-1967 borders, in the late 1970s, it abstained from U.N. votes on the right of Palestinian self-defense and on granting observer status to the Palestinian Liberation Organization (PLO). In 1980, though West Germany signed the EEC's Venice Declaration endorsing Palestinian self-determination, German officials are reported to have successfully blocked initiatives to include direct reference to the PLO. While the Venice Declaration and other EEC positions were certainly viewed as less favorable toward Israel than previous German policy, Germany maintained Israeli trust as a strong ally within Europe. German reparations and compensation for crimes committed during the Holocaust and long-standing defense and scientific cooperation continue to represent the cornerstone of a robust German-Israeli bilateral relationship. However, as memory of the Holocaust fades and public criticism of Israeli policies increases, the countries have focused on expanding cultural and broader societal exchanges. With bilateral trade worth 3.7 billion Euros (approximately $4.8 billion), Germany is Israel's second largest trading partner after the United States. However, given the comparatively small size of the Israeli market relative to Germany's main export markets, most agree that economic considerations do not play a decisive role in German policy towards Israel. Though it is increasing, German direct investment in Israel also is not considered particularly significant. In fact, former Israeli Ambassador to Germany Avi Primor has identified increased German investment as an area of primary importance for the future of German-Israeli relations and some analysts suggest that security concerns regarding the Israeli-Palestinian conflict represent the primary obstacle to greater investment. Conversely, Israeli investment in Germany is reportedly rising, with more than 40 Israeli companies based in Germany as of 2005. In 2005, business associations from both countries established the German-Israeli Business Council to stimulate business relations. Germany has also been a strong advocate of preferential trade agreements between Israel and the EU. Cooperation between German and Israeli scientists began as early as 1961--four years before the establishment of diplomatic relations--and has grown into a pillar of bilateral relations. According to the German government, Germany, after the United States, is the second largest sponsor of scientific research in Israel, and German scientists represent the largest group of foreign scientists working in Israel. The primary vehicle for German-Israeli scientific cooperation is the Minerva Foundation, which receives annual funding from the German government and supports projects administered by Israel's Weizmann Institute. Particularly as memory of the Holocaust fades among younger generations of Germans and Israelis, leaders on both sides have emphasized the need for strong people-to-people exchanges and Holocaust education. There are currently over 100 "sisterships" between German and Israeli towns, and up to 10,000 youth and volunteers from both countries participate in exchange programs each year. Cultural exchange between the two countries has been historically slow to develop, but has grown substantially over the past decade. This includes efforts to promote the German language in Israel and agreements to jointly promote Holocaust education. Over 100,000 Jews now live in Germany and are reported to make up the world's most rapidly growing Jewish population. The vast majority of these Jews have come from the former Soviet Union since 1990. Historical accounts reveal that robust, but highly secretive military and intelligence cooperation between Germany and Israel resumed in the late 1960s, not long after the West German government suspended covert arms shipments in 1964. The select group of German officials overseeing the arms trade considered secrecy vital both to avoid scrutiny under a law banning German arms exports to areas of potential conflict, and perhaps more importantly, to avert negative consequences in relations with the Arab world. Despite these risks, successive German leaders have remained committed to far-reaching defense cooperation with Israel and Israel continues to be a top recipient of German military technology. The extent and precise value of arms shipments to and from Germany through the mid-1990's remains unclear, yet analysts assert that German arms played a considerable role in Israeli military victories in 1967, 1973 and 1982. In response to Iraqi scud missile attacks on Israel during the Gulf War of 1990-1991, the German army provided Israel with arms and substantial financial assistance. In 1999 and 2000, in perhaps the most high-profile German arms shipments to Israel since German unification, Germany financed 50% of the costs for three "Dolphin-class" submarines designed specifically for the Israeli navy. In August 2006, the German government committed to deliver and finance one-third of the costs, approximately 1 billion Euros ($1.3 billion), for two more submarines by 2010. Those opposed to the most recent agreement, primarily members of the Green and Left political parties, cite widespread concern that Israel plans to reconfigure the submarines to enable them to launch nuclear missiles. Proponents repeatedly invoke a German obligation to defend the existence of the state of Israel. Israelis have generally welcomed the continuing defense cooperation with Germany. In August 2006, the Jerusalem Post reacted to the latest submarine agreement by writing, "While their grandparents' generation perpetrated the Holocaust, and the previous generation paid for the Holocaust with reparations to its victims, the current generation is helping prevent a second Holocaust by providing the [Israel Defense Forces] with some of the most important defensive weapons systems in its arsenal. As far as corrective steps go, that's a huge one." Germany and Israel's respective intelligence agencies, the Bundesnachrichtendienst (BND) and Mossad, enjoy a history of extensive and often secretive cooperation dating back to the 1960s, when they began facilitating the arms trade between the two countries. Counter-terrorism cooperation began in the wake of the terrorist attack at the 1972 Munich Olympics and has reportedly increased since September 11, 2001. In 2002, in what was viewed by many as a response to pressure from Israeli officials, the German government banned the Al-Aqsa charity, an organization long accused by the Israelis of fund-raising for the Palestinian terrorist organization Hamas. While many Israelis considered the German government's response overdue, most indicate that the action was emblematic of the close cooperation between Israeli and German authorities. It appears that despite continued Israeli concerns regarding perceived constraints imposed on counter-terror operations by German law, cooperation between the countries remains strong. Israeli leaders consistently praise their country's relations with Germany, welcoming German advocacy on Israel's behalf within the EU and internationally, and the extensive bilateral contacts that have developed since the 1950s. Yet, some prominent Israelis and members of Germany's Jewish community express concern that the historical basis for the strong relationship could be weakening, particularly as collective memory of the Holocaust recedes. Such concerns focus on a rise in neo-Nazi activity, anti-Israel and pro-Palestinian sentiment among the German public and general trends against U.S. policy, unilateralism and military action. An October 2006 study reported a 20% increase in crimes committed by neo-Nazis in Germany since 2005. Such crimes had grown by about 10% the previous year. The increase coincides with a political gain for the neo-Nazi National Democratic Party (NPD), which won seats in the state parliament of the eastern state of Mecklenburg West Pomerania in September 2006 elections and has held seats in Saxony's state legislature since 2004. While most observers believe the NPD will be voted out of the Saxon legislature in the next elections, the apparent rise of neo-Nazi movements in German society and political life has elicited criticism and statements of concern from the President of the Central Council of Jews in Germany and Israel's ambassador to Germany. Asked by an Israeli journalist to address concerns regarding anti-Semitic trends, Chancellor Angela Merkel responded, "sometimes people are not sufficiently aware of anti-Semitic tendencies. Therefore, we intend to treat education and training as a very important component." The German government funds a range of tolerance-education programs, many of which focus specifically on anti-Semitism and Holocaust remembrance, including some in collaboration with Israeli organizations, and continues to provide 24-hour police protection at synagogues and other Jewish institutions. In addition, the government devotes significant resources to investigating xenophobic and anti-Semitic crimes and prosecuting their perpetrators. These crimes often receive broad media attention and public condemnation from the political establishment. In recent years, increasing public and political opposition to Israeli policies in the Middle East has illuminated a long-standing tension in German society between Germany's special commitment to the state of Israel and German criticism of the policies of Israeli governments. German and Israeli leaders and representatives of Germany's Jewish community consistently state that such criticism is a natural part of any healthy bilateral relationship. However, in reaction to alleged media bias and strong opposition from German politicians to Israeli bombings during Israel's July 2006 war with Hezbollah, the leader of the German Jewish Council alleged an "absolutely hostile attitude towards Jews and Israel," in Germany. In a survey taken shortly after the end of the conflict, 75% of Germans indicated they considered the Israeli action to be "disproportionate." This compared to 63% of British who indicated the action was "inappropriate and disproportionate" and 50% of Americans who reported Israeli action as "justified." Until the 1993 Oslo Peace Accords and the subsequent creation of the Palestinian Authority (PA), Germany was one of Europe's most cautious supporters of Palestinian self-determination. However, since the Israeli government and PLO afforded one another mutual recognition in1993, Germany has become both a strong advocate for a two-state solution to the Israeli-Palestinian conflict and one of the PA's largest donors. Germany was the first country to open a representative office in the Palestinian territories. It consistently seeks a common EU approach to the region and is a strong supporter of EU participation in the so-called Quartet (the EU, Russia, the U.N. and the United States). Since 1993, Germany and the EU have faced varying degrees of Israeli pressure to take stronger measures to ensure that European funding to the Palestinians is not used to finance terrorist operations. On the other hand, Israeli officials have also expressed their support of German and European aid to the Palestinian people and in specific instances, have even requested German aid. Successive German governments have prioritized support for Israel as a cornerstone of German policy in the Middle East. During the Cold War, Germany tended to express this support quietly, favoring covert financial and military support over vocal political backing. However, since unification and during a period of European integration and unprecedented EU expansion, Germany has emerged as an increasingly proactive advocate for greater EU engagement in the Middle East. German leaders have become vocal supporters of a two-state solution to the Israeli-Palestinian conflict. Former Foreign Minister Joschka Fischer's 2002 push to revitalize the peace process is considered by many to have been both a significant first step towards the 2003 "Performance-based Roadmap to a Permanent Two-State Solution to the Israeli-Palestinian Conflict" (Road Map) and a turning point in Germany's role in the region. While some Israelis are skeptical of increased EU influence, most appear to continue to view Germany as a strong and reliable partner within a union of countries generally considered less sympathetic to Israel, and have welcomed a more proactive German role in driving EU policy. For its part, Germany seeks to carry out its support of Israel within the overarching framework of the EU's Common Foreign and Security Policy (CFSP). Despite periods of increased tension between Germany and Israel, leaders on both sides continue to characterize the relationship as an essential component of their foreign policy. In the past decade, Germany has extended political support to Israel largely through its advocacy within the EU. In 2002, despite having temporarily suspended arms shipments to Israel in response to Israeli actions during the Al-Aqsa Intifadah , Germany is reported to have successfully blocked proposals for EU sanctions against Israel. In 2004, although Germany ultimately endorsed the EU's official opposition to Israel's security fence in the West Bank, German Interior Minister Otto Schily and other prominent officials openly supported Israel's decision. During Israel's July 2006 conflict with Hezbollah in Lebanon, Germany and the United Kingdom were the only two EU member states officially opposed to an immediate cease-fire. And, in November 2006, Germany is reported to have joined the Czech Republic and the United Kingdom in blocking public EU condemnation of Israel's military operation in the Gaza Strip. While distinguishing itself as a strong supporter of Israel within the EU, Germany appears to have maintained the trust of Palestinians and other groups in the region traditionally opposed to Israeli objectives. After a Tel Aviv nightclub bombing in 2001, Foreign Minister Fischer is reported to have shuttled between PLO leader Yasser Arafat and Israeli Prime Minister Ariel Sharon, successfully eliciting restraint from Sharon and condemnation of the bombing from Arafat. Analysts also cite the success of German negotiators in facilitating highly delicate prisoner exchanges between the Israeli government and Hezbollah in 1996 and 2004 as evidence of the trust Germany enjoys from both Hezbollah and the Israelis. More recently, a German negotiator is reportedly mediating between Israel and Hezbollah for the release of two Israeli soldiers kidnaped in July 2006. Chancellor Angela Merkel and Foreign Minister Frank Walter Steinmeier took office in November 2005 promising continuity in a German Middle East policy based on a commitment to protect Israel's right to exist; support for a two-state solution to the Israeli-Palestinian conflict; a commitment to a European framework for peace; and a belief that U.S. engagement in the region is essential. Since the historic deployment of German troops to the Lebanese coast in October 2006, Merkel and Steinmeier have increased their calls for revived U.S. and Quartet engagement in the Israeli-Palestinian peace process, joining other European leaders in asserting that the conflict lies at the root of many of the other challenges in the Middle East. Germany has been active in international negotiations aimed at curbing Iran's nuclear ambitions and, despite continuing to rule out a German troop deployment to Iraq, some German leaders have indicated a willingness to increase German support for Iraqi reconstruction efforts and initiatives to train Iraqi security forces. While Israeli and U.S. officials appear to welcome increased German engagement in the region, both Israel and the United States have expressed disapproval of German efforts to engage Syria in the Arab-Israeli peace process, and have reacted skeptically to German-supported proposals to link the resolution of other major disputes in the region to the Israeli-Palestinian peace process. At Israel's and Lebanon's request, in September 2006 the German Parliament authorized a German naval deployment of up to 2,400 soldiers as part of the expanded United Nations Interim Force in Lebanon (UNIFIL). Germany now leads a contingent tasked with monitoring the Lebanese coast to prevent weapons smuggling to Hezbollah forces in Lebanon. The decision to deploy troops so close to Israel--unprecedented in German history--followed several months of widespread debate, which illuminated both the continuing sensitivity surrounding German policy towards Israel and growing German interests in the region. Ultimately, German participation in UNIFIL has increased domestic pressure on Merkel to push for a political solution to the broader Arab-Israeli conflict. At the outset of discussions regarding European contributions to UNIFIL, Merkel and other leading German politicians all but ruled out a military role for Germany, highlighting strong discomfort with the idea of German soldiers being in a position to confront Israeli troops. However, a direct request for ground troops from Israeli Prime Minster Ehud Olmert compelled Germany to reconsider its stance and was a key factor in the decision to deploy the naval contingent. Although Germany ruled out sending ground troops, members of both governing political parties, and particularly the Social Democrats (SPD), expressed a surprising willingness to consider the option, largely because it had been requested by Israel. In the end, opposition from the right wing of Merkel's Christian Democratic Union and from its sister party, the Christian Social Union, reportedly prevented further consideration of more robust German engagement. Nonetheless, Olmert's request broadened debate within the German political spectrum over Germany's future role in the region. In her justification to parliament for the mission, Merkel highlighted its "historic dimension," stating that, "it was impossible to overstate the significance of how much Germany is now trusted," by Israel and others in the region. Since Germany's naval deployment in October 2006, the actions of Israeli Air Force jets flying over German vessels have heightened diplomatic tension between the countries, eliciting official German complaints and Israeli apologies on at least two occasions, and heightening a widespread belief that a weak U.N. mandate is rendering the UNIFIL mission ineffective. While Israeli leaders have officially apologized for a lack of communication during fly-overs, Israel has complained that conditions requiring German officials to secure approval from Lebanese authorities before boarding suspicious ships or entering territory within six miles of the Lebanese coast severely limit Germany's ability to track potential arms shipments. On the other hand, many Germans have taken the actions as evidence of Israel's lack of respect and even disdain for the European military presence. Chancellor Merkel has announced her intention to revive Quartet efforts to advance the Israeli-Palestinian peace process while Germany acts as the EU's representative to the Quartet during its EU presidency in the first half of 2007. However, both she and Foreign Minister Steinmeier emphasize the necessity of U.S. engagement and leadership to any successful peace initiative. Observers and German officials expect Germany to exhaust much of its diplomatic capital in the first half of 2007 seeking to gain increased U.S. engagement and the backing of European countries that tend to be less sympathetic toward Israel than Germany and the United States. Since Hamas's victory in January 2006 Palestinian legislative elections, Germany has remained steadfast in its public commitment to the conditions for relations with Hamas outlined by the Quartet. However, German officials have also supported Palestinian President Mahmoud Abbas's efforts to form a national unity government with Hamas, and some American commentators worry that Europeans may be more willing than the United States to work with such a government. Merkel and Steinmeier have demonstrated a desire to broaden the peace process to include more neighboring states with a stake in the outcome. On several occasions, Steinmeier has voiced an interest in expanding the Quartet to include Egypt or other Arab states. Arguing that any sustainable agreement must involve Syria, Steinmeier met with President Bashar Asad in Damascus in December 2006. Steinmeier says he urged Asad to cease support for Hezbollah fighters in Lebanon and use his leverage over Hamas to pressure its officials to cooperate in the peace process. Despite reports that Merkel was opposed to Steinmeier's Syria visit, a possibility made more likely by the fact that the two represent different political parties, she subsequently defended the decision, citing the need to demonstrate a readiness for dialogue with all stake-holders in the region. Israeli Prime Minister Ehud Olmert has pledged support for the Road Map and Germany's role in realizing it, even welcoming the efforts of moderate Arab states to move the process forward. However, he openly criticized Steinmeier for traveling to Damascus and is skeptical of a German-supported proposal to discuss the Israeli-Palestinian conflict as part of a broader international conference on Iraq. The Bush Administration, which accuses Syria of supporting terrorist organizations and of involvement in the 2005 killing of former Lebanese Prime Minister Rafik Hariri, has consistently opposed dialogue with Syria. As a member of the so-called EU-3 (France, Germany and the United Kingdom), Germany has been a proponent of EU and multilateral efforts to prevent Iran from developing nuclear weapons and was an architect of December 2006 U.N. Security Council Resolution 1737 imposing sanctions on Iran for its refusal to comply with previous Security Council decisions regarding its nuclear program. German officials speak forcefully on the importance of curbing Iranian nuclear ambitions and, despite strong opposition from business associations, Merkel and Steinmeier have indicated a willingness to consider more stringent economic sanctions in the case of continued Iranian obstinance. On the other hand, Germany has demonstrated a commitment to international unity, suggesting that it may be more willing to accept compromises in exchange for U.N. Security Council unanimity rather than take unilateral measures in the face of Chinese or Russian opposition. Indeed, some German officials who favor more stringent sanctions assert that such measures will be ineffective without Russian and Chinese support. Merkel has been unequivocal in her opposition to a military response to the crisis. Israel views Iran as its most formidable enemy and an existential threat. While it has welcomed international efforts to curb the Iranian nuclear program, Israeli officials have called on the international community to take more assertive steps. Prime Minister Olmert has specifically urged a stronger German stance, citing Germany's moral obligation to confront Iran and concern regarding German government support of companies with significant business interests in Iran. German-Iranian trade in 2005 was valued at close to $6 billion, making Germany Iran's second largest European trading partner after Italy. During a December 2006 visit to Berlin, Olmert reportedly pressured Merkel to cease government loan guarantees to companies doing business in Iran. Taking a similar approach, the United States Treasury Department has urged Germany to stem what it claims is the illicit exploitation of German and other European banking systems by Iranian companies involved in financing terrorist activities. Since opposing the U.S. decision to invade Iraq in 2003, Germany has ruled out sending troops to Iraq and has limited its efforts to promote stability in the country to training Iraqi police and military forces in the United Arab Emirates and providing financial assistance for civilian reconstruction and debt relief within the framework of the Paris Club. While continuing to rule out a German troop deployment, German leaders, particularly within Merkel's Christian Democratic Union, indicate a growing willingness to increase German support of stabilization and reconstruction efforts, though concrete proposals have yet to be put forth. Both Merkel and Steinmeier have endorsed the U.S. Iraq Study Group report, and have expressed support for an international conference on Iraq that would include discussion of other disputes in the region, including the Israeli-Palestinian conflict. Merkel has said a "comprehensive diplomatic initiative" as envisioned in the Iraq Study Group report could make an important contribution to stabilizing the Middle East as a whole. In a December 2006 meeting, Secretary of State Condoleezza Rice reportedly reacted skeptically to Steinmeier's proposal for German assistance for such an initiative. Israeli Prime Minister Olmert has opposed the idea of including the Israeli-Palestinian conflict on the agenda of a broader international conference, saying, "the best way to advance our relations with the Arabs is by means of bilateral negotiations." The United States and Germany share several national security interests and policy priorities in the Middle East. Germany's commitment to Israel's sovereignty and security remains the strongest influence on its policy and a key factor in its cooperation with the United States. As noted above, the two countries are widely considered Israel's closest allies and both share a commitment to a two-state solution to the Israeli-Palestinian conflict and to preventing Iran from developing nuclear weapons. Moreover, both the U.S. and Germany consider terrorism, radical Islamic fundamentalism, and the proliferation of weapons of mass destruction, particularly to Iran, the primary threats to national security. At times, however, Germany tends to favor different policy approaches to realizing these objectives. In the Middle East, Germany's emphasis on diplomatic engagement and dialogue over military measures and isolation suggests a greater willingness to engage traditional adversaries of the United States and Israel such as Syria and Iran in search of diplomatic solutions. Merkel's call for a comprehensive diplomatic initiative indicates a desire to link discussion of the Israeli-Palestinian and Israel-Lebanon conflicts to discussion of security in Iraq, to which both Israel and key figures in the Bush administration have reacted skeptically. The presence of German troops off the Lebanese coast and increasing criticism regarding the strength of their mandate are fueling German calls to offer Syria concessions within the framework of a broader dialogue. Proponents of such an approach argue that cooperation with Syria is essential to achieving stability in Lebanon and cooperation from Hamas, and can only be achieved through constructive dialogue. Although Merkel has joined European leaders in advocating dialogue with Syria and Iran and increased EU engagement in the Israeli-Palestinian conflict, Germany and most EU member states remain dedicated to securing robust U.S. engagement in any peace proposal. Numerous analysts assert that Germany is unlikely to assume a leadership role in the peace process without strong U.S. backing. However, calls for EU-led initiatives from Spain, France and Italy indicate ongoing European frustration with perceived U.S. inattention to the peace process. This leads many analysts to predict that Germany will be hard-pressed to forge European and transatlantic consensus during its EU-presidency, let alone lead a revived Quartet initiative. Accordingly, German diplomats are careful to dampen expectations of Germany's ability to drive the peace process. Merkel has shown no signs of deviating from Germany's traditional support for Israel and, if anything, has displayed a tendency to be less critical of Israeli policies than her predecessor Gerhard Schroder. Nonetheless, growing criticism within the German media and Germany's political classes, and high public disapproval of Israeli action during its July 2006 incursion into Lebanon, suggest a growing willingness to challenge Israeli policies. Furthermore, the presence of German troops in the region has significantly raised Germany's interest in seeing a peaceful resolution to Israeli-Arab conflicts. These factors and Germany's commitment to a stronger EU foreign policy are taken by some as indications of increasing potential for divergence between German policy on the one hand and U.S. and Israeli policies on the other. On the other hand, German officials and politicians consistently assert that Germany's commitment to Israel and a common transatlantic approach to the Arab-Israeli peace process will continue to remain the paramount drivers of German policy in the region. Indeed, a historical perspective on Germany's relationship with Israel indicates that German leaders have consistently chosen to support Israel--whether militarily, financially or politically--despite periods of public, political or even international opposition. This support, however, has often been carried out secretively. In fact, historical accounts suggest that German success in maintaining relatively positive relations on both sides of the Arab-Israeli conflict has depended largely on its ability to avoid a high-profile leadership role in the region. Aspects of Germany's relations with Israel intersect with congressional concerns, especially with respect to policy issues in the Middle East. Recent relevant examples include congressional perspectives on Hezbollah and international assistance to the Palestinians. Members of Congress have repeatedly called on the European Union to classify Hezbollah as a terrorist organization. In March 2005, both the House and Senate passed resolutions ( H.Res. 101 and S.Res. 82 ) urging the EU to add Hezbollah to its list of terrorist organizations. In July 2006, as fighting between Hezbollah and Israel escalated, 200 Members of the House signed a letter to EU High Representative for Common Foreign and Security Policy Javier Solana reiterating their request. The EU has not designated Hezbollah as a terrorist organization because some member states view it as playing an important social and economic role in Lebanon or as a legitimate political entity represented in the Lebanese parliament and cabinet. EU and German officials indicate that such a designation is unlikely as long as EU member states are negotiating with the Lebanese government as part of the UNIFIL force currently maintaining a cease-fire in southern Lebanon. Unlike some EU member states, such as the United Kingdom, which has placed Hezbollah on its terrorist list, Germany does not maintain an independent national list of terrorist organizations, choosing instead to adopt the common EU list. Composition of the EU list is agreed on unanimously and deliberations remain secret. Although most observers assert that the French government has been the strongest European opponent to classifying Hezbollah as a terrorist organization, German officials indicate that they would likely support such a designation. Members of Congress also remain concerned about EU aid to the Palestinians. Congress has enacted a series of measures to restrict U.S. funding for the Palestinian Authority. As noted previously, Germany has been one of the largest donors to the PA, and has provided direct assistance to the Palestinian people through the EU's Temporary International Mechanism (TIM) since July 2006. After Hamas's victory in parliamentary elections in January 2006, Chancellor Merkel was one of the first European leaders to back Quartet conditions for the provision of EU aid and negotiations with Hamas. Nonetheless, some observers have voiced concern that Germany and other European states may be more willing than the United States to show flexibility in their commitment to these requirements, particularly in exchange for Hamas cooperation in a potential national unity government or in peace talks. In response to such allegations, German officials consistently cite a steadfast German commitment to the Quartet principles. | Most observers agree that moral considerations surrounding the Holocaust continue to compel German leaders to make support for Israel a policy priority. Since 1949, successive German governments have placed this support at the forefront of their Middle East policy and today, Germany, along with the United States, is widely considered one of Israel's closest allies. Germany ranks as Israel's second largest trading partner and long-standing defense and scientific cooperation, people-to-people exchanges and cultural ties between the two countries continue to grow. On the other hand, public criticism of Israel in Germany, and particularly of its policies with regard to the Israeli-Palestinian conflict, appears to be on the rise. Since the mid-1990s, German policy toward Israel has become progressively influenced by Germany's commitment to a two-state solution to the Israeli-Palestinian conflict. Germany has been one of the single largest contributors to the Palestinian Authority (PA) and an increasingly vocal advocate for European Union (EU) engagement in the Middle East. Germany's September 2006 decision to send a naval contingent to the Lebanese coast as part of an expanded United Nations mission after Israel's July 2006 war with Hezbollah is considered to have significantly raised German interest in a resolution to the Israeli-Palestinian conflict and sparked widespread debate within Germany regarding the evolution of the German-Israeli relationship and Germany's role in the region. Stating that the Israeli-Palestinian conflict lies at the root of other challenges in the Middle East, German Chancellor Angela Merkel has announced her intention to revive international engagement in the peace process while Germany holds the EU's rotating presidency during the first half of 2007. Given Germany's long-standing support of Israel and close ties to the United States, Israeli and Bush Administration officials have generally welcomed the idea of increased German engagement in the region. For their part, German officials and politicians assert that their commitment to Israel and active U.S. involvement in the Israeli-Palestinian peace process remain the paramount drivers of German policy in the Middle East. However, most experts indicate that Germany will be hard-pressed to overcome both U.S. inattention stemming from a perceived preoccupation with Iraq, and diminished support for Israel and the United States among other EU member states, to forge a revived transatlantic approach to the peace process. Furthermore, the presence of German troops in Lebanon, growing public opposition to Israeli policies and Germany's commitment to a European approach lead others to highlight a growing potential for divergence between German policy on the one hand and Israeli and U.S. policies on the other. This report will be updated as events warrant. For related information, see CRS Report RL31956, European Views and Policies Toward the Middle East, by [author name scrubbed]; CRS Report RL33476, Israel: Background and Relations with the United States, by [author name scrubbed]; and CRS Report RL33530, Israeli-Arab Negotiations: Background, Conflicts, and U.S. Policy, by [author name scrubbed]. | 7,771 | 663 |
T he House and Senate are scheduled to convene in joint session on January 6, 2017, for the purpose of opening the 2016 presidential election electoral votes submitted by state government officials, certifying their validity, counting them, and declaring the official result of the election for President and Vice President. This report describes the steps which precede the joint session and the procedures set in the Constitution and statute by which the House and Senate jointly certify the results of the electoral vote. It also discusses the procedures set in law governing challenges to the validity of an electoral vote, and makes reference to the procedures followed during the joint session in 2005 by which the election of George W. Bush was certified. Much of what follows in this report is based on the United States Constitution (particularly Article II, Section 1, and Amendment 12), and on a federal law enacted in 1887 (the Electoral Count Act of 1887) and amended in 1948, now codified in Title 3 of the United States Code . Reference is also made to congressional precedent and practice. Early congressional precedents on the counting of electoral votes, which may be found in Hinds' and Cannon's Precedents of the House of Representatives , are sometimes inconsistent with each other and with more recent practice. This record, coupled with disputes over the electoral count in 1877, provided the impetus for codifying procedure in the 1887 law. Precedents which pre-date the 1887 act may be primarily of historical significance, particularly to the extent that they are inconsistent with express provisions of the 1887 act, as amended. Due to the absence of specific and persuasive authority on some issues, and in the interest of brevity, this report attempts to at least identify and present some of the possible issues and questions that have been raised, even when not necessarily resolving them by reference to authoritative source material or decisions. The topics presented are arranged in the approximate order of their occurrence. The United States Constitution provides that each state "shall appoint" electors for President and Vice President in the manner directed by its state legislature (Article II, Section 1, clause 2), on the day which may be determined by Congress (Article II, Section 1, clause 3). Congress has determined in federal law that the "electors of President and Vice President shall be appointed, in each State" on Election Day, that is, the "Tuesday next after the first Monday in November" every fourth year (on November 8, 2016) (3 U.S.C. SS1). Congress has, since 1887, sought to place the responsibility for resolving election contests and challenges to presidential elections in a state upon the state itself. Federal law provides that if a state, under its established statutory procedure, has made a "final determination of any controversy or contest" relative to the presidential election in the state, and if that determination is completed under this procedure at least six days before the electors are to meet to vote, such determination is to be considered "conclusive" as to which electors were appointed on election day (3 U.S.C. SS5). As explained below, the electors vote on December 19, 2016, so the last day for making a final determination is December 13, 2016. The governor of each state is required by federal law "as soon as practicable" after the "final ascertainment" of the appointment of the electors, or "as soon as practicable" after the "final determination of any controversy or contest" concerning such election under its statutory procedure for election contests, to send to the Archivist of the United States by registered mail and under state seal, "a certificate of such ascertainment of the electors appointed," including the names and numbers of votes for each person for whose appointment as elector any votes were given (3 U.S.C. SS6). On or before December 19, 2016, the governor of each state is required to deliver to the electors of the state six duplicate-originals of the certificate sent to the Archivist of the United States under state seal (3 U.S.C. SS6). The electors of each state meet at the place designated by that state, on the first Monday after the second Wednesday in December (December 19, 2016), to cast their votes for President and Vice President of the United States (United States Constitution, Amendment 12; 3 U.S.C. SSSS7,8). After the electors have voted in each state, they make and sign six certificates of their votes containing two distinct lists, one being the votes for President and the other the votes for Vice President. The law instructs the electors to attach to these lists a certificate furnished to them by the governor; to seal those certificates and to certify on them that these are all of the votes for President and Vice President; and then to send one certificate to the President of the Senate, and two certificates to the secretary of state of their state (one to be held subject to the order of the President of the Senate). On the day after their meeting (December 20, 2016), the electors are to forward by registered mail two of the certificates to the Archivist of the United States (one to be held subject to the order of the President of the Senate), and one to the federal judge in the district where the electors have assembled (3 U.S.C. SSSS9,10,11). If no certificates of votes or lists have been received by the President of the Senate or the Archivist from electors by the fourth Wednesday in December (December 28, 2016), then the President of the Senate (or the Archivist if the President of the Senate is not available) is directed by law to request the state's secretary of state to immediately forward the certificates and lists lodged with the secretary of state, and to send a special messenger to the local federal district judge to transmit the lists that are to be lodged with that judge (3 U.S.C. SSSS12,13). At the first meeting of Congress, set for January 3, 2017, the Archivist of the United States is required to transmit to the two houses every certificate received from the governors of the states (3 U.S.C. SS6). The date for counting the electoral votes is fixed by law as January 6 following each presidential election (3 U.S.C. SS15), unless the date is changed by law. For example, when January 6, 2013, was to fall on a Sunday, the date was changed to January 4, 2013, when the President signed H.J.Res. 122 on December 28, 2012. The electoral votes are counted at a joint session of the Senate and the House of Representatives, meeting in the House chamber. (The United States Code refers to the event as a joint meeting; it also has been characterized in the Congressional Record as a joint convention.) The joint session convenes at 1:00 p.m. on that day. The President of the Senate is the presiding officer (3 U.S.C. SS15). The President pro tempore of the Senate has presided in the absence of the President of the Senate. Under 3 U.S.C. SS15, the President of the Senate opens and presents the certificates of the electoral votes of the states and the District of Columbia in alphabetical order. (As discussed above, under 3 U.S.C. SSSS9-10, the electors in each state, having voted, are to sign, seal, and certify the certificates. Under SS11 of the same title, they are to mail one such certificate to the President of the Senate and mail two others to the Archivist of the United States.) The certificate, or an equivalent document, from each state and the District of Columbia then is to be read by tellers previously appointed from among the membership of the House and Senate. Before the joint session convenes, each chamber appoints two of its Members to be the tellers (the appointments are made by the presiding officers of the respective chambers, based on recommendations made to them by the leaders of the two major parties). The appointed tellers are often members of the House Administration and Senate Rules and Administration Committees, the panels in each chamber having jurisdiction over matters relating to the election of the President and Vice President. In 2013, the House tellers were Members who would serve as chair and ranking member of the House Administration Committee that Congress. The Senate tellers were the chair and ranking member of the Senate Rules and Administration Committee. After the votes of each state and the District of Columbia have been read, the tellers record and count them. When this process has been completed, the presiding officer announces whether any candidates have received the required majority votes for President and Vice President. If so, that "announcement shall be deemed a sufficient declaration of the persons, if any, elected President and Vice President of the United States" (3 U.S.C. SS15). The joint session may agree to expedite this process when no controversy is anticipated. In the 1997 joint meeting, for example, the Vice President announced: "Under well-established precedents, unless a motion shall be made in any case, the reading of the formal portions of the certificates will be dispensed with. After ascertainment has been had that the certificates are authentic and correct in form, the tellers will count and make a list of the votes cast by the electors of the several States." The Vice President proceeded to open the certificates in alphabetical order and passed to the tellers the certificates showing the votes of the electors in each state and the District of Columbia. In each case, the tellers then read, counted, and announced the result for each state and the District of Columbia. According to the Congressional Record , the joint session consumed precisely 24 minutes. A similar process was followed in 2013, when, according to the Congressional Record , the joint session consumed 23 minutes. The 12 th Amendment requires the winning candidate to receive "a majority of the whole number of Electors appointed." That number normally becomes the same as a majority of the number of electoral votes counted by the tellers. One exception that has been identified occurred in 1873 when the Vice President announced that President Ulysses S. Grant had received "a majority of the whole number of electoral votes," even though he also indicated that not all of those electoral votes had been counted. In that case, the two houses, under procedures similar to those described below, had decided not to count the electoral votes from Arkansas and Louisiana. Nonetheless, the number of electoral votes allocated to Arkansas and Louisiana evidently were included in "the whole number of electoral votes" for purposes of determining whether President Grant had received the majority required for election. It should be noted that President Grant was victorious by whichever standard was used. He received 286 electoral votes out of the 352 electoral votes counted, or out of the potential 364 electoral votes (if the contested votes from Arkansas and Louisiana were included in the whole number). In 1865, by contrast, only two of the three Nevada electors cast their electoral votes. In the joint session, only two Nevada votes were counted and included in the "whole number of electoral votes." Similar instances of votes "not given" by electors not being included in the "whole number" of electors reported, thus reducing the so-called denominator and the "majority" needed to elect, occurred in 1809, 1813, and 1817. We are not aware of instances in which this issue has become a source of contention or was determinative of which candidate was elected. If electoral votes from a state or the District of Columbia were not available to be counted during the joint session (and if the question were raised in a timely fashion), the joint session might be called upon to address the effect of this situation on what number of votes would constitute the "majority of the whole number of Electors appointed." Title 3 of the U.S. Code includes provisions governing the conduct of the joint session. Section 16 of Title 3 is intended to ensure that the joint session conducts and completes its business expeditiously. As discussed below, SS18 prohibits debate as well as the offering and consideration of almost all questions. Section 16 provides that the joint session is to continue until the count is completed and the result announced, and limits recesses if the process of counting the votes and announcing the results becomes time-consuming. The seating of Senators, Representatives, and officials (the Clerk of the House, the Secretary of the Senate, the Members designated as tellers, and other administrative officers of the House and Senate) is also governed by SS16. Under SS18, the President of the Senate is to preserve order. This authority may be interpreted as encompassing the authority to decide questions of order, but the statute is not explicit on this point. Nevertheless, on several occasions during the joint session of January 6, 2001, Vice President Albert A. Gore, Jr., presiding over the joint session, ruled on the admissibility of objections to the receipt of electoral votes from the state of Florida, and also advised House and Senate Members that debate was not permitted and that a unanimous consent request for debate on the issue could not be entertained. He further stated that even incidental parliamentary motions, including those that only affect the actions of the House, needed the written endorsement of at least one Representative and one Senator in order to be valid. Vice President Gore also declined to entertain a point of order that no quorum was present because the point of order had not been endorsed by one Member from each chamber. The statute provides that no question is to be "put by the presiding officer except to either House on a motion to withdraw." (The statute provides for the Senate to withdraw automatically under circumstances discussed below. The statute, however, makes no other explicit reference to a motion to withdraw.) Provisions in 3 U.S.C. SS15 include a procedure for making and acting on objections to the counting of one or more of the electoral votes from a state or the District of Columbia. When the certificate or equivalent paper from each state (or the District of Columbia) is read, "the President of the Senate shall call for objections, if any." Any such objection must be presented in writing and must be signed by at least one Senator and one Representative. The objection "shall state clearly and concisely, and without argument, the ground thereof.... " During the joint session of January 6, 2001, the presiding officer intervened on several occasions to halt attempts to make speeches under the guise of offering an objection. When an objection, properly made in writing and endorsed by at least one Senator and one Representative, is received, each house is to meet and consider it separately. The statute states that "[n]o votes or papers from any other State shall be acted upon until the objections previously made to the votes or papers from any State shall have been finally disposed of." However, in 1873, before enactment of the law now in force, the joint session agreed, without objection and for reasons of convenience, to entertain objections with regard to two or more states before the houses met separately on any of them. The joint session does not act on any objections that are made. Instead, the joint session is suspended while each house meets separately to debate the objection and vote whether, based on the objection, to count the vote or votes in question. Both houses must vote separately to agree to the objection. Otherwise, the objection fails and the vote or votes are counted. (3 U.S.C. SS15, provides that "the two Houses concurrently may reject the vote or votes.... ") These procedures have been invoked twice since enactment of the 1887 law. The first was an instance of what has been called the "faithless elector" problem. In 1969, a Representative (James O'Hara of Michigan) and a Senator (Edmund S. Muskie of Maine) objected in writing to counting the vote of an elector from North Carolina who had been expected to cast his vote for Richard Nixon and Spiro Agnew, but who instead cast his vote for George Wallace and Curtis LeMay. Both chambers met and voted separately to reject the objection, so when the joint session resumed, the challenged electoral vote was counted as cast. In that instance, the elector whose vote was challenged was from a state that did not by law "bind" its electors to vote only for the candidates to whom they were pledged. The instance of a "faithless" elector from a state that does, in fact, bind the elector by law to vote for the candidate to whom listed or pledged has not yet been expressly addressed by Congress or the courts. The second instance was related to reported voting irregularities in Ohio. In 2005, a Representative (Stephanie Tubbs Jones of Ohio) and a Senator (Barbara Boxer of California) objected in writing to the Ohio electoral votes. The chambers withdrew from the joint session to consider the objection, and the House and Senate each rejected the objection. When the House and Senate resumed the joint session, the electoral votes were counted as cast. 3 U.S.C. SS17 lays out procedures for each house to follow in debating and voting on an objection. These procedures limit debate on the objection to not more than two hours, during which each Member may speak only once, and for not more than five minutes. Then "it shall be the duty of the presiding officer of each House to put the main question without further debate." Under this provision, the presiding officer in each house held in 1969 that a motion to table the objection was not in order. In the House, the Speaker announced both in 1969 and 2005 that he would attempt to recognize supporters of the objection and opponents in an alternating fashion for the duration of the two-hour period. In one instance in 1969, the Speaker inquired whether a Member supported or opposed the challenge before he agreed to recognize him to speak. Members can yield to each other during debate as they can during five-minute debate in the Committee of the Whole, and many chose to do so in 2005. The Speaker also entertained unanimous consent requests to insert material in the Congressional Record. In 1969 the Senate agreed, by unanimous consent, to a different way in which the time for debate was to be controlled and allocated, granting one hour each to the majority and minority leaders and authorizing them to yield not more than five minutes to any Senator seeking recognition to speak. The five-minute debate prescribed in the statute was followed in 2005, however, and the Presiding Officer entertained requests to insert statements into the Congressional Record. The general grounds for an objection to the counting of an electoral vote or votes would appear from the federal statute and from historical sources to be that such vote was not "regularly given" by an elector, and/or that the elector was not "lawfully certified" according to state statutory procedures. The statutory provision first provides in the negative that "no electoral vote ... regularly given by electors whose appointment has been lawfully certified ... from which but one return has been received shall be rejected" (3 U.S.C. SS15), and then reiterates for clarity that both houses concurrently may reject a vote when not "so regularly given" by electors "so certified" (3 U.S.C. SS15). It should be noted that the word "lawfully" was expressly inserted by the House in the Senate legislation (S. 9, 49 th Congress) before the word "certified." Such addition arguably provides an indication that Congress thought it might, as grounds for an objection, question and look into the lawfulness of the certification under state law. The objection that votes were not "regularly given" may, in practice, subsume the objection that the elector was not "lawfully certified," for a vote given by one not "lawfully certified" may arguably be other than "regularly given." Nevertheless, the two objections are not necessarily the same. In the case of the so-called "faithless elector" in 1969, described above, the elector was apparently "lawfully certified" by the state, but the objection raised was that the vote was not "regularly given" by such elector. In the above-described 2005 case, the objection was also based on the grounds that the electoral votes "were not, under all of the known circumstances, regularly given." Influenced by its historical experience prior to 1887, Congress was particularly concerned in the statute of 1887 with the case of two lists of electors and votes being presented to Congress from the same state. Three different contingencies appear to be provided for in the statute for two lists being presented. In the first instance, two lists would be proffered, but the assumption presented in the law is that only one list would be from electors who were determined to be appointed pursuant to the state election contest statute (as provided for in 3 U.S.C. SS5), and that in such case, only those electors should be counted. In the second case, when two lists were proffered as being from two different state authorities who arguably made determinations provided for under 3 U.S.C. SS5 (a state statutory election contest determined at least six days prior to December 18, the winner of the state presidential election), the question of which state authority is "the lawful tribunal of such State" to make the decision (and thus the acceptance of those electors' votes) shall be decided only upon the concurrent agreement of both houses "supported by the decision of such State so authorized by its law.... " In the third instance, if there is no determination by a state authority of the question of which slate was lawfully appointed, then the two chambers must agree concurrently to accept the votes of one set of electors; but the two chambers may also concurrently agree not to accept the votes of electors from that state. When the two houses disagree, then the statute states that the votes of the electors whose appointment was certified by the governor of the state shall be counted. It is not precisely clear whether this provision for resolving cases in which the House and Senate vote differently applies only to the last two situations (that is, when either two determinations have allegedly been made under state contest law and procedure, or no such determination has been made); or, instead, also when only one such determination is present. Although this section of the statute is not free from doubt, its structure and its relationship to SS5 (and to give effect to SS5) seem to indicate that when there is only one determination by the state made in a timely fashion under the state's election contest law and procedures (even when there are two or more lists or slates of electors presented before Congress), then Congress shall accept that state determination (3 U.S.C. SS15) as "conclusive" (3 U.S.C. SS5). By this interpretation, the language providing that if the House and Senate split, the question shall be decided in favor of the choice certified by the governor, may not have been intended to be applicable to cases covered by the first clause in the statute in which only one slate or group has been determined, in a timely fashion, to be the electors through the state's procedures for election contests and controversies. Hinds' Precedents of the House of Representatives suggests that when a state has settled the matter "in accordance with a law of that state six days before the time for the meeting of electors," then a controversy over the appointment of electors in that state "shall not be a cause of question in the counting of the electoral vote by Congress." It should be noted that Hinds' cites no precedent or ruling, but merely paraphrases the statute, and it seems likely that this issue of the lawfulness of the determination and certification by a state could be raised and dealt with in the joint session. Precedent subsequent to the statute's original enactment in 1887 has been sparse. There appears only to have been one example, in 1961, when the governor of the state of Hawaii first certified the electors of Vice President Richard M. Nixon as having been appointed, and then, due to a subsequent recount which determined that Senator John F. Kennedy had won the Hawaii vote, certified Senator Kennedy as the winner. Both slates of electors had met on the prescribed day in December, cast their votes for President and Vice President, and transmitted them according to the federal statute. This was the case even though the recount was apparently not completed until a later date, that is, not until December 28. The presiding officer, that is, the President of the Senate, Vice President Nixon, suggested "without the intent of establishing a precedent" that the latter and more recent certification of Senator Kennedy be accepted so as "not to delay the further count of electoral votes." This was agreed to by unanimous consent. The timetable for the certification, transmission, review, and approval of the electoral votes was established by Congress to avoid a repetition of the extraordinary delay incident to the electoral vote controversy surrounding the 1876 presidential election. In the event that no candidate has received a majority of the electoral vote for President, the election is ultimately to be decided by the House of Representatives in which the names of the three candidates receiving the most electoral votes for President are considered by the House, with each state having one vote. In the event that no candidate receives a majority of the electoral votes for Vice President, the names of the two candidates receiving the highest number of electoral votes for that post are submitted to the Senate, which elects the Vice President by majority vote of the Senators. The development and current practices for election of the President and Vice President by Congress specified in the Constitution and law are discussed in detail in CRS Report RL32695, Election of the President and Vice President by Congress: Contingent Election , by [author name scrubbed]. | The Constitution and federal law establish a detailed timetable following the presidential election during which time the members of the electoral college convene in the 50 state capitals and in the District of Columbia, cast their votes for President and Vice President, and submit their votes through state officials to both houses of Congress. The electoral votes are scheduled to be opened before a joint session of Congress on January 6, 2017. Federal law specifies the procedures which are to be followed at this session and provides procedures for challenges to the validity of an electoral vote. This report describes the steps in the process and precedents set in prior presidential elections governing the actions of the House and Senate in certifying the electoral vote and in responding to challenges of the validity of one or more electoral votes from one or more states. This report has been revised, and will be updated on a periodic basis to provide the dates for the relevant joint session of Congress, and to reflect any new, relevant precedents or practices. | 5,695 | 199 |
T his report provides an overview of the payment and other protections for subcontractors on certain federal prime contracts under the Miller Act, the 1988 amendments to the Prompt Payment Act, and the Small Business Act. Congress enacted these statutes to give subcontractors rights and remedies they would not otherwise have because of legal doctrines relating to sovereign immunity, privity of contract, and freedom to contract. Payment and other protections for subcontractors on federal contracts are of perennial interest to Members and committees of Congress, in part, because many subcontractors are small businesses, and it is the "declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small business concerns." A Depression-era enactment named after its sponsor, Representative John Elvis Miller of Arkansas, the Miller Act creates a federal remedy for subcontractors who "furnish[] labor or material in carrying out work provided for" in certain federal construction contracts. Absent the Miller Act, such subcontractors would generally have to rely on breach of contract actions against the prime contractor under state law to recover payments due to them because of the operation of the legal doctrines of privity of contract and sovereign immunity. Although working pursuant to a subcontract under a federal contract, subcontractors generally cannot enforce the payment or other terms of the contract or subcontract against the federal government because there is no privity of contract, or direct contractual relationship, between the subcontractor and the government. The subcontractor's contract is with the prime contractor, as is the government's contract; there is no contract between the subcontractor and the government. Additionally, because the government has sovereign immunity and cannot be sued without its consent, the subcontractor cannot place a mechanic's lien on the improved property, as it potentially could with a private construction project. The Miller Act requires that, before any contract of more than $150,000 is awarded for the construction, alteration, or repair of a "public building or public work of the Federal government," the contractor furnish two bonds to the government. The first of these is a performance or completion bond, which would compensate the government for any defects in the contractor's performance under the contract. The second is a payment bond, which would assure that certain persons who supply labor or materials used in carrying out the work provided for in the contract receive payment. Both bonds become legally binding upon award of the contract, and their "penal amounts," or the maximum amounts of the surety's obligation, must generally be 100% of the original contract price plus 100% of any price increases. The act further authorizes "[e]very person that ... furnished labor or material" in carrying out work provided for in the contract who was not paid in full within 90 days of completing performance to bring a civil action on the payment bond for the amount due. However, "[e]very person," as used here, has been construed to include only first- and second-tier subcontractors. Lower-tier subcontractors are excluded, as are "materialmen" or other parties who supply materials or labor without a contract. These exclusions are partly based on policy considerations and partly based on the definition of "subcontractor." Prime contractors would have greater difficulties in protecting themselves from liability to remote tiers of subcontractors or materialmen than they would in protecting themselves from liability to first- or second-tier subcontractors. Materialmen are excluded because the usage of "subcontractor" in the building trades includes only "one who performs for or takes from the prime contractor a specific part of the labor or material requirements of the original contract." The term "thus exclude[s] ordinary laborers and materialmen." Within one year of completing performance, first- and second-tier subcontractors seeking payment on a Miller Act bond must file suit in the name of the United States in the federal district court for the area where the subcontractor provided labor or services under the contract. They must also provide the prime contractor with notice served in the same manner as a summons, or by any other means that provides written, third-party verification of delivery to the contractor at its place of business or primary residence. Failure to provide proper notice may bar recovery from either the prime contractor or the surety. Assuming proper notice, the amount a subcontractor may recover if it prevails in the litigation is generally based on the contract amount for the goods or services or, if no amount is specified in the contract, the amount that a person in the subcontractor's position at the time and place the services were rendered would have spent completing those services. However, after performance is completed, subcontractors may waive in writing their right to bring a civil action, in which case no recovery may be made on the bond. Contractors that fail to obtain performance bonds as required under the Miller Act are in breach of their contract with the government and could potentially be terminated for default by the government. However, the subcontractor cannot recover from the government for the prime contractor's failure to obtain a bond, or its failure to obtain a sufficient bond. Enacted in response to agencies' widely reported delays in paying their bills, the Prompt Payment Act of 1982, as amended, generally requires federal agencies to pay interest on any payments they fail to make by the date(s) specified in the contract, or within 30 days of receipt of a "proper invoice," if no date is specified in the contract. This act originally applied only to payments made by the government to prime contractors, although it encompassed payments under all types of contracts (e.g., manufacturing, construction, service). However, the Prompt Payment Act was amended in 1988 to extend certain payment protections to subcontractors on federal construction contracts, in part, because agencies' continued practice of paying late created particular difficulties for subcontractors on construction projects. At the time when these amendments were adopted, subcontractors reportedly performed 80% of the work on construction projects, and subcontractors on construction contracts generally do not get paid until the prime contractor has been paid. Without the 1988 amendments, or similar contract terms, prime contractors would generally be free to agree to whatever payment terms they wish with their subcontractors and would not necessarily pay their subcontractors as quickly. The 1988 amendments require that every construction contract awarded by a federal agency contain clauses obligating the prime contractor to (1) pay the subcontractor for "satisfactory performance" under the subcontract within seven days of receiving payment from the agency and (2) pay interest on any amounts that are not paid within the proper time frame. The contract must also obligate the prime contractor to include similar payment and interest penalty terms in its subcontracts, as well as require its subcontractors to impose these terms on their subcontractors. This latter provision, requiring subcontractors to impose the terms on their subcontractors, ensures that the payment and interest penalty requirements "flow down" to all tiers of subcontractors. The prime contractors would have obligations to any first-tier subcontractors, who would have obligations to second-tier subcontractors, who would have obligations to third-tier subcontractors, etc. The 1988 amendments do, however, allow contractors and higher-tier subcontractors to negotiate terms permitting them to retain or withhold payment from subcontractors or lower-tier subcontractors without incurring interest penalties. "Retainage" is generally said to occur when a contractor holds back a specified percentage (often 10%) of each progress payment otherwise due under a construction contract as a routine matter, or because of the subcontractor's failure to perform. Retainage can be seen as a type of withholding. However, the term "withholding" can also be used more broadly to describe the nonpayment of contract amounts because of debts of the contractor outside of the contract. Contractors withholding funds under a contract subject to the Prompt Payment Act must generally provide both the procuring agency and the subcontractor with written notification of withholding, and the amount withheld cannot exceed the amount specified in this notice. Contracting parties often agree to retainage and withholding in order to encourage timely completion of the contract and ensure full understanding between the parties regarding the terms of completion. Because the payment and interest clauses of the contract apply only to the parties, the federal government's obligations run only to the prime contractor. Prime contractors have the duty to pay subcontractors, and subcontractors have the duty to pay lower-tier subcontractors. The federal government cannot be interpleaded as a party to any disputes between contractors and subcontractors over late payments or interest, and contractors' obligations to pay subcontractors also cannot be passed on to the federal government in any way, including by contract modifications or cost-reimbursement claims. In 2011-2012, the Obama Administration issued guidance that supplements the requirements of the Prompt Payment Act as to the payment of small business contractors and subcontractors. Initially, this guidance called for agencies to pay small business contractors within 15 days of receipt of a proper invoice. However, subsequent guidance sought to address payment of small business subcontractors by calling for agencies to "accelerate payments to all prime contractors, in order to allow them to provide prompt payments to small business subcontractors." Subsequently, in November 2013, the Administration amended the Federal Acquisition Regulation (FAR) to implement the accelerated payment policy as to small business subcontractors . As amended, the FAR requires that agencies' prime contracts include terms that obligate the contractor, [u]pon receipt of accelerated payments from the Government, [to] make accelerated payments to its small business subcontractors under this contract, to the maximum extent practicable and prior to when such payment is otherwise required under the applicable contract or subcontract, after receipt of a proper invoice and all other required documentation from the small business subcontractor. The FAR amendment also requires that agencies' contracts include terms which obligate prime contractors to incorporate similar language in their subcontracts with small businesses (including those for the acquisition of commercial items), thereby binding themselves to make accelerated payments to their subcontractors. However, agencies are not required to pay interest on any payments that are not made within "accelerated" time frames, unlike with "late" payments under the Prompt Payment Act. In addition, because they lack privity of contract with the government, small business subcontractors generally cannot hold agencies accountable if the prime contractor fails to incorporate the requisite clauses in its subcontracts, or fails to make accelerated payments pursuant to such clauses. The FAR has not been similarly amended to address "accelerated" payments to small business contractors , although the general policy of accelerating payments to such entities remains in effect. Section 8(d) of the Small Business Act provides several different protections to subcontractors that qualify as "small businesses" pursuant to the act, by generally requiring prime contractors to (1) agree to subcontract certain percentages of the work to be performed under federal contracts to various types of small businesses; (2) make "good faith efforts" to work with the subcontractors whom they "used" in preparing their bids or proposals; and (3) notify the contracting officer of the federal agency that awarded the contract in writing if payment to a subcontractor is late or reduced. Amendments made to Section 8(d) of the Small Business Act in 1978 established the "Small Business Subcontracting Program," a program designed to benefit certain prospective subcontractors on federal prime contracts. The requirements of this program vary depending upon the anticipated value of the contract. Contracts valued at over $150,000 and performed within the United States must generally include two clauses pertaining to subcontracting with small businesses. The first of these clauses articulates federal policies regarding subcontracting with small businesses and timely payment of subcontractors: It is the policy of the United States that small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified [Historically Underutilized Business Zone] HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women shall have the maximum practicable opportunity to participate in the performance of contracts let by any Federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women.. The second of these clauses embodies the contractor's agreement to carry out the aforementioned policy "to the fullest extent consistent with the efficient performance of this contract," as well as cooperate in any studies necessary to determine the extent of its compliance. Contracts in excess of $700,000 ($1.5 million for construction contracts) that offer subcontracting possibilities generally must also incorporate a subcontracting plan that includes the following: "[s]eparate percentage goals" for subcontracting with small businesses, veteran-owned small businesses, service-disabled veteran-owned small businesses, HUBZone small businesses, small disadvantaged businesses, and women-owned small businesses; a statement of the total dollars planned to be subcontracted and the total dollars planned to be subcontracted to small businesses; a description of the principal types of supplies and services to be subcontracted; and assurances that the contractor will (1) include terms relating to the government's policy of promoting contracting with small businesses in all subcontracts that offer subcontracting opportunities and (2) require all subcontractors receiving subcontracts valued in excess of $700,000 ($1.5 million for construction) that are not themselves small businesses to adopt their own subcontracting plans. Contractors on these "larger" contracts are also required by Small Business Administration (SBA) regulations to provide pre-award written notification to unsuccessful small business offerors on all subcontracts valued at over $150,000 for which a small business concern received a preference. This notification must include the name and location of the apparently successful offeror and its small business status, if any. "Large" prime contractors are encouraged, but not required, to provide similar notice to offerors for subcontracts valued at less than $150,000. The contracting officer has discretion in determining whether particular contracts require a subcontracting plan, and the percentage goals for particular contracts need not correspond to the procuring activities' goals for the percentage of contract and/or subcontract dollars awarded to various categories of small businesses. However, any subcontracting plan that is required constitutes a material part of the contract, potentially allowing the contractor to be terminated for default if it fails to substantially perform in accordance with the requirements of the plan. Additionally, the contract must include a clause requiring the contractor to pay liquidated damages of an "amount equal to the actual dollar amount by which the contractor failed to achieve each subcontracting goal" if the contractor fails to make a good faith effort to comply with the plan. Agencies are also required to consider contractors' performance vis-a-vis their subcontracting plans when evaluating their past performance, determining whether prospective contractors are responsible, and making source selection decisions in certain negotiated procurements. If such percentage goals were not contained in the subcontracting plan, prime contractors would generally be free to subcontract with whomever they wish, and various categories of small businesses would not necessarily have this opportunity to obtain federal contract dollars. However, although subcontracting plans are intended to benefit small businesses, these businesses are not parties to the contract between the government and the contractor, and they generally cannot enforce its terms against the prime contractor. Only the government may generally do so. The 111 th Congress expanded the payment and other protections for small business subcontractors under Section 8(d) of the Small Business Act when it enacted the Small Business Jobs Act (SBJA) of 2010. Among other things, the SBJA amended Section 8(d) to require that prime contracts incorporating subcontracting plans also include terms obligating the contractor to: make a good faith effort to acquire articles, equipment, supplies, services, or materials, or obtain the performance of construction work from the small business concerns used in preparing and submitting ... the bid or proposal, in the same amount and quality used in preparing and submitting the bid or proposal, and provide the contracting officer with a written explanation whenever it fails to do so. In addition, the SBJA amended Section 8(d) to require that prime contractors with subcontracting plans notify the contracting officer in writing if they pay a subcontractor a reduced price, or if payment is more than 90 days past due on a contract for which the federal agency has paid the prime contractor. Contracting officers are also required to consider any "unjustified failure" by a prime contractor to make full or timely payments to a subcontractor in evaluating the contractor's performance, and note any "history" of unjustified failures to make full or timely payment in the Federal Awardee Performance and Integrity Information System (FAPIIS). Regulations promulgated by SBA to implement these provisions of the SBJA further bar prime contractors from restricting subcontractors' ability to "discuss[] any material pertaining to payment or utilization with the contracting officer," apparently with the intent of promoting reporting by subcontractors in the event that prime contractors fail to provide the requisite notices. However, the preface to these regulations also makes clear that SBA does not view the SBJA as requiring contracting officers to involve themselves in disputes regarding reduced or late payments, or regarding whether particular subcontractors were "used" in preparing bids or proposals. Instead, SBA envisions contracting officers factoring contractors' failure to work with small businesses "used" in their bids or offers, or unjustifiable late or reduced payments, into contractors' performance evaluations. | Payment and other protections for subcontractors on federal contracts are of perennial interest to Members and committees of Congress, in part, because many subcontractors are small businesses, and it is the "declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small business concerns." Subcontractors on federal contracts do not have "privity of contract"--or a direct contractual relationship--with the federal government. As such, subcontractors would generally lack the payment and other protections that federal prime contractors enjoy. However, Congress has enacted several measures that give small business and other subcontractors certain protections. Key among these are the Miller Act, the 1988 amendments to the Prompt Payment Act, and Section 8(d) of the Small Business Act. The Miller Act of 1935, as amended, authorizes subcontractors who furnished labor or materials used in carrying out federal construction projects valued in excess of $150,000 to bring a civil action against prime contractors' payment bonds to obtain payments due. Congress enacted the Miller Act to compensate for the difficulties that subcontractors would otherwise have in obtaining payment from federal construction contractors, given that they cannot place a mechanic's lien on the work because the government has sovereign immunity. The doctrine of sovereign immunity protects the government from being sued without its consent, and the Contract Disputes Act waives the government's sovereign immunity only as to suits involving contracts to which the government is a party, not subcontracts under these contracts. Relatedly, because there is no privity of contract between the government and the subcontractor, the subcontractor generally cannot sue to enforce the payment or other terms of the subcontract against the government. The 1988 amendments to the Prompt Payment Act provide an additional form of payment protection for subcontractors on federal construction contracts by requiring federal agencies to include in their contracts a clause obligating the prime contractor to pay the subcontractor for "satisfactory" performance within seven days of receiving payment from the government. Absent such a clause in the prime contract, the prime contractor would generally be free to agree to whatever payment terms it wishes with the subcontractor and would not necessarily pay the subcontractor as quickly. However, the federal government cannot be interpleaded as a party to any disputes between contractors and subcontractors over late payments or interest, and contractors' obligations to pay subcontractors cannot be passed on to the federal government in any way, including by contract modifications or cost-reimbursement claims. Section 8(d) of the Small Business Act provides yet another payment protection for subcontractors by requiring that prime contractors notify officials of the federal agency that awarded the contract (known as "contracting officers") in writing whenever they pay a "reduced price" to a subcontractor for completed work, or whenever payment is more than 90 days past due. Section 8(d) also generally requires that prime contractors agree to plans for subcontracting certain percentages of the work to be performed under federal contracts to various types of small businesses. In addition, under Section 8(d), prime contractors must make "good faith efforts" to work with the subcontractors whom they "used" in preparing their bids or proposals, and provide agency contracting officers with a written explanation whenever they fail to do so. Without these subcontracting plans, or similar contract terms, prime contractors would generally be free to subcontract with whomever they wish for the completion of work under the contract and would not be required to deal with various categories of small businesses. | 3,960 | 774 |
President Obama's FY2015 budget proposes to add to the Temporary Assistance for Needy Families (TANF) block grant a $602 million per year "Pathways to Jobs" fund. The fund would exclusively finance subsidized employment programs. The proposal outlined in budget documents would make grants to states to subsidize jobs for low-income parents, including noncustodial parents; guardians of children; and youth. Eligible persons would either have to be eligible for TANF cash assistance or have incomes below 200% of the poverty line. Under the proposal, the program would subsidize up to 100% of employment costs (wages, workplace benefits, training, and administrative costs) for the first 90 days of employment. Partial subsidies would be payable thereafter. To offset the cost of the "Pathways to Jobs" fund, the budget proposes to end the current law TANF "contingency fund. " The Administration's "Pathways to Jobs" proposal comes as interest in subsidized employment for the economically disadvantaged has been rekindled by a brief experience of TANF-funded jobs during the recent recession. To help assess the proposal, this report provides background on government-funded subsidized employment programs; discusses the history of subsidized employment within the TANF block grant; and examines some of the policy considerations raised by the proposal. Subsidized employment programs use government funds to pay all or part of the wages of those working in jobs. The job may be in either the public or the private sector. The employment subsidies are payments to employers that reduce the cost of hiring and employing a program participant. These jobs pay wages, unlike unpaid activities that are performed in exchange for receiving a cash assistance benefit (often referred to as "workfare"). Subsidized employment programs are also distinct from "on-the-job training," because there is no explicit requirement that employees be given training opportunities. Historically, subsidized employment programs usually provided public service jobs. They began as measures to provide work and income during the mass unemployment of the Great Depression, as the federal government employed persons in the Works Progress Administration (WPA) and Civilian Conversation Corps (CCC). Beginning in the 1970s, public service jobs were also used to address unemployment during recessions. Under the Comprehensive Employment and Training Act (CETA), public service jobs were used both to address cyclical unemployment as well as provide employment to the economically disadvantaged. These were jobs in state or local governments. CETA's public service employment program ended in 1981. From that time until the 2007-2009 recession, subsidized employment was provided primarily in summer youth employment, and in transitional jobs demonstrations targeting very "hard-to-serve" adults. Transitional jobs are usually in either state or local governments or in the nonprofit sector. There has been limited funding for transitional jobs. In FY2011, an appropriation of $40 million was provided for the Department of Labor's (DOL's) enhanced transitional jobs demonstration program. Though subsidized employment, by paying part or all of the wages to employers, has been a small part of recent policies for the economically disadvantaged, wage subsidies in general have been an important part of public policy for low-income families with children since the 1990s. The largest wage subsidies go directly to low-income workers (rather than employers) through the Earned Income Tax Credit (EITC) and child tax credit. These two refundable tax credits are conditioned on having earnings, and are policies designed to "make work pay" more than public assistance and induce parents who would earn low wages into the labor force. Less attention has been focused on reducing the costs to employers of hiring people in low-income families. Much of the experience of subsidizing private sector employment is from tax credits to employers for hiring recipients of public assistance or disadvantaged persons (for example, the Work Opportunity Tax Credit (WOTC) and the Welfare-to-Work Tax Credit). Though there is limited recent experience with subsidized employment programs from which to determine whether they can achieve their policy goals, this might soon change. The Department of Health and Human Services (HHS) is currently fielding an experiment evaluating subsidized jobs programs, though findings from this study are yet to be published. The Department of Labor is currently fielding and evaluating "enhanced" transitional jobs programs. Additionally, the recent "Farm Bill" permitted states to operate pilot work programs in the Supplemental Nutrition Assistance Program (SNAP), which could include subsidized employment. The TANF block grant is best known for helping states finance cash assistance ("welfare") for needy families with children. In addition to cash assistance, TANF finances a wide range of benefits and services aimed at ameliorating the effects of, and addressing the root causes of, child poverty. Since the enactment of the 1996 welfare reform law, which established TANF, states have had the authority to use TANF funds for subsidizing the employment for certain populations. States can subsidize employment for recipients of cash assistance, or operate programs for broader populations as long as it is consistent with TANF goals. The populations states can use TANF to assist include parents, including noncustodial parents, and youths. States have broad latitude in designing their TANF programs, including subsidized employment. However, states must have procedures in place to address potential "displacement" of regular workers by TANF assistance recipients involved in work activities, including subsidized employment. States are prohibited from employing a TANF assistance recipient in a position when another individual is on layoff from the same or a substantially equivalent job, and they cannot place an individual in a job from which another person has been fired for the purpose of replacement with a TANF assistance recipient in an activity. States must create a procedure to hear complaints of violations of the "nondisplacement" rules. Though subsidized employment has been a part of TANF from its inception, up until FY2010 it was little used. Figure 1 shows federal and state TANF expenditures on wage subsidies for FY2000 through FY2012. As shown, expenditures tended to be low before FY2010, but then spiked to over $1 billion in FY2010. The spike occurred at the level of peak unemployment caused by the 2007-2009 recession. It was also in response to extra TANF funding provided, in part, to finance subsidized employment programs. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) included a provision to create a special temporary "Emergency Contingency Fund" (ECF) within TANF. The ECF was created, in part, because of projections that the "regular" TANF contingency fund created in the 1996 welfare reform law would be exhausted. Unlike other TANF grants to states, the ECF financed three categories of spending only, rather than any allowable TANF activity. The three categories were (1) basic assistance, (2) non-recurrent short-term aid, and (3) subsidized employment. Of the $5 billion in extra funds provided to states and tribes under the ECF, $1.3 billion financed extra spending for subsidized employment. Most of the subsidized employment expenditures financed by the ECF were made in one year, FY2010. The ECF financed an estimated 280,000 subsidized job slots, making it the largest subsidized employment program of its kind since the 1970s. About half of these slots were for needy parents; the other half were used to expand youth employment programs. The ECF was created as an emergency measure in response to steep employment declines during the 2007-2009 recession, and did not include provisions to evaluate the efficacy of its spending. However, a retrospective study of ECF-funded subsidized employment found the following: States were able to implement subsidized employment programs rapidly in response to ECF funding. Some states expanded existing programs; others created entirely new programs. Unlike previous subsidized employment programs, the ECF often financed jobs in the private sector. While some programs provided public sector employment as well, the ECF did not rely solely on public service employment to provide jobs. Many of those served by ECF subsidized jobs were not on the TANF cash assistance rolls. Some individuals might have been eligible for TANF assistance and were in subsidized jobs in lieu of receiving cash assistance. However, the ECF also served a broader population than those eligible for TANF cash. To make subsidized employment programs attractive for private sector employers, states tended to select "work-ready" individuals for subsidized jobs. Under TANF, st ates must meet numerical work participation standards, which specify that a percentage of each state's cash assistance caseload must be engaged in certain activities. There are 12 enumerated activities that states may count toward meeting their standards, including subsidized public sector and subsidized private sector employment. Figure 2 shows the percentage of TANF cash assistance adults who were engaged in public or private sector subsidized employment for FY2000 through FY2011. As shown, this percentage has been relatively low throughout the period. There was an increase in the share engaged in subsidized employment beginning in FY2008, and this percentage spiked in FY2010. However, even in FY2010, the share of TANF adults engaged in subsidized employment reached only 1.6%--which translates into a monthly average of about 19,000 recipients. This reinforces the finding from the study on ECF-funded subsidized employment that many of these jobs went to people who were not on the cash assistance rolls. ECF-subsidized employment benefitted a broader population of disadvantaged adults and youth. The Administration's proposal to create a TANF fund to exclusively finance subsidized employment and end the current law contingency fund raises two sets of policy considerations. The first is whether subsidized employment programs can achieve certain policy goals. Subsidized employment programs can be intended to serve a number of policy purposes, including (1) creating jobs, (2) providing income support to those in subsidized jobs, and (3) increasing the long-term employability of participants. There is some research to draw upon in assessing whether the TANF subsidized employment initiative might meet these goals. The second set of policy considerations asks whether certain policy goals are forgone by offsetting the cost of the subsidized employment program through ending the current law contingency fund. Policy makers, should they choose to end the current TANF contingency fund, might wish to consider alternative uses of the budget savings from such an action. A policy goal of subsidized employment, particularly during economic downturns, is creating jobs that would otherwise not exist. The available evidence from previous public service employment programs indicates that some new jobs are created. However, at least some of these public service jobs would have existed as regular public sector jobs in the absence of the program. At the conclusion of the CETA public service employment program in 1981, the Congressional Budget Office (CBO) noted that there were "no firm estimates" of the degree to which public service employment funds substituted for state and local funds in employing individuals. The research on employer tax credits for hiring disadvantaged workers notes that the rate of participation among employers in these tax credit programs is fairly low. Programs with low interest among employers are unlikely to have job creation potential. However, it has been noted that programs that are less targeted to the most disadvantaged might receive more interest from employers. A goal of the 1996 welfare reform law was to have assistance recipients work. It attempted to end "long-term dependency on public benefits without being required to return anything to society." Subsidized jobs provide the opportunity to earn income through work, furthering that goal. There are three evaluations of subsidized jobs programs to help inform whether this policy goal might be met: The National Supported Work Demonstration of the 1970s, and two more recent evaluations of "transitional jobs." The three evaluations found that the subsidized employment program raised the earned income of program participants during the period that they were in subsidized jobs. That is, they are effective in employing those who would otherwise not be employed. Thus, the past research indicates that if the goal of a subsidized employment program is to provide income support through work, subsidized employment can be an effective strategy. The existing evaluation research provides mixed evidence on whether subsidized employment programs increase the long-term employability of program participants. That is, does participation in subsidized employment provide benefits once the subsidized job ends? One of the first evaluated subsidized jobs programs--the National Supported Work Demonstration Project of the 1970s--found beneficial long-term impacts of participation for single mothers receiving assistance. However, more recent evaluations of "transitional jobs" programs found little evidence of long-term impacts. The President's FY2015 budget proposal would offset the cost of the new "Pathways to Jobs" fund by ending the current law contingency fund. The TANF contingency fund was established in response to the 1996 welfare law's changes in financing programs providing assistance to needy families with children. The 1996 law converted pre-TANF matching grant programs, which automatically responded to changes in expenditures and caseloads, into a set block grant. The basic TANF block grant is a fixed dollar amount and does not change with the circumstances in a state (e.g., its economic conditions, caseloads, or number of children in poverty). The fixed basic grant under TANF led to concerns that funding might be inadequate during economic downturns. Thus, the 1996 law created a separate $2 billion fund to provide extra TANF funding during those periods. States would need to meet criteria of economic need in order to access the fund. Figure 3 shows TANF contingency fund grants and their relationship to the unemployment rate for FY1998 through FY2014. As shown in the figure, the contingency fund often has not behaved as a countercyclical source of extra TANF funds. The fund was little used before FY2008. Grants did not increase together with the unemployment rate during the 2001 recession. States generally did not meet the criteria of economic need required to access this fund during that recession. Beginning in 2008, grants did increase with the more severe recession of 2007-2009. With the increase in access to the contingency fund, it was projected that the $2 billion fund would be exhausted. In fact, the contingency fund was exhausted in early FY2010. Figure 3 also shows grants from the ECF. It was the ECF--and not the regular contingency fund--that provided the bulk of extra TANF funding in response to the recent severe recession. The ECF expired at the end of FY2010. Congress has provided new, annual appropriations for the regular contingency fund in each year, FY2011 to FY2014. For future years, the Congressional Budget Office (CBO) baseline assumes that TANF contingency fund grants will remain at their current level, despite continuing declines in unemployment. Based on these projections, the contingency fund would also not behave as intended for the future, as spending would continue even in an improved economy. Table 1 shows the estimated FY2014 contingency fund awards by state. In FY2014, 20 states are drawing funds from the TANF contingency fund. Though the existing contingency fund has not functioned as originally intended, the use of these funds for subsidized employment would leave TANF without a potential source of additional spending during a future recession. During the past recession, state government budgets were stressed, with many states cutting back on spending to meet balanced budget requirements. However, for the period when the ECF provided states with extra funds, states generally maintained their TANF benefit amounts. When the ECF expired at the end of FY2010, a number of states reduced their benefits and tightened eligibility for cash assistance. Congress could opt to redesign the TANF contingency fund so that it would be more responsive to changes in economic conditions than the current contingency fund. That is, it could create a fund that would spend less than is currently projected during good economic times, and would provide a higher level of funding in case the economy falls into recession. Though a fund to provide extra grants during recessions might help TANF respond to future economic downturns, there are a number of difficulties in developing such a fund. Each recession is different--and there is no guarantee that a program that would have been responsive in past recessions will be responsive in future recessions. Subsidized employment programs historically were provided in the workforce programs, with most jobs in the public sector. Such public service jobs used to be associated with both counter-cyclical job creation as well as providing work for the economically disadvantaged. Except for youth employment programs, large-scale public service employment ended in 1981. The brief experience of TANF ECF-funded subsidized jobs has rekindled interest in providing government funds to subsidize the cost of employing the economically disadvantaged. Unlike many earlier subsidized jobs programs, the ECF did not rely on public service jobs alone, financing some jobs in the private sector. Subsidized jobs are one means of having economically disadvantaged parents work--a goal of the 1996 welfare reform law. However, the evidence is mixed on whether subsidized jobs programs can have positive long-term impacts on the employment and earnings of program participants. Research comparing the efficacy of subsidized jobs to other potential policies--such as education, training, or on-the-job training--has yet to be done. U.S. Department of Health and Human Services, Administration for Children and Families, Office of Planning, Research, and Evaluation (OPRE). Subsidizing Employment Opportunities for Low-Income Families. A Review of State Employment Programs Created Through the TANF Emergency Fund , OPRE Report 2011-38, December 2011, prepared by MDRC, http://www.acf.hhs.gov/sites/default/files/opre/tanf_emer_fund.pdf . Dan Bloom. Transitional Jobs: Background, Program Models, and Evaluation Evidence. MDRC. February 2010. http://www.mdrc.org/sites/default/files/transitional_jobs_background_fr.pdf . | President Obama's FY2015 budget proposal would establish within the Temporary Assistance for Needy Families (TANF) block grant a "Pathways to Jobs" fund. The fund would help states pay for subsidized employment programs targeted toward needy parents, guardians, and youth. Subsidized employment programs use government funds to pay all or part of the wages, benefits, and other costs of employing a participant. Under the President's proposal, the subsidized job could be in either the public or the private sector. Funding for "Pathways to Jobs" would be $602 million per year beginning in FY2015. The Administration's "Pathways to Jobs" proposal comes as interest in subsidized employment as a policy for the economically disadvantaged was rekindled by a brief experience of TANF-funded jobs during the recent recession. The American Recovery and Reinvestment Act of 2009 (P.L. 111-5) created a temporary "Emergency Contingency Fund" (ECF) that provided $5 billion for FY2009 and FY2010. The ECF was created, in part, because of projections that the TANF contingency fund created in the 1996 welfare reform law would be exhausted. The ECF was different from other TANF grants to states in that it financed only certain TANF expenditures: basic assistance, short-term aid, and subsidized employment. Of the $5 billion in ECF funding, $1.3 billion financed increased subsidized employment expenditures. An estimated 280,000 persons benefitted from ECF-funded subsidized jobs. About half of these persons were adult parents; the other half were youth. ECF subsidized employment differed from earlier subsidized jobs initiatives by placing some adult parents in private sector jobs, in addition to public service employment. ECF-funded subsidized employment served a population broader than those on the TANF cash assistance rolls. Subsidized employment programs can have a number of policy goals: job creation, particularly during a recession; providing income support through work; and improving the long-term employability of participants. There is little recent experience to draw on in assessing the Administration's proposal. However, past research has indicated that subsidized employment programs can meet the goal of providing income support through work, as evaluations have indicated that such programs employ those who would otherwise not have a job. The research is less conclusive on the other policy goals. The costs of the Administration's proposed TANF-subsidized employment initiative would be offset by ending the current law TANF contingency fund. The TANF contingency fund was created in the 1996 welfare reform law and provided $2 billion for extra grants to states during recessions. However, the fund often has not behaved as a countercyclical source of extra TANF funds. In assessing the Administration's proposal, policy makers might also consider whether savings from ending the current contingency fund should go to subsidized employment programs or other uses--for example, creating a modified contingency fund to provide a better countercyclical source of extra TANF funds. | 4,029 | 688 |
Afghanistan has been a central U.S. foreign policy concern since American forces, in the wake of the September 11, 2001, attacks, helped lead a military campaign against Al Qaeda and the Taliban government that harbored it. Since then, the United States, along with NATO and other international partners, has deployed tens of thousands of troops and provided tens of billions of dollars in development assistance. The overarching goal of this effort is to support the elected Afghan government and bolster its security forces against a resilient insurgency by the Taliban and others, including (since 2014) an active affiliate of the Islamic State (IS, also known as ISIS, ISIL, or the Arabic acronym Da'esh ). After an Afghan opposition coalition known as the Northern Alliance drove the Taliban government out of Kabul with the help of American airpower and a small number of U.S. special forces, the U.N. convened Afghan leaders in Bonn, Germany to lay out a roadmap for the creation of a democratic government in Afghanistan. Taliban representatives were not invited to participate in the meetings in Bonn. That conference established an interim administration headed by Hamid Karzai, and called for a June 2002 emergency loya jirga (a traditional Afghan consultative assembly). Another loya jirga was convened in late 2003 to endorse a new constitution, which was ratified in January 2004. Afghanistan held its first presidential election in October 2004, and Karzai was elected with 55% of the vote. The first parliamentary elections followed in September 2005. Sporadic Taliban attacks continued during this time, with U.S. intelligence collecting evidence of an "organized Taliban revival" by early 2004. Under intense U.S. pressure most Al Qaeda and Taliban fighters had fled into Pakistan, where they helped to inspire an Islamist insurgency that would later drive the Pakistani state into full-scale crisis. At the same time as they battled Al Qaeda and other Islamist militants at home, Pakistan's security institutions aided the Afghan Taliban, including by providing safe haven to much of its leadership, a legacy of Pakistan's formal recognition of the group from 1996 to 2001. By 2007, despite nascent democratic development and improvements in most Afghans' quality of life, the American effort in Afghanistan, once described as "the good war," appeared "off course," with security deteriorating, narcotics production increasing, and levels of Taliban violence steadily rising. In response, President Barack Obama increased the number of American forces (from approximately 36,000 in February 2009 to a high of about 100,000 in 2011) as part of an effort to combat the Taliban insurgency and increase the capacity of the Afghan government and security forces. Most security metrics improved during the "surge," but uncertainty rose as Afghan forces took the lead for security nationwide (in mid-2013) amidst a steady drawdown of U.S. and international forces as part of a planned withdrawal. That uncertainty was compounded by the 2014 presidential election, which was marred by widespread allegations of fraud and was only resolved with the creation of a fragile unity government formed after months of U.S. mediation. Still, the NATO-led International Security Assistance Force (ISAF, 2003-2014) mission was replaced by Resolute Support Mission (RSM, 2015-present) at the end of 2014 as scheduled. The killing of Taliban leader Mullah Mansour (successor to original Taliban leader Mullah Omar, who died of natural causes in 2013) in a May 2016 U.S. airstrike in Pakistan demonstrated continued Taliban vulnerabilities to U.S. military and intelligence capabilities. At the same time, the Taliban expanded their control and influence in rural areas while pressuring urban centers (as evidenced by their brief seizure of the provincial capital of Kunduz in 2015). President Donald Trump expressed few policy positions on Afghanistan during the 2016 presidential campaign, though he had previously conveyed skepticism about the American effort there. After months of debate within the Administration, President Trump announced a new strategy for Afghanistan and South Asia in a nationwide address on August 21, 2017. The strategy features a tougher line against Pakistan and a larger role for India; no set timetables; expanded targeting authorities for U.S. forces; and around 3,000 additional troops, bringing the total number of U.S. forces in the country to approximately 14,000-15,000 (about 8,500 of which are part of RSM). President Trump, who criticized his predecessor's use of "arbitrary timetables," did not specify what conditions on the ground might necessitate or allow for alterations to the strategy going forward. Some have characterized the Trump strategy as "short on details" and serving "only to perpetuate a dangerous status quo." Others welcomed the strategy, contrasting it favorably with proposed alternatives such as a full withdrawal of U.S. forces, which President Trump described as his "original instinct," or a strategy that relies heavily on contractors. More than a year after President Trump's speech, it remains unclear to what extent the new strategy has changed dynamics on the ground in Afghanistan. While U.S. officials continue to publicly express optimism, the extent of territory controlled or contested by the Taliban has steadily grown in recent years by most measures. In its July 30, 2018, report, the Special Inspector General for Afghanistan Reconstruction (SIGAR) reported that the share of districts under government control or influence remains at 56%, tied for the lowest level recorded in the two years SIGAR has tracked that metric, with 14% under insurgent control or influence, and the remaining 30% contested. While most Taliban gains have been in sparsely populated rural or mountainous areas, the group has also been able to contest urban centers; militants have briefly overrun two provincial capitals in 2018 thus far (Farah in May, Ghazni in August). Additionally, the Taliban have demonstrated an ability to conduct operations in different parts of the country simultaneously and inflict significant casualties on Afghan forces, though the U.S. military classified those figures and various other metrics related to ANDSF performance in 2017. Reflecting the Trump Administration's reported frustration with the 17-year-old U.S. war effort, 2018 has seen a flurry of diplomatic activity that may portend progress toward peace talks. Most importantly, the Trump Administration is reportedly considering direct talks with the Taliban in what would represent a significant change in American policy. Other reports, which U.S. officials have not denied, indicate that at least some preliminary discussions between U.S. and Taliban officials have already taken place. However, the Afghan government, or some of its members, may be opposed to any negotiation with the Taliban in which they are not the lead interlocutor, and the Taliban's own stance on negotiations is unclear. Ongoing disputes between Afghan leaders may worsen in advance of long-delayed and already controversial parliamentary elections, set for October 2018, and the presidential election slated for April 2019. In the decade before the September 11, 2001, terror attacks, Afghanistan was not a major focus of congressional attention. Since then, Congress has taken an active role in shaping U.S. policy toward Afghanistan. Major initiatives and areas of congressional interest are described below. U.S. military forces deployed into Afghanistan under the 2001 Authorization for Use of Military Force (AUMF, P.L. 107-40 ), which allows the president "to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided" the September 11, 2001, attacks as well as any entities that harbored them. The Taliban regime collapsed after about two months of major combat operations. U.S. operations in Afghanistan against the Taliban, Al Qaeda, and the local Islamic State affiliate continue under that resolution, though Members have proposed a range of measures to replace the 2001 AUMF with a new authorization that could alter U.S. military engagement in Afghanistan, as outlined in the chart below. After the fall of the Taliban, U.S. efforts shifted quickly to providing humanitarian support to the Afghan people, stabilizing the country, and building up a democratic Afghan government. One of the most important congressional measures in this regard was the 2002 Afghanistan Freedom Support Act (AFSA, P.L. 107-327 ), which authorized a total of $3.8 billion in humanitarian, developmental, counter-narcotics, and security assistance over four years. The act contains a number of provisions directing U.S. efforts in Afghanistan and establishing congressional oversight thereof; many of these provisions anticipate additional congressional directives enacted in subsequent years. Such provisions include the authorization of funds for specific purposes (including the creation of positions within executive branch agencies; see below); regular notification and reporting requirements; and subjecting aid to Afghanistan to the same conditions as assistance provided under other pieces of legislation, like the Foreign Assistance Act of 1961 and the Arms Export and Control Act of 1976. The U.S.-led invasion of Iraq in March 2003 largely overshadowed the war in Afghanistan, and much of the legislative attention to Afghanistan in the subsequent several years came in bills and legislative provisions that treated the two wars together. As conditions in Afghanistan deteriorated, however, congressional attention returned to Afghanistan and some Members sought to scrutinize the U.S.-led international project there more closely. Congress mandated a number of reports, which remain among the most important sources for information on U.S. efforts in Afghanistan. One of the most significant congressional oversight actions was the 2008 establishment of a Special Inspector General for Afghanistan Reconstruction (SIGAR), modeled in part on a similar office overseeing Iraq. Congress directed that SIGAR publish quarterly reports detailing the obligation and expenditure of funds appropriated for Afghan reconstruction. Congress also required periodic audits and investigations of specific projects and funds. The FY2008 National Defense Authorization Act (NDAA) added more reporting requirements. Section 1230 of the Act directed the President, through the Department of Defense, to submit a biannual report on "Progress Toward Security and Stability in Afghanistan." The first report was submitted under that title in June 2009. In the FY2015 NDAA ( P.L. 113-291 ), Congress required a report on "Enhancing Security and Stability in Afghanistan," among other reporting requirements, and biannual reports have been submitted under that title since June 2015 (most recently on July 3, 2018). In addition to these ongoing reports, Congress has regularly mandated the submission of one-time reports on specific issues in appropriations and defense authorization bills. Individual report directives proposed to and included in legislation in the 115 th Congress can be found below. Congress has appropriated $126.3 billion for relief and reconstruction in Afghanistan s ince FY2002 , according to SIGAR's July 30, 2017 quarterly report. During the Karzai administration, the United States and oth e r international donors "increasingly sought to condition assist ance funds for Afghanistan... as a result of inadequate reforms." A 2014 report by m ajority s taff of the Senate Foreign Relations Committee also recommended that "a higher proportion of U.S. assistance should be conditioned based on specific reforms by the Afghan government." Accordingly, Congress has imposed a number of directives and conditions on the use of both security and development assistance to Afghanistan (e.g. , Economic Support Fund, ESF, and International Narcotics Control and Law Enforcement, INCLE) for a number of years. Most of those statutory conditions have been enacted through appropriations measures. As outlined below, FY 2019 appropriations bills would prohibit the use of funds for activities that involve individuals suspected of involvement in corruption, narcotics trafficking, or human rights violations . A dditionally, they would require the Secretary of State to certify that the Afghan government is governing democratically , protect ing women's rights, and publicly reporting its national budget (among other conditions) before obligating funds . T here are a number of additional conditions on U.S. assistance not specific to Afghanistan, such as the Leahy Laws prohibiting security assistance to foreign security forces that have perpetrated a gross violation of human rights. S ome have suggested that Afghan forces may have committed such violations . Congress has also played an important role in shaping the bureaucratic structures within the executive branch that are responsible for U.S. policy on Afghanistan. In the 2002 AFSA, Congress authorized the creation of a "coordinator" for Afghanistan and U.S. assistance there, to serve at the rank of ambassador. In 2007, the House passed a bill that would have authorized a Senate-confirmed special envoy to promote cooperation between Afghanistan and Pakistan. The George W. Bush Administration described the section authorizing the special envoy as "significantly objectionable," and the Senate did not take up the bill." In 2009, however, the Obama Administration created a similar position under State Department general authorities by appointing Richard Holbrooke as the first Special Representative for Afghanistan and Pakistan (SRAP). Various congressional proposals in recent years would have statutorily authorized, altered the mission of, required reporting on, or otherwise addressed the office, which the Trump Administration closed in September 2017. Other congressional measures have sought to condition, limit, or end the U.S. military effort in Afghanistan. While no measure limiting or terminating the U.S. military presence in Afghanistan has ever passed either chamber, support for such proposals in the House of Representatives generally seems to have grown from 2009 to 2014, the period when most of these measures were introduced. House bills calling for a "responsible end to the war in Afghanistan," for example, attracted 33 cosponsors in 2010 and 72 cosponsors in 2011; NDAA amendments that would have cut off funding for U.S. operations (other than the withdrawal of U.S. forces) attracted 113 and 153 votes in 2012 and 2014, respectively. Since the Trump Administration's announcement of the South Asia strategy in August 2017, congressional interest in Afghanistan seems to have increased, with some Members assessing the new strategy, events on the ground, and broader U.S. foreign and domestic policy interests as they relate to Afghanistan. The table below provides summaries and information on the status of proposed and enacted Afghanistan-related legislation in the 115 th Congress. | For nearly two decades, Congress has shaped the U.S. approach to Afghanistan and the ongoing conflict there. This product provides a summary of legislative proposals considered in the 115th Congress that relate to U.S. policy in Afghanistan. These address a number of issues, including the following. The size, mission, and other aspects of the U.S. troop presence in the country. Types of information that the executive branch provides to Congress, largely as part of regular reporting requirements. The role of women in Afghan society, government, and the military. The purposes for U.S. aid, and conditions under which it can be obligated. The overall U.S. strategy in Afghanistan, including prospects for a negotiated settlement. Regional dynamics, including the role of Russia in Afghanistan. While Pakistan is a key player in the Afghan conflict, the measures described in this report do not include any primarily related to Pakistan, though many such proposals reference the war in Afghanistan. This report also does not include legislative proposals related to special immigrant visas for Afghan nationals who work for or on behalf of the U.S. government in Afghanistan. For more on that program, see CRS Report R43725, Iraqi and Afghan Special Immigrant Visa Programs, by Andorra Bruno. For more information on U.S. policy in Afghanistan, see CRS Report R45122, Afghanistan: Background and U.S. Policy In Brief, by Clayton Thomas. | 3,143 | 312 |
During the Obama Administration, the two federal agencies primarily responsible for administering the private health insurance provisions in the Affordable Care Act (ACA)--the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS), and the Internal Revenue Service (IRS) within the Treasury Department--took a series of actions to delay, extend, or otherwise modify the law's implementation. This report discusses selected administrative actions taken by CMS and the IRS through February 2015 to address ACA implementation. The report is no longer being updated and is available primarily for reference purposes. Table 1 summarizes the more significant administrative actions taken, all of which focused on implementation of the ACA's complex set of interconnected provisions to expand private insurance coverage for the medically uninsured and underinsured. These actions were not the result of a single policy decision. Instead, they represented many separate decisions taken by the Obama Administration to address a variety of factors affecting the implementation of specific provisions of the law. The Administration announced a series of delays and other changes before and during the first (i.e., 2014) open enrollment period and the problematic launch of the federal--and some state-run--exchanges. The second (i.e., 2015) open enrollment period that closed on February 15, 2015, experienced far fewer administrative and technical problems. Other administrative actions largely focused on the ACA's tax provisions. The 2014 tax filing season (deadline April 15, 2015) was the first one in which individuals were required to indicate on their tax return whether they had health insurance coverage that meets the ACA's standards. Those without coverage risked being penalized unless they could claim an exemption. In addition, everyone who enrolled in coverage for 2014 through an exchange and received advance payments of the premium tax credit had to file a federal tax return in which they reconciled those payments with the actual tax credit to which they were entitled. In compiling the table, CRS made decisions about which administrative actions to include, and which ones to leave out. Generally, CRS included the more significant actions that had been the subject of debate among health policy analysts and, in many instances, the target of criticism by opponents of the ACA. It is important to keep in mind that the table is not--nor was it intended to be--a comprehensive list of ACA-related administrative actions. The table entries, which are grouped under general topic headings, are not organized in any particular priority order. Each entry includes a brief summary of the action and some accompanying explanatory material and comments to help provide additional context. Where available, links are provided to relevant regulatory and guidance documents online. Readers are encouraged to review these documents for more details about each action, including the motivation and legal authority for taking it. A companion CRS report summarizes all the legislative actions taken by the 112 th , 113 th , and 114 th Congresses to repeal, defund, delay, or otherwise amend the ACA. Perhaps the most controversial administrative action taken by the Administration was its decision to delay enforcement of the ACA's "employer mandate." On July 9, 2013, the IRS announced that it would not take any enforcement action against employers who fail to comply with the law's employer mandate until the beginning of 2015 (see Table 1 ). This ACA provision, which took effect on January 1, 2014, requires employers with 50 or more full-time equivalent employees (FTEs) to offer their full-time workers health coverage that meets certain standards of affordability and minimum value. Those employers who do not provide such coverage risk having to pay a penalty if one or more of their employees obtain subsidized coverage through an exchange. The IRS subsequently announced that employers with at least 50 but fewer than 100 FTEs will have an additional year to comply with the employer mandate (see Table 1 ). According to the Administration, these actions were taken after it was concluded that the ACA's employer mandate could not be enforced until the related requirement that employers report the coverage they offer to their employees had been fully implemented. The IRS indicated that it would work with stakeholders to simplify the reporting process consistent with effective implementation of the law. Other controversial administrative actions include those taken in response to the decision by insurers to cancel individual and small-group health plans that do not meet the ACA's new standards for health insurance coverage, which also took effect on January 1, 2014. On November 14, 2013, the Administration notified state insurance commissioners of the option to delay enforcement of certain health insurance reforms under the ACA. It encouraged state officials to permit insurers to renew noncompliant policies in the individual and small-group market for policy years starting between January 1, 2014, and October 1, 2014. The Administration subsequently extended this policy for two years. Thus, at the option of state regulators, insurers could continue to renew noncompliant policies at any time through October 1, 2016 (see Table 1 ). The Administration was criticized for creating numerous special enrollment periods that enable individuals to enroll in an exchange plan outside the annual open enrollment period. Individuals can qualify for a special enrollment period as a result of a variety of events that affect their ability to obtain or maintain health insurance coverage (e.g., moving, losing job-based coverage, gaining legal U.S. residency). Special enrollment periods were also established for individuals unable to begin or complete the process of enrolling in an exchange plan before the end of the open enrollment period because of technical problems or other circumstances. State-run exchanges were encouraged to adopt special enrollment periods similar to the ones established for federally facilitated exchanges. In addition, the Administration established numerous hardship exemptions from the ACA's "individual mandate" penalty. Under the law, most U.S. citizens and legal residents are required to maintain ACA-compliant health coverage beginning in 2014. Those without coverage for three or more consecutive months are subject to a penalty unless they meet one of the statutory exemptions, or qualify for one of the health coverage-related or hardship exemptions established by CMS. In some instances the hardship exemption is tied to qualifying for a special enrollment period. For example, individuals who qualified for a special enrollment period to finish enrolling in an exchange plan after the 2014 open enrollment period closed on March 31, 2014, were granted a hardship exemption so that they would not be penalized for being uninsured for the first four months of the year (see Table 1 ). Opponents of the ACA, who believe that the law is fundamentally flawed, argued that some of the Obama Administration's actions were effectively rewriting the ACA in an effort to make it work and add to the public's confusion about the law. The ACA's critics asserted that the actions taken by the Administration to delay enforcement of the employer mandate were illegal and raised concerns that the President was not upholding his constitutional duty to faithfully execute federal law. The Administration countered that its actions were not a refusal to implement and enforce the ACA as written. Instead, they represented temporary corrections necessary to ensure the effective implementation of a very large and complex law. Agency officials pointed to a number of factors that made it difficult to meet various ACA deadlines. Those factors included a lack of appropriations to help fund implementation activities, technological problems including the poorly managed launch of the websites for the federally facilitated exchanges and some state-run exchanges, and the need to phase in the various interconnected parts of the law so as to avoid unnecessary disruption of employment and insurance markets. Regarding the delay of the employer mandate, the Administration said that its actions were no different from those taken by previous administrations faced with the challenges of implementing a complicated law. The Administration noted that its decision to grant employers "transition relief," taken pursuant to administrative authority under the Internal Revenue Code to "prescribe all needful rules and regulations" to administer tax laws, was part of an established practice to provide relief to taxpayers who might otherwise struggle to comply with new tax law. Notwithstanding the Administration's arguments, critics question whether some of the recent delays of ACA provisions exceed the executive's traditional discretion in enforcing law to the point that they represent a blatant disregard of the law. For example, they argue that the decision to encourage states to allow insurers to renew noncompliant policies for people who want to keep their current plans directly contravenes provisions of the ACA that had become politically inconvenient. On July 30, 2014, the House voted 225-201 to approve a resolution ( H.Res. 676 ) authorizing Speaker John Boehner, on behalf of the House, to sue the President or other executive branch officials for failing to "to act in a manner consistent with [their] duties under the Constitution and laws of the United States with respect to implementation of the [ACA]." The Speaker indicated that any such lawsuit would specifically challenge the Administration's delay of the ACA employer mandate. "In 2013, the President changed the health care law without a vote of Congress, effectively creating his own law by literally waiving the employer mandate and the penalties for failing to comply with it," said Mr. Boehner. A lawsuit was filed on November 21, 2014, consisting of two counts. First, it claimed that the Administration had violated the Constitution by delaying the ACA employer mandate. Second, the lawsuit challenged the ACA's cost-sharing subsidies. These are paid to insurance companies to reduce the out-of-pocket health care costs of certain individuals and their families receiving premium tax credits. Unlike the premium tax credits, for which the ACA provided a permanent appropriation, the lawsuit argues that the law did not appropriate any funding for the cost-sharing subsidies. | During the Obama Administration, the two federal agencies primarily responsible for administering the private health insurance provisions in the Affordable Care Act (ACA)--the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS), and the Internal Revenue Service (IRS) within the Treasury Department--took a series of actions to delay, extend, or otherwise modify the law's implementation. This report summarizes selected administrative actions taken by CMS and the IRS through February 2015 to address ACA implementation. The report is no longer being updated and is available primarily for reference purposes. A companion product--CRS Report R43289--summarizes all the legislative actions taken by the 112th, 113th, and 114th Congresses to repeal, defund, delay, or otherwise amend the ACA. The most significant administrative action was the decision by the IRS to delay implementation of the law's "employer mandate." This ACA provision, which took effect on January 1, 2014, requires employers with 50 or more full-time equivalent employees (FTEs) to offer their full-time workers health coverage that meets certain standards of affordability and minimum value. Those employers who do not provide such coverage risk having to pay a penalty if one or more of their employees obtain subsidized coverage through an exchange. The IRS announced that it would not take any enforcement action against employers who fail to comply with the law's employer mandate until the beginning of 2015. Subsequently, the agency announced that employers with at least 50 but fewer than 100 FTEs would have an additional year to comply with the employer mandate. Other controversial administrative actions include those taken in response to the decision by insurers to cancel individual and small-group health plans that do not meet the ACA's standards for health insurance coverage, which also took effect on January 1, 2014. Opponents of the ACA argued that these administrative actions were an attempt to rewrite the law in order to make it work. They asserted that some of the Administration's actions were illegal and raised concerns that the President was not upholding his constitutional duty to faithfully execute federal law. The Administration countered that its actions were authorized by federal law and represented temporary corrections necessary to ensure the effective implementation of a very large and complex act. On July 30, 2014, the House approved a resolution (H.Res. 676) authorizing Speaker John Boehner, on behalf of the House, to sue the President or other executive branch officials for failing to "to act in a manner consistent with [their] duties under the Constitution and laws of the United States with respect to implementation of the [ACA]." A lawsuit was filed on November 21, 2014, consisting of two counts. First, it claimed that the Administration had violated the Constitution by delaying the ACA employer mandate. Second, the lawsuit challenged the Administration's authority to pay cost-sharing subsidies, arguing that the law had not appropriated any funding for them. | 2,105 | 647 |
The United States established diplomatic relations with Mongolia in 1987, when it was still a Communist state, and since then has sought to expand bilateral cultural and economic ties. In 1991, following the signing of a bilateral trade agreement, President Bush restored Mongolia's most-favored-nation (MFN) trading status--now referred to as Normal Trade Relations (NTR)--under the conditional annual waiver provisions of Title IV of the Trade Act of 1974. That NTR status was made permanent (PNTR) effective July 1, 1999, obviating the annual trade status review process. In 1990, the ruling Mongolian People's Revolutionary Party (MPRP) declared the end of the country's one-party communist state and initiated democratic reforms with U.S. assistance. Since then, the country has been an enthusiastic practitioner of democratic government, although not without some difficulty. Mongolia has seen several reshufflings of government, for instance--the most recent in 2008-2009, when the MPRP won a majority in the State Great Hural and elected the head of the Party as Prime Minister (2008), and the Democratic Party Chairman won popular election as Mongolia's president (2009). This report provides background information on Mongolia, including political and economic conditions, the status of U.S.-Mongolian political and economic relations, and key security and foreign policy issues. Once part of the Chinese empire, Mongolia achieved independence in 1921 in a revolution backed by the Soviet Union. After this, the communist Mongolian People's Revolutionary Party (MPRP) ruled for almost 70 years, maintaining a tenuous balance between the Soviet Union and China and receiving substantial financial assistance from each. Public demonstrations for political pluralism in 1990 led to the resignation of the Communist MPRP government, whose leaders declared the end of a one-party Communist state. Since then, Mongolia has been undergoing a political and economic transition to a parliamentary democracy under new constitutional rules adopted in 1991. After decades of dependency on Soviet aid (at one point worth nearly 40% of the country's GDP), Mongolia has sought to broaden its foreign contact and trade. Mongolia's legal and financial institutions remain underdeveloped and are a serious impediment to improving the country's economy and business climate. In part because of these weak institutions, the existence and enforcement of laws protecting private property is extremely limited even though the government passed a land ownership law in 2002 that allows the sale of farmland to individuals. Government corruption also is becoming a more acute problem and was the subject of demonstrations and protests during the 2005 presidential election campaign. In some respects, and with considerable assistance from western democratic organizations, the fledgling government has made great strides in the 15 years since it adopted multi-party politics. Still, Mongolia's legislative processes remain in their infancy. It was only in 2004, for instance, that Mongolia's parliament, the State Great Hural (SGH), passed measures giving parliamentary committees separate budgets, staff, and rules of procedure. The first public hearing by a parliamentary committee was held only in 2002, although western groups providing assistance are encouraging the SGH to hold public hearings as a routine part of the legislative process. Despite the official demise of Communism in Mongolia in 1990, the formerly communist MPRP has continued to play a dominant political role. In the first popular elections ever for Mongolia's parliament in 1990, the formerly communist People's Great Hural, the MPRP won 80% of the seats. In turn, the same year, this MPRP-dominated parliament elected an MPRP member, P. Ochirbat, as Mongolia's first president. While a new constitution in 1992 created a new parliament (the State Great Hural) to replace the People's Great Hural, the MPRP also won a significant majority in the new body. Its 71 out of a total of 76 seats gave it firm control while Mongolia's fledgling opposition parties remained essentially powerless. But the balance began to tip away from the MPRP in 1994, when the party turned against Ochirbat after he vetoed legislation passed by the parliament. When Ochirbat lost the MPRP's backing in Mongolia's first direct presidential election in 1993, he ran and won as an opposition candidate. Mongolia's parliamentary elections on June 30, 1996, were the first in which an effective, organized opposition existed to challenge the MPRP's 75-year rule. The "Democratic Union," formed over a period of about five years by a coalition of eight opposition parties, was the only party to field a clear, recognizable political platform to challenge MPRP candidates. It achieved a stunning electoral victory in what was widely regarded as a free and fair election. With 91% of the electorate turning out to vote, the Democratic Coalition took 50 of the 76 seats, giving it a majority in the parliament as well as the support of President Ochirbat. The new Mongolian leadership was quoted as crediting the victory to help from U.S. political strategists (such as the International Republican Institute and the National Democratic Institute) and to study of American political devices--the "Contract with America" in particular. Economic issues, political reform, and foreign relations dominated the 1996 election campaign. In a political strategy that many came to view as the cause of the MPRP's downfall, the party offered no firm prescriptions for Mongolia's political problems or for its relations with other countries. Democratic Union coalition candidates, on the other hand, put forward a more specific policy agenda, vowing to make government more transparent, sell state-owned media organizations, establish pension plans, increase teacher salaries, and reform Mongolia's judicial system. Finally, the coalition placed a strong emphasis on friendship with the West--primarily with the United States, which Mongolia calls its "third neighbor." Mongolia held two related elections in 1997. In the presidential election on May 18, the results of the 1993 presidential election were reversed, and the presidency was won by Natsagiin Bagabandi, the MPRP candidate, leaving the government divided between the executive and the parliament. Bagabandi won with 60.8% of the vote against two other candidates: the incumbent of seven years, President Ochirbat, from the Democratic Union coalition, which retained its majority in the Great Hural from the 1996 elections; and Gombojav, from the Mongolian Unity Party (MUP). On August 20, 1997, Mongolia held an interim parliamentary election to replace Bagabandi, who had to give up his seat in the Great Hural in order to become president. Bagabandi's former parliamentary seat was won by MPRP member Nambaryn Enkhbayar. To some extent, political analysts at the time regarded Bagabandi's election as a symbolic gesture of public frustration over the drastic and painful economic reforms imposed by the new government after the 1996 elections in an attempt to cope with the collapse of Soviet subsidies after the fall of the Soviet Union. Under those reforms, unemployment, crime, and taxes rose, while other financial and economic policies were not entirely successful. In addition, some believed that the Democratic coalition majority elected in 1996 did not communicate its goals and policies effectively enough to the public to sustain its popularity in the 1997 presidential election cycle. Most believed that Bagabandi's election would not change the overall direction of democratic development and reform in Mongolia. For one thing, Mongolia's 1991 Constitution reserves only limited powers to the President--in principle, the power to veto--while giving most political power to the Great Hural, including the power to appoint government ministers. Nevertheless, the Democratic coalition's 50-seat majority in the Great Hural, though substantial, was still one vote short of the margin needed to override presidential vetoes. Mongolia's political situation became more tumultuous in 1998, with a series of political crises leading to much legislative maneuvering between the MPRP-led government and the ruling Democratic coalition. On April 17, 1998, Prime Minister Enkhsaikhan announced his resignation in the wake of public discontent over harsh reform measures he had adopted to strengthen Mongolia's economy. On April 23, 1998, Enkhsaikhan was replaced as Prime Minister by MNDP member Tsakhiagiyn Elbegdorj, the majority leader in parliament, who was elected with 60 votes out of the 76 members in the Great Hural. Elbegdorj, in turn, was forced to resign by a no-confidence vote in the Great Hural on July 24, 1998--making his government the shortest in Mongolia's brief democratic history--because of his controversial decision on May 27, 1998, to allow the state-owned Renovation Bank to merge into the privately held Golomt Bank. The parliamentary group of the MPRP charged that the decision on the bank merger violated the Mongolian constitution and posed a threat to national economic security. In the ensuing months, the ruling parliamentary coalition struggled with President Bagabandi over the naming of a new Prime Minister, with Bagabandi repeatedly rejecting the Great Hural's choice of Davaadorj Ganbold. In December 1998, the new MNDP leader, Janlavyn Narantsatsralt, became Prime Minister. But his government fell in scandal in July 1999. On July 30, 1999, the Great Hural endorsed as Prime Minister Rinchinnyamyn Amarjargal, another Democratic coalition candidate. Ultimately, in 2000, the strain of these political crises proved too much for the Democratic coalition. It collapsed, setting the stage for a dramatic comeback by the MPRP in parliamentary elections in July, when MPRP candidates won 72 out of the 76 seats in the Great Hural. That month, the MPRP leader, Nambaryn Enkhbayar, became Mongolia's 5 th Prime Minister in two years. In December 2000, the remnants of the former Democratic coalition, including the MNDP and the MSDP, merged to form the Democratic Party (DP). President Bagabandi was elected to a second term as president in May 2001. In the 2004 parliamentary elections, an assortment of democratic-minded parties under the umbrella title Motherland Democracy Coalition (MDC) won 34 parliamentary seats (out of a total of 76) to the MPRP's 38 seats. After weeks of political gridlock, the two groups compromised to form a workable coalition government: the Democratic Party leader, Tsakhiagiyn Elbegdorj, became the new Prime Minister and the MPRP assumed 10 positions in Elbegdorj's 18-member cabinet. But the troubled government struggled with growing unemployment, allegations of corruption, and factional differences. The increasing popular disillusionment with the coalition's rule was reflected in presidential elections in May 2005, when MPRP candidate and former Prime Minister Nambaryn Enkhbayar won the presidency (considered a less powerful position than that of Prime Minister) with 53.4% of the vote, compared to the 19.7% garnered by his Democracy Party rival, Mendsaikhani Enkhsaikhan. On January 11, 2006, the fragile government collapsed altogether when all 10 MPRP cabinet members resigned in protest to what they said was the alliance's ineffective governance and loss of public support. The collapse was followed by days of protests in the capital--some protesting government corruption and economic deprivation, some accusing the MPRP of attempting to seize power for itself. The official government response to the MPRP resignation, however, followed established political procedures. On January 25, 2006, the parliament chose Miyeegombo Enkhbold, MPRP chairman, as the new Prime Minister succeeding Elbegdorj. According to reports, the Democratic Party declined the MPRP's offer to join in a "national unity" government and instead chose to function as an opposition and establish a "shadow cabinet." Since the collapse of the Democratic Coalition in 2006, the MPRP has been able to maintain an uneasy dominance in what has become a volatile political scene in Mongolia. In legislative elections for the Great Hural on June 29, 2008, the MPRP increased its legislative margin to 47 seats (up from 39 in the previous election) out of a total of 76 seats, followed by the Democratic Party with 25 seats. After Democratic Party Chairman Tsakhya Elbegdorj declared the elections to have been fraudulent, demonstrators attacked MPRP headquarters in Ulan Bator, burning the building and causing the government to declare a four-day state of emergency - the first in the country's history - in the capital. The election results were upheld by the electoral commission on July 3, 2008, but continued to be contested by the Democratic Party. The newly elected parliament finally was sworn in on August 26, 2008, after the MPRP invited the opposition to join in yet another fragile coalition government and agreed to investigate allegations of electoral fraud. On September 11, 2008, the Great Hural elected MPRP member Sanjaaglin Bayar, seen as an economic reformer favoring private enterprise, as the new prime minister of the coalition government. Mongolia held elections for president in May 2009, with incumbent president Nambaryn Enkhbayar running again on the MPRP ticket. Opposition parties united behind Democratic Party candidate Tsakhiagiin Elbegdorj, who declared himself the victor. MPRP candidate Enkhbayar conceded defeat and said he accepted the electoral results. Mongolia's economy is relatively poor and agrarian, with few industries but extensive mineral deposits. About one-third of Mongolia's people live in poverty. Its gross domestic product (GDP) in 2008 was an estimated $5.3 billion - this figure rises to $9.4 billion when measured on a purchasing power parity (PPP) basis, which factors in price differentials between Mongolia and the United States. Mongolia's per capita GDP on a PPP basis (a commonly-used measurement of a country's living standards) was $3,541, equivalent to 7.6% of U.S. levels. Industry contributed 35.7% of Mongolia's GDP in 2007 (mining alone contributed 27.4%), followed by agriculture at 20.6%, transport and communications at 9.3%, and trade at 7.6%. Mineral production accounts for 77% of industrial output, 67% of foreign direct investment (FDI), 40% of the central government's revenues, and 57% of Mongolia's export earnings. The collapse of the Soviet Union in the early 1990s had a severe impact on Mongolia's economy, which had employed Soviet-style economic policies and heavily relied on Soviet assistance. After that aid abruptly ended, the economy suffered; real GDP fell by 9.2% in 1991 and by 9.5% in 1992, leading to a significant decline in Mongolian living standards. Subsequently, the central government moved to privatize its state-owned economy and adopt other free market reforms. From 1990 to 2006, the proportion of GDP accounted for by the private sector rose from 4% to 80%. Such reforms enabled Mongolia to join the World Trade Organization (WTO) in 1997. Mongolia has struggled to reform the economy while promoting economic growth. From 1997 to 2002, real GDP growth averaged only 2.8%. In 2003, Mongolia agreed to pay Russia $250 million, an enormous sum for the government, to resolve most of its debt obligations in an effort to strengthen investor confidence. From 2003 to 2008, real annual GDP growth averaged 8.7%; much of that growth resulted from increases in global metal prices (such as cooper and gold), and relatively mild winters (which affects livestock). However, inflation has been a problem for the past few years; in 2008 the consumer price index rose by an estimated 23.2% over the previous year. Mongolia, like most other countries of the world, has been hard hit by the current global economic slowdown (see Table 1 ). The International Monetary Fund (IMF) projects real GDP growth will slow from 8.9% in 2008 to 2.7% in 2009. Exports are projected to fall from $2.5 billion to $1.9 billion, due to falling prices for copper and a decline in demand for exports by its major trading partners, especially China. Global Insight, an international forecasting firm, projects that Mongolia's real GDP could fall by 3.9% in 2009. Growing trade imbalances and rising government deficits have also put new strains on the central government. In April 2009, the IMF agreed to extend a $224 million loan to Mongolia to help it meet its balance of payments needs. In addition to the effects of the global economic slowdown, challenges Mongolia faces over the long term include a weak banking system, sharp fluxes in global mineral prices, high dependency on imported energy, high unemployment, weak rule of law, government corruption, and inadequate infrastructure. Mongolia's merchandise exports and imports in 2007 totaled $1.9 billion and $2.1 billion, respectively (see Table 2 ). The top three Mongolian exports were copper, gold, and animal hairs. Its top three imports were oil; machinery, and transport equipment. China was Mongolia's largest export market (accounting for 74.2% of total, mainly minerals), followed by Canada (11.4%) and the United States (3.4.%). Russia was Mongolia's largest source of its imports. mainly oil (at 34.3% of total), followed by China (31.1%) and South Korea (5.6%); the United States ranked 6 th at 2.4% (see Figure 1 and Figure 2 ). According to a U.S. government report, Mongolia supports foreign direct investment (FDI) in all sectors and businesses and does not discriminate against foreign investors except in certain sectors. Foreigners may own 100% of any registered business with the exception of land ownership, petroleum extraction, and strategic minerals deposits. Cumulative FDI in Mongolia through 2008 was estimated at $2.5 billion. The largest foreign investors in Mongolia (cumulative through 2005) were China (47.4% of total), Canada (12.2%) and South Korea (7.3%); the United States ranked 6 th at 2.3%. FDI in 2008 was estimated at $682.5 million, but was projected by the IMF to fall to $316.5 million in 2009, due to the effects of the global financial crisis. Russia is a large and growing investor and economic player in Mongolia. In March 2009, Russia extended a $300 million loan to help boost Mongolia's agriculture sector. In May 2009, the Russian and Mongolian governments agreed to create the Mongolian Railway Company, a 50-50 joint venture that is intended to help Mongolia modernize and build up its railroad system in exchange for development rights in various mining ventures (including uranium, coal, and copper), a deal reportedly valued at $7 billion. In June 2009, the Mongolian government reportedly requested the United States to re-direct nearly $188 million dollars in U.S. aid to improve the rail network to other projects, due to objections from Russia. Since the early 1990s, Mongolia has pursued an open and non-aligned foreign policy, seeking supportive friendships broadly in Asia and around the world and taking a more active role in international organizations, particularly in the United Nations. Not surprisingly given its geographical location, the land-locked country maintains good relations with Russia and China, its two giant neighbors. As a new democracy, Mongolia also places a high priority on cultivating good relations with the United States, which government officials in Ulaan Bator have referred to as Mongolia's "third neighbor." The United States recognized Mongolia in 1987 and since then has sought to expand cultural and economic ties. At Mongolia's invitation, the United States began a Peace Corps program there in 1991, which by 2007 was maintaining about 100 Peace Corps volunteers in the country. Also in 1991, following the signing of a bilateral trade agreement, the President restored Mongolia's most-favored-nation (MFN) trading status--now referred to as Normal Trade Relations (NTR)--under the conditional annual waiver provisions of Title IV of the Trade Act of 1974. NTR status was made permanent for Mongolia effective July 1, 1999, obviating the annual trade status review process, and creating a more stable trade environment. Total USAID assistance to Mongolia from 1991 through 2008 was about $174.5 million. Major USAID programs have focused largely on promoting sustainable private sector-led economic growth and more effective and accountable governance. The Administration proposed FY2009 USAID budget would give Mongolia $10.4 million. One primary U.S. interest in Mongolia is in supporting the country's ongoing transition from a communist state to a nation with a market-based economy and a democratically elected government. U.S. support for both Mongolia's political and its economic reforms has been tangible. The United States strongly supported Mongolia when it joined the IMF, the World Bank, and the Asian Development Bank in 1991. Congress annually has earmarked U.S. assistance amounts for Mongolia to signal its support. In addition, in 2007, the House Democracy Assistance Commission initiated a program of parliamentary assistance to Mongolia's parliament, the State Great Hural. Mongolia is a relatively minor U.S. trading partner. In 2008, Mongolia was the 164 th largest U.S. export market (at $57.2 million) and its 139 th largest source of imports (at $52.8 million). From 2000 to 2008, U.S. exports to Mongolia more than tripled, but they remain extremely small. U.S. imports from Mongolia peaked in 2004 at $239.1 million, but have steadily declined each year since, largely due to a sharp fall in U.S. imports of apparel products. Major U.S. exports to Mongolia in 2008 included motor vehicles, agriculture and construction machinery, and railroad rolling stock, while the top three imports from Mongolia were apparel, basic chemicals, and animal hairs (see Table 3 , Table 4 , and Table 5 ). U.S. data for January-April 2009 show that U.S. exports to Mongolia were up 16.4% over the same period in 2008, while U.S. imports from Mongolia were down 87.0%. On July 15, 2004, the United States signed a Trade and Investment Framework Agreement (TIFA) with Mongolia to boost bilateral commercial ties and resolve trade disputes. Annual TIFA meetings have been held, focusing largely on issues relating to protection for intellectual property, standards development, and transparency. In addition, the two sides created the U.S.-Mongolian Business Forum to hold annual meetings involving government and private sector officials on how to improve mutual trade and investment opportunities. The most recent forum was held in Washington, DC, in June 2009 and focused on energy development, including coal mining and production, renewable energy, oil and gas, and nuclear energy. From 1991-2004, the U.S. Agency for International Development (USAID) provided around $150 million in assistance to Mongolia. USAID programs have focused on two main projects which seek to promote private sector led economic growth and efforts to achieve more effective and accountable governance; U.S. appropriations for these two projects totaled $7.5 million in FY2007. Other projects have sought to promote: tax reform, the investment climate, tourism, and business training for rural inhabitants. Mongolia also is eligible for assistance under the U.S. Millennium Challenge Account. In an address to the American Center For Mongolian Studies in June 2006, U.S. Ambassador to Mongolia Pamela Slutz called on Mongolia to lessen its dependence on foreign assistance by promoting policies that would encourage more trade and foreign investment. The ambassador stated that (according to the World Bank and IMF) Mongolia had received $2 billion in assistance over the last 15 years, and that it annually receives $300 million in aid, making it one of the world's most dependent countries on foreign aid. Mongolia has asked for a Free Trade Agreement (FTA) with the United States. However, U.S. officials have indicated that Mongolia must make major reforms of many sectors of its trade regime and legal system, and to improve its labor conditions, before it will consider FTA negotiations. In FY2004, Mongolia became an eligible country for U.S. assistance through a Millennium Challenge Account (MCA). After a consultation process, Mongolia submitted an official MCA proposal to the Millennium Challenge Corporation (MCC) late in 2005. The MCC conducted "due diligence" on Mongolia's proposal (assessing it for its suitability, technical viability, and compliance with MCC environmental and other guidelines) for several years. During her visit to Mongolia in January 2007, the Managing Director of the MCC, Frances Reid, reaffirmed that it was the U.S. intent to conclude an MCA agreement with Mongolia in 2007. On June 14, 2007, the MCC issued notification to Congress initiating a 15-day consultation period prior to commencing Compact negotiations with Mongolia. On September 12, 2007, the MCC Board of Directors awarded Mongolia a $285 million aid program, focused mainly on improving rail transportation, property rights, and vocational education and health care. On October 22, 2007, President Bush approved the aid package during a visit to Washington, DC, by Mongolian President Nambaryn Enkhbayar after the two presidents signed an MCC Compact. Mongolia was an early political supporter of the U.S. global anti-terror effort, as well as an early logistics supporter, offering training opportunities and overflight clearances for U.S. forces. Mongolia has contributed troops, engineers, and medical personnel to Operation Iraqi Freedom since April 2003. At the request of the United States, Mongolian forces also are participating in training artillery units of the Afghan National Army. U.S. appreciation for this assistance led in part to last year's visits to Mongolia by Secretary of Defense Donald Rumsfeld (in October 2005) and President George Bush (in November 2005)--the first U.S. Defense Secretary and U.S. President ever to visit Mongolia. President Bush's visit resulted in a Joint Statement reaffirming the U.S.-Mongolian "comprehensive partnership between their two democratic countries based on shared values and common strategic interests ... " In 2006, Mongolia expanded its global peacekeeping activities by sending a contingent of 250 soldiers to protect the U.N. war crimes tribunal in Sierra Leone, a platoon to participate in the NATO mission in Kosovo, and by helping to serve as U.N. observers in Sudan and Ethiopia/Eritrea. On October 23, 2007, the U.S. and Mongolia signed a memorandum of understanding to increase cooperation in preventing nuclear smuggling by allowing the U.S. to install radiation detection equipment in Mongolia and at several of its border crossings. In addition, the two sides signed the Proliferation Security Initiative Shipboarding Agreement, which would allow either side to request the other to confirm the nationality of a U.S. or Mongolian flagged vessel, and possibly detain the ship or its cargo, in order to prevent the proliferation of weapons of mass destruction (WMD). | Once a Soviet satellite state ruled by the communist Mongolian People's Revolutionary Party (MPRP), Mongolia underwent a democratic transformation in 1990 after public demonstrations for political pluralism led to the resignation of the MPRP government. Since then, Mongolia has been undergoing a chaotic political and economic transition to a parliamentary democracy under new constitutional rules adopted in 1991. The now non-communist MPRP has competed in free elections with opposition parties that grew from economic reformists. The country remains quite undeveloped, but with enormous potential from vast metal and mineral resources. Mongolia's political scene remains democratic but volatile, with the MPRP able to maintain an uneasy dominance. In legislative elections on June 29, 2008, the MPRP increased its legislative margin to 47 seats (up from 39) out of a total of 76 seats, followed by the Democratic Party with 25 seats. After Democratic Party Chairman Tsakhya Elbegdorj declared the elections to have been fraudulent, demonstrators attacked MPRP headquarters in Ulaanbaatar, causing the government to declare a four-day state of emergency in the capital. Ultimately, the MPRP invited the opposition to join in yet another in a series of fragile coalition governments. Mongolia has seen several reshufflings of government since 1990. A former coalition government collapsed in 2006. The United States recognized Mongolia in 1987 and since then has sought to expand cultural and economic ties. At Mongolia's invitation, the United States began a Peace Corps program there in 1991, which by 2007 was maintaining about 100 Peace Corps volunteers in the country. Also in 1991, following the signing of a bilateral trade agreement, the President restored Mongolia's most-favored-nation (MFN) trading status--now referred to as Normal Trade Relations (NTR)--under conditional annual waiver provisions. NTR status was made permanent (PNTR) for Mongolia effective July 1, 1999. In FY2004, Mongolia became eligible for U.S. assistance through the Millennium Challenge Account (MCA), and submitted a proposal late in 2005. On September 12, 2007, the MCC Board of Directors awarded Mongolia a $285 million aid program, focused mainly on improving rail transportation, property rights, and vocational education and health care. President Bush approved the aid package on October 22, 2007. The House Democracy Assistance Commission (HDAC) has established a partnership with the Mongolian parliament, the State Great Hural, focusing on parliamentary reform and improving transparency in government. HDAC sent its first bipartisan delegation to Mongolia in the summer of 2007. Mongolia's relatively small economy relies heavily on trade and, like many other countries, has been hit hard by the global economic downturn. Prices for Mongolia's main export, copper, have declined sharply. U.S.-Mongolian bilateral trade is relatively small; total trade in 2008 was $110 million. China and Russia account for a large share of Mongolia's trade. U.S. foreign aid to Mongolia has focused largely on helping it complete its transition to a free market economy and enhancing the rule of law; the Administration's proposed FY2009 USAID budget would give Mongolia $10.4 million. In June 2009, Mongolia's government reportedly asked the United States to re-direct nearly $188 million dollars in aid to improve the rail network, due to objections from Russia. This report provides background information on Mongolia, including political and economic conditions, the status of U.S.-Mongolian political and economic relations, and key security and foreign policy issues. | 5,915 | 760 |
Japan's trade policy has historically centered on multilateral negotiations and dispute resolution mechanisms. The rules of the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) have provided Tokyo an ability to interact with its trade partners on an equal basis. Given its global trade interests, a contentious bilateral past with the United States, and historic legacy with Asian countries, particularly Korea and China, reliance on the multilateral system has helped promote Japan's trade interests. Over the past five years, Japan has shifted course somewhat by pursuing negotiations in the WTO but by also seeking free trade agreements (FTAs) and Economic Partnership Agreements (EPAs) with mostly Asian countries. An FTA is an agreement between two countries or regional groupings to eliminate tariffs and other trade barriers, while an EPA goes further by also attempting to facilitate the free movement of people and capital among the partners to an agreement. Non-members find their exports discriminated against. As a practical matter, officials at Japan's Ministry of Economy, Trade, and Industry (METI) acknowledge that there is little difference between an FTA and EPA. METI, however, prefers the EPA label based on the view that it does less to provoke domestic political opposition than the "free trade" moniker. The pursuit of FTAs is occurring worldwide with nearly 300 estimated to be currently in effect. The United States has an extensive FTA program and agenda, and has FTAs in effect with two Asian-Pacific countries--Singapore and Australia. Europe has been pursuing a similar course for years. China and six ASEAN states (Thailand, Malaysia, Indonesia, Philippines, Singapore, and Brunei) are in the process of establishing an FTA by 2010. Now Japan is trying to catch up. Economists still disagree about the merits of negotiating FTAs on the grounds that discrimination may undermine the multilateral trading system while others believe that FTAs promote multilateral deals in the long run. The concern is that FTAs could lead to a "spaghetti bowl" of overlapping conflicting trading partnerships each with its own set of rules at the expense of a more unified and non-discriminatory set of multilateral rules. But domestic support in Japan for an FTA program appears strong. Prime Minister Koizumi is firmly behind the approach, as well as the ruling LDP-Komeito coalition. While the Democratic Party, the major opposition party, supports the general thrust of the policy, some members maintain that the United States and China should be considered as prospective FTA partners. Given its own aggressive FTA program, the United States is hardly in a position to criticize Japan's new policy orientation. But it has considerable interest in whether Japan's policy evolves in a manner that is supportive of U.S. interests in Asia--which include promoting a stable balance of power and insuring that U.S. trade and investment interests are not discriminated against in the region. Japan's FTA program has been motivated by a combination of economic and political objectives. The most important entail avoidance of becoming isolated as other major trading countries actively pursue FTAs, energizing domestic economic activity, and promoting Japanese influence in Asia. Japan's concern about the possible emergence of economic blocs in the Americas and in Europe goes back to the early 1990s. In 1994 the United States entered into the North America Free Trade Agreement (NAFTA) and announced plans to create a Free Trade Area of the Americas. Europe at the same time was busy entering into preferential trade agreements and subsequently has come to conduct trade relations on a multilateral or non-discriminatory basis with only a handful of trading partners, including Japan and the United States. In 1999 the collapse of multilateral trade negotiations at the WTO Ministerial in Seattle shook Japanese confidence in the future of multilateralism. China's decision in 2001 to negotiate an FTA with ASEAN countries was also a seminal event, providing more ammunition for those in Japan that were advocating a change of policy course. The case for developing an FTA program was also driven by Asian economic trends and opportunities. METI officials see East Asia as the fastest growing region in the world and a region that is increasingly vital to Japan's economic future. FTAs and EPAs are viewed as one way to deepen economic ties with East Asia and facilitate a new division of labor and production sharing. The experience of the European Union has demonstrated that, as institutional integration develops, so too does intra-regional division of labor that leads to a more effective production network and to more efficient industrial structures. As a result, METI maintains that both individual parties to an FTA, as well as the region as a whole, can enjoy more robust economic growth powered by an expansion of exports and imports. Reform-minded METI officials also hope that an aggressive FTA-EPA program will serve as a force for promoting domestic agricultural reforms. By entering into negotiations with trading partners that continue to demand liberalization of Japan's protected agricultural sector, it is hoped that domestic support for programs that might aid farmers transition to a less protected environment would be proposed and implemented. Finally, many decision makers see FTAs providing Japan with varied political and diplomatic advantages. These range from increasing Japan's bargaining power in WTO negotiations to helping Japan better compete with China for influence in Asia. Under the view that FTAs symbolize special relationships based on political trust, Japan hopes to bolster its diplomatic influence on a range of political and security issues. Three regions--Asia, North America, and Europe--account for 80% of Japan's total trade. Given that the simple average tariff rates imposed by the United States and the European Union are low (3.6% for the U.S. and 4.1% for the EU) compared to East Asia (10% for China, 14.5% for Malaysia, 16.1% for South Korea, 25.5% for the Philippines, and 37.5% for Indonesia), the Government of Japan (GOJ) placed priority on negotiating FTAs with countries in East Asia. Not only do East Asian countries impose the highest trade barriers against Japanese exports, they also account for the highest and most dynamic share of Japan's trade, thereby providing the greatest additional opportunities for expanding Japan's economy via cuts in both foreign and domestic trade barriers. As shown in Table 1 , 11 East Asian countries (China, South Korea, Taiwan, Hong Kong, Thailand, Singapore, Malaysia, Australia, the Philippines, Indonesia, and Vietnam) purchased nearly 50% of Japan's total exports in 2004, up from 33% in 1998. Similarly, Japan is sourcing a growing share of its imports from these 11 countries as well. As shown in Table 2 , these countries supplied Japan with 47.86% of its imports in 2004, up from 39.59% in 1998. Accordingly, in developing its FTA strategy, the GOJ placed the highest priority on negotiating FTAs with the Republic of Korea and the four largest ASEAN member states (Thailand, the Philippines, Malaysia, and Indonesia). An FTA with Mexico, now in effect, was also made a priority due to the relatively high tariffs Japanese companies face compared to those companies from the United States, Canada, and European Union. The latter enjoy duty free treatment for the most part due to NAFTA (1994) and the EU-Mexican FTA (2000). After achieving FTAs with priority countries, the GOJ views China and Australia as the next most promising candidate partners. Consideration is also being given to countries outside East Asia, including Chile and Switzerland. Since Japan launched its first FTA negotiation with Singapore in 2000, progress has been hampered by a defensive agricultural position. While some liberalization has been achieved, the amount so far has been greatly constrained by an inability to offer major reductions in its most protected crops--beef, rice, starches, wheat, and dairy--and to open up its borders to foreign labor. Some critics have argued that Japan, following a course of least resistance, could end up with numerous watered-down FTAs that neither harm nor energize the Japanese economy. According to this view, the FTAs with the largest benefits for Japan, such as Australia, China, and South Korea, are also the most politically challenging and the most likely to fail. A short synopsis of the main features and significance of Japan's FTA program follows. The negotiations are divided into four categories: (1) those already entered into force; (2) those agreed to in principle; (3) those under negotiation; and (4) those that are in the pipeline or under consideration. The Japan-Singapore Economic Partnership Agreement (JSEPA), Japan's first EPA/FTA, was entered into force in November 2002. Tariffs were eliminated on 98% of the merchandise trade between the two countries, and further liberalization took place in services and investment. Given that there is virtually no agricultural trade between the two countries, and tariffs were already very low, it reportedly was a very easy FTA to conclude. According to one report, other than some increase in imports of Japanese beer, Singapore has experienced no major changes from the FTA. The minimal impact may be due to the fact that tariffs were low to begin with and some chemical products in which Singapore companies have a competitive edge, were excluded from the agreement. From Japan's perspective, the significance of this initial FTA seems to be good learning experience for its negotiators in how to negotiate an FTA. Japan and Mexico signed an FTA/EPA in September 2004 and it went into effect in April 2005. Under the agreement (formally called an EPA), tariffs on 90% of goods that account for 96% in total trade value will be phased out by 2015, making 98% of exports from Japan and 87% of imports from Mexico duty free. Previously, only 16% of Japanese exports received duty-free treatment from Mexico, whereas 70% of Mexican exports entered duty free. From Japan's perspective, the agreement helps eliminate the disadvantages its companies have incurred in competing against North American and European firms since NAFTA went into effect in 1994 and the EU-Mexican FTA went into effect in 2000. Facing an average Mexican tariff of 16%, Japan saw its share of Mexican imports drop sharply, from 6.1% in 1994 to 3.7% in 2000. Since the FTA became operational, its import share increased to 4.8% in 2001, to 5.5% in 2002, and 4.4% in 2003. Japan's auto and steel companies are expected to benefit the most. The FTA offers a new tariff-free export quota for Japanese cars, in addition to the existing quota of about 30,000. The duty-free quota will make up 5% of the Mexican market in the first year and the quotas will be expanded before being completely lifted by 2011. With the abolition of the tariffs, exports of Japanese-finished cars are expected to double in the next few years. Steel tariffs are also being eliminated over a 10-year period. The agreement is notable in that Japan agreed to reduce some protection of agricultural products. While the details remain sketchy, Japan reportedly cut tariffs on a variety of products such as pork, orange juice, fresh oranges, beef and poultry although these commodities will still will be regulated by quotas. (Actual tariff rates are to be negotiated after the FTA is in place for two years). Yet, the value of Mexico's agricultural products exempt from import tariffs will still be less than 50% of its total agricultural exports to Japan. Furthermore, Mexico supplies only 1% of Japan's total imports of agricultural products, suggesting that the limited liberalization will not pose much of a threat to Japanese producers nor be a precedent for other FTAs. Negotiations with the Philippines began in February 2004 and a basic EPA was reached in principle at a bilateral summit in November 2004. The agreement, which covers investment, trade in services, customs procedures, intellectual property, and competition policy, is expected to be finalized this year and become effective in 2006. A key bargain in the agreement calls for the Philippines to lowers its tariffs on most steel products and autos by 2010 in exchange for lower Japanese tariffs on pineapples and bananas. Bananas are not grown in Japan and pineapples are only grown in a small area of Okinawa. For the most part, Japan negotiated not to open its market further to sensitive agricultural products such as rice, wheat, barley, designated dairy products, beef, pork, starches and selective fishery products. Liberalization of Japan's protection of raw cane sugar will be reconsidered after the agreement has been in effect for four years. In return, Japan agreed to allow more Philippine nurses and care givers to work in Japan if they pass Japanese qualification examinations (in Japanese). The number and selection process of such care providers has not yet been determined, and remains a major stumbling block to finalizing the agreement. Negotiations with Malaysia began in January 2004 and a basic EPA agreement was reached in May 2005. The two sides hope to sign the agreement before the year-end, putting it into effect in 2006. One estimate is that the agreement will increase Japan's gross domestic product by 0.08% in real terms and boost Malaysia's real GDP by 5.07%. The FTA will eliminate or reduce tariffs on industrial goods by 2015. Of particular interest to Japan, Malaysia has agreed to immediately remove tariffs on all parts imported for local car production (used for the so-called breakdown format, under which components are imported to Malaysia for assembling). Customs duties on most finished vehicles (i.e. large cars that do not compete with Malaysian cars) and other car parts will be gradually removed by 2010. Japanese automakers that manufacture locally can cut production costs if tariffs on auto parts from Japan are removed. Tariffs on small vehicles which compete with Malaysia's Proton "national car" will be abolished in stages by 2015. The grace period is designed to shield the market for small Malaysian-made autos, like those produced by Proton Holdings, from outside competition for five years. National car Proton and privately manufactured Perodua, have more than 70% of the market in Malaysia. Malaysia also agreed to eliminate tariffs on essentially all steel products within 10 years. Japan for its part will eliminate tariffs on selective farm and fishery products within 10 years, with immediate abolishment of tariffs on such products as mangoes, durians, papayas, okra, shrimp, prawns, jellyfish, and cocoa. The tariff on margarine will be lowered from 29.8% to 25% in five years, and up to 1,000 tons of bananas will be duty free immediately. Tariffs on all forestry products except plywood, which is one of Malaysia's top exports to Japan, will also be eliminated immediately. But sensitive products such as rice, wheat, barley, dairy, beef, pork, starches, and fishery items under import quota are excluded from liberalization. Japan's negotiations with Korea, which began in December 2003, are currently stalled. The two sides initially planned to submit liberalization offers by January 2005, but both countries developed reservations. Reportedly, Japan expressed reluctance to abolish tariffs on agricultural and marine products, while South Korea hesitated to cut tariffs on industrial goods, particularly those that could affect its auto sector. South Korean officials are also worried that an FTA could exacerbate its large trade deficit with Japan. Prospects for more flexible negotiating positions were not helped by a recent WTO case that Korea filed against Japan's import quotas for dried laver seaweed. Korea reportedly took a hard line on this marine product that it does not export in great quantities to symbolize its protest over Japan's refusal to negotiate "seriously" on agricultural issues. Japan's negotiation with Thailand, which began in February 2004, has proved difficult due in large part to agriculture. Japan and Thailand initially agreed that rice--long considered the main obstacle in the negotiations--would not be subject to tariff cuts. But Thailand still continues to demand elimination of Japan's tariffs on chicken, sugar, starch and forestry and fisheries products. Thailand also wants Japan to accept more chefs and spa specialists. Japan's demands on Thailand center on autos and steel. Cuts on Thai auto tariffs--which are 80% for Japanese built cars--are complicated by heavy Japanese foreign direct investment in the Thai auto sector. Japanese companies control over 80% of the production, sales, and exports of autos in Thailand. Japan and Indonesia agreed in June 2005 to launch FTA/EPA negotiations with a view to reaching agreement by June 2006. The agreement would cover trade in goods and services, investment, labor flows, technological exchanges, and intellectual property rights. Indonesia, which is a major provider of crude oil, coal, and natural gas to Japan, hopes to see the agreement facilitate a large-scale increase in Japanese foreign investment. Japan's agricultural protection, along with Indonesia's protection of its auto and steel sectors, are likely to be divisive issues. Japan is considering FTA/EPA negotiations with a number of other countries, including Australia, Chile, China, and Switzerland. In addition, after concluding agreements with Malaysia, the Philippines and Thailand, Japan hopes to expand those agreements (including the one with Singapore) to ASEAN as a whole. Malaysia, the Philippines, and Thailand account for about 75% of Japan's trade with ASEAN. The conclusion of an FTA with either the United States or the European Union is not being considered, due largely to constraints on liberalizing trade in agricultural, forestry, fishery products. Australia is an important trading partner for Japan and a key supplier of Japan's oil, coal, iron ore, and natural gas. Two years of FTA discussions, however, have not progressed far reportedly due to Japan's resistance to open its market to more beef, rice, and dairy products from Australia. While a high-level agreement was made in April 2005 to continue discussing the feasibility of an FTA, most observers think that Australia won't enter into negotiations if agriculture is not on the table. In effectively downplaying the prospects for this FTA, Prime Minister Koizumi noted that an FTA with Australia that included beef would have an adverse effect on relations with the United States. While many Japanese officials are intrigued by the possibility of negotiating an FTA with China, the consensus is that it is much too early to move forward. For the present, Japan wants to monitor China's fulfillment of WTO obligations, the status of its state-owned sectors, and progress in Doha Round of multilateral negotiations. Switzerland is what one Japanese trade official calls a good pipeline project. An attractive feature of this prospective negotiation is that the Swiss do not want to liberalize agriculture so there would be no major impediment to a negotiation. Lacking much liberalizing content, such an agreement would have mostly geo-political merit. Japan's ability to promote its economic interests through an aggressive FTA/EPA program is constrained by protection of its agricultural sector and rigid immigration policies. While the FTA/EPA negotiations themselves provide pressures for more open policies, the ministries charged with these portfolios (Agriculture and Justice, respectively) have not yet advanced effective reform policies that would make a substantial difference. Agriculture accounts for only 1.3% of Japan's GDP and 4.6% of its total employment, but remains heavily supported and protected from import competition. According to the OECD, support to producers as a percent of gross receipts was 58% in 2002-04, down from 61% in 1986-1988, but still almost twice the OECD average. Rice, wheat, other grains, meat, sugars, and dairy are the most heavily supported commodities. Tariff-rate quotas are employed to shield these commodities from international competition, resulting in food prices that in Tokyo are on average 130% higher than the rest of the world. Many in Japan believe that support for agricultural protection will disappear over time. They cite the declining share of the population engaged in agriculture and the high percentage of farmers (60%) who are over 65 years old and who derive the majority of their income from non-agricultural activities. In the process, the hold of the agricultural lobby is said to be slipping as evidenced by the slippage of the LDP in the 2004 Upper House election. The LDP derives most of its support from rural areas, in part, due to Japan's disproportionate electoral districting system; each rural vote is worth an estimated 2 urban votes. However, policy reforms to help move Japan away from considerable agricultural protection have been slow to materialize. While the Ministry of Agriculture, Forestry, and Fisheries has released papers that have raised the idea that Japan should stop wasting resources on crops that can be imported more cheaply, little follow-up has occurred. These reports advocate consideration of policies that would increase competition in the sector by encouraging new entrants and providing direct compensation to farmers through tax incentives in lieu of price controls and high tariffs. In large measure, this is due to opposition from influential members of the LDP's "farm tribe." In the absence of a substantive reform plan to make Japan's farm sector more efficient, agriculture is bound to continue to be a major stumbling block for concluding economically meaningful FTAs/EPAs. Among industrial nations, Japan maintains the tightest policy towards accepting foreign workers and remains extremely cautious about changing course. However, due to a declining birthrate and an aging workforce, Japan's decision-makers are under increased pressure to accept more foreign workers to keep the economy from stagnating. The demands of FTA negotiating partners such as the Philippines and Thailand to liberalize Japan's labor market prohibitions have brought added pressures and debate about a more open door policy. A 1999 government employment plan called for Japan to promote foreign employment in "specialized and technical areas," but a "careful approach based on national consensus" towards manual workers. Despite the needs in certain sectors to accept more foreign workers, such as nurses and care providers, public support is lacking. Concerns about increased crime rates, the social costs of accepting more foreigners, and an adverse impact on Japanese homogeneity tend to dominate, along with the resistance of labor unions. In addition, neither the LDP or the Democratic Party stand clearly in favor of liberalizing immigration. The significance of the immigration issue transcends the problems it creates for Japan reaching closure on FTA negotiations with its Asian partners, such as Thailand and the Philippines. The continuation of exclusionary immigration policies may also undercut Japan's ambition to play a leading role in a more integrated and interdependent Asian economy. Japan's FTA program, assuming the current defensive course persists, may have varied effects on U.S. interests. On the one hand, it is likely to provide a positive, yet small, boost to increasing Japan's role in the economics and political economy of East Asia. It is also likely to be favorable to bilateral trade ties as other Asian trading partners, instead of the United States, pressure Japan to open its agricultural market further. In the absence of a Japan-U.S. FTA as a realistic option, other forms of comprehensive engagement may be considered. On the other hand, lack of a meaningful agricultural reform program bodes poorly for positive support from Japan in the agricultural negotiations of the Doha Round. There are also concerns that a defensive and weak FTA program pursued by Japan could allow China to play a more dominant role in the Asian economy--perhaps even creating an exclusionary Asian trading bloc. More than a decade ago, there was concern in the United States that Japan was an economic threat because its economy was too strong. Subsequently, U.S. policymakers have come to believe that Japan is more of a problem when its economy is weak. A lackluster growth position in Japan not only affects U.S.-Japan trade and financial ties adversely, but also undermines growth of the East Asian economy. Moreover, an economically strong Japan is needed to serve as a counterweight to a rising China. Despite regaining a good deal of financial stability in recent years, Japan's economy remains weak. With growth projections of no more than 1.3%-1.6% over the next five years, Japan will not be in a position to play much of a locomotive role either for the United States or the region. This assessment is not likely to be altered by the estimated weak impact of Japan's FTA program on growth. Lagging China in FTAs with Asian countries, as well in other trade and investment linkages, Japan currently cannot be said to be moving rapidly to establish itself as a credible counterweight to a rising China. Post 9/11, U.S.-Japan trade relations arguably have received less attention than security issues. With the exception of Japan's ban of the imports of beef from the United States, there have been few bilateral trade disputes and tensions. Perhaps due to a declining share of the U.S. trade deficit and a stagnant economy for much of the 1990s, Japan's economy is no longer seen as threat to major U.S. industries. The reduction in bilateral tensions has been accompanied by Japan's FTA negotiating partners replacing the United States as demanders of agricultural trade liberalization. To the extent that these pressures lead to cuts in Japan's agricultural protection or agricultural reform proposals, this will be helpful to U.S. agricultural interests not only in bilateral context, but also in the context of the Doha Round. Unfortunately, slow movement or progress along these lines is occurring. At the same time, Japan's FTAs could diminish the benefits that the United States has obtained from FTAs. The Japan-Mexico FTA and the Japan-Singapore FTA are cases in point, moving Japan towards an equal footing with these trading partners. Although proposals have been made in the past for negotiation of an FTA between Japan and the United States, Japan's reluctance to reduce its agricultural protection has proved a formidable stumbling block. Nothing has changed in recent years to alter that calculation, but concerns have been raised that the respective FTA programs of the two sides could allow the bilateral economic relationship to drift and weaken as Japan engages increasingly with its Asian neighbors and the U.S. seeks new partnerships throughout the world. One consequence could be lost economic opportunities for the two largest economies in the world, as well as a weakening of political and security cooperation. In this context, one former U.S. trade negotiator has proposed consideration of what he calls a "Comprehensive Economic Initiative" (CEI) between Japan and the United States. The CEI is seen as a way for Japan and the United States (both governments and private sector representatives) to consider actions to promote trade, investment, financial flows, and deregulation, and to harmonize standards and coordinate competition policy. China has been much more aggressive than either Japan or the United States in negotiating FTAs. Beijing has concluded a partial FTA with ASEAN ahead of Japan and South Korea. China has also opened its tropical farm products to Thailand in a partial FTA, and has also agreed to start FTA negotiations with Singapore, Australia, and New Zealand. Moreover, China's long-term goal may be to form the center of an East Asian trade bloc. Given that the United States has a limited FTA agenda with Asian countries (FTAs in place with Singapore and Australia and talks contemplated with only South Korea), an East Asian trade bloc could have the potential for substantial discrimination against U.S. exports. In addition, such a bloc could have adverse effects on U.S. influence in the region. Also worrisome is the possibility of a Japan-China FTA. Much of Japan's private sector reportedly is enthusiastic about such a deal. A Japanese government sponsored study found that a China FTA could boost Japan's GDP by 0.5%, the most among any potential partner country or region. While many big obstacles stand in the way of a Japan-China FTA, the possibility should give pause to U.S. policymakers. Some observers opine that the United States would actively work to deter Japan from entering into an FTA with China. At the same time, China's aggressive FTA program is said to being used by Tokyo's opposing FTA negotiators for negotiating advantage. Trade negotiators representing ASEAN, for example, reportedly have played this "China card" by telling Japan that China is more forthcoming and willing to negotiate an FTA than Japan. Presumably, this kind of gamesmanship could nudge Japan to take more aggressive and trade liberalizing FTA positions. How this confluence of FTA developments in Asia ultimately impacts U.S. interests is uncertain. What seems clear, however, is the need for U.S. policymakers to give appropriate attention to how U.S. trade policies can best affect trends in the region to evolve in a direction favorable to U.S. interests. | Japan's trade policy historically has centered on multilateral negotiations and dispute settlement mechanisms. Over the past five years, however, Japan has shifted course somewhat by seeking free trade agreements (FTAs) with a number of countries, mostly in Asia. An FTA is an agreement between two countries or regional groupings to eliminate or reduce tariffs and other barriers on trade in goods and services. Non-members find their exports discriminated against. The pursuit of FTAs is occurring worldwide. The U.S. has an aggressive program and has FTAs in place with two Asian-Pacific countries--Singapore and Australia--and is negotiating one with Thailand. Europe has been pursuing a similar course for years. China and 10 members of the Association of Southeast Asian Nations (ASEAN) began implementing a partial FTA this year. Now Japan is trying to catch up. By freeing up trade in goods and services, Japan hopes to energize its economy, as well as to better compete with China for influence in Asia--objectives that seem to support U.S. interests. However, Japan's FTA program to date has not been robust enough to have much impact. Constrained by domestic pressures to continue protection of its agricultural sector, the FTA agreements Japan now has implemented with Singapore and Mexico and is scheduled to implement next year with the Philippines, Malaysia, and Thailand are unlikely to have a significant impact on Japan's economy. Agreements with larger countries where the commercial stakes are greater, such as South Korea, Australia, and China, are either stalled or being shied away from. Agriculture is Japan's biggest constraint on moving forward on FTAs. While some progress is being made in cutting tariffs on food items that serve small markets, highly protected rice and beef markets are not being offered for liberalization. Moreover, in the absence of a substantial farm reform program that would make liberalization of these products easier, many Japanese decision-makers hope protectionist pressures will go away over time with an aging farmer population that is shrinking and increasingly part-time. Japan's FTA program, assuming the current cautious and defensive course persists, is likely to have varied effects on U.S. interests. On the one hand, it is likely to provide a positive, yet small, boost to increasing Japan's role in the economics and political economy of East Asia. It is also likely to be favorable to bilateral trade ties as other Asian trading partners (instead of just the United States) pressure Japan to open its agricultural market further. On the other hand, the absence of a meaningful agricultural reform bodes poorly for support from Japan in the agricultural negotiations of the Doha Round. There are also concerns that a defensive and weak FTA program could allow China to play a more dominant role in the Asian economy through its own FTA program--perhaps even creating a exclusionary Asian trading bloc. This report will be updated as events warrant. | 6,370 | 635 |
Among the creative works that U.S. copyright law protects are sound recordings, which the Copyright Act defines as "works that result from the fixation of a series of musical, spoken, or other sounds." Owners of copyrighted sound recordings have exclusive rights to reproduce, adapt, or distribute their works, or to perform them publicly by digital means. Normally, anyone who wants to exercise any of the copyright owner's exclusive rights must obtain the copyright owner's permission to do so, typically by direct negotiations between copyright owners and users. However, the copyright law also provides several types of statutory, or compulsory, licenses for sound recordings. These licenses allow third parties who pay statutorily prescribed fees to use copyrighted sound recordings under certain conditions and according to specific requirements, without having to negotiate private licensing agreements. In 1998, in the Digital Millennium Copyright Act (DMCA), Congress amended several statutory licensing statutes to provide for and clarify the treatment of different types of Internet broadcasting, or "webcasting." Some transmissions of sound recordings are exempt from the public performance right, for example, a nonsubscription broadcast transmission; a retransmission of a radio station's broadcast within 150 miles of its transmitter; and a transmission to a business establishment for use in the ordinary course of its business. In contrast, a digital transmission by an "interactive service" is not exempt from the public performance right, nor does it qualify for a statutory license. The owner of an interactive service--one that enables a member of the public to request or customize the music that he or she receives --must negotiate a license, including royalty rates, directly with copyright owners. But, two categories of webcasting that do qualify for a compulsory license are specified "preexisting" subscription services (existing at the time of the DMCA's enactment) and "an eligible nonsubscription transmission." A subscription service is one that is limited to paying customers. The broader category of webcasters who may qualify for the statutory license under 17 U.S.C. SS 114(d) are those who transmit music over the Internet on a nonsubscription, noninteractive basis. A licensee under SS 114 may also qualify for a statutory license under 17 U.S.C. SS 112(e) to make multiple "ephemeral"--or temporary--copies of sound recordings solely for the purpose of transmitting the work by an entity legally entitled to publicly perform it. The initial ratemaking proceeding for statutory royalty rates for webcasters for the period 1998 through 2005 (referred to as "Webcaster I") proved to be controversial, perhaps reflecting in some degree the relative newness of both the DMCA and webcasting activity. A Copyright Arbitration Royalty Panel (CARP) issued a recommendation for the initial statutory royalty rate for eligible nonsubscription webcasters on February 20, 2002. Small-scale webcasters objected to the proposed rates. In accordance with then-existing procedures, the Librarian of Congress, on the recommendation of the U.S. Copyright Office, rejected the CARP's recommendation and revised rates downward. Congress interceded as well with enactment of the Small Webcasters Settlement Act (SWSA) of 2002, P.L. 107-321 . Although very complex, the law permitted more options than the royalty rates established by the Librarian's order. Qualifying small webcasters, for example, could elect to pay royalties based on a percentage of revenue or expenses rather than on a per-song per-listener basis. The rate agreement made pursuant to SWSA was published in the Federal Register but not codified in the Code of Federal Regulations. However, by SWSA's own terms, its provisions were not to be considered in subsequent ratemaking proceedings. Subsequent to passage of the SWSA and the initial ratemaking proceeding, Congress substantially revised the underlying adjudicative process. Enactment of the Copyright Royalty and Distribution Reform Act of 2004, P.L. 108-419 , abolished the CARP system and substituted a Copyright Royalty Board composed of three standing Copyright Royalty Judges. Rates established pursuant to the original ratemaking determination and SWSA were to remain in effect through 2005. As required by law, in March 2007 the Copyright Royalty Board announced royalty rates for the period that commenced (retroactively) from January 1, 2006, through December 31, 2010. The general process for statutory license ratemaking factors in a three-month period, during which interested parties are encouraged to negotiate a settlement agreement. In the absence of an agreement, written statements and testimony are gathered, discovery takes place, hearings are held, and the Copyright Royalty Board issues a ruling. Notice announcing commencement of the "Webcaster II" proceedings was published on February 16, 2005. On March 9, 2007, the Copyright Royalty Board issued its decision, which was published as a Final Rule and Order on May 1, 2007. The final determination of the CRB establishes new rates for commercial and noncommercial webcasters who qualify for the SS 114 compulsory license; the decision is effective on July 15, 2007. Rates are as follows: For commercial webcasters: $.0008 per performance for 2006, $.0011 per performance for 2007, $.0014 per performance for 2008, $.0018 per performance for 2009, and $.0019 per performance for 2010. This includes fees for making an ephemeral recording under 17 U.S.C. SS 112. For noncommercial webcasters: (i) For Internet transmissions totaling less than 159,140 Aggregate Tuning Hours (ATH) a month, an annual per channel or per station performance royalty of $500 in 2006, 2007, 2008, 2009, and 2010. (ii) For Internet transmissions totaling more than 159,140 Aggregate Tuning Hours (ATH) a month, a performance royalty of $.0008 per performance for 2006, $.0011 per performance for 2007, $.0014 per performance for 2008, $.0018 per performance for 2009, and $.0019 per performance for 2010. These rates include fees for making an ephemeral recording under 17 U.S.C. SS 112. Minimum fee. Commercial and noncommercial webcasters will pay an annual, nonrefundable minimum fee of $500 for each calendar year or part thereof. This rate structure does not make special provision for "small" webcasters, who were addressed in the SWSA by reference to revenues. The standard for establishing rates, set forth by statute, is known as the "willing buyer/willing seller" standard. The determination is informed by the "Webcaster I" initial royalty proceedings of the CARP. In essence, both the previous CARP and the current Copyright Royalty Board attempt to implement the statutorily mandated standard to reach a royalty rate. Explaining its interpretation of the governing language, the CRB wrote the following: Webcaster I clarified the relationship of the statutory factors to the willing buyer/willing seller standard. The standard requires a determination of the rates that a willing buyer and willing seller would agree upon in the marketplace. In making this determination, the two factors in section 114(f)(2)(B)(i) and (ii) must be considered, but neither factor defines the standard. They do not constitute additional standards, nor should they be used to adjust the rates determined by the willing buyer/willing seller standard. The statutory factors are merely to be considered, along with other relevant factors, to determine the rates under the willing buyer/willing seller standard. The board considered the proposals of representatives for "small" webcasters that rates be structured as a percentage of revenue, but ultimately rejected them: In short, among the parties on both sides who have proposed rates covering Commercial Webcasters, only Small Commercial Webcasters propose a fee structure based solely on revenue. However, in making their proposal, this group of five webcasters clearly is unconcerned with the actual structure of the fee, except to the extent that a revenue-based fee structure--especially one in which the percent of revenue fee is a single digit number (i.e., 5%)--can protect them against the possibility that their costs would ever exceed their revenues.... Small Commercial Webcasters' focus on the amount of the fee, rather than how it should be structured, is further underlined by the absence of evidence submitted by this group to identify a basis for applying a pure revenue-based structure to them. While, at times, they suggest that their situation as small commercial webcasters requires this type of structure, there is no evidence in the record about how the Copyright Royalty Judges would delineate between small webcasters and large webcasters. And, in a substantive footnote, the board expressed its view that it lacks statutory authority to carve out royalty rate niches for the emergent business models promoted by small commercial webcasters: It must be emphasized that, in reaching a determination, the Copyright Royalty Judges cannot guarantee a profitable business to every market entrant. Indeed, the normal free market processes typically weed out those entities that have poor business models or are inefficient. To allow inefficient market participants to continue to use as much music as they want and for as long a time period as they want without compensating copyright owners on the same basis as more efficient market participants trivializes the property rights of copyright owners. Furthermore, it would involve the Copyright Royalty Judges in making a policy decision rather than applying the willing buyer/willing seller standard of the Copyright Act. In setting the rates, the board looked to proposed "benchmark" agreements to determine what a hypothetical buyer and seller would agree to in the marketplace. It rejected the proposals advanced by the radio broadcasters and small commercial webcasters that the appropriate benchmark was the fee paid to performing rights organizations (PROs), such as ASCAP, BMI and SESAC, for the digital public performance of the underlying musical composition. It also rejected a proposal that analog over-the-air broadcast music radio be used as a benchmark, with reference to musical composition royalties paid by such broadcasters to the PROs. Based on the evidence before it, the Copyright Royalty Board found that the most appropriate benchmark agreements are those in the market for interactive webcasting covering the digital performance of sound recordings, with appropriate adjustments. In summary, the Copyright Royalty Board's decision, like that of its predecessor, the CARP, declines to delineate a separate class or to integrate a separate market analysis on behalf of "small" webcasters. The expiration of the option to pay a percentage of revenues, to be replaced by a minimum payment, per-song per-listener formula, was, predictably, not well received in the small webcasting business community, among others. Some Members of Congress voiced concern as well. What follows below are descriptions of the responses to the CRB decision in different settings: the negotiating table, the federal courts, and the Congress. Following the issuance of the CRB decision, private negotiations between SoundExchange, the organization charged with collecting and distributing performance royalties, and both large and small webcasters were initiated in an attempt to reach a compromise royalty rate agreement that would serve as an alternative to the payment scheme provided by the CRB decision. In response to a request from the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property, SoundExchange offered in May 2007 to extend the terms of the Small Webcaster Settlement Act of 2002, with some modifications, to certain qualified small webcasters through 2010. "Small" webcasters, those with annual revenues of less than $1.25 million, could pay royalties based on a percentage of revenue model, that is, fees of 10% of all gross revenue up to $250,000, and 12% for gross revenue above that amount. SoundExchange's proposal for small webcasters, however, was met by criticism that the deal would effectively restrict small webcasters from becoming larger, more profitable businesses and would limit the diversity of music that may be played. Another proposal that was discussed and subsequently agreed to between several of the largest webcasters and SoundExchange is a $50,000 per year cap on the $500 annual-per-channel minimum fee through 2010. In exchange for this cap, the webcasters agreed to provide SoundExchange with a comprehensive annual accounting of all songs performed (24 hours a day, 365 days a year) and to form a committee with SoundExchange to evaluate the issue of unauthorized copying of Internet radio streams (a practice known as "streamripping," or the process of converting ephemeral Internet-streamed content into permanent recordings). The agreement does not require webcasters to implement technological measures aimed at preventing their listeners from engaging in streamripping, however. In a unilateral offer put forth by SoundExchange, qualified small webcasters (those earning $1.25 million or less in total revenues) would be permitted to stream sound recordings of all SoundExchange members by paying royalties under the old percentage-of-revenue scheme. Over 20 small webcasters have since accepted this offer, the terms of which are retroactive to January 1, 2006, and continue through December 31, 2010. Parties to the "Webcaster II" proceeding before the CRB appealed the board's decision. On April 16, 2007, the Copyright Royalty Board issued an order denying rehearing. On May 30, 2007, several parties, including the Digital Media Association, National Public Radio, and a coalition of small commercial webcasters filed suit in the U.S. Court of Appeals for the D.C. Circuit requesting a stay pending their appeal of the board's decision. The motion alleged that the board's decision is arbitrary and capricious in several respects, but particularly with regard to the requirement of a minimum fee "per station" or "per channel." On July 11, 2007, a three-judge panel of the court of appeals denied the emergency motion to delay the CRB decision pending the parties' appeal. The five separate appeals by the parties were consolidated into one case. On July 10, 2009, the federal court of appeals issued an opinion in the case that affirmed nearly all aspects of the "Webcaster II" royalty rate proceeding, although it vacated the $500 minimum annual fee per channel or station and remanded that portion of the determination for the CRB to reconsider. In evaluating the CRB's determination, the appellate court followed the standard of review provided for under the Administrative Procedure Act (APA); that is, the court was required to "uphold the results of adversarial agency proceedings unless they are arbitrary, capricious, contrary to law, or not supported by substantial evidence." The court admitted that "the standard of review applicable in ratemaking cases is highly deferential." According to the court, the webcasters failed to show that the CRB's rates satisfied any of the criteria under the APA that would permit the court to set them aside. The court also upheld the CRB's decision to reject the small commercial webcasters' arguments for including a percentage of revenue royalty fee option, noting that the Copyright Royalty Judges are not required to preserve the business of every participant in a market. They are required to set rates and terms that "most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller." 17 U.S.C. SS 114(f)(2)(B). If small commercial webcasters cannot pay the same rate as other willing buyers and still earn a profit, then the [Copyright Royalty] Judges are not required to accommodate them. While the D.C. Circuit Court of Appeals sustained the royalty rates that were the result of the "Webcaster II" proceeding, the court vacated the minimum fee provision of the CRB determination that would have required webcasters to pay a minimum fee of $500 per channel or station. The court first observed that the Copyright Act requires the CRB to set a minimum fee that licensees must pay to cover the "administrative costs of the copyright owners in administering the license." While acknowledging that some webcasters represented by the Digital Media Association (DiMA) had reached an agreement with SoundExchange in 2007 to cap the minimum fees at $50,000 per year per license, the court explained that not all parties that would be bound by the CRB decision had contracted around the statutory minimum fee requirement and thus the issue was not moot. The court expressed concern that the CRB's determination on minimum fees did not reveal an awareness of the possibility of a licensee paying "hundreds of thousands of dollars or more" in minimum fees, depending on the potential interpretation of the phrase "per channel or station": Depending on future interpretations of "channel or station," the Judges' determination might impose enormous fees on some business models and tiny fees on others, based on regulations that have not yet been defined. Such a regime is arbitrary and does not appear to represent what "would have been negotiated in the marketplace between a willing buyer and a willing seller." Consequently, the appellate court remanded the minimum fee portion of the determination to the CRB for further reconsideration. On October 23, 2009, the CRB issued an order that established a one-month period, from November 2, 2009, until December 2, 2009, during which the parties to the litigation were to negotiate and submit a settlement of the minimum fee issue for commercial webcasters. SoundExchange and DiMA submitted a settlement on December 2, 2009, to the CRB, which calls for each commercial webcaster that utilizes the SS 114 compulsory license to pay an annual, nonrefundable minimum fee of $500, for each individual channel and each individual station that it maintains, although no commercial webcaster is required to pay more than $50,000 per calendar year. To implement the settlement, the CRB published proposed regulations concerning the minimum fees in the Federal Register on December 23, 2009; public comments and objections to the proposed amendments were due no later than January 22, 2010. Two bills related to the CRB's decision were introduced in the 110 th Congress (the Internet Radio Equality Act; H.R. 2060 , S. 1353 ) that would have nullified the board's decision and substituted different rates and terms. Neither were enacted, however. Instead, the 110 th Congress passed the Webcaster Settlement Act of 2008 ( P.L. 110-435 ) that authorized SoundExchange to enter into settlement agreements with webcasters that effectively replace the CRB's decision. Such authority expired on February 15, 2009. In the 111 th Congress, the Webcaster Settlement Act of 2009 ( P.L. 111-36 ) was passed to reinstate SoundExchange's authority to negotiate settlement agreements with webcasters for a period of 30 days starting on July 1, 2009. The Webcaster Settlement Act of 2008 (WSA of 2008), H.R. 7084 , was introduced on September 25, 2008, by Representative Inslee and then subsequently approved by voice vote in the House on September 27 and by unanimous consent in the Senate on September 30. It was signed by President Bush on October 16, 2008 ( P.L. 110-435 ). The purpose of the act was to provide statutory authority for SoundExchange to negotiate and enter into alternative royalty fee agreements with webcasters that would replace the rates established under the CRB's decision, while Congress was in recess for the November 2008 elections. However, the act provided a limited period of time for reaching voluntary accords, as it terminated SoundExchange's authority to make settlements with webcasters on February 15, 2009. These agreements "shall be binding on all copyright owners of sound recordings and other persons entitled to payment ... in lieu of any determination [of royalty rates] by the Copyright Royalty Judges." However, the act did not mandate that SoundExchange negotiate agreements with webcasters. The WSA of 2008 amended 17 U.S.C. SS 114(f)(5), which had been added to the Copyright Act by the Small Webcaster Settlement Act of 2002. The act deleted references to "small" webcasters, thereby allowing the section to pertain to all webcasters regardless of size. The act also amended the section to state that agreements "may" include provisions for payment of royalties on the basis of a percentage of revenue or expenses, or both, and a minimum fee; the section originally provided that agreements "shall" contain these terms. The WSA also provided that the terms of a negotiated agreement may be effective for up to a period of 11 years beginning on January 1, 2005. The act permitted any agreement to be precedential in future CRB ratemaking proceedings, if the parties to the agreement so expressly authorized. Finally, the act declared that nothing in the WSA of 2008 (or any agreement entered into under it) shall be taken into account by the U.S. Court of Appeals for the District of Columbia Circuit in its review of the May 1, 2007, determination of royalty rates by the Copyright Royalty Judges. Three negotiated royalty agreements have been made under the authority of the WSA of 2008. The Corporation for Public Broadcasting (CPB) and SoundExchange announced on January 15, 2009, that they had reached a "comprehensive agreement" on the royalty rates to be paid for Internet streaming of sound recordings by approximately 450 public radio webcasters, including CPB-supported station websites, NPR, NPR members, National Federation of Community Broadcasters members, American Public Media, Public Radio Exchange, and Public Radio International. The agreement, which substitutes for the statutory rates determined by the CRB in May 2007, covers a royalty period from January 1, 2005, through December 31, 2010. Under the agreement, CPB is required to pay SoundExchange a single, "up-front" flat-fee royalty payment of $1.85 million. The agreement applies to 450 public radio stations in the years 2005-2007, with an allowance for growth in the number of stations of up to 10 per year starting in 2008 (therefore a maximum of 480 stations in 2010). In addition, CPB, on behalf of the public radio system, is to provide SoundExchange with consolidated usage and playlist reporting in order to "improve the efficiency of the payment process helping to ensure that performers and sound recording copyright owners are accurately paid for the use of their recordings." As a condition of the agreement, NPR also agreed to drop its appeal of the CRB's royalty rate decision. On February 15, 2009, the National Association of Broadcasters (NAB) and SoundExchange informed the Copyright Office that they had made an agreement that covers an extended royalty period (from January 1, 2006, through December 31, 2015) for terrestrial AM or FM radio broadcasters (licensed by the Federal Communications Commission) who simulcast their signal or stream other programming over the Internet. The negotiated agreement calls for each broadcaster to pay an annual minimum fee of $500 for each of its channels, although no broadcaster is required to pay more than $50,000 on the minimum fees. In addition, broadcasters must pay royalty rates on a per-performance basis, as follows: Broadcasters must also submit, on a monthly basis, "census" reports to SoundExchange that detail information about the songs that they play over the Internet, including song title, artist, album, number of times a song is played, and the number of listeners for each song. "Small" broadcasters that stream less than 27,777 aggregate tuning hours per year may pay $100 per year to obtain a waiver from this detailed annual census reporting requirement. On February 15, 2009, a limited number of "small" webcasters reached an agreement with SoundExchange for the same royalty period as the NAB's license (2006-2015). The webcasters that are party to this agreement must comply with census reporting requirements and pay annual minimum fees that vary from $500 to $5,000, depending on specified gross revenue limits. The negotiated royalty rate for these small webcasters is as follows: All of the three agreements described above provide that their rates and terms are nonprecedential, and "shall not be admissible as evidence or otherwise taken into account in any administrative, judicial, or other government proceeding involving the setting or adjustment of" royalties for Internet transmission of copyrighted music. Although SoundExchange successfully negotiated new rates with certain categories of webcasters discussed above, SoundExchange did not reach agreements with all webcasters, including the largest commercial webcasters such as Pandora, Live365, and RealNetworks, prior to the February 15, 2009, sunset of SoundExchange's settlement authority under the WSA of 2008. SoundExchange appealed to Congress to renew such authority due to "positive developments in its discussions" with these webcasters. The Webcaster Settlement Act of 2009 (WSA of 2009) ( H.R. 2344 , S. 1145 ) was introduced in the House on May 12, 2009, by Representative Inslee, and in the Senate by Senator Wyden on May 21, 2009. On June 9, 2009, the House passed H.R. 2344 by voice vote under suspension of the Rules of the House. The Senate passed H.R. 2344 without amendment by unanimous consent on June 17, 2009. President Obama signed the bill on June 30, 2009 ( P.L. 111-36 ). The WSA of 2009 reinstated SoundExchange's authority to negotiate settlement agreements for a 30-day period starting on July 1, 2009. Pursuant to the WSA of 2009, SoundExchange negotiated five royalty agreements. The first agreement was announced on July 7, 2009, and is available to certain "pureplay" commercial webcasters (those that derive nearly all of their revenue from the streaming of sound recordings) such as Pandora, AccuRadio, and Live365.com. Commercial pureplay webcasters can either opt-in to the agreement or choose not to sign onto it and instead comply with the CRB-issued rates and terms. The pureplay agreement covers three rate classes: large commercial webcasters (those exceeding $1.25 million in annual revenues); small pureplay webcasters (those with an annual gross revenue of less than $1.25 million and that do not exceed certain monthly aggregate tuning hour limits ); and webcasters that provide bundled, syndicated, or subscription services. The pureplay webcaster agreement pertains to the royalty period starting on January 1, 2006, and ending on December 31, 2015 (although it expires at the end of 2014 for small webcasters). Commercial webcasters that want to claim the benefit of the rates and terms under this agreement must submit to SoundExchange an election form every year. The agreement contains the following warning: It is the responsibility of each transmitting entity to ensure that it is in full compliance with applicable requirements of the statutory licenses under Sections 112(e) and 114 of the Copyright Act. SoundExchange is not in a position to, and does not, make determinations as to whether each of the many services that rely on the statutory licenses is eligible for statutory licensing or any particular royalty payment classification, nor does it continuously verify that such services are in full compliance with all applicable requirements.... SoundExchange and copyright owners reserve all their rights to take enforcement action against a transmitting entity that is not in compliance with all applicable requirements. The rates available under the pureplay webcaster agreement are described in Table 3 . Under the pureplay agreement, commercial webcasters must provide monthly census reports to SoundExchange concerning every sound recording performed during that month and the number of performances of each recording. The agreement also provides that its rates and terms may not be admissible as evidence or otherwise taken into account in any administrative, judicial, or other government proceeding concerning the setting of royalties for public performance of sound recordings. Furthermore, the agreement contains a clause that expresses the following sentiment: These Rates and Terms shall be considered as a compromise motivated by the unique business, economic and political circumstances of Commercial Webcasters, copyright owners and performers rather than as matters that would have been negotiated in the marketplace between a willing buyer and a willing seller. The agreement with college-affiliated Internet radio webcasters covers those that are "directly operated by, or [are] affiliated with and officially sanctioned by, and the digital audio transmission operations of which are staffed substantially by students enrolled at, a domestically-accredited primary or secondary school, college, university or other post-secondary degree-granting educational institution." The college webcaster agreement covers the period from January 1, 2011, until December 31, 2015. There is a minimum annual fee of $500 for each individual channel and each station that the college webcaster operates. For college webcasters that make total transmissions in excess of 159,140 aggregate tuning hours (ATH), the webcaster must pay additional usage fees at the following per-performance rates: College webcasters that do not exceed 55,000 total ATH per month for any individual channel may pay a $100 annual "proxy" fee in lieu of providing reports of use to SoundExchange. Those not exceeding 159,140 total ATH per month may submit reports of use on a sample basis (two weeks per calendar quarter) and such reports need only report how many times a song is played (rather than ATH or actual total performances). College webcasters that exceed 159,140 total ATH must submit census reporting (name of each song performed and how many listeners for each song). The college webcaster agreement expressly provides that the rates and terms contained within the agreement may be used as precedent in future ratemaking proceedings. The noncommercial religious broadcaster agreement governs the royalty period from 2006 to 2015. Like the agreement made with noncommercial college webcasters, this agreement requires religious webcasters to pay SoundExchange an annual minimum fee of $500 for each individual channel or station through which they stream sound recordings over the Internet. This minimum fee constitutes "full payment" for the religious webcaster to stream up to 159,140 monthly ATH of programming on each channel or station. If religious webcasters stream in excess of that amount per month, they must pay SoundExchange additional royalties at the following rates: Religious webcasters that do not exceed 44,000 ATH per year may pay SoundExchange a $100 proxy fee to waive the reporting requirement. Those not exceeding 159,140 total ATH per month may submit reports of use on a sample basis (two weeks per calendar quarter) and such reports must describe total ATH. Religious webcasters that exceed 159,140 total ATH per month must submit census reporting (total performances and number of listeners). Unlike the noncommercial educational webcaster agreement, the noncommercial religious broadcaster agreement does not authorize its rates to be precedential in future administrative, judicial, or other government proceeding involving royalty rate setting. The agreement SoundExchange reached with Sirius XM applies not to performances of sound recordings transmitted by satellite, but rather to the streaming of Sirius programming over the Internet or to mobile phones using Internet technology. The Sirius agreement covers the royalty period 2009-2015, and the annual minimum fee required is $500 for each individual channel and each station. There is a $50,000 cap on this minimum fee in any one year. In addition, Sirius must pay royalties at the following per-performance rate: The Sirius XM agreement requires monthly statements of account and reports of use. In addition, it expressly authorizes the use of the agreement in future ratemaking proceedings. Under the WSA of 2009, Sound Exchange and the Corporation for Public Broadcasting (CPB) reached another agreement that extends the agreement the parties had made under the WSA of 2008. The second agreement governs the royalty period from January 1, 2011, through December 31, 2015. The total license fee that CPB must pay to SoundExchange for this royalty period is $2.4 million, payable in five equal installments each year starting December 31, 2010. The license applies to 490 public radio stations in the year 2011, with an allowance for growth in the number of stations of up to 10 per year (and a limit of 530 stations in 2015). For all of these stations, if the total music ATH exceeds certain ATH limits per year, CPB must pay additional fees to SoundExchange on a per performance basis as specified in the table below: The agreement requires CPB-affiliated public radio broadcasters to submit reports of use, play frequency, and ATH per calendar quarter. The agreement provides that the rates, fees, and other requirements are nonprecedential and may not be introduced as evidence or taken into account in any ratemaking proceeding. Although the past two years have been consumed with the reactions to the Copyright Royalty Board's May 2007 decision, time marches on, and the CRB announced on January 5, 2009, that it would begin the third proceeding ("Webcaster III") to determine the royalty rates for the statutory license covering Internet transmissions of sound recordings, applicable to the next royalty period that runs from January 1, 2011, through December 31, 2015. Any webcaster that chooses not to opt-in to one of the settlement agreements described above may participate in this proceeding and would be bound by the rates and terms that the CRB shall determine. | Under the Copyright Act, Internet radio broadcasters, or "webcasters," that stream copyrighted music to their listeners are obliged to pay royalty fees to the sound recording copyright owners at statutory rates established by the Copyright Royalty Board (CRB). However, some webcasters may also have the option of paying different royalty fees that are privately negotiated with SoundExchange, the entity that collects performance royalties on behalf of sound recording copyright owners and recording artists. On March 9, 2007, the CRB announced statutory royalty rates for certain digital transmissions of sound recordings by webcasters for the royalty period January 1, 2006, through December 31, 2010. Several webcasters appealed the CRB's decision to the U.S. Court of Appeals for the District of Columbia Circuit. The appellants argued that the rates were unreasonably high and that the absence of a cap on minimum fees paid per licensee was arbitrary and capricious. On July 10, 2009, the federal court of appeals issued a decision that upheld nearly all aspects of the CRB's determination of rates. Two recent laws, the Webcaster Settlement Act of 2008 (WSA of 2008; P.L. 110-435) and the Webcaster Settlement Act of 2009 (WSA of 2009; P.L. 111-36), facilitated the ability of webcasters to enter into voluntary agreements with SoundExchange that provide alternative royalty rates that substitute for the statutory rates established under the CRB's decision. These agreements generally permit a webcaster to pay lower rates and may cover a longer royalty period. Pursuant to the WSA of 2008 and 2009, voluntarily negotiated royalty agreements were reached between SoundExchange and the following entities: the Corporation for Public Broadcasting (for the online streaming of public radio stations); the National Association of Broadcasters (for online simulcasts by FM and AM radio stations); a group of "small" webcasters; certain "pureplay" commercial webcasters (those that derive nearly all of their revenue from the streaming of sound recordings) such as Pandora, Live365.com, and AccuRadio; noncommercial educational webcasters (college-affiliated Internet radio stations); noncommercial religious broadcasters (that stream their AM/FM programming over the Internet); and Sirius XM (concerning Internet streaming of Sirius programming as opposed to its satellite-transmitted programming). Although the above settlements cover the same royalty period as the CRB's determination (from 2006 through 2010), some rate agreements extend beyond that period, until the end of 2015. Thus, webcasters that are parties to extended agreements need not participate in the CRB proceedings to determine statutory royalty rates for the period 2011 to 2015, which were initiated in January 2009. Any webcaster that chooses not to opt-in to a settlement agreement with SoundExchange must instead comply with the applicable statutory rates and terms established by the CRB for the period 2006-2010, and will be subject to any new rates that the CRB determines for 2011-2015. This report surveys the legislative history of this issue, the CRB's rate decision, and the congressional and public response. | 7,301 | 691 |
Buprenorphine is one of three medications currently used in medication-assisted treatment of opioid use disorders. As such, buprenorphine's effectiveness, safety, and availability are of considerable interest to policymakers seeking to address the ongoing opioid crisis in the United States. During the 115 th Congress, committees held hearings on opioid-related topics such as implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA, P.L. 114-198 ), the effects of the opioid crisis on families, and opioid use among veterans. Members have introduced more than 150 bills related to opioids. On October 24, 2018, President Trump signed into law H.R. 6 , the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (the SUPPORT Act; P.L. 115-271 ), a broad measure designed to address widespread overprescribing and abuse of opioids in the United States. Congressional actions taken in recent years to address the opioid crisis, including the SUPPORT Act, have included attempts to increase access to buprenorphine. Among the U.S. population aged 12 or older, an estimated 11.4 million individuals (4.2%) used heroin, misused prescription pain relievers, or did both in 2017. This includes over 2 million people (0.8% of the U.S. population aged 12 or older) who met full diagnostic criteria for an opioid use disorder. A minority of those with a substance use disorder receive specialty treatment. In 2016, 21.1% of those with any opioid use disorder received specialty substance use treatment, including 37.5% of those with heroin use disorder and 17.5% of those with prescription pain reliever use disorders. This CRS report attempts to answer questions policymakers may have about the following topics: the effectiveness of buprenorphine as a treatment for opioid use disorder, the demand for buprenorphine as a treatment for opioid use disorder, and access to buprenorphine as a treatment for opioid use disorder. The information about effectiveness in this report is based on a systematic review of research on buprenorphine. A systematic review is a comprehensive report collating all of the relevant empirical evidence on a specific topic. A more thorough explanation of the methodology for the systematic review of the literature, including all citations on which much of the information in this report is based, is available in the Appendix . The report focuses on buprenorphine as a treatment for opioid use disorder for adults. It does not provide a comprehensive overview of opioid abuse as a public health or criminal justice issue. Whether buprenorphine (or any medication) is effective is not a simple "yes" or "no" answer, for several reasons. Buprenorphine comes in different formulations, each of which has been evaluated separately. Studies may define effectiveness in different ways and may compare buprenorphine to different treatments (e.g., another medication or a nonpharmacological treatment). Also, effectiveness is weighed against safety risks. Finally, buprenorphine may be more effective for some people, or in some circumstances, than in others. The following sections address these topics. Buprenorphine is a partial opioid agonist, meaning it binds to the same opioid receptors in the brain as full opioid agonists (such as heroin or methadone) but activates the receptors less strongly. Similar to methadone, buprenorphine can reduce the cravings and withdrawal symptoms that often accompany discontinuation of the opioid of abuse, but buprenorphine does so without producing the same euphoria or "high." As a partial agonist, buprenorphine offers less potential for abuse and has a lower overdose risk than methadone. Buprenorphine was first approved by the Food and Drug Administration (FDA) as a pain reliever in 1981. Research on buprenorphine as a pain analgesic showed mixed effectiveness, though the drug did demonstrate lower rates of abuse than other opioid pain medications such as oxycodone. More than 20 years after it was first approved to treat pain, buprenorphine was approved by FDA as a treatment for opioid use disorder, under the trade names Subutex®️ and Suboxone®️. The difference between the two products is that Suboxone®️ combines buprenorphine with naloxone - an opioid antagonist that blocks opioid receptors from being activated and thereby reduces the risk of abuse. Since 2002, FDA has approved other forms of buprenorphine (with and without naloxone) for the treatment of opioid use disorders, as shown in Table 1 . Overall, research on buprenorphine has found it to be an effective medication for maintenance treatment of opioid dependence. A 2014 review of buprenorphine efficacy trials conducted by Cochrane found that buprenorphine can be useful in helping individuals discontinue opioid drug use and maintain abstinence. The efficacy of buprenorphine in reducing opioid use, however, appeared to be dependent on several factors. For example, buprenorphine effectiveness seems to be dose dependent. It was only found to be superior to placebo when used at high doses. Buprenorphine was most effective when used at 16mg daily doses or higher, compared to low or medium doses of 15mg or less. The standard of care for buprenorphine treatment currently includes "flexible dosing" which involves individual clinicians determining dose based on each patient, rather than fixed dosing consisting of predetermined dosage regimens. Other factors influencing the effectiveness of buprenorphine include primary opioid of use (i.e., prescription pain medication versus heroin) and length of buprenorphine treatment (see questions below for further elaboration). When compared to methadone (the most common treatment for opioid abuse), buprenorphine appears to be equally as effective in promoting abstinence from drug use. Buprenorphine offers several benefits compared to methadone. Buprenorphine has less potential for abuse and overdose than methadone, and some research suggests it may be more cost effective. Abrupt discontinuation of buprenorphine leads to milder withdrawal symptoms than methadone. Individuals using buprenorphine, however, appear to drop out of treatment at higher rates than those using methadone. Table 2 describes various opioid treatment modalities. Treatment retention describes the rate in which individuals remain in substance abuse treatment. Retention is often essential to achieve the goals of the treatment, namely abstinence from drug use. Retention in treatment for individuals using buprenorphine increases linearly as both the dose of buprenorphine and length of time spent weaning off the medication increase. Put simply, research implies that as the dose of buprenorphine increases, retention in treatment improves. Similarly, with a longer period of tapering off the medication comes greater retention in the treatment. Taper length for buprenorphine is also associated with greater rates of abstinence from other opioids and successful completion of treatment. Therefore, the higher the dose of buprenorphine and the longer individuals are on the medication, the more likely they are to remain in treatment, abstain from opioid use, and successfully complete treatment. Studies seem to indicate that methadone is better able to retain participants in treatment than buprenorphine, but it remains unclear why this is the case. It may be that buprenorphine, being a partial opioid agonist, is less satisfying than methadone because it does not produce a comparable euphoric effect. Also, buprenorphine may not typically be increased to effective doses quickly enough, resulting in more attrition early in treatment. It is also possible that buprenorphine does not retain people as well because mild withdrawal symptoms from the opioid of abuse may still be present for many patients while using the medication. Being only a partial opioid agonist, buprenorphine is also easier to discontinue without withdrawal symptoms of its own, which may make dropping out of treatment less difficult. Buprenorphine is an opioid itself and therefore carries a risk for addiction and overdose. As a partial opioid agonist, the euphoric effects of buprenorphine are low compared to full agonists like heroin, fentanyl, morphine, or methadone. Therefore, the abuse potential for buprenorphine is generally considered to be less than that of full opioid agonists. Overdoses caused solely by buprenorphine are rare, with most overdoses occurring when the medication is used at the same time as other drugs such as benzodiazepines or other sedatives. Other adverse events associated with buprenorphine diverted intravenously, such as the transmission of communicable diseases, are similar to those of other misused injected substances. When buprenorphine is combined with naloxone, an opioid antagonist, it discourages misuse via injection which may contribute to buprenorphine's lower rates of abuse and overdose. Preliminary evidence on buprenorphine suggests it may be a safer treatment compared to methadone. Buprenorphine has less abuse potential and appears to result in fewer fatalities than methadone. In one study, patients taking buprenorphine experienced half as many ambulatory care visits compared to those taking methadone, suggesting buprenorphine use was associated with fewer incidents endangering health and safety. Only a few studies have compared mortality rates between buprenorphine and methadone treatments; however, existing data suggest that methadone is associated with a higher potential for mortality in the first few weeks of treatment. Research indicates that rates of opioid overdose with buprenorphine are lower than those associated with methadone. Data from one study conducted in France showed that death rates attributable to methadone may be as much as three times greater than that of buprenorphine, though other studies found no significant differences. Comparison of the safety of these two treatments in the United States awaits further research. There appear to be differences in successful outcomes of treatment for opioid addiction based on whether an individual was primarily abusing prescription pain medication or heroin. When using buprenorphine for addiction treatment, heroin users seem to have less positive outcomes compared to individuals who abuse prescription painkillers. While both groups are retained in treatment at similar rates, those abusing pain medication demonstrate greater improvement when using buprenorphine. Also, several of the studies noted that more than ever before, heroin users began their drug abuse with prescription opioid medications. The effectiveness of buprenorphine treatment, therefore, may depend in part on whether an individual with opioid use disorder has transitioned from misusing prescription opioids to using heroin. Buprenorphine is one of three medications currently used to treat adults addicted to opioids. The precipitous rise in opioid misuse in the last decade and increasing financial burden of this epidemic highlight the need for effective treatments. Despite marked increases in opioid abuse, deaths attributed to opioids, and related hospital admissions, the majority of individuals in need of treatment do not receive it. Opioid overdose deaths have increased significantly in the past 15 years ( Figure 1 ). In 2015, an estimated 33,091 Americans died of opioid-related overdoses. In 2016, that number increased to 42,249. Data for 2017 revealed 47,600 deaths involving opioids, representing a fourfold increase over 2002, around the advent of the epidemic. Almost a third of patients prescribed opioid pain relievers misuse these medications, and an estimated 1 in 10 become addicted. Misuse of opioid pain medications remains high ( Figure 2 ). In 2017, an estimated 11.4 million people aged 12 and older misused opioids, including 11.1 million misusers of prescription pain relievers and 886,000 heroin users. While the majority of individuals who misuse prescription opioids will not progress to heroin use, they are 13 times more likely to use heroin in their lifetime than those who use pain medication as prescribed. The financial costs of this epidemic have been substantial. The combined economic influence of the opioid epidemic (healthcare, labor, and criminal justice costs) was estimated at $92 billion in 2016, an increase of 67% from a decade ago. Another analysis, which included the cost of opioid overdose fatalities, estimated the cost of the opioid epidemic at $504 billion in 2015. Buprenorphine is regulated differently when used for opioid use disorder than when used for pain. The Controlled Substances Act (CSA) limits who may prescribe (or administer or dispense) buprenorphine to treat opioid use disorder, and the circumstances under which they may do so. These limits have implications for how patients gain access to buprenorphine and how they pay for buprenorphine. The different forms of buprenorphine (e.g., implants vs. sublingual, etc.) also have implications for how patients gain access to buprenorphine and how they pay for it. Buprenorphine may be used to treat opioid use disorder in two settings: (1) within a federally certified opioid treatment program (OTP) and (2) outside an OTP pursuant to a waiver. When used within an OTP, buprenorphine is administered or dispensed on site, rather than prescribed. That is, a patient does not receive a prescription to be filled at a retail pharmacy; instead, a patient receives the buprenorphine at the OTP, necessitating nearly daily visits to the OTP unless the patient is using injectable or implantable forms of buprenorphine which can last up to several months. A physician or other practitioner (e.g., physician assistant or nurse practitioner) may obtain a waiver to administer, dispense, or prescribe buprenorphine outside an OTP. This is commonly known as a DATA waiver, drawing its name from the law that established the waiver authority: the Drug Addiction Treatment Act of 2000 (DATA 2000). Under the CSA, as amended by DATA 2000 and subsequent legislation, the requirement for separate Drug Enforcement Administration (DEA) registration as an OTP may be waived if both the medication and the practitioner meet specified conditions. To date, buprenorphine is the only medication to meet the conditions for the DATA waiver. To qualify for a waiver, a practitioner must notify the Health and Human Services (HHS) Secretary of the intent to use buprenorphine to treat opioid use disorders and must certify that he or she is a qualifying practitioner; can refer patients for appropriate counseling and other services; and will comply with statutory limits on the number of patients that may be treated at one time. The patient limit is 30 individuals during the first year and may increase to 100 after one year or immediately if the practitioner holds additional credentialing or operates in a qualified practice setting. The patient limit may increase to 275 after one year under certain conditions specified in regulation. The SUPPORT Act removed the temporary authority (through October 1, 2021) for qualifying nurse practitioners and physician assistants to obtain DATA waivers and expanded the definition of "qualifying other practitioners" to include clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. Qualifying nurse practitioners and physician assistants may obtain waivers permanently, while clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives are authorized to obtain DATA waivers until October 1, 2023. In the 1990s, the makers of buprenorphine argued successfully that opioid substitution therapy with buprenorphine need not be limited to OTPs, primarily because the safety profile of buprenorphine compared favorably to that of methadone. Congress remained convinced that opioid substitution therapy with buprenorphine should be subject to restrictions beyond those applicable when the same opioid medications are used to treat pain. The patient limit is one such restriction. As originally enacted, DATA 2000 amended the CSA to allow qualifying physicians to treat opioid addiction using buprenorphine and imposed a patient limit of 30 individuals. This patient limit remains in place for qualifying practitioners that do not meet additional requirements. In 2006, the CSA was amended to allow a DATA-waived physician to increase the patient limit to 100 patients after one year. As aforementioned, subsequent legislation expanded eligibility for DATA waivers to other clinicians besides physicians. Pursuant to a statutory provision authorizing the HHS Secretary to raise the patient limit through rulemaking, in March 2016, HHS issued a notice of proposed rulemaking that would have increased the patient limit to 200. The proposed higher patient limit was intended to significantly increase patient capacity for practitioners qualified to prescribe at this level while also "ensuring quality of care and minimizing diversion." In response to public comments arguing that raising the patient limit to 200 was not likely to make a significant impact on addressing the treatment gap, HHS issued a final rule setting the patient limit at 275 after two years (subject to certain conditions). Using survey data, HHS found that an OTP could manage, on average, 262 to 334 patients at any given time. HHS set the new DATA waiver patient limit near the low end of this range, a conservative estimate of the number of patients who could be treated by a single physician in "a high-quality, evidence-based manner that minimizes the risk of diversion." The SUPPORT Act codified this number in law, allowing practitioners to increase the patient limit to 275 after one year of maintaining a waiver to treat up to 100 patients. The SUPPORT Act also amended the CSA to allow up to 100 patients to be treated immediately if the practitioner holds additional credentialing or operates in a qualified practice setting. As opioid abuse rates have increased, the federal government has made efforts to address this epidemic. Both Congress and the Administration have implemented policies intended to increase access to buprenorphine, such as changes to the DATA waivers described above. Policy efforts to address the opioid epidemic have corresponded with increased treatment availability. Since 2003, treatment capacity has increased and continues to rise. The number of OTPs offering buprenorphine increased from 121 (11% of all OTPs) in 2003 to 779 (58% of all OTPs) in 2015. The number of non-OTP substance abuse treatment facilities (non-OTPs) offering buprenorphine increased from 620 (5% of all non-OTPs) in 2003 to 2,625 (21% of all non-OTPs) in 2015. In total, the proportion of facilities (either OTP or non-OTP) providing buprenorphine treatment increased from 14% in 2007 to 29% of all facilities in 2017. The total number of facilities offering buprenorphine is depicted in Figure 3 . This does not include practitioners with office-based (as opposed to facility-based) practices. Data from SAMHSA's annual National Survey of Substance Abuse Treatment Services (N-SSATS) indicate that the proportion of clients at substance use facilities who receive buprenorphine has increased in the past decade, from less than 1% in 2007 to 8% in 2017. The cumulative number of DATA-waived providers has increased also. The number of DATA-waived physicians with a 30-patient limit increased from 1,800 in 2003 to 16,095 by 2012, and those with a 100-patient limit expanded from 1,937 in 2007 to 6,103 in 2012. By 2012, the maximum number of patients who could be treated with buprenorphine in the United States was 1,093,150, a rate of 420.3 per 100,000 people aged 12 years and older. Due to this increase in DATA-waivers for buprenorphine treatment, nearly 3.5 times as many patients could be treated with buprenorphine in 2012 as were receiving methadone in 2012. The Substance Abuse and Mental Health Services Administration (SAMHSA), which oversees the buprenorphine waiver program, provides daily updates on the number of DATA waivers. As of December 1, 2018, the number of DATA-waived providers with a 30-patient limit exceeded 40,000 and those with a 100-patient limit exceeded 11,000. The number of practitioners with a 275-patient limit totaled over 4,500. This provides the capacity for almost 3.6 million patients to be treated with buprenorphine. Despite this increase, access to substance abuse treatment such as buprenorphine has not kept pace with the mounting rates of opioid addiction in the United States. In 2012, the difference between the number of people experiencing opioid dependence and the combined methadone and buprenorphine treatment capacity in the U.S. was nearly one million. Forty-eight states and the District of Columbia had higher rates of past-year opioid abuse than capacity for buprenorphine treatment in 2012. During that year, 82% of federally certified opioid treatment programs (OTPs) reported operating at 80% or greater capacity. Admissions to substance abuse treatment facilities involving prescription opioids nearly quadrupled between 2002 and 2014. In 2015, 18.3% of individuals in need of treatment for an illicit drug problem, including prescription pain relievers, received it. In 2016, one-fifth (21.1%) of those with any opioid use disorder received specialty treatment, including 37.5% of those with heroin use disorder and 17.5% of those with prescription pain reliever use disorders. A study conducted in Massachusetts found that of individuals recently hospitalized for a nonfatal opioid-related overdose, less than one-third received any medication-assisted treatment in the 12 months following the overdose. In addition, while the capability to treat patients with buprenorphine has expanded through an increase in DATA-waivers, practitioners with these waivers are not treating to capacity. A 2018 study by SAMHSA leadership found that the number of patients being treated by DATA-waived providers was substantially lower than the authorized waiver patient limit. The percentage of clinicians prescribing buprenorphine at or near the patient limit in the past month was 13.1%. Geography may be relevant in understanding the treatment discrepancy: where services are located may be more important than the capacity for treatment in addressing the gap between need and availability. Other factors affecting the treatment gap besides location of services may include health insurance coverage, reimbursement for treatment services, transportation, stigma, awareness of treatment options and availability, and motivation for recovery among others. The cost of any prescribed medication is influenced by the pharmaceutical manufacturer, the insurer, the health plan or prescribing clinic, and the retail pharmacies that dispense the medication. It is difficult, therefore, to identify a precise figure for the cost of buprenorphine. The Department of Defense (DOD) and the National Institute for Drug Abuse (NIDA) have estimated the following costs: methadone treatment: $126 per week ($6,552 per year) buprenorphine treatment: $115 per week ($5,980 per year) naltrexone: $1,176.50 per month ($14,122 per year) Most of the research comparing the costs of medication-assisted treatments has found similar results, suggesting buprenorphine may be cheaper than other medications. Some studies, however, have been inconclusive or suggest the opposite. In one study conducted at a Veterans Affairs (VA) medical center, the average cost of care for six months of buprenorphine treatment was $11,597. The costs associated with methadone over that same time period were $14,921. The costs were not significantly different in subsequent months after the first six months of treatment, however. Indirect costs in that same study were also higher for the methadone group, which had twice as many ambulatory care visits as the buprenorphine group. Other estimates suggest that the costs of buprenorphine treatments may be as much as 49% lower than those for methadone. Preliminary studies on the subdermal formulation of buprenorphine approved in 2016 suggest that this type of treatment may have lower total costs than other forms. Other studies have found buprenorphine treatment costs equivalent to, or slightly higher than, those for methadone. For instance, NIDA reported that the annual cost of methadone treatment may be closer to $4,700 per patient. The findings of a few studies may not be representative of the costs of buprenorphine (or methadone) in other VA medical centers or other settings. Determination of the cost effectiveness of buprenorphine, particularly compared to other treatment options such as methadone, awaits further research. Medicare reimbursement for prescription drugs depends on the setting in which the drugs are used and how they are administered. In general, Medicare Part A covers drugs used as part of an in-patient medical treatment; Medicare Part B covers prescription drugs that are not usually self-administered and are furnished and administered as part of a physician service; and Medicare Part D covers FDA-approved drugs that (1) are available only by prescription, (2) are used for a medically accepted indication, and (3) are not covered under Parts A or B. As noted previously, buprenorphine may be administered or dispensed (but not prescribed) in an OTP, and also may be administered, dispensed, or prescribed outside an OTP pursuant to a DATA waiver. Medicare does not recognize OTPs as covered providers, and does not provide Medicare reimbursement for buprenorphine dispensed in an OTP. Medicare Part B has no separate benefit category for drugs used in the management of opioid use disorder. However, Part B will cover long-acting injectable and implantable forms of buprenorphine if administered by a physician and used in the management of opioid use disorder (referred to as "incident to a physician's services" by Medicare). Since January 1, 2018, Medicare Part B has provided a separate payment for insertion, removal, and removal with reinsertion of buprenorphine subdermal implants. Part B does not pay for self-administered drugs used during a provider visit. For example, if a physician's office stocks sublingual buprenorphine, its use would not be paid under Part B because such forms of the drug are considered self-administered (thus not payable under the "incident to" benefit). Payment to a physician for the observation of self-administration of the drug by the patient (such as initial induction doses, for example) may be possible under Part B. Medicare Part D plans must cover buprenorphine and other self-administered drugs used in MAT for opioid use disorder, either on their formularies (list of covered drugs) or via a coverage exception request by an enrollee. Part D plans also must provide a transition supply of drugs for new enrollees who are already in treatment for opioid use disorder. Part D plans are to place MAT drugs on lower-cost-sharing tiers, although beneficiary cost sharing might vary depending on the Part D plan. Medicare Part D does not cover oral buprenorphine or buprenorphine-naloxone combination products for the treatment of opioid dependency when they are administered or dispensed by OTPs. The Centers for Medicare & Medicaid Services has told Part D plan sponsors that they are expected to set low enrollee cost-sharing for MAT drugs, including buprenorphine. All 48 states that responded to a 2017 survey (Arkansas and Illinois did not respond) indicated that their Medicaid programs covered buprenorphine. Analysis of 2013-2014 survey data found that all 50 states and the District of Columbia covered buprenorphine and that 49 respondents imposed some limits, such as prior authorization requirements, duration of treatment, or per-day maximum doses. Even though state Medicaid programs cover buprenorphine, states may only cover certain buprenorphine forms or may only cover buprenorphine under certain conditions. For instance, a state Medicaid program may use a formulary that requires beneficiaries to enroll and attend MAT therapy or counseling before they can receive buprenorphine. States also may use a preferred drug list to require providers to use specific products first. Buprenorphine is one of three medications currently used to treat adults addicted to opioids. The rise in opioid abuse in the last decade and substantial financial burden of this epidemic highlight the need for effective treatments. Overall, buprenorphine appears to be an effective medication for treatment of opioid dependence. Despite marked increases in opioid abuse, related hospital admissions, and overdose deaths, the majority of individuals in need of treatment do not receive it. Prescribing practices for buprenorphine as a treatment for opioid use disorder are carefully regulated and include provisions that limit the number of patients certain providers can treat simultaneously. Congress and the executive branch have made efforts to increase access to buprenorphine treatment while balancing potential risks of this opioid-replacement therapy. Congress is likely to continue grappling with the opioid crisis for some time, as policymakers and medical and public health professionals wait for new data to indicate whether existing efforts have changed the trajectory of the opioid epidemic. Striking a balance between providing access to buprenorphine and maintaining quality standards for those who prescribe or dispense it may prove challenging. Report Methodology Much of the information in this CRS report is based on a systematic review of the scientific literature on buprenorphine, undertaken in August 2017. A systematic review is a single comprehensive report collating all of the relevant empirical evidence on a specific topic. Systematic reviews use explicit, systematic methods to identify studies that fit pre-specified eligibility criteria. Systematic reviews have become an increasingly important source of information for clinical practice and policymaking. They synthesize large amounts of information and provide better estimations of performance and generalizability than individual studies. CRS' systematic review aimed to determine how well buprenorphine works in the treatment of opioid dependence compared to other treatments (such as methadone) or no treatment at all. Studies were included if they were comparisons of buprenorphine with other interventions in outpatient community settings in the United States and were published in the past five years. These included primary and secondary analyses of randomized control trials, quasi-experimental studies, and cohort studies. The CRS review concentrated on effectiveness rather than efficacy (see textbox under " How well does buprenorphine maintain people in treatment? "). Therefore, studies were excluded from this review if they examined efficacy, occurred in inpatient settings, focused on withdrawal, or occurred outside the United States. To identify original articles that met the inclusion criteria, we developed a search strategy for each of the three scientific databases used. We searched PubMed life science and biomedical database, PyscINFO behavioral sciences and mental health database, and CINAHL nursing journal database through July 21, 2017. Article Summaries Table A-1 provides full citations and abbreviated references to the 16 articles identified above. Table A-2 summarizes each article, including its participants, study design and aims, and conclusions. | Buprenorphine is a medication used to treat adults addicted to opioids (it is also used in the treatment of pain). Buprenorphine's effectiveness, safety, and availability in the treatment of opioid addiction are of considerable interest to policymakers seeking to address the ongoing opioid epidemic in the United States. Congressional actions taken in recent years to address the opioid crisis have included attempts to increase access to buprenorphine. This report addresses questions policymakers may have about the effectiveness of buprenorphine, the demand for buprenorphine, and access to buprenorphine. Effectiveness of Buprenorphine Overall, buprenorphine appears to be an effective medication for treatment of opioid dependence. When compared to other treatments for opioid addiction such as methadone, buprenorphine appeared equally as effective in promoting abstinence from drug use. Buprenorphine does not seem to retain individuals in treatment as well as methadone, however, though the reasons for this remain unclear. The research on buprenorphine suggests that it works better at higher daily doses (16mg or higher). The higher the dose of buprenorphine and the longer people used the drug, the more likely they were to remain in treatment, abstain from opioid use, and successfully complete treatment. Preliminary data suggest that buprenorphine may be safer and more cost effective than methadone; comparison of the safety and costs of buprenorphine with other treatments awaits further research. Demand for Buprenorphine Admissions to substance abuse treatment facilities involving prescription opioids nearly quadrupled between 2002 and 2014; in 2015 18% of individuals in need of treatment for opioid use disorders received it. In 2016, one-fifth (21.1%) of those with any opioid use disorder received specialty treatment, including 37.5% of those with heroin use disorder and 17.5% of those with prescription pain reliever use disorders. Despite marked increases in opioid abuse, deaths attributed to opioids, and related hospital admissions, the majority of individuals in need of treatment do not receive it. Access to Buprenorphine Buprenorphine is regulated differently when used to treat opioid use disorder than when used to treat pain. The Controlled Substances Act (CSA) limits who may prescribe (or administer or dispense) buprenorphine to treat opioid use disorders, and the circumstances under which they may do so. These limits have implications for how patients gain access to buprenorphine and how they pay for buprenorphine. Buprenorphine comes in different formulations, and these modes of administration also have implications for how patients gain access to buprenorphine and how they pay for buprenorphine. As of December 1, 2018, the Substance Abuse and Mental Health Services Administration has estimated the U.S. capacity for health providers to treat with buprenorphine at over 3.6 million patients. Nonetheless, access to substance abuse treatment such as buprenorphine has not kept pace with the mounting rates of opioid addiction in the United States. | 7,001 | 689 |
The Bush Administration considers coal a major component of its National Energy Strategy.The Administration anticipates a long-term reliance on coal because of its low-cost abundance.Numerous issues arise when harnessing this cheap, abundant fuel source. This report examines someof the major legislative issues related to coal in the 109th Congress, including coal and energysecurity, clean air and environmental concerns, funding strategies for technology R&D, loanguarantees for coal gasification projects, and the Abandoned Mine Land program. Energy that is available, reliable, and affordable is a focal point when discussing energysecurity concerns. (2) Andcoal will be part of that conversation. Out of the four major fuel sources -- oil, gas, uranium, andcoal -- coal has the largest domestic reserve base, the largest share of U.S. energy production inBTUs, and the smallest percent met by imports. The Energy Information Administration (EIA)projects that coal imports will continue to be negligible through 2025, while there will be a growingreliance on foreign sources for other major fuels. In addition, coal is forecast to be the largest sourceof domestic fuel production in the foreseeable future. Coal supplies 22% of U.S. energy demand but over 50% of the energy used by the electricpower sector (both utility and non-utility consumers). The electric power sector consumes 90% ofall coal in the United States. The remaining 10% is used in the industrial and commercial sectorsor used in coke plants. Coal use in the electric power sector has maintained a share greater than 50%for the past two decades. The EIA forecasts electricity consumption to grow by 1.9% per year through 2025 -- from3,481 billion kilowatt hours (kwh) to 5,220 billion kwh. (3) The increase in demand is largely to be met by new coal-fired ornatural gas-fired power plants. The price of each fuel, the capital costs associated with power plantconstruction, and plant efficiencies will determine the competitiveness of each fuel source. Butbecause of limited domestic supply, natural gas supply is unlikely to keep pace with demand. Thiswill lead to increased imports, according to EIA forecasts. Per-well reserve additions are expectedto continue to decline over the EIA forecast period (2004-2025). EIA further forecasts that naturalgas will not displace coal as the dominant fuel supply for power generation despite projectedincreases in liquefied natural gas (LNG) imports, additional domestic supply from the lower 48states, and Alaskan natural gas from a newly constructed pipeline. (4) Power plant development for electricity generation is primarily driven by economics. Thelower-cost, more efficient operations are the plants that get built. Production costs include the costsof fuel, operation and maintenance, and capital. Fuel costs are a major consideration for fossilfuel-fired plants, and the fuel cost differences between a coal-fired and natural gas-fired plant aresignificant. For instance, fuel costs for a coal-fired plant are about 24% of total costs, whereas fuelcosts for a natural gas facility are close to 69% of total costs. This price difference could give coalan advantage. However, new plant capital costs favor natural gas, accounting for only 23% of totalelectric production costs. Capital costs for new coal-fired plants are closer to 60% of total costs. Table 1 , below, illustrates the dynamics of power plant economics for advanced coal and advancedcombined cycle (natural gas-fired) plants expected to be built in the years 2015 and 2025. Table 1. Costs of Producing Electricity from NewPlants (2003 mills/Kwh) Source: DOE/EIA, Annual Energy Outlook, 2005, p. 89. A combination of low capital costs, greater efficiency, and reasonable natural gas prices ledto the current build-up of natural gas-fired capacity. Power plant capacity rose an estimated 186gigawatts (GW) from 2000 to 2003: 27 GW in 2000; 42 GW in 2001; 72 GW in 2002; and 45 GWin 2003. About 175 GW was new natural gas-fired capacity, and only 1 GW was new coal-firedcapacity. (5) This build-uphas led to excess capacity, which should diminish after 2010. Capacity utilization would rise from72% in 2003 to 83% in 2025, according to EIA. EIA projects that a total of 281 GW of new capacity will be needed by 2025 -- including anestimated 19 GW annually from 2011 to 2025 (268 GW total). Natural gas facilities (combinedcycle; combustion turbine or distributed generation technology) are forecast to account for 60% ofthe new capacity. Total new coal capacity of 87 GW is to come online between 2004-2025; thus,coal capacity will be 33% of new capacity after 2011, according to EIA. New coal capacity becomesmore competitive with natural gas late in the forecast between 2016 and 2025. Despite relativelylow coal costs, the high capital costs will likely limit the number of advanced coal integratedgasification combined cycle (IGCC) facilities to about 16 plants or 6 GW of commercial capacityby 2025. (6) Rising natural gas prices will lead to the construction of more coal-fired facilities betweenthe years 2010 and 2025, according to EIA. Coal is competitive at natural gas prices of $4-$6 permillion Btus; prices above that range push up the total cost of gas-fired power facilities abovecoal-fired plants. Even so, natural gas, as a percent of the total electricity, will increase to 24% in2025 from 17% in 2003, projects EIA, while nuclear and petroleum will remain flat. Renewablesrise from 359 billion Kwh to 489 billion Kwh during the same time period. Coal maintains a 50%share of the electricity market in 2025, says EIA. New capacity is also needed to replace retired capacity and to meet rising demand. Anestimated 43 GW of fossil fuel capacity is expected to be retired from 2004 to 2025 (3 GW Coal;15 GW of older oil or gas combustion turbines or combined cycle, and 25 GW of oil and gas steamplants). If the EIA forecasts prove to be accurate, then long-term investment in clean coal could payoff because of the greater coal capacity needs beyond 2016. Among the most important factors towatch regarding coal versus natural gas-fired plants are the natural gas prices, capital costs for IGCCplants, and stricter environmental regulations aimed at pollutants derived from burning coal. By mandating significant reductions in three pollutants emitted by coal-fired electricgenerating units, proposed Clear Skies legislation could have significant impact on coal productionand distribution, if enacted. Electric utilities are the largest users of coal, and legislation restrictingtheir emissions could affect coal markets in several ways, depending on the specifics of any finallegislation. In the 109th Congress, a modified version of the President's proposed Clear Skies legislationhas been introduced by Senator Inhofe -- S. 131 . The proposal would amend the CleanAir Act to place caps on electric utility emissions of sulfur dioxide (SO 2 ), nitrogen oxides (NOx),and mercury (Hg). Implemented through a tradeable allowance program, the emissions caps wouldbe imposed in two phases: 2010 (2008 in the case of NOx) and 2018. (8) The proposed caps aresummarized in Table 2 . Table 2. Proposed Emission Caps Under S.131 Although proposed Clear Skies legislation is the focus of legislative debate, regulatoryinitiatives currently being promoted by Environmental Protection Agency (EPA) raise many of thesame issues for coal interests as does Clear Skies. These initiatives include the proposed Clean AirInterstate Rule and the proposed Mercury Rule. (9) When Clear Skies was introduced in the 108th Congress, EPA conducted an analysis of itseffects on the coal industry. (10) While the analysis indicated growth in coal production forelectric utility consumption (from 905 million tons in 2000 to 998 million tons in 2020), coalgeneration's share of the 2020 generation mix (11) was projected to decline from 46% to 44%. The beneficiary ofthis projected decline was natural gas combined cycle, whose share of the mix climbed from 24%in 2000 to 26% in 2020. Obviously the actual mix that would result from any enactment of ClearSkies would be heavily dependent on future natural gas prices and utility decisions with respect tocompliance strategies. With respect to compliance strategies, the EPA analysis projected a substantial increase inthe installation of flue-gas desulfurization units (FGD) to achieve the 70% reduction in SO 2 requiredby the proposed legislation. Currently, about 100,000 megawatts (Mw) of coal-fired capacity hasFGD units. EPA projected that Clear Skies would result in that number rising to just over 200,000Mw by 2020. (12) Thiswould increase the share of FGD-equipped coal-fired capacity in the country from about one-thirdto two-thirds. A similar increase was expected for the installation of Selective Catalytic Reduction(SCR) to reduce NOx emissions, although some of that increase would be due to the implementationof the NOx SIP Call. (13) Such an increase in emissions control (particularly FGD units) could reduce the marketadvantage that high-sulfur coal currently enjoys in the coal markets. As indicated by Table 3 , EPAanalysis indicates that the Interior Basin in particular benefits from the increased SO 2 controls. Table 3. EPA's Projections of Coal Production Under Clear SkiesLegislation (million tons) Source : EPA, Technical Analysis, Section D , p. D-3. With respect to Hg controls, S. 131 would weaken the proposed phase 1 Hg capfrom the 26 tons originally proposed by the Administration to 34 tons, based on a DOE estimateabout the actual level of emissions that could be achieved without dedicated Hg controls (i.e.,"co-benefits"). There are substantial differences between the Hg characteristics of bituminous andsubbituminous coals, and uncertainty about what the actual "co-benefits" levels for Hg control are. If Clear Skies reflects the actual "co-benefits" levels, the effect of Hg controls on coal productionwould be nil, beyond that estimated for SO 2 and NOx controls. Likewise, the commercialization ofemerging Hg control technology, such as activated carbon injection (ACI), would eliminate any shiftbetween coal types. However, there is substantial controversy over what any "co-benefits" level isand the future availability of ACI and other alternatives. The pivotal issues for coal and Clear Skies include the following: (1) the potential for naturalgas to erode market share for coal due to higher pollution control costs under Clear Skies, (2) thepotential for market shift between western suppliers and eastern suppliers because of increased SO2controls, and (3) the uncertain effects of Hg controls if they exceed "co-benefit" levels or if emergingHg controls are not available. Clear Skies faces an uncertain future. In March 2005, the Senate Environment and PublicWorks Committee killed S. 131 on a 9-9 vote. However, many of the issues identifiedhere also manifest themselves in EPA's final Clear Air Interstate Rule (CAIR) and its final Hg rule. So the issue is not likely to disappear. The original Clean Coal Technology (CCT) program began in 1984 to demonstrate emissionscontrol technologies, advanced electric power generation facilities, and coal and industrial processingprojects. Congress had appropriated $2.5 billion for the CCT program by 1990, but since 1994 asmuch as $300 million had been deferred or rescinded because of limited commercial prospects andless Administration interest. President Bush, however, has revived the CCT program under a newbanner -- the Clean Coal Power Initiative (CCPI) -- focusing on advanced coal combustiontechnology for removal of SOx, NOx, mercury, and fine particulate matter and carbon sequestration. Coal plants are responsible for 69% of all SO2, 33% of mercury, 39% of CO 2 , and 22% of nitrogenoxide air emissions in the United States. The CCPI is a 10-year, $2 billion government-industry cost sharing program structuredsimilarly to the original CCT program. There are currently 10 active CCPI projects. The DOEwanted the early projects to focus on technologies that would reduce pollutants being addressedunder the President's "Clear Skies" proposal and Global Climate Change initiative. Round 1 projectsfeature multi-pollutant control systems, while Round 2 features two multi-pollutant controltechnologies and two integrated gasification combined cycle (IGCC) demonstration projects.Announcements for Round 3 projects are expected to occur during FY2006. One of the issues that arise is funding for long-term clean coal technology versus closer-termpilot and demonstration projects. Both are being funded. Based on recent appropriation trends, thegreatest interest for closer-term R&D is with IGCC projects for electricity supply and emissionsreduction. There are two small-scale IGCC commercial plants operating today: a 250 megawatt (MW)facility operated by Tampa Electric Power in Florida and a 300 MW facility operated by Cinergy atits Wabash River site in Indiana. IGCC technology involves the gasification of coal to produceelectricity. During the gasification process, coal is co-fed with water and oxygen in a reducingatmosphere at high pressure to produce synthetic gas, carbon monoxide, and hydrogen. Sulfur andcarbon dioxide are also produced and removed. The synthetic gas drives a combustion turbine,whose exhaust is used to make steam to drive a secondary turbine. One of the biggest obstaclesfacing IGCC is the reliability of the gasification process. Because of reliability questions, amongother challenges, large-scale competitive commercial plants may still be years away. Both Congressand the Administration continue to invest heavily in IGCC because of the potential benefits fromreduced NOx, SOx, mercury, and particulate matter. Moreover, lower CO 2 emissions throughgreater plant efficiencies and/or potential sequestration could be substantial. The Administration is looking at very long-term investments as well. FutureGen representsthat strategy. FutureGen -- an integrated sequestration and hydrogen research initiative -- is a $1billion dollar industry/government partnership to build a coal-fired gasification and hydrogenproduction plant to serve as a prototype to test emissions-free and carbon sequestration technologies. The goal is to permanently sequester CO2 in a geologic formation. A FutureGen plant wouldprovide 275 MW from electricity and hydrogen and sequester 1 million metric tons of carbondioxide annually. The project is designed to build international support to address "global warmingand energy security." (15) The prototype will allow DOE to operate a large-scale facility to prove the technical feasibility ofzero emission production. Out of the $950 million cost estimate of the project, DOE would invest$500 million, plus an additional $120 million from its sequestration program, the private sectorwould contribute $250 million (which would be capped), and about $80 million is anticipated fromthe international community. The funding for FutureGen began in FY2004 at $9 million. Appropriations were nearlydoubled to $17.5 million in FY2005. The Bush Administration is seeking $18 million for FY2006. Project funding between FY2004 and FY2006 is for plant definition and NEPA requirements. Funding requests are projected by DOE to rise rapidly in the near-term to $50 million in FY2007,then $100 million in FY2008, at which time procurement and construction efforts would begin. DOEprojects another $228 million of direct funding needed between FY2009-FY2013, plus an additional$120 million from the DOE Sequestration program during this time frame. Finally, an additional$77 million would be needed through FY2018. The Bush Administration has also been seeking tocancel previously appropriated funds for the original CCT program and shift that money toFutureGen. Congress has blocked such an effort in the past two budgets. Below is a summary of the Administration's funding request for Clean Coal R&D programsfor FY2006: Clean coal power initiative -- A 10 year, $2 billion effort that began in FY2002. TheAdministration has submitted a $50 million request for FY2006. Nearly $400million in funding has already been appropriated since FY2002. Rounds 1 and 2 arealready underway. DOE's Office of Fossil Energy will begin Round 3 solicitationsduring FY2006 Coal R&D programs -- These programs are being encouraged by the Administration.Within the Fossil Energy R&D program, Coal R&D programs, other than the CCPIand FutureGen, would rise by 5.9% to $218 million while nearly all other fossilenergy programs would be cut. Major cuts to programs other than coal are proposedwhich would reduce the total Fossil Energy program to $491.5 million -- 14% ($80.5million) less than the enacted amount for FY2005. Coal Gasification -- Within the Coal R&D program, the Administration's request forgasification research went up from $34.5 million in FY2005 to $56.4 million inFY2006. FY2005 appropriations were $45.8 million. This level of increase is anindication of more commitment by the Administration and Congress to IGCC effortsaimed at commercialization of the technology. Carbon sequestration -- The R&D program would receive $67.2 million in theAdministration's FY2006 request -- a $21.8 million increase over FY2005. FutureGen -- The FY2006 Administration request is $18 million. The FY2006 funding request for Fossil Energy R&D is heavily weighted towards clean coaltechnology, potentially at the expense of other fossil technologies -- such as natural gas orpetroleum technology R&D. However, the CCPI may need consistently higher investments in aconstrained spending environment to provide the desired long-term results -- a commerciallyaffordable coal technology for electricity generation while substantially reducing emission levels. If funding support or incentives are not high enough, industry may forgo the long-term commitmentneeded and instead abandon gasification projects altogether. Even with heavy investment in cleancoal/gasification strategies, natural gas-fired generation may retain its economic advantage over thelong-term because of moderate natural gas prices and/or more efficient gas units. On a similar note,technology obstacles with IGCC may not be resolved, IGCC may not be deployed for larger-scalecommercial production, and decades-long R&D funding never recouped. However, the strategy of investing in coal-gasification projects for closer-termcommercialization fits EIA's forecast that16 commercial IGCC plants will be on-line between2011-2025. The total output would still be only 7% of all coal-fired capacity, but if there are capitalcost reductions and greater technological efficiencies, IGCC is likely to continue its growth beyond2025. The House-passed version of the FY2006 Energy and Water Development appropriations bill( H.R. 2419 ), which includes funding for Fossil Energy R&D, supports theAdministration's request for CCPI and FutureGen. However, while both agree there is an unusedpreviously appropriated balance of $257 million from the Clean Coal Technology program, theAdministration requests rescinding the money and incorporating the funds into the fossil fuel accountfor FutureGen activities as an advanced appropriation to be used in FY2007 and beyond. The Houseapproved, instead, deferring the $257 million, while acknowledging that the funds will be used forthe FutureGen program in FY2007 and beyond. Energy legislation initiated in the 107th Congress reached a conference-level agreement( H.R. 6 ) in the 108th Congress, and was passed by the House but was blocked by aSenate filibuster. A Senate alternative ( S. 2095 ) introduced to address the differenceswith the House version over MTBE and energy tax incentives also died in the 108th Congress. Theseearlier versions both contained provisions under Title IV (Coal) that would have provided loanguarantees for various coal projects focused on developing the IGCC technology. Provisions underTitle IX supported R&D for IGCC, carbon sequestration, and other coal-related technologies. Therewere also loan guarantees to fund a Fischer-Tropsch synthetic fuels project for diesel fuel. Legislation in the 109th Congress for an omnibus energy bill ( H.R. 6 ) wasapproved by the House on April 21, 2005. H.R. 6 includes provisions for coal nearlyidentical to the H.R. 6 conference report filed in the 108th Congress. (17) Within the Clean CoalPower Initiative section there would be loan guarantees for specific IGCC projects. Federal loansor loan guarantees would account for up to 30% of all obligated money in any fiscal year with thefederal share not to exceed 50% of any one project. Pollution control projects (i.e., for mercury,NOx, SOx, and particulate matter) would get $500 million in funding, and $1.5 billion would beauthorized for cogeneration and gasification projects between fiscal years 2006 and 2012. CoalTechnology provisions include an R&D program on IGCC systems, turbines for synthetic gas fromcoal, carbon sequestration, and loan guarantees for development of Fischer-Tropsch diesel fuels. TheSenate version of comprehensive energy legislation ( S. 10 ), among other things,authorizes CCPI for $200 million annually for FY2006-FY2014. Funding for R&D and loan guarantees for the development of IGCC technology appear tohave some bipartisan support, based on previous support of clean coal technology programs receivedin the annual Interior appropriations bill. The Natural Resources Defense Council (NRDC), while on record in support of IGCCtechnology because of its potential for emissions reduction and better efficiencies, would prefer tosee more stringent standards serve as a catalyst for the industry to solve the clean air problem. (18) That sentiment is echoedby Resources for the Future Senior Fellow Dallas Burtraw. He argues that the Clean Air ActAmendments of 1990 were the catalyst that led to major reductions in SO2 despite years ofincentives. (19) AnAmerican Electric Power (AEP) representative contends that without a subsidy, large-scale IGCCdevelopment will not take place. The AEP argues that the Administration would need to"jump-start" development of about six commercial-scale plants. (20) The DOE has a studyunderway to help determine the "best federal incentives" to move IGCC forward. (21) The Senate Committee on Energy and Natural Resources held hearings on energy policy inFebruary 2005, but the anticipated schedule for omnibus energy legislation in the House has slowed. Concern over spending has given rise to differing opinions about how costly the energy taxprovisions in the bill should be. On February 10, 2005, the House Science Committee reported H.R. 610 , legislation including less controversial R&D provisions that were part ofcomprehensive legislation debated in the 108th Congress. The Surface Mining Control and Reclamation Act (SMCRA, P.L. 95-87 ), enacted in 1977,established reclamation standards for all coal surface mining operations and for the surface effectsof underground mining. It also established the Abandoned Mine Land (AML) program to promotethe reclamation of sites mined and abandoned prior to the enactment of SMCRA. To financereclamation of abandoned mine sites, the legislation established fees on coal production. Thesecollections are divided into federal and state shares; subject to annual appropriation, AML funds aredistributed annually to states with approved reclamation programs. Since the program's inceptionand through FY2004, collections have totaled $7.1 billion; appropriations from the fund have totaled$5.5 billion. The unappropriated balance in the fund approached $1.7 billion at the end of FY2004.As of the end of FY2004, roughly $1.1 billion of this sum is credited to the state share accounts, ofwhich nearly $430 million alone is in Wyoming's account, because -- even though most of the sitesawaiting cleanup are in the eastern part of the nation -- coal production has shifted westward.Consequently, the western states have been making significantly larger contributions to the fund inrecent years. Authorization for collection of AML fees was scheduled to expire at the end of FY2004 andwas extended nine months to the end of June 2005 by the Consolidated Appropriations Act for 2005( P.L. 108-447 ). Subsequently, H.R. 1268 ( P.L. 109-13 ), a supplemental appropriationsbill for FY2005, extended AML authorization to the end of FY2005. Bills have been introduced inthe 109th Congress to extend the authorization for fee collections and make changes to the programthat would address concerns about the mechanics of the program, the fee structure, and theunappropriated balances. Legislation reauthorizing AML was introduced in the 108th Congress, but did not pass. Inaddition, Congress did not adopt in its FY2005 AML appropriation an Administration proposal thatwould have refunded, through a significant increase in appropriations, unobligated state balancesover a 10-year period. In its FY2006 budget request, the Administration has made virtually the sameproposal and seeks an additional $58 million to begin returning the unobligated balances. A billadvancing the Bush changes to the AML program, H.R. 2721 , was introduced May 26,2005. Under the Bush plan, unappropriated balances would be returned to states and Indian tribesthat had completed reclamation of their Priority 1 sites. These states would no longer receive grantsfrom the AML fund itself, freeing up funds to be targeted to states with sites awaiting cleanup. It isnot apparent that the Administration proposal will receive a different reception in the 109th Congressthan in the previous one. Another bill introduced in the 109th Congress, H.R. 1600 , is similar to legislationintroduced in the 108th Congress, and differs greatly in some respects from the Administrationproposal. The bill would extend authorization of the program through FY2020, and reduce the feecollected per ton of coal production. It would maintain the distinction between state and federalshares and would require that 50% of annual contributions be returned to states even if cleanup ofpriority abandoned mine sites had been completed. States and tribes would be allowed to use themoney for other purposes if cleanup of AML sites had been completed. Both H.R. 2721 and H.R. 1600 would end an allocation of a portion of AML collections to the RuralAbandoned Mine Land Program, a program that has received no appropriation since 1995. | Major legislative issues related to coal in the 109th Congress include coal and energy security,clean air and environmental concerns, funding strategies for technology R&D, loan guarantees forcoal gasification projects, and the Abandoned Mine Land (AML) program. The Administration anticipates a long-term reliance on coal because of its relatively low-costabundance. Coal supplies 22% of U.S. energy demand but over 50% of the energy used by theelectric power sector. The Energy Information Administration forecasts electricity consumption togrow by 1.9% per year through 2025. The increase will largely be met by new coal-fired or naturalgas-fired power plants. By mandating significant reductions in three pollutants emitted by coal-fired electricgenerating units, proposed Clear Skies legislation ( S. 131 ) could have significantimpact on coal production and distribution, if enacted. When Clear Skies was introduced in the 108thCongress, the Environmental Protection Agency (EPA) conducted an analysis of its effects on thecoal industry. While the analysis indicated growth in coal production for electric utility production(from 905 million tons in 2000 to 998 million tons in 2020), coal generation's share of the 2020generation mix was projected to decline from 46% to 44%. Clear Skies legislation, however, facesan uncertain future. In March 2005, the Senate Environment and Public Works Committee killed S.131 on a 9-9 vote. In FY2002, President Bush initiated the Clean Coal Power Initiative (CCPI) focusing onadvanced coal combustion technology for removal of SOx, NOx, mercury, and fine particulatematter and carbon sequestration. The CCPI is a 10-year, $2 billion government-industry cost sharingprogram. The FY2006 funding request for Fossil Energy R&D is heavily weighted towards cleancoal technology, potentially at the expense of other fossil technologies -- such as natural gas orpetroleum technology R&D. Legislation in the 109th Congress for an omnibus energy bill ( H.R. 6 ) wasapproved by the House on April 21, 2005. H.R. 6 includes provisions for coal nearlyidentical to the H.R. 6 conference report filed in the 108th Congress. Within the CCPIsection there would be loan guarantees for specific integrated gasification combined cycle projects. The Senate Committee on Energy and Natural Resources approved its version of the bill( S. 10 ) on May 26, 2005. Authorization for collection of AML fees was scheduled to expire at the end of FY2004 andwas extended nine months to the end of June 2005 by the Consolidated Appropriations Act for 2005( P.L. 108-447 ). Subsequently, H.R. 1268 ( P.L. 109-13 ) a supplemental appropriationsbill for FY2005, extended AML authorization to the end of FY2005. In its FY2006 budgetsubmission for the Office of Surface Mining, the Administration once again proposed the changesin the AML program included with the FY2005 budget, this time seeking a $58 million increase inthe appropriation for the fund. This report will be updated. | 5,985 | 701 |
Bolivia is a country rich in cultural diversity and natural resources, whose political and economic development have been stymied by chronic instability, poverty, corruption, and deep ethnic and regional cleavages. In 1825, Bolivia won its independence from Spain, but then experienced frequent military coups and counter-coups until democratic civilian rule was established in 1982. As a result of the War of the Pacific (1879-1883) with Chile, Bolivia lost part of its territory along the Pacific coast and has no sovereign access to the ocean, a source of lingering resentment among Bolivians. Bolivia does have preferential rights of access to the Chilean ports of Antofagasta and Arica and the Peruvian port of Ilo. As a result of the Chaco War with Paraguay (1932-1935), Bolivia lost access to the Atlantic Ocean by way of the Paraguay River and significant territory. Bolivia possesses the second-largest natural gas reserves in Latin America after Venezuela and significant mineral deposits, yet at least 42% of Bolivians live in poverty (down from 64% in 2005). Some sources point to a higher figure, nearing 60%. Bolivia has been deemed as having an "acute" level of vulnerability to natural disasters; recent flooding has disproportionately affected poor communities in rural areas. Bolivia's population of 10.5 million people is among the most ethnically diverse in South America. Quechua and Aymara are the two predominant indigenous groups, together comprising some 55% of the population. Despite the National Revolution of 1952, in which the Bolivian indigenous peoples benefitted from land reform and expanded suffrage, indigenous groups have historically been under-represented in the Bolivian political system and disproportionately affected by poverty and inequality. In the 1980s, indigenous-based political parties and movements emerged in Bolivia, and by 2006 some 17% of members of the Bolivian Congress self-identified as indigenous. Since the mid-2000s, indigenous representatives have used the legislature as a forum to advocate for indigenous rights, equitable economic development, and the preservation of indigenous land and culture. Nevertheless, indigenous communities continue to engage in large-scale protests to ensure that their interests are met. Bolivia has been a major producer of coca leaf, the main ingredient in the production of cocaine. Although coca leaf is legal in the country for traditional uses and is grown legally in some parts of the country, its cultivation for illegal purposes increased in the 1970s and 1980s. By the early 2000s, cultivation levels had decreased to half of the levels of the 1990s as a result of aggressive, U.S.-backed policies to eradicate illicit production. These policies, and the way in which they were implemented, caused social unrest and economic hardship in the two main coca-growing regions. Opposition to forced eradication policies led to the rise of coca growers' trade unions and an associated political party, the Movement Toward Socialism (MAS). Since taking power in January 2006, Evo Morales and his leftist Movement Toward Socialism (MAS) party have presided over a period of relative political stability and economic expansion. After being governed by six different presidents between 2001 and 2005, Bolivians have repeatedly gone to the polls to reaffirm their support for Morales and the MAS; the party now has majorities in both chambers of the legislature. President Morales has expanded state control over the economy by renegotiating contracts with some companies to increase the taxes and royalties they pay, and by expropriating other companies. These policies have angered foreign investors, but have brought the government substantial revenue. President Morales has used that influx of revenue to expand social programs and provide cash transfers to the elderly, families with children, and pregnant women. Buoyed by record prices for its gas and mineral exports, economic growth in Bolivia has averaged 4.5% per year during the Morales Administration, according to the World Bank. Under Evo Morales, democracy in Bolivia has in some ways become more representative and participatory, but less accountable and transparent. The participation of women in all branches of the federal government increased after a law mandating gender parity in the selection process for government jobs took effect; however, women remain under-represented in mayoral posts. Indigenous participation in the executive branch, legislature (where seven seats are set aside for representatives from indigenous districts), and courts has increased since Morales took office. The 2009 constitution guarantees the autonomy of subnational entities (departments, indigenous communities, municipalities, and sub-departmental regions), providing more opportunities for direct political participation, but challenges remain in implementing those provisions. According to the United Nations (U.N.), additional progress needs to be made in order to protect indigenous communities' rights, particularly their right to be consulted prior to infrastructure or mining projects being carried out on their lands. In dealing with the opposition, President Morales and his government have periodically used anti-democratic methods to consolidate power and quell dissent. In December 2007, for example, Morales' supporters in the Constituent Assembly passed a draft constitution (which prioritized indigenous rights and agrarian reform) during a series of sessions that many opposition delegates were not permitted to attend. Opposition governors and other political leaders have also been sidelined by sometimes controversial charges of corruption and other malfeasance. The corruption, inefficiency, and politicization in Bolivia's criminal justice system have been identified as barriers to democratic development in the country. Restrictions on freedom of the press, including retaliatory actions against media outlets that do not report positively about government actions, as well as periodic attacks against journalists critical of the government, have been reported. With Bolivia's traditional political parties in disarray, opposition to Morales has generally been divided between those in the wealthy eastern provinces (led by Governor Ruben Costas of Santa Cruz) who oppose his state-led, pro-indigenous policies, and those who originated from within his own base, some of whom favor more radical policies than he does. Despite opposition from conservative sectors during his first term and protests by unions and indigenous groups during his second term, Morales has remained popular in Bolivia, particularly among the poor and indigenous (who were arguably neglected by previous governments). President Morales received the support of 67% of Bolivian voters in a national recall referendum held in August 2008, 61% support for the new constitution he backed in 2009, and 64% support for his re-election that year. Support for President Morales remains higher in the poorer western highlands (where Quechua and Aymara indigenous groups predominate) than in the wealthier eastern lowlands, sometimes called the Media Luna (Half Moon) states of Beni, Pando, Santa Cruz, and Tarija (see Figure 1 ). The coca leaf has been used for thousands of years by indigenous communities in the Andean region for spiritual and medical purposes, and its use is considered an important indigenous cultural right. In 2013, the United Nations accepted Bolivia's petition for recognition that it allows coca cultivation for licit uses within its borders. The coca leaf is also a primary component of cocaine, an illicit narcotic. Unlike past Bolivian governments, which sought to criminalize coca production, President Morales and the MAS developed a "coca yes, cocaine no" policy for Bolivia that permits each family to produce one cato (1,600 square meters) of coca to be used for traditional uses, but any coca grown beyond that is subject to eradication. The policy seeks to (1) recognize the positive attributes of the coca leaf; (2) commercialize coca for licit uses; (3) continue "rationalization" of coca (voluntary eradication) in the Chapare and extend it to other regions; and, (4) increase interdiction of cocaine and other illicit drugs at all stages of production. Proponents of the "coca yes, cocaine no" policy argue that it is a culturally sensitive approach to coca eradication that is widely accepted in Bolivia. They assert that Morales' experience as a coca grower has enabled him to negotiate agreements with producers in regions where prior governments were unable to limit coca cultivation. Critics of Morales' coca policy argue that it is based on the false premises that traditional demand for coca exceeds the current legal threshold of 12,000 hectares, and that there are viable markets outside Bolivia for licit coca-based products. A 2013 study funded by the European Union reportedly found that Bolivia needs some 14,700 hectares to meet traditional demands for coca, but produces more than 25,000 hectares. According to U.S. estimates, coca cultivation in Bolivia declined by 4,000 hectares between 2009 and 2012. In 2012, estimated coca cultivation in Peru was twice that of Bolivia and estimated coca cultivation in Colombia was three times that of Bolivia. The way that Bolivia is perceived by international investors contrasts markedly with the way its macroeconomic and fiscal policies have been evaluated by economists from the leading multilateral development institutions. Bolivia ranks 167 th out of 189 countries evaluated in the World Bank's 2013 Ease of Doing Business report and third from the bottom (behind Haiti and Venezuela) among Latin American and Caribbean countries. Summing up several other investment climate rankings, the State Department maintains that Bolivia receives a "low ranking" due, in part, to its official corruption, social unrest, expropriations of private companies, and questionable commitment to international dispute settlement. Nevertheless, the World Bank has praised Bolivia's economy, which is driven by state-centered policies and fueled by commodity exports, for its positive macroeconomic results, declining public debt, and increasing international reserves. The International Monetary Fund (IMF) has found that solid economic performance, prudent fiscal policy, and "active social policies since the mid-2000s have helped Bolivia to nearly triple income per capita and reduce poverty." Despite its recent economic expansion, Bolivia remains among the poorest countries in South America and one of the most unequal countries in the Western Hemisphere. Bolivia ranked 108 th out of 187 countries in the U.N. Development Program's 2012 human development index. Bolivia has one of the lowest life expectancies in the region (67), as well as some of the highest maternal and child mortality rates. These indicators are much worse in indigenous and rural communities, due to a continued lack of access to sanitation and health services. Progress has been made in some critical areas, however. For example, according to the Pan American Health Organization (PAHO), access to treated drinking water stood at 50% in rural areas as recently as 2007. In 2012, 79% of the population had access to clean water. Like other populist leaders in Latin America, Evo Morales is seeking to extend his time in office rather than entrusting his legacy to a successor such as, for example, Vice President Alvaro Garcia Linera. Morales backtracked on an earlier pledge not to run for a third term after a controversial Constitutional Court decision in May 2013 cleared him to compete in the October 2014 presidential elections. Although the 2009 constitution established a two-term limit for Bolivian presidents, the Constitutional Court ruled that President Morales is exempted from that limit due to the fact that he is technically serving his first term under the new constitution. Polls predict that President Morales will be easily re-elected. In a poll from mid-February 2014, Morales had 46% of the vote. His closest rivals were Samuel Medina, a cement magnate, with 13.4% support, and Governor Ruben Costas, with 9% support. Some analysts doubt that any opposition candidate from the Media Luna stands a chance at defeating President Morales. For instance, none of the opposition candidates have thus far been able to capitalize on popular protests that forced the Morales Administration to back away from pushing the Congress to enact a new mining code. Bolivia is also scheduled to convene legislative elections in October 2014. There are 60 Senate seats and 130 Chamber of Deputies seats up for election. Some predict the opposition could prevent the MAS from winning a majority in the Senate, where each province holds four seats. From the late 1980s through the mid-2000s, U.S. relations with Bolivia centered largely on controlling the production of coca leaf and coca paste, much of which was usually shipped to Colombia to be processed into cocaine. In support of Bolivia's counternarcotics efforts, the United States provided significant interdiction and alternative development assistance, and forgave all of Bolivia's debt for development assistance projects and most of the debt for food assistance. Bolivia, like Peru, had been viewed by many as a counternarcotics success story, with joint air and riverine interdiction operations, successful eradication efforts, and some effective alternative development programs. Others, however, view the forced eradication policies that U.S. antidrug efforts emphasized as a social and political disaster that fueled popular discontent, worsened Bolivia's chronic instability, and contributed to human rights violations. Prior to the December 2005 elections, most analysts predicted that a Morales victory would complicate U.S. relations with Bolivia. After the election, U.S. State Department officials congratulated Evo Morales but noted that "the quality of the relationship between the United States and Bolivia will depend on what kind of policies they [Morales and the MAS government] pursue." Despite an initial openness to dialogue, U.S.-Bolivian relations became tense soon after President Morales took office. U.S. officials expressed concerns about the Morales government's commitment to combating illegal drugs, its ties with Venezuela and Cuba, and its nationalization of Bolivia's hydrocarbons industry. Tensions in U.S.-Bolivian relations flared during the fall of 2007 as Bolivian authorities (including President Morales) complained that some U.S. assistance was going to support opposition groups seeking to undermine the MAS government. In 2008, U.S.-Bolivian relations deteriorated from what analysts described as "tenuous" at best in the summer, to extremely tense by the fall. U.S.-Bolivian relations hit their lowest point in modern times in September 2008, when President Morales accused the U.S. Ambassador to Bolivia of supporting opposition forces and expelled him from the country. The U.S. government responded by expelling Bolivia's Ambassador to the United States. On September 16, 2008, President Bush designated Bolivia as a country that had failed to live up to its obligations under international narcotics agreements. That decision was closely followed by the suspension of Bolivia's trade preferences under the Andean Trade Preferences Act (ATPA) for a lack of counternarcotics cooperation. On November 1, 2008, Bolivian President Morales announced an indefinite suspension of U.S. Drug Enforcement Administration (DEA) operations in Bolivia after accusing some DEA agents of espionage. The Peace Corps also suspended operations in Bolivia that fall due to "growing instability" in the country and has since closed the program. It is unlikely that the agency would resume operations until and unless the U.S. government has more of a diplomatic presence in the country. Periodic efforts to repair relations in subsequent years have failed for different reasons. After two years of high-level negotiations, on November 7, 2011, the U.S. and Bolivian governments signed a Framework Agreement to guide relations that said both governments looked forward to the "early return of ambassadors to both Washington and La Paz." However, after the United States requested Bolivian approval of a nominee to serve as U.S. Ambassador in La Paz (through the diplomatic procedure known as agrement ) in November 2012, the Bolivian government leaked the name of the U.S. nominee to the press. President Morales then said in February 2013 that he no longer had an interest in exchanging Ambassadors. Two events that occurred in 2013 resulted in the end of most, if not all, U.S. foreign aid to Bolivia. In May 2013, President Morales asked the U.S. Agency for International Development (USAID) to end its operations in Bolivia after 52 years in the country. He claimed that USAID had funded opposition forces that had sought to undermine his government, charges that USAID vigorously denied. As USAID began shutting down its operations, the State Department decided to close its International Narcotics and Law Enforcement Affairs office in Bolivia in December 2013 due to a lack of adequate cooperation from Bolivian authorities. Another source of tension in the relationship has been the case of New York flooring contractor Jacob Ostreicher, who launched a rice farm in Bolivia in 2008. The Bolivian government arrested Mr. Ostreicher on suspicion of money laundering in June 2011, imprisoned him for 18 months in what was termed pre-trial detention, and then placed him under house arrest even though he was never formally charged with a crime. Several Bolivian officials in the Interior Ministry and Attorney General's Office reportedly were jailed for allegedly attempting to extort Ostreicher in exchange for his release. Corruption and inefficiency in Bolivia's judicial system has been identified as a serious human rights problem in the country. Congress held multiple hearings pushing for Mr. Ostreicher to be freed; he eventually escaped house arrest and returned to the United States in December 2013. The Bolivian government considered Mr. Ostreicher a fugitive. As the United States criticized Bolivia's handling of the Ostreicher case, Bolivia protested the U.S. government's 2012 denial of its request for former President Gonzalo Sanchez de Lozada, currently living in the United States, to be extradited to Bolivia to stand trial for civilian deaths that occurred when he ordered government security forces to respond to violent civilian protests in the fall of 2003. When Evo Morales took office, Bolivia was among the top recipients of U.S. aid in Latin America. However, assistance levels have been declining since FY2007. Bolivia received $122.1 million in U.S. assistance in FY2007, including $66 million in counternarcotics assistance for robust interdiction and alternative development programs. Other goals of U.S. assistance in Bolivia included promoting economic opportunities, particularly for indigenous groups; combating malaria and other illnesses while also strengthening and decentralizing healthcare provision; and providing support for justice reform and for regional and municipal governments. Since many of the regional governments were controlled by opposition parties, President Morales came to oppose USAID's regional and municipal government strengthening programs. As a result of President Morales' decisions to expel the U.S. Ambassador, DEA, and USAID, U.S. assistance to Bolivia fell from $99.7 million in FY2008 to $5.2 million in FY2013 and to zero in FY2014. The FY2015 budget request does not include any funding for Bolivia. Although other donors, such as the European Union (EU), support development assistance, health, and alternative development programs in Bolivia, they have not traditionally provided the same types of surveillance and interdiction programs that the U.S. government supported through the State Department and DEA. The EU has recently begun to fund interdiction with the construction of a base in Yapacani, Santa Cruz, for Bolivian antidrug forces, as well as a program to improve Bolivian border controls. On September 13, 2013, President Obama identified Bolivia as a major drug producing country that had "failed demonstrably" to make sufficient efforts to meet its obligations under international counternarcotics agreements for the sixth consecutive year. The U.S. determination was made despite the fact that Bolivia reported eradicating over 10,000 hectares of coca in 2012 and that official U.S. estimates for coca cultivation and potential cocaine production in Bolivia showed decreases of 2% and 18%, respectively, for 2012 as compared to 2011. Arguments used to justify the determination include Bolivia's reservation to the 1961 U.N. Single Convention on Narcotic Drugs (allowed by the U.N. in January 2013 but opposed by the United States) recognizing coca leaf chewing as legal in the country, Bolivia's failure to prevent coca produced for licit uses from being diverted into illicit markets, and its inability to convict individuals accused of drug trafficking. The U.S. determination was vigorously rejected by the Bolivian government. Bolivia is not a major U.S. trade partner; two-way trade totaled just over $2 billion in 2013. Bolivia's largest export by far is natural gas, with the bulk of that destined for neighboring Brazil and Argentina. Bolivian exports to the United States in 2013 consisted mainly of precious metals and stones followed by tin and related products. Although the United States is not Bolivia's primary export market, it does rank just behind Brazil and ahead of China as a source for Bolivian imports. In 2013, top Bolivian imports from the United States included heavy machinery, electronics, and vehicles. From 1991 through 2008, Bolivia received U.S. trade preferences under the Andean Trade Preference Act (ATPA; Title II of P.L. 102-182 ). The purpose of ATPA was to promote economic growth in the Andean region and to encourage a shift away from dependence on illicit drugs by supporting legitimate economic activities. ATPA encouraged some limited textile and jewelry production in Bolivia. As previously stated, Bolivia's ATPA benefits were suspended in 2008 due to its lack of counternarcotics cooperation with the United States. The effects of that suspension on the Bolivian economy as a whole have been small because exports under ATPA accounted for a small percentage of Bolivia's GDP. A majority of Bolivia's textile exports are now destined for Venezuela. Economists predict that Bolivia is likely to enjoy steady economic growth averaging roughly 4% in the coming years (2015-2018). Even if prices or demand for its commodity exports were to fall, neither of which is likely, Bolivia's significant reserves should cushion its economy from economic shocks. Economic growth and improving social indicators should enable President Morales and the MAS to continue dominating the Bolivian political system for the foreseeable future, despite periodic protests from disgruntled interest groups. With presidential elections expected to be held in October, the Morales government is unlikely to make overtures to improve relations with the United States. At the same time, none of the issues that usually draw U.S. interest to particular Latin American countries--proximity, counternarcotics concerns, or trade--are particularly salient with Bolivia. Bolivia is a landlocked country in South America that supplies only 1% of U.S. cocaine and whose primary trade partner is Brazil. And, although Bolivia is a member of the nine-member Venezuelan-led Bolivarian Alliance of the Americas (ALBA), it does not possess the same ambitions to serve as a regional counterweight to the United States as Venezuela. Nevertheless, there is always a chance that President Morales could change his mind regarding a desire to improve relations with the United States and eventually exchange Ambassadors. He reportedly expressed a willingness to do so within an environment of "mutual respect" during a meeting with a recent U.S. Senate delegation to Bolivia. It remains to be seen what type of conditions either government might place on efforts to improve relations. | In the last decade, Bolivia has transformed from a country plagued by political volatility and economic instability that was closely aligned with the United States to a relatively stable country with a growing economy that now has strained relations with the U.S. government. Located in the Andean region of South America, Bolivia, like Peru and Colombia, has been a major producer of coca leaf, the main ingredient in the production of cocaine. Since 2006, Bolivia has enjoyed a period of relative political stability and steady economic growth during the two presidential terms of populist President Evo Morales, the country's first indigenous leader and head of the country's coca growers' union. Buoyed by a booming natural gas industry, Morales and his party, the leftist Movement Toward Socialism (MAS) party, have decriminalized coca cultivation, increased state control over the economy, expanded social programs, and enacted a new constitution favoring the rights of indigenous peoples. U.S. interest in Bolivia has traditionally centered on counternarcotics, trade, and development matters. From the late 1980s through the mid-2000s, successive Bolivian governments, with financial and technical assistance from the United States, tried various strategies to combat illicit coca production, including forced eradication. In support of Bolivia's counternarcotics efforts, the United States has provided significant interdiction and alternative development assistance, and has forgiven all of Bolivia's debt for development assistance projects and most of the debt for food assistance. From 1991 through November 2008, Bolivia also received U.S. trade preferences in exchange for its counternarcotics cooperation under the Andean Trade Preference Act (ATPA; Title II of P.L. 102-182). Bolivia also received U.S. development, democracy, and health assistance provided by the U.S. Agency for International Development (USAID) from 1961 through 2013. Although President Morales' policies have proven popular with his supporters, they have worried foreign investors and strained U.S. relations, particularly in the realm of drug control. With an antagonistic foreign policy closely aligned with that of Venezuela, Bolivian-U.S. relations have been more tense during the Morales Administrations than they have been in decades. Despite significant strains in the bilateral relationship, the two countries have not formally severed diplomatic or consular relations, even though they have not exchanged Ambassadors since President Morales expelled the U.S. Ambassador in the fall of 2008. Due to actions taken by the Morales government (including the 2013 expulsion of USAID from the country) and a lack of counterdrug cooperation with the United States, Bolivia has lost U.S. trade preferences and no longer receives U.S. foreign aid. This report provides background information on Bolivia, an analysis of its current political and economic situation, and an assessment of some key issues in Bolivian-U.S. relations. | 5,148 | 639 |
Each year, the federal government spends billions of dollars implementing, operating, and modernizing agency financial management systems. Financial systems are vital to the effective management and oversight of public funds, because the information they provide is used by government officials to make decisions about agency programs and operations. For example, federal managers use financial data to monitor contract costs, measure program performance, and identify improper payments. When agency financial systems provide inaccurate or incomplete data, the government might be less able to operate at maximum efficiency, and the risk of waste, fraud, and abuse arguably increases. For example, GAO has reported that financial management deficiencies at the Department of Defense (DOD) have resulted in hundreds of millions of dollars in over- and underpayments to contractors and contributed to DOD's high rate of travel card delinquency. Significant financial management weaknesses can be found throughout the government, and according to GAO most agency financial systems are unable to routinely produce reliable, useful, and timely information. In order to improve the quality of financial data available to government officials, Congress has funded a number of financial management improvement initiatives. Such initiatives, by their nature, are often complex and entail a degree of risk. The National Aeronautics and Space Administration (NASA), for example, spent $180 million on two failed efforts to modernize its financial systems, and NASA's third such attempt, currently underway, will cost an additional $983 million. Similarly, problems with inaccurate data led the Department of Veterans Affairs to halt deployment of its new financial system after an investment of $250 million. One recent effort to improve agency financial systems, the Financial Management Line of Business (FMLOB) initiative, was launched by the Office of Management and Budget (OMB) in 2004. Based on the recommendations of an interagency task force, the FMLOB proposed that the government move to a "shared services" model of financial management, whereby agencies would transfer their core financial system functions--such as accounting, payments, and reporting--to government-wide shared service providers (SSPs). Outsourcing administrative and financial operations to third-party service providers is a common practice in the private sector, and it has already been employed by the federal government in some instances. The National Finance Center, for example, a component of the U.S. Department of Agriculture (USDA), currently provides payroll and personnel services for 120 federal organizations across the three branches of government. According to OMB, the use of SSPs will enhance the timeliness and accuracy of financial information while reducing the costs associated with operating and modernizing agency financial systems. Several departments and agencies have already begun making plans to migrate core functions to SSPs, including the Department of Labor, the Department of Commerce, USDA, and the Environmental Protection Agency. OMB has estimated that remaining agencies will follow suit within the next seven or eight years. While the objective of moving to a shared services environment is widely supported in principle, a range of public and private sector observers has expressed concern that the initiative is moving too fast. Critics say that the capabilities of some SSPs have not been adequately demonstrated, that internal control problems should be addressed prior to migrating core financial systems, and agencies need time to prepare their personnel and build internal support for the initiative. Implementation should be delayed, critics argue, until these and other risk factors have been mitigated. The FMLOB has implications for Congress, in terms of both its appropriations and oversight responsibilities. Large-scale financial modernization efforts have the potential to generate more timely and accurate financial data, which are needed for effective oversight of agency programs and operations. As previously noted, however, modernization initiatives require substantial funding and often fail to produce the intended results. The House Subcommittee on Government Management, Finance, and Accountability, has held several hearings on the initiative, although no bills have been introduced. This report provides background information on the FMLOB's origins and goals, and presents the arguments of supporters and critics of the initiative. Finally, it discusses the project's implementation status. In the spring of 2004, OMB launched a series of interagency task forces to determine if services commonly found in numerous agencies, called lines of business, might be provided in a more efficient manner. The financial management task force determined that "significant savings" over a 10-year period were possible if the government consolidated agency financial systems and standardized the related business processes. In order to realize these savings, the task force recommended that the government establish centralized shared service providers (SSPs) to which agencies would transfer their core financial management functions, rather than invest in modernizing existing agency systems. OMB concurred with the recommendation and worked with the task force to develop an FMLOB business case that outlined the shared services concept and its expected benefits. The business case called for consolidating agency financial systems into a smaller number of government-wide SSPs, each of which could provide financial management services to multiple agencies. According to the business case, transferring agency financial management functions to SSPs would enable to government to: improve its leverage in negotiations with suppliers; reduce future agency development, modernization, and enhancement expenditures; reduce future agency operation and maintenance expenditures; retire agency "stovepiped" core financial systems; re-deploy current agency financial management personnel; improve agency program decision making due to enhanced financial reporting; and leverage best practices for investment management, procurement, budgeting, and real estate management. The business case explained that agencies may select as their service provider either a private sector contractor or one of a limited number of government agencies designated by OMB to be federal SSPs. In order to identify potential federal SSPs, OMB asked agencies with the skills, capabilities, and interest to function as government-wide financial management service providers to include business cases for doing so as part of their FY2006 budget submissions. OMB then evaluated the business cases using a "due diligence checklist" that assessed agencies' past performance, current capabilities, skill to operate a customer-focused organization, and adherence to federal policy and regulations. Based on these evaluations, OMB designated four agencies as federal SSPs: the Bureau of the Public Debt's Administrative Resource Center, the Department of the Interior's National Business Center, the Department of Transportation's Enterprise Service Center, and the General Service Administration's External Services Division. Only these agencies are permitted to compete with private firms for FMLOB contracts. In order to explain the initiative to federal agencies and help them prepare for the transition to a shared services environment, OMB released Version 1 of its Migration Planning Guidance in September 2006. Key provisions of the guidance are outlined below. The stated objective of the FMLOB is to improve the cost, quality, and performance of government financial management systems by utilizing shared service providers and implementing other government-wide reforms. Specific goals of the initiative include providing timely and accurate data for decision making; strengthening internal controls; providing a competitive alternative for agencies to acquire, develop, implement, and operate financial systems through shared services; standardizing business systems, processes, and data elements; and providing seamless data exchange between agencies. With "limited exception," the guidance requires that when an agency identifies a need to upgrade or modernize its core financial system, it must, at that time, either select an SSP or become designated as a federal SSP itself. OMB maintains that this policy enables the government to avoid investments on "in-house" agency systems that would eventually be replaced by more cost effective shared service providers. An agency may continue to operate its in-house system without being designated as a federal SSP only if it can demonstrate that doing so is a better value and lower risk alternative. The guidance provides no estimated timeline for migration, but OMB has told GAO that it expects most federal agencies to move to SSPs "within the next seven to eight years." The guidance stated that all agencies are required to conduct public-private competitions when selecting an SSP, unless OMB grants a deviation. Additionally, when public-private competitions involve work performed by more than 10 full-time employees, those competitions are required to follow OMB Circular A-76, which establishes government-wide guidelines for opening federal jobs to private bids. The guidance makes A-76 optional for competitions involving work performed by 10 or fewer full-time agency employees. The FMLOB includes an effort to establish standardized business practices that all agencies would eventually adopt. For example, it is developing standard processes for core financial management functions, such as payments and reporting, which would make it easier for agencies to share data. The FMLOB has also developed a standard government accounting code, which was released in July 2007. In a January 2008 memorandum, OMB stated that agencies are required to adopt the new business standards when they migrate to SSPs. OMB also argues that the FMLOB will increase the number of agencies in compliance with the Federal Financial Management Improvement Act (FFMIA) of 1996. FFMIA establishes standards for federal agency financial systems, with the objective of ensuring they generate reliable, useful, and timely information for decision makers. In FY2009, 15 of 24 agencies covered by the act were in substantial compliance. OMB has stated that by moving some agencies to SSPs and standardizing financial processes across the government, the FMLOB will help agencies select and implement FFMIA-compliant financial systems. Initial support for the FMLOB, while widespread, was qualified by concerns over the pace of implementation. By the time OMB released the Migration Planning Guidance in September 2006, the Department of Labor had awarded a contract to a private firm for hosting components of its financial system, the Department of Commerce had announced plans to begin consolidating its financial management platforms, the Office of Personnel Management had selected the Bureau of Public Debt as its SSP, and the Environmental Protection Agency had begun evaluating proposals for software, integration, and hosting services. Some observers said that the initiative, given its scope and complexity, was moving too quickly, and that agency migration efforts should have been delayed in order to reduce the risk of costly mistakes. A survey of Chief Financial Officers (CFOs) and other federal financial managers, for example, found "almost no" opposition to using SSPs in principle, so long as the quality of service and the cost of migration met expectations. The survey also revealed that one of the "greatest fears" of agency officials was that they would invest millions of dollars into migrating to SSPs, only to discover that their service provider was not capable of delivering the promised services. One reason for this concern was that some of the designated federal SSPs were components of departments that were themselves not FFMIA compliant. Some managers also suggested that small agencies--those with a budget of less than $100 million--might realize greater gains in efficiency from migrating to SSPs than larger agencies. Overall respondents said that they wanted more evidence of the capabilities of potential SSPs, more guidance on agency recourse should an SSP fail to meet performance expectations, and more time to consider their options before migrating. Similarly, a report by the National Academy of Public Administration (NAPA) endorsed the objectives of the FMLOB while expressing concerns about its implementation. In the report, which was prepared at the request of the House Subcommittee on Government Management, Finance, and Accountability, NAPA stated that the move to a shared services environment "makes a great deal of sense," citing its potential to reduce operating costs and free agency CFOs and their staff to focus on core program activities. Many of the CFOs interviewed for the report were, however, concerned about moving core accounting and reporting functions outside their purview, an opinion that NAPA shared. The report also said that economies of scale might not always result from consolidation, particularly if some agencies contract with multiple SSPs for different elements of their financial management system. NAPA recommended delaying further migrations to allow additional review, discussion, and analysis of these issues. Private sector observers also offered qualified support for the initiative. At FMLOB hearings held in March 2006, Stan Soloway, the president of the Professional Services Council (PSC), called the strategic underpinnings of the initiative "sound and rational ... the right thing to do." He cautioned, however, that the benefits of shared services might not be realized if agency leadership and staff are not "involved and fully invested" in the initiative. Additionally, he questioned whether sufficient attention had been paid to the need for the FMLOB to connect with other lines of business, particularly the Human Resources Line of Business (HRLOB), where travel systems will need to interface with financial systems. If poor planning caused the government to change its requirements during implementation, Soloway said, then the costs of the initiative might rise. PricewaterhouseCooper partner Joe Kull also testified at the March 2006 hearings. Kull, a former OMB deputy controller, said agencies should not be required to meet an "arbitrary timeframe" for implementation, asserting that government projects like FMLOB have often failed because agencies had not invested sufficient resources in educating, training, and communicating with employees about the initiative. Kull also said that it was "critical" for agencies to improve their internal controls prior to migration--even though those improvements might take several years--because core systems are only as good as the data flowing into them. Agency financial systems would thus continue to be limited by weak internal controls even after migration, and presumably those problems would be more difficult to correct when core functions were hosted by a third party. One union, the American Federation of Government Employees (AFGE), strongly criticized the initiative, largely over OMB's policy on the application of Circular A-76 to migration competitions. As previously discussed, agencies are only required to follow the provisions of A-76 when migrating more than 10 full-time positions to an SSP, and A-76 is optional when 10 or fewer full-time employees are involved. In hearings on the FMLOB held in June 2006, the AFGE argued that by making A-76 optional in some cases, agencies were, in effect, authorized to transfer federal jobs to private contractors without giving agency employees the opportunity to compete for them, a practice called "direct conversion." An OMB official said the AFGE had misinterpreted the policy, stating that while A-76 is optional in some instances, a public-private competition is required for every migration, regardless of the number of employees involved. OMB's Migration Planning Guidance, released three months after the hearings, clarifies this point, explicitly stating that direct conversions are not authorized. In a March 16, 2010, memorandum, OMB identified several steps that had been completed in implementing the FMLOB. Among these, OMB noted that it had developed and issued standard business processes for a number of core financial management functions, a competition framework for FMLOB migrations, and a Financial Services Assessment Guide. In its FY2007 Federal Financial Management Report (FFMR), OMB set as a target to migrate a majority of agencies to SSPs by FY2011, but its FY2009 FFMR did not reference any migration goals. The migration status update provided in the FY2009 FFMR noted that five agencies have selected a commercial SSP--the Departments of Agriculture, Labor, and Housing and Urban Development, the Environmental Protection Agency, and the Office of Personnel Management--but it is not clear what stage of migration those agencies are currently in, or when other agencies might begin migrating. GAO has recommended that OMB finalize and publish a migration timeline as soon as possible. | Federal financial management systems generate the information that is used by government officials to manage and oversee agency programs and operations. Concerns about the quality of agency financial information, and about the costs of operating and modernizing the systems that produce it, have prompted a number of systems improvement initiatives in recent years. One such effort, the Financial Management Line of Business (FMLOB), seeks to improve the cost, quality, and performance of government financial systems by consolidating agency core systems functions at a limited number of third-party shared service providers (SSPs), and by standardizing the related business processes government-wide. As part of the initiative, the Office of Management and Budget (OMB) in 2006 directed all federal agencies needing to upgrade or modernize their financial management systems either to transfer their core financial functions to an SSP, seek designation as an SSP, or to prove that they can operate their in-house systems with less risk and at a lower cost than an SSP. Agencies that undergo migration must, in most cases, select their SSPs through competitions between public and private organizations. OMB's guidance also requires all agencies eventually to adopt government-wide business and accounting practices, which are under development in FMLOB workgroups. It is widely acknowledged that consolidation and standardization might improve the cost and quality of agency financial data. Proponents suggest that the sooner agencies move to SSPs, the sooner the government might enhance its efficiency and capacity for oversight. Concerns have been expressed, however, by both public and private sector observers, that the initiative is moving too fast, and that important issues surrounding the transition to shared service providers have not been adequately addressed. Critics argue that migration should be delayed until agencies have strengthened their internal controls, fully evaluated the qualifications of potential SSPs, and educated their personnel about the initiative. Evidence from previous systems modernization efforts suggests that these issues might put the FMLOB at increased risk for cost overruns, schedule delays, and problems with the accuracy of the data after implementation. Effective congressional oversight of agency programs and operations is dependent, in part, on the availability of timely and accurate financial data. Congress has invested billions of dollars in systems modernization projects in recent years, but these efforts have not consistently yielded significant improvements in the information they produce. The House Subcommittee on Government Management, Finance, and Accountability has held several hearings on the initiative, although no bills have been introduced. This report examines the origins and objectives of the FMLOB, outlines the arguments of the initiative's supporters and critics, and discusses the project's status. It will be updated as events warrant. | 3,385 | 562 |
DOE is responsible for managing defense nuclear waste and cleaning up contamination at sites involved in the past production of nuclear weapons. Among these challenges are the management and disposal of radioactive waste stored in underground tanks at sites in three states: Hanford in Washington, Savannah River in South Carolina, and the Idaho National Laboratory (INL). The production of radioactive materials for nuclear weapons generated 53 million gallons of radioactive waste stored in 177 tanks at Hanford, 37 million gallons in 49 tanks at Savannah River, and nearly 1 million gallons in 11 tanks at the INL. Some of these tanks are deteriorating and are known or suspected to have leaked, contaminating soil and groundwater. Of greatest concern are the tanks at Hanford, 67 of which are known or suspected to have leaked radioactive waste that has migrated through groundwater into the Columbia River. However, recent monitoring data indicate that the level of radionuclides in the Columbia River meets federal and state water quality standards. There are similar concerns about the possible contamination of the Snake River in Idaho and the Savannah River in South Carolina. How to decommission (i.e., close) the tanks in a cost-effective and timely manner that mitigates environmental risk and potential exposure of workers has been the subject of controversy. DOE has argued that removing all of the waste in the tanks would take too long to respond to environmental risks from leaking tanks. DOE favors removal of the "pumpable" liquid waste and immobilizing (i.e., binding up) the sludge-like residual waste by filling the tanks with a cement grout to prevent leaks. The waste removed from the tanks classified as "high-level" would be stored for future disposal in a deep geologic repository (see below). Potentially affected states and environmental organizations raised questions regarding how much waste would be left in the tanks and whether the grout would thoroughly mix with the residual waste to solidify and contain it safely. Although the sludge-like consistency of the residual waste likely would not be as prone to leakage because of its semisolid form, whether pockets or layers of liquid waste may exist within the sludge-like residues and present greater risk of leakage is uncertain. Although removing all of the waste in the tanks would eliminate the risk of contamination, this alternative poses other risks and challenges. DOE has argued that methods to extract the residual waste after the pumpable liquid waste is removed would generate a new hazardous waste stream that would need to be managed and disposed of safely to protect the environment. DOE also asserts that there would be significant risks of exposure to workers who would remove the residues and manage and dispose of the resulting new waste stream. Once a tank is cleaned, there would be additional risks to workers who would extract the tank from the ground, and there would be environmental risks from the management and disposal of the contaminated tank metal. How to dispose of the tank waste is further complicated by the legal issue of how much of the waste is "high-level." Under the Nuclear Waste Policy Act of 1982 (NWPA), high-level radioactive waste must be disposed of in a deep geologic repository. Consequently, the tank waste classified as high-level must be removed from the tanks, processed, and stored for disposal in such a repository. In July 1999, DOE issued internal agency Order 435.1 to classify residual tank waste as "waste incidental to reprocessing," rather than as high-level. In effect, this order would exempt the residual tank waste from NWPA requirements for disposal in a geologic repository. DOE proposed to dispose of the residual tank waste at Hanford, Savannah River, and the INL by grouting it in place, as discussed above. Sealing a tank using this method would depend on state concurrence, as DOE must obtain approval from the state where the tank is located before it can be closed with no further action to be taken. DOE grouted residual waste in two tanks at the Savannah River site in 2000, with state concurrence. In 2002, DOE issued a Record of Decision to apply Order 435.1 to the closure of the remaining 49 tanks at the site, and to grout the residual waste it classified as incidental to reprocessing. The Natural Resources Defense Council (NRDC) legally challenged DOE's authority to dispose of the waste in this manner. The state of South Carolina and others filed as "friends of the court," due to concern that states would not have a role under Order 435.1 in determining how much of the residual waste would be left in the tanks. In 2003, a federal district court determined that DOE does not have the authority to classify any of the waste in the tanks as other than high-level, nor to dispose of it permanently on site through grouting or other means. DOE appealed the 2003 ruling, and in 2004, the U.S. Court of Appeals for the Ninth Circuit reversed the above district court opinion, ruling that the challenge to Order 435.1 was not "ripe" for review. The court noted that DOE had planned to implement Order 435.1 to grout the 49 tanks, but had not yet done so. Thus, the court determined that DOE had not violated the NWPA because it had not yet taken such action. The circuit court opinion resulted in allowing DOE to pursue activities under Order 435.1, and NRDC or others then could bring suit if they believed actions taken by DOE violate the law. Prior to the appeals court decision, DOE had asked Congress to enact legislation to clarify its authority for Order 435.1 and allow it to proceed with grouting the waste in tanks at Hanford, Savannah River, and the INL. After considerable debate, the 108 th Congress included provisions in Section 3116 of the Ronald W. Reagan National Defense Authorization Act for FY2005 ( P.L. 108-375 ) authorizing DOE to classify some of the tank waste in South Carolina and Idaho as incidental to reprocessing and to grout it in place. Congress did not provide this authority in Washington State, where most of the leaking tanks are located. Although this targeted authority is permanent, unless repealed by Congress, funding to implement it is subject to annual authorization and appropriation. An examination of provisions in Section 3116 of P.L. 108-375 follows. Section 3116(a) authorized the Secretary of Energy, in consultation with the Nuclear Regulatory Commission (NRC), to classify tank waste in South Carolina and Idaho as other than high-level, upon making certain determinations. These determinations are (1) that the waste "does not require permanent isolation in a deep geological repository," as is required for high-level waste, and (2) that highly radioactive radionuclides have been removed from the waste to the "maximum extent practical." Assuming these requirements are met, the Secretary must determine if the radioactivity of the waste will exceed concentration limits for Class C low-level waste. However, the waste could be disposed of according to Class C performance objectives for human exposure , regardless of whether the concentration exceeds allowable limits. If the concentration does exceed allowable limits, the Secretary must consult with the NRC to develop a plan for the disposal of such waste. In any case, disposal also would be subject to a state-approved closure plan and state permit authorized under other law. The performance objectives for Class C waste require "reasonable assurances" that concentrations of radioactive materials that may be released into the environment do not result in human exposure to specific levels of radiation. The ability of the grout to accomplish this objective would depend primarily on the extent to which it mixes with the residual waste to prevent leaks from the tank. However, even if a tank leaks, the performance objectives could still be met if the radioactivity decays to allowable levels before contamination migrates and results in human exposure. The objectives also require that protection of individuals from inadvertent intrusion be ensured after institutional controls are removed. Sealing the tanks with a cement grout could provide a barrier to intrusion, and institutional control of the grouted tanks, presumably would continue as long as the Savannah River site and the INL remain federal facilities. Although grouting of the residual waste would be subject to state approval, the authority of states is limited to the hazardous component of the waste. Thus, South Carolina and Idaho presumably would not have the authority to prevent the grouting of a tank based solely on objections to the radioactivity left in the tank, as long as Class C performance objectives are met. In effect, Section 3116(a) authorizes DOE to grout the residual waste in tanks in Idaho and South Carolina, if it consults with the NRC in making the determination that the waste is not high-level and if it meets the performance objectives for disposing of Class C waste. Section 3116(b) requires the NRC to monitor DOE's implementation of this authority, in coordination with Idaho and South Carolina. If the NRC determines that DOE is not in compliance, it is directed to inform DOE, the state, and the congressional committees with relevant jurisdiction. Section 3116(c) clarified that the waste classification authority in subsection (a) would not apply to any material transported outside of covered states, which are defined as Idaho and South Carolina in Section 3116(d). In effect, the law does not allow DOE to reclassify waste shipped out of South Carolina or Idaho as "incidental to reprocessing" and to dispose of it as low-level waste in other states. Section 3116(e) addressed the effect of the entire section on other laws and regulations and their application within Idaho and South Carolina. This provision stated that the authority in Section 3116(a) shall not "impair, alter, or modify the full implementation of any Federal Facility Agreement and Consent Order or other applicable consent decree" for a DOE site. These documents specify federal and state requirements applicable to waste disposal and cleanup, and establish legally binding time frames for disposal and cleanup actions. Thus, it appears that Section 3116 leaves the existing agreements for Savannah River and the INL intact, and would not permit DOE to leave more waste in the tanks than previously agreed to. Other provisions in Section 3116(e) clarified that the authority in subsection (a) is binding only in Idaho and South Carolina and that it does not override certain other statutes relevant to waste disposal. Section 3116(f) clarified the availability of judicial review under the Administrative Procedure Act (APA), for "any determination made by the Secretary or any other agency action taken by the Secretary pursuant to this section," and for any failure of the NRC to carry out its monitoring and reporting responsibilities. Although Section 3116 does not require public notice of actions taken pursuant to it, DOE may be required to provide notice under other federal laws, such as the National Environmental Policy Act and the APA. The disposal of the tank waste is also subject to a state-approved closure plan, the preparation of which may provide opportunity for public notice under state law. In implementing the authority in Section 3116, DOE must first determine what portion of the tank waste is classified as other than high-level and is therefore not subject to disposal in a geologic repository. In November 2006, DOE determined in consultation with the NRC how much waste would be left in the tanks at the INL, but DOE has not made such a determination at Savannah River, where the removal of the tank waste is not as far along. However, in January 2006, DOE did determine the portion of the retrievable waste at Savannah River that would be classified as other than high-level. This waste would be solidified and disposed of in vaults on site rather than in a geologic repository. Although the NRC concurred with DOE in issuing these waste determinations, the two agencies have disagreed about their respective roles in making future determinations of the tank waste that has yet to be classified for disposal. To inform decisions to dispose of the tank waste, Section 3146 of P.L. 108-375 authorized DOE to arrange for the National Academy of Sciences (NAS) to study disposal alternatives at Savannah River, the INL, and Hanford. The NAS released its final report in April 2006. The NAS concluded that DOE's "overall approach" to remove most of the waste from the tanks and to grout the residual waste in place is "workable." However, the NAS noted that "clear, definitive" answers to certain questions were not possible because of insufficient information and technical, economic, and regulatory uncertainties, such as the lack of explicit authority for grouting tank waste in Washington State. The NAS acknowledged that using a cement grout is likely the most effective method currently available to immobilize the waste left in the tanks after all retrievable waste is removed, but noted that the long-term performance of the grout to safely contain the waste left in the tanks is uncertain and necessitates further research. However, the ability to reliably predict performance until all radioactivity decays to harmless levels appears doubtful, likely leaving some uncertainty for a substantial period of time, despite efforts to assess performance over the long-term. The NAS also noted that many of the facilities to process the retrieved waste are not constructed or have ongoing problems, and that the regulatory deadlines for tank closure are years away, from 2016 to 2032. The NAS concluded that enough time likely remains to explore ways to remove more of the waste from the tanks before closing them. The NAS recommended that DOE delay the grouting of tanks with greater amounts of residual waste to allow for the development of technologies to retrieve a larger portion of the waste. Accordingly, the NAS recommended $50 million annually over 10 years for a research program to develop more effective methods to remove the waste from the tanks and to ensure the immobilization of residues left in them upon closure. The John Warner National Defense Authorization Act for FY2007 ( P.L. 109-364 , H.R. 5122 ) authorized $10 million for DOE to establish such a program, subject to appropriations. DOE estimates that the cleanup of the Savannah River site will be complete in 2025 at a cost of $32.1 billion, the INL in 2035 at a cost of $15.3 billion, and Hanford also in 2035 at a cost of $60.0 billion. The disposal of the tank waste at these sites is among the greater challenges to completing cleanup, along with remediation of existing soil and groundwater contamination. The authority in Section 3116 of P.L. 108-375 has implications in terms of cost and pace of cleanup at both Savannah River and the INL. Based on a 2002 assessment, DOE estimated that grouting residual tank waste at Savannah River would cost between $3.8 million and $4.6 million per tank, compared with a cost of greater than $100 million per tank to remove and dispose of all of the waste and to clean and remove the tank. The per tank closure costs at the INL likely would be lower because the tanks there contain less waste than those at Savannah River. DOE continues to assess alternatives and costs for the disposal of the tank waste at Hanford under other authorities, but a final decision has not been made. Grouting the tank waste also has implications in terms of environmental risk. If the grout is effective in solidifying the residual waste and containing it safely, this disposal method could provide a less costly and faster means of addressing risks. On the other hand, the possibility of future leaks and resulting environmental contamination remains if the grout does not mix thoroughly with the residual waste to solidify it completely, as potentially affected states and environmental organizations have noted. Whether contamination resulting from tank leaks could migrate and present a potential risk of human exposure would depend on many factors, including the hydrological conditions of the site and the effectiveness of any engineered or natural geologic barriers to migration. If a grouted tank leaked and contamination resulted, the federal government would remain liable for cleanup according to applicable federal and state requirements. Depending on the extent of contamination, potential risk of human exposure, and remedial actions selected to address such risk, the time and costs to clean up contamination from tank leaks could offset the initial savings from grouting the residual waste. | How to safely dispose of wastes from producing nuclear weapons has been an ongoing issue. The most radioactive portion of these wastes is stored in underground tanks at Department of Energy (DOE) sites in Idaho, South Carolina, and Washington State. There have been concerns about soil and groundwater contamination from some of the tanks that have leaked. DOE proposed to remove the "pumpable" liquid waste, classify the sludge-like remainder as "waste incidental to reprocessing," and seal it in the tanks with a cement grout. DOE has argued that closing the tanks in this manner would be a cost-effective and timely way to address environmental risks. Questions were raised as to how much waste would be left in the tanks and whether the grout would contain the waste and prevent leaks. After considerable debate, the 108th Congress included provisions in the Ronald W. Reagan National Defense Authorization Act for FY2005 (P.L. 108-375) authorizing DOE to grout some of the waste in the tanks in Idaho and South Carolina. Congress did not provide such authority in Washington State. This report provides background information on the disposal of radioactive tank waste, analyzes the waste disposal authority in P.L. 108-375, discusses the implementation of this authority, and examines relevant issues. | 3,481 | 278 |
This report provides an overview of the development of the process for appointing the Director of the Federal Bureau of Investigation (FBI), briefly discusses the history of nominations to this position from 1973 through 2017, and identifies related congressional hearing records and reports. Federal statute provides that the Director of the FBI is to be appointed by the President by and with the advice and consent of the Senate. When there is a vacancy or an anticipated vacancy, the President begins the appointment process by selecting and vetting his preferred candidate for the position. The vetting process for presidential appointments includes an FBI background check and financial disclosure. The President then submits the nomination to the Senate, where it is referred to the Committee on the Judiciary. The Committee on the Judiciary usually holds hearings on a nomination for the FBI Director. The committee may then vote to report the nomination back to the Senate favorably, unfavorably, or without recommendation. Once reported, the nomination is available for Senate consideration. If the Senate confirms the nomination, the individual is formally appointed to the position by the President. Prior to the implementation of the current nomination and confirmation process, J. Edgar Hoover was Director of the FBI for nearly 48 years. He held the position from May 10, 1924, until his death on May 2, 1972. The current process dates from 1968, when the FBI Director was first established as a presidentially appointed position requiring Senate confirmation in an amendment to the Omnibus Crime Control and Safe Streets Act of 1968. The proposal for a presidentially appointed Director had been introduced and passed in the Senate twice previously, but had never made it through the House. Floor debate in the Senate focused on the inevitable end of Hoover's tenure (due to his advanced age), the vast expansion of the FBI's size and role under his direction, and the need for Congress to strengthen its oversight role in the wake of his departure. In 1976, the 10-year limit for any one incumbent was added as part of the Crime Control Act of 1976. This provision also prohibits the reappointment of an incumbent. As with the previous measure, the Senate had introduced and passed this provision twice previously, but it had failed to pass the House. From 1973 through 2017, eight nominations for FBI Director were confirmed, and two other nominations were withdrawn. Due to a 2011 statute allowing for the reappointment of a specific incumbent, two of the eight confirmed nominations were of the same person, Robert S. Mueller III. Each of these nominations is shown in Table 1 and discussed below. L. Patrick Gray III. On the day after the death of long-time Director J. Edgar Hoover, L. Patrick Gray was appointed acting Director. President Richard M. Nixon nominated Gray to be Director on February 21, 1973. Over the course of nine days, the Senate Committee on the Judiciary held hearings on the nomination. Although Gray's nomination was supported by some in the Senate, his nomination ran into trouble during the hearings as other Senators expressed concern about partisanship, lack of independence from the White House, and poor handling of the Watergate investigation. The President withdrew the nomination on April 17, and Gray resigned as acting Director on April 27, 1973. Clarence M. Kelley. Clarence M. Kelley was the first individual to become FBI Director through the nomination and confirmation process. A native of Missouri, Kelley was a 21-year veteran of the FBI, becoming chief of the Memphis field office. He was serving as Kansas City police chief when President Nixon nominated him on June 8, 1973. During the three days of confirmation hearings, Senators appeared satisfied that Kelley would maintain nonpartisan independence from the White House and be responsive to their concerns. The Senate Committee on the Judiciary approved the nomination unanimously the following day. He was sworn in by the President on July 9, 1973. Kelly remained FBI Director until his retirement on February 23, 1978. Frank M. Johnson Jr. With the anticipated retirement of Clarence Kelley, President Jimmy Carter nominated U.S. District Court Judge Frank M. Johnson Jr. of Alabama, on September 30, 1977. Johnson faced serious health problems around the time of his nomination, however, and the President withdrew the nomination on December 15, 1977. William H. Webster. In the aftermath of the withdrawn Johnson nomination, President Carter nominated U.S. Court of Appeals Judge William H. Webster to be Director on January 20, 1978. Prior to his service on the U.S. Court of Appeals for the Eighth Circuit, Webster had been U.S. Attorney and then U.S. District Court Judge for the Eastern District of Missouri. After two days of hearings, the Senate Committee on the Judiciary unanimously approved the nomination and reported it to the Senate. The Senate confirmed the nomination on February 9, 1978, and Webster was sworn in on February 23, 1978. He served as Director of the FBI until he was appointed as Director of the Central Intelligence Agency (CIA) in May 1987. William S. Sessions. On September 9, 1987, President Ronald W. Reagan nominated William S. Sessions, Chief Judge of the U.S. District Court of Western Texas, to replace Webster. Prior to his service on the bench, Sessions had worked as chief of the Government Operations Section of the Criminal Division of the Department of Justice and as U.S. Attorney for the Western District of Texas. Following a one-day hearing, the Senate Committee on the Judiciary unanimously recommended confirmation. The Senate confirmed the nomination, without opposition, on September 25, and Sessions was sworn in on November 2, 1987. Sessions was the first of two FBI Directors to be removed from office. President William J. Clinton removed Sessions from office on July 19, 1993, citing "serious questions ... about the conduct and the leadership of the Director," and a report on "certain conduct" issued by the Office of Professional Responsibility at the Department of Justice. Some Members of Congress questioned the dismissal, but they did not prevent the immediate confirmation of Sessions's successor. Louis J. Freeh. President Clinton nominated former FBI agent, federal prosecutor, and U.S. District Court Judge Louis J. Freeh of New York as FBI Director on July 20, 1993, the day following Sessions's removal. The Senate Committee on the Judiciary held one day of hearings and approved the nomination. The nomination was reported to the full Senate on August 3, and Freeh was confirmed on August 6, 1993. He was sworn in on September 1, 1993, and served until his voluntary resignation, which became effective June 25, 2001. Robert S. Mueller III. On July 18, 2001, President George W. Bush nominated Robert S. Mueller III to succeed Freeh. The Senate Committee on the Judiciary held two days of hearings, and the nomination was reported on August 2, 2001. The nomination was confirmed by the Senate on the same day by a vote of 98-0. Mueller had served as the U.S. Attorney for the Northern District of California in San Francisco, and as the Acting Deputy U.S. Attorney General from January through May 2001. The former marine had also been U.S. Attorney for Massachusetts and served as a homicide prosecutor for the District of Columbia. Under President George Bush, Mueller was in charge of the Department of Justice's criminal division during the investigation of the bombing of Pan Am Flight 103 and the prosecution of Panamanian leader Manuel Noriega. From 1973 through 2016, Mueller was the only FBI Director to be appointed to more than one term. P.L. 112-24 , enacted on July 26, 2011, allowed the incumbent Director to be nominated for, and appointed to, an additional two-year term. After the bill was signed, Mueller was nominated for this second term by President Barack Obama, and he was confirmed the following day by a vote of 100-0. Mueller's two-year term expired on September 4, 2013. James B. Comey Jr. As Mueller's unique two-year term drew to a close, President Obama nominated James B. Comey Jr. to succeed him. Comey had previously served as U.S. Attorney for the Southern District of New York, from January 2002 to December 2003, and as Deputy Attorney General, from December 2003 to August 2005. The President submitted Comey's nomination on June 21, 2013. The Senate Committee on the Judiciary held a hearing on the nomination on July 9 and voted unanimously to report the nomination favorably to the full Senate on July 18. The Senate confirmed the nomination by a vote of 93-1 on July 29. Comey began his term of office on September 4, 2013. Comey was removed from office by President Donald J. Trump on May 9, 2017. Christopher A. Wray. Seven weeks after Comey was removed from office, President Trump nominated Christopher A. Wray to succeed him. From 1997 until 2005, Wray served in several leadership positions at the Department of Justice, including Principal Associate Deputy Attorney General and Assistant Attorney General for the Criminal Division. He later worked in private practice at a law firm. The President submitted Wray's nomination on June 26, 2017. The Senate Committee on the Judiciary held a hearing on the nomination on July 12 and voted unanimously to report the nomination favorably to the full Senate on July 20. The Senate confirmed the nomination by a vote of 92-5 on August 1. Wray began his term of office on August 2, 2017. U.S. Congress. Senate Committee on the Judiciary. Nomination of Louis Patrick Gray III, of Connecticut, to be Director, Federal Bureau of Investigation . Hearings. 93 rd Cong., 1 st sess., February 28, 1973; March 1, 6, 7, 8, 9, 12, 20, 21, and 22, 1973. Washington: GPO, 1973. --.--. Executive Session, Nomination of L. Patrick Gray, III to be Director, Federal Bureau of Investigation. Hearing. 93 rd Cong., 1 st sess., April 5, 1973. Unpublished. --.--. Nomination of Clarence M. Kelley to be Director of the Federal Bureau of Investigation . Hearings. 93 rd Cong., 1 st sess., June 19, 20, and 25, 1973. Washington: GPO, 1973. --.--. Nomination of William H. Webster, of Missouri, to be Director of the Federal Bureau of Investigation . Hearings. 95 th Cong., 2 nd sess., January 30 and 31, 1978; February 7, 1978. Washington: GPO, 1978. --.--. Nomination of William S. Sessions, of Texas, to be Director of the Federal Bureau of Investigation . Hearings. 100 th Cong., 1 st sess., September 9, 1987. S.Hrg. 100-1080. Washington: GPO, 1990. --.--. Nomination of Louis J. Freeh, of New York, to be Director of the Federal Bureau of Investigation . Hearings. 103 rd Cong., 1 st sess., July 29, 1993. S.Hrg. 103-1021. Washington: GPO, 1995. --.--. Confirmation Hearing on the Nomination of Robert S. Mueller, III to be Director of the Federal Bureau of Investigation . Hearings. 107 th Cong., 1 st sess., July 30-31, 2001. S.Hrg. 107-514. Washington: GPO, 2002. --.--. Confirmation Hearing on the Nomination of James B. Comey, Jr., to be Director of the Federal Bureau of Investigation . Hearings. 113 th Cong., 1 st sess., July 9, 2013. S.Hrg. 113-850. Washington: GPO, 2017. --.--. Subcommittee on FBI Oversight. Ten-Year Term for FBI Director . Hearing. 93 rd Cong., 2 nd sess., March 18, 1974. Washington: GPO, 1974. U.S. Congress. Senate Committee on the Judiciary. Ten-Year Term for FBI Director . Report to accompany S. 2106 . 93 rd Cong., 2 nd sess. S.Rept. 93-1213. Washington: GPO, 1974. --.--. William H. Webster to be Director of the Federal Bureau of Investigation . Report to accompany the nomination of William H. Webster to be Director of the Federal Bureau of Investigation. 95 th Cong., 2 nd sess., February 7, 1978. Exec. Rept. 95-14. Washington: GPO, 1978. --.--. William S. Sessions to be Director of the Federal Bureau of Investigation . Report to accompany the nomination of William Sessions to be Director of the Federal Bureau of Investigation. 100 th Cong., 1 st sess., September 15, 1987. Exec. Rept. 100-6. Washington: GPO, 1987. --.--. A Bill to Extend the Term of the Incumbent Director of the Federal Bureau of Investigation . Report to accompany S. 1103 . 112 th Cong., 1 st sess., June 21, 2011. S.Rept. 112-23 . Washington: GPO, 2011. | The Director of the Federal Bureau of Investigation (FBI) is appointed by the President by and with the advice and consent of the Senate. The statutory basis for the present nomination and confirmation process was developed in 1968 and 1976, and has been used since the death of J. Edgar Hoover in 1972. From 1973 through 2017, eight nominations for FBI Director were confirmed, and two other nominations were withdrawn by the President before confirmation. The position of FBI Director has a fixed 10-year term, and the officeholder cannot be reappointed, unless Congress acts to allow a second appointment of the incumbent. There are no statutory conditions on the President's authority to remove the FBI Director. From 1973 through 2017, two Directors were removed by the President. President William J. Clinton removed William S. Sessions from office on July 19, 1993, and President Donald J. Trump removed James B. Comey from office on May 9, 2017. Robert S. Mueller III was the first FBI Director to be appointed to a second term, and this was done under special statutory arrangements. He was first confirmed by the Senate on August 2, 2001, with a term of office that expired in September 2011. In May 2011, President Barack Obama announced his intention to seek legislation that would extend Mueller's term of office for two years. Legislation that would allow Mueller to be nominated to an additional, two-year term was considered and passed in the Senate and the House, and President Obama signed the bill into law (P.L. 112-24) on July 26, 2011. Mueller subsequently was nominated and confirmed to the two-year term, and he served until September 4, 2013. This report provides an overview of the development of the process for appointing the FBI Director, briefly discusses the history of nominations to this position from 1973-2017, and identifies related congressional hearing records and reports. | 2,924 | 391 |
This report provides a brief history and analysis of general revenue sharing (GRS). GRS is commonly defined as a program of federal transfers to state and local governments that does not impose specific or categorical spending requirements on the recipient government. The United States implemented a GRS program in 1972 that expired on September 30, 1986. Congress looked to the bygone GRS program once before as an option designed to address the fiscal year 2003 (FY2003) and FY2004 state budget shortfalls ($21.5 billion and $72.2 billion, respectively). Some observers have suggested that a revenue sharing program that provided states with grants to forestall spending cuts and tax increases in 2009 may deter pro-cyclical actions by states and produce national fiscal stimulus. The budget gaps for is estimated to be $31.0 billion for the remainder of FY2009 and for FY2010 it is estimated to be $64.7 billion. An examination of the GRS program that existed from 1972 to 1986 could provide some historical perspective if policy makers were to consider a revised GRS program in 2009. The first section provides a brief overview of GRS as authorized by the State and Local Fiscal Assistance Act of 1972 (P.L. 92-512, the 1972 Act) and the three extensions. The second section analyzes the economic rationale for GRS. The third section analyzes GRS in the context of its possible use for stimulus of the nation's economy in 2009 including estimated distribution to the states based on the original GRS formula. The Appendix provides a more detailed legislative history of the GRS program created by the 1972 Act and its three extensions. General revenue sharing (GRS) is typically defined as unconditional federal grants to state and local governments. These grants are intended to provide state and local governments with spending flexibility. The total grant amount is fixed annually, sometimes called "closed-ended," and allocated to the recipient governments by formula. GRS has not been explicitly identified as a primary tool to provide counter-cyclical assistance. The GRS program created by the 1972 Act exemplifies how a GRS program can work. Over the almost 15-year life of the GRS program (1972 through 1986), over $83 billion was transferred from the federal government to state and local governments. To achieve a comparable magnitude of assistance today, approximately $313 billion (in 2008 dollars) would need to be distributed over the next 15 years. Table 1 provides detailed information on the 17 entitlement periods for the GRS grants (as provided for in the 1972 Act and subsequent extensions, both in nominal dollars and adjusted to 2008 dollars). The estimates provided in Table 1 for 2008 can be thought of as the relative value of a commitment made in the past in current dollars. For example, a $1 commitment in 1972 would be equivalent to a $5.08 commitment in 2008. The payment periods in the 1972 Act were designed to roughly follow the budget calendars of state and local governments. The grants in subsequent extensions tracked the federal budget calendar. Note that after FY1980, only local governments, not states were entitled to GRS grants. GRS allocations were determined by a formula that used a combination of the following variables: tax effort, population, and per capita income. Generally, the greater the tax effort and population, the larger the grant. In contrast, the higher the per capita personal income, the smaller the grant. More specifically, section 106 of the GRS legislation stipulates that under the three-part formula, each state shall receive: an amount which bears the same ratio to the amount appropriated under that section for that period as the amount allocable to that State under subsection (b) bears to the sum of the amounts allocable to all States under subsection (b) The three-factor formula can be summarized symbolically: State " i " Share of GRS = where: A us = total appropriation, = population of state " i ", = total personal income of state " i ", , or state " i " relative income factor, and , or state " i " general tax effort factor. The two ratios in the formula, the relative income factor (RIF) and the general tax effort factor (GTEF), were intended to adjust the state allocations based on the state's "ability-to-pay" and tax structure. The RIF for a state is the pre capita income for the U.S. divided by the per capita income of the state. If the state's RIF is greater than one, then it is considered relatively low income. Analogously, a RIF less than one indicates a state has relatively high income. In the three-part GRS formula, the higher a state's RIF, the greater the share of revenue. The GTEF was considered important for GRS because it created a disincentive for states to reduce taxes and rely more on the federal government for revenue over time. The GTEF is total state tax collections as a share of state personal income. In the GRS formula, the larger the GTEF component, the greater the share of revenue. Under the original GRS, the first step in the allocation procedure was to calculate each state's share based on the three variable formula. After each state's share was determined, one-third of the total amount was allocated to the state government and two-thirds to local general purpose governments within the state. The two-thirds portion was then distributed to each geographically defined county (parish) area within the state using the same three variable formula used to determine the state share. Each government within the county area then received an amount equal to the ratio of taxes it collected to total taxes collected by all general purpose governments in the county. The allocation formula was criticized for generating inequitable treatment of local governments. Generally, the arguments arose from "similar governments within a state receiv[ing] different revenue sharing payments, primarily because of their geographic location." According to a GAO report, "These inequities are created primarily by tiering allocation procedures whereby revenue sharing funds are first allocated to county geographic areas." Table 2 below employs the three-part formula to allocate a hypothetical appropriation of $40 billion and $20 billion using data for 2007, the latest year where data for the full years is available. Only states are eligible in the example provided in Table 2 . From the time the active debate surrounding GRS began in the 1960s, through eventual passage of the 1972 Act and subsequent extensions, general economic conditions and the political environment changed dramatically. Thus, the proponents and opponents of GRS modified their political and economic arguments depending on the current political and economic conditions. Because of this turbulence, the rationale behind GRS cannot be traced to a single political or economic objective. This section of the report summarizes three frequently mentioned economic rationales behind GRS: to initiate an intergovermental fiscal reallocation, to address state and local government liquidity crises, and to synchronize federal and state-local fiscal policy. Fiscal reallocation has two components. Generally, under a GRS program, state and local tax regimes are partly replaced by the federal tax regime. Also, the federal spending objectives are replaced, in part, by state and local spending priorities. Proponents of reallocation cite the more "progressive," and thus desirable, structure of federal taxes. However, an assessment of the merits of a more progressive tax structure require subjective claims of what is "fair" taxation. Even if there is agreement that a more progressive structure is needed for fairness, it is unclear that GRS on the relatively small scale of the previously implemented program could achieve that objective. GRS would also shift government spending decisions for the grant amount from the federal government to state and local governments. The rationale for such a shift can be traced to the assertion that state and local governments are better able to understand and satisfy the preferences of their residents. A reallocation through GRS could also address the "assignment" issue. The assignment issue arises when the revenue productivity of a government does not match the spending requirements for the public services assigned to that level of government. Although these observations may be true for some publicly provided goods and services, it is not clear that nationally, the net gain in spending efficiency alone would justify a GRS program. And, the small relative size of a GRS program relative to overall tax collections would limit any gains in government spending efficiency. The arguments for and against fiscal reallocation are subjective because they rely on measuring fairness. Some would argue that a more progressive tax system is patently unfair, while others would argue that a tax system that redistributes income is more equitable and desirable. Fiscal reallocation would change the structure of government fiscal relationships, but analysis of the degree to which it does and the desirability of such a shift are beyond the scope of this report. State, and more specifically, local governments, often face fiscal liquidity problems that arise from revenues that fluctuate more dramatically with the business cycle than do expenditures. As the economy slows, revenue falls more sharply than expenditures, creating a budget deficit. Governments without sufficient reserves are then compelled to reduce expenditures or raise taxes to balance their budgets. State and local governments cannot use debt to close deficits because of state constitutional or statutory restrictions requiring a balanced budget. In contrast, the federal government can issue more debt when expenditures exceed revenue. A countercyclical GRS program could help alleviate these relatively short-term liquidity problems for states. Opponents of federal assistance to state and local governments during economic slowdowns suggest that poor state-local fiscal management creates deficit problems. State and local governments could "save" surplus revenue during economic expansions to then use when the economy contracts and revenue falls. If the rise and fall of revenue is symmetric, then the revenue saved should be sufficient to cover revenue shortfalls when the economy slows. However, research has shown that state government budgets are generally asymmetric over the business cycle. State and local governments tend to save less during expansions for a variety of reasons. Political pressure from voters to reduce taxes when large budget surpluses accrue is a commonly cited reason. This objective is related to the liquidity objective discussed above. However, the rationale for a long-term GRS program designed for economic stabilization is somewhat different than a one-time grant to remedy a temporary fiscal imbalance. The federal government will typically employ monetary and fiscal policy to help stabilize consumption patterns and the price level as the economy cycles between periods of growth and recession. Generally, stimulative fiscal policy is implemented through tax reductions or increased government spending. In theory, tax reductions and/or increased government spending stimulates the demand for goods and services. The increased demand for goods and services then leads to economic expansion and recovery. This fiscal policy counters the economic downturn and is thus termed countercyclical fiscal policy. However, state and local governments may mitigate countercyclical federal fiscal policy if they are forced to raise taxes and reduce expenditures during recessions. Such a "pro-cyclical" state and local government response could undermine any federal fiscal stimulus. During economic downturns, this rationale played a more prominent role for proponents of general revenue sharing. While debating the 1976 extension, Senator Muskie offered the following rationale for GRS: we at the Federal level are trying to speed up economic recovery by cutting taxes, [while] state and local governments are being forced to raise their own taxes, thus delaying the impact of the Federal effort. The economic situation in the early to mid 1970s, about the time of initial passage of GRS, may seem similar to today's economic situation. However, the 1973-1975 recession was much deeper and longer and coincided with a sharp oil supply shock that the current downturn has not experienced. Nevertheless, the debate surrounding countercyclical aid to the states today is reminiscent of the 1975-1976 debate. This section analyzes how GRS might affect the economy if implemented in 2009. The first subsection describes the potential size of GRS compared to current state deficits. The second section analyzes implementation issues that may arise if a new GRS program were authorized, including a discussion of how states might use new federal grants. The principal question is: "Will the supposed pro-cyclical state actions in the absence of federal assistance dampen the effect of federal fiscal policy?" From a national economic perspective, closing the remaining state FY2009 budget gaps with revenue sharing would likely have little if any effect on the national economy. The National Conference of State Legislatures reported that the remaining FY2009 gap for 38 states of $31.0 billion (as of November 2008) is approximately 0.22% of the U.S. GDP of $14.4 trillion, hardly enough to effectuate a stimulative response. The same NGA study, however, notes projected shortfalls of $64.7 billion for FY2010. The budget gaps for FY2009 are after closing a $40.3 billion budget shortfall before enacting the FY2009 budget. A one-time GRS type grant to states that closed the estimated FY2009 fiscal imbalance of $31 billion and forestalled anticipated state spending cuts and tax increases for FY2010 of $64.7 billion could provide significant fiscal stimulus. This assumes other federal spending would not be reduced and the states spent the federal grants immediately. The degree of stimulus would be tempered by the net spending response of the recipient government. Research has generally shown that for every $1 lump sum transfer, only a portion is translated into new spending. For example, assume a state has planned spending of $100 to be paid with own source tax revenue of $100. Under this leakage theory, a $10 transfer from the federal government would not lead to $110 of spending. Instead, the state may lower own-source tax revenue $5 and use half the federal grant to cover the tax reduction. The result would be an increase in government spending of $5, not the full $10 transferred. The above discussion assumed that federal spending would flow seamlessly from the federal government through states to the designated spending program. Two factors may result in a drag on this flow. First, state government administration may increase the lag time and second, each state would use the grant for budget priorities of varying stimulative effect. Following is a brief analysis of these two important implementation factors. Time lags in implementation are the primary impediment to effective fiscal stimulus. Generally, the objective of fiscal policy during a recession is to boost aggregate demand and generate short term economic stimulus. However, if the stimulus comes too late, the increased spending may occur when the economy has already begun to revive and is approaching full employment. In that case, the stimulus becomes pro-cyclical and possibly inflationary. Policy makers should therefore use fiscal stimulus with caution because of the potential for mistimed action. GRS grants may be subject to two time lags, thus increasing the potential for mistimed fiscal policy. The first occurs at the federal level where policy makers must identify the need for stimulus then agree upon the size of the stimulus. Once the need and size are determined, Congress must then agree upon a grant allocation scheme that satisfies the competing goals of equity among jurisdictions and optimal stimulus. For example, suppose the grant allocation formula includes a component that provides greater assistance to states with greater need. If so, states that may have been more fiscally responsible would receive less, possibly violating the fairness criterion. However, from a broader macroeconomic perspective, aid that prevents more layoffs and state government budget cuts would seem to deliver greater short-term stimulus. Determining the structure of the allocation scheme could generate considerable debate, possibly delaying initial implementation efforts. The second time lag occurs at the state level. Federal grants that arrive before June 30, 2009, might avert some of the pro-cyclical state actions (e.g., budget cuts and tax increases) for many states. If the grants arrive too late for FY2009, state budget officials could simply add this revenue to the operating budget for FY2010 and perhaps avoid implementing tax increases and spending cuts that would otherwise begin on July 1, 2009. What could states do with unconditional revenue sharing grants? Generally, states have four options for federal grants (listed in order of stimulative response): increase government spending, reduce taxes (or rescind past tax increases), reduce debt (or not issue more debt), and/or contribute to a rainy day fund (or not draw down a rainy day fund). Increased spending would be the most stimulative in the short run, because the grant is immediately injected into the economy. This option for the states would include retaining state employees who would have been furloughed, maintaining current operations that would have been reduced, and not scaling back social programs such as education and healthcare. Theoretically, this fiscal stimulus works best when government spending is quickly multiplied through the economy. This means that each dollar of the federal transfer payment stimulates the economy the most if the entire dollar is spent by the recipient and then spent again. The degree of stimulative effect of avoided state actions, such as not furloughing workers, depends on this "multiplier effect." Thus, to achieve the greatest stimulus, the most contractionary state actions should be the first avoided. The National Conference of State Legislatures (NCSL) asked budget officials from all states to categorize their spending strategies to reduce or eliminate budget gaps remaining for FY2009. Changes in taxes are difficult to implement in the middle of a budget year and are not included. Table 3 below lists the strategies identified by NCSL and the number of states that proposed implementing those strategies for 2009. For FY2010, several state and local governments are likely going to increase taxes to help close budget gaps. The spending option for states that would produce the most relative stimulus for each dollar of spending would be to avoid net job losse s ( e.g. , layoffs, furloughs, and, to a degree, early retirement and hiring freezes ) . To see why this is true, consider what would happen if net job losses occurred. First, layoffs reduce aggregate demand because when workers are laid off, their income would fall steeply until they find new jobs, causing their consumption to fall. (Even though all of the federal spending is not entirely multiplied through the economy because of employment taxes and income taxes, the stimulative action is relatively effective because the federal government is essentially "paying" the state employees.) Second, since government services are included in GDP, measured economic activity would be directly reduced as long as resources (workers) lay idle. In an environment of rising unemployment, it is unlikely that all of these resources would quickly be put back to use through market adjustment. If GRS prevented net job losses, these negative effects on the economy could be avoided. The saving behavior of potentially separated employees would likely enhance the stimulative effect of avoiding job losses. (However, avoiding induced early retirement may provide less stimulus than avoiding furloughs and lay-offs.) If the employees are early in their careers and/or are in low skill positions--likely candidates for furloughs or lay-offs--it is likely that their incomes are lower than the median for state employees. Research has shown that low income workers save a smaller portion of their income than high income workers. Thus, preventing the employment separation of low income workers should provide more relative stimulus than the alternative of not offering early retirement. Across-the-board cuts would affect a variety of spending programs that do not easily conform to one succinct appraisal. The stimulative effect of avoiding across-the-board cuts would vary from state to state based on the state's spending pattern. Aid to local governments also falls into an uncertain category because of differing intergovernmental transfers across states. The stimulative effect of avoiding cuts in local aid would be positive, though the magnitude is uncertain. Generally, tax cuts are less stimulative than direct spending increases, because individuals are likely to save some of their tax cut. Analogously, a rescinded or avoided tax increase would also be less stimulative than spending increases because taxpayers would likely save some portion of the reduced tax payment. Debt reduction and contributing to a rainy day fund would offer little stimulus because such action would be equivalent to an increase in public saving. In the short run, increased public saving does not stimulate the economy. If the federal grants were used to avoid tapping into tobacco revenue, the saving effect would be similar to contributing to a rainy day fund. The combined effect of the various potential responses of state and local governments to federal grants is difficult to quantify a priori . Nevertheless, one could confidently assert that $1 of federal grants would not lead to a corresponding $1 increase in fiscal stimulus. While some state and local governments may spend all the federal grants and not change pre-grant taxing and spending priorities, some portions of the GRS grants would likely be used for non-stimulative purposes such as substituting for previously planned spending or tax increases. The 1972 Act The GRS grants authorized by the State and Local Fiscal Assistance Act of 1972 (the 1972 Act) were essentially unconditional. A trust fund was established and annual appropriations were dedicated to the trust fund. Even though the grants were identified at the time as general revenue sharing, the legislation did include a list of "priority expenditures" for which the shared revenue sent to local governments could be used. (The grants to states were unconditional.) GRS grants could be used by local governments for the following acceptable operating expenditures: (1) public safety; (2) environmental protection; (3) public transportation; (4) health; (5) recreation; (6) libraries; (7) social services for the poor or aged; and (8) financial administration. "Ordinary and necessary capital expenditures" were also allowed. The grants could not be used for education. Note that the priority expenditure list was discontinued by the 1976 extension. In addition to the priority expenditure list, the 1972 Act also disallowed the use of GRS for matching federal grants. That restriction was also dropped in the 1976 extension. Congress believed GRS was necessary for a variety of reasons. The most prominent reason at the time was the perceived need for reallocation of government responsibilities arising from the changing citizen demands for government services (fiscal reallocation as cited earlier). The congressional sentiment behind the 1972 Act that created general revenue sharing is summarized well in the following passage from the Senate report accompanying the 1972 Act: Today, it is the States, and even more especially the local governments, which bear the brunt of our more difficult domestic problems. The need for public services has increased manyfold and their costs are soaring. At the same time, State and local governments are having considerable difficulty in raising the revenue necessary to meet these costs. The Nixon Administration seemed to have a similar perspective. When President Nixon signed the legislation, the President remarked that the GRS program would "place responsibility for local functions under local control and provide local governments with the authority and resources they need to serve their communities effectively." However, the shift in the demand for and provision of government services was not the only justification for GRS. Observers at the time cited these additional reasons for implementing a revenue sharing program: to stabilize or reduce state and local taxes, particularly the property tax; to decentralize government; to equalize fiscal conditions between rich and poor states and localities; and to alter the nation's overall tax system by placing greater reliance on income taxation (predominantly federal) as opposed to property and sales taxation. Counteracting cyclical economic problems, such as state and local budget deficits induced by a slowing economy, was not explicitly mentioned as justification for GRS in the 1972 Act. However, when the debate began in 1974 on extending GRS beyond 1976, the countercyclical potential of revenue sharing apparently became important to policymakers. The counter cyclical arguments were likely initiated by the relatively severe recession that lasted from November 1973 through March 1975. The 1976 Extension The State and Local Fiscal Assistance Act of 1976 extended the GRS program through FY1980 with minor modifications. In the Senate report accompanying the legislation, Congress identified the following two reasons for the extension: (1) "Rapidly rising services costs coupled with sluggish declining tax bases has meant that State and local governments have had to raise tax rates and/or cut services," and (2) "A chronic problem State and local governments face is that the demand for public services is more elastic than the availability of revenues to finance them." The Senate report suggested that the extension of the GRS program "not only serves to help solve the fiscal problems of individual state and local governments, but also serves to stabilize the economy." The 1976 extension also eliminated the priority expenditure categories for local governments and the prohibition on states from using the grants for federal matching grants. Policymakers recognized the fungibility of local revenues which initiated the elimination of the spending restrictions. Although the fiscal stimulus features were mentioned during the debate surrounding extension, the ultimate purpose of revenue sharing was characterized as a long-term restructuring of the intergovernmental transfers. The desire to use revenue sharing as a countercyclical fiscal policy tool was not directly addressed in the 1976 extension. However, the reference to revenue sharing's ability to "stabilize" the economy may have arisen due in part to the countercyclical merits of GRS as suggested during the debate leading up to the extension. The total size of the extension, $25.5 billion, was approximately 2.5% of total state and local own-source tax revenue collected over the FY1977 to FY1980 period. Nationally, the transfer averaged 0.29% of national gross domestic product (GDP) annually over the four-year period. The 1980 Extension The State and Local Fiscal Assistance Act Amendments of 1980 ( P.L. 96-604 ) extended the general revenue sharing program through September 30, 1983, but only for local governments. According to the House report accompanying act, the state share was eliminated as a means of helping to balance the Federal budget. The Committee believes that State governments are better able to adjust to the discontinuance of revenue sharing allocations than local governments. Until the 1980 Act, approximately one-third of the GRS grants had been allocated to the states. The 1980 Act reduced the GRS grants by one-third--from $6.850 billion to $4.567 billion--and only local governments received the grants (see Table 1 ). In addition to continuing GRS for local governments, the 1980 Act also authorized the creation of a "countercyclical assistance program" to be triggered by national economic downturns. The purpose of the program was to provide assistance to state and local governments during recessions. To achieve this, the program authorized $1 billion for each of the fiscal years, 1981, 1982, and 1983, subject to the trigger mechanism described in the House report accompanying the legislation: funding would be triggered when the national economy has experienced two consecutive quarterly declines in both real gross national product and real wages and salaries [emphasis added] (that is, corrected for inflation). Once a recession has been confirmed by these declines, funds would be provided for each recession quarter in relation to the severity of the recession. The program would be funded at a rate of $10 million for each one-tenth percentage point decline in real wages and salaries measured from the pre-recession base--the average of the real wages and salaries for the two quarters preceding the decline. The amount of money allocated in any one quarter would be limited to $300 million. After setting aside 1% of the funds for Puerto Rico, Guam, American Samoa, and the Virgin Islands, the remaining funds would then be split evenly between state governments and "county areas." The relative size of payments to states and county areas would have been based on the severity of the economic downturn in that area. The state portion would be adjusted by the state's tax effort. The greater the effort, the greater the grant. Apparently, the trigger threshold was never crossed. No grants were provided under the countercyclical fiscal assistance program. Table A-1 below reports the quarterly change in the real wage and real GNP for the second quarter of 1980 through the third quarter of 1983. The time periods reported in Table A-1 are the three federal fiscal years for which funding was authorized plus the two quarters before the first fiscal year of authorization. Note that for the 14-quarter time frame reported below, there were never two consecutive quarters where both the real GNP and real wage declined from the previous quarter. The 1980 Act is significant because the act discontinued revenue sharing for the states and formally introduced the concept of providing countercyclical fiscal assistance through federal grants to state and local governments as part of GRS legislation. Ultimately, the countercyclical assistance program was never funded and thus no countercyclical fiscal assistance was provided. Local governments generated $593.8 billion of own source revenue over the three fiscal years covered by the 1980 Act. GRS provided $13.7 billion in grants to local governments--approximately 2.3% of total own-source revenue. The grants to local governments probably had little effect on the national economy given they represented 0.14% of U.S. GDP over the three-year time frame. The $1 billion for each of 1981, 1982, and 1983 for countercyclical aid, authorized but never spent, would have produced a negligible effect on the economy, even if fully realized. The 1983 Extension The final installment of the GRS program was signed into law on November 30, 1983, as the Local Government Fiscal Amendments of 1983 ( P.L. 98-185 ). As with the 1980 Act, only local governments received grants. The 1983 extension was intended to stabilize the fiscal condition of local governments. The conference report accompanying the legislation stated that the tendency of State and Local governments to rely on relatively inelastic revenue sources, such as local property taxes, has limited their flexibility in responding to fiscal problems. To assist local governments in meeting the needs of their communities in a time of fiscal stringency, the Committee amendment extends the general revenue sharing program for three years. The final extension provided the same amount for local governments as did the 1980 Act ($13.7 billion) in three equal annual installments of $4.567 billion. This amount was equal to the amount received by local governments from 1977 through 1980. The countercyclical aid program was not extended. The GRS program ended September 30, 1986. | This report provides background and analysis of the general revenue sharing program (GRS) as authorized in the State and Local Fiscal Assistance Act of 1972 (P.L. 92-512, the 1972 Act). The GRS program was extended three times before finally expiring on September 30, 1986. Over the almost 15-year life of the GRS program (1972 through 1986), more than $83 billion was transferred from the federal government to state and local governments. From 1972 to 1980, states received approximately one-third of the grants and local governments received two-thirds. State governments were excluded from GRS beginning in the 1981 fiscal year (FY). In 2003, policymakers suggested using the original GRS program as a model for a new, short-term, GRS program. The FY2004 budget resolution contained a proposal (H.Con.Res. 95, Sec. 605) expressing a sense of the Senate that $30 billion should be set aside over the next 18 months for state fiscal relief. Congress ultimately approved $20 billion in aid to states; $10 billion through Medicaid and $10 billion distributed by population. By comparison, in 1972, the federal government authorized $8.3 billion ($42.1 billion in 2008 dollars) for the first 18 months of the original GRS program. More recently, the recession that began in 2008 has prompted similar proposals. The rationale behind GRS in 1972 cannot be traced to a single political or economic objective, such as economic stimulus. The turbulent economic and political environment that characterized the 1960s and 1970s led proponents and opponents of GRS to modify their political and economic arguments as that environment changed. Generally, GRS could be implemented to (1) initiate intergovernmental fiscal reallocation; (2) address state and local government liquidity crises; and (3) synchronize federal and state-local fiscal policy. A revised GRS program intended to help close state budget deficits (estimated to be $31.0 billion for the remainder of FY2009 and estimated to be $64.7 billion for FY2010) has been advocated based on the last two objectives. The budget crisis facing state and local governments in 2009 has generated renewed concern at the state and local level. A GRS program designed as a countercyclical initiative would encounter two primary implementation issues: fiscal policy time lags and variability in the state response to GRS grants. In addition, as with all fiscal policy, the overall size of the additional federal spending is critical to the impact of the fiscal stimulus. This report provides general background and analysis and does not track current legislation. It will not be updated. | 6,526 | 538 |
Autism spectrum disorder (ASD) and autism are general terms for a group of developmental disabilities that cause impairments in social skills and communication, and are often characterized by certain atypical behaviors. Autism spectrum disorders include autistic disorder, Asperger disorder, and pervasive developmental disorder-not otherwise specified. These conditions have overlapping symptoms that differ in terms of onset, severity, and nature. ASDs are referred to as "spectrum disorders" because they encompass a range of behaviorally defined conditions. The complex nature of these conditions creates diagnostic challenges; there are no consistent genetic or biologic markers to facilitate diagnosis. Autism has been linked to abnormal biology and chemistry in the brain; however, the cause or causes of these abnormalities remain unknown. According to the Centers for Disease Control and Prevention (CDC), as many as 1 in 110 eight-year-olds currently have an autism spectrum disorder, with boys affected more than four times as often as girls. This represents an increase from past autism rates, and has generated public interest in the causes of autism. The increased prevalence has also focused attention on the demand for effective treatment and support services for individuals with these conditions. In addition, some have questioned whether the current rates of ASD reflect increased awareness and diagnosis, a true increase in the incidence of ASD, or a combination of these factors. For many, autism is a lifelong illness whose symptoms often manifest before age three. Autistic children and adults generally display a unique set of symptoms, but common traits associated with autism include difficulty talking, repeated behaviors, and aversion to loud noises. ASD impedes an individual's communication skills, making it difficult to learn or to integrate socially. There are no medical treatments for autism itself; however, medications and behavioral therapy can help mitigate certain symptoms. While there is currently no known cause or cure for autism, research to determine the cause or causes may identify risk factors, some of which may be modifiable. Other studies may determine optimal methods of screening and diagnosis, identify the most effective mental and behavioral health therapies, and find the best medical treatments for individuals with ASD. The federal government has a role in the financing (through Medicaid and State Children's Health Insurance Programs) and delivery (through funding of developmental disabilities programming in schools, Title V Maternal and Child Health funding, and other sources) of treatment for ASD. The number of cases and their appropriate diagnosis and treatment affect federal and state expenditures. As such, Congress has shown interest in financing research on ASD prevalence, causes, and optimal treatment for individuals with ASD. This interest in ASD surveillance and research has been demonstrated through inclusion of autism research provisions in the Children's Health Act (CHA, P.L. 106-310 ) in 2000, enactment of the Combating Autism Act in 2006 (CAA, P.L. 109-416 ), and the recent enactment of the Combating Autism Reauthorization Act (CARA, P.L. 112-32 ) by the 112 th Congress. This report presents an overview of the CAA and CARA, Department of Health and Human Services (HHS) funding and activities under the CAA and CARA, other federal activities related to autism, and selected issues for Congress. The precursor to the CAA was the Children's Health Act of 2000 (CHA), which addressed a number of child health issues. Title I of the CHA authorized the Secretary of HHS (the Secretary) to conduct certain activities relevant to autism and developmental disabilities. It established funding for autism surveillance at CDC and established the National Center on Birth Defects and Developmental Disabilities. Under the CHA, the National Institutes of Health (NIH) was authorized to expand and intensify its autism research efforts and to establish Centers of Excellence for autism research. The CHA also established an Autism Coordinating Committee to coordinate research within NIH, and authorized funds for HHS to establish and implement an information and education campaign for health care providers and the general public. Enacted in 2006 and subsequently reauthorized by the Combating Autism Reauthorization Act of 2011, the CAA is intended to address growing concern about the increasing prevalence of autism spectrum disorders, and to stimulate research into possible autism causes and treatments. It authorized funding from FY2007 through FY2011 for autism research, screening, early intervention, and education. CARA reauthorized this funding through FY2014. The CAA authorizes the Secretary to expand, intensify, and coordinate existing ASD research activities; to expand surveillance and epidemiological research; to increase awareness of ASD; and to provide access to screening and early intervention services. It authorizes expanded research activities at NIH, and created the Interagency Autism Coordinating Committee (IACC) to coordinate all federal autism research efforts (this expanded the mission of the Autism Coordinating Committee described above). At CDC, the CAA authorizes surveillance and establishes ASD awareness programs. At the Health Resources and Services Administration (HRSA), the CAA authorizes expanded federal efforts in autism education, early detection, and intervention. The CAA also required a report to Congress on implementation and progress four years after enactment, which was provided to Congress on January 7, 2011. CARA requires a report to Congress two years after enactment. The following sections summarize the programs and funding authorized under the CAA and subsequently reauthorized by CARA. The CAA authorizes CDC to award competitive grants for the collection, analysis, and reporting of state-level epidemiological data on ASD and other developmental disabilities. CDC must establish guidelines for reporting these data, in collaboration with other public and private entities. CDC is also required to coordinate the federal response to potential or alleged clusters of ASD or developmental disabilities (DD). The CAA also requires CDC to award grants or cooperative agreements for the establishment of regional centers of excellence in the epidemiology of ASD and other developmental disabilities. The purpose of the centers of excellence is to collect and analyze information on the number, incidence, correlates, and causes of ASD and other DD. The centers are required to collect and report data according to the guidelines established by CDC. In addition, centers are required to develop an area of special research expertise (such as genetics, epigenetics, or environmental epidemiology), and to identify suitable cases and controls for research into potential causes or risk factors for ASD. The CAA authorizes the Secretary to provide grants for projects designed to (1) increase awareness of ASD; (2) reduce barriers to screening and diagnosis; (3) promote evidence-based interventions for individuals with ASD or other developmental disabilities; (4) train health care professionals to use valid, reliable screening tools; and (5) provide early intervention if needed. The Secretary must use an interdisciplinary approach that also focuses on specific issues for children who are not receiving early diagnosis and interventions. These activities are carried out through HRSA. The Secretary must, subject to funding, provide information and education on ASD to increase public awareness of developmental milestones; promote research into the development and validation of reliable screening tools; promote early screening of high-risk individuals; increase the number of individuals who are able to diagnose or rule out ASD; increase the number of individuals who are able to provide evidence-based interventions; and promote the use of evidence-based interventions for high-risk individuals. The Secretary must, subject to funding, collaborate with a number of federal programs for low-income individuals to provide culturally competent information regarding ASD and developmental disabilities, in collaboration with the Department of Education and the Department of Agriculture. These programs include Head Start; Early Start; Healthy Start; programs under the Child Care and Development Block Grant Act of 1990; Medicaid, including the Early and Periodic Screening, Diagnosis, and Treatment Program (EPSDT); the State Children's Health Insurance Plan (CHIP); the Maternal and Child Health Block Grant; Individuals with Disabilities Education Act Parts B and C; and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). The CAA authorizes the Secretary to require states to designate a lead agency responsible for disseminating the information described above available to individuals in the state. This information may be provided through toll-free numbers, Internet websites, mailings, or other means, as determined by the governor of each state. In addition, the Secretary, through the states, must promote and assist the development and use of screening tools. The Secretaries of HHS and the Department of Education must provide for the collection, storage, coordination, and public availability of screening tools and educational materials. The CAA also authorizes the Secretary to fund grants to expand existing interdisciplinary training and leadership programs (authorized in Title V of the Social Security Act). The Secretary must also promote best practices in autism screening and diagnosis. The CAA authorizes the Secretary of HHS to expand, intensify, and coordinate ASD research activities at NIH, and to consolidate existing program activities if necessary. It directs NIH to investigate the cause, diagnosis, early detection, prevention, services, supports, intervention, and treatment of ASD. The CAA also authorizes the Interagency Autism Coordinating Committee (IACC) at NIH to coordinate all ASD research, screening, intervention, and education efforts within HHS. Members of the IACC are appointed for a term of four years and may be reappointed once. Members must include representatives of the following: Administration for Children and Families (ACF), CDC, Centers for Medicare and Medicaid Services (CMS), HRSA, NIH, HHS Office on Disability, Substance Abuse and Mental Health Services Administration (SAMHSA), and the Department of Education. No fewer than six members, or one-third of the committee (whichever is greater) must be non-federal public members, including people with autism, parents of people with autism, and leaders of national autism organizations. The IACC is required to meet at least twice per year in public session. It is responsible for formulating and annually updating the strategic plan for ASD research, and presenting those recommendations to the Secretary and to Congress. The IACC must also monitor all federal ASD activities, make recommendations to the Secretary and to NIH regarding changes to these activities, and make recommendations on public participation in decision making to the Secretary. Funding for CAA programs was authorized through FY2011; the Combating Autism Reauthorization Act (CARA), which extends funding at current levels through FY2014, was signed into law on September 30, 2011. CARA authorizes appropriations through FY2014 for CAA activities, but does not include funding or authorizations for an expansion of research and/or other services as some autism advocates had requested. Table 1 presents authorizations of appropriations for the provisions of the CAA and CARA. The table includes authorizations of appropriations from FY2007 through FY2014. Table 2 provides details of funding for CAA activities, as reported by HHS. Full-year appropriations for FY2013 have yet to be enacted and therefore are not included in Table 2 . However, the six-month FY2013 CR ( P.L. 112-175 , signed into law on September 28, 2012) provided funding at FY2012 levels, increased by 0.612%. As such, the funding levels for FY2013 are estimates. For CAA activities, FY2012 funding totaled $237 million. Funding for FY2013 activities is estimated at $238 million, a $1 million increase. CAA authorizations and funding are presented in two separate tables because funding for autism-related activities is not specifically limited to the authorizations shown in Table 1 , and may be more or less in a given year. In addition, agencies typically do not have disease-specific budget lines. Autism-related activities may also be funded at CDC and NIH through general authorizations. The information on agency level spending in Table 2 is compiled from the Moyer Report, a report published by the HHS Office of the Assistant Secretary for Financial Resources. The Moyer Report presents information as reported by the agencies on spending for selected diseases and conditions, including autism. Federally funded autism research not authorized under the CAA, including activities carried out by the Departments of Defense and Education, is discussed below in the section " Other Federal Activities Related to Autism Research ." The activities carried out by CDC, HRSA, and NIH under the CAA are summarized below. As discussed previously, CDC focuses on surveillance and epidemiological research, NIH on basic science and research coordination, and HRSA on autism education, detection, and early intervention. For further detail on agencies' autism-related activities and publications, refer to the IACC's Report to Congress on Activities Related to Autism Spectrum Disorder and Other Developmental Disabilities Under the Combating Autism Act of 2006. Under the Combating Autism Act, the CDC is responsible for ASD and developmental disabilities surveillance and epidemiological research. Under the CHA and CAA, CDC formed the National Center on Birth Defects and Developmental Disabilities, the Autism and Developmental Disabilities Monitoring Network (ADDM), and the Centers for Autism and Developmental Disabilities Research and Epidemiology (CADDRE), an ASD education campaign for caregivers and health professionals, and has collaborated on the International Autism Epidemiology Network (IAEN). CDC also coordinates with other agencies, including HRSA and the Department of the Army, on other epidemiologic ASD research. The National Center on Birth Defects and Developmental Disabilities established the ADDM network for the collection, analysis, and reporting of state-level epidemiological data on ASD and other developmental disabilities. ADDM monitors the prevalence of ASD among eight-year-olds at selected sites. The sites, which are regional or state-based public or private nonprofit entities, collect data on ASD prevalence using uniform surveillance methods, which include screening health and education records at multiple sources. Pilot surveillance sites were established with funding from the Children's Health Act; the program was expanded to additional sites under the CAA. ADDM has published two widely cited reports on ASD prevalence, one in 2007 and another in 2009. Under the CAA, CDC established a grant program for states or other entities (e.g., private nonprofits institutions, including institutions of higher education and hospitals) to establish regional centers of excellence in ASD. These centers, called the Centers for Autism Developmental Disabilities Research and Epidemiology (CADDRE), are part of a multi-site collaborative study examining the risk factors for ASD and other developmental disabilities. The CADDRE network is currently working on the Study to Explore Early Development (SEED), which seeks to characterize ASD-related traits. CDC has partnered with the autism advocacy organization Autism Speaks to compile statistics on the global prevalence of autism. This partnership is called the International Autism Epidemiology Network. The IAEN has produced a fact sheet that summarizes global autism prevalence from 2000 to 2008. In addition to research and surveillance activities, CDC has established a health communication campaign, entitled "Learn the Signs. Act Early," to improve early identification of children with ASD. The campaign is intended to educate parents, health care professionals, and early educators on the developmental milestones of early childhood. Under the CAA, the Maternal and Child Health Bureau of HRSA must ensure that children with ASD are screened, diagnosed, and receive appropriate treatment. It is also tasked with addressing the shortage of trained professionals who provide autism treatment. HRSA received funding to address the five following objectives: (1) to increase awareness of ASD; (2) to reduce barriers to screening and diagnosis; (3) to promote evidence-based interventions for individuals with ASD or other developmental disabilities; (4) to train health care professionals to use valid, reliable screening tools; and (5) to provide early intervention if needed. To address these objectives, HRSA established or increased support for four programs: Leadership Education in Neurodevelopmental Disabilities (LEND), Developmental Behavioral Pediatric training programs, state implementation programs, and research programs. HRSA has used CAA funding to support 43 LEND programs and 10 Developmental Behavioral Pediatric training programs by public and private nonprofit agencies in FY2011. The programs focus on the use of screening and diagnostic tools, and continuing education for health care providers that serve women, children, and families. These programs are designed to address the shortage of qualified professionals available to assess and assist autistic individuals. The governor of each state must designate a lead agency to coordinate the HRSA-funded activities in that state. HRSA state-level grantees have used their funds to implement state autism plans, promote autism awareness, and develop model systems of services for children with ASD and developmental disabilities. The primary focus of state implementation grants is to improve access to ASD and developmental disabilities screening and diagnostic services. HRSA has established Autism Intervention Research programs, focusing on interventions to improve the health and well-being of children and adolescents with ASD and other developmental disabilities. These grants are provided to develop research networks among public and non-profit private institutions that focus on evidence-based research and the development of best practices in physical health, behavioral health, and the general health and well-being of individuals with ASD. Autism Intervention Research programs develop evidence-based guidelines and test and validate tools for measuring treatment outcomes. CAA funding at NIH supports intramural and extramural research at multiple institutes and centers. Under the CAA, NIH-funded researchers are tasked with studying potential risk factors and causes of autism, and to coordinate and consolidate its research on ASD and other developmental disabilities with other agencies. NIH supports and coordinates the Autism Centers of Excellence Program, consisting of 11 research centers and networks that focus on identifying the causes of ASD and developing treatments. This includes research on biomarkers, genetic susceptibility, pharmacotherapy, language development, early intervention, and risk and protective factors. Another study, the Early Autism Risk Longitudinal Investigation, is looking into the interaction of environmental and genetic factors in ASD. NIH has sponsored a number of scientific workshops and symposia on ASD-related research. NIH also supports ASD research infrastructure, including biobanking (storage and archiving of biological samples) support, and the establishment of a common database (the National Database for Autism Research) to warehouse data collected in NIH-funded ASD studies. The Children's Health Act required NIH to form a committee to coordinate research among the Institutes. The CAA broadened the mission of the coordinating committee to include other entities, both within and outside of HHS. The Interagency Autism Coordinating Committee (IACC), chaired by the director of the National Institute for Mental Health, is intended to facilitate the exchange of information on autism activities among the member agencies, and coordinates HHS autism-related programs and initiatives. The CAA required the IACC to present a strategic plan for ASD research, focusing on gaps, opportunities, and new knowledge in the autism research field. The strategic plan must be updated annually. The 2011 IACC Strategic Plan, released on February 28, 2011, includes a new focus on interventions for non-verbal people with ASD, health promotion efforts, and safety. Federal funding for autism research is not limited to the Combating Autism Act, and is supported by the Department of Defense and the Department of Education in addition to HHS. Many of the stakeholders in the IACC do not receive funding under the CAA, but through their participation in autism research, these stakeholders have an interest and a guiding role. Following is a brief description of the autism-related research activities of the other federal participants in the IACC. Certain HHS agencies employ general authorities to direct funds as needed to address public health concerns. For example, CDC may provide funding for autism programs under its general authorities to fund public health activities. Other relevant activities may focus broadly on developmental disabilities and receive funding under different authorities. Within HHS, ACF, CMS, the Office on Disability, and SAMHSA conduct activities that contribute to the growing body of research on ASD. The CAA does not authorize appropriations for these agencies. ACF is the HHS agency responsible for federal programs that promote the economic and social well-being of families, including Head Start and Temporary Assistance for Needy Families. The agency participates in the IACC and provides services for children with ASD through funds authorized under the Developmental Disabilities Assistance and Bill of Rights Act of 2000 ( P.L. 106-402 ). ACF funds state Developmental Disabilities Councils; Protection and Advocacy Agencies; Centers for Excellence in Developmental Disabilities Education, Research, and Services; and Projects of National Significance. CMS administers the Medicare, Medicaid, and State Children's Health Insurance Program. The agency participates in the IACC and supports autism education, early detection, and intervention services under the CAA through Medicaid's EPSDT program. CMS has also conducted several studies on best practices in autism treatment, and is planning to issue a report of all state services available to individuals with ASD. The HHS Office on Disability is primarily a policy office that supports coordination of resources across HHS and federal agencies to support individuals with disabilities, including those with autism. Finally, SAMHSA is the HHS agency responsible for supporting mental health and substance abuse programs. The agency provides services to children with ASD through the Child Mental Health Initiative, a grant program mandated by Congress to serve children and youth with serious emotional disorders. This program provides grants for the development of coordinated support systems for children who are referred to the program. Federal autism activities are not limited to HHS agencies. Other federal entities use general authorities and previously established programs to address ASD. These entities include the Department of Defense (DOD) and the Department of Education. The DOD does not receive funds under the CAA. However, it maintains a congressionally directed research program for ASD research, which was first funded in FY2007. The program, which supports a range of scientific and clinical research on autism, received $41 million in total funding from FY2007 to FY2012. The Department of Education does not receive appropriations under the CAA. However, it funds a number of research programs and collects data on individuals served by special education programs. Programs and services in the Department of Education are geared toward individuals with disabilities in general, and not autism or developmental disabilities specifically. In 2010, the IACC conducted an analysis of autism research spending by private and federal entities that are represented on the IACC. Analysts found that private entities funded 24% of autism research in the United States in 2009, while the federal government funded 76%. The report also gauged the relevance of the funded projects to the topic areas that were identified in the IACC strategic plan. These objectives for 2009 were (1) When should I be concerned? (2) How can I understand what is happening? (3) What caused this to happen and can it be prevented? (4) Which treatments and interventions will help? (5) Where can I turn for services? (6) What does the future hold, particularly for adults? (7) What other infrastructure and surveillance needs must be met? The vast majority (95%) of ASD research aligned with research questions in the IACC strategic plan, with the largest proportion of research focused on the causes and prevention of ASD. Research on access to ASD-related services and lifespan issues received the least amount of funding. During CAA enactment and reauthorization, several issues were highlighted, some of which are of general interest to Congress when deciding whether to support disease-specific legislation. Specifically, concerns were raised about barriers to data sharing and confidentiality across state and federal government entities; the coordination of surveillance and research, across both agencies and diseases; and the pros and cons of Congress directing funding to specific diseases (or groups of diseases). These concerns apply not only to autism research policy, but can be applied broadly to any disease-specific legislation, and the consequent policy decisions may affect access to care and treatment for individuals with autism. Coordination of research and sharing of the resulting data is an ongoing interest of Congress. Researchers call for accurate case estimates in order to study common characteristics of autistic individuals and potential risk factors for autism. Federal and state-funded programs provided through health care providers and schools must provide certain services for individuals with ASD, and need accurate estimates to anticipate the need for those services. However, enumerating autism cases for researchers, health care providers, and schools has presented an ongoing challenge at the state, local, and federal levels. During the reauthorization process, some Members of Congress raised the concern that continuing to pass disease-specific legislation allows Congress to prioritize one disease (or group of diseases, in this case developmental disabilities) over another, and that priority-setting should be left to the agencies that perform the research. The issue of prioritizing one developmental disability over another has also been raised among researchers and families of children with developmental disabilities and other conditions. Advocates for CARA argued that allowing authorization of these programs to lapse would interrupt the progress made under the CAA. Autism services research, such as the development and adoption of new screening tools and implementation of best practices in autism therapy, has effects on both health care cost and coverage decisions made at the government and individual level. The Patient Protection and Affordable Care Act (ACA, P.L. 111-148 ) includes provisions that may affect coverage for individuals with autism, including prohibitions on the cancellation of coverage by an insurer due to a preexisting condition, elimination of lifetime caps on insurance benefits and annual limits on coverage, and eligibility for tax subsidies to assist low- and middle-income individuals in the purchase of coverage from state health insurance exchanges. In addition, Medicaid eligibility will be broadened to include single adults. The long-range impact of health reform on individuals with ASD (specifically, the coverage of recommended treatments for ASD) is unknown. | Autism spectrum disorder (ASD) and autism are general terms for a group of developmental disabilities that cause impairments in social skills and communication, and are often characterized by certain atypical behaviors. The federal government has a role in the financing (through Medicaid and State Children's Health Insurance Programs) and delivery (through funding of developmental disabilities programming in schools, Title V Maternal and Child Health funding, and other sources) of treatment for ASD. The number of autism cases and their appropriate diagnosis and treatment affect federal and state expenditures. As such, Congress has shown interest in financing research on ASD prevalence, causes, and optimal treatment for individuals with ASD. On September 26, 2011, the 112th Congress passed the Combating Autism Reauthorization Act (CARA, P.L. 112-32), which reauthorized funding for autism research authorized under the Combating Autism Act of 2006 (CAA, P.L. 109-416). The CAA was enacted to address public and congressional concern with growing rates of autism; to increase existing autism research funding authorizations; and to stimulate state-level coordination of health, education, and disability programs. The CAA authorizes funding for ASD surveillance, research, and education at the Department of Health and Human Services (HHS), at the Centers for Disease Control and Prevention (CDC), the Health Resources and Services Administration (HRSA), and the National Institutes of Health (NIH). The CAA authorizes funding for CDC to administer a grant program for states and other entities to conduct surveillance on ASD and developmental disabilities, and to establish regional centers of excellence in ASD epidemiology. The CAA also authorizes funding for HRSA to support autism education, intervention, and early detection. NIH is authorized under the CAA to conduct and fund basic scientific research on autism and other developmental disabilities. In addition, NIH is tasked with the coordination of all research, screening, intervention, and education efforts through the Interagency Autism Coordinating Committee. The Combating Autism Act authorized appropriations for these activities from FY2007 through FY2011. The Combating Autism Reauthorization Act of 2011 extends authorizations of appropriations at FY2011 levels for FY2012 through FY2014. Funding for research authorized by CARA is discretionary and subject to the annual appropriations process. Full-year appropriations for FY2013 have yet to be enacted. However, a six-month government-wide continuing resolution (CR) was signed into law on September 28, 2012 (P.L. 112-175), which generally maintained funding for discretionary programs at their FY2012 levels, increased by 0.612%. This report presents an overview of the CAA and CARA, HHS funding and activities under the CAA and CARA for FY2007 through FY2013, other federal activities related to autism, and selected issues for Congress. | 5,563 | 610 |
Congress uses an annual appropriations process to provide discretionary spending for federal government agencies. The responsibility for drafting legislation to provide such spending is currently divided among 12 appropriations subcommittees in each chamber, each of which is tasked with reporting a regular appropriations bill to cover all programs under its jurisdiction. The timetable currently associated with this process requires the enactment of these regular appropriations bills prior to the beginning of the fiscal year (October 1). If regular appropriations are not enacted by that deadline, one or more continuing resolutions (CRs) may be enacted to provide funds until all regular appropriations bills are completed or the fiscal year ends. During the fiscal year, supplemental appropriations may also be enacted to provide funds in addition to those in regular appropriations acts or CRs. Amounts provided in these appropriations acts are subject to limits, both procedural and statutory, that are enforced through respective mechanisms such as points of order and sequestration. The timing and focus of the FY2015 appropriations process was affected at the outset by at least three significant factors. First, the enactment of the Bipartisan Budget Act of 2013 ( P.L. 113-67 ) provided set levels for the FY2015 statutory discretionary spending limits on defense and nondefense spending. It also provided an alternative basis for procedural budget enforcement in the absence of a budget resolution. This agreement was enacted on December 26, 2013, about nine months ahead of the start of FY2015. At about the time of its enactment, some observers asserted that the earliness with which funding levels had been provided could contribute to the enactment of some or all of the FY2015 appropriations bills before the fiscal year began. In addition, in establishing levels for defense and nondefense spending, some observers suggested that the debate over FY2015 appropriations would be focused on the specifics of funding various agencies and programs instead of on overall levels of budgetary resources. The second and third significant factors that affected the start of the FY2015 appropriations process were the late enactment of FY2014 regular appropriations and the delays in the President's budget submission to Congress. Regular appropriations for FY2014 were not enacted until January 17, 2014, more than three months after the beginning of the fiscal year. The President's budget submission followed about six weeks later, roughly one month after it was due. The bulk of the submission occurred on March 4, with additional details provided the following week. The Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) portion of the submission was not provided until June 26. In response to these delays, the House and Senate Appropriations Committees conducted hearings on a condensed schedule to allow committee action on the draft appropriations bills to begin during the months of April and May. None of the FY2015 regular appropriations bills were enacted by the beginning of the fiscal year. In the 113 th Congress, the House Appropriations Committee reported 11 of the 12 regular appropriations bills, and the House passed seven of these. During that same Congress, the Senate Appropriations Committee reported eight of the regular bills. Although one of them received floor consideration, none was passed by the Senate. Consequently, on September 19, 2014, a FY2015 CR ( P.L. 113-164 ) was enacted into law to provide temporary funding through December 11, 2014. Two further extensions of this CR were enacted to provide temporary funding for all 12 regular appropriations bills through December 13 and December 17 ( P.L. 113-202 and P.L. 113-203 , respectively). On December 16, 2014, regular appropriations for 11 out of the 12 regular appropriations bills were enacted as part of the Consolidated and Further Continuing Appropriations Act (Divisions A-K of ( P.L. 113-235 ); the FY2015 Consolidated Act). A fourth CR was also enacted in Division L of P.L. 113-235 to extend temporary funding for the Department of Homeland Security (DHS) through February 27, 2015. Action on FY2015 appropriations also occurred in the early part of the 114 th Congress. On February 27, a fifth CR was enacted to further extend temporary funding for DHS through March 6, 2015 ( H.R. 33 ; P.L. 114-3 ). Full year appropriations for the DHS were ultimately signed into law on March 4, 2015 ( H.R. 240 ). This report provides background and analysis on congressional action related to the FY2015 appropriations process. The first section discusses the status of discretionary budget enforcement for FY2015, including the statutory spending limits and allocations normally associated with the congressional budget resolution. The second section provides information on the consideration and enactment of regular appropriations and an overview of aggregate discretionary spending. The third section discusses the legislative action on FY2015 CRs and associated budget enforcement considerations. Further information with regard to the FY2015 regular appropriations bills is provided in the various CRS reports that analyze and compare the components of the current House and Senate proposals. The framework for budget enforcement of discretionary spending under the congressional budget process has both statutory and procedural elements. The statutory elements are the discretionary spending limits derived from the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The procedural elements are primarily associated with the budget resolution and limit both total discretionary spending and spending under the jurisdiction of each appropriations subcommittee. The BCA imposes separate limits on defense and nondefense discretionary spending for each of the fiscal years from FY2012 through FY2021. The defense category includes all discretionary spending under budget function 050 (defense); the nondefense category includes discretionary spending in all other budget functions. Enacted discretionary spending may not exceed these limits , which are enforceable through sequestration. The Office of Management and Budget (OMB) evaluates enacted discretionary spending relative to the spending limits and determines if sequestration is necessary to enforce either or both of them. For FY2015 discretionary spending, the first such evaluation and any necessary enforcement are to occur within 15 calendar days after the 2014 congressional session adjourns sine die. For any FY2015 discretionary spending that becomes law after the session ends, evaluation and any enforcement of the limits are to occur 15 days after enactment. To achieve additional budgetary savings, the BCA as originally enacted included procedures to lower the amount of the initial spending limits for each of the fiscal years from FY2014 through FY2021. However, the Bipartisan Budget Act of 2013 amended the BCA to set the FY2014 and FY2015 limits at specific levels. The limits for FY2015 discretionary spending are $521.272 billion for defense spending and $492.356 billion for nondefense spending. The procedural elements of budget enforcement generally stem from requirements under the Congressional Budget Act of 1974 (CBA) that are associated with the adoption of an annual budget resolution. Through this CBA process, the Appropriations Committee in each chamber receives a procedural limit on the total amount of discretionary budget authority for the upcoming fiscal year, referred to as a 302(a) allocation. The Appropriations Committee subsequently divides this allocation among its 12 subcommittees, referred to as a 302(b) suballocation. The 302(b) suballocation restricts the amount of budget authority available to each subcommittee for the agencies, projects, and activities under its jurisdiction, effectively acting as a cap on each of the 12 regular appropriations bills. Enforcement of the 302(a) allocation and 302(b) suballocations occurs through points of order. As of the date of this report, Congress has not adopted a FY2015 budget resolution. The House agreed to a budget resolution ( H.Con.Res. 96 ) on April 10, 2014, and the measure was placed on the Senate calendar the following day. No further action occurred. The Senate did not consider a budget resolution for FY2015. Both the House and Senate have used an alternative mechanism for FY2015 procedural budget enforcement that was enacted as part of the Bipartisan Budget Act. Section 115 of that act provided the chair of the House Budget Committee the authority to enter a statement into the Congressional Record between April 15, 2014, and May 15, 2014, that included an allocation for the House Appropriations Committee. This allocation was required to be consistent with the FY2015 discretionary spending limits. Section 116 provided similar authority to the Senate Budget Committee chair. Once filed, the allocation would be enforceable as if it had been associated with a budget resolution adopted by Congress. The House statement was filed in the Congressional Record on April 29; the Senate statement was filed on May 5. Based upon the budget enforcement provided via this alternative mechanism, the House and Senate Appropriations Committees each reported 302(b) suballocations to their subcommittees prior to floor consideration of the FY2015 regular appropriations bills. In the House, interim suballocations were reported on April 29 for two subcommittees--Legislative Branch and Military Construction and Veterans Affairs. These were later superseded by allocations for all 12 subcommittees on May 19. In the Senate, 302(b) suballocations were reported on May 22. The House and Senate currently provide annual appropriations in 12 regular appropriations bills. Each of these bills may be considered and enacted separately, but it is also possible for two or more of them to be combined into an omnibus vehicle for consideration and enactment. Alternatively, if some of these bills are not enacted, funding for the projects and activities therein may be provided through a full-year CR. None of the FY2015 regular appropriations bills was enacted by the beginning of the fiscal year, October 1, 2014. Final action for 11 out of the 12 regular appropriations bills occurred during the 113 th Congress with the enactment of the Consolidated and Further Continuing Appropriations Act (Divisions A-K of P.L. 113-235 , the FY2015 Consolidated Act) on December 16, 2014. The FY2015 Department of Homeland Security Appropriations Act was considered and enacted during the first months of the 114 th Congress, on March 4, 2015 ( H.R. 240 ). Table 1 lists the 12 regular appropriations bills, along with the associated date of subcommittee approval, date reported to the House, and report number. Subcommittee and full committee action on approving and reporting regular appropriations bills occurred over about a 16-week period. In total, 11 regular appropriations bills were approved by subcommittees and reported to the House by the House Appropriations Committee. The first regular appropriations bills to be approved in subcommittee were the Military Construction and Veterans Affairs, and Related Agencies appropriations bill ( H.R. 4486 ) and the Legislative Branch appropriations bill ( H.R. 4487 ), both on April 3, 2014. This was reportedly the earliest that a House appropriations subcommittee had approved a regular appropriations bill in several decades. Those same bills were also the first regular appropriations bills to be reported to the House, which occurred on April 17. In total, three regular appropriations bills were approved by their respective subcommittees during the month of April, four in May, three in June, and one in July. Of these, the House Appropriations Committee reported two in each of April and May, five in June, and the remaining two in July. The final bill reported to the House was the Department of the Interior, Environment, and Related Agencies appropriations bill ( H.R. 5171 ) on July 23. Of the 12 regular appropriations bills for FY2015, only one was not reported to the House. The Departments of Labor, Health and Human Services, and Education and Related Agencies appropriations bill was neither approved by the subcommittee nor considered by the full committee. Table 2 presents the eight regular appropriations bills that were considered on the House floor during the 113 th Congress, along with the date consideration was initiated, the date consideration was concluded, and the vote on final passage. Such consideration occurred over about an 11-week period. The first bill to be considered on the House floor was the Military Construction and Veterans Affairs, and Related Agencies appropriations bill ( H.R. 4486 ). Consideration was initiated on April 30, and the House passed the bill on the same day by a vote of 416-1. The House considered and passed two bills during the month of May and two in June. A third bill--the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies appropriations bill ( H.R. 4800 )--was considered and amended on the House floor on June 11 without a vote on final passage. The House considered and passed the final two bills in July. The last floor action on initial consideration of individual regular appropriations bills occurred on July 16 with the passage of the Financial Services and General Government appropriations bill by a vote of 228-195. OMB projected the budgetary levels of the House regular appropriations bills on August 20, 2014. Defense discretionary spending subject to the BCA limits was projected to be about $521.261 billion, which is about $0.11 billion below the defense limit. When defense spending designated under Section 251(b) of the BBEDCA for OCO/GWOT was accounted for, the total amount of defense discretionary spending was projected to be about $579.835 billion. Nondefense discretionary spending subject to the BCA limits was projected to be about $487.724 billion, which is about $4.632 billion below the nondefense limit. When nondefense spending designated as for OCO/GWOT, continuing disability reviews and redeterminations, health care fraud and abuse control, or disaster relief was accounted for, the total amount of nondefense discretionary spending was projected to be about $504.260 billion. Table 3 lists the 12 regular appropriations bills and their associated date of subcommittee approval, date reported to the Senate, and report number. Subcommittee and full committee action on approving and reporting regular appropriations occurred over about an eight-week period. In total, 11 regular appropriations bills were approved by subcommittees and eight were reported to the Senate by the Senate Appropriations Committee. The first regular appropriations bills to be approved by a subcommittee were the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies appropriations bill ( S. 2389 ) and the Military Construction and Veterans Affairs, and Related Agencies appropriations bill ( H.R. 4486 ) on May 20, 2014. Both of these bills were reported to the Senate on May 22. In total, two regular appropriations bills were approved by their respective subcommittees in May, eight in June, and one in July. The full committee pattern of reporting to the Senate was similar, with two bills reported in May, five in June, and one in July. The final bill to be approved in subcommittee and reported to the Senate was the Department of Defense appropriations bill ( H.R. 4870 ), on July 17, 2014. Four of the 12 regular appropriations bills were not reported to the Senate. The Labor, Health and Human Services, and Education, and Related Agencies; Energy and Water Development; and Financial Services and General Government subcommittees all reported regular appropriations bills to the full committee, but no further action occurred. The Departments of the Interior, Environment, and Related Agencies appropriations bill was neither approved by the subcommittee nor considered by the full committee. The only regular appropriations bill to receive initial floor consideration in the Senate during the 113 th Congress was the Commerce, Justice, Science, and Related Agencies appropriations bill ( H.R. 4660 ). Prior to the bill being brought to the floor, Senator Mikulski, chairwoman of the Senate Appropriations Committee, indicated her intention to propose an amendment that would add to the bill the texts of two additional regular appropriations bills--Agriculture, Rural Development, Food and Drug Administration, and Related Agencies; and Transportation, Housing and Urban Development, and Related Agencies. This was to allow initial floor consideration of those appropriations to occur in the same legislative vehicle. On June 12, the motion to proceed was made in the Senate and cloture was filed on that motion. Cloture was invoked on the motion to proceed on June 17 by a vote of 95-3. The motion to proceed was agreed to on June 19 by a voice vote, but no further proceedings occurred after that time. OMB projected the budgetary levels of the Senate regular appropriations bills on August 20, 2014. Defense discretionary spending subject to the BCA limits was projected to be about $521.306 billion, which is about $0.034 billion in excess of the defense limit. When defense spending designated under Section 251(b) of the BBEDCA for OCO/GWOT was accounted for, the total amount of defense discretionary spending subject to the BCA limits was projected to be about $579.880 billion. Nondefense discretionary spending subject to the BCA limits was projected to be about $488.603 billion, which was about $3.753 billion below the nondefense limit. When nondefense spending designated as for OCO/GWOT, continuing disability reviews and redeterminations, health care fraud and abuse control, or disaster relief was accounted for, the total amount of nondefense discretionary spending was projected to be about $505.139 billion. On December 9, the House and Senate Appropriations Committee chairs announced an omnibus appropriations package that combined an agreement on 11 of the 12 regular appropriations bills into a single vehicle, referred to in this report as the FY2015 Consolidated Act. Congress did not include annual funding for the Department of Homeland Security (DHS) as part of that package. The exclusion of annual appropriations for DHS was, in large part, due to the lack of consensus on how Congress would respond to the Obama Administration's announcement of immigration-related executive action that had occurred the previous month. Some congressional critics of the Administration's proposal suggested that annual appropriations for DHS be used as the vehicle to respond to those actions. Consequently, this omnibus package contained a temporary extension of the DHS funding provided in the first CR for the fiscal year ( H.J.Res. 124 , P.L. 113-164 ) through February 27, 2015. This omnibus agreement was to be considered as a House amendment to a Senate amendment to an unrelated bill ( H.R. 83 ). After adopting a special rule that provided for the consideration of the amendment ( H.Res. 776 ), the House concurred in the Senate amendment with an amendment by a vote of 219-206 on December 11. On December 13, cloture was invoked in the Senate on the motion to concur in the House amendment by a vote of 77-19. After disposing of a point of order against the motion to concur, the Senate agreed to the motion that same day by a vote of 56-40. The bill was signed into law by the President on December 16, 2014. Prior to consideration on the House floor, CBO estimated the discretionary appropriations that would be provided through the enactment of H.R. 83 , Divisions A-L. This included the budgetary effects of the 11 annual regular appropriations acts contained in those divisions, as well as the annualized budget authority for the part-year CR for DHS. These are listed in Table 4 below. CBO estimated that appropriations subject to the FY2015 discretionary spending limits would not exceed those levels. When adjustments to the limits were accounted for, total appropriations were projected to be about $1.1 billion. Because FY2015 annual appropriations were not enacted for DHS during the 113 th Congress, congressional action related to those appropriations occurred in the first months of the 114 th Congress. On January 9, Representative Harold Rogers, chairman of the House Appropriations Committee, introduced H.R. 240 , the Department of Homeland Security Appropriations Act for 2015. On January 13 and 14, the House considered this measure pursuant to a special rule that made in order five amendments to address certain immigration-related executive actions that have occurred over the past few years. After adopting all five amendments, the House passed H.R. 240 by a vote of 236-191. Over the next six weeks, the Senate unsuccessfully attempted to invoke cloture on the motion to proceed to the measure on five occasions, the last of which occurred on February 25. Ultimately, cloture was invoked later that same day by a vote of 98-2 after a deal was reached to consider an amendment to remove the House language related to executive action ( S.Amdt. 255 ). On February 27, after adopting the amendment to H.R. 240 , the Senate passed the measure by a vote of 68-31. Action to resolve differences between the House and Senate versions of H.R. 240 occurred between February 27 and March 3, 2015. On February 27, the House adopted a motion to disagree to the Senate amendment and request a conference on H.R. 240 by a vote of 228-191. Later that same day, the Senate proceeded to consider the House message, and a motion was made to insist on the Senate amendment, agree to the request for the conference, and authorize the presiding officer to appoint conferees. On March 2, cloture was filed on the motion but failed to achieve the necessary three-fifths vote (47-43). The Senate subsequently tabled the House message by a vote of 58-31. On March 3, the House voted to recede from disagreement and concur in the Senate amendment by a vote of 257-167. The bill was signed into law on March 4, 2015. Because none of the FY2015 regular appropriations bills was to be enacted by the beginning of the fiscal year, a CR ( H.J.Res. 124 ; P.L. 113-164 ) was enacted on September 19, 2014. This CR generally extended funding at last year's levels, with a small across-the-board reduction and certain enumerated exceptions, through December 11, 2014. Two additional CRs were enacted to extend temporary funding for all 12 regular appropriations bills through December 13 and December 17 ( P.L. 113-202 and P.L. 113-203 , respectively). A fourth CR was enacted as part of the Consolidated and Further Continuing Appropriations Act to extend temporary funding for DHS through February 27, 2015 (Division L, H.R. 83 ). On February 27, a fifth CR was enacted to further extend funding through March 3, 2015 ( H.R. 33 ; P.L. 114-3 ), after another CR ( H.J.Res. 35 ) was defeated on the House floor. The Continuing Appropriations Resolution for FY2015 was introduced by Representative Harold Rogers, chairman of the House Appropriations Committee, on September 9, 2014. The following week, on September 16, the House adopted a special rule ( H.Res. 722 ) allowing for the consideration of an amendment that authorized the President to arm and train vetted elements of Syrian opposition groups and that provided for the potential use of funds for those purposes. The next day, after debate on H.J.Res. 124 and the Syria amendment thereto was completed, the House adopted the amendment by a vote of 273-156 and passed the CR by a vote of 319-108. On September 18, the Senate invoked cloture on the CR by a vote of 73-27. It then passed the CR on that same day by a vote of 78-22. The President signed the CR into law on September 19. According to the Congressional Budget Office (CBO), the annualized budget authority for regular appropriations provided in the CR that is subject to the BCA limits was $1,012.236 billion. When spending designated as for OCO/GWOT, continuing disability reviews and redeterminations, health care fraud abuse control, or disaster relief is included, the total amount of annualized budget authority in the CR was $1,110.678 billion. CBO also estimated that annualized spending in the CR would exceed one of the two statutory discretionary spending limits. Defense spending in the CR was estimated to total $517.689 billion, which is about $3.583 billion below the defense limit, but nondefense spending was estimated to total $494.547 billion, which was about $2.191 billion above the nondefense limit. However, the BCA limits are first enforced within 15 calendar days after the congressional session adjourns sine die, and the funds in this CR were superseded by the enactment of H.R. 83 prior to that time. As congressional action was occurring on H.R. 83 to complete the annual appropriations process for 11 out of the 12 regular appropriations bills, it became evident that additional time would be needed. On December 10, 2014, Representative Harold Rogers, chairman of the House Appropriations Committee, introduced H.J.Res. 130 to extend the effectiveness of the first FY2015 CR for two additional days--to December 13, 2014. On December 11, this measure was agreed to in the House without objection and passed the Senate by a voice vote. It was signed into law by the President on December 12, 2014 ( P.L. 113-202 ). That same day, the chairman of the House Appropriations Committee introduced another CR, H.J.Res. 131 , to further extend the effectiveness of the first FY2015 CR through December 17, 2014. The measure passed the House without objection and the Senate by a voice vote. It was signed into law on December 13, 2014 ( P.L. 113-203 ). These temporary appropriations laws were superseded by the enactment of H.R. 83 on December 16, 2014. As was previously discussed, the omnibus appropriations package that provided annual appropriations for 11 out of the 12 regular appropriations acts also contained an extension of the DHS funding provided in the first CR through February 27, 2015 (Division L of H.R. 83 ). This CR also made a few modifications to the first CR, including the addition of two provisions related to DHS (Section 101 of Division L). Congressional consideration of H.R. 83 is discussed in the report section entitled " The FY2015 Consolidated Act (H.R. 83, P.L. 113-235; Divisions A-K) ." The measure was enacted on December 16, 2014. Congressional negotiations on H.R. 240 and annual funding for DHS had not been completed by the time the temporary funding provided by the fourth CR was scheduled to expire on February 27. Consequently, on February 26, Representative Harold Rogers introduced a measure to provide a further temporary extension of funding for DHS through March 19, 2015 ( H.J.Res. 35 ). On February 27, the House considered the measure pursuant to a special rule ( H.Res. 129 ), but it was defeated by a vote of 203-224. Later on February 27, the Senate took up an unrelated measure ( H.R. 33 ) and amended it with a one-week extension of DHS funding that expires on March 3, 2015. The measure passed the Senate by a voice vote. The House subsequently suspended the rules and agreed to the Senate amendment by a vote of 357-60. The measure was signed into law by the President that evening ( P.L. 114-3 ). The funding provided therein was superseded by the enactment of annual appropriations for DHS ( H.R. 240 ) on March 4, 2015. | The congressional appropriations process, which provides discretionary spending for federal government agencies, assumes the annual enactment of 12 regular appropriations bills prior to the beginning of the fiscal year (October 1). One or more continuing resolutions (CRs) may be enacted if all regular appropriations bills are not completed by that time. This report provides information on the budget enforcement framework for the consideration of FY2015 appropriations measures, the status of the FY2015 regular appropriations bills as of the beginning of the fiscal year, and the enactment of FY2015 continuing appropriations. Budget enforcement for discretionary spending under the congressional budget process has two primary sources. The first is the discretionary spending limits that are derived from the Budget Control Act of 2011 (P.L. 112-25). The FY2015 levels for those limits are about $521.3 billion for defense spending and $492.4 billion for nondefense spending. The second source is the limits associated with the budget resolution on both total discretionary spending and spending under the jurisdiction of each of the appropriations subcommittees. However, Congress has not adopted a FY2015 budget resolution and has instead used an alternative mechanism for budget enforcement that was enacted as part of the Bipartisan Budget Act of 2013 (P.L. 113-67). On the basis of this mechanism, the House and Senate Appropriations Committees received the total allocation for spending under their jurisdictions, and each reported 302(b) suballocations to its subcommittees prior to floor consideration of the FY2015 regular appropriations bills. In the course of the FY2015 appropriations process that occurred during the 113th Congress, the House Appropriations Committee reported all but one of the 12 regular appropriations bills for FY2015. The House separately considered eight regular appropriations bills on the floor and passed seven of them. The Senate Appropriations Committee reported eight of the 12 regular appropriations bills. Although the Senate began floor consideration of one of these bills, it did not complete it. The Senate did not separately consider any other regular FY2015 appropriations bills prior to the beginning of the fiscal year. Because none of the FY2015 regular appropriations bills were to be enacted by the beginning of the fiscal year, a CR (H.J.Res. 124; P.L. 113-164) was enacted on September 19, 2014. This CR generally extended funding at last year's levels, with a small across-the-board reduction and certain enumerated exceptions, through December 11, 2014. Two additional CRs extended temporary funding for all 12 regular appropriations bills through December 13 and December 17 (P.L. 113-202 and P.L. 113-203, respectively). The regular appropriations process for 11 of the 12 regular appropriations bills was concluded on December 16, 2014, when the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235), Divisions A-K) was enacted. A fourth CR was enacted as Division L of P.L. 113-235 to extend temporary funding for the Department of Homeland Security (DHS) only through February 27, 2015. On February 27, a fifth CR (H.R. 33; P.L. 114-3) was enacted to extend temporary funding for DHS through March 6, 2015, after another CR (H.J.Res. 35) was defeated on the House floor. On March 4, 2015, the FY2015 Department of Homeland Security Appropriations Act was signed into law (H.R. 240). This report will be updated during the FY2015 appropriations process as developments warrant. For information on the current status of FY2015 appropriations measures, see the CRS Appropriations Status Table: FY2015, at http://www.crs.gov/Pages/AppropriationsStatusTable.aspx. | 6,266 | 864 |
The Arecibo Ionospheric Observatory is a radio and radar telescope located on approximately 120 acres of federally owned land in Barrio Esperanza, Arecibo, Puerto Rico. Currently, the Arecibo Observatory is managed, operated, and maintained by SRI International. (SRI International partners with the Universities Research Association, and the Universidad Metropolitana, San Juan, and the University of Puerto Rico). Built in a natural depression in the jungles of Puerto Rico, Arecibo is the world's largest single-dish radio-wavelength reflector, measuring approximately 1,000 feet across and 167 feet deep. The 900-ton receiver platform is suspended 450 feet above the reflector dish. The 40,000 aluminum panels of the structure cover 20 acres. Arecibo can receive signals from 25 megahertz to 10 gigahertz. Transmitters include an S-band 2,380-megahertz radar system for solar studies and a 430-megahertz radar system for ionospheric studies. Arecibo can access approximately 40.0% of the sky and "has an unrivalled sensitivity due to its large size." The fixed spherical telescope has the ability to predict and track the movement of potentially hazardous near-Earth objects. Construction of the Arecibo Observatory began in 1960 at the initial cost of $9.7 million. The Defense Department's Advanced Research Projects Agency provided funding for the project, the Air Force administered it, and Cornell University managed the project for the Air Force. Arecibo was commissioned for service on November 1, 1963. Initially designed for radar studies of Earth's ionosphere, it was also found to be valuable for research in radio and radar astronomy. In 1970, ownership of Arecibo was transferred from the Department of Defense to the National Science Foundation's (NSF) Division of Astronomical Sciences (AST), with NSF subsequently taking responsibility for funding of the telescope. It was at this time that the NAIC was established at Cornell University to manage the facility. The telescope has evolved and developed over its lifetime. In 1974, the first upgrade was completed, replacing the original wire mesh surface with aluminum panels. The upgrade totaled approximately $8.0 million--approximately $5.0 million from NSF and $3.0 million from National Aeronautics and Space Administration (NASA). The upgrade enabled Arecibo to operate at 3 gigahertz. Also, planetary radar studies were expanded with the installation of a 420 kilowatt transmitter, operating at 2.4 gigahertz. In 1997, the second upgrade of the facility was completed, with the installation of a Gregorian reflector system, suspended approximately 450 feet above the telescope's 1,000-foot dish and a 1-megawatt radar transmitter. This upgrade allowed the telescope to operate at up to 10 GHZ, increasing the telescope's "sensitivity, frequency coverage, and agility, and enabl[ing] dual-beam incoherent scatter radar capability, providing new research opportunities." The upgrade was undertaken by NSF and NASA, with support from Cornell University, at a cost of $25.0 million--$14.0 million from NSF and $11.0 million from NASA. Arecibo is recognized for its research in radio astronomy, solar system radar astronomy/planetary radar, and ionospheric observations/terrestrial aeronomy. It has been used for research in such diverse areas as interstellar gas, pulsars and fundamental physics, variations in Earth's ionosphere, galactic structure formation and evolution, complex and pre-biotic molecules in the interstellar medium, planetary surfaces and moons, and the post-discovery characterization and orbital refinement of near-Earth asteroids. One of the first accomplishments of Arecibo was determining the correct rotation rate of Mercury, which was found to be 59 days instead of the previously estimated 88 days. Other Arecibo firsts include the first discovery of a binary pulsar, the first discovery of planets outside the solar system, and the first detailed three-dimensional mapping of how galaxies are distributed in the universe. In 1982, research conducted at Arecibo discovered a type of radio emission--hydroxyl megamaser--that has since been found to indicate a collision between two galaxies. In 1997, the Board on Physics and Astronomy of the National Research Council (NRC) established the Astronomy and Astrophysics Survey Committee to assess the field of ground- and space-based astronomy and astrophysics for the decade 2000 to 2010. The committee was charged with recommending priorities for initiatives during that decade and to explore areas of development of new technologies. The report of the 2000 decadal survey, Astronomy and Astrophysics in the New Millennium, made an effort to find the balance between long-term support for facility operations and research grants and priority for new technological opportunities and facilities. The committee made recommendations relating to coordination of the astronomy and astrophysics programs of the NSF, NASA, and the Department of Energy Office of Science (DOE). The committee also explored possibilities for international collaboration and private, state, and federal partnerships. The decadal survey recommended that NSF conduct competitive review of its astronomy facilities and organizations approximately every five years. Another report of the NRC, Connecting Quarks with the Cosmos , proffered recommendations that paralleled those of the decadal survey. Both noted that AST should respond to emerging scientific opportunities and construct different operational models for future astronomy facilities and organizations. The 2008 annual report of the federal Astronomy and Astrophysics Advisory Committee mirrored many of the recommendations contained in the 2000 decadal survey and Connecting Quarks with the Cosmos . It stated that AST's focus must of necessity change to reflect the needs of these new, powerful and very expensive facilities. A robust program of support for the majority of our current facilities, combined with the operations funding needed for our new and immensely more powerful facilities..., mandate cuts in funding for some current facilities if we are to make a credible case for new funding! The report suggested that in order to bring long-term stability to Arecibo for the science community, alternative funding sources and partnerships should be explored with other institutions in Puerto Rico and possibly with support from NSF's Division of Atmospheric Sciences. It was suggested also that international partnerships should be explored. In a joint NSF-NASA response to the committee, it was noted that although partnerships and joint projects can be problematic by increasing managerial complexity, they do offer the benefit of sharing responsibility and authority. A January 2010 report of the National Research Council examined near-earth objects (NEOs) and hazard mitigation strategies. Included in this report was an analysis of the costs of detecting potentially hazardous NEOs and the costs associated with mitigation efforts. The survey sought to determine the role the Arecibo would have in detecting, tracking, and characterizing NEOs. One of the findings in the report was that The Arecibo and Goldstone radar systems play a unique role in the characterization of NEOs, providing unmatched accuracy in orbit determination, and insight into the size, shape, surface structure, and other properties for objects within their latitude coverage and detection range. The report further recommended that Immediate action is required to ensure the continued operation of the Arecibo Observatory at a level sufficient to maintain and staff the radar facility. Additionally, NASA and NSF should support a vigorous program of radar observations of NEOs at Arecibo and NASA should support such a program at Goldstone for orbit determination and characterization of physical properties. The current decadal survey, addressing the period 2010-2020, was released in August 2010-- New Worlds, New Horizons in Astronomy and Astrophysics . This survey provides a comprehensive and robust review of strategic planning process. In addition, it explores interagency issues among NSF's AST, NASA's Astrophysics Division, and DOE's Office of Science, High Energy Physics. The committee for this survey, known as Astro2010, was directed to make its recommendations and considerations for funding levels for astronomical research based on limited resources and a flat budget trajectory. This survey included prioritization of "unrealized projects from previous decadal surveys that had not had a formal start alongside new research activities that had emerged from the research community." The report recommended that NSF-Astronomy should complete its next senior review before the mid-decade independent review that is recommended elsewhere in this report, so as to determine which, if any, facilities NSF-AST should cease to support in order to release funds for (1) the construction and ongoing operation of new telescopes and instruments, and (2) the science analysis needed to capitalize on the results from existing and future facilities. In 2005-2006, NSF's AST conducted a Senior Review of its portfolio of facilities. This review resulted from a combination of factors--projections for federal spending on research and development, growth of the AST budget, the proposed directions of the astronomical research community, and the recommendations and analyses contained in the aforementioned reports on ground-and space-based facilities. The Senior Review was to, among other things, identify potential reinvestment in the highest priority existing programs in AST and to restructure the operational efficiency of the existing AST-operated facilities. The Senior Review examined the balance within the full portfolio of projects and recommended changes that would provide savings from existing programs to be redirected in support of new activities. The Senior Review stated that Arecibo continues to produce scientific results, but when budgets are limited, choices have to be made to explore new science opportunities and new capabilities. The committee reported that the scientific value of the telescope was modest when compared to other existing and proposed projects funded primarily by the NSF. NSF has stated that Identifying potential cost savings in our current portfolio of projects and devising an acceptable implementation plan for realizing these savings will allow progress to be made on the next generation of Astronomical instruments and better position AST for future budget augmentation. The Senior Review determined that the approximately $200.0 million astronomy budget was facing a deficit of $30.0 million by 2010. The Senior Review recommended decreasing the Arecibo's annual $12.0 million budget to $9.0 in FY2009 and securing partnerships for the remaining necessary funding. It stated that if alternative funding sources or partnerships could not be obtained by 2011, the Observatory should be dismantled. The Senior Review anticipated that by FY2010, the $2.5 million savings resulting from the proposed changes would be recovered by the AST budget and be made available for other projects and activities. The recommendation from the Senior Review as it relates to Arecibo is as follows The [Senior Review] recognizes the significant and unique scientific contributions that the Arecibo Observatory has made to astronomy and astrophysics and it congratulates NAIC and Cornell on operating the facility so effectively.... However, the committee was not persuaded of the primacy of the science program beyond the end of the decade and found that the case for long term support at the present level was not as strong as that for other facilities. The [Senior Review] recommends a decrease in AST support for Arecibo to $8 m (plus the $2M from ATM) over the next three years. This should permit a reduction in the scientific and observing support staff and a discontinuation of the future instrumentation program without compromising the main science program.... The [Senior Review] recommends that NAIC plan either to close Arecibo or to operate it with a much smaller AST budget. This will require that NAIC seek sufficient external funding to continue to operate it fully. If Arecibo is kept operating beyond 2011, it is expected that this will only be a limited term extension, pending the deliberations of the next decadal survey. Supporters of Arecibo charge that the Senior Review made its recommendations based on anticipated flat budget forecasts. They contend that NSF's budget has been increasing over the years, and that should translate into additional funding for the AST and Arecibo in particular. There are some in the scientific community who believe that the NSF does not view solar system science as a high priority. In testimony before the House Subcommittee on Space and Aeronautics, Donald B. Campbell, professor, Cornell University, contended that the planetary/near-Earth objects radar research program at the Arecibo was in jeopardy as a result of the recommendations in the Senior Review. Campbell charged that the Senior Review gave the planetary program scant attention in its report and failed to take into account the telescope's capabilities in detecting NEOs. The Arecibo radar system has conducted approximately 65.0% of all radar observations characterizing NEOs. Others in the science community maintain that NASA should provide funding for the Observatory because it benefits greatly from its ability to track NEOs. The NASA Authorization Act, 2005, directs NASA to, among other things, track and catalogue, and characterize all near-Earth objects. NASA counters that NSF should be the supporter of the Observatory. NASA contends that it is focused on space-based programs and not ground-based programs. The report of the Senior Review noted that NASA has been very clear that it does not regard the support of ground-based telescopes as part of its mandate although on those occasions when it has contributed in this manner, the results have usually been scientifically highly productive. There are good reasons now to revisit the working relationship between the two agencies. The relationship with DOE has a shorter history but is currently more stable. In response to the Senior Review recommendations, Cornell University, which at that time operated the Arecibo , said that it would terminate operations of the planetary radar in October 2007 in order to meet budget deadlines. However, the University continued operation of the radar on a "less frequent schedule." The Senior Review proposed that the Arecibo and the NSF seek partners, including international partners, to share operation costs and to allow the telescope to remain as a competitive scientific and educational facility. Within AST and in anticipation of a more constrained budget, efforts are being made to examine and balance both the operation of older facilities and the planning and construction of new facilities. In February 2011, the Senior Review Committee stated that the "AST Division must consider carefully the relative priorities of continuing to operate its older facilities and transitioning to the increased cost of operating the new facilities." The report also estimated that closure and decommissioning the Arecibo could cost an estimated $88.0 million, approximately eight times its current annual operating cost. The Senior Review report further stated that "Despite the challenge, the budget and facilities planning process must identify and take such costs into account." An April 2010 NSF program solicitation indicated that the Arecibo Observatory would continue to operate at least until 2016. It was anticipated that in addition to AST, the Arecibo would receive funding from NSF's Division of Atmospheric and Geospace Sciences (AGS) and NASA. The proposed funding structure would allow for additional astronomical research at the Observatory and an increase in asteroid-detection efforts and atmospheric research. The AGS would increase its support of the Arecibo, rising from $2.3 million to $3.0 million in FY2011 to approximately $4.0 million in FY2015. Funding from AST decreased from $6.2 million in FY2011 to an estimated $5.5 million in FY2012. It is estimated that support would further decrease to approximately $4.0 million by FY2015. NASA provided funding of $2.0 million in FY2011 and has provided budget plans to support planetary radar in FY2012 and beyond. In June 2011, NSF announced that it awarded a $42.0 million, five-year contract to SRI International to manage, operate, and maintain the Arecibo. SRI International partners with the Universities Space Research Association, the Ana G. Mendez-Universidad Metropolitana, San Juan, and the University of Puerto Rico. The Arecibo will, among other things, expand its research on the study of the ionosphere, the remains of imploded stars, and also search within and beyond the Milky Way for asteroids and pulsars. At present, the Arecibo is operating on a $10.7 million budget. The Administration's FY2013 budget request for NSF provides a total of $8.2 million for the Arecibo Observatory--$5.0 million from the AST and $3.2 million from the AGS. Support provided in FY2012 is estimated at $5.5 million from AST and $3.2 million form AGS. Language in the FY2008 Omnibus Appropriations Act stated The Appropriations Committees express concern over the conclusion of the NSF's division of Astronomical Science Senior Review with regard to the Arecibo Observatory. The Committees believe that this Observatory continues to provide important scientific findings on issues of near-space objects, space weather, and global climate change, as well as numerous other research areas. The Committees believe that these endeavors will have scientific merit far beyond the end of this decade. As such, the Committees hope the Division of Astronomical Science will reconsider its conclusion regarding future funding for the Arecibo Observatory. In the 110 th Congress, S. 2862 , a bill to provide for NSF and NASA utilization of the Arecibo Observatory, was introduced on April 15, 2008. The bill would have provided for operation of Arecibo to continue. It would (1) ensure that the facility is fully funded to continue (A) its research on Earth's ionosphere, and (B) its research in radio astronomy, and (C) research on the solar system; and (2) coordinate with the Administrator of NASA to ensure that the capabilities of the Arecibo Observatory continue to be available for NASA in characterizing and mitigating near-Earth objects, and other research as needed. A similar bill, H.R. 3737 , was introduced on October 3, 2007. The 112 th Congress may choose to consider increased funding for Arecibo. NASA has received a legislative mandate to observe and detect near-Earth objects. Considering the capabilities of Arecibo to characterize the physical properties of near-Earth objects, some say NASA could benefit from its continued support. In addition, preliminary estimates for dismantling Arecibo and restoring the land to its original state could exceed the cost of maintaining it for several years. It is anticipated that continued operation of the Arecibo will be assessed in a mid-decade independent review that was recommended in the August 2010 decadal survey. Also, it was noted in a January 2012 presentation of NSF's AST outlook that budget realities and constraints are expected to have a long-term impact on several programs, possibly leaving many of the recommendations of the decadal survey unfunded or not addressed. | The Arecibo Ionospheric Observatory is a radio and radar telescope located in Barrio Esperanza, Arecibo, Puerto Rico. The Arecibo Observatory is managed, operated, and maintained by SRI International, under contract with the National Science Foundation (NSF). In 2005-2006, NSF's Division of Astronomical Sciences (AST) conducted a Senior Review of its portfolio of facilities. Among other things, the Senior Review was to identify potential reinvestment in the highest priority existing programs in AST and restructure the operational efficiency of the existing facilities. The Review reported that the scientific value of the Arecibo was modest when compared to other existing and proposed projects and recommended decreasing the telescope's annual $12.0 million budget to $9.0 million in FY2009, and securing partnerships for the remaining necessary funding. If alternate funding sources or partnerships could not be obtained by 2011, the Review recommended dismantling the facility. In February 2011, a report of the Senior Review estimated that closure of the Arecibo could approach $88.0 million, approximately eight times its current operating cost. The Review determined that AST should carefully examine the priorities of continuing to operate older facilities while simultaneously transitioning to newer facilities. The issue before the 112th Congress is whether the Arecibo is more cost-effective than replacing it with newer, available technology. In June 2011, NSF announced that it awarded a $42.0 million, five-year contract to SRI international to manage, operate, and maintain the Arecibo. SRI International will partner with the Universities Research Association, the Universidad Metropolitana, San Juan, and the University of Puerto Rico. The Arecibo will, among other things, expand its research on the study of the ionosphere, the remains of imploded stars, and also search within and beyond the Milky Way for asteroids and pulsars. The Administration's FY2013 budget request for the Arecibo in the NSF totals $8.2 million; the FY2012 estimate is $8.7 million. Requested funding for the Arecibo Observatory in the FY2013 request includes $5.0 million from the AST, and $3.2 million from the Division of Atmospheric and Geospace Sciences (AGS). | 4,163 | 500 |
Since July 1999, when the Chinese government began detaining thousands of Falun Gong (FLG) adherents, the spiritual exercise movement has gained the attention of many U.S. policy makers, primarily as an international human rights concern. Many FLG practitioners reportedly have died or remain in PRC prisons or other forms of detention. In 2005, the United States Commission on International Religious Freedom recommended that China remain as a "country of particular concern" (CPC) and stated that crackdowns on the group have been "widespread and violent." On the basis of this recommendation, the State Department, in its annual International Religious Freedom Report (November 2005), designated China as a CPC for the sixth consecutive year, noting: "The arrest, detention, and imprisonment of Falun Gong practitioners continued; those who refused to recant their beliefs were sometimes subjected to harsh treatment in prisons and reeducation-through-labor camps, and there were credible reports of deaths due to torture and abuse." The PRC government appears to have been largely successful in not only suppressing FLG activity in China but also discrediting Falun Gong in the eyes of PRC citizens and preventing linkages between Falun Gong and other social protest movements. Nonetheless, FLG followers have displayed a remarkable tenacity and dedication both domestically and abroad. They have become a recurring irritant in China's efforts to project an image of a peaceful world power that abides by international norms, and have raised suspicions among some PRC leaders that the U.S. government is colluding with them. On April 20, 2006, at the official welcoming ceremony of PRC President Hu Jintao's visit to Washington, D.C., Ms. Wang Wenyi, a reporter for the Epoch Times , interrupted Hu's speech by shouting in support of Falun Gong for more than two minutes before being hustled away by U.S. security agents. Although ostensibly not a political movement, Falun Gong practitioners in the United States have become visible and vocal, particularly in major U.S. cities and in Washington, D.C., in criticizing the PRC government and publicizing human rights abuses against their fellow members in China. The PRC government reportedly also has been aggressive abroad, attempting to refute FLG claims and counteract their activities. "Falun Gong,"also known as "Falun Dafa," combines an exercise regimen with meditation, moral values, spiritual beliefs, and faith. The practice and beliefs are derived from qigong , a set of movements said to stimulate the flow of qi --vital energies or "life forces"--throughout the body, and Buddhist and Daoist concepts. Falun Gong upholds three main virtues--truthfulness, compassion, and forbearance ( zhen-shan-ren) --which may deliver practitioners from modern society's "materialism" and "moral degeneration." FLG adherents claim that by controlling the "wheel of dharma," which is said to revolve in the body, one can cure a wide range of medical ailments and diseases. They believe that by practicing Falun Gong, or "cultivation," they may achieve physical well-being, emotional tranquility, moral virtue, an understanding of the cosmos, and a higher level of existence or salvation. Some observers maintain that Falun Gong resembles a cult and refer to the unquestioning support given to its founder, Master Li Hongzhi, departure from orthodox Buddhism and Daoism, and emphasis on supernatural powers. Others criticize the spiritual practice for being intolerant or exclusive. The PRC government charges that Falun Dafa has disrupted social order and contributed to the deaths of hundreds of Chinese practitioners and non-practitioners by discouraging medical treatment and causing or exacerbating mental disorders leading to violent acts. FLG followers counter that the practice is voluntary and that levels of faith and involvement vary with the individual practitioner. They also emphasize that Falun Gong is not a religion--there is no worship of a deity, all-inclusive system of beliefs, church or temple, or formal hierarchy. During the mid-1990s, Falun Gong acquired a large and diverse following, with estimates ranging from 3 to 70 million members, including several thousand practitioners in the United States. Falun Gong attracted many retired persons as well as factory workers, farmers, state enterprise managers, entrepreneurs, intellectuals, and students in China. The practice's claimed healing powers became especially attractive as economic reforms caused many citizens to lose medical benefits and services. In addition, Falun Gong reportedly was embraced by many retired and active Chinese Communist Party (CCP) and government cadres and military officials and personnel. In 1999, then Vice-President Hu Jintao stated that of 2.1 million known members of the Falun Gong group, one-third belonged to the CCP. Falun Gong's apparently loose but effective organization has remained somewhat mysterious. During the early phase of the crackdown, adherents of Falun Gong generally characterized their objectives as personal and limited in scope. They described their movement as being loosely organized and without any political agenda beyond protecting the constitutional rights of practitioners in China. According to some analysts, however, the movement was well organized before the crackdown in 1999. After the government banned Falun Gong, a more fluid, underground network, aided by the Internet, pagers, and cell phones, carried on for over two years. Li Hongzhi ("Master Li"), a former Grain Bureau clerk, developed Falun Gong in the late 1980s, when qigong began to gain popularity in China. In 1992, Li explained his ideas in a book, Zhuan Falun . Falun Gong was incorporated into an official organization, the Chinese Qigong Association, in 1993 but separated from it by 1996. Around this time, Li reportedly left China. Since 1999, Li, who lives with his family outside New York City, has remained in seclusion, but has made occasional appearances at Falun Gong gatherings. In 2005 and 2006, Li gave lectures to followers in Chicago, New York, San Francisco, and Los Angeles. Some reports suggest that Li Hongzhi has directed his adherents from behind the scenes and that his public statements are interpreted by many Falun Gong practitioners as instructions. On April 25, 1999, an estimated 10,000 to 30,000 Falun Gong practitioners from around China gathered in Beijing to protest the PRC government's growing restrictions on their activities. Some adherents presented an open letter to the Party leadership at its residential compound, Zhongnanhai , demanding official recognition and their constitutional rights to free speech, press, and assembly. Party leaders reportedly were split on whether to ban Falun Gong and conveyed contradictory messages. Premier Zhu Rongji reportedly met with a delegation of practitioners and told them that they would not be punished. By contrast, President Jiang Zemin was said to be shocked by the affront to Party authority and ordered the crackdown. Jiang was also angered by the apparent ease with which U.S. officials had granted Li Hongzhi a visa and feared U.S. involvement in the movement. The government produced circulars forbidding Party members from practicing Falun Gong. Security forces collected the names of instructors, infiltrated exercise classes, and closed book stalls selling Falun Dafa literature. Tensions escalated as followers engaged in 18 major demonstrations, including occupying a government building in the city of Nanchang and demonstrating in front of China Central Television Station in Beijing. The official crackdown began on July 21, 1999, when Falun Gong was outlawed and an arrest warrant was issued for Li Hongzhi. On October 30, 1999, China's National People's Congress promulgated an "anti-cult" law (article 300 of the Criminal Law), effective retroactively, to suppress not only the Falun Gong movement but also thousands of religious sects across the country. However, Ye Xiaowen, director of the State Bureau of Religious Affairs, stated that police would not interfere with people who practiced alone in their own homes. In Beijing alone, public security officers closed 67 teaching stations and 1,627 practice sites. In the immediate aftermath, the state reportedly detained and questioned over 30,000 followers nationwide, releasing the vast majority of them after they promised to quit or identified group organizers. Under article 300, cult leaders and recruiters may be sentenced to 7 or more years in prison, while cult members who disrupt public order or distribute publications may be sentenced to three to seven years in prison. During the first two years of the crackdown, between 150 and 450 group leaders and other members were tried for various crimes and sentenced to prison terms of up to 18-20 years. Estimates of those who have spent time in detention or "labor reeducation" range from 10,000 to100,000 persons. According to estimates by the State Department and human rights organizations, since 1999, from several hundred to a few thousand FLG adherents have died in custody from torture, abuse, and neglect. Many other followers have been suspended or expelled from school or demoted or dismissed from their jobs. It took the PRC government, employing methods of social control that have deep roots in both Chinese Communist Party practice and Chinese history, over two years to subdue the Falun Gong organization. Incremental improvements in the rule of law in China in the past decade have had little if any effect in protecting the constitutional rights of FLG followers. In 1999, the central government reportedly combined an intensive propaganda campaign with stern internal party directives and reliance upon a system of informal control at the local level. At first, the local enforcement of government decrees, such as those requiring universities, employers, and neighborhood committees to obtain individual repudiations of Falun Gong, was often lax. Some reports suggested that local officials had hoped that they could persuade Falun Gong members to give up the practice or at least refrain from engaging in public protests in the capital. However, between July 1999 and October 2000, many Falun Gong adherents continued to journey to Beijing and staged several large demonstrations (involving several hundred to over a thousand persons)--many participants were sent home repeatedly or evaded the police. As Falun Gong demonstrations continued, the government crackdown took on a greater sense of urgency. The PRC leadership employed a traditional method of threats and incentives toward lower authorities to prevent public displays of Falun Gong, particularly demonstrations in Beijing. Central leaders turned a blind eye to local methods of suppression against unrepentant practitioners, including the reported use of torture. The largest memberships and severest human rights abuses have been reported in China's northeastern provinces. There has been little, if any, FLG activity reported in the past year, although the State Department reported that in 2005, there were still hundreds of thousands of practitioners in the country. Many FLG followers are believed to be still practicing in their homes or meeting secretly. One source estimates that there are 60,000 FLG practitioners left in China: half of them are still in detention while the other half remain under surveillance. According to another expert, there are between 15,000 and 25,000 political or religious prisoners in China, half of whom are linked to the Falun Gong movement. FLG members in the United States claim that adherents in China continue to disseminate written information about the practice. Between 2002 and 2005, in about a dozen reported cases, Falun Gong members interrupted programming in several large Chinese cities and broadcast their own images, possibly with the aid of sources outside the country. In 2002, PRC courts sentenced 27 practitioners to prison terms of 4 to 20 years for carrying out these activities. In July 2005, satellite broadcasts reportedly were interrupted by a 15-minute FLG video. On May 19, 2003, U.S. citizen Charles Li was sentenced to three years in prison for "intending to sabotage" Chinese television broadcasts. Li returned to California after he was released in January 2006. U.S. consular officials had maintained regular contact with Li through his detainment. In a letter that he sent while under incarceration, Li reportedly wrote of physical and mental abuse in prison. In March 2006, U.S. Falun Gong representatives claimed that thousands of practitioners had been sent to 36 concentration camps throughout the PRC, particularly in the northeast, and that many of them were killed for profit through the harvesting and sale of their organs. Many of these claims were based upon allegations about one such camp in Sujiatun, a district of Shenyang city in Liaoning province. The Epoch Times , a U.S.-based newspaper affiliated with Falun Gong, first reported the story as told by a Chinese journalist based in Japan and a former employee of a Sujiatun hospital that allegedly operated the camp and served as an organ harvesting center. According to Epoch Times reports, of an estimated 6,000 Falun Gong adherents detained there, three-fourths allegedly had their organs removed and then were cremated or never seen again. American officials from the U.S. Embassy in Beijing and the U.S. consulate in Shenyang visited the area as well as the hospital site on two occasions--the first time unannounced and the second with the cooperation of PRC officials--and after investigating the facility "found no evidence that the site is being used for any function other than as a normal public hospital." Amnesty International spokespersons have stated that the claims of systematic organ harvesting of Falun Gong practitioners cannot be confirmed or denied. The PRC government has rejected claims about live organ harvesting of Falun Gong practitioners. In December 2005, Chinese officials reportedly confirmed that executed prisoners had been "among the sources of organs for transplant" and admitted that a market for such organs had existed, but denied that they had been removed without consent. In March 2006, the Chinese Ministry of Health announced stricter regulations that would require written consent from organ donors, ban the sale of human organs, and limit the number of hospitals allowed to perform transplants. On July 6, 2006, two Canadian investigators, former Liberal Member of Parliament David Kilgour and David Matas, an international human rights attorney, published Report into Allegations of Organ Harvesting of Falun Gong Practitioners in China. The report concludes that the allegations that "large numbers" of Falun Gong practitioners in the People's Republic of China (PRC) have been victims of live organ harvesting are true. For the most part, however, the report does not bring forth new or independently-obtained testimony and relies largely upon the making of logical inferences. The authors had conducted their investigation in response to a request by the Coalition to Investigate the Persecution of the Falun Gong in China (CIPFG), a U.S.-based, non-profit organization founded by the Falun Dafa Association in April 2006. In addition to interviewing the same former Sujiatun hospital worker as featured in the Epoch Times , Kilgour and Matas refer to recordings of telephone conversations provided by CIPFG. In these recorded calls that CIPFG members allegedly made from locations outside China to PRC hospitals, police bureaus, and detention centers, telephone respondents reportedly indicated that organ harvesting of live Falun Gong detainees was common. Although many claims and arguments in the Kilgour-Matas report are widely accepted by international human rights experts, some of the reports's key allegations appear to be inconsistent with the findings of other investigations. The report's conclusions rely heavily upon transcripts of telephone calls in which PRC respondents reportedly stated that organs removed from live Falun Gong detainees were used for transplants. Some argue that such apparent candor would seem unlikely given Chinese government controls over sensitive information, which may raise questions about the credibility of the telephone recordings. Practicing Falun Gong is permitted in the Hong Kong Special Administrative Region (HKSAR) and local members, which number an estimated 500, frequently stage protests against PRC policies toward Falun Gong on the mainland. In November 2004, a Hong Kong appeals court reversed convictions for "obstructing a public place" against sixteen Falun Gong members who had participated in a demonstration in March 2002. The judges ruled that the defendants had been exercising their right to demonstrate. In May 2005, the Court of Final Appeal overturned the convictions of eight other protesters for assaulting and obstructing police, stating that "the freedom to demonstrate peacefully is protected by law." The HKSAR government reportedly has occasionally barred entry to foreign Falun Gong adherents. In February 2006, 83 overseas Falun Gong practitioners, mostly from Taiwan, were refused entry prior to a conference organized by the Hong Kong Association of Falun Dafa, leading some to speculate that PRC authorities keep tabs on overseas and Taiwan FLG members. There are an estimated several thousand Falun Gong practitioners in the United States and similarly large numbers of adherents in other countries with large ethnic Chinese populations. The movement has become highly public in the United States. Members regularly stage demonstrations, distribute flyers, and sponsor cultural events. In addition, FLG followers are affiliated with several mass media outlets, including Internet sites. These include The Epoch Times , a newspaper distributed for free in eight languages and 30 countries (with a distribution of 1.5 million); New Tang Dynasty Television (NTDTV), a non-profit Chinese language station based in New York with correspondents in 50 cities worldwide; and Sound of Hope, a northern California radio station founded by FLG members. These media outlets report on a variety of topics but emphasize human rights abuses in China, particularly against Falun Gong members, and publish mostly negative or critical reports on PRC domestic and foreign policies. Two U.S. Internet companies founded by Chinese Falun Gong practitioners, Dynaweb Internet Technology Inc. and UltraReach Internet Corporation, have been at the forefront of overseas Chinese and U.S. efforts to breach the PRC "Internet firewall." They have each developed software to help Chinese Web users--estimated at 111 million in 2005--to circumvent government censorship and access websites which the PRC government has attempted to block. The United States Broadcasting Board of Governors has provided funding to these companies in order to help sustain their efforts in enabling Web users in China to freely access the Internet, including Voice of America and Radio Free Asia websites. On behalf of plaintiffs in China, Falun Gong adherents in the United States have filed several civil complaints in U.S. federal courts against PRC leaders for violations of the Torture Victim Protection Act, the Alien Tort Claims Act, and other "crimes against humanity." In September 2003, a U.S. District Court judge in Chicago dismissed a lawsuit filed against former PRC President Jiang Zemin, on the basis of lack of jurisdiction and sovereign immunity. In December 2004, a U.S. District Court in San Francisco ruled that Beijing Party Secretary and former Beijing mayor Liu Qi had broken U.S., international, and PRC law for his role in violating the human rights of Falun Gong practitioners. PRC officials in the United States have engaged in a public relations blitz to counter FLG efforts. In 2001, over one dozen U.S. mayors reported pressure from PRC officials urging them not to give public recognition to Falun Gong. In 2002, according to Falun Gong practitioners, PRC consulates sent approximately 300 letters to local U.S. officials, including mayors and the governor of Washington state, asking them not to support Falun Gong. The Wall Street Journal wrote: "Chinese diplomats spend a lot of time writing letters and making visits to governments, local newspapers and television outlets, politicians and others...warning them about the movement." Since 2001, Falun Gong plaintiffs have filed several lawsuits in federal courts claiming that the PRC officials in the United States have been responsible for dozens of isolated incidents of physical and verbal harassment, eavesdropping, and destruction of property of Falun Gong adherents and supporters in the United States. However, plaintiffs often have possessed little evidence of direct involvement by the Chinese government in the alleged incidents. PRC consular officials deny participation in such criminal activity in the United States and claim that they are entitled to diplomatic immunity. In November 2002, the Circuit Court of Cook County charged a PRC immigrant with battery for having physically assaulted a Falun Gong hunger striker in front of the Chinese Consulate in Chicago in September 2001. In February 2005, Falun Gong members in the United States reported that a coordinated, world-wide campaign (in over 20 countries) of telephone harassment against them had taken place. This telephone harassment allegedly consisted of pre-recorded anti-Falun Gong messages in both English and Chinese, some purportedly originating in China. In May 2005, Mr. Chen Yongli, a political officer at the PRC Consulate General in Sydney, Australia, defected and requested political asylum on the grounds that he would be persecuted if sent back to China. On June 4, 2005, Chen made a public appearance at a rally in Sydney to commemorate the 16 th anniversary of the 1989 Tiananmen Square military action. In his speech, Chen declared that Beijing had directed the PRC consulate to identify and harass members of the Australian Chinese community who belonged to groups that the PRC deems subversive, such as democracy activists and Falun Gong practitioners. As a consular official, Chen reportedly resisted orders to provide extensive details about FLG adherents in Australia. Chen alleged that the PRC government had deployed a network of 1,000 agents and spies in Australia to discredit Falun Gong and to spy on its members, and that the number of such agents in the United States was likely higher. In July 2005, the Australian Immigration Department granted permanent protection visas to Chen, his wife and daughter. The Chinese government reportedly referred to Falun Gong as "the most serious threat to stability in 50 years of [Chinese] communist history." The practice's popularity in China's northeast and other economically depressed areas was especially worrisome to the Party because of the fear that "religious fever" combined with economic unrest could spark widespread political protests. Some observers noted that the crackdown on Falun Gong deepened anti-government sentiment among not only adherents but also non-adherents, including many reform-minded intellectuals. However, there has been little indication that Falun Gong has become a rallying cry for other disaffected social groups or China's small number of political activists. Many Chinese, either because of government propaganda or their indifference toward Falun Gong, have become critical toward the movement or apathetic about the crackdown. Some have charged that Li Hongzhi has exploited vulnerable people and caused their suffering by exaggerating the healing powers of Falun Gong or by encouraging followers in prison to attain full enlightenment by exercising "forbearance" or refusing to recant. The January 2001 self-immolations of six purported Falun Gong members on Tiananmen Square was exploited by the official media, further alienating many PRC citizens. Since 1999, some Members of the United States Congress have made many public pronouncements and introduced several resolutions in support of Falun Gong. In the 109 th Congress, H.Res. 608 , agreed to in the House on June 12, 2006, condemns the "escalating levels of religious persecution" in China, including the "brutal campaign to eradicate Falun Gong." H.Res. 794 , passed by the House on June 12, 2006, calls upon the PRC to end its most egregious human rights abuses, including the persecution of Falun Gong. H.Con.Res. 365 , introduced on March 28, 2006, would urge the PRC government to allow civil rights attorney Gao Zhisheng to continue practicing law. PRC authorities reportedly revoked Gao's license after he provided legal assistance for peasant demonstrators, Christian house church worshipers, Falun Gong practitioners, and others. For six consecutive years (1999-2004), the U.S. Department of State has designated China a "country of particular concern" for "particularly severe violations of religious freedom," including its persecution of Falun Gong. An ongoing ban on the export of crime control and detection instruments and equipment to China satisfies the requirements of P.L. 105-292 , the Freedom from Religious Persecution Act of 1998, which authorizes the President to impose sanctions upon countries that violate religious freedom. In April 2006, prior to PRC President Hu Jintao's visit to the United States, 81 Members of Congress reportedly co-signed a letter written by Representative Dana Rohrabacher to President Bush in support of an investigation into the allegations of organ harvesting of Falun Gong adherents in China. | In 1999, the "Falun Gong" movement gave rise to the largest and most protracted public demonstrations in China since the democracy movement of a decade earlier. The People's Republic of China (PRC) government, fearful of a political challenge and the spread of social unrest, outlawed Falun Gong and carried out an intensive, comprehensive, and unforgiving campaign against the movement. Since 2003, Falun Gong has been largely suppressed or pushed deep underground in China while it has thrived in overseas Chinese communities and Hong Kong. The spiritual exercise group has become highly visible in the United States since 1999, staging demonstrations, distributing flyers, and sponsoring cultural events. In addition, Falun Gong followers are affiliated with several mass media outlets. Despite the group's tenacity and political activities overseas, it has not formed the basis of a dissident movement encompassing other social and political groups from China. The State Department, in its annual International Religious Freedom Report (November 2005), designated China as a "country of particular concern" (CPC) for the sixth consecutive year, noting: "The arrest, detention, and imprisonment of Falun Gong practitioners continued; those who refused to recant their beliefs were sometimes subjected to harsh treatment in prisons and reeducation-through-labor camps, and there were credible reports of deaths due to torture and abuse." In March 2006, U.S. Falun Gong representatives claimed that thousands of practitioners had been sent to 36 concentration camps throughout the PRC. According to their allegations, at one such site in Sujiatun, near the city of Shenyang, a hospital has been used as a detention center for 6,000 Falun Gong prisoners, three-fourths of whom are said to have been killed and had their organs harvested for profit. American officials from the U.S. Embassy in Beijing and the U.S. consulate in Shenyang visited the area as well as inspected the hospital on two occasions and "found no evidence that the site is being used for any function other than as a normal public hospital." Since 1999, some Members of the United States Congress have made many public pronouncements and introduced several resolutions in support of Falun Gong and criticizing China's human rights record. In the 109th Congress, H.Res. 608, agreed to in the House on June 12, 2006, condemns the "escalating levels of religious persecution" in China, including the "brutal campaign to eradicate Falun Gong." H.Res. 794, passed by the House on June 12, 2006, calls upon the PRC to end its most egregious human rights abuses, including the persecution of Falun Gong. In January 2006, U.S. citizen Charles Li was released from a PRC prison after serving a three-year term for "intending to sabotage" broadcasting equipment in China on behalf of Falun Gong. This report will be updated periodically. | 5,652 | 656 |
Federal civilian employees may be compensated for periods of illness, disability, or injury through one of three systems: paid sick leave, disability retirement, or workers' compensation benefits for injuries sustained at work. In most cases, short-term illness or injury is compensated through paid sick leave. A federal employee who experiences a permanent disability can take a disability retirement before reaching the statutory retirement age. Disability retirement benefits differ between the two federal retirement systems: the Civil Service Retirement System (CSRS) and the Federal Employees' Retirement System (FERS). Federal employees hired before 1984 are covered by CSRS and those who were hired in 1984 or later are covered by FERS. Employees enrolled in CSRS do not pay Social Security taxes and do not earn Social Security benefits while employed by the federal government. Employees enrolled in FERS pay Social Security taxes and earn Social Security benefits. Until the age of 62, disability retirement annuities under FERS are offset in part by the amount of Social Security benefits the annuitant receives. Workers who experience short-term illnesses or injuries can use paid sick leave to take time off from work. Federal employees accrue sick leave at the rate of 4 hours for each two-week pay period up to a total of 104 hours (13 days) per year. Unused sick leave continues to accrue without limit throughout a federal employee's career. If an employee has exhausted his or her accrued sick leave balance, the worker's employing agency can advance up to 30 days of sick leave per year. Ill or injured workers who have exhausted their accrued sick leave but who expect to be able to return to work can use their accrued annual leave or, in some cases, can take leave without pay until they have recovered and can return to work. The federal government does not offer short-term disability insurance to workers who have exhausted their accrued sick leave and annual leave. The Federal Employees Leave Sharing Act of 1988 ( P.L. 100-566 ) authorizes a voluntary leave bank program through which federal agencies may allow employees to donate unused annual leave to employees who have exhausted their accrued sick leave. Employees cannot donate unused sick leave. When a worker covered by CSRS or FERS retires, any unused sick leave that he or she has accrued is added to the employee's length of service for purposes of computing the employee's annuity. A federal employee enrolled in CSRS is eligible for a disability retirement if he or she has completed at least five years of creditable civilian service; the employee has a disability that results in deficient performance, conduct, or attendance or that is incompatible with the individual continuing to perform useful and efficient service in his or her job; a physician certifies that the disability is expected to last a year or more; the worker's employing agency is unable to accommodate the disability in the worker's current job or in an existing vacant position at the same grade or pay and in the same commuting area; and an application for disability retirement is filed with the employing agency before separation or with the Office of Personnel Management within one year of the date of separation from employment. Unlike the eligibility requirements for benefits under the Social Security Disability Insurance Income (SSDI) and Supplemental Security (SSI) programs, eligibility for a CSRS disability retirement annuity does not require the employee to be disabled for any employment in the national economy. Instead, to be eligible for a CSRS disability retirement annuity, the employee must be unable to perform the job to which he or she was assigned or a job at the same pay in the same commuting area. Unless the Office of Personnel Management (OPM) certifies that the individual's disability is permanent, an employee who has retired due to disability is required to undergo periodic medical reevaluations until the age of 60. If the individual recovers, disability annuity payments continue temporarily while the individual seeks reemployment. The disability annuity terminates at the earliest of (1) the date on which the individual is reemployed by the government, (2) one year from the date of a medical examination showing that the individual has recovered from the illness or disability, or (3) six months from the end of the calendar year in which the individual demonstrates that his or her earning capacity has been restored. The individual's earning capacity is deemed to have been restored if, in any calendar year, his or her income from wages, self-employment, or both is equal to at least 80% of the current rate of pay for the position he or she occupied immediately before retiring. Under CSRS, a disabled worker is eligible for a retirement annuity equal to the greater of (1) the annuity that he or she would receive under the regular retirement formula, or (2) a minimum benefit that is the lesser of 40% of the average of the employee's highest three consecutive years of basic pay ("high-three" pay), or the annuity that would be paid if the employee continued working until the age of 60 at the same high-three pay, including in the annuity computation the number of years of service and the years between the date of retirement and the date on which the individual would reach the age of 60. The method of computing a CSRS disability retirement annuity assures that an employee will not receive a larger annuity through a disability retirement than he or she would receive from having worked to the minimum age and years of service required for a normal retirement. In general, a worker who becomes disabled after 22 or more years of federal service will receive an annuity computed under the regular CSRS annuity formula, regardless of his or her age. Because CSRS has been closed to new entrants since 1984, most federal employees covered by CSRS now have 30 or more years of service. Under CSRS, a regular retirement annuity for 30 years of service would replace 56.25% of the worker's high-three average pay. A federal employee covered by CSRS can take regular retirement with an immediate, unreduced annuity at the age of 55 or later with at least 30 years of service, at the age of 60 or later with at least 20 years of service, or at the age of 62 with at least five years of service. CSRS retirement annuities are indexed annually to the rate of growth of the Consumer Price Index (CPI), regardless of whether the individual retired due to disability or under normal retirement rules. A federal employee who is enrolled in FERS must have completed at least 18 months of service to be eligible for a disability retirement. All other eligibility rules for disability retirement under FERS are the same as under CSRS. Federal employees enrolled in FERS also are covered by Social Security, and the amount of a disability annuity under FERS is offset until the age of 62 by a portion of any Social Security Disability Insurance (SSDI) benefit that the individual receives. Federal employees covered by FERS who apply for disability retirement also must apply for Social Security disability benefits. Eligibility for Social Security disability benefits requires a determination by the Social Security Administration that the individual is unable to perform substantial gainful activity in any job in the national economy. Therefore, an individual covered by FERS may be determined to be disabled for purposes of his or her job with the federal government, but not with respect to other employment. In such a case, the individual would be eligible to receive a FERS disability annuity but be ineligible for SSDI. A federal employee who is disabled under both the FERS and Social Security statutes would be eligible to receive both a FERS disability annuity and a Social Security benefit, subject to the provisions of federal law integrating the two benefits. For federal employees under 62 years of age, the FERS disability retirement annuity in the first year of disability is 60% of the individual's high-three average pay minus 100% of any Social Security benefit that he or she is receiving. In years after the first year of disability, the FERS disability annuity is 40% of the individual's high-three average pay minus 60% of any Social Security benefit that he or she is receiving. The FERS disability annuity remains at that level--adjusted annually by the FERS cost-of-living adjustment--until the individual reaches the age of 62. When a FERS disability annuitant reaches the age of 62, the FERS annuity is adjusted to the amount that the individual would have received if he or she had continued to work until the age of 62. This ensures that an individual who retires from federal employment as the result of disability does not receive a higher annuity after this age than he or she would have received as the result of taking a normal retirement. The adjusted annuity at the age of 62 is equal to 1.0% of the individual's high-three average pay (increased by the FERS cost-of-living adjustments since the date of the disability retirement) multiplied by the sum of years of service performed before the date of disability retirement plus the number of years since that date. If the total number of years is 20 or more, the annuity is 1.1% of high-three average pay multiplied by this number of years. If an employee covered by FERS becomes disabled at the age of 62 or later, his or her FERS annuity is computed under the regular FERS retirement rules. In most cases, the adjusted FERS benefit payable at the age of 62 will be lower than the annuity that was paid before age 62. However, at the age of 62 and later, the offset to the FERS annuity for any Social Security benefits that the individual may be receiving will cease. Also, a worker who was receiving a FERS annuity but was not eligible for SSDI can apply for Social Security retired worker benefits at the age of 62, provided that he or she has completed the required 40 quarters of employment covered by Social Security. The Social Security benefit will compensate in part for the reduction in the FERS annuity. FERS disability annuities are adjusted for inflation beginning in the second year of payment. If the CPI has increased by 2.0% or less during the year ending on September 30, the FERS cost-of-living adjustment in the following January is equal to the percentage change in the CPI. If the CPI has increased by more than 2.0% but less than 3.0%, the FERS COLA is 2.0%. If the CPI has increased by 3.0% or more, the FERS COLA is one percentage point less than the increase in the CPI. FERS retirement benefits consist of the FERS annuity, Social Security, and the Thrift Savings Plan. P.L. 108-92 (October 3, 2003) changed the computation of the FERS annuity for federal employees who are injured on the job. An injured employee cannot contribute to Social Security or to the Thrift Savings Plan while receiving workers' compensation under the Federal Employees' Compensation Act. Social Security taxes and TSP contributions must be paid from earnings , and workers' compensation payments are not classified as earnings under either the Social Security Act or the Internal Revenue Code. As a result, the employee's future retirement income from Social Security and the TSP may be reduced. P.L. 108-92 increased the FERS basic annuity from 1.0% of the individual's high-three average pay to 2.0% of high-three average pay for the duration of the period when the individual received workers' compensation. This is intended to replace income that may have been lost from lower Social Security benefits and reduced income from the TSP. The Federal Employees' Compensation Act (FECA) provides benefits to federal employees who suffer a partial or total disability as the result of an injury incurred at work. In the event of the worker's death as the result of an on-the-job injury, FECA pays benefits to the worker's surviving dependents. FECA pays benefits only in the case of an illness, injury, or disability that is determined to be work-related. Federal workers are covered by FECA immediately upon employment. FECA benefits consist of cash compensation, payment of medical expenses related to the illness or injury, vocational rehabilitation assistance, and payment for attendant care services. The cash payment is calculated as a percentage of average annual earnings prior to the individual's injury or death. FECA benefits are indexed annually to the rate of growth of the CPI. FECA benefits are not subject to income taxes. FECA cash compensation equals two-thirds of lost earning capacity if the worker has no dependents or three-fourths of lost earning capacity if the worker has dependents. FECA payments may not exceed 75% of the maximum rate of pay for grade GS-15 of the general schedule, and in case of total disability, may not be less than the minimum pay for the GS-2 pay grade. FECA cash benefits continue as long as the disability lasts. Compensation does not end when the individual reaches retirement age. An injured employee may elect to receive a disability retirement annuity instead of FECA benefits, but may not receive both simultaneously. If an employee covered by FERS elects to receive FECA compensation, it will be reduced by the amount of any Social Security benefits that are based on the period of his or her federal employment. An election between FECA and a disability retirement annuity may be changed at any time. For certain listed injuries, minimum cash benefits are provided, regardless of how long the disability lasts. In case of injuries resulting from a specific incident, the employee's full pay continues for the term of the disability up to a maximum of 45 days, after which regular FECA compensation payments begin if the disability continues. If a federal employee dies from a work-related injury, FECA pays cash compensation to the worker's surviving dependents. A surviving spouse receives annual compensation equal to 50% of the worker's last annual rate of pay. Benefits terminate if the surviving spouse remarries before age 60, although in the event of remarriage before the age of 60, the surviving spouse is paid a lump sum equal to two years of benefits. If the worker had both a spouse and dependent children, the spouse's benefit is equal to 45% of the worker's last annual rate of pay, and each dependent child receives a benefit equal to 15% of pay, up to a maximum family benefit equal to 75% of pay. If the worker had dependent children but no spouse, the compensation is equal to 40% of pay for one child and an additional 15% for each additional child up to a maximum of 75% of pay. A dependent child's benefit ends at the age of 19, unless he or she is incapable of self-support due to disability. In some cases, other surviving dependent relatives, including parents, siblings, grandparents, and grandchildren may be eligible for compensation, according to the extent of their financial dependence on the deceased worker. Section 651 of P.L. 104-208 , the Omnibus Consolidated Appropriations Act for FY1997, authorizes the heads of federal agencies to pay a gratuity payment of up to $10,000 to the executor of the estate of a federal employee who dies as the result of injury sustained in the performance of official duties after August 1, 1990. | Paid sick leave, disability retirement, or workers' compensation may provide benefits for federal civilian employees during periods of illness, disability, or workplace injury, respectively. Federal civilian employees earn 13 days of paid sick leave per year. Sick leave can be used because of the worker's own illness or injury or to care for an ill or injured family member. A worker's employing agency can advance up to 30 additional days of sick leave to an employee who has exhausted his or her accrued sick leave. A federal worker with a long-term disability can separate from service through a disability retirement. A federal employee who sustains a disabling injury on the job can receive benefits under the Federal Employees' Compensation Act (FECA), the workers' compensation program for federal employees. FECA benefits consist of cash compensation, payment of medical costs related to the injury, vocational rehabilitation assistance, the cost of attendant care services, and burial benefits. A disabled federal employee may not receive a disability retirement annuity and FECA benefits simultaneously. | 3,372 | 219 |
By virtue of his constitutional role as commander-in-chief and head of the executive branch, the President has access to all national intelligence collected, analyzed, and produced by the Intelligence Community. Because the intelligence agencies are part of the executive branch, the President's position affords him the authority--which, at certain times, has been asserted --to restrict the flow of intelligence information to Congress and its two intelligence committees, which are charged with providing legislative oversight of the Intelligence Community. The issue of restricting the flow of intelligence information to Congress, a perennial point of conflict between the legislative and executive branches, has most recently resurfaced in the wake of the Fort Hood Army base shootings in November 2009, the subsequent Christmas Day airline bombing plot, and the Afghanistan suicide bombing that killed seven Central Intelligence Agency employees later that year. Together, these incidents underscored the degree of sensitivity with which Congress views the executive branch's statutory obligation to keep the legislative branch fully and currently informed of all intelligence activities. While some Members of Congress reportedly voiced satisfaction with executive branch efforts to keep them informed about some of these attacks, other Members have generally criticized the White House's notification efforts, particularly with regard to the Fort Hood shootings are concerned. House Intelligence Committee Chairman Reyes reportedly said that he has been "very satisfied" with the Administration's response with regard to information sharing pertaining to the Christmas Day airline bombing attempt. Representative Peter Hoekstra, however, reportedly asserted that the White House has done a poor job of keeping Congress informed of national security issues, generally, and criticized the White House for continuing to "put up roadblocks and hurdles to prevent us form getting information or answers to even basic questions." As a result of its control over intelligence, the executive branch, including the President, the vice president and a small number of presidentially-designated Cabinet-level officials --in contrast to Members of Congress --arguably have access to a greater overall volume of intelligence and to more sensitive intelligence information, including information regarding intelligence sources and methods. Top Administration officials, unlike Members of Congress, also have the authority to more extensively task the Intelligence Community, and its extensive cadre of analysts, for follow-up information. As a result, some contend, the President and his most senior advisors are better positioned to assess accurately the quality of the Intelligence Community's intelligence than is Congress. In addition to their greater access to intelligence, the President and his senior advisors also are arguably better equipped than is Congress to assess intelligence information by virtue of the primacy of their roles in formulating U.S. foreign policy. Their foreign policy responsibilities often require active, sustained, and often personal interaction, with senior officials of many of the same countries targeted for intelligence collection by the Intelligence Community. Thus the President and his senior advisors, some contend, are better positioned to glean additional information and impressions--information that, like certain sensitive intelligence information, is generally unavailable to Congress--that can provide them with additional perspective with which to judge the quality of intelligence. The President is able to control dissemination of intelligence information to Congress because the Intelligence Community is part of the executive branch. The Intelligence Community was created by law and executive order to principally serve the government's executive branch in the execution of its responsibilities. Thus, as the head of the executive branch, the President generally is acknowledged to be "the owner" of national intelligence. The President's otherwise exclusive control over national intelligence, however, is tempered by a statutory obligation to keep Congress, through its two congressional intelligence committees, "fully and currently informed of all intelligence activities." Current law also prevents the executive branch from withholding intelligence information from the committees on the grounds that providing such information would constitute the unauthorized disclosure of classified information, or information relating to intelligence sources and methods. In 2004, Congress further strengthened its access claims to national intelligence when it approved intelligence reform legislation explicitly directing that the Director of National Intelligence (DNI) provide the legislative branch access to national intelligence. Under previous statute, the head of the Intelligence Community was legally required to provide the legislative branch national intelligence, but only "where appropriate." Congress never defined, either in statute, report language, or during debate, what it considered to be "appropriate," essentially ceding to the executive branch the freedom to adopt its own interpretation of congressional intent in this regard. Despite the unqualified directive adopted in 2004, however, its impact on the Intelligence Community, as is so often the case, turns on how aggressively Congress chooses to assert its statutory prerogative. Despite certain conflicting legal authorities governing congressional access to national intelligence, the U.S. Judicial Branch has not had to address the issue, since no case involving an executive-legislative branch dispute over access to intelligence has reached the U.S. courts. Absent a court ruling more clearly defining executive and legislative branch authorities in this area, which most observers view as unlikely, the executive branch has contended that it is under no legal obligation to provide Congress access to all national intelligence. By contrast, Congress, through its congressional intelligence oversight committees, has asserted in principle a legal authority for unrestricted access to intelligence information. The Committees, historically, have interpreted the law as allowing room to decide how , rather than whether , they will have access to intelligence information, provided that such access is consistent with the protection of sources and methods. In practice, however, Congress has not sought all national intelligence information. Unless the intelligence committees have asserted a compelling need, the committees generally have not routinely sought access to certain sensitive intelligence information, such as intelligence sources and methods. When the committees have cited a compelling need for such access, Members generally have reached an accommodation with the executive branch, but not always. Perhaps, in part, because of these differing legal views, the executive and legislative branches apparently have not agreed to a set of formal written rules that would govern the sharing and handling of national intelligence. Rather, according to one observer, writing in a 1997 monograph: The current system is entirely the product of experience, shaped by the needs and concerns of both branches over the last 20 years. While some aspects of current practice appear to have achieved the status of mutually accepted "policy," few represent hard-and-fast rules. "Policy" will give way when it has to. In 2001, and again in 2002, the Senate Select Committee on Intelligence (SSCI) directed that the Director of Central Intelligence prepare a comprehensive report that would examine the role of Congress as a consumer of intelligence, and explore the development of mechanisms that would provide Members tailored intelligence products in support of their policymaking responsibilities. CRS is unaware whether the Director produced such a report. Subsequently, both intelligence committees attempted to ensure that the full membership of each committee were kept fully and currently informed of that intelligence viewed by executive branch as being the most sensitive. In the fiscal year (FY) 2006 intelligence authorization bill ( S. 1803 ), the SSCI included language requiring that the Intelligence Community, upon the request of either the chairman or ranking Member of either of the congressional intelligence committees, provide "any intelligence assessment, report, estimate, legal opinion, or other intelligence information," within 15 days of the request being made, unless the President certifies that the document or information is not being provided because the President is asserting "a privilege pursuant to the Constitution of the United States." Subsequently, both intelligence committees have attempted to address so-called Gang of Eight notifications, which are notifications of especially sensitive covert actions that by statute can be limited to the chairmen and ranking minority members of the two congressional intelligence committees, the Speaker and minority leader of the House, and Senate majority and minority leaders if the President determines that doing so is essential in order to protect vital U.S. interests. In its version of the FY2010 Intelligence Authorization bill, the House Intelligence Committee replaced the current Gang of Eight statutory provision, by adopting a statutory requirement that each of the intelligence committees establish written procedures as may be necessary to govern such notifications. The Senate Intelligence Committee, in its version of the FY2010 Intelligence Authorization bill, left the Gang of Eight statutory structure unchanged, adopting instead, language requiring that the full membership of the intelligence committees be informed of all covert actions and that all members of the two intelligence committees be notified when the executive branch notified the Gang of Eight of any covert action activities. The enacted version of the legislation, P.L. 111-259 , provided that in cases where findings or notifications are not made available to all members of the intelligence committees, within 180 days the President shall notify all committee members that notification has been provided only to the Gang of Eight, and provide all intelligence members a general description of the activity planned. The executive branch generally does not routinely provide with Congress four general types of intelligence information: 1. the identities of intelligence sources; 2. the "methods" employed by the Intelligence Community in collecting and analyzing intelligence; 3. "raw" intelligence, which can be unevaluated or "lightly" evaluated intelligence, which in the case of human intelligence, sometimes is provided by a single source, but which also could consist of intelligence derived from multiple sources when signals and imagery collection methods are employed; and 4. certain written intelligence products tailored to the specific needs of the President and other high-level executive branch policymakers. Included is the President's Daily Brief (PDB), a written intelligence product which is briefed daily to the President, and which consists of six to eight relatively short articles or briefs covering a broad array of topics. The PDB emphasizes current intelligence and is viewed as highly sensitive, in part, because it can contain intelligence source and operational information. Its dissemination is thus limited to the President and a small number of presidentially-designated senior Administration policymakers. In not providing Congress routine access to source identities, executive branch officials cite the need to protect against "leaks" or unauthorized disclosures of information that the Intelligence Community generally considers to be its most sensitive. The argument is made that as more individuals are briefed about sources, the greater is the risk that this information will be disclosed, inadvertently or otherwise. Consequently, such disclosures, it is asserted, could endanger the lives of sources, or, at the very least, jeopardize current or future access to those intelligence sources. Executive branch officials point to similar security-related concerns in explaining why Congress is not routinely provided information on intelligence methods, particularly collection methods. As in the case of source protection, officials argue that effective intelligence collection demands that intelligence collection methods--human and technical--must be protected. Officials also attribute security concerns, in part, as the reason for generally withholding raw intelligence from the legislative branch. Raw intelligence, it is argued, is sometimes necessarily derived from a single source, thus making the source more vulnerable to identification and ultimate exposure. Moreover, it is asserted, even when intelligence is collected from multiple sources, as it sometimes is when signals and imagery intelligence collection efforts are employed, knowledge of these collection methods can be determined from the underlying raw intelligence. Intelligence Community officials generally cite two additional reasons for restricting congressional access to raw intelligence. First, they contend that it would be "dangerous" if a Member of Congress were to gain access to, and possibly make policy decisions based upon, raw, unevaluated intelligence that has not been analyzed and placed into proper context. Second, they argue that, as a practical matter, Congress lacks the physical capacity to securely store the volume of raw intelligence the Intelligence Community generates. Finally, executive branch officials generally restrict congressional access to written intelligence products--including PDBs--that are tailored to the needs of individual policymakers. They assert that it would be inappropriate to provide such products to Congress, because these products are tailored to the specific needs of individual policymakers, and often include information about the policymaker's contacts with foreign counterparts, as well as the reactions of those counterparts. Although PDB consumers have access to all such intelligence, intelligence sources, methods, and operational information historically have been tightly restricted, even within the executive branch. Intelligence Community analysts, for example, often have access to such information, only on a need-to-know basis. While congressional intelligence officials have not routinely requested access to the types of intelligence information discussed above, they have questioned the executive branch's security concerns with regard to certain raw intelligence, noting that it generally is more widely available to executive branch officials. They have disputed whether Congress is less capable than is the Executive in its ability to evaluate and safeguard sensitive intelligence. Although Congress generally has not had access to information pertaining to intelligence sources and methods, raw intelligence, or to intelligence products tailored to high-level policymakers--including PDBs--notably, Congress occasionally has successfully obtained such intelligence information from the executive branch. For example, while investigating Central Intelligence Agency (CIA) covert action operations in Nicaragua in the 1980s, the intelligence committees requested and obtained the identities of certain intelligence sources. The committees also sought and gained access to certain raw intelligence. On other occasions, committee members have successfully requested raw intelligence in order to verify certain Intelligence Community judgments contained in various National Intelligence Estimates (NIE). Intelligence committee staff also has been granted access to PDBs, and PDB articles in the course of conducting certain investigations and oversight. Generally, however, various Administrations, sooner or later, have been reluctant to share certain intelligence information. In 2002, for example, President Bush rejected a request by the Congressional Joint Inquiry investigating the September 11 th terrorist attacks to review the August 6, 2001, PDB, which contained an article titled Bin Ladin Determined To Strike in U.S. The Bush Administration also denied a request by the SSCI to review PDBs relevant only to Iraq's weapons of mass destruction capabilities and links to terrorists as part of the Committee's review of the Intelligence Community's prewar intelligence assessments on Iraq. (The Bush Administration, however, did provide limited access to PDBs to two commissions: the 9/11 Commission and the Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction (hereafter, cited as the WMD Commission).) Critics also have faulted President Barack Obama in this regard, asserting that he and his Administration has failed to keep Congress informed of certain national security issues and specifically criticizing the Administration for not briefing the intelligence committees on the Fort Hood shootings. Congress generally receives access to most finished intelligence products that are published for general circulation within the executive branch. A finished intelligence product is one in which an analyst evaluates, interprets, integrates, and places into context raw intelligence. Although congressional access is limited to finished intelligence products, the volume of such products provided to Congress has increased over time. Between 1947, when the National Security Act establishing the CIA was enacted, and the mid-1970s, the executive branch shared relatively little intelligence with Congress, and congressional overall access to intelligence information was quite limited. But after two special congressional investigative committees headed by former Senator Frank Church and Representative Otis Pike, respectively, investigated the Intelligence Community in the mid-1970s, the executive branch permitted the Intelligence Community to increase the flow of intelligence information to Congress. The Intelligence Community says it continues in its efforts to strike an appropriate balance between protecting its intelligence sources while providing intelligence analysts and consumers--including those in Congress--more information about the reliability of those sources. The issue of source protection gained prominence when it became clear that critical sourcing for the 2002 NIE on Iraq turned out to be inaccurate. In its 2004 report on the U.S. Intelligence Community's prewar intelligence assessments on Iraq, the Senate Select Committee on Intelligence (SSCI) criticized the Intelligence Community for not providing more information about its sources. The Senate Committee concluded that source protection policies within the Intelligence Community direct or encourage "reports officers" to exclude relevant detail about the nature of their sources. As a result, according to the Committee, Intelligence Community analysts are unable to make fully informed judgments about the information they receive, relying instead on nonspecific source lines to reach their assessments. Moreover, relevant operational data is nearly always withheld from analysts, putting them at a further analytic disadvantage, the Committee stated in its final report. The DNI in 2007 promulgated a new policy intended to provide more source information to intelligence analysts. In a directive to the Intelligence Community, the DNI called for "consistent and structured sourcing information for all significant and substantive reporting or other information upon which the product's analytic judgments, assessments, estimates, or confidence levels depend." Doing so, the DNI asserted, would enable "consumers to better understand the quantity and quality of information underlying the analysis." Some observers have suggested that because of the new policy, the Intelligence Community is now more fully and, thus, more accurately characterizing the reliability of it sources. Some of these same observers, however, assert that the DNI may have gone too far by requiring such precise sourcing that analysts my find themselves being hampered in interjecting their own informed views in the final intelligence product because of the new emphasis being placed on source information and its evaluation. Critics, however, contend that the DNI's directive has had limited impact and that it is still difficult for analysts to judge the reliability of certain intelligence sources because of their lack of access to information about sources. Although Congress receives numerous written intelligence products, it receives the preponderance of its intelligence information through briefings, which generally are initiated at the request of congressional committees, individual members, or staff. Such briefings can include a discussion of more sensitive information pertaining to intelligence sources and methods, particularly when the briefings involve the congressional intelligence committees. But even then, if the executive branch determines that such information is particularly sensitive, it will brief only the chairmen and ranking members of the two intelligence committees, or in lieu of the committee leadership, the committees' majority and minority staff directors. Based upon the executive branch's perspective that it is not legally obligated to provide Congress access to all intelligence, an Administration could choose not to share certain sensitive information with Congress at all. Congress, particularly its two congressional intelligence committees, could decide to explore ways to better ensure that it is kept fully and currently informed of all intelligence activities, as required under statute. In this regard, the FY2010 Intelligence Authorization Act ( P.L. 111-259 ) gave the full membership of each committee access to intelligence information deemed to be extremely sensitive by the executive branch and which previously had been limited to committee and Senate and House leadership although the statute permits the President to limit notification but provide all members of the intelligence committees a general description of the activity. Congress could also assess the suitability of source transparency, and could require that the DNI revisit the issue if it is determined that further changes are necessary to make sourcing more transparent for consumers. The congressional intelligence committees could also make a more concerted effort to require that analysts and collectors make joint presentations during certain hearings and briefings, in order to be better able to determine the degree of credibility Intelligence Community analysts attach to certain intelligence sources and to be able to more easily identify any disagreements between collectors and analysts as to source credibility. Finally, in those cases where the credibility of sourcing is of particular importance--for instance, those situations involving the possibility of war--the intelligence committees might opt to explore with the executive branch appropriate mechanisms that would allow at minimum, committee leadership to gain access to more detailed sourcing information. In general, Congress has the option of exploring various mechanisms that would permit it to achieve more equal footing with executive branch policymakers as a consumer of intelligence. It also could explore ways that it could become a better and more disciplined consumer and thus better able to assess the quality of the Intelligence Community's analysis and collection. | This report examines the role of Congress as a consumer of national intelligence and examines several issues that Congress might address during the second session of the 112th Congress. The President, by virtue of his role as commander-in-chief and head of the executive branch, has access to all national intelligence collected, analyzed and produced by the Intelligence Community. By definition, the President, the Vice President, and certain Cabinet-level officials, have access to a greater overall volume of intelligence and to sensitive intelligence information than do members of the congressional intelligence committees. Moreover, since the intelligence agencies are part of the executive branch, the President has the authority to restrict the flow of intelligence information to Congress and its two intelligence committees. The Fort Hood Army base shootings in November 2009, followed later that year by the Christmas Day airline bombing plot and the Afghanistan suicide bombing that killed seven Central Intelligence Agency employees refocused congressional attention on a number of intelligence issues, including the role Congress plays as a consumer of intelligence. Each of these cases serves to underscore the sensitivity with which Congress views the executive branch's statutory obligation to keep the legislative branch fully and currently informed of all intelligence activities. While some Members of Congress reportedly have voiced satisfaction with executive branch efforts to keep them informed about some of these attacks, other Members generally have criticized the White House's notification efforts on national security issues and particularly its efforts to keep Congress apprised of the results of some of its reviews of the Fort Hood shootings. Congress generally has routine access to "finished intelligence," or to those intelligence products that are published for general circulation within the executive branch. A finished intelligence product is one in which an analyst evaluates, interprets, integrates and places into context raw intelligence. Congress receives the preponderance of its intelligence information through briefings, which generally are initiated at the request of congressional committees, individual members or staff. Congress does not routinely have access to the identities of intelligence sources, methods employed by the Intelligence Community in collecting analyzing intelligence, "raw" or unevaluated intelligence, or certain written intelligence products tailored to the specific needs of the President and other high-level executive branch policymakers. Among the issues the 112th Congress may choose to examine is whether the executive branch is meeting its statutory obligation to keep Congress fully and currently informed of all intelligence matters. Congress also may choose to review what the Intelligence Community says is its intention to strike an appropriate balance between protecting intelligence sources while providing intelligence analysts and consumers--including those in Congress--more information about the reliability of those sources. | 4,391 | 548 |
The Federal Home Loan Bank system is a cooperative, government-sponsored enterprise, created to provide liquidity to the nation's lenders with a special focus on low and moderate-income housing and community development, all under the supervision of the recently created Federal Housing Finance Agency. The Federal Home Loan Bank (FHLBank) essentially acts as a lender to lenders. The 12 regional banks engage in no direct lending to the public. Instead, member banks turn to the FHLBank for on-demand low interest loans which the member bank can then use to issue mortgages or other loans to the general public. The 12 regional banks that make up the FHLBank system, though unfamiliar to many, have been key players throughout the financial crisis and are likely to continue to play an important role in the ongoing economic recovery. Many of the FHLBanks, however, like so many other entities involved in providing or financing mortgages, are suffering serious financial stress as a result of the collapse of the housing market. With the regional FHLBanks suffering various degrees of financial difficulty, and a number reporting capital shortages, concerns have been raised as to the stability of the FHLBank system as well as the consequences of an FHLBank failure. Anxiety over a struggling FHLBank system may be warranted, as the banks as a whole are equal in size to failed mortgage giants Fannie Mae and Freddie Mac and just as interconnected with the national mortgage market. This report discusses the FHLBanks' creation, purpose, structure, and position within the overall financial system so as to clarify the functions of the FHLBank. The report then outlines the FHLBanks' current financial state and the statutory options for handling a potential failure. Until the Depression, mortgages were designed to be refinanced every five to 10 years. During the Depression, depositors withdrew their money from banks, leaving banks unable to fund replacement mortgages for the loans that came due. Unable to refinance, many homeowners had insufficient resources to pay off the mortgages and defaulted. The weak economy and previous defaults and foreclosures depressed home prices and exacerbated the problem. The Federal Home Loan Bank Act of 1932 created the Federal Home Loan Bank (FHLB) system to make loans, known as "advances," to member banks that lent the money as mortgages to homeowners. The banks pledged existing mortgages as collateral for the advances and to assure that the funds were used to finance housing. Mortgage lenders wishing access to advances had to join the system and were regulated for safety and soundness by the Federal Home Loan Bank Board. The FHLBank underwent significant reforms in 1989, 1999, and 2008. In 1989, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) made major changes to the system in response to severe failures in the savings and loan industry. FHLBank system membership was opened to any depository institution engaging in significant mortgage lending. The new Federal Housing Finance Board replaced the Federal Home Loan Bank Board in regulating members. Each FHLBank had to set aside at least 10% of net earnings for low and moderate-income housing programs. The Federal Home Loan Bank System Modernization Act of 1999 expanded the membership and mission of the FHLBank system by dropping minimum mortgage asset requirements, and making voluntary membership available to a broader range of financial institutions. The mission of the FHLBanks was also expanded by allowing the banks to secure advances with assets other than housing loans such as agricultural and small business loans. In 2008, the Housing and Economic Recovery Act (HERA) instituted a new FHLBank system regulator in response to concerns that the FHLBank Board lacked sufficient powers and a desire to combine FHLBank system regulation with that for two other housing government-sponsored enterprises (GSE), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). The new regulator, the Federal Housing Finance Agency (FHFA), was granted broad supervisory and regulatory powers, including the new authority to set risk-based capital requirements, liquidate an FHLBank, or act as either a conservator or a receiver of an FHLBank facing potential insolvency. HERA also made the FHFA Director a presidential appointee subject to Senate confirmation, who would serve a five year term and hold broad discretion over the regulation of the housing. Regulation of FHLBank members depends on the form of legal organization, such as a state charter or federal savings association, that the member has selected. Similar to the Federal Reserve System, the FHLBank system consists of 12 regional member-owned and federally chartered banks, each with its own individual board of directors. There are regional FHLBanks in Atlanta, Boston, Chicago, Cincinnati, Dallas, Des Moines, Indianapolis, New York, Pittsburgh, San Francisco, Seattle, and Topeka. The Office of Finance is jointly owned by the FHLBanks and coordinates the sale of debt securities, the system's chief means of raising funds. Each regional bank has its own independently operating 13-member board of directors. Although member banks are free to elect the directors, the majority of each board must be officers of member banks, and at least two-fifths of board members must be independent (non-member bank) directors. While each regional bank operates independently, all FHLBanks are responsible for the debts and obligations of the other banks. This relationship of joint and several liabilities adds reliability to FHLBank debt securities and is one reason why the banks are usually considered a single GSE rather than a collection of separate entities. All 12 of the regional banks are private cooperatives that are owned and operated by their individual member institutions. Membership in the FHLBank system is open to any federally regulated depository or financial institution that engages in "long-term" home mortgage lending. To gain membership status, the eligible institution must purchase stock in the regional FHLBank that serves the state in which the institution's home office or principal place of business is found. Once an institution has purchased stock in its regional bank, it then becomes a partial owner of the regional FHLBank and is eligible to receive benefits such as dividend payments and FHLBank advances. As of September 30, 2009, membership in the FHLBank system exceeded 8,000 institutions, with collective assets measuring more than $13 trillion. Commercial banks represent over 70% of the total FHLBank system membership. The fundamental characteristic that allows the FHLBanks to provide low interest loans to member institutions is their collective status as a "government-sponsored enterprise" (GSE). Often described as a public/private hybrid, a GSE is a quasi-governmental, privately owned and managed, but federally chartered, financial lending institution whose activities are limited to certain public purposes. For example, the three housing GSEs can only purchase mortgages that have already been originated and either borrowing funds to hold the mortgages or packaging the mortgages into mortgage-backed securities (MBS). These MBS can be either held by the GSEs or sold to investors. GSEs do not normally receive explicit government funding. In addition to the FHLBank system, the other GSEs are Fannie Mae, Freddie Mac, the Federal Agricultural Mortgage Corporation (Farmer Mac), and the Farm Credit System. Although a federally chartered organization generally receives increased governmental supervision and cannot bind the government in any way, Congressional sponsorship brings with it the authority to exercise specifically enumerated governmental powers and a number of significant financial benefits. For instance, the FHLBank system enjoys a variety of special privileges such as exemption from federal, state, and local income tax. Although Fannie Mae's and Freddie Mac's stock is traded on the New York Stock Exchange, only members can purchase stock in their FHLBank. FHLBank shares are purchased from and sold to the FHLBank that issued them. Perhaps the most important benefit enjoyed by the FHLBank, however, is the so-called implicit guarantee that the federal government backs FHLBank obligations. The value of this implicit guarantee is, however, ambiguous. On the one hand, all debt issued by the FHLBank system, Fannie Mae, and Freddie Mac must state that repayment is not guaranteed by the federal government. On the other hand, Congress has assisted GSEs that were in financial difficulty. For example, when Fannie Mae was losing significant amounts of money in 1982, Congress passed the Miscellaneous Revenue Act of 1982 that provided tax benefits for Fannie Mae. The Farm Credit System was aided with the Agricultural Credit Act of 1987, which authorized the issuance of $4 billion in bonds to support system members. Furthermore, Section 1117 of the Housing and Economic Recovery Act of 2008 (HERA) authorized the Secretary of the Treasury to purchase any amount of GSE securities--debt or equity--necessary to provide stability to financial markets, prevent disruptions in the availability of mortgage finance, and protect the taxpayer. This authority, which expired December 31, 2009, was used by the Secretary of the Treasury to enter into a contract with Fannie Mae and Freddie Mac to supply an unlimited amount of equity between 2010 and 2012. Because of this implicit federal guarantee on FHLBank debts, FHLBank securities are considered to have little to no risk and regional FHLBanks can borrow funds from investors at very low interest. The FHLBanks played an active role in efforts to stabilize the financial system throughout the financial crisis. As other sources of funding fell, financial institutions increasingly turned to the FHLBank as a source for capital both to help cover losses and to allow members to continue making mortgages. FHLBank advances to member banks likely prevented a number of financial institutions from collapsing, and delayed the failure of other institutions long enough to allow a merger or acquisition by a third party. One result of the FHLBanks' role in the financial crisis has been an increased concentration of advances. For example, 62% of the San Francisco FHLBank's advances were to Citigroup, JP Morgan Chase, and Wachovia (currently owned by Wells Fargo). This concentration increased the potential losses to FHLBanks if a member, such as Wachovia, were to become insolvent. In modern finance, banks seek to have a large number of relatively small borrowers instead of a few large customers because they are better able to sustain more small losses than one large loss. Another result has been that because of mergers, advances will decline for some banks and other banks will increase advances. For example, the Seattle FHLBank lost its largest member and largest advance user when JP Morgan Chase purchased Washington Mutual. The FHLBank system (along with Fannie Mae and Freddie Mac) continue to be in various degrees of financial difficulty due to declining home prices, rising delinquencies and foreclosures, and previous decisions that turned out badly. All three balance profitability against providing support for the housing finance system and affordable housing opportunities. According to preliminary, unaudited 2009 financial reports, combined new operating income for 2009 was $1.9 billion compared to $1.2 billion for 2008. Four FHLBanks reported preliminary net losses: Boston (-$187 million), Chicago (-$65 million), Pittsburgh (-$37 million), and Seattle (-$162 million). According to the FHLBank Office of Finance, most of these losses were due to declines of fair market value of certain assets. In recent years, the FHLBanks' income has decreased for a number of reasons: Mergers between member banks have reduced the number of members and shifted membership (and borrowing) between the regional FHLBanks. FHLBank profitability has decreased because the difference ("spread") between FHLBanks' cost of borrowing funds and the interest rate charged on advances to members has been smaller than in previous years. The FHLBanks purchased private label MBS (MBS not issued by Fannie Mae, Freddie Mac or the federal government), which have not been as profitable as anticipated. The Chicago and Seattle FHLBanks developed programs to sell MBS in competition with Fannie Mae and Freddie Mac, but these programs produced losses and have since been terminated. More specifically, the Chicago FHLBank signed a consent order to cease and desist repurchasing capital stock, and the Seattle FHLBank is officially considered to be undercapitalized. Des Moines and Pittsburgh are, also, considered to be in less than satisfactory condition. Boston and Atlanta have suspended dividends to conserve capital. Table 1 provides more details on the conditions of each of the 12 banks. In the first nine months of 2009, FHLBank system assets decreased to $1,062 billion from $1,349 billion (21%) and total capital decreased to $45 billion from $50 billion (12%). For the first nine months of 2009 system net income was $1.3 billion compared to $1.9 billion for the same period in 2008. Decreasing mortgage market activity led to a reduction of bonds and notes outstanding (used mainly to finance advances to members) to $980 billion from $1,258 billion. Appendix Table A-1 contains more detailed financial information. The FHLBanks' recent financial troubles have led to questions as to what options would be available to handle the failure of one, or all, of the regional FHLBanks. Both the structure of the FHLBank system itself and federal law provide for certain procedures to stave off any system wide collapse. If necessary, however, FHFA has the same authority under HERA to seize control of one or more FHLBanks as it used to take over management of Fannie Mae and Freddie Mac. The FHLBank system is structured in a way that protects the viability of the system as a whole. Each regional bank is jointly and severally responsible for the liabilities and debts of all the other banks. Therefore, if one regional bank were to approach insolvency, the other regional banks would be required to cover the failing bank's debts. In most situations, the eleven remaining banks would likely be able to recover from such an incident without requiring any further federal involvement. However, if a number of regional banks fail, or if all 12 banks happen to be suffering severe financial stress at the time of a single failure, the cooperative structure of the FHLBank system may not be sufficient to produce a full recovery. FHLBanks are also authorized to engage in voluntary mergers with the approval of the Director of the FHFA and the boards of directors of the banks involved. There is no statutory requirement that the FHLBank system be comprised of 12 banks. Although there may not be more than 12, HERA amended the Federal Home Loan Bank Act to allow any reduction in the number of FHLBanks pursuant to a merger or liquidation. The voluntary merger of a struggling bank with a stronger FHLBank would therefore be another internal option for handling a single FHLBank failure. Where internal resources are insufficient, HERA provides the statutory authority for handling a financially troubled FHLBank in need of government intervention. Under the statutory scheme, HERA empowers the FHFA with a variety of options, allowing for various levels of government involvement, to respond to a potential FHLBank insolvency. Depending on the magnitude of the capital shortage, the agency has the authority to change the leadership of the banks, merge regional banks, liquidate individual banks, or place a regional bank under a conservatorship or a receivership. Additionally, HERA gave the Secretary of the Treasury the temporary authority to lend or invest as much money as is necessary in the event of a mortgage or financial market emergency. In conjunction with its authority to set minimum risk-based capital levels, the FHFA may enforce established levels through corrective action. The type of action available to the FHFA depends on the degree of undercapitalization. HERA sets up four classifications for undercapitalization: adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. The Director of FHFA is required to "closely monitor" the condition of any undercapitalized FHLBank. If conditions worsen and the FHLBank becomes significantly undercapitalized, the FHFA must either order a new election for the board of directors of the affected bank, mandate the dismissal of directors or executive officers, or require the bank to hire "qualified executive officers." Should a bank become critically undercapitalized, HERA provides for the discretionary appointment of the FHFA as conservator or receiver of the FHLBank. The statute lists a number of grounds for this discretionary appointment, including but not limited to, insufficient assets, an inability to meet obligations, or the realization of significant losses. Where the statutory grounds are satisfied, the FHFA Director has the discretion to choose whether to place the bank in a conservatorship, a receivership, or neither. Generally speaking, a conservator is appointed to operate the institution, conserve its resources, and restore it to viability. A receiver is appointed to liquidate the institution, sell its assets, and pay claims against it to the extent available funds allow. As a conservator or receiver, the FHFA would exercise a high degree of control over the failing bank. The agency would be authorized to operate and manage the institution while exercising "all rights, titles, powers, and privileges of the regulated entity, and of any stockholder, officer, or director of the regulated entity." Explicitly granted powers include the authority to transfer assets, pay obligations, issue subpoenas, repudiate or enforce contracts entered into by the FHLBank, and any other action "necessary to put the regulated entity in a sound and solvent condition." In limited circumstances, HERA removes the Director's discretion and mandates that an FHLBank be placed into a mandatory receivership. Only where a bank's debts exceed its assets during the previous 60 days, or the bank generally has not been paying debts as they come due does HERA mandate that the bank be placed into a receivership. Under a receivership the FHFA is authorized to liquidate and sell any assets held by the FHLBank. However, whether the FHFA establishes a discretionary conservatorship or receivership or a mandatory receivership, the affected FHLBank may challenge the appointment in court. Additionally, the FHFA has broad authority to liquidate or reorganize an individual FHLBank. The liquidation or reorganization of FHLBank assets may occur "whenever the Director finds that the efficient and economical accomplishment of the purposes [of the FHLBank] will be aided by such action." Prior to taking action under this provision however, the FHFA must give the affected FHLBank 30 days' written notice of the basis for such a determination. The affected bank may then challenge the determination through a hearing before the FHFA. The authority given to the FHFA director which was used to place Fannie Mae and Freddie Mac into voluntary conservatorship based on their critical undercapitalization would apply to handling a critically undercapitalized FHLBank. HERA ensures that when any action is taken, the FHFA Director consider the differences between the FHLBanks and other GSEs like Fannie Mae and Freddie Mac. In other words, the Director is required by statute to consider the FHLBank's cooperative ownership, liquidity and affordable housing mission, capital structure, and joint and several liability before taking any formal or informal corrective action. The FHLBanks utilize the many benefits of their GSE status to provide their member banks with access to low-cost funding. During the recession that started in 2008 and the current liquidity crunch, the FHLBanks are likely to continue to play a large role in the ongoing recovery of the national housing market. The mortgage crisis, however, has left some FHLBanks in a precarious financial situation, with billions in unprofitable MBS weakening their financial books. Were an FHLBank to fail, the existing internal cooperative structure of the FHLBank may be able to stabilize the system as a whole. If internal corrections fail, however, statutory authority exists for a government intervention targeted at containing the disruption by stabilizing or liquidating the affected FHLBank. As of September 30, 2009 the FHLBank system had assets of slightly less than $1.1 trillion, with over 70% of those assets tied up in advances or mortgage loans. The FHLBank exercises no oversight over their advances once they are distributed to member banks. A member bank is limited, however, on how much it can borrow from the FHLBank based on the amount of stock the bank has purchased and the percentage of mortgage-related assets it holds. | The Federal Home Loan Bank system is a cooperative, government-sponsored enterprise, created to provide liquidity to the nation's lenders with a special focus on low and moderate-income housing and community development, all under the supervision of the recently created Federal Housing Finance Agency. Each Federal Home Loan Bank (FHLBank) essentially acts as a lender to lenders. The 12 regional banks engage in no direct lending to the public. Instead, member banks turn to the FHLBank for on-demand low interest loans, which the member bank can then use to issue mortgages or other loans to the general public. The 12 regional banks that make up the FHLBank system, though unfamiliar to many, have been key players throughout the financial crisis and are likely to continue to play an important role in the ongoing economic recovery. The FHLBanks played an active role in efforts to stabilize the financial system throughout the financial crisis. As other sources of funding fell, financial institutions increasingly turned to the FHLBanks as a source for capital. FHLBank advances (loans to member banks) likely prevented a number of financial institutions from collapsing, and delayed the failure of other institutions long enough to allow a merger or acquisition by a third party. The FHLBanks are currently, however, suffering various degrees of financial difficulty due to declining home prices, rising delinquencies and foreclosures, and previous decisions that turned out badly. The FHLBanks' recent financial troubles have led to questions as to what legal options would be available to handle the failure of one, or all, of the FHLBanks. Both the structure of the FHLBank system itself and federal law provide for certain procedures to stave off any system wide collapse. Were an FHLBank to fail, the existing internal cooperative structure of the FHLBank system may be able to stabilize the system as a whole. If internal corrections fail, however, statutory authority exists for a government intervention targeted at either stabilizing or liquidating the affected bank. This report provides an overview of the FHLBanks, analyzes the current financial condition of the FHLBanks, and examines the legal issues that would be germane if one of the 12 regional FHLBanks were to become insolvent. | 4,512 | 482 |
On June 2, 2014, the United States Supreme Court overturned Carol Bond's conviction under the Chemical Weapons Convention Implementation Act as a matter of congressional intent rather than Congress's constitutional authority. The Court concluded that Congress could not have intended the Act to reach "run of the mill" local crimes like Mrs. Bond's. It had been anticipated that the Court might take the opportunity to clarify the scope of Congress's legislative authority under the treaty power. It elected instead to emphasize, for purposes of statutory interpretation, the Constitution's structural constraints on federal intrusions into the domain of the states. On numerous occasions, Carol Bond, a microbiologist, coated the car door handles and mailbox of her husband's paramour with a mixture of toxic chemicals. Although Mrs. Bond's efforts were clumsily done, the victim did on one such occasion sustain a minor chemical burn on her thumb. Mrs. Bond was eventually implicated and indicted in federal court for possession and use of a chemical weapon in violation of 18 U.S.C. 229(1)(a). Reserving the right to appeal, she pled guilty and was sentenced to imprisonment for six years. On appeal, Mrs. Bond argued that the implementing statute under which she was convicted was either unconstitutional or inapplicable. The United States Court of Appeals for the Third Circuit initially ruled that she lacked standing to raise the constitutional issue, since the Tenth Amendment exists for the protection of state, not individual, rights. The Supreme Court disagreed and returned the case to the Court of Appeals for a decision on the merits. Mrs. Bond's constitutional claim was grounded on the argument that the legislation is an intrusion upon sovereign prerogatives of the states with respect to local criminal offenses. The government has responded that (1) the authority to negotiate and ratify the Chemical Weapons Convention comes within the President's constitutional treaty making power; (2) enactment of legislation to implement the Convention comes within Congress's authority to make laws necessary and proper to carry into execution the President's treaty making power; and (3) Mrs. Bond's conduct was condemned by a literal reading of the implementing legislation's criminal proscriptions. To prevail on her constitutional challenge, Mrs. Bond needed to reconcile her position with the Supreme Court's decision in Missouri v. Holland. In Missouri v. Holland , state officials sought to enjoin federal enforcement of the Migratory Bird Treaty Act, which they argued constituted an intrusion on state authority in violation of the Tenth Amendment. Prior to ratification of the treaty, lower federal courts had held that the Tenth Amendment limited Congress's constitutional authority to enact a similar measure. The state argued that the treaty could not vest Congress with legislative power that would otherwise rest beyond its constitutional reach. The Supreme Court, speaking through Justice Holmes, began with the observation that it was "not enough to refer to the Tenth Amendment, reserving the powers not delegated to the United States, because by Article II, SS2, the power to make treaties is delegated expressly.... If the treaty is valid there can be no dispute about the validity of the statute under Article I, SS8, as a necessary and proper means to execute the powers of the Government." The treaty collided with no explicit constitutional prohibition. The only question was whether the treaty was "forbidden by some invisible radiation from the general terms of the Tenth Amendment." Justice Holmes did not suggest that the question might never be answered in a state's favor; only that the state's interest was insufficient in the case before the Court. Missouri claimed exclusive authority over the birds within its domain. The treaty protected birds with international migratory habits, threatened with extinction by virtue of the hunting practices in some of the states they traversed. The federal interest was substantial, and Missouri's interest was not enough to cast doubt on the validity of the treaty or its implementing statute. Although the Court in Holland identified no Tenth Amendment-implicit, contextual limits on Congress's legislative authority, it has done so in other cases. Thus, the Court has held that Congress may not "commandeer the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program." Moreover, it has been said that legislation cannot be considered Necessary and Proper, if it fails to recognize the contextual limitations that flow from the Constitution's presumption of dual federal-state sovereignty. All of which proved to be of no avail for Mrs. Bond in the Third Circuit. The court concluded that the Convention was a proper subject for the President's treaty making power. Moreover, "with practically no qualifying language in Holland to turn to, [appellate courts] are bound to take at face value the Supreme Court's statement that 'if the treaty is valid there can be no dispute about the validity of the statute ... as a necessary and proper means to execute the powers of the Government,'" federalism concerns notwithstanding. A concurring member of the panel, however, expressed the hope that the Supreme Court would "flesh out the most important sentence in the most important case about the constitutional law of foreign affairs, and in doing so, clarify (indeed curtail) the contours of federal power to enact laws that intrude on matters so local that no drafter of the Convention contemplated their inclusion in it." Mrs. Bond contended that the focus of the Chemical Weapons Convention and its implementing legislation are so distinct that Congress could not have intended them to apply to her conduct. The nature of the statute made her claim creditable; its breadth made it difficult. The United States signed the Convention on the Prohibition of Development, Production, Stockpiling and Use of Chemical Weapons and On Their Destruction (the Convention) in Paris on January 13, 1993. The President supplied a capsulized description of the Convention when he transmitted it to the Senate: The convention will require States Parties to destroy their chemical weapons and chemical weapons production facilities under the observations of international inspectors; subject States Parties' citizens and businesses and other nongovernmental entities to its obligations; subject States Parties' chemical industry to declarations and routine inspection; and subject any facility or location in the State Party to international inspection to address other States Parties' compliance concerns. The Convention requires signatories to condemn within their jurisdictions those activities it has agreed to forego. More specifically, "each State Party is prohibited from ... (b) Using chemical weapons under any circumstances , including retaliatory use (which many countries protected under the Geneva Protocol of 1925).... " Each nation must establish corresponding restrictions upon individuals and entities found within its own jurisdiction. That is, "each State Party must ... (c) Extend its penal legislation enacted under subparagraph (a) above to any activity prohibited to a State Party under the Convention undertaken anywhere by natural persons, possessing its nationality, in conformity with international law." The Senate did not readily give its advice and consent on the Convention. The Senate Foreign Relations Committee held six days of hearings towards the close of the 103 rd Congress. The committee heard further witnesses during the 104 th , and issued a favorable executive report under which the Senate's advice and consent would have been subject to 7 conditions and 11 declarations. Even so, the Convention apparently lacked the votes, for it was never brought to the floor. Pressed by time deadlines within the Convention during the 105 th Congress, the Senate discharged the Foreign Relations Committee from further consideration of the Convention. The Senate only then gave its advice and consent subject to page after page of conditions--none of them addressed to the criminal penalties which the Convention obligated the United States to enact with respect to the use of chemical weapons. Implementing proposals appeared in both the House and Senate shortly thereafter. The Senate held hearings and passed an amended version of its bill. A year later, the proposal that became the Chemical Weapons Convention Implementation Act was tucked in towards the end of the 900-plus-page Omnibus Consolidated and Emergency Supplemental Appropriations measure. Throughout the ratification debate, the principal concerns were the protection of United States businesses subject to international inspection and doubts that the pact would lead to international chemical weapons disarmament. The need to protect American industry during the international inspection process drove the compromises necessary for Senate passage of implementing legislation. There can be little doubt, however, that Mrs. Bond's conduct fell within a literal reading of the implementing legislation. The legislation outlaws knowingly using a chemical weapon. A chemical weapon is any toxic chemical, and a toxic chemical is any chemical that "can cause death, temporary incapacitation or permanent harm to humans or animals." The legislation does establish several exceptions, such as the exceptions for possession by members of the Armed Forces or the exceptions for use for peaceful purposes "related to an industrial, agricultural, research, medical, or pharmaceutical activity or other activity." Neither these nor any of the other exceptions, however, seem to fit Mrs. Bond's conduct. On appeal, the Third Circuit conceded that the implementation legislation's "breadth is certainly striking, seeing as it turns each kitchen cupboard and cleaning cabinet in America into a potential chemical weapons cache." Nor was it impressed with the government's decision to press prosecution. Yet at the end of the day, Mrs. Bond's conduct satisfied the statute's broadly drafted elements. The Third Circuit affirmed her conviction and set the stage for Supreme Court review. The Supreme Court unanimously agreed that Mrs. Bond's conviction must be overturned. For a majority of the Court, the primacy of the states over criminal matters provided a presumption of statutory construction that could not be rebutted in Mrs. Bond's case. For the three concurring Justices--Scalia, Thomas, and Alito--the constitution does not permit the federal government to outlaw Mrs. Bond's conduct based on the treaty power. Chief Justice Roberts, writing for the Court, began his analysis with a reminder that the federal government may exercise only those legislative powers which can be traced to a specific grant in the Constitution, and, more importantly, that the states are the residual domain of criminal law. The Constitution grants the federal government no power to enact and enforce general criminal laws, although it may enact and apply specific prohibitions incidental to the powers which it has been given, such as the power to regulate interstate and foreign commerce or the power to implement treaties. Before considering Mrs. Bond's constitutional challenges, the Court thought it prudent to determine whether the federal government enjoyed statutorily authority to prosecute her. Yet, it interpreted the statute using constitutional principles: These precedents make clear that it is appropriate to refer to basic principles of federalism embodied in the Constitution to resolve ambiguity in a federal statute. In this case, the ambiguity derives from the improbably broad reach of the key statutory definition given the term--"chemical weapon"--being defined; the deeply serious consequences of adopting such a boundless reading; and the lack of any apparent need to do so in light of the context from which the statute arose--a treaty about chemical warfare and terrorism. We conclude that, in this curious case, we can insist on a clear indication that Congress meant to reach purely local crimes, before interpreting the statute's expansive language in a way that intrudes on the police power of the States. The Court felt Congress gave no such indication. In fact, the statute's language and context convey a different message. The statute speaks of chemical weapons, not the household chemicals an expansive reading would encompass. The context reflects an international concern that nations or their agents might develop and maintain the capacity to engage in chemical warfare, not that individuals would use the materials at hand to settle a domestic dispute. "In sum," said the Court, "the global need to prevent chemical warfare does not require the Federal Government to reach into the kitchen cupboard, or to treat a local assault with a chemical irritant as the deployment of a chemical weapon. There is no reason to suppose that Congress--in implementing the Convention on Chemical Weapons--thought otherwise." Justices Scalia, Thomas, and Alito agreed that Mrs. Bond's conviction should be overturned, but on constitutional rather than statutory grounds. Justice Scalia, in an opinion joined by Justices Thomas and Alito, wrote that the statute clearly outlawed Mrs. Bond's conduct. He characterized the majority opinion as rewriting the statute, yet leaving it in a form in which its exact prohibitions cannot be discerned. For Justice Scalia, the treaty making power is the power to make treaties, not to implement them. The authority to implement a treaty must come from one of the other enumerated powers. The government asserted that the treaty-making power authorized the statute under which Mrs. Bond was convicted. In the eyes of the concurring Justices, it did not, and it could not. Justice Thomas offered a separate concurrence to emphasize that in his mind "the Treaty Power can be used to arrange intercourse with other nations, but not to regulate purely domestic affairs." Justice Alito joined much of Justice Thomas's concurrence and expressed the view "that the treaty power is limited to agreements that address matters of legitimate international concern.... But insofar as the Convention may be read to obligate the United States to enact domestic legislation criminalizing conduct of the sort at issue in this case, which typically is the sort of conduct regulated by the States, the Convention exceeds the scope of the treaty power." A majority of the Supreme Court preferred not to use Mrs. Bond's conviction as a vehicle to define the scope of Congress's legislative authority under the treaty power. It may be that there is no majority view of the scope of the treaty power. It may be that a majority would prefer to clarify the scope of treaty power without having to find that the federal government has overstepped its constitutional bounds. It may be that a majority considered the Bond case an aberration, and found the fact pattern of "this curious case" ill-suited to demonstrate the bounds of the treaty power. It may be a majority of the Court finds the Missouri v. Holland declaration a satisfactory statement of the law. It may be a majority preferred to resolve the case on statutory grounds so as not to call in question other treaty implementing legislation. It may be, as Court opinion stated, that a majority would simply prefer to resolve cases using principles of statutory rather than constitutional construction, whenever possible. It may be that several of these factors were in play. The only thing that can be said with certainty is that the Third Circuit's opinion has been reversed, and the case remanded there for disposition consistent with the Supreme Court's opinion. | The Chemical Weapons Convention obligates the United States to outlaw the use, production, and retention of weapons consisting of toxic chemicals. The Chemical Weapons Convention Implementation Act outlaws the possession or use of toxic chemicals, except for peaceful purposes. In Bond v. United States, the Supreme Court concluded that Congress had not intended the Act to reach a "run of the mill" assault case using a skin irritating chemical. Carol Anne Bond, upon discovering that her husband had impregnated another woman, repeatedly dusted the woman's mail box, front door knob, and car door handles with a toxic chemical. Mrs. Bond was indicted in federal court and pled guilty to possessing a chemical weapon in violation of Section 229 of the Act, but reserved the right to appeal. The United States Court of Appeals for the Third Circuit rejected her constitutional challenge. A concurring member of the panel, however, urged the Supreme Court to clarify the nearly century-old pronouncement in Missouri v. Holland, "if the treaty is valid there can be no dispute about the validity of the statute ... as a necessary and proper means to execute the powers of the Government." The concurring judge observed that, "since Holland, Congress has largely resisted testing the outer bounds of its treaty-implementing authority. But if ever there was a statute that did test those limits, it would be Section 229. With its shockingly broad definitions, Section 229 federalizes purely local, run-of-the mill criminal conduct.... Sweeping statutes like Section 229 are in deep tension with an important structural feature of our Government: The States possess primary authority for defining and enforcing the criminal law." The Supreme Court found it unnecessary to decide the treaty power issue. Instead, it ruled Congress did not intend the Act to apply to Mrs. Bond's conduct. The Convention did not require a criminal statute sweeping enough to encompass Mrs. Bond's conduct. If Congress intended to reach that deeply into an area within the primacy of the state authority, the Court said, its intention would have to more apparent. Three concurring members of the Court would have held that the federal government lacked the constitutional authority under the treaty power to punish Mrs. Bond. The question of whether application of the statute might be sustained under the Commerce Clause was not before the Court. | 3,281 | 514 |
T his report identifies and briefly summarizes the 21 budget reconciliation measures enacted into law during the period covering 1980, when reconciliation procedures were first used by both chambers, through 2017. The budget reconciliation process is an optional procedure that operates as an adjunct to the budget resolution process established by the Congressional Budget Act of 1974. The chief purpose of the reconciliation process is to enhance Congress's ability to change current law in order to bring revenue, spending, and debt-limit levels into conformity with the policies of the annual budget resolution. Reconciliation is a two-stage process. First, reconciliation directives are included in the budget resolution, instructing the appropriate committees to develop legislation achieving the desired budgetary outcomes. Reconciliation directives instruct specified committees to develop legislation changing existing law in order to alter revenue, spending, or debt-limit levels to conform with budget resolution policies. Over the years, compliance with reconciliation directives has been determined on the basis of the net revenue or spending effects of all changes in the legislation. A particular reconciliation measure, therefore, may have included changes that raised spending as well as changes that reduced spending, changes that raised revenue as well as changes that reduced revenue, or both, and still adhered to the overall budgetary goals. If the budget resolution instructs more than one committee in a chamber, then the instructed committees submit their legislative recommendations to their respective Budget Committees by the deadline prescribed in the budget resolution; the Budget Committees incorporate them into an omnibus budget reconciliation bill without making any substantive revisions. In cases where only one committee has been instructed, the process allows that committee to report its reconciliation legislation directly to its parent chamber, thus bypassing the Budget Committee. The second step involves consideration of the resultant reconciliation legislation by the House and Senate under expedited procedures. Among other things, debate in the Senate on any reconciliation measure is limited to 20 hours (and 10 hours on a conference report) and amendments must be germane and not include extraneous matter. The House Rules Committee typically recommends a special rule for the consideration of a reconciliation measure in the House that places restrictions on debate time and the offering of amendments. If the House and Senate do not reach final agreement on a budget resolution, then the reconciliation process is not triggered. As an optional procedure, reconciliation has not been used in every year that the congressional budget process has been in effect. Reconciliation was not used during the first several years of the congressional budget process and, more recently, was not used in years immediately following successful action on a budget summit agreement. In 1990, for example, the George H. W. Bush Administration successfully negotiated a budget summit agreement with Congress that was reflected in the FY1991 budget resolution. Pursuant to reconciliation directives in that resolution, Congress and the President enacted the Omnibus Budget Reconciliation Act of 1990. Reconciliation was not used in the following two years, involving budget resolutions for FY1992 and FY1993. In nine years, 1998 (for FY1999), 2002 (for FY2003), 2004 (for FY2005), 2006 (for FY2007), 2011-2014 (for FY2012-2015), and 2016 (for FY2017), the House and Senate did not agree on a budget resolution. Beginning with the first use of reconciliation by both the House and Senate in 1980, reconciliation has been used in a majority of years. Congress has sent the President 25 reconciliation acts over the years: 21 were signed into law, President Clinton vetoed three, and President Obama vetoed one (and the vetoes were not overridden). The 25 reconciliation measures sent to the President are shown in Table 1 . Reconciliation practices in the House and Senate vary and change over time. In earlier years, spending and revenue changes were incorporated into a single measure. In the Omnibus Reconciliation Act of 1980, for example, about $8 billion in deficit reduction for FY1981 was split fairly evenly between spending reductions and revenue increases. In more recent years, revenue and spending changes have often been segregated into separate reconciliation measures. For the FY2006 budget cycle, for example, the Deficit Reduction Act of 2005 was a spending reconciliation bill, and the Tax Increase Prevention and Reconciliation Act of 2005 was a revenue reconciliation bill. Most recently, however, the Health Care and Education Reconciliation Act of 2010 included significant changes in both spending and revenues. Reconciliation directives in a single budget resolution sometimes lead to more than one reconciliation measure, as indicated above for the FY2006 budget cycle. Multiple reconciliation measures also were considered in calendar years 1982 and 1997. Finally, the consideration of reconciliation measures sometimes extends into a succeeding year. Action on reconciliation measures initiated in 1983, 1985, and 2005 was not completed until the following year. Although in these instances legislative action spilled over into the following year, the initial year was retained in the titles of the acts (e.g., the Deficit Reduction Act of 2005 was enacted in 2006). In the FY2010 budget cycle, the budget resolution containing reconciliation directives was adopted in 2009 but the reconciliation legislation was not considered until 2010. A brief description of each of the 21 reconciliation measures enacted into law is provided in the Appendix . The laws are presented in chronological order. For each reconciliation law listed in the Appendix , some of the major subject areas affected by the revenue or spending changes are identified, but no determination is made as to whether the specific changes involved increases or decreases. The subject areas identified range from fairly specific (e.g., Nuclear Regulatory Commission fees) to quite broad (e.g., Medicare), with broad subject areas sometimes encompassing dozens or hundreds of separate provisions. Some of the reconciliation measures included in the listing were very lengthy and complicated, involving the legislative proposals of many different House and Senate committees. Accordingly, the subject areas identified in the listing should be regarded as illustrative and not comprehensive. The source from which the summary information was drawn is indicated for each law by a bracketed reference at the end of the summary. 1.Omnibus Reconciliation Act of 1980 P.L. 96-499 (December 5, 1980) This act, signed into law by President Jimmy Carter, was the first reconciliation bill to pass the House and Senate. It was estimated to reduce the FY1981 deficit by $8.276 billion, including $4.631 billion in outlay reductions and $3.645 billion in revenue increases. Major spending changes affected such areas as child nutrition subsidies; interest rates for student loans; "look back" cost-of-living adjustment (COLA) benefit provisions for retiring federal employees; highway obligational authority; railroad rehabilitation, airport development, planning, and noise control grants; veterans' burial allowances; disaster loans; Medicare and Medicaid; unemployment compensation; and Social Security. Major revenue changes affected such areas as mortgage subsidy bonds; payment of estimated corporate taxes; capital gains on foreign real estate investments; payroll taxes paid by employers; telephone excise taxes; and the alcohol import duty. [1980 Congressional Quarterly Almanac, pp. 124-130] 2.Omnibus Budget Reconciliation Act of 1981 P.L. 97-35 (August 13, 1981) President Ronald Reagan used this act, along with a nonreconciliation bill, the Economic Recovery Tax Act of 1981 ( P.L. 97-34 ), to advance much of his agenda in his first year in office. This act was estimated to reduce the deficit by $130.6 billion over three years, covering FY1982-FY1984. Major spending changes affected such areas as health program block grants; Medicaid; television and radio licenses; Food Stamps; dairy price supports; energy assistance; Conrail; education program block grants; Impact Aid and the Title I compensatory education program for disadvantaged children; student loans; and the Social Security minimum benefit. [1981 Congressional Quarterly Almanac, pp. 256-266] 3.Tax Equity and Fiscal Responsibility Act of 1982 P.L. 97-248 (September 3, 1982) This act, one of two reconciliation measures signed by President Reagan in 1982, was estimated to increase revenues by $98.3 billion and reduce outlays by $17.5 billion over three years, covering FY1983-FY1985. Major spending changes affected such areas as Medicare, Medicaid, aid to families with dependent children (AFDC), child support enforcement (CSE), supplemental security income (SSI), unemployment compensation, and interest payments on U.S. savings bonds. Major revenue changes affected such areas as the alternative minimum tax, medical and casualty deductions, pension contribution deductions, federal employee payment of the FICA tax for Medicare coverage, accelerated depreciation and investment tax credits, corporate tax payments, foreign oil and gas income, corporate tax preferences, construction deductions, insurance tax breaks, "safe-harbor leasing," corporate mergers, withholding on interest and dividends, aviation excise taxes, unemployment insurance, telephone and cigarette excise taxes, and industrial development bonds. [1982 Congressional Quarterly Almanac, pp. 29-39 and 199-204] 4.Omnibus Budget Reconciliation Act of 1982 P.L. 97-253 (September 8, 1982) This act, the second of two reconciliation measures signed by President Reagan in 1982, was estimated to reduce outlays by $13.3 billion over three years, covering FY1983-FY1985. Major spending changes affected such areas as payments to farmers, dairy price supports, Food Stamps, inflation adjustments for federal retirees, lump-sum premiums for Federal Housing Administration housing insurance, user fees on Veterans Administration-backed home loans, veterans' compensation and benefits, and reduction in the membership of the Federal Communications Commission and the Interstate Commerce Commission. [1982 Congressional Quarterly Almanac, pp. 199-204] 5.Omnibus Budget Reconciliation Act of 1983 P.L. 98-270 (April 18, 1984) Initial consideration of this act occurred in 1983, but final action did not occur until 1984. It was estimated to reduce the deficit by $8.2 billion over four years, covering FY1984-FY1987. Major spending changes affected such areas as limitation and delay of federal civilian employee pay raises, delay of federal civilian and military retirement and disability COLAs, delay of veterans' compensation COLAs, and disaster loans for farmers. [1983 Congressional Quarterly Almanac, pp. 231-239, and 1984 Congressional Quarterly Almanac, p. 160] 6.Consolidated Omnibus Budget Reconciliation Act of 1985 P.L. 99-272 (April 7, 1986) Initial consideration of this act occurred in 1985, but final action did not occur until 1986. The act was estimated to reduce the deficit by $18.2 billion over three years, covering FY1986-FY1988. Major spending changes affected such areas as student loans, highway spending, veterans' medical care, Medicare, Medicaid, and trade adjustment assistance. Major revenue changes affected such areas as the cigarette tax, excise taxes supporting the Black Lung Trust Fund, unemployment tax exemptions, taxation of railroad retirement benefits, airline employee income subject to taxation, and the deduction of research expenses of multinational firms. [1986 Congressional Quarterly Almanac, p. 521 and pp. 555-559] 7.Omnibus Budget Reconciliation Act of 1986 P.L. 99-509 (October 21, 1986) The reconciliation measure covered the period of FY1987-FY1989. An estimated $11.7 billion in deficit reduction contributed to the avoidance of a sequester (i.e., across-the-board spending cuts in nonexempt programs to eliminate a violation of the applicable deficit target under the Balanced Budget and Emergency Deficit Control Act) for FY1987. Major spending changes affected such areas as Medicare, Medicaid, agricultural income support payments, loan asset sales, federal employee retirement programs, federal subsidy for reduced-rate postage, federal financing for fishing vessels or facilities, retirement age limits, and elimination of the trigger for Social Security COLAs. Major revenue changes affected such areas as the tax treatment of the sale of the federal share of Conrail, commercial merchandise import fee, increased penalty for untimely payment of withheld taxes, denial of certain foreign tax credits, and the oil-spill liability trust fund. [1986 Congressional Quarterly Almanac, pp. 559-576] 8.Omnibus Budget Reconciliation Act of 1987 P.L. 100-203 (December 22, 1987) The reconciliation measure covered the period of FY1988-FY1990 and was the final reconciliation measure signed by President Reagan. Together with an omnibus appropriations act ( P.L. 100-202 ), the reconciliation act implemented the $76 billion in deficit reduction over FY1988 and FY1989 called for in a budget summit agreement reached after a sharp decline in the stock market in October. Major spending changes affected such areas as Medicare, Medicaid, agricultural target prices, farm income support payments, deferral of lump-sum retirement payments to federal employees, Postal Service payments into retirement and health benefit funds, the Guaranteed Student Loan program, Nuclear Regulatory Committee license fees, and National Park user fees. Major revenue changes affected such areas as home mortgage interest deduction, deduction of mutual fund expenses, "completed contract" method of accounting, repeal of installment-sales accounting, "master-limited" partnerships, and accelerated payments of corporate estimated taxes. [1987 Congressional Quarterly Almanac, pp. 615-627] 9. Omnibus Budget Reconciliation Act of 1989 P.L. 101-239 (December 19, 1989) The act, signed into law by President George H. W. Bush, was estimated to contain $14.7 billion in deficit reduction, which represented about half of the deficit reduction envisioned in a budget summit agreement reached earlier in the year (the remaining savings were expected to occur largely in annual appropriations acts). Major spending changes affected such areas as Medicare, Medicaid, veterans' housing loans, agricultural deficiency payments and dairy price supports, the Supplemental Loans for Students program, Federal Communications Commission and Nuclear Regulatory Commission fees, vaccine injury compensation amendments, and the Maternal and Child Health Block Grant program. Major revenue changes affected such areas as the exclusion for employer-provided education assistance, targeted-jobs tax credit, mortgage revenue bonds, self-employed health insurance, low-income housing credit, treatment of junk bonds, and research and experimentation credits. [1989 Congressional Quarterly Almanac, pp. 92-113] 10. Omnibus Budget Reconciliation Act of 1990 P.L. 101-508 (November 5, 1990) This five-year reconciliation act, covering FY1991-FY1995, implemented a large portion of the deficit reduction required by an agreement reached during a lengthy budget summit held at Andrews Air Force Base. According to the Senate Budget Committee, the act was estimated to reduce the deficit by $482 billion over five years, including $158 billion in revenue increases and $324 billion in spending cuts and debt service savings. Major spending changes affected such areas as Medicare, Medicaid, agricultural loans, acreage reduction, deposit insurance premiums, mortgage insurance premiums, collection of delinquent student loans, Occupational Safety and Health Administration penalties, AFDC, CSE, SSI, unemployment compensation, child welfare and foster care, Social Security, abandoned mines, Environmental Protection Agency, federal employee retirement and health benefits, veterans' compensation and disability payments, airport ticket fees, customs user fees, and tonnage duties. Major revenue changes affected such areas as individual income tax rates, the alternative minimum tax, limitation on itemized deductions, excise taxes on alcoholic beverages and tobacco products, motor fuel excise taxes, and Superfund tax extension. The public debt limit was increased from $3.123 trillion to $4.145 trillion. [1990 Congressional Quarterly Almanac, pp. 138-173] 11. Omnibus Budget Reconciliation Act of 1993 P.L. 103-66 (August 10, 1993) This five-year reconciliation act, covering FY1994-FY1998, was signed by President Bill Clinton in the first year of his Administration. According to the Senate Budget Committee, the act reduced the deficit by $496 billion over five years, including $241 billion in revenue increases and $255 billion in spending cuts and debt service savings. Major spending changes affected such areas as Medicare, Medicaid, Food Stamps, auction of the radio spectrum, student loan programs, veterans' benefits, agricultural price supports, crop insurance, liabilities of the Postal Service, and Nuclear Regulatory Commission fees. Major revenue changes affected such areas as a fuels tax increase, maximum individual income tax rates, maximum corporate income tax rate, small business tax incentives, empowerment zones, and unemployment insurance surtax. The public debt limit was increased from $4.145 trillion to $4.9 trillion. [1993 Congressional Quarterly Almanac, pp. 107-139] 12. Personal Responsibility and Work Opportunity Reconciliation Act of 1996 P.L. 104-193 (August 22, 1996) This six-year reconciliation act, covering FY1997-FY2002, was estimated to reduce the deficit by $54.6 billion over that period. Major spending changes affected such areas as temporary assistance for needy families (TANF), work requirements, SSI, CSE, restrictions on benefits for illegal aliens, Child Care and Development Block Grant, child nutrition, Food Stamps, teenage pregnancies, and abstinence education. [1996 Congressional Quarterly Almanac, pp. 6-3 through 6-24] 13. Balanced Budget Act of 1997 P.L. 105-33 (August 5, 1997) This five-year reconciliation act, covering FY1998-FY2002, was one of two reconciliation acts signed by President Clinton in 1997 and largely contained spending provisions. According to the Senate Budget Committee, the two acts together reduced the deficit by $118 billion over five years, including spending cuts and debt service savings of $198 billion and $80 billion in revenue reductions. Major spending changes affected such areas as Medicare, Medicaid, children's health initiative, electromagnetic spectrum auction, Food Stamps, TANF, SSI, increased contributions to the Civil Service Retirement System, subsidized housing, and veterans' housing. The public debt limit was increased from $5.5 trillion to $5.95 trillion. [1997 Congressional Quarterly Almanac, pp. 2-27 through 2-30 and pp. 2-47 through 2-61] 14. Taxpayer Relief Act of 1997 P.L. 105-34 (August 5, 1997) The second of the two reconciliation measures enacted in 1997, this five-year reconciliation act, covering FY1998-FY2002, largely included revenue provisions. Major revenue changes affected such areas as a child tax credit, education tax incentives (including the HOPE tax credit, the lifetime learning credit, and education savings accounts), home office deductions, capital gains tax cut, the "Roth IRA," gift and estate tax exemptions, corporate alternative minimum tax repeal, renewal of the work opportunity tax credit, and the airline ticket tax. [1997 Congressional Quarterly Almanac, pp. 2-27 through 2-46] 15. Economic Growth and Tax Relief Reconciliation Act of 2001 P.L. 107-16 (June 7, 2001) This 11-year reconciliation act, covering FY2001-2011, advanced President George W. Bush's tax-cut agenda during the first year of his Administration. According to the Senate Budget Committee, revenue reductions, together with outlay increases for refundable tax credits, reduced the projected surplus by $1.349 trillion over FY2001-FY2011. The tax cuts were scheduled to sunset in 10 years in order to comply with the Senate's ''Byrd rule'' against extraneous matter in reconciliation legislation (Section 313 of the Congressional Budget Act of 1974). Major revenue changes affected such areas as individual income tax rates, the "marriage penalty," child tax credit, estate and gift taxes, individual retirement accounts and pensions, charitable contributions, education incentives, health insurance tax credit, flexible spending accounts, research and experimentation tax credit, and adoption tax credit and employer adoption assistance programs. [CRS Report RL30973, 2001 Tax Cut: Description, Analysis, and Background , by David L. Brumbaugh et al.] 16. Jobs and Growth Tax Relief Reconciliation Act of 2003 P.L. 108-27 (May 28, 2003) This 11-year reconciliation act, covering FY2003-2013, was estimated to reduce revenues by $349.667 billion over that period. Major revenue changes affected such areas as the acceleration of certain previously enacted tax reductions (including expansion of the child tax credit and the 10% bracket), increased bonus depreciation and Section 179 expensing, taxes on dividends and capital gains, the Temporary State Fiscal Relief Fund, and special estimated tax rules for certain corporate estimated tax payments. [Joint Committee on Taxation, Estimated Budget Effects of the Conference Agreement for H.R. 2 , The "Jobs and Growth Tax Relief Reconciliation Act of 2003," JCX-55-03, May 22, 2003] 17. Deficit Reduction Act of 2005 P.L. 109-171 (February 8, 2006) This five-year reconciliation act, covering FY2006-FY2010, was one of two reconciliation acts signed by President George W. Bush in 2006 (initial consideration of both measures occurred in 2005). This act, the spending reconciliation bill, was estimated to reduce the deficit over the five-year period by $38.810 billion. Major spending changes affected such areas as Medicare, Medicaid, State Children's Health Insurance Program (SCHIP), student loan interest rates and lenders' yields, electromagnetic spectrum auction, digital television conversion, grants for interoperable radios for first responders, low-income home energy assistance program (LIHEAP), Federal Deposit Insurance Corporation premium collections, agricultural conservation programs, Katrina health care relief, and Pension Benefit Guarantee Corporation (PBGC) premiums. [CRS Report RL33132, Budget Reconciliation Legislation in 2005-2006 Under the FY2006 Budget Resolution , by Robert Keith] 18. Tax Increase Prevention and Reconciliation Act of 2005 P.L. 109-222 (May 17, 2006) This act, the second of two reconciliation bills enacted in 2006, was the revenue reconciliation bill. It was estimated to increase the deficit over the five-year period covering FY2006-FY2010 by $69.960 billion. Major revenue changes affected such areas as tax rates on dividends and capital gains, the alternative minimum tax for individuals, delay in payment date for corporate estimated taxes, controlled foreign corporations, Foreign Sales Corporation/ Extraterritorial Income binding contract relief, elimination of the income limitations on Roth IRA conversions, and withholding on government payments for property and services. [CRS Report RL33132, Budget Reconciliation Legislation in 2005-2006 Under the FY2006 Budget Resolution , by Robert Keith] 19. College Cost Reduction and Access Act of 2007 P.L. 110-84 (September 27, 2007) This six-year reconciliation act, covering FY2007-FY2012, was estimated to reduce the deficit over that period by $752 million. Major spending changes affected provisions relating to lenders and borrowers involved with the Federal Family Education Loan program and the William D. Ford Direct Loan program. [CRS Report RL34077, Student Loans, Student Aid, and FY2008 Budget Reconciliation , by Adam Stoll, David P. Smole, and Charmaine Mercer] 20. Health Care and Education Reconciliation Act of 2010 P.L. 111-152 (March 30, 2010) This reconciliation act, which resulted from reconciliation directives in the FY2010 budget resolution (adopted in 2009) for the five-year period encompassing FY2010-FY2014, modified the Patient Protection and Affordable Care Act ( P.L. 111-148 , March 23, 2010) and also contained changes in federal postsecondary education programs. According to the Congressional Budget Office and the staff of the Joint Committee on Taxation, the changes made by the reconciliation act, combined with the changes made by the Patient Protection and Affordable Care Act, were estimated to reduce the deficit by $109 billion over five years (FY2010-FY2014) and by $143 billion over 10 years (FY2010-FY2019). 21. An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 P.L. 115-97 (December 22, 2017) This reconciliation act resulted from reconciliation directives in the FY2018 budget resolution (adopted in October 2017) for the 10-year period encompassing FY2018-FY2027. The reconciliation act includes permanent and temporary changes to the tax code and directs the Secretary of the Interior to implement a certain oil and gas leasing program. More specifically, the act temporarily reduces most individual income tax rates, modifies tax brackets for individuals, increases the standard deduction and the child tax credit, repeals deductions for personal exemptions, repeals or limits certain itemized deductions, and increases the exemption amounts for the individual alternative minimum tax. (These temporary changes take effect on January 1, 2018, and are scheduled to expire after 2025.) The act permanently repeals the penalties associated with the "individual mandate" (which requires that most people obtain health insurance coverage). The act makes permanent modifications to business taxation. Most notably, the law replaces the graduated corporate tax rate structure (with a maximum rate of 35%) with a flat 21% tax rate. The law also provides a reduction from qualified business income of up to 20% for pass-through businesses. The act also significantly alters the tax treatment of U.S. multinational corporations. Lastly, the act directs the Secretary of the Interior to implement an oil and gas leasing program for the coastal plain of the Arctic National Wildlife Refuge and would affect oil and gas leases and the Strategic Petroleum Reserve. The Congressional Budget Office and the staff of the Joint Committee on Taxation estimated the legislation to reduce revenue by about $1.65 trillion and decrease outlays by $194 billion over the 2018-2027 period. The bill is therefore estimated to increase the deficit by $1.46 trillion over that period, excluding effects from macroeconomic feedback. | The budget reconciliation process is an optional procedure that operates as an adjunct to the budget resolution process established by the Congressional Budget Act of 1974. The chief purpose of the reconciliation process is to enhance Congress's ability to change current law in order to bring revenue, spending, and debt-limit levels into conformity with the policies of the annual budget resolution. This report identifies and briefly summarizes the 21 budget reconciliation measures enacted into law during the period covering 1980, when reconciliation procedures were first used by both chambers, through 2017. | 5,647 | 110 |
On January 4, 2012, President Obama exercised his recess appointment power and appointed three individuals--Terrence F. Flynn, Sharon Block, and Richard F. Griffin, Jr.--to be members of the National Labor Relations Board (NLRB or Board). Whether the President had authority to make these appointments pursuant to the Recess Appointments Clause was at issue in the 2014 Supreme Court case National Labor Relations Board v. Noel Canning . This case marked the first time that the Court would examine the scope of the Recess Appointments Clause. This report provides an overview of the Recess Appointments Clause, as well as the unique factual circumstances of the NLRB recess appointments. The report also reviews the Supreme Court's decision in Noel Canning , and discusses some of the practical implications at issue for the NLRB in the aftermath of the Court's decision. The U.S. Constitution allocates specific roles to both the President and the Senate in the appointment of government officials. The Constitution establishes two methods by which the President may make appointments. The Appointments Clause, which establishes the principal method of appointment, requires that the President: " shall nominate, and by and with the Advice and Consent of the Senate , shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law." Thus, while the Appointments Clause authorizes the President to nominate principal officers of the United States, a nominee cannot assume the powers of the office for which she has been nominated until confirmed by the Senate. The Constitution also provides an alternative method of appointment that may be exercised only "during the Recess of the Senate." The Recess Appointments Clause establishes that: The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session. The Recess Appointments Clause permits the President to make temporary appointments unilaterally during periods in which the Senate is not in session. It has generally been opined that the Clause was crafted to enable the President to ensure the operation of the government during periods when the Senate was not in session and therefore unable to perform its advice and consent function. Though designed to ensure administrative continuity, Presidents also have exercised their recess appointment power for tactical or political purposes throughout the history of the republic, giving rise to significant political and legal controversy. Interpretations and the President's application of the recess appointment power have evolved over time, likely due to the inherent textual ambiguities of the Recess Appointments Clause. Most prominent among these lingering questions is the proper interpretation of the two phrases that form the very foundation of the Clause: "the Recess of the Senate" and "Vacancies that may happen." With respect to the former, what is meant by "the Recess"? Specifically, is the President's recess appointment authority triggered only during inter-session recesses (recesses between enumerated sessions of Congress) or may he also exercise his authority during intra-session recesses (recesses that occur within an enumerated session of Congress)? Regarding the latter, must the vacancy arise during the recess in which the President exercises his appointment authority, or is it sufficient that the vacancy merely exist at the time the Senate is in recess and the appointment made? Prior to the Supreme Court's decision in Noel Canning , only a handful of courts engaged in any significant interpretive analysis of the Recess Appointments Clause. Those three decisions-- United States v. Allocco , United States v. Woodley , and Evans v. Stephens -- upheld recess appointments to the judiciary and arguably interpreted the Clause in a broad manner, such that a variety of circumstances could be viewed as triggering the use of the President's recess appointment power. The traditionally prevailing view of the Recess Appointments Clause has been that the President is authorized to make recess appointments during an inter- or intra-session recess of the Senate to any vacancy regardless of when the vacancy occurred. Despite an arguably settled interpretation of the President's recess appointment power, at least from the executive branch's perspective and congressional acquiescence on the matter, the unique facts underlying President Obama's recess appointments of Flynn, Block, and Griffin, Jr. brought the inherent tensions of the appointments process into stark focus. The NLRB consists of a board of five officials appointed by the President with the advice and consent of the Senate. At least three Board members are needed to sustain a quorum. In 2011, the NLRB had only three Board members, with one of the three scheduled to vacate his seat by the end of the first session of the 112 th Congress. In an effort to prevent membership from dropping below the number required to sustain a quorum, President Obama nominated Terrence F. Flynn to be a member on January 5, 2011. The President also formally nominated Sharon Block and Richard F. Griffin, Jr., to be members of the NLRB on December 15, 2011. By December 17, 2011, the Senate had not acted on any of these nominations. On this date, the Senate adopted a unanimous consent agreement in which the body adjourned, but scheduled a series of pro forma sessions every three to four days to occur from December 20, 2011, until January 23, 2012. The unanimous consent agreement established that "no business" would be conducted during the pro forma sessions and that the second session of the 112 th Congress would begin at 12:00 pm on January 3, 2012, as required by the Constitution. As none of the three nominees were confirmed, the President, citing Senate inaction and asserting that the Senate was in recess despite the pro forma sessions, exercised his recess appointment power to appoint Mr. Flynn, Ms. Block, and Mr. Griffins, Jr., on January 4, 2012, the date between the January 3 and January 6 pro forma sessions. Acting with its newly appointed members, the NLRB issued an administrative decision against the Noel Canning Corporation (a Pepsi distributor and bottler) in February 2012, ruling that the company had violated the National Labor Relations Act (NLRA) by failing to reduce to writing a collective bargaining agreement with a local Teamsters Union. Noel Canning challenged the NLRB's decision in the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit), claiming that three members of the Board were invalidly appointed and that, as a result, the Board lacked a quorum to issue the decision. The D.C. Circuit ruled that the appointments were constitutionally invalid because the President may only make recess appointments during an inter-session recess when the Senate adjourns sine die and only to those vacancies that arise during that inter-session recess. The D.C. Circuit's interpretation of the Clause was contrary to the holdings of the other three federal circuit courts that had earlier examined and supported a broad interpretation of the phrases "the Recess of the Senate" and "Vacancies that may happen." The Supreme Court granted the government's petition for writ of certiorari , and heard oral argument on January 13, 2014. A unanimous Supreme Court affirmed the judgment of the D.C. Circuit, concluding that the three recess appointments to the NLRB were constitutionally invalid. However, the Court was sharply divided when it came to the reasoning for why the appointments were infirm. Despite adopting a broad reading of the Recess Appointments Clause, such that the President can make appointments during an inter- or intra-session recess of longer than 10 days to any vacancy, the majority of the Court ruled the appointments invalid because it determined that the Senate was only in an intra-session recess of three days, a period of time deemed insufficient to trigger the President's recess appointment power. A minority of Justices, in contrast, ruled the appointments invalid based on a narrow interpretation of the Clause as articulated by the D.C. Circuit. Under their view, the President lacked authority to make these recess appointments because no inter-session recess occurred as the Senate did not adjourn sine die , and moreover, the vacancies to which the members were appointed were pre-existing vacancies. Between January 4, 2012, the date of appointment for the three NLRB members at issue in Noel Canning , and August 5, 2013, when the Board consisted of three Senate-confirmed members, it is believed that the NLRB issued approximately 700 decisions and approved the appointments of several regional directors. The Court's June 2014 decision has called into question the validity of the Board's actions during this 19-month period. Since the Court's decision, the Board has attempted to clarify how it will address its relevant actions. On July 9, 2014, for example, the NLRB's General Counsel indicated that the agency had already set aside its orders in 43 cases that were pending in federal appellate courts when Noel Canning was decided. In addition, on July 18, 2014, the NLRB unanimously ratified all of the administrative, personnel, and procurement matters taken by the Board between January 4, 2012 and August 5, 2013. Although the NLRB has not indicated formally how it will address the remaining decisions that were issued during the relevant period, its approach is likely to follow the actions taken by the agency in 2010, when approximately 550 Board decisions were similarly called into question following the Supreme Court's decision in New Process Steel, L.P. v. National Labor Relations Board . In New Process Steel , a case involving the validity of a collective bargaining agreement, the Court considered whether, following a delegation of the NLRB's powers to a three-member panel, two members could continue to exercise the delegated authority after the departure of the group's third member. For 27 months, between January 1, 2008 and April 5, 2010, the Board operated with just two members after the third member's term expired. Focusing on the plain meaning of Section 3(b) of the National Labor Relations Act, the Court emphasized that "a straightforward understanding of the text . . . coupled with the Board's longstanding practice, points us toward an interpretation of the delegation clause that requires a delegee group to maintain a membership of three." The Court's decision in New Process Steel effectively invalidated the decisions that were issued during the 27-month period. Shortly after the Court ruled in New Process Steel , the NLRB outlined its plans for handling "returned cases." The Board indicated that it would seek to have 96 cases that were pending on appeal before a federal court of appeals or the Supreme Court remanded for further consideration. The cases would be considered by a three-member panel that included the two Board members who were involved with the original decisions. The remaining two members of the five-person Board could participate in the reconsideration, but would not be required to be involved. By March 2013, new decisions were issued by the Board on all of the returned cases. It appears that the Board closed most of the remaining two-member cases that were not pending before a federal court of appeals or the Supreme Court. In a fact sheet , the Board stated simply that "nearly all of the remaining two-member cases were closed under the Board's processes with no review required." Given the composition of the three-member panel, some speculated that most employers chose not to challenge the two-member decisions because it seemed likely that the outcome would not be any more favorable. For example, one commentator observed: "[I]t may not be worth the time and expense for the vast majority of employers to challenge the two-member board decisions." Although the NLRB has not outlined its plans for cases that were decided between January 4, 2012, and August 5, 2013, in the same way that it did following New Process Steel , it does appear that the Board is approaching the cases pending on appeal in a similar fashion. In addition to setting aside Board orders in 43 cases, the NLRB has also filed motions with the various federal courts of appeals to return cases to the Board for further action. While the NLRB's General Counsel has noted that the Board could potentially reconsider cases that did not reach the courts of appeals, he also observed that parties would probably not seek reconsideration by the Board if they received a satisfactory ruling or if a dispute has been resolved. Following New Process Steel , for example, new decisions were issued in roughly only one-fifth of the cases decided by the two-member Board. In August 2014, the NLRB began its reconsideration of cases held in abeyance pending the Court's decision in Noel Canning . To date, the same three-member panel has been used to reconsider these cases. In each case, the panel considered the administrative law judge's decision and the record in light of the exceptions and briefs de novo. Thus far, the panel has adopted the judge's recommended order in each case. While the Board appears to be acting upon cases that were pending on appeal either through reconsideration or by setting aside its prior orders, it has taken a different approach with regard to its administrative, personnel, and procurement actions between January 4, 2012, and August 5, 2013. As noted, on July 18, 2014, the Board ratified its administrative, personnel, and procurement actions during that period. The Board explained that it ratified its past actions "to remove any question concerning the validity of actions undertaken during that period." The doctrine of ratification is derived from the principles of agency law and recognizes a principal's ability to approve the prior actions of its purported agent. Although some may contend that ratification amounts to nothing more than a "rubberstamp" of past actions, at least some courts have sustained ratifications, particularly when it seems that redoing administrative proceedings will yield the same outcome. For example, in Federal Election Commission v. Legi-Tech, Inc ., a 1996 case involving ratification and the enforcement actions of a reconstituted Federal Election Commission, the D.C. Circuit explained that "forcing the Commission to start at the beginning of the administrative process, given human nature, promises no more detached and 'pure' consideration of the merits of the case than the Commission's ratification decision reflected." In 2010, following the Court's decision in New Process Steel , the NLRB ratified all personnel, administrative, and procurement actions taken by the two-member Board between January 1, 2008 and April 5, 2010. The Board explained that the ratification "is intended to remove any question that may arise regarding this period during which the Board was reduced to two Members." It appears that the NLRB's 2010 ratification has not been questioned. The absence of any legal challenges to the 2010 ratification might arguably suggest that the Board's recent ratification of administrative, personnel, and procurement actions between January 4, 2012, and August 5, 2013, might be similarly uncontroversial. While Noel Canning has required the NLRB to revisit its decisions and actions between January 4, 2012, and August 5, 2013, the decision has also allowed the Board to seek reconsideration of at least one decision involving a recess appointee who was not involved with that case. In National Labor Relations Board v. New Vista Nursing and Rehabilitation , a case decided after the D.C. Circuit's consideration of Noel Canning , but before the Supreme Court's June 2014 decision, the U.S. Court of Appeals for the Third Circuit (Third Circuit) vacated a Board order on the grounds that one member of the three-member panel that issued the order was improperly appointed. New Vista, the operator of a nursing and rehabilitative care center, had argued that because NLRB member Craig Becker was appointed during an intra-session recess, he was not validly appointed under the Recess Appointments Clause. If Becker was not validly appointed, the relevant panel would have included only two members in contravention of the NLRA and New Process Steel . Like the D.C. Circuit in Noel Canning , the Third Circuit concluded that the Recess Appointments Clause contemplates appointments only during breaks between enumerated or annual sessions of the Senate. Becker was appointed during an intra-session recess that began on March 26, 2010 and ended on April 12, 2010. During this time, the Senate was not holding pro forma sessions. Finding Becker's appointment to be invalid, the Third Circuit concluded that the three-member panel "acted without power and lacked jurisdiction when it issued the order." In light of the Supreme Court's Noel Canning decision, however, the NLRB has sought a rehearing of New Vista . On August 11, 2014, the Third Circuit granted the Board's petition for rehearing. | On January 4, 2012, President Obama exercised his recess appointment power and appointed three individuals--Terrence F. Flynn, Sharon Block, and Richard F. Griffin, Jr.--to be members of the National Labor Relations Board (NLRB or Board). Whether the President had authority to make these appointments pursuant to the Recess Appointments Clause was at issue in the 2014 Supreme Court case National Labor Relations Board v. Noel Canning. The case marked the first time that the Court would examine the scope of the Recess Appointments Clause. This report provides an overview of the Recess Appointments Clause, as well as the unique factual circumstances of the NLRB recess appointments. In Noel Canning, a unanimous Supreme Court concluded that the three recess appointments were constitutionally invalid. The Court was sharply divided, however, when it came to the reasoning for why the appointments were infirm. Despite adopting a broad reading of the Recess Appointments Clause, the majority of the Court ruled the appointments invalid because it determined that the Senate was only in an intra-session recess of three days, a period of time deemed insufficient to trigger the President's recess appointment power. The report also discusses some of the practical implications at issue for the NLRB in the aftermath of the Court's decision, and examines how the Board will address the roughly 700 decisions that were issued between January 4, 2012, and August 5, 2013, when the NLRB consisted of three Senate-confirmed members. Although the NLRB has not formally outlined its plans for these decisions, its approach is likely to follow the actions taken by the agency in 2010, when approximately 550 Board decisions were similarly called into question as a result of the Supreme Court's decision in New Process Steel, L.P. v. National Labor Relations Board. In July 2014, the NLRB's General Counsel indicated that the agency had already set aside its orders in 43 cases that were pending in federal appellate courts when Noel Canning was decided. In addition, to setting aside these orders, the Board has also filed motions with the various federal courts of appeals to return other pending cases to the Board for further action. | 3,849 | 498 |
This report focuses on FY2016 appropriations for Interior, Environment, and Related Agencies. It first presents a brief overview of the agencies in the bill. It then describes the appropriations enacted for FY2016 in Division G of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), on December 18, 2015. The report next sets out earlier action on FY2016 funding for Interior, Environment, and Related Agencies. This section includes a description of the appropriations requested by the President for FY2016 and a comparison of the President's request and appropriations enacted for FY2015. It also includes a comparison of the FY2016 appropriations reported by the House and Senate Appropriations Committees with each other, with FY2015 enacted appropriations, and with FY2016 appropriations requested by the President. Appropriations are complex. For example, budget justifications for requests for some agencies are large, numbering several hundred pages 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 does not provide account- and subaccount-level information or detail of budgetary reorganizations or legislative changes enacted in law or proposed by the President, the House Appropriations Committee, or the Senate Appropriations Committee. For information on FY2016 appropriations for a particular agency or for individual accounts, programs, or activities administered by a particular agency, contact the key policy staff listed at the end of this report. The annual Interior, Environment, and Related Agencies appropriations bill includes funding for agencies and programs in three separate federal departments as well as numerous related agencies. The Interior bill typically contains three primary titles. 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 II contains appropriations for the Environmental Protection Agency (EPA). Title III funds about 20 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, such as the Smithsonian Institution; and various other entities. Title III of the bill is referred to as "Related Agencies." Selected major agencies in the Interior bill are briefly described below. The mission of DOI is to protect and manage the nation's natural resources and cultural heritage; provide scientific and other information about those resources; and exercise trust responsibilities and other commitments to American Indians, Alaska Natives, and affiliated island communities. DOI agencies funded in the Interior bill that carry out this mission include the following: The Bureau of Land Management administers about 245 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 is also responsible for about 700 million acres of federal subsurface mineral estate throughout the nation and supervises the mineral operations on about 56 million acres of Indian Trust lands. The Fish and Wildlife Service administers the National Wildlife Refuge System, consisting of 89 million acres of federal land, of which 77 million acres (86%) are in Alaska. It also manages several large marine refuges and marine national monuments, sometimes jointly with other federal agencies. It is the primary agency responsible for implementing the Endangered Species Act (through listing of species; consulting with other federal agencies; collaborating with private entities and state, tribal, and local governments; and through other measures), 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 the National Park System--407 diverse units covering 85 million acres in all 50 states, the 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 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 change, 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 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 mines. The agency also regulates active coal mines to minimize environmental impacts during mining and to reclaim affected lands and waters after mining. Indian Affairs provides and funds a variety of services to federally recognized American Indian and Alaska Native Tribes and their members and historically has been the lead agency 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. The mission of EPA is to protect human health and the environment. Primary responsibilities include the implementation of federal statutes regulating air quality, water quality, 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 in complying with federal requirements to control pollution. Among the Related Agencies funded in the Interior bill, roughly 95% of the funding is typically provided to the following agencies and organizations: The Forest Service in the Department of Agriculture manages 193 million acres of national forests, national grasslands, and a tallgrass prairie in 44 states and the Commonwealth of Puerto Rico; 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. As of January 2015, the agency operated 28 hospitals, 62 health centers, and 25 health stations. Tribes and tribal organizations, through Indian Health Service contracts and compacts, operated another 18 hospitals, 282 health centers, 80 health stations, and 150 Alaska Native village clinics. Urban Indian organizations operated 33 ambulatory or referral programs. The Smithsonian Institution is a museum and research complex consisting of 19 museums and galleries, the National Zoo, and nine research facilities throughout the United States and around the world. Almost 27 million people visited Smithsonian facilities in 2014. 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, with nearly $1.36 billion in total revenue from all sources of funding for FY2014. 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 that 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 almost 63,000 grants. It also supports a Challenge Grant program to stimulate and match private donations in support of humanities institutions. Prior to enactment of FY2016 appropriations for Interior, Environment, and Related Agencies, the Bipartisan Budget Act of 2015 ( P.L. 114-74 ) raised the caps in the Budget Control Act of 2011 ( P.L. 112-25 ) for each type of discretionary spending--defense and nondefense. Specifically, the 2015 law raised the caps by $25 billion in FY2016 (and $15 billion in FY2017). Thus, consideration of the appropriations legislation enacted for FY2016 was subject to the increased spending limits in the 2015 law. The Consolidated Appropriations Act, 2016, enacted December 18, 2015, provided $32.23 billion for Interior, Environment, and Related Agencies. The total included $452.0 million for the Payments in Lieu of Taxes (PILT) program, which compensates counties and local governments for nontaxable lands within their jurisdictions. Although the enacted appropriation included additional funding for Wildland Fire Management as compared with FY2015, it did not provide for either a new cap adjustment to the discretionary spending limits in law or emergency funding for this purpose, as had been proposed. Agencies received varying amounts of the $32.23 billion total appropriation. For DOI agencies in Title I, appropriations were $12.02 billion. This figure was 37.3% of the total enacted. For EPA, appropriations were $8.14 billion, or 25.3% of the total. For agencies and other entities in Title III, appropriations were $12.07 billion, or 37.5% of the total. Figure 1 identifies the share of the FY2016 enacted appropriations for particular agencies. Moreover, FY2016 appropriations were concentrated on a relatively small subset of agencies. Three agencies--the EPA, Forest Service, and Indian Health Service--received nearly three-fifths (57.8%) of the enacted appropriations. Together with the National Park Service and Indian Affairs, these five agencies received three-quarters (75.3%) of the total FY2016 appropriations. For DOI agencies, appropriations ranged from $74.2 million for the Bureau of Ocean Energy Management to $2.85 billion for the National Park Service. Appropriations for 7 of the 10 DOI agencies were more than $1 billion. The National Park Service and Indian Affairs ($2.80 billion) together accounted for nearly half (47.0%) of the $12.02 billion enacted for DOI agencies. Funding enacted for the 20 Related Agencies in Title III had a wider range, from $1.0 million for the Dwight D. Eisenhower Memorial Commission to $5.66 billion for the Forest Service. The second-largest appropriations figure was for the Indian Health Service, with $4.81 billion, and the next-largest was less than $1 billion--$840.2 million for the Smithsonian Institution. By contrast, six agencies had appropriations of less than $10 million each. The FY2016 total enacted appropriation was a $1.75 billion increase (5.7%) over the FY2015 enacted appropriation of $30.48 billion. Similar to the FY2016 enacted appropriation, the FY2015 enacted appropriation included funding for PILT--$372.0 million for FY2015. FY2016 enacted appropriations for all DOI agencies increased by $925.5 million (8.3%), with all 10 DOI agencies receiving additional funding above the FY2015 levels. The National Park Service and Indian Affairs received the largest dollar increases. An increase of $236.6 million (9.1%) above the FY2015 enacted level for the National Park Service was provided in anticipation of increased visitation for the agency's centennial in 2016 and for grants to states for outdoor recreation (through the Land and Water Conservation Fund), construction and maintenance, and other programs. An increase of $194.6 million (7.5%) for Indian Affairs was included for various activities, among them public safety and justice, contract support costs, education, and construction of educational facilities. FY2016 total enacted appropriations for EPA were the same as the FY2015 enacted appropriations. All EPA accounts were funded at FY2015 levels, with the exception of the account for State and Tribal Assistance Grants (STAG), which was reduced by $27.0 million overall. In addition, FY2016 appropriations included $27.0 million for purposes of EPA meeting federal requirements for cybersecurity implementation. Most EPA programs and activities within accounts also were funded at FY2015 enacted levels, although some received higher or lower amounts relative to FY2015. FY2016 enacted appropriations for Related Agencies increased by $822.3 million (7.3%) from the FY2015 level. The Forest Service received the largest dollar increase--$608.1 million (12.0%). Most of the increase was for Wildland Fire Management, especially fire suppression under the FLAME Wildfire Suppression Reserve Account. For each agency, Table 1 contains the FY2015 enacted appropriations, amount requested by the President for FY2016, level reported by the House Appropriations Committee in H.R. 2822 for FY2016, level reported by the Senate Appropriations Committee in S. 1645 for FY2016, and level enacted for FY2016 in the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). For FY2016, the President requested $33.32 billion for the approximately 30 agencies and entities typically funded in the annual Interior, Environment, and Related Agencies appropriations law. For the 10 major DOI agencies in Title I of the bill, the request was $12.09 billion, or 36.3% of the total requested. For EPA, funded in Title II of the bill, the request was $8.59 billion, or 25.8% of the total. For about 20 agencies and other entities typically funded in Title III of the bill, the request was $12.65 billion, or 38.0% of the total. The total requested by the Administration included a proposed $1.05 billion cap adjustment to the discretionary spending limits in law. Of the total proposed adjustment, $200.0 million was for DOI Wildland Fire Management, and $854.6 million was for Forest Service Wildland Fire Management. Appropriations for agencies vary widely for a number of 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 FY2016 request covered approximately 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 nearly three-fifths (58.4%) of the total request. Further, more than three-quarters (76.4%) of the request was for these three agencies and two others--National Park Service and Indian Affairs. For DOI agencies, the FY2016 requests ranged from $74.2 million for the Bureau of Ocean Energy Management to $3.05 billion for the National Park Service. The requests for 6 of the 10 agencies exceeded $1 billion. Nearly half (49.4%) of the $12.09 billion requested for DOI agencies was for two agencies--the National Park Service and Indian Affairs ($2.92 billion). For Related Agencies in Title III, the requested funding levels exhibited even more variation. The President sought amounts ranging from $2.0 million for grants under National Capital Arts and Cultural Affairs to $5.78 billion for the Forest Service. The Indian Health Service would be the only other agency to receive more than $5 billion. The next-largest request was for the Smithsonian Institution, at $935.8 million. By contrast, 14 agencies would receive less than $80 million each, including 6 with appropriations of less than $10 million each. Figure 2 identifies the share of the President's request for particular agencies in the Interior bill. Table 2 contains the FY2015 enacted appropriations for each agency, amount requested by the President for FY2016 for each agency, and percentage change from FY2015 as compared with the President's request for FY2016. The President's request of $33.32 billion for FY2016 would have been an increase of $2.85 billion (9.3%) over the total FY2015 enacted appropriations of $30.48 billion. The FY2015 appropriation included $372.0 million for PILT, as noted above, whereas the President did not seek discretionary funding for PILT for FY2016. The FY2016 request would have been an increase of $3.22 billion (10.7%) over FY2015 appropriations of $30.11 billion excluding the PILT funding. Unlike the President's request, the FY2015 enacted appropriation did not include a cap adjustment for Wildland Fire Management. Under the President's proposal, the total for each of the three titles of the bill would have increased above FY2015 by varying amounts. DOI agencies would have received an increase of $994.3 million (9.0%), funding for EPA would have increased by $451.8 million (5.6%), and the total for all Related Agencies in Title III would have increased by $1.40 billion (12.4%). With regard to DOI, the President proposed increases above FY2015 for 9 of the 10 agencies. The increases varied in dollar amount and percentage of appropriations, with the lowest dollar increase of $1.4 million (1.7%) for the Bureau of Safety and Environmental Enforcement and the highest of $433.1 million (16.6%) for the National Park Service. Some of the National Park Service increase was intended to enhance park units in light of the agency's 2016 centennial. Activities that would have received additional funds included park facility operations and maintenance, resource stewardship, visitor services, line item construction, historic preservation, and the centennial challenge (a federal matching program to leverage donations for park units). Only one DOI account, Departmental Offices, would have received an overall decrease ($298.6 million, 30.0%) under the President's FY2016 request. This decrease would have occurred because the President did not seek discretionary funding under this account for PILT, as noted. The other four programs included under this heading would have received increases under the President's proposal, as shown in Table 2 . Within the overall increase for EPA, the President sought additional funds for each of the agency's accounts. The $228.0 million (8.7%) increase for the Environmental Programs and Management account was the largest overall dollar increase proposed for EPA accounts. This account funds a broad array of activities supporting EPA's development and enforcement of pollution control regulations and standards, technical assistance, and administrative and operational expenses. The $65.1 million (6.0%) increase for the Hazardous Substance Superfund account was the second-largest overall dollar increase for EPA accounts. This account supports the assessment and cleanup of sites contaminated from the release of hazardous substances. EPA administers these activities under the Superfund program, as authorized in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). Despite the increases the President sought for each EPA account, funding for some programs and activities would have remained level or declined. The largest proposed dollar decrease ($332.9 million, 23.0%) was for grants to states for wastewater infrastructure projects through the Clean Water State Revolving Fund. By contrast, the President sought an increase ($279.1 million, 30.8%) for drinking water infrastructure grants to states through the Drinking Water State Revolving Fund. Although most Title III agencies would have received increases under the President's FY2016 proposal, the three largest agencies would have received the biggest dollar increases. Specifically, the President sought an additional $724.2 million (14.3%) for the Forest Service, $460.6 million (9.9%) for the Indian Health Service, and $116.3 million (14.2%) for the Smithsonian Institution. The proposed Forest Service increase was primarily for suppressing wildland fires and for the National Forest System account. The Indian Health Service would have received increases for many programs and activities, including clinical services, contract support costs, and construction of facilities for health care and sanitation. The Smithsonian Institution's additional funds were to be directed to facilities maintenance, operations, security, revitalization, planning, and design, among other purposes. By contrast, three Title III agencies would have received level funding, and two agencies would have received decreases. H.R. 2822 , as reported by the House Appropriations Committee on June 18, 2015, would have provided $30.23 billion for Interior, Environment, and Related Agencies for FY2016. The total included $452.0 million for PILT. During three days of floor debate, the House considered dozens of amendments to H.R. 2822 . Although 57 of the amendments were agreed to, others were rejected, withdrawn, or considered but not voted upon. No vote on final passage of the bill occurred following a difference of opinion on amendments related to display and sale of the Confederate flag on National Park Service lands. S. 1645 , as reported by the Senate Appropriations Committee on June 23, 2015, would have provided $31.13 billion for Interior, Environment, and Related Agencies. The total included $1.05 billion in emergency appropriations for Wildland Fire Management activities of DOI and the Forest Service. Such emergency funding typically does not count toward a subcommittee's allocation for the bill. S. 1645 was not considered by the Senate. See Table 1 for the House and Senate bill totals as well as agency and title totals. The Senate committee-reported bill was $899.6 million (3.0%) more than the House committee-reported bill. The largest dollar difference was for Wildland Fire Management. S. 1645 included $4.66 billion for DOI and Forest Service Wildland Fire Management, which was $1.08 billion (30.1%) more than the $3.58 billion in H.R. 2822 . Unlike H.R. 2822 , the Senate bill did not include discretionary appropriations for PILT. Other selected differences between the bills are highlighted below. With regard to DOI agencies, H.R. 2822 included $11.43 billion for FY2016, which was $204.3 million (1.8%) more than the $11.23 billion in S. 1645 . The higher House bill total was primarily due to the inclusion of $452.0 million for PILT under DOI Departmental Offices. Of the 10 DOI agencies, S. 1645 recommended higher funding for all but three: Office of Surface Mining Reclamation and Enforcement, Indian Affairs, and Departmental Offices. The $7.60 billion reported in S. 1645 for EPA was $175.2 million (2.4%) more than the $7.42 billion reported in H.R. 2822 . The bills proposed different levels of appropriations for all nine EPA accounts. The Senate bill included higher funding for all accounts except for two--Science and Technology and the Leaking Underground Storage Tank Trust Fund (LUST). The Science and Technology account funds the development of the scientific knowledge and tools to inform EPA's formulation of pollution control regulations, standards, and agency guidance. The LUST account is used in part for preventing and responding to releases from underground storage tanks that contain petroleum. The largest dollar difference was for the Environmental Programs and Management account, with the Senate committee reporting $2.56 billion, or $89.2 million (3.6%) more than the $2.47 billion reported in the House bill. Activities in the account that would have received higher funding in the Senate bill included geographic programs, information exchange/outreach, and legal/science/regulatory/economic review. For all 20 Related Agencies in Title III, the Senate committee-reported bill included $12.31 billion, $928.7 million (8.2%) more than the $11.38 billion included in the House committee-reported bill. The funding recommendations in the two bills were equal for 13 agencies, higher for 5 agencies in the Senate bill, and higher for 2 agencies in the House bill. The overall difference between the two bills was primarily related to the Forest Service, for which the Senate committee reported $5.98 billion--$934.2 million (18.5%) more than the $5.04 billion in H.R. 2822 . The higher funding for Wildland Fire Management in the Senate bill ($867.8 million higher, 32.3%) was the single biggest difference. H.R. 2822 as reported by the House Appropriations Committee recommended decreased appropriations from the FY2015 enacted level, while S. 1645 as reported from the Senate Appropriations Committee recommended an increase above FY2015 enacted appropriations. With regard to the House bill, the $30.23 billion for FY2016 was $246.0 million (0.8%) less than the FY2015 appropriation of $30.48 billion (including FY2015 PILT funding). DOI agencies, however, would have received an overall increase of $340.0 million (3.1%) for FY2016, with 6 of the 10 DOI agencies sharing in the increase. The largest recommended dollar increase was $164.9 million (6.3%) for Indian Affairs. Like the FY2015 appropriation, the House committee bill included discretionary funding for PILT. For EPA, H.R. 2822 would have reduced funding by $717.7 million (8.8%)--the largest recommended decrease in the reported bill. The EPA account with the largest dollar decline would be State and Tribal Assistance Grants, with $565.3 million (15.9%) less than FY2015, largely from reduced funding for grants to states through the Clean Water State Revolving Fund (SRF) and the Drinking Water SRF. While Title III agencies would have received an overall increase of $131.7 million (1.2%) for FY2016, the Indian Health Service was the only agency for which additional funds were recommended ($145.5 million, 3.1%). Most Title III agencies would have received level funding, with others proposed at levels lower than FY2015. With regard to the Senate bill, the $31.13 billion for FY2016 was $653.6 million (2.1%) more than FY2015 appropriations ($30.48 billion, including PILT funding). S. 1645 included higher appropriations for every DOI agency except Departmental Offices, largely because it did not propose PILT funding. As with the House bill, EPA would have received the largest decrease--$542.5 million (6.7%)--with State and Tribal Assistance Grants declining more than other accounts ($517.2 million, 14.6%) in large part from reduced grants to states through the SRFs. Most Title III agencies would have received level funding under the Senate bill, and a couple would have received lower appropriations. Nevertheless, the Senate bill recommended overall higher funding for Title III agencies ($1.06 billion, 9.4%). The largest dollar increases were $921.6 million (18.2%) for the Forest Service, primarily attributable to increased funding for Wildland Fire Management, and $136.9 million (2.9%) for the Indian Health Service. Both the House and Senate committee-reported bills had recommended lower funding for FY2016 than sought by the President. The $30.23 billion in H.R. 2822 as reported by the House Appropriations Committee for FY2016 was $3.09 billion (9.3%) less than the President's request of $33.32 billion for FY2016. H.R. 2822 recommended lower funding than sought by the President for many agencies, including the following: $1.17 billion (13.6%) lower for EPA, $736.7 million (12.7%) for the Forest Service, and $380.6 million (12.5%) for the National Park Service. However, for some agencies H.R. 2822 recommended the same or higher funding relative to the President's request. For instance, the House bill recommended $364.8 million (52.4%) more than the President for DOI Departmental Offices, largely due to funding for PILT included within this account (under Office of the Secretary). The $31.13 billion in S. 1645 as reported by the Senate Appropriations Committee for FY2016 was $2.19 billion (6.6%) less than the President's request. Like the House bill, S. 1645 also recommended lower funding than sought by the President for many agencies. Among the lower amounts were the following: $994.4 million (11.6%) less for EPA, $323.7 million (6.3%) less for the Indian Health Service, and $318.7 million (10.5%) less for the National Park Service. For other agencies, S. 1645 contained the same or higher funding relative to the President's request. For instance, the Senate bill proposed $197.5 million (3.4%) more than the President for the Forest Service, largely due to additional funding for the Wildland Fire Management account. Unlike the President's request, the FY2016 House committee-reported bill did not include a cap adjustment for Wildland Fire Management. S. 1645 included bill language to provide for a new cap adjustment and also designated some of the funds in the bill for Wildland Fire Management as emergency funding. | The Interior, Environment, and Related Agencies appropriations bill includes funding for most of the Department of the Interior (DOI) and for agencies within other departments--including the Forest Service within the Department of Agriculture and the Indian Health Service within the Department of Health and Human Services. It also provides funding for the Environmental Protection Agency (EPA), arts and cultural agencies, and numerous other entities. The Consolidated Appropriations Act, 2016 (P.L. 114-113), provided $32.23 billion for FY2016 for Interior, Environment, and Related Agencies. The total included $452.0 million for the Payments in Lieu of Taxes (PILT) program, which compensates counties and local governments for nontaxable lands within their jurisdictions. It also included additional funding for Wildland Fire Management, but it did not provide for either a new adjustment to the discretionary spending limits in law or emergency funding for this purpose, both of which had been proposed. The FY2016 enacted total was a $1.75 billion increase (5.7%) over the FY2015 total of $30.48 billion. Compared to FY2015, FY2016 funding for all DOI agencies increased by $925.5 million (8.3%), for EPA remained the same, and for Related Agencies increased by $822.3 million (7.3%). Agencies received varying amounts of the $32.23 billion for FY2016. The appropriations were $12.02 billion (37.3% of total) for DOI agencies, $8.14 billion (25.3% of total) for EPA, and $12.07 billion (37.5% of total) for other agencies and entities in Title III of the bill. In earlier action, the President had requested $33.32 billion in FY2016 Interior, Environment, and Related Agencies appropriations. The President had sought an increase of $2.85 billion (9.3%) compared to the FY2015 total appropriation of $30.48 billion. The President's request for FY2016 did not include funding for PILT, whereas the FY2015 appropriation included $372.0 million for the program. For Wildland Fire Management in FY2016, the President proposed a new $1.05 billion discretionary cap adjustment. H.R. 2822, as reported by the House Appropriations Committee on June 18, 2015, contained $30.23 billion for Interior, Environment, and Related Agencies for FY2016. The bill included $452.0 million for PILT but did not include a new cap adjustment for wildfires. The House considered many amendments during three days of floor debate, but no vote on final passage occurred. S. 1645, as reported by the Senate Appropriations Committee on June 23, 2015, contained $31.13 billion for Interior, Environment, and Related Agencies. The total did not include discretionary funding for PILT, but it reflected $1.05 billion in emergency appropriations for Wildland Fire Management. S. 1645 was not considered on the Senate floor. The Senate committee-reported bill included $899.6 million (3.0%) more than the House committee-reported bill. The largest dollar difference was for Wildland Fire Management. The Senate bill also was $653.6 million (2.1%) more than FY2015 appropriations, whereas the House bill was $246.0 million (0.8%) less than FY2015. Both the Senate and House committee-reported bills contained lower funding for FY2016 than sought by the President; S. 1645 was $2.19 billion (6.6%) less than the President's request, while H.R. 2822 was $3.09 billion (9.3%) less. | 6,499 | 779 |
R eports of alien minors being separated from their parents at the U.S. border--either when they have presented themselves at a port of entry to claim asylum or when they have been apprehended by authorities after unlawfully entering between ports of entry --have raised questions about the authority of the Department of Homeland Security (DHS) to detain families together pending removal proceedings. The Immigration and Nationality Act (INA) does not provide a specific framework for the detention of alien families during the removal process. Much of the governing law stems from a binding, 20-year-old settlement agreement ( Flores Settlement) between the federal government and parties challenging the detention of alien minors, which the U.S. District Court for the Central District of California entered in a case now called Flores v. Sessions . The Flores Settlement establishes a policy favoring the release of alien minors, including alien minors accompanied by an alien parent, from immigration detention and requires that those alien minors who are not released from government custody be transferred within a brief period to non-secure, state-licensed facilities. According to DHS, few if any such state-licensed facilities capable of holding minors and adults together exist. For that reason, it is DHS's position that, to comply with the Flores Settlement, it must choose between (1) releasing the family together and (2) releasing the alien child while the adult family members remain in detention until removal proceedings have concluded. Recent federal court decisions cast doubt on the legality of the second option, however, leaving the general release of family units together as the only clearly viable option under current law. In an executive order issued on June 20, 2018, President Trump directed DHS "to the extent permitted by law and subject to the availability of appropriations, [to] maintain custody of alien families during the pendency of any criminal improper entry or immigration proceedings involving their members." The executive order also directed Attorney General Sessions to ask the district court overseeing the Flores Settlement to modify the agreement to allow the government to detain alien families together throughout the duration of the family's immigration proceedings as well as the pendency of any criminal proceedings for unlawful entry into the United States. While that motion was pending, in a different lawsuit, Ms. L. v. ICE , challenging the government's policy of separating alien children from their parents when family units entered the United States at or in between ports of entry, a district judge issued a preliminary injunction mandating alien family reunification. In response, the government notified the Flores court that it would begin detaining alien family units together in DHS facilities until a family's immigration proceedings had been completed. The Flores court rejected the government's motion and argument that the preliminary injunction in the Ms. L. lawsuit allowed the government to detain family units together in DHS facilities. In the aftermath of this ruling, DHS appears to have returned to its prior practice of generally releasing family units apprehended at the border that demonstrate a credible fear of persecution pending removal proceedings. However, on September 7, 2018, DHS and the Department of Health and Human Services (HHS), the primary agency responsible for the care and custody of unaccompanied alien minors, published a notice of proposed rulemaking, which, once finalized, w ould allow DHS to detain families together until immigration proceedings were completed. The proposed regulations would create an alternative federal licensing scheme for family residential centers that purports to mimic the standards for the detention of minors set forth in the Flores Settlement, which mandates the use of state-licensed facilities only. This report answers frequently asked legal questions pertaining to the Flores Settlement and the settlement's impact on the detention of alien families apprehended at or near the U.S. border. In particular, the report addresses (1) the background of the Flores litigation, (2) how the Flores Settlement restricts DHS's power to keep families in civil immigration detention, (3) the relationship between the Ms. L. litigation and the Flores Settlement, (4) the executive branch's policy options for detaining or releasing family units apprehended at or near the U.S. border under the Flores Settlement, (5) the September 7, 2018, notice of proposed rulemaking purporting to implement the terms of the Flores Settlement, and (6) the extent to which either the executive branch or Congress can override or modify the terms of the Flores Settlement. Before considering the legal impact of the Flores Settlement on DHS's authority to detain family units arriving at the border without valid entry documents, it is useful to review the relevant statutory framework. The INA contains provisions that govern the detention of aliens in general pending the outcome of removal proceedings. Federal statutes also contain specific provisions concerning the detention of unaccompanied alien children (UACs) who are in removal proceedings. However, neither federal law generally, nor the INA, contains provisions that specifically address the detention of family units or accompanied alien minors for immigration enforcement purposes. Whether they attempt to enter the United States surreptitiously or present themselves at a port of entry, aliens encountered near the border without valid entry documents are generally subject to expedited removal under the INA. Expedited removal is a streamlined process that contemplates removal without a hearing before an immigration judge. Family units, including children arriving with their families, encountered near the border without valid entry documents are subject to expedited removal, but UACs are not subject to this streamlined removal process. If an alien subject to expedited removal "indicates either an intention to apply for asylum . . . or a fear of persecution," then the immigration officer must refer the alien to an asylum officer for a determination of whether the alien has a credible fear of persecution. Aliens who demonstrate such a fear are referred to standard removal proceedings in immigration court for further consideration of their claims for asylum or other relief. The statutory framework that governs the detention of aliens in this situation--that is, where an alien has been referred from expedited to standard removal proceedings after showing a credible fear of persecution--is not straightforward, but its general effect is to permit (without requiring) DHS to detain such aliens pending the outcome of the standard proceedings. First , for aliens referred from expedited to standard removal proceedings following surreptitious entry (i.e., entry or attempted entry into the United States at a place other than a port of entry), the applicable statute is 8 U.S.C. SS 1226(a). That statute authorizes DHS to continue detaining the alien, or to release the alien on bond or parole. If DHS decides to keep the alien in detention, the alien is entitled to challenge that decision in a custody redetermination hearing before an immigration judge. Under the standard that governs both the DHS and immigration judge custody determinations, the alien must demonstrate that release on bond or parole "would not pose a danger to property or persons, and that the alien is likely to appear for any future proceeding." Second , for aliens referred from expedited to standard removal proceedings after presenting themselves at a port of entry without valid entry documents, the applicable statute is 8 U.S.C. SS 1225(b). That statute provides that such aliens "shall be detained" pending the outcome of the standard removal proceedings in immigration court. But the INA grants DHS authority to release even these aliens on parole. DHS regulations and internal guidance, in turn, instruct DHS officials to make individualized determinations about whether to release such aliens on parole, taking into account factors such as flight risk, danger to the public, and whether the alien has established his identity sufficiently. Recently, in light of evidence that DHS has deviated from this policy in order to detain more aliens for deterrence purposes, two different federal judges in the District of Columbia issued preliminary injunctions ordering DHS to comply with the policy by making individualized parole determinations for aliens detained under SS 1225(b). Some federal case law suggests that constitutional principles may limit DHS's ability to detain aliens pending removal proceedings for general deterrence purposes (that is, for the purpose of deterring other aliens from committing civil immigration violations), notwithstanding the statutory authorization in the INA for detention during the removal process. The Supreme Court has yet to resolve this question, however. Federal statutes set forth a separate framework for the treatment of UACs. The Homeland Security Act of 2002 tasks the Office of Refugee Resettlement (ORR), within the Department of Health and Human Services, with "coordinating and implementing the case and placement of unaccompanied alien children who are in Federal custody by reason of their immigration status." Minors remain subject to DHS custody unless and until they are deemed "unaccompanied." Under the Trafficking Victims Protection Reauthorization Act of 2008 (TVPRA), if DHS learns that a person in its custody is an "unaccompanied alien child" (UAC), it must transfer the UAC to ORR custody within 72 hours (unless the child is from a contiguous country, in which case the UAC generally may be given the option to voluntarily return to that country in lieu of being held by ORR and DHS authorities). An alien minor is considered a UAC if (1) the minor has no parent or legal guardian in the United States, or (2) no parent or legal guardian "is available to provide care and physical custody" in the United States. Once a UAC is in ORR custody, ORR must "promptly place[] [the child] in the least restrictive setting that is in the best interest of the child." As noted above, UACs are not subject to expedited removal. The Flores lawsuit began in 1985, reached a settlement in 1997, and remains under the supervision of a U.S. district judge in the Central District of California until the federal government promulgates final regulations implementing the 1997 agreement. Initially, the lawsuit involved a class of unaccompanied alien minors who were apprehended at or near the U.S. border and then detained pending removal proceedings. At that time, before the enactment of the Homeland Security Act or the TVPRA, there was no national policy addressing the care for unaccompanied alien minors. One former Immigration and Naturalization Service (INS) facility in California had adopted a policy of releasing apprehended alien minors only to "a parent or lawful guardian" except in "unusual and extraordinary cases." Several detainees filed a lawsuit on behalf of a class of all aliens under the age of 18 who were detained at that facility because a parent or legal guardian did not personally appear to take custody of the child. The lawsuit challenged the conditions of confinement at the INS facility and also contended that the release policy violated the Due Process Clause of the Fifth Amendment. By 1987, the parties had settled the claims related to the conditions of confinement, but the constitutional challenge to the release policy continued to be litigated. Meanwhile, the INS promulgated a rule governing the detention and release of alien minors (accompanied and unaccompanied) at all INS facilities. That rule authorized additional adult relatives (other than a parent or lawful guardian) to whom alien minors could be released from custody. The Flores plaintiffs maintained the lawsuit by challenging the new INS policy under the Due Process Clause, arguing that the government had violated their fundamental right to be released to unrelated adults. The litigation ultimately made its way to the Supreme Court. In a 1993 ruling--nearly a decade after the litigation's start--the Supreme Court upheld the constitutional validity of the INS policy on its face. In doing so, the Court concluded that the detained alien minors had no constitutional right to be released from government custody into the custody of a "willing-and-able private custodian" when a parent, legal guardian, or close relative is unavailable. After the case was remanded to the district court for further proceedings, the parties continued to litigate whether the INS was complying with the earlier settlement agreement, in which the government had agreed to house alien minors in facilities meeting certain minimum standards. The parties in the Flores litigation eventually reached a settlement agreement in 1997, a modified version of which remains in force today. The Flores Settlement establishes a "nationwide policy for the detention, release, and treatment of minors" in immigration custody. The settlement agreement announces a "general policy favoring release" and requires the government to place apprehended alien minors in "the least restrictive setting appropriate to the minor's age and special needs, provided that such setting is consistent with its interests to ensure the minor's timely appearance before the INS and immigration courts and to protect the minor's well-being and that of others." The settlement agreement further elaborates that when alien minors are first arrested by immigration authorities, those minors may be detained only in "safe and sanitary" facilities. Within a few days, subject to exception, federal authorities must transfer the detained alien minor to the custody of a qualifying adult or a non-secure facility that is licensed by the state to provide residential, group, or foster care services for dependent children. The Flores Settlement binds the parties until the federal government promulgates final regulations implementing the agreement. However, to date, no implementing regulations have been promulgated. Additionally, although the litigation initially stemmed from the detention of unaccompanied alien minors, the Flores Settlement defines a "minor," subject to certain exceptions, as any person under age 18 who is detained by immigration authorities. Accordingly, the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) later held that the Flores Settlement applies to both accompanied and unaccompanied minors in immigration custody. The Flores Settlement qualifies the authority that DHS possesses under the INA and other statutes to detain alien minors--whether accompanied or unaccompanied--pending the outcome of removal proceedings. With regard to minors meeting the statutory definition for UACs, Congress has enacted statutes regulating their care and custody and providing protections that to some extent displace the Flores Settlement as the operative body of law. But Congress has enacted no such laws with regard to accompanied alien minors or alien family units. Accordingly, much of the current impact of the Flores Settlement comes in the manner that it restricts DHS's authority to detain accompanied alien minors. As mentioned earlier, the Flores Settlement establishes a "nationwide policy for the detention, release, and treatment of minors" in the custody of the former INS. The core of the Flores Settlement favors the release of alien minors and requires that those alien minors who are not released from government custody be housed in non-secure, state-licensed facilities. Subject to exceptions described below, the government must do so within three days if the minor is apprehended in a district where space is available at a licensed facility or, otherwise, within five days. However, as of the date of this report, there presently do not appear to be any qualifying facilities that can house alien minors and their parents. Under the Flores Settlement's terms, alien minors' placement in a non-secure, licensed facility may be delayed when there is an "influx of minors into the United States." An influx of minors exists when more than 130 minors are eligible for placement at a licensed facility. When there is an influx, placements must be made "as expeditiously as possible." The effect of these provisions, as interpreted by the district court overseeing the Flores Settlement, has allowed DHS to detain some family units for longer than five days during "influxes." There is no fixed amount of time for what amounts to "expeditious" placement during an influx, but the district court that has continued to oversee the settlement has provided some guidance. For instance, time extensions must be "de minimis" (i.e., minimal) and made based on individualized circumstances. In other words, during an influx the government likely cannot announce a blanket extension of time for placements of particular groups. In 2015, for example, the government advised the Flores court that, for alien families subject to expedited removal but seeking asylum, the government would need to detain those families for an average of 20 days to complete the credible fear interview and processing. The court opined that "if 20 days is as fast as [the government], in good faith and in the exercise of due diligence, can possibly go in screening family members for reasonable or credible fear," then a 20-day extension "may" be expeditious under the terms of the settlement, "especially if the brief extension of time will permit the DHS to keep the family unit together." But the court did not place its imprimatur on 20 days for all families seeking asylum. Further, when class members attested to being detained for periods ranging from 5 weeks to 13 months, the court concluded that the government was in substantial noncompliance with the Flores Settlement. The requirement for expeditious release remains the law of the land because the district court rejected the government's motion to amend the Flores Settlement. In sum, the reason alien minors and their parents generally cannot remain together for more than brief periods while in immigration detention is because the Flores Settlement requires minors to be placed in non-secure, state-licensed facilities within days or (in individualized circumstances during an influx) weeks of their apprehension, yet there do not appear to be any facilities that both comply with the Flores -required conditions and authorize adults to be housed in the facility. Exactly how long DHS may detain alien minors in a temporary, nonqualifying facility during an influx remains unclear. But the overseeing district court has opined that 20 days may be reasonable under certain individualized circumstances. Having said that, an exception exists if an alien parent affirmatively waives a child's right under the Flores Settlement to be detained in a non-secure, state-licensed facility. The government has unsuccessfully argued in the Flores litigation that it has been absolved of its obligation to house alien minors in non-secure, state-licensed facilities as a consequence of the preliminary injunction entered in the Ms. L. litigation. In Ms. L. , two asylum seekers brought a class action lawsuit claiming that their substantive due process rights had been violated by the government's practice of separating families entering the United States at the border--both when lawfully seeking admission at a port of entry and when illegally crossing into the United States between ports of entry. The district court certified a class generally composed of all alien adult parents who enter the United States at or between designated ports of entry who (1) have been, are, or will be detained in immigration custody by the DHS, and (2) have a minor child who is or will be separated from them by DHS and detained in ORR custody, ORR foster care, or DHS custody. Then the court imposed a preliminary injunction against the government, which, as relevant here, orders it to refrain from detaining in DHS custody class members without their minor children and to reunite all class members with their minor children. The injunction required reunification within 14 days for children under age five, and within 30 days for older children. In Flores , the government alerted the district court to the Ms. L. preliminary injunction and explained that, to comply with the injunction, it intended to detain families together during the entirety of immigration proceedings. The government asserted that the Flores Settlement permits alien children to remain in DHS detention alongside their parents because the agreement requires the release of minors "without unnecessary delay," and the Ms. L. injunction, the government said, makes delay necessary . The Flores court rejected the government's contention that it could indefinitely detain alien minors in secure, unlicensed facilities and still comply with the terms of the Flores Settlement. The court characterized the government's submission as a "strained construction" of the Flores Settlement--one that renders many of its protective requirements meaningless. Nor, the court added, does the injunction make it impossible to comply with both court orders--the Ms. L. injunction and the Flores Settlement--because, the court explained, "[a]bsolutely nothing prevents [the government] from reconsidering their current blanket policy of family detention and reinstating prosecutorial discretion." Consequently, as children of class members were reunited with their detained parents in unlicensed facilities, the Flores clock, so to speak, began running. Once the clock started, the government faced the requirement to "expeditiously"--generally viewed as a 20-day window--place each family in a Flores -qualifying detention facility or release the family. In practice, because of a lack of qualifying bed space, the government has been releasing families. With the Flores Settlement in place, the executive branch maintains that it has two options regarding the detention of arriving family units that demonstrate a credible fear of persecution pending the outcome of their removal proceedings in immigration court: (1) generally release family units; or (2) generally separate family units by keeping the parents in detention and releasing the children only. The executive branch appears to have resumed implementing the first option after the district court in Flores rejected the argument that it could detain family units together in DHS facilities under Ms. L . As for the second option--to separate families by detaining parents only--doubts exist as to whether it is legally viable. The "zero-tolerance policy" for prosecuting illegal entry offenses, announced by Attorney General Sessions in April 2018, was one manner of implementing this option, at least for family units that entered the country surreptitiously: when parents were referred for criminal prosecution for illegal entry or other criminal violations, the children were deemed UACs and transferred to ORR custody. The June 20, 2018, executive order ended this practice, and the district court in Ms. L . concluded that the practice likely violated due process by separating families without a plan for their reunification following the conclusion of criminal proceedings. Thus, to effect the release of children without their parents through a general policy of criminally prosecuting the parents does not appear to be a legally viable policy for the executive branch because due process may require that the families be reunited following the criminal proceedings. The Department of Justice may decide to prosecute parents who enter the country illegally, but the executive branch as a whole likely cannot use prosecution to separate families for prolonged periods. Aside from criminal prosecution, another way for the executive branch to pursue the second option would be to keep parents in DHS civil immigration detention while releasing children to other relatives or guardians. The Ninth Circuit has held that the Flores Settlement does not require DHS to release parents along with their children. The executive branch has argued that this holding "specifically envisioned separating parents from their children under the terms of the [ Flores ] Agreement." Nonetheless, it does not appear that DHS has ever pursued a general policy of releasing children without their parents from civil immigration detention. Such a policy, in any event, would likely face practical and legal barriers. On the practical front, DHS would need to locate other relatives or licensed programs to accept the children while the parents remained in detention. On the legal front, the Ms. L. court has held that a "government practice of family separation without a determination that the parent was unfit or presented a danger to the child" likely violates due process, except to the extent that the family separation occurs during pending criminal proceedings. Under this standard, it is not clear that DHS could constitutionally create family separation by continuing to detain, in civil immigration detention, alien parents whose children were released under the Flores Settlement. A conceivable third option would be for the executive branch to create licensed family detention centers that comply with the Flores Settlement and detain families together in those centers. The executive branch apparently does not count this as a feasible option, however, and has said that "ongoing and unresolved disputes" exist "over the ability of States to license these types of facilities that house both adults and children." Even if such licensed facilities existed, a blanket policy of detaining families together in them arguably might still violate the Flores Settlement, which favors release over detention in qualifying facilities. Also, apart from the Flores Settlement, at least one federal district court has concluded that the detention of arriving family units pending the outcome of their removal proceedings in immigration court would likely violate due process, if undertaken for the purpose of deterring future arrivals. In summary, the only clearly viable option under current law for the treatment of family units that demonstrate a credible fear of persecution is for the executive branch generally to release the families pending their removal proceedings in immigration court. The executive branch may modify or terminate its obligations under the Flores Settlement through three primary avenues: (1) by reaching an agreement with the plaintiffs; (2) by prevailing on a motion to modify the settlement; or (3) by terminating the agreement through promulgation of "final regulations implementing th[e] Agreement," pursuant to the terms of the settlement agreement (as interpreted by the district court). On June 21, 2018, the executive branch began pursuing the second option by asking the Flores district court to approve changes to the settlement agreement that would exempt accompanied minors from the general release policy and make the state-licensure requirement inapplicable to ICE family residential facilities. These modifications would allow DHS to detain accompanied alien minors with their families in ICE family detention centers for more than brief periods without violating the Flores Settlement. However, the district court rejected the government's motion on July 9, 2018. The government has filed an appeal to the Ninth Circuit. On appeal, the government would appear to have limited prospects for success under current circuit case law. A party seeking judicial modification of a settlement agreement must establish that "'a significant change in circumstances warrants revision of the decree.'" The Ninth Circuit has applied this standard to the Flores Settlement on two occasions in recent years. In 2016, the Ninth Circuit held that the "surge in family units crossing the Southwest border" during the migrant crisis that began in 2014 did not constitute a significant change in circumstances and thus did not justify modifying the settlement agreement so that it no longer applied to accompanied alien minors. The Ninth Circuit reasoned that the Flores Settlement anticipated that such an influx could occur and provided the government added flexibility in responding under the "as expeditiously as possible" standard. In 2017, the Ninth Circuit held that developments in the law after the Flores Settlement went into effect in 1997--in particular, the enactment of provisions governing the care and custody of UACs in the Homeland Security Act of 2002 and the Trafficking Victims Protection Reauthorization Act of 2008--did not release the government from its obligations under the decree to provide UACs in removal proceedings with bond hearings. The two statutes, the Ninth Circuit held, did not constitute a "significant change in circumstances" for modification purposes because they did not render compliance with the terms of the consent decree "impermissible." The thrust of the government's argument in its most recent motion is that a "worsening influx of families unlawfully entering the United States at the southwest border" constitutes a significant change in circumstances that justifies modifying the Flores Settlement to allow accompanied minors to remain detained with their families in unlicensed ICE facilities. This is similar to the argument that the Ninth Circuit rejected in the 2016 ruling--that a "surge in family units crossing the Southwest border" justified modification of the consent decree. Indeed, the district court concluded that the most recent government motion is but "a thinly veiled motion for reconsideration" of the argument that the Ninth Circuit rejected in 2016. In the most recent motion, the government argued that "the number of family units crossing the border illegally has increased . . . by 30% since the 2014 influx" and that, notwithstanding the 2016 decision, "nothing suggests that the parties anticipated that this increase would consist largely of children who were accompanied by their parents." Nonetheless, in light of the Ninth Circuit's holding that influxes do not justify modification because they were anticipated by, and addressed in, provisions of the Flores Settlement, the government's best prospects of success on the motion might be on eventual review at the Supreme Court, which would not be bound by the Ninth Circuit's 2016 opinion. On September 7, 2018, the DHS and HHS published a notice of proposed rulemaking for the "Apprehension, Processing, Care, and Custody of Alien Minors and Unaccompanied Alien Children" to replace the Flores Settlement. According to the parties' 2001 stipulation, the Flores Settlement will terminate 45 days after the government publishes final regulations implementing the agreement. Likely, one or both parties to the agreement will seek a court determination as to whether the final rules implement the settlement agreement. It is unclear whether the district court overseeing the settlement would conclude that the rules, at least as proposed, constitute "final regulations implementing th[e] Agreement" within the meaning of the settlement's termination provision. Principally, the proposed regulations provide standards for DHS care and custody of alien minors who were accompanied upon entry and for HHS care and custody of unaccompanied children. In doing so, the regulations would separately define "minor" and "unaccompanied alien child." "Minor" will be defined as any alien who is under 18 years old and has not been emancipated or incarcerated for a criminal offense for which the alien had been tried as an adult. "Unaccompanied Alien Child," like the statutory definition, will be defined as an alien without lawful immigration status, who is under the age of 18 years old and who has no parent or legal guardian in the United States or has no parent or legal guardian in the United States that is available to provide care and physical custody. The proposed regulations diverge from the original agreement in two notable ways. First, the rules are written to conform to two intervening statutes--(1) The Homeland Security Act of 2002, which transferred from the former INS to ORR the function of caring for UACs, and (2) the TVPRA, which provides placement and custody standards for UACs in ORR's custody. Second, and perhaps more likely to generate legal dispute, the proposed rules seek to create a federal alternative to the Flores Settlement's requirement that facilities be state-licensed, which the government views as an impediment to detaining families together. The proposed rules specify that any unreleased alien minor who is not a UAC will remain in DHS custody in a non-secure, licensed facility. If an ICE family detention center is situated in a locality that does not have a licensing scheme that would allow for family detention, a family detention center would still be considered "licensed" under the proposed regulations if DHS hires a third party with "relevant audit experience" to ensure compliance with ICE-established standards for family residential centers. The proposed regulations outline certain minimal provisions that ICE must include when establishing its standards, including arrangements for living accommodations, food, clothing, medical care, counseling, individualized needs assessments, education, recreation, religious services, and information about legal services, among others. These minimal standards are not identical to the minimal standards for licensed programs outlined in the Flores Settlement, and thus an argument could be made that the proposed regulations do not "implement" the settlement. For instance, according to the Flores Settlement--but not the proposed regulations--a licensing program must maintain discipline standards and client records. More generally, it might be argued that the proposed regulations replace Flores 's general policy favoring release of minors with a policy that favors maintaining family unity, even if that requires detaining minors for longer periods in a family residential center. The proposed regulations do afford DHS officials some discretion to parole alien children in custody, and further indicate that a "[m]inor may be released with an accompanying parent or legal guardian who is in detention." But the Federal Register notice for the proposed regulations indicates that "[t]o the extent that [the Flores Settlement] has been interpreted to require . . . [the parole of juveniles] during expedited removal proceedings, this regulation is intended to permit detention . . . in order to avoid the need to separate or release families in these circumstances." If a court accepts the argument that the proposed regulations, once finalized, do not implement the terms of the Flores Settlement, the court would probably hold that the regulations do not satisfy the settlement agreement's termination provision, leaving the agreement in effect. If Congress enacts new statutes that directly conflict with provisions of the Flores Settlement--such that the provisions of the settlement become "impermissible" under the law--then the executive branch could move the district court to modify the decree in conformity with the new statutes. For example, the Flores Settlement establishes a general policy that minors in removal proceedings should be released from custody. In contrast, the Protect Kids and Parents Act ( S. 3091 ), as introduced in the Senate on June 19, 2018, would provide that "[a] child shall remain in the custody of and be detained in the same facility as the Asylum Applicant who is the child's parent or legal guardian during the pendency of the Asylum Applicant's asylum or withholding of removal proceedings." If the bill becomes law, it likely would enable the executive branch to obtain modification of the settlement's general release policy on the ground that the policy is "impermissible" under the new law. Other bills introduced in the 115 th Congress may have similar consequences. Constitutional restrictions would remain a potential obstacle to such a government motion, however. For example, if the district court determines that new statutory provisions are unconstitutional as applied to alien minors accompanied by their parents in immigration detention pending formal removal proceedings, the court likely would not grant a motion to conform the Flores Settlement to the new statute. Any district court holding to this effect--which would implicate unsettled issues noted above about the constitutionality of prolonged immigration detention --would be subject to de novo review on appeal. | Reports of alien minors being separated from their parents at the U.S. border have raised questions about the Department of Homeland Security's (DHS's) authority to detain alien families together pending the aliens' removal proceedings, which may include consideration of claims for asylum and other forms of relief from removal. The Immigration and Nationality Act (INA) authorizes--and in some case requires--DHS to detain aliens pending removal proceedings. However, neither the INA nor other federal laws specifically address when or whether alien family members must be detained together. DHS's options regarding the detention or release of alien families are significantly restricted by a binding settlement agreement from a case in the U.S. District Court for the Central District of California now called Flores v. Sessions. The "Flores Settlement" establishes a policy favoring the release of alien minors, including accompanied alien minors, and requires that those alien minors who are not released from government custody be transferred within a brief period to non-secure, state-licensed facilities. DHS indicates that few such facilities exist that can house adults and children together. Accordingly, under the Flores Settlement and current circumstances, DHS asserts that it generally cannot detain alien children and their parents together for more than brief periods. Following an executive order President Trump issued that addressed alien family separation, the Department of Justice filed a motion to modify the Flores Settlement to allow for the detention of alien families in unlicensed facilities for longer periods. The district court overseeing the settlement rejected that motion, much as it has rejected similar motions to modify the settlement filed by the government in recent years. (The U.S. Court of Appeals for the Ninth Circuit has affirmed the earlier rulings but has not yet reviewed the most recent ruling.) In its most recent motion, the government has argued, among other things, that a preliminary injunction entered in a separate litigation, Ms. L v. ICE, which generally requires the government to reunite separated alien families and refrain from separating families going forward, supports a modification of the Flores Settlement to allow indefinite detention of alien minors alongside their parents. On a separate track, DHS and the Department of Health and Human Services (HHS) have announced that they intend to seek termination of the Flores Settlement through the promulgation of new regulations that, according to the agencies, would adopt the substantive terms of the agreement with certain modifications. Significantly, the proposed regulations would allow DHS to detain families together until immigration proceedings were completed by creating an alternative federal licensing scheme for family residential centers. That federal scheme would impose facility standards that purport to mimic the standards set forth in the Flores Settlement, which calls for the exclusive use of state-licensed facilities for the detention of minors. A legal dispute seems likely to arise over whether the proposed regulations adequately implement the Flores Settlement, including whether the regulations are consistent with the agreement's general policy favoring the release of minors from immigration custody. Congress, for its part, could largely override the Flores Settlement legislatively, although constitutional considerations relating to the rights of aliens in immigration custody may inform the permissible scope and effect of such legislation. | 7,822 | 719 |
Over the past several years, the United States has become increasingly integrated with the world economy. In 2007, the United States was the world's largest exporter (at $1.6 trillion) and largest importer of goods and services (at $2.4 trillion). From 1960 to 2007, U.S. exports of goods and services as a share of gross domestic product (GDP) rose from 4.9% to 12.2%, while imports rose from 4.3% to 17.0%. The Economist Intelligence Unit (EIU) projects that by the year 2037, U.S. exports and imports as a percent of GDP will total 39.5% and 33.8%, respectively (see Figure 1 ). U.S. economic integration with the world has greatly changed the nature and complexity of U.S. trade flows. For example, many U.S. firms have shifted production abroad to take advantage of lower costs with some production sold locally and some exported, including to the United States. In addition, many firms in the United States import inputs (such as auto parts) to produce finished goods (such as cars). Trade in services, while much smaller than merchandise trade, is becoming an increasingly important component of U.S. trade. Many commercial activities in the United States that impact trade are not always reflected in U.S. trade data. For example, many U.S. companies design and develop products that are manufactured overseas, such as in China. Frequently, a significant share of the value added to these products (and profits) accrue to U.S. firms and workers, while only a small part of the value added accrues to where the products are made. Finally, over the past several years, a significant level of U.S. trade (especially imports) has shifted away from developed countries (such as Western Europe and Japan) to developing countries (especially those in Asia, such as China). From 1985 to 2007 the share of U.S. merchandise exports to developing countries rose from 33% to 49%, while the share of U.S. merchandise imports from these countries rose from 35% to 57%. Financial flows play a critical role in the U.S. global economic integration. In 2007, the United States was the largest cumulative source of foreign direct investment (FDI) around the world at $2.6 trillion and was the largest cumulative destination of FDI at $1.8 trillion. FDI plays a critical role for many U.S. firms attempting to sell their goods and services in foreign markets. Many companies set up subsidiaries abroad in order to tailor products and services to suit each country's specific tastes or standards (or because of lower costs). These overseas subsidiaries often import machinery, parts, and other inputs from the parent company in the United States and thus help generate U.S. exports. FDI in the United States helps create employment (about 5.1 million jobs in 2005 by majority-owned nonbank U.S. affiliates of foreign companies). According to the Bureau of Economic Analysis, U.S. affiliates of foreign firms accounted for 20% of U.S. exports and 25% of U.S. imports in 2005. In addition, foreign investment has gone into U.S. securities, such as U.S. Treasury securities, which is used to finance U.S. budget deficits. This investment helps to fund the shortfall in U.S. domestic savings relative to its investment needs and enables the United States to enjoy healthier economic growth and relatively lower interest rates. As of March 2008, foreign investors owned 51.4% of privately-held U.S. debt (at $2.4 trillion). A major concern for many U.S. policymakers and economists is the size and growth of the U.S. trade deficit. The current account balance (the broadest measurement of trade flows because it includes merchandise trade, services trade, investment income and unilateral transfers) went from a $2.9 billion surplus in 1991 to a $738.6 billion deficit in 2007. The deficit reflects the high level of foreign savings the United States must obtain to fund its investment needs. Many mainstream economists contend that free trade is a win-win situation because it enables countries to focus on producing goods they are relatively more efficient at (comparative advantage) and trading for those goods they are less relatively efficient at producing. This enables countries to consume more goods than they could if they were self-sufficient. However, some observers of trade contend that this simple explanation of trade does not always apply in today's global economy where the factors of production (including capital and technology) are internationally mobile. They argue that U.S. trade with some countries, especially those with low wages but high productivity levels (such as India and China), may not always produce net benefits for the United States if such countries are able to gain a comparative advantage in more advanced goods and services over the United States. Another argument is that, in some cases, the benefits of trade in the United States may mainly accrue to upper income groups, while mainly hurting income-competing firms and lower income groups (through job losses and depressed wages). For example, a factory in the United States may be closed and workers laid off because it is no longer competitive. The U.S. company might relocate production to another country, such as or Mexico. Profits from this venture would accrue mainly to company officials and stockholders of the company. The laid off factory workers may find new jobs, but they may not always pay as well as the previous ones. Other economists counter that raising productivity, innovation, and education and training levels are keys to ensuring U.S. global competitiveness and high paying jobs. They further contend that the United States cannot isolate itself from the global economy, and that protectionist measures to try to restrict imports that negatively affect certain domestic industries will adversely affect other industries and have a net negative impact on the U.S. economy. Most trade analysts on both sides of the free trade argument contend that some sort of assistance and/or retraining should be afforded to workers that are displaced by trade (although opinions differ as to what extent that assistance should be given). U.S. post-World War II trade policy under various presidential administrations has had several interrelated objectives. One has been to secure open markets for U.S. exports. A second has been to protect domestic producers from foreign unfair trade practices and from rapid surges in fairly traded imports. A third has been to control trade for foreign policy and national security reasons. A fourth objective has been to help foster global trade to promote world economic growth. In fulfilling these objectives, U.S. policymakers have employed an array of policy tools. One set of tools are multilateral and bilateral/regional negotiations and agreements. The United States has been a major player in establishing a multilateral system of rules on trade. It was a leader in nine rounds of negotiations of the General Agreement on Tariffs and Trade (GATT), including the current Doha Development Agenda (DDA) round, that have expanded the coverage of multilateral trade rules and that led to the establishment in 1995 of the World Trade Organization (WTO). However, progress in the DDA has been slow at best as WTO members have found it difficult to reach consensus on some basic issues, such as reducing tariffs and nontariff barriers on trade in agriculture, manufactured goods, and services. These difficulties have generated debate over the future role of multilateral negotiations and the WTO itself as a tool of trade policy. U.S. trade negotiations have become increasingly dominated by bilateral and regional negotiations to establish free trade agreements (FTAs). To date the United States has FTAs in effect with 14 countries, and FTAs with three other countries pending. Some experts and other observers view the FTAs as a building block to broader, multilateral negotiations. Others consider them an unhelpful roadblock that undermines the multilateral system (because they may lead to trading blocs and trade diversion). In general, support for FTAs in the United States and elsewhere may be waning, in part due to growing uncertainty and skepticism regarding the benefits of trade liberalization among some policymakers and various segments of the population. A second group of trade policy tools are trade remedies- measures applied primarily against imports to alleviate or "remedy" the price impact of unfairly traded imports and of some fairly traded imports. Trade remedies include antidumping (AD) measures and countervailing (CV) measures applied in the form of extra duties on imports that are, respectively, sold at less than fair market value or have benefitted from foreign government subsidies, as determined by the U.S. Department of Commerce (DOC), and that cause or threaten to cause material injury to the U.S. industry, as determined by the U.S. International Trade Commission (USITC). These measures are the most frequently used trade remedies. A more powerful, yet less frequently used, trade remedy is the escape clause or safeguard measure. Safeguards, sometimes called section 201 measures, are applied in the form of higher duties or quotas, on imports that are trade fairly but enter at such rapid rates as to cause or threaten to cause serious injury to the domestic industry. They are applied to the imports of the product from all countries. As a result, safeguards have a potentially powerful impact. The cause and injury thresholds that petitioners must meet before receiving trade remedy relief are much higher than for AD and CV measures. In addition, they require presidential approval. As a result, safeguards are not as frequently applied as other trade remedies and even less so than in the past. Section 301 and its derivatives are another set of trade remedies that are part of trade policy "toolbox" but infrequently used. Section 301 (of the Trade Act of 1974) authorizes the USTR to apply sanctions against a trading partner that uses unfair trade practices against U.S. exports. A related provision, called "Special 301" requires the USTR to identify countries that fail to protect the rights of U.S. owners of intellectual property and to apply sanctions if the trading partner does not improve IPR protection. Some U.S. trading partners have criticized the "aggressive" U.S. use of trade remedies, particularly AD and CV measures (which some claim are protectionist). The European Union and Japan, for example, successfully challenged the U.S. practice of "zeroing" when calculating "fair value" in AD cases. Many WTO members have also argued that trade remedy practices should be reviewed and revised as part of the Doha Development Agenda round. Congress has mandated, as part of the Trade Promotion Authority (TPA), that the President shall not enter into any trade agreement that weakens U.S. trade remedy laws. Besides trade agreements and trade remedies, U.S. policymakers use other tools to achieve various policy objectives. For example, the Department of Commerce, the Department of Agriculture, the U.S. Export-Import Bank and other agencies operate programs to promote U.S. exports of manufactured goods and agricultural products. The Commerce Department and Labor Department administer Trade Adjustment Assistance (TAA) programs for firms (Commerce) and workers (Labor) that are negatively affected by trade in order to help them adjust. In addition, U.S. trade preference programs, including the Generalized System of Preferences (GSP), allow certain products imported from eligible developing countries to enter the United States duty free. These programs are designed to encourage economic development in those countries. Furthermore, sometimes trade is used to achieve overtly foreign policy goals. For example, the U.S. Government controls exports of some high technology to prevent it from getting into the hands of adversaries. It also restricts trade with states deemed to be detrimental to U.S. national interests, such as Burma, Cuba, and North Korea. The direction of U.S. trade policy is likely to be a hotly contested issue among U.S. policymakers over the next several years. Challenges include reaching a consensus on how to lower the U.S. trade deficit (without slowing the economy), the design and funding of programs to assist displaced workers, the extent U.S. trade remedy laws should be used to respond to unfair trade practices (without becoming protectionist), policies the federal government can initiate to help the U.S. economy become more globally competitive, strategies the United States can take to induce other countries to lower their trade barriers (multilaterally in the WTO and/or bilaterally through FTAs), and the extent that trade policy should be used to promote environment (e.g., global climate change) and worker rights. Reaching a consensus on these issues within Congress, as well as between Congress and the Administration, will likely prove difficult since the stakeholders of trade are widespread and diverse (e.g., in terms of whether free trade benefits them or hurts them), and because there are differing opinions over the effects trade has on the U.S. economy, as well as different views over which trade policies are effective in promoting U.S. trade goals. One of the biggest challenges for the next President and Congress will be whether TPA, which expired in July 2007, should be renewed, thus enabling the President to pursue additional bilateral, regional, and multilateral trade agreements. Some policymakers oppose extending TPA, contending that trade liberalization has had little positive impact on the U.S. economy and has hurt some U.S. workers, while others have argued that failure to renew TPA will undermine U.S. leadership on free trade and will enable other countries (such as China) to form trade blocs that exclude the United States, thus putting U.S. exporting firms at a disadvantage. | The United States has become increasingly integrated with the rest of the world economy. This integration has offered benefits and presented challenges to U.S. business, agriculture, labor, and consumers. Those who can compete in the more integrated economy have enjoyed opportunities to broaden their success, while those who are challenged by increased foreign competition have been forced to adjust and some have exited the market or relocated overseas. Some observers contend that, in order to remain globally competitive, the United States must continue to support trade liberalization policies, while assisting those hurt by trade. Others have raised doubts over whether free trade policies benefit the U.S. economy (e.g., some blame such policies for the large U.S. trade deficit, declining wages, and growing income disparity). Many contend that trade liberalization works only when everyone plays by the rules and have urged the aggressive enforcement of U.S. trade laws to address unfair trade practices. Still others maintain that such issues as labor rights, the environment, and climate change should be linked to trade policies. These competing views are often reflected in the struggle between Congress and the Executive branch in shaping U.S. trade policy. This report provides an overview and background on the debate over the future course of U.S. trade policy and will be updated as events warrant. | 2,954 | 273 |
The House of Representatives follows a well-established routine on the opening day of a new Congress. The proceedings include electing and swearing in the Speaker, swearing in Members, electing and swearing in House administrative officers, and adopting rules of procedure and various administrative resolutions. Resolutions assigning some or many Members to committees may also be adopted. The House must take these actions at the beginning of each new Congress because it is not a continuing body. Article 1, Section 2 of the Constitution sets a term of office for Members of the House at two years. Thus, one House ends at the conclusion of each two-year Congress, and the newly elected Representatives must constitute a new House at the beginning of a new Congress. The Twentieth Amendment to the Constitution directs that a new Congress convene at noon on January 3 in each odd-numbered year, unless the preceding Congress has by law designated a different day for the new Congress's convening. On November 20, 2014, the 113 th Congress completed action on H.J.Res. 129 , setting the convening date for the 114 th Congress as January 6, 2015. The joint resolution was signed into law by President Obama on December 4 ( P.L. 113-201 ). Congressional leaders planned that the 115 th Congress would convene January 3, 2017, and that the 116 th Congress would convene January 3, 2019, obviating the need for a law to set the date. In recent years, it has been the exception rather than the rule for a new Congress to begin on January 3. Nine of the past 12 Congresses began on a date other than January 3: 104 th Congress (January 4, 1995), 105 th Congress (January 7, 1997), 106 th Congress (January 6, 1999), 108 th Congress (January 7, 2003), 109 th Congress (January 4, 2005), 110 th Congress (January 4, 2007), 111 th Congress (January 6, 2009), 112 th Congress (January 5, 2011), and 114 th Congress (January 6, 2015). The 107 th , 113 th , and 115 th Congresses were the 3 of these 12 to begin on January 3, convening January 3, 2001; January 3, 2013; and January 3, 2017, respectively. Although no officers of the House will have been elected when the House first convenes, officers from the previous Congress perform certain functions. The previous Clerk of the House calls the House to order and presides over the chamber until the Speaker is elected and sworn in. In the absence of the Clerk, the Sergeant at Arms performs this duty. After the Clerk calls the Representatives-elect to order, the Chaplain offers a prayer. The Clerk leads the Members-elect and their guests in reciting the Pledge of Allegiance. The Clerk then directs a reading clerk to call the roll of all Members-elect to establish that a quorum is present. In current practice, the roll is not actually called by a clerk; rather, the Members-elect record their presence by inserting their official voting cards (obtained prior to or on opening day) in the chamber's electronic voting machines. Once the call of the roll is completed, a majority having registered their names, a quorum (218, if no vacancies) is indicated. This action fulfills the requirements of Article I, Section 5 of the Constitution that a quorum be present to conduct business. The Clerk then announces the election of the Resident Commissioner from Puerto Rico (when applicable since the Resident Commissioner's term is four years) and of the Delegates--one person from the District of Columbia and one person from each of the territories of Guam, the U.S. Virgin Islands, the Northern Mariana Islands, and American Samoa. The Clerk also reports any deaths or resignations since the election. A quorum being present, the first order of official business is the election of the Speaker of the House of Representatives. The candidates for Speaker are nominated from the floor by the leaders of their respective parties. Traditionally, there is one candidate from the majority party and one from the minority party, selected by the Republican Conference and the Democratic Caucus at their early organizational meetings. Individual Members-elect may place other names in nomination. Debate on the nomination of candidates for Speaker is allowed but not customary. Instead, the nominations are followed immediately by a viva voce roll-call vote, that is, a vote in which the Members-elect respond orally to the calling of their names. In this vote, the Members-elect call out the last name of their choice for Speaker when their names are called by a reading clerk. The Clerk appoints Members-elect to serve as majority and minority tellers, usually two each, to ascertain the vote. So long as nearly all of the majority party's members vote for its candidate, the majority party is able to assure its candidate's election because the vote is likely to be almost exclusively along party lines. The candidates themselves, however, often vote "present" or do not vote. The following excerpt is from the proceedings for the election of the Speaker in the 115 th Congress. ELECTION OF SPEAKER The CLERK. Pursuant to law and precedent, the next order of business is the election of the Speaker of the House of Representatives for the 115 th Congress. Nominations are now in order. The Clerk now recognizes the gentlewoman from Washington (Mrs. McMORRIS RODGERS). Mrs. MCMORRIS RODGERS. ... As chair of the Republican Conference, I am directed by the vote of that conference to present for election to the office of Speaker of the House of Representatives for the 115 th Congress the name of the Honorable PAUL D. RYAN.... The Clerk now recognizes the gentleman from New York (Mr. CROWLEY). Mr. CROWLEY. ... Madam Clerk, [as chair of the Democratic Caucus] I am pleased to put forth the name of the Representative-elect from California, NANCY PELOSI, for Speaker of the House of Representatives for the 115 th Congress. The CLERK. The names of the Honorable PAUL D. RYAN, a Representative-elect from the State of Wisconsin, and the Honorable NANCY PELOSI, a Representative-elect from the State of California, have been placed in nomination. Are there further nominations? There being no further nominations, the Clerk appoints the following tellers: The gentleman from Mississippi (Mr. HARPER); the gentleman from Pennsylvania (Mr. BRADY); the gentlewoman from Ohio (Ms. KAPTUR); and the gentlewoman from Florida (Ms. ROS-LEHTINEN). The tellers will come forward and take their seats at the desk in front of the Speaker's rostrum. The roll will now be called, and those responding to their names will indicate by surname the nominee of their choosing. The Reading Clerk will now call the roll. The tellers having taken their places, the House proceeded to vote for the Speaker. ... The CLERK. The tellers agree in their tallies that the total number of votes cast is 433, of which the Honorable PAUL D. RYAN of the State of Wisconsin has received 239, the Honorable NANCY PELOSI of the State of California has received 189, the Honorable TIM RYAN of the State of Ohio has received 2, the Honorable JIM COOPER of the States of Tennessee has received 1, the Honorable JOHN LEWIS of the State of Georgia has received 1, and the Honorable DANIEL WEBSTER of the State of Florida has received 1. Therefore, the Honorable PAUL D. RYAN of the State of Wisconsin, having received a majority of the votes cast, is duly elected Speaker of the House of Representatives for the 115 th Congress. After the Speaker's election, the Clerk appoints a bipartisan committee to escort the Speaker-elect to the Speaker's chair on the dais. The Speaker-elect is escorted by leaders of both parties and, often, by Representatives-elect from his or her home state. He or she is introduced to the chamber by the minority leader, who might deliver a statement from the chair. The Speaker may make a statement of his or her own and then takes the oath of office. By precedent, the dean of the House, the most senior (longest-serving) Member, regardless of party, administers the oath to the Speaker. That oath is identical to that of the other Members. (See " Oath of Office for Members-Elect .") The Speaker during the day's proceedings delivers a letter to the Clerk listing Members in the order in which they may act as the Speaker pro tempore, should a vacancy occur in the office, until a new Speaker is elected. After taking the oath, the Speaker administers the oath to all Members of the House, en masse, including the nonvoting Delegates and Resident Commissioner. The Speaker directs the Representatives-elect to rise and raise their right hands. The oath, which follows, is stated in the form of a question, to which the newly elected Members respond in the affirmative: [Do you] I do solemnly swear (or affirm) that [you] I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that [you] I will bear true faith and allegiance to the same; that [you] I take this obligation freely, without any mental reservation or purpose of evasion; and that [you] I will well and faithfully discharge the duties of the office on which [you] I am about to enter[?]. So help [you] me God. An oath is mandated by Article VI of the Constitution, and its text is set by statute (5 U.S.C. 3331). As the Members-elect raise their right hands, they are not required to hold anything in their left hands. Many have held a family Bible or another sacred text in their left hands, but there is no requirement that anything be held when the oath is taken. The same is true for Representatives who re-enact the event with their families and the Speaker in the Speaker's office after the formal ceremony. Many Members choose to hold something meaningful in their left hands. These objects have often been, but are not limited to, a family heirloom or something else of special significance. Nothing, however, is required. It is up to the Member to determine what, if anything, he or she holds. While photography is not permitted of the swearing-in on the House floor, ceremonial swearing-ins may be photographed or recorded. Members who were not present when all Members were sworn in might take the oath in the House chamber later on opening day. Occasionally, the swearing-in of a Member-elect is delayed because of illness or other circumstances. When that happens, the Member-elect is sworn in at a later date in the House chamber or elsewhere by someone designated by the Speaker. The oath of office may be administered by another Member or by a judge. The location has been at sites in Washington, DC, other than the Capitol and in other parts of the country. If the swearing-in of a Member is challenged, the Speaker, pursuant to House precedents, will ask the Member-elect to remain seated while the others are sworn in. The House then determines the disposition of the challenge. After the Speaker administers the oath of office, he or she receives reports from the chairs of the two party organizations, the Republican Conference and the Democratic Caucus, who announce their parties' choice for majority leader and minority leader. Mrs. MCMORRIS RODGERS. Mr. Speaker, as chair of the Republican Conference, I am directed by that conference to notify the House officially that the Republican Members have selected as majority leader the gentleman from California, the Honorable KEVIN MCCARTHY. Mr. CROWLEY. Mr. Speaker, as chairman of the Democratic Caucus, I have been directed to report to the House that the Democratic Members have selected as minority leader the gentlewoman from California, the Honorable NANCY PELOSI. The party chairs then announce the names of those elected to serve as majority and minority whips. The House next turns to the election of its administrative officers: Clerk, Sergeant at Arms, Chief Administrative Officer, and Chaplain. A simple resolution nominating the slate of candidates is offered by the chair of the caucus or conference of the majority party. The minority party proposes its own roster of candidates as an amendment to the majority party's resolution. By tradition, neither the resolution nor the amendment is debated, although the slate can be divided with a separate vote on any or all officers. Again, because of its numerical advantage, the majority is able to defeat the minority substitute and to adopt the resolution naming its chosen candidates. The Speaker administers the oath to the newly elected officers. Six staff of the minority party leadership are subsequently designated. The House adopts simple resolutions to formally notify the Senate and the President that it has elected its leaders, is assembled, and is ready to receive messages from them. Subsequently, the majority and minority leaders as well as two Senators (usually the majority and minority leaders) telephone the President with the news that Congress has assembled is ready to begin its work. The Clerk of the House is also authorized by resolution to inform the President that the House has selected its Speaker and Clerk. The next order of business is the adoption of the rules of the House. Although the rules of one House do not carry over to the next House, a newly elected House typically approves its rules by adopting the rules of the previous Congress with specific amendments. Traditionally, prior to the first day of a new Congress, majority and minority Rules Committee members and possibly other party groups have worked on any changes the majority or minority wish to implement in the House's standing rules. With the majority party's numerical advantage, its rules package, as presented, prevails. The majority's proposed rules are offered in the form of a House simple resolution, most often numbered H.Res. 5 . Since there are at that time no existing House rules, the resolution is considered under "general parliamentary law," which the House interprets to include the rules in force in the preceding Congress. Debate is normally limited to one hour, although the time might be extended by unanimous consent, and the majority party floor manager of the resolution traditionally yields half the debate time "for purposes of debate only" to the minority floor manager. Participants in the debate discuss the majority's proposal and any minority-party alternate proposal. At the end of debate time, the majority manager moves the previous question. The majority party's numerical advantage assures the adoption of this motion. The effect is to force a nearly immediate vote on the question of final approval of the majority's own rules package. Adoption of the previous question motion ends debate and prevents the minority from actually offering its alternate rules package. Nonetheless, the minority still has the ability to offer a motion to commit with instructions, that is, one more chance to offer an amendment to the majority's rules resolution. Only 10 minutes of debate, equally divided, is allowed but the House often forgoes this debate by unanimous consent. With its numerical majority, the majority party is able to prevail in defeating a motion to commit, if offered, and, then, in adopting its rules resolution. In addition to allowing the adoption of the previous House's rules with specific amendments to those rules, a rules resolution may include other provisions that govern additional House action or activities. Such provisions typically appear as the final sections of the rules resolution, may be extensive, and may be labeled as separate orders, additional orders, or even with a specific name. In the 115 th Congress rules resolution, Section 3 was labeled Separate Orders; Section 4 was labeled Committees, Commissions, and House Offices; and Section 5 was labeled Order of Business. The separate orders in Section 3 pertained to House rules (e.g., access to House exercise facilities by former Members who were registered lobbyists) and rules in rulemaking statutes (e.g., the Congressional Budget Act). These separate orders and other orders departed from or interpreted these rules in a specific manner and were applicable for the first session of the 115 th Congress or for the duration of the 115 th Congress. The provisions related to committees, commissions, and House offices in Section 4 continued the existence for the 115 th Congress of resolutions from prior Congresses that created the House Democracy Partnership, the Tom Lantos Human Rights Commission, and the Office of Congressional Ethics. The House needed to formally indicate that these resolutions were in effect since a simple resolution normally expires at the end of the Congress in which it is adopted. An additional order in Section 5 provided for the reading of the Constitution in the House. The terms special order and special rule are used somewhat interchangeably. In either case, a special rule may make in order House consideration of a measure and establish the terms of the measure's debate and amendment, among other provisions. It might also alter specific rules of the House only for the consideration of one or more measures identified in the special order, perhaps permitting an action that would otherwise be prohibited. When the majority party wishes to begin moving quickly in a new Congress on legislation, it might include in the rules resolution special orders making in order the consideration of specified measures or temporarily altering specific rules to allow the consideration of a specified measure. In the 115 th Congress, Section 5 of H.Res. 5 made in order the consideration of H.R. 21 , which would amend the Congressional Review Act, related to congressional review of certain proposed regulations, to allow a joint resolution to disapprove two or more proposed regulations rather than one regulation. The special order was a closed rule, meaning that no amendments could be offered. In the 113 th Congress, Section 5 of H.Res. 5 allowed a motion to suspend the rules on Friday, January 4, 2013, so that the House could consider a flood insurance measure under that procedure; without this order, the motion could be made only on Mondays, Tuesdays, and Wednesdays. A similar provision in Section 5 of H.Res. 5 in the 112 th Congress applied to a resolution to be considered on Thursday, January 6, 2011, that reduced salaries and expenses authorized for Member, committee, and leadership offices. This provision also expanded the debate time of 40 minutes under the rule on suspension of the rules to 2 hours. In the 111 th Congress, Section 5 of H.Res. 5 made in order the consideration of H.R. 11 , the Lilly Ledbetter Fair Pay Act, and H.R. 12 , the Paycheck Fairness Act, and set the terms for the measures' debate. The House agreed to H.Res. 5 on January 6, 2009. On January 9, it considered H.R. 11 and H.R. 12 under the terms of the special order included in H.Res. 5 , and passed the bills. In the 110 th Congress, special orders were included in H.Res. 6 providing for the consideration of H.R. 1 , pertaining to recommendations of the 9/11 Commission; H.R. 2 , relating to the minimum wage; H.R. 3 , governing stem cell research; and H.R. 4 , authorizing the Secretary of Health and Human Services to negotiate drug prices under Medicare Part D. H.Res. 5 in the 106 th Congress made in order consideration of a resolution to amend the House gift rules ( H.Res. 9 ). H.Res. 6 in the 104 th Congress made in order the consideration of H.R. 1 , the Congressional Accountability Act. On the day of convening or shortly thereafter, the Speaker customarily announces the Speaker's policies with respect to certain floor practices for the duration of the Congress. These policies are grounded in authority or discretion granted the Speaker in the rules. The 10 policies in effect for the 115 th Congress address-- privileges of the floor, introduction of bills and resolutions, unanimous consent requests for the consideration of legislation, recognition for one-minute speeches, recognition for special-order speeches, decorum in debate, conduct of votes by electronic device, use of handouts on the House floor, use of electronic equipment on the House floor, and use of the House chamber. In recent Congresses, the majority leader has initiated a set of written protocols to guide the scheduling or consideration of legislation during a two-year Congress. The protocols cover matters involving the content of authorization bills, the availability of measures scheduled for consideration under the suspension of the rules procedure, and other items. Both parties' rules also contain guidance on scheduling or considering legislation. For example, both parties' rules contain guidance on legislation qualifying to be considered under the suspension of the rules procedure. These protocols and party rules are not printed in the Congressional Record . The Speaker, the chair of the Rules Committee, or the chairs of relevant committees might submit memoranda of understanding for printing in the Congressional Record . These memoranda most often provide guidance to the Speaker on the referral of legislation where an ambiguity is present, possibly triggered by a change in rules. In the 114 th Congress, for example, the Speaker inserted three memoranda of understanding between the chair of the Judiciary Committee and, respectively, the chairs of the Agriculture, Energy and Commerce, and Ways and Means Committees. In adopting H.Res. 5 , the House made a change in the Judiciary Committee's jurisdiction by adding the phrase "and criminalization" to the committee's jurisdiction over "criminal law enforcement." The change was intended to "cover measures that alter the elements of a crime so as to criminalize new conduct and, in so doing, trigger an existing criminal penalty." Measures reported from committees other than Judiciary with these kinds of provisions had affected the scope of the Judiciary Committee's jurisdiction over criminal law enforcement. The Speaker might alternately include a policy statement in the Speaker's announcements for a Congress. The Speaker also appoints Members who may sign enrolled bills and joint resolutions. The House establishes its daily hour of meeting for the first session of the new Congress by a simple resolution. It must therefore be renewed for the next session of Congress. The House by unanimous consent allows a period preceding House sessions called Morning Hour. In Morning Hour, Members may speak up to five minutes on topics of their choice. To eliminate a routine daily unanimous consent request, the House agrees by unanimous consent at the beginning of a Congress that Members may publish remarks and include supporting information in the Extension of Remarks section of the Congressional Record . The House adopts a concurrent resolution ( H.Con.Res. 1 , 115 th Congress) by unanimous consent to allow the Speaker and the majority leader of the Senate (or their designated representatives) to notify the Members of the House and Senate to assemble outside of Washington, DC, if circumstances require it. The committee assignment process occurs largely within the party groups--the Republican Conference and the Democratic Caucus. The conference and the caucus have their own rules governing committee assignments. The only action visible on the chamber floor is the adoption of simple resolutions that implement the committee nominations recommended by the conference and the caucus. The adoption of such resolutions is routine and occurs without debate or amendment because of the tacit understanding that each party has a right to establish its own internal distribution of committee assignments. The House may take up one or more assignment resolutions on opening day, but the consideration of additional assignment resolutions extends throughout January and possibly for several additional weeks. The House typically in March adopts a funding resolution for its committees. Interim funding through March would have been provided by the House in the preceding Congress. Other routine organizational business may be taken up on the House floor on the first day. Concurrent resolutions may be adopted providing for a joint session of Congress to receive the President's State of the Union message, or providing for an adjournment of the House and Senate. The Speaker and minority leader might make appointments to commissions or committees or other offices. A resolution of condolence on the death of a Member that occurred subsequent to the adjournment of the last Congress may also be considered. Some resolutions are dependent on specific circumstances that might not occur in every new Congress. For example, following a presidential election, the new House adopts resolutions providing for the counting by the new Congress of electoral votes cast for the President and Vice President of the United States; continuing the Joint Congressional Committee on Inaugural Ceremonies; and authorizing the use of the Capitol and its grounds for inaugural activities. After the House has completed its initial organizational proceedings, it might then turn to legislative or routine business, which normally completes its legislative day. Routine business might include the introduction of bills and resolutions, receipt and referral of messages from the President and executive agencies, receipt of messages from the Senate, one-minute and special-order speeches, and notices and announcements required by House rule or regulation. | Article 1, Section 2 of the Constitution sets a term of office of two years for all Members of the House. One House ends at the conclusion of each two-year Congress, and the newly elected Representatives must constitute a new House at the beginning of the next Congress. Consequently, the House must choose its Speaker and officers and adopt the chamber's rules of procedure every two years. The Constitution mandates that Congress convene at noon on January 3, unless the preceding Congress by law designated a different day. P.L. 113-201 set January 6, 2015, as the convening date of the 114th Congress. Congressional leaders planned that the 115th Congress would convene January 3, 2017, and that the 116th Congress would convene January 3, 2019, obviating the need for a law to set the date. Although no officers will have been elected when the House first convenes, officers from the previous Congress perform certain functions, such as conducting the election of the Speaker. The House follows a well-established first-day routine. The proceedings include-- a call to order by the Clerk of the House; a prayer led by the Chaplain and the Pledge of Allegiance led by the Clerk; a quorum call ordered by the Clerk; the election of the Speaker, ordered by the Clerk and conducted with the assistance of tellers; remarks by the Speaker-elect, followed by his or her swearing-in by the dean of the House; the oath of office for the newly elected and re-elected Members, administered by the Speaker; adoption of the rules of the House for the new Congress; adoption of various administrative resolutions and unanimous consent agreements; and announcement of the Speaker's policies on certain floor practices. On opening day, the House often adopts resolutions assigning some or many of its Members to committees. This process regularly continues over several more weeks. The committee assignment process occurs primarily within the party groups--the Republican Conference and the Democratic Caucus. Other routine organizational business may also be taken up on the House floor on the first day, such as adoption of a resolution to allow a judge or a Member of Congress to administer the oath of office to one or more Members-elect who are absent. Some resolutions on opening day are dependent on specific circumstances and do not occur at the beginning of each new Congress. At the outset of a new Congress following a presidential election, the House and Senate must adopt a resolution agreeing to meet to count the electoral votes cast for President and Vice President. For an explanation of proceedings occurring on the first day in the Senate, see the companion report: CRS Report RS20722, The First Day of a New Congress: A Guide to Proceedings on the Senate Floor. | 5,626 | 596 |
The Elementary and Secondary Education Act (ESEA) is the primary source of federal aid to elementary and secondary education. Title I-A is the largest program in the ESEA, funded at $14.9 billion for FY2016. 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). The ESEA was comprehensively reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95 ) on December 10, 2015. The ESSA made few changes to the Title I-A formulas. These changes took effect in FY2017. This report provides final FY2016 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 , by [author name scrubbed]. 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 , by [author name scrubbed] and [author name scrubbed]. 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 FY2016, about 43% of Title I-A appropriations were allocated through the Basic Grants formula, 9% through the Concentration Grants formula, and 24% 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 in poor families, by an "expenditure factor" based on state average per pupil expenditures for public elementary and secondary education. In some formulas, additional factors are multiplied by the formula child count and expenditure factor. 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. Final FY2016 grants included in this report were calculated by ED. The percentage share of funds allocated under each of the Title I-A formulas was calculated by CRS for each state by dividing the total grant received by the total amount allocated under each respective formula. Table 1 provides each state's grant amount and percentage share of funds allocated under each of the Title I-A formulas for FY2016. Total Title I-A grants, calculated by summing the state level grant for each of the four formulas, are also shown in Table 1 . Overall, California received the largest total Title I-A grant amount ($1.8 billion) and, as a result, the largest percentage share (11.98%) of Title I-A grants. Wyoming received the smallest total Title I-A grant amount ($34.8 million) and, as a result, the smallest percentage share (0.24%) of Title I-A grants. In general, grant amounts for states vary among formulas due to the different allocation amounts for the formulas. For example, the Basic Grant formula receives a greater share of overall Title I-A appropriations than the Concentration Grant formula, so states generally receive higher 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 much larger population of children included in the formula calculations than North Carolina and, therefore, received 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 for which the state's share of funds is below its overall share of Title I-A funds. For example, Florida and Nevada received a substantially higher percentage share of Targeted Grants than of overall Title I-A funds, indicating that the Targeted Grants formula is more favorable to them than other Title I-A formulas may be. At the same time, both states received a smaller percentage share of Basic Grants than of overall Title I-A funds, indicating that the Basic Grants formula is less favorable to them than other Title I-A formulas may be. In states that received a minimum grant under all four formulas (Alaska, North Dakota, South Dakota, Vermont, and Wyoming), the shares under the Targeted Grants and EFIG formulas are greater than under the Basic Grants or Concentration Grants 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) was comprehensively reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95) on December 10, 2015. The Title I-A program is the largest grant program authorized under the ESEA and was funded at $14.9 billion for FY2016. 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 final FY2016 state grant amounts under each of the four formulas used to determine Title I-A grants. Overall, California received the largest FY2016 Title I-A grant amount ($1.8 billion or 11.98% of total Title I-A grants). Wyoming received the smallest FY2016 Title I-A grant amount ($34.8 million or 0.24% of total Title I-A grants). | 1,424 | 299 |
Untreated HIV infection leads to a gradual deterioration of the immune system and leavesaffected individuals susceptible to the opportunistic infections and cancers that typify AIDS. Since1981, a cumulative total of 1,014,797 AIDS cases in the United States and dependent areas havebeen reported to the Centers for Disease Control and Prevention (CDC). (1) Of this total, 448,871 personswere reported to be living with AIDS as of the end of December 2006. In addition to the totalnumber of people living with AIDS, another 233,079 persons were known to be infected with HIV(does not include data from five states and the District of Columbia; these areas have not beenreporting name-based HIV infection case numbers to CDC since at least 2003). Figure 1. Estimated Total Federal Spending on HIV/AIDS,by Function, FY2008 Source: HHS Budget Office, March 20, 2008. Federal government AIDS spending is estimated at $23.3 billion in FY2008 (see Table 5 ). The Bush Administration request for FY2009 is $24.1 billion. Of the total amount spent by thefederal government on HIV/AIDS in FY2008, the majority (63%) of funding is for treatmentprograms; funding for research receives 13% of the total (see Figure 1 and Table 4 ). The remainingamounts are for prevention programs (14%) and income support for persons with AIDS (10%). AIDS programs within HHS (Health and Human Services) account for 66% of the totalamount spent on AIDS by the federal government (see Figure 2 ). HHS entitlement funding supportsthe treatment of HIV/AIDS patients through Medicaid and Medicare, which are administered by theCenters for Medicare and Medicaid Services (CMS). HHS discretionary funding supports AIDSresearch and prevention programs, as well as treatment programs. Table 2 provides a history ofHHS discretionary funding for HIV/AIDS from the beginning of the epidemic in FY1981 to thepresent. Funding for HIV/AIDS programs within HHS has increased markedly over the past 15 yearsas measured in constant 2000 dollars, shown in Figure 4 near the end of this report. Even thoughHHS has revised its estimates of spending by Medicaid for FY2007 through FY2009, Figure 4 stillshows that most of the overall rise can be attributed to increased spending on Medicaid, Medicare,and treatment programs in the discretionary budget, largely through the Ryan White programadministered by the Health Resources and Services Administration (HRSA). The increase inHIV/AIDS research and prevention programs has been much less pronounced, and their portion ofthe total amount spent by HHS on HIV/AIDS has declined over the past 15 years (see Figure 5 ). For example, in FY1992 HIV/AIDS research and prevention programs at HHS accounted for 51%of the total amount spent by HHS on HIV/AIDS; by FY2008, such programs were about 27% of thetotal amount spent by HHS on HIV/AIDS, reflecting the growing amounts spent on treatmentservices under Medicaid and Medicare. Figure 2. Estimated Total Federal Spending on HIV/AIDS, byAgency, FY2008 Source: HHS Budget Office, March 20, 2008. Note: USAID, U.S. Agency for International Development. See Table 4 . About 90% of FY2008 HHS discretionary funding for HIV/AIDS is allocated to three HHSagencies: the National Institutes of Health (NIH), which supports HIV/AIDS research ; CDC, whichsupports HIV/AIDS prevention programs; and, HRSA, which administers the Ryan White program,an HIV/AIDS treatment program (see Table 3 and Table 4 ). The budgets and activities of thesethree agencies are briefly described below, followed by a discussion of entitlement program spendingon HIV/AIDS. NIH is the principal agency of the federal government charged with the conduct and supportof biomedical and behavioral research. NIH conducts research at its own 27 institutes and centersand supports more than 200,000 scientists and research personnel working at over 3,100 U.S.institutions. NIH funding for FY2008 was provided in P.L. 110-161 ( H.R. 2764 ), andNIH estimates FY2008 funding for AIDS research at $2.913 billion. The Administration's requestfor FY2009 is $2.913 billion. (2) Funding for AIDS research is distributed among the NIH institutesin accordance with the scientific priorities identified in the annual comprehensive plan for AIDSresearch developed by the institutes along with the Office of AIDS Research (OAR). OAR was established in statute by the National Institutes of Health Revitalization Act of1993 ( P.L. 103-43 ) and given substantially enhanced authority and responsibility beyond the officeNIH had established under the same name. Congress appropriated funds to OAR in FY1995. However, since FY1996, Congress has not provided a direct appropriation for the OAR (aside fromamounts identified for the operations of the office itself). For FY2008, the House and Senate do notspecify a funding amount for AIDS research at NIH. Instead, funding for AIDS research is includedwithin the appropriation for each Institute/Center/Division of NIH, with decisions as to specificprojects to fund and levels of funding left to the Director of NIH and the Director of OAR. CDC works with community, state, national, and international public health agencies toprevent HIV infection and reduce AIDS-associated morbidity and mortality through its informationand education programs. CDC also supports research, surveillance, and epidemiology studies onHIV/AIDS. CDC distributes much of its HIV funds to state and local agencies through cooperativeagreements, grants, and contracts. CDC funding for FY2008 was provided in P.L. 110-161 ( H.R. 2764 ). According to the HHS Budget Office, CDC will be spending $872 millionon HIV/AIDS activities in FY2008; the Administration's request for FY2009 is $871 million. (3) The HIV/AIDS Bureau within HRSA administers the Ryan White program, a four-partfederal grant program designed to provide emergency relief and essential health care services topatients infected with HIV. The program funds hundreds of grantees that serve 531,000 people eachyear. The Ryan White HIV/AIDS Treatment Modernization Act of 2006 ( P.L. 109-415 , H.R. 6143 ) reauthorized the Ryan White program through September 30, 2009. HRSA funding for FY2007 was provided in P.L. 110-161 ( H.R. 2764 ). According to the HHS Budget Office, HRSA will be spending $2.170 billion on Ryan Whiteprogram activities in FY2008. The Administration's request for FY2009 is $2.171 billion. (4) (For further information onthe Ryan White program, see CRS Report RL33279 , The Ryan White HIV/AIDS Program , by JudithA. Johnson.) Medicaid is a federal-state matching entitlement program that provides medical assistancefor eligible low-income persons and families and certain aged, disabled, and medically needyindividuals. In order to obtain Medicaid coverage, persons must belong to one of the categories ofpersons who can qualify for coverage (such as families with children and disabled persons) and havelow income or deplete their income on the cost of their care. Medicaid has played an important rolein needed health care for persons with HIV and AIDS because of its coverage of prescription drugs. Within broad federal guidelines, each state designs and administers its own Medicaidprogram, resulting in wide variations among the states in coverage, benefits offered, and paymentfor services. The portion of a state's Medicaid budget provided by the federal government variesfrom 50% in relatively affluent states to 80% in poorer states. Medicaid is one of the largest sourceof federal funding for AIDS treatment and health care services (see Figure 3 ). For FY2008, the federal share of Medicaid spending on AIDS treatment is estimated at $4.1billion, and for FY2009, the federal share estimate is $4.4 billion. Total FY2008 federal and stateMedicaid spending for AIDS treatment will be an estimated $7.2 billion ($4.1 billion federal and$3.1 billion state). (5) CMSanalysts have significantly lowered their estimate of the federal share of Medicaid spending on AIDStreatment due to two factors: (1) the impact of Medicare Part D prescription drug coverage and (2)lowered per capita health care costs based on internal CMS data and external data. (6) However, a study by analystsoutside of CMS found that although "implementation of Medicare drug benefit resulted in a majorshift of prescription drug spending from Medicaid to Medicare ... spending for antiretroviralmedications decreased by a much smaller percentage than did spending for many other classes.People with HIV and AIDS continue to depend heavily on Medicaid to pay for their health care, asmost do not qualify for Medicare." (7) Figure 3. Estimated Federal Government Spending on HIV/AIDSTreatment, FY2008 Source: HHS Budget Office, March 20, 2008. Notes: Other includes the following: Substance Abuse and Mental Health; Public Health EmergencyFund; Department of Defense; Bureau of Prisons; Federal Employee Health Benefits Program;Global AIDS Trust Fund. See Table 3 . Medicare is a federal health care insurance program for the elderly and certain disabledpersons. In general, in order to qualify for coverage under Medicare, a person must be age 65 orolder, disabled, or suffering from kidney failure (end-stage renal disease or ESRD). According toone estimate, about 80% of beneficiaries with HIV/AIDS that qualified for Medicare did so becauseof a disability, (8) theremainder were eligible because they were 65 or older or had ESRD. (9) The elderly qualify the monththey turn 65, and those with ESRD qualify within three months of being diagnosed with irreversiblekidney disease requiring dialysis or a kidney transplant. However, disabled people, including thosewith AIDS, must wait for a total of 29 months after a determination that they are disabled before theybecome eligible for Medicare coverage. (10) Early in the epidemic, few individuals with AIDS survived the long waiting period. Withimproved drug therapies, the life expectancy of individuals with HIV has increased, and it isexpected that the number able to qualify for Medicare coverage will continue to rise. (11) The Medicare PrescriptionDrug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ) provided for the implementationof a prescription drug program, often called Medicare Part D, which became effective January 1,2006. CMS analysts have adjusted their estimate of Medicare spending on AIDS treatment basedon two factors: (1) the impact of Medicare Part D prescription drug coverage and (2) lowered percapita health care costs based on internal CMS data and external data. (12) For FY2008, funding forthe care of persons with HIV/AIDS under Medicare is estimated to be $4.5 billion, and the estimatefor FY2009 is $4.8 billion. In 1998 the White House announced a series of initiatives targeting appropriated funds forHIV/AIDS prevention and treatment programs in minority communities. The Congressional BlackCaucus worked with the Clinton Administration to formulate the approach. For FY2008, a total of $403 million is provided to continue these activities. For FY2009, the Administration has requested$387 million. See Table 1 below for further details. Table 1. HIV/AIDS Minority Initiative ($ in millions) Source: Table prepared by the Congressional Research (CRS) based on analysis from the HHSBudget Office, February 15, 2008. Notes: Totals may not add due to rounding. FY2009 is based on the Administration's budgetrequest. In January 2003, President Bush announced in the State of the Union speech a five-year $15 billionprogram, the President's Emergency Plan for AIDS Relief (PEPFAR). (13) The five-year programtargets countries with a very high prevalence of HIV infection; its goals are to prevent 7 million newinfections, provide treatment to 2 million HIV-infected people, and provide care for 10 millionHIV-infected individuals and AIDS orphans. The Global Fund to Fight AIDS, Tuberculous and Malaria, was first proposed at the July2000 G-8 Summit in Okinawa. (14) Its purpose is to attract, manage and disburse funding througha public-private partnership dedicated to the reduction of infections, illness and death caused bythese three diseases in countries in need. It was established in January 2002 as a charitablefoundation in Geneva, Switzerland; the first round of grants was approved in April 2002. U.S.support of the fund occurs through USAID and HHS. As indicated in Table 6 , federal government spending on international HIV/AIDS programsin FY2008 is $5.8 billion; the Administration's request for FY2009 is $5.9 billion. (15) Table 2. HHS Discretionary Funding forHIV/AIDS ($ in thousands) Source: Table prepared by the Congressional Research Service (CRS) based on analysis from HHSBudget Office, March 20, 2008. Note: FY2009 is based on the Administration's budget request. Table 3. HHS Discretionary Funding for HIV/AIDS, by Agency ($in thousands) Source: Table prepared by the Congressional Research Service (CRS) based on analysis from HHS Budget Office, March 20, 2008. Notes: FY2009 is based on the Administration's budget request. FDA: Food and Drug Administration; HRSA: Health Resources and ServicesAdministration; IHS: Indian Health Service; CDC: Centers for Disease Control and Prevention; NIH: National Institutes of Health; SAMHSA: Substance Abuse and Mental Health Services Administration; AHRQ: Agency for Healthcare Research and Quality; OS: Office of the Secretary(includes the Office of HIV/AIDS Policy, Office for Civil Rights, Office of Minority Health, Office of Women's Health and the Public Health and SocialServices Emergency Fund/Minority Communities Fund); Global Aids Trust Fund: While budgeted in NIH, HHS contributions to the Global Fund toFight HIV/AIDS, Malaria, and Tuberculosis are not reflected in the NIH HIV/AIDS spending figures, but are accounted for separately. a. CDC reported funding for HIV/AIDS expenditures have been comparably adjusted downward to reflect the new budget structure at CDC that excludesadministrative and management costs. The FY2004 adjustment was about $68 million, and the FY2005 adjustment was about $74 million. Table 4. Total Federal Government Spending on HIV/AIDS, by Function ($ in millions) Source: Table prepared by the Congressional Research Service (CRS) based on analysis from HHS Budget Office, March 20, 2008. Notes: HHS : Department of Health and Human Services; CMS : Centers for Medicare and Medicaid Services; DI : Disability Insurance; HUD :Department of Housing and Urban Development; SSI : Supplemental Security Income; OPM-FEHB : Office of Personnel Management-Federal EmployeesHealth Benefits. Table 5. Federal Government Spending on HIV/AIDS: FY1982-FY2009 ($ in millions) Source: Table prepared by the Congressional Research Service (CRS) based on analysis from HHS Budget Office, March 20, 2008. Notes: FY2009 is based on the Administration's budget request. May not add due to rounding. HHS: Department of Health and Human Services;Discretionary AIDS budget; CMS: Centers for Medicare and Medicaid Services; SS: Social Security; DI: Disability Insurance; SSI: SupplementalSecurity Income; VA: Veterans Affairs; AID: U.S. Agency for International Development; DOJ-Prisons: Department of Justice, Bureau of Prisons; HUD: Department of Housing and Urban Development; OPM-FEHB: Office of Personnel Management-Federal Employees Health Benefits. a. FY2000 total includes $75 million for the HRSA Ricky Ray Hemophilia program, and FY2001 total includes $580 million for the HRSA Ricky RayHemophilia program. b. Medicaid and Medicare amounts have been revised due to the impact Medicare Part D prescription drug coverage and lowered per capita health carecosts. Figure 4. HHS Spending on HIV/AIDS Programs Source: HHS Budget Office, March 20, 2008. Note: FY2009 is based on the Administration's budget request. Figure 5. HHS HIV/AIDS Spending, by Program/Function, as aPercentage of Total Source: HHS Budget Office, March 20, 2008. Note: FY2009 is based on the Administration's budget request. Table 6. Federal Government Spending on International HIV/AIDS Programs, by Function ($ in millions) Source: Table prepared by the Congressional Research Service (CRS) based on analysis from HHS Budget Office, March 20, 2008. Notes: May not add due to rounding. HHS: Department of Health and Human Services. | Federal government spending on HIV (the human immunodeficiency virus) and AIDS(acquired immune deficiency syndrome) is estimated at $23.3 billion in FY2008. Of the total, 63%is for treatment programs; research programs receive 13%; prevention programs receive 14%, andincome support programs receive 10%. The Administration's government-wide request level for allHIV/AIDS programs in FY2009 is $24.1 billion. AIDS programs within the Department of Health and Human Services (HHS) account for66% of the total amount spent on HIV/AIDS by the federal government in FY2008, a total of $15.2billion for both discretionary and entitlement programs. Within the HHS discretionary budget,funding for HIV/AIDS research, prevention, and treatment programs has increased from $200,000in FY1981 to an estimated $6.586 billion in FY2008; the Administration's request for FY2009 is$6.592 billion. This report provides an overview of HHS spending on HIV/AIDS as well as budget numbersfor other federal government programs targeting HIV/AIDS. This report is updated once per yearto reflect the new budget figures. | 3,733 | 244 |
T he manner in which staff are deployed within an organization may reflect the missions and priorities of that organization. In Congress, employing authorities hire staff to carry out duties in Member-office, committee, leadership, and other settings. The extent to which staff in those settings change may lend insight into the Senate's work over time. Some of the insights that might be taken from staff levels include an understanding of the division of congressional work between Senators working individually through their personal offices, or collectively, through committee activities; the relationship between committee leaders and chamber leaders, which could have implications for the development and consideration of legislation, the use of congressional oversight, or deployment of staff; and the extent to which specialized chamber administrative operations have grown over time. This report provides staffing levels in Senators', committee, leadership, and other offices since 1977. No Senate publication appears to officially and authoritatively track the actual number of staff working in the chambers by office or entity. Data presented here are based on staff listed by chamber entity (offices of Senators, committees, leaders, officers, officials, and other entities) in Senate telephone directories. Figure 1 displays overall staffing levels in the Senate. Table 1 in the " Data Tables " section below provides data for all staff listed in chamber directories in the Senate through 2016. Joint committee staff data from the Senate for panels that met in the 114 th Congress (2015-2016) are provided in Table 7 . This report provides data based on a count of staff listed in the Senate telephone directories published since 1977. Like most sources of data, telephone directory listings have potential benefits and potential drawbacks. Telephone directories were chosen for a number of reasons, including the following: telephone directories published by the Senate are an official source of information about the institution that are widely available; presumably, the number of directory listings closely approximates the number of staff working for the Senate; while arguably not their intended purpose, the directories provide a consistent breakdown of Senate staff by internal organization at a particular moment in time; and the directories afford the opportunity to compare staff levels at similar moments across a period of decades. At the same time, however, data presented below should be interpreted with care for a number of reasons, including the following: There is no way to determine whether all staff working for the Senate are listed in the chambers' telephone directories. If some staff are not listed, relying on telephone directories is likely to lead to an undercount of staff. In particular, staff working in Senators' state offices were not listed until 1987. This likely led to an undercount of staff, and makes comparisons pre-1987 and post-1987 difficult. It is not possible to determine if staff who are listed were actually employed by the Senate at the time the directories were published. If the directories list individuals who are no longer employed by the Senate, then relying on them is likely to lead to an overcount of staff. The extent to which the criterion for inclusion in the directories for the Senate has changed over time cannot be fully determined. Some editions of the directory do not always list staff in various entities the same way. This may raise questions regarding the reliability of telephone directory data as a means for identifying congressional staff levels within the Senate over time. Some Senate staff may have more than one telephone number, or be listed in the directory under more than one entity. As a consequence, they might be counted more than once. This could lead to a more accurate count of staff in specific entities within the Senate, but multiple listings may also lead to an overcount of staff working in the chamber. Chamber directories may reflect different organizational arrangements over time for some entities. This could lead to counting staff doing similar work in both years in different categories, or in different offices. It appears that the Senate telephone directories started listing Senate staff working in Senators' state offices in 1987. Given the lack of consistent staff data from Senators' offices prior to 1987, comparisons between data from those offices from 1977-1986 and 1987-2016, as well as any analysis of total staffing levels in the Senate before 1987, would be incomplete. Staff levels from committees, leadership, and officers and officials, however can be evaluated across the entire 1977-2016 time period. Additionally, analysis of total staffing levels, as well as staff distribution, since 1987 is discussed below. In the Senate, the number of staff has grown steadily, from 4,916 in 1987 to 5,749 in 2016, or 16.94%. Each year since 1987, the number of Senate staff has grown by an average of 29 individuals, or 0.58%. From 1977 to 1986, excluding congressional staff from state offices, the number of staff in the Senate has grown steadily from 3,397 in 1977 to 4,180 in 1986, or 23.05%. Figure 1 displays staff levels in six categories (Senators' DC offices, Senators' state offices, total staff in Senators' offices, committees, leadership, and officers and officials) since 1977. Figure 2 provides the distributions among categories of offices from 1987 to 2016. Table 1 in the " Data Tables " section, below, provides detailed staff levels in those categories. Staff in Senators' offices grew from 2,068 in 1977 to 2,474 in 1986, or 19.63%. Due to the addition of staff in Senators' state offices, comparisons of total staff before 1986 to after are not possible. But staff in Senators' Washington, DC, offices continued to grow. In 2016, there were 2,342 staff in Senators' DC offices, an increase of 13.25% from the 1977 level, 2,068. Staff in Senators' offices, including state-based staff, have grown from 3,286 in 1987 to 4,120 in 2016, or 25.38%. Senators' office staffs have grown as a proportion of overall Senate staff over time. In 1987, Member-office staff comprised 66.84% of Senate staff. The proportion grew to 67.51% in 1990, and 72.96% in 2000, before dropping slightly to 71.66% in 2016. Most of the growth in Senators' staffs since 1987 appears to have been among state-based staff, which nearly doubled in size from 935 in 1987 to 1,778 in 2016. More staff work in Washington, DC, offices than in state offices, but the percentage of Senators' staff based in states has grown steadily since 1987, while the number of staff in Senators' Washington, DC, offices has remained relatively flat. In 2016, 56.84% of staff listed in the Senate telephone directory as working in Senators' offices did so in Washington, DC, down from a high of 72.18% in 1988. Table 2 in the " Data Tables " section below provides the number of staff working in Senators' offices in Washington, DC, and state offices. Senate committee staff levels have shown the smallest change among Senate staff categories, increasing from 1,084 in 1977 to 1,153 in 2016, or 6.37%. Change among Senate committee staff may be characterized in three stages: an increase during 1977-1980 (20.57%); a period of decline in 1980-1999 (-27.93%); and a period of growth from 1999 to 2016 (22.40%). Between 1987 and 2016, committee staff comprised a decreasing proportion of Senate staff, falling from a peak of 23.39% of Senate staff in 1987 to a low of 17.49% of staff in 1995. The proportion of Senate committee staff grew to 20.06% in 2016, still below its 1987 peak. In the " Data Tables " section below, three tables provide staff levels in various Senate committees. Table 3 provides data for 2007-2016; data for 1997-2006 are available in Table 4 , Table 5 provides data for 1987-1996, and data for 1977-1986 are in Table 6 . Totals for each year, which include Senate joint committee staff found in Table 7 , are provided in Table 1 . The number of staff in Senate leadership offices grew from 44 in 1977 to 160 in 2016. The majority of the growth in leadership staff occurred between 1977 and 1981, from 44 to 119, or 170.45%. The number of leadership staff peaked in 2012 at 234. As a proportion of Senate staff, leadership employees were 2.69% in 1987 and 2.78% in 2016. Staff working in the offices of Senate officers and officials has grown 57.21% since 1977. Staff levels have grown from 201 in 1977 to 316 in 2016, but were characterized by sharp decreases in 1988, from 1998-2001, in 2012, and in 2016. Despite the growth, Senate officers and officials' staff decreased as a proportion of Senate staff, falling from 7.08% in 1987 to a low of 5.21% in 2012. In 2016, the proportion of officers and officials' staff was 5.50%. Since 1987, the number of staff working for the Senate has grown. There have been increases in the number of staff working in Senate leadership offices, and larger increases in the staffing of officers and officials through 2015, though 2016 saw a dip in those numbers. Staff working for Senators have shifted from committee settings to leadership settings or the personal offices. Some of these changes may be indicative of the growth of the Senate as an institution, or the value the chamber places on its various activities. One example that may be an indication of institutional development arguably is found in the growth of the number of staff working in leadership and officers and officials' offices. A potential explanation for these changes may be found in what some might characterize as an ongoing professionalization and institutionalization of congressional management and administration. Some note that as organizations such as governing institutions develop, they identify needs for expertise and develop specialized practices and processes. In Congress, some of those areas of specialization arguably include supporting the legislative process through the drafting of measures, oversight and support of floor activities, and the management of legislation in a bicameral, partisan environment. Another potential explanation related to a more institutionalized, professionalized Congress could be the demands for professional management and support. This could arise as a result of congressional use of communications technologies, and the deployment of systematic, professionalized human resources processes, business operations, and financial management. Consequently, increased specialized support of congressional legislative and administrative activities may explain increases among staff working for chamber leaders, and officers and officials. In another example, the distribution of staff working directly for Senators has shifted from committee settings to personal office settings. Staff in Member offices has grown while staff in Senate committees has decreased, both in real numbers and in percentage of total staff. This may represent a shift from collective congressional activities typically carried out in committees (including legislative, oversight, and investigative work) to individualized activities typically carried out in Senators' personal offices (including direct representational activities, constituent service and education, and political activity). | The manner in which staff are deployed within an organization may reflect the missions and priorities of that organization. This report provides staffing levels in Senators' Senate committee, leadership, and other offices since 1977. From 1977 to 1986, Senate staff, excluding state-based staff, increased from 3,397 to 4,180, or 23.05%. From 1987 to 2016, all Senate staff grew from 4,916 to 5,749, or 16.94%. The changes in both time periods were characterized in part by increases in the number of staff working in chamber leadership offices, and, prior to 2016, increases in the staffing of chamber officers and officials. Additionally, staff working for Members have shifted from committees to the personal offices of Members. Since 2010, however, staff working for the Senate has decreased 6.79%. Some of these changes may be indicative of the growth of the Senate as an institution, or the value the chamber places on its various activities. This report is one of several CRS products focusing on congressional staff. Others include CRS Report RL34545, Congressional Staff: Duties and Functions of Selected Positions, by R. Eric Petersen; CRS Report R43947, House of Representatives Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2016, by R. Eric Petersen and Amber Hope Wilhelm; CRS Report R44324, Staff Pay Levels for Selected Positions in Senators' Offices, FY2001-FY2015, coordinated by R. Eric Petersen; CRS Report R44323, Staff Pay Levels for Selected Positions in House Member Offices, 2001-2015, coordinated by R. Eric Petersen; CRS Report R44322, Staff Pay Levels for Selected Positions in House Committees, 2001-2015, coordinated by R. Eric Petersen; and CRS Report R44325, Staff Pay Levels for Selected Positions in Senate Committees, FY2001-FY2015, coordinated by R. Eric Petersen. | 2,304 | 435 |
Congress maintains an active interest in the effective implementation of regulatory systems adopted by federal agencies. A common concern is the pace at which agencies establish rules and complete adjudications. Commentators and courts have noted that agency delay can impact the effectiveness of a regulatory system. Delays can also negatively affect regulated entities that must wait for final agency action. As one court noted: "Quite simply, excessive delay saps the public confidence in an agency's ability to discharge its responsibilities and creates uncertainty for the parties, who must incorporate the potential effect of possible agency decisionmaking into future plans." Substantial case law has emerged on how courts will treat agency delay in a variety of circumstances. The Administrative Procedure Act (APA) imposes a general time restraint on administrative agencies--they must act within a "reasonable time." If a person meets the necessary standing requirements, he can sue the agency for failing to act within a reasonable time. However, when there is no hard deadline imposed on the agency, courts are often reluctant to compel an agency to act and often allow an agency to set its own priorities. In addition to the general timing requirements imposed by the APA, Congress also has the power to require agencies to act on issues within a specific time frame by establishing a statutory deadline in the agency's enabling statute. When an agency fails to meet a statutory deadline, courts are more willing to compel the agency to take prompt action. Judicial remedies available for delayed agency actions are somewhat limited. Generally, a court is restricted to ordering an agency to act by a specific deadline. The following sections outline the timing requirements imposed by the APA, discuss the available judicial remedies when actions are found to be unreasonably delayed, and provide an examination of cases where courts have been asked to compel agency action. Finally, the report concludes with a discussion of legislative tools that Congress can use to try to set agency priorities. The APA does not provide any concrete time limits for agency actions. Instead, the APA leaves most deadlines to be established in the particular agency's enabling statute, if at all. However, the APA states that "within a reasonable time, each agency shall proceed to conclude a matter presented to it." Further, the APA states that courts shall "compel agency action unlawfully withheld or unreasonably delayed." As such, the APA provides individuals with a cause of action when agency action has been unreasonably delayed. A court may hear a claim for unreasonable delay despite the fact that the agency has yet to take a final action on the subject. Generally, under Section 704 of the APA, a court does not have jurisdiction over an agency matter until the agency action is final. However, a court can have jurisdiction over a matter pending before an agency when a party claims that there has been an unlawful or unreasonable delay. In Norton v. SUWA , the Supreme Court stated that "when an agency is compelled by law to act within a certain time period ... a court can compel the agency to act." The United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has also noted that the language of the APA indicates that Congress intended the courts to play a role in ensuring that agencies fulfill their obligation to act within a reasonable time, and other circuits have noted that a claim of unreasonable delay qualifies for judicial review despite a lack of "final agency action." Claims for unreasonable delay can be brought under the APA against an agency in court. However, a claim of unreasonable delay can only be brought against an agency for actions that the agency is legally obligated to take. The Supreme Court has stated that "a claim under SS 706(1) [of the APA] can proceed only when a plaintiff asserts that an agency failed to take a discrete agency action that it is required to take." If taking a certain action is "committed to agency discretion by law," then no claim can be made against the agency for failing to take such an action. In other words, an agency must be required to act by law in order to establish a claim that the agency has unreasonably delayed in acting. Before discussing how a court determines whether an unreasonable delay has occurred, it is important to understand the limitations on available judicial remedies. When a court determines that an action has been unreasonably delayed, it must then decide what remedy to provide the plaintiff. First, although a court can order an agency to take prompt action on an issue, the Supreme Court has declared that a court cannot dictate what conclusion the agency should reach. The Court stated that when an agency misses a deadline, a court can issue "a judicial decree under the APA requiring the prompt issuance of regulations, but not a judicial decree setting forth the content of those regulations." For example, if an agency must determine critical habitat for an endangered species, the court can direct the agency to act immediately, but the court cannot determine which habitat is critical. Furthermore, the Supreme Court has stated that regulations issued after a deadline has passed still maintain the force of law, despite the tardiness of their promulgation. Therefore, a plaintiff cannot challenge the validity of regulations merely based on their promulgation after a deadline. Thus, judicial remedies are generally limited to imposing deadlines on the agency. Courts take varying approaches when fashioning a remedy for an agency action that has been unduly delayed. In some cases a court will order an agency to act promptly. In other situations, a court might impose a deadline on the agency. Sometimes courts merely direct the agency to impose a deadline on itself, which the court will accept unless the agency's proposed deadline is unreasonable. Additionally, courts will often maintain jurisdiction over the case until the agency action has been completed. In these situations, the court will require the agency to file regular reports with the court detailing the progress the agency has made on the action to ensure the agency is actively working to comply. Examples of how courts fashion remedies are provided in the cases discussed in this report. Generally, courts tend to avoid compelling agency action because they do not want to impose agendas on the more politically accountable regulatory agencies. Courts will look to enabling statutes to see if there are statutory time requirements imposed on the agency. When there is no statutory deadline for the agency action, courts tend to be more deferential to the agency's priorities. According to the Blackletter Statement of Federal Administrative Law from the American Bar Association: An agency's delay in completing a pending action as to which there is no statutory deadline may not be held unlawful unless the delay is unreasonable in light of such considerations as the agency's need to set priorities among lawful objectives, the challenger's interest in prompt action, and any relevant indications of legislative intent. In considering such challenges courts are deferential to agencies' allocation of their own limited resources. The D.C. Circuit, in Telecommunications Research & Action Center v. FCC (" TRAC "), established guidelines to consider when determining whether an agency delay warrants mandamus compelling the agency to act. The court stated that "[i]n the context of a claim of unreasonable delay, the first stage of judicial inquiry is to consider whether the agency's delay is so egregious as to warrant mandamus." The court then enumerated several factors, known as the TRAC factors, to consider when answering this question: (1) the time agencies take to make decisions must be governed by a "rule of reason;" (2) where Congress has provided a timetable or other indication of the speed with which it expects the agency to proceed in the enabling statute, that statutory scheme may supply content for this rule of reason; (3) delays that might be reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake; (4) the court should consider the effect of expediting delayed action on agency activities of a higher or competing priority; (5) the court should also take into account the nature and extent of the interests prejudiced by delay; and (6) the court need not find any impropriety lurking behind agency lassitude in order to hold that agency action is unreasonably delayed. Although the TRAC factors are widely cited with regard to whether a court should issue mandamus to compel agency action, courts have also been quick to point out that "mandamus is a drastic remedy, suitable only in extraordinary situations." In cases where there are no statutory deadlines imposed, agency delay of several years on an adjudication may pass before a court issues a writ of mandamus. Decisions seem to vary, and it can be difficult to predict how a court will rule on a question of unreasonable delay. The D.C. Circuit has noted that "[t]here is no per se rule as to how long is too long to wait for agency action," and it can be hard to determine which TRAC factor a court will decide to rely on most heavily. As a result, it appears that each claim of agency delay is determined on a case-by-case basis. This section explores some court decisions to illustrate the difficulty in determining which way a court will rule on a claim of unreasonable delay. For example, in one circumstance, a court determined a delay of 10 years on reaching a decision to be reasonable, while in another situation, a court determined an eight-year delay to be unreasonable. In TRAC , the petitioners claimed that the Federal Communications Commission (FCC) had unreasonably delayed in determining whether AT&T should reimburse ratepayers for certain alleged overcharges. Despite the fact that the proceeding had taken five years and had not yet been resolved, the court decided that the delay did not warrant mandamus in light of the fact that mere economic interests were involved and that the agency had assured the court that it was working expeditiously to resolve the proceeding. Instead of compelling the agency to act, the court required the FCC to provide the anticipated date of resolution and maintained jurisdiction in order to ensure that the agency proceeded accordingly. In Potomac Elec. Power Co. v. ICC , a court found an eight-year adjudication to determine the justness and reasonableness of a railroad's rates to be unreasonable. In this case, the court issued a writ of mandamus and required a final agency order to be issued within sixty days. In justifying the writ of mandamus, despite the fact that the matter merely involved economic interests, the court pointed to legislative history that indicated that Congress wanted the Interstate Commerce Commission (ICC) to act quickly in these rate proceedings. However, in Kokajko v. FERC , despite the presence of similar legislative history--"FERC is statutorily required to give preference and speedy consideration to questions concerning increased rates or charges for the transmission or sale of electric energy"--the court determined that five years was not an unreasonable amount of time to wait for a final agency determination and dismissed the petitioner's claim. In Kokajko , the court focused on the fact that the case merely involved an economic interest and that there was no "significant length of unexplained agency inaction." The court stated, however, that "a five year delay is approaching the threshold of unreasonableness." The United States Court of Appeals for the Fourth Circuit, in In re City of Virginia Beach , determined that mandamus was not warranted for a four and one-half year wait for approval of a water pipeline construction project. Although the court noted that the water pipeline affected "human health and welfare," the court declined to compel immediate agency action in light of the Federal Energy Regulatory Commission's (FERC) assurances that the project was a high priority and would be expedited. Because the delay was not entirely caused by FERC, the court determined that mandamus was not warranted despite the fact that the court was "[not] happy about the overall time elapsed." The United States Court of Appeals for the Eighth Circuit upheld a ten-year delay by the Citizenship and Immigration Services (CIS) on an application for permanent residence. The court noted that the application was given considerable attention by the agency and that the delays were partially caused by changes in legislation regarding required investigations of applicants. The court held that the agency had thus not unreasonably delayed in reaching a final determination on the proceeding within 10 years. Courts have treated an agency's delay in promulgating rules similarly to agency delay in adjudication procedures. Courts still apply the TRAC factors when determining whether a delay is unreasonable in the rulemaking setting. Again, it can be difficult to predict whether a court will compel an agency to act on a claim for unreasonable delay when there is no statutory deadline. In one case involving rulemaking proceedings, the court found that a three-year delay by the Environmental Protection Agency (EPA) was reasonable. The EPA had undertaken a rulemaking to determine if it should regulate strip mines under the Clean Air Act. The court noted that "absent a precise statutory timetable or other factors counseling expeditious action, an agency's control over the timetable of a rulemaking procedure is entitled to considerable deference." The court again applied the TRAC factors and considered the fact that human health and welfare was at stake. It also noted that the agency had been progressing on the rule by holding public meetings, accepting comments, and issuing reports on the issue. After weighing all the considerations, the court stated "given the complexity of the issues facing EPA and the highly controversial nature of the proposal, agency deliberation for less than three years ... can hardly be considered unreasonable." However, in a different case, Public Citizen Health Research Group v. Auchter , the same court held that the Occupational Safety and Health Administration's (OSHA) three-year delay in promulgating a final rule for ethylene oxide (EtO) safety standards was unreasonably delayed. Although this case was decided prior to TRAC , the court still made reference to the same factors. It stated that "[d]elays that might be altogether reasonable in the sphere of economic regulation are less tolerable when human lives are at stake." Emphasizing the delay's potential impact to human health, the court ordered that a notice of proposed rulemaking be issued within thirty days and stated that it expected a final rule within a year. In In re International Chemical Workers Union , the court determined that a six-year delay in promulgating a rule regarding cadmium exposure safety standards was unreasonable. In this case the agency acknowledged that a new standard for cadmium exposure limits was necessary, but repeatedly pushed back the expected release date for the final rule. The court used the TRAC standards and noted that the purpose of the OSHA statute was to protect the health of American workers. It balanced this against the agency's limited resources and other competing activities. In the end, the court accepted the agency's "estimate of the additional time it needs to complete the final stages of the rulemaking," but warned that any additional postponement "would violate [the] court's order." The agency was forced to promulgate a final standard within seven months of the court order. These few examples show that it can be challenging to pinpoint when a court will compel agency action in both rulemaking and adjudication proceedings when there are no statutory deadlines in place. Courts more readily compel agencies to act in cases where there is a statutory deadline imposed on an agency. The Supreme Court declared, in Norton v. SUWA , that "when an agency is compelled by law to act within a certain time period ... a court can compel the agency to act." Some lower courts have made a distinction between actions "unlawfully withheld" (actions that are delayed beyond a statutory deadline) and actions "unreasonably delayed" (actions that are only governed by the APA's "reasonable time" provision) and have determined that a missed statutory deadline compels the court to mandate prompt agency action. Although it is commonplace for courts to compel agencies to act if a deadline has been missed, some courts, as illustrated below, may decline to compel an agency to act in such circumstances. For example, despite the existence of a statutory deadline, the D.C. Circuit still applies the TRAC test to determine whether it is appropriate to issue an order compelling the agency to act. In Forrest Guardians v. Babbitt , the United States Court of Appeals for the Tenth Circuit (Tenth Circuit) stated that when an agency fails to act by a "statutorily imposed absolute deadline," the action has been "unlawfully withheld" and the court has no choice but to compel the agency to act. The Tenth Circuit noted that Section 706(1) of the APA states that courts "shall compel agency action unlawfully withheld," and declared that the court, because of Congress's use of the word "shall," had no discretion on the issue. The court stated that although the TRAC factors might be helpful when considering action guided by a mere general timing provision, the court could not apply the TRAC test to situations where an agency has failed to meet a specific statutory deadline. The court remanded the case and directed the district court to order the Secretary to "issue a final critical habitat designation ... as soon as possible, without regard to the Secretary's other priorities under the [Endangered Species Act]." Similarly, the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) has held that a court must compel agency action when the agency fails to comply with a statutory deadline. In Biodiversity Legal Foundation v. Badgley , the Ninth Circuit found that it was required to issue an injunction to require the Fish and Wildlife Service (FWS) to comply with a twelve-month deadline imposed by the Endangered Species Act. Although the Ninth Circuit acknowledged that it follows the TRAC standard in cases involving general timing provisions, the court stated that "Congress has specifically provided a deadline for performance by the Service, so no balancing of factors is required or permitted." The court stated that the missed deadline "compelled the court to grant injunctive relief" and that the "court had no discretion to consider the Service's stated priorities." Other courts, however, do not follow this distinction. For these courts, a statutory deadline acts only as one of the factors to consider when applying the TRAC test for unreasonable delay and is not, by itself, determinative. Although a deadline will weigh heavily in favor of compelling an agency to act, some courts have declined to order an agency to take action even in the face of deadlines that have long passed. The United States District Court for the District of Columbia, in Ctr. for Biological Diversity v. Pirie , criticized the reasoning followed by the Tenth Circuit in the Forrest Guardians decision. Although the court acknowledged that Section 706 of the APA states that the courts " shall compel agency action unlawfully withheld or unreasonably delayed," the court determined that courts still have discretion when determining whether to issue a writ of mandamus or injunction against an agency. The court pointed to Section 702 of the APA, and declared that the language of this section preserved the courts' equitable discretion in these cases: "Because 702 of the APA explicitly states that a court retains equitable discretion, this Court cannot hold that Congress has clearly and unequivocally limited that discretion under the APA." Therefore, the court determined that it is not forced to compel agency action, even if the agency has missed a statutory deadline. In its opinion from In Re Barr Laboratories, Inc. , the D.C. Circuit noted that "a finding that delay is unreasonable does not, alone, justify judicial intervention." In this case, the Food and Drug Administration (FDA) had missed a statutory deadline for reviewing "generic drug" applications. By statute, the FDA was supposed to review these applications within 180 days. However, the FDA estimated that its response time could range from 389 to 669 days. Barr Laboratories sought mandamus compelling the agency to review its application and claimed that, by missing the statutory deadline, the FDA had unreasonably delayed. The court responded: "Though we agree with Barr that FDA's sluggish pace violates a statutory deadline, we conclude that this is not an appropriate case for equitable relief." The court looked at all of the TRAC factors and determined that mandamus was not appropriate despite the fact that the FDA failed to meet their statutory deadline by a significant margin. The court noted that simply putting one drug manufacturer's case to the front of the line would necessarily push other similar cases further back and would not ultimately promote Congress's objective of having all applications dealt with swiftly. The court did not want to determine the agency's priorities; however, the court did note that if Barr Laboratories had been singled out for mistreatment, an order of mandamus might have been appropriate. Finally, the D.C. Circuit held that a nine-year delay by the United States Coast Guard, in the face of a one-year deadline for promulgating regulations regarding oil tanker standards, was unreasonable. The court ordered the agency to take "prompt" action. However, it applied the TRAC factors, indicating that merely missing the deadline was not, by itself, enough for the court to issue mandamus to compel the agency to act. The TRAC factors remain the most common approach to determining whether agency actions have been unreasonably delayed in both rulemaking proceedings and adjudicatory proceedings. One potential problem with the TRAC test is that it fails to provide any clear answer to whether an agency has delayed unreasonably. Even the D.C. Circuit acknowledges "[t]here is no per se rule as to how long is too long to wait for agency action" and that the TRAC balancing test "sometimes suffers from vagueness." With no clear standard, it can be difficult for regulated entities to estimate when they could expect agency action finally to occur or when it would be appropriate to sue an agency for their delays. However, it seems that two factors always tend to receive ample discussion from the courts. First, statutory deadlines appear to be a significant factor in determining a case of unreasonable delay. When Congress signifies that it wants an agency to prioritize an action, the courts are more willing to enforce that priority. Second, courts appear to be more willing to compel an agency to act when the action involves public health or safety, compared to mere economic interests. Ultimately, however, the determination is made on a fact specific, case-by-case basis. Congress often attempts to press agencies to resolve issues and promulgate rules in swift fashion. Perhaps Congress's most effective tool, discussed above, is the statutory deadline. Although in some circumstances courts will decline to enforce the deadline on the agency, claims for unreasonable delay are vastly more successful when there is a statutory deadline imposed by Congress. Recent scholarship also notes that rulemakings that are undertaken with an imposed statutory deadline are, on average, completed sooner than similar rules with no deadline imposed. It is important to note, however, that when overly imposing deadlines are placed on agency action, agencies often have to act hastily and may reduce the time available for public participation in a rulemaking. In some circumstances, a tight deadline can lead an agency to avoid normal notice and comment procedures by invoking the "good cause" provision under the APA. Another tool available to Congress is the imposition of "hammer" provisions. These provisions, which may be written in tandem with a statutory deadline, dictate what is to happen if a regulatory deadline is missed. These provisions, therefore, impose a consequence if the agency fails to meet the statutory deadline. The consequences for missing a deadline vary. Some laws establish a regulatory scheme that will be put in place if a deadline is missed; others mandate that the agency's proposed rule would go into effect if a final rule is not promulgated by the deadline. At least one law has withheld funding from an agency until certain rules are promulgated. Although these provisions can force an agency to act quickly, they can also be difficult for Congress to establish. For example, for laws that require a congressionally mandated regulatory scheme to go into effect if the agency misses a deadline, subject matter expertise may be helpful or necessary to establish a statutorily imposed regulatory scheme. Congress also maintains the "power of the purse" and can place restrictions on appropriations or threaten to do so if Congress determines that an agency is failing to act in a timely manner. Finally, in the event that an agency is taking too long to take an action, Congress also has the ability to exert political pressure on the agency. Congressional committees can call oversight hearings to question an agency leader regarding delays. Individual members are also permitted to express their concerns to agencies and often send letters to pressure agencies to act promptly on certain issues. Although courts will ultimately determine whether an action has been delayed unreasonably, Congress is able to use these tools to try to establish priorities for the federal agencies' agendas. | One common concern about federal agencies is the speed with which they are able to issue and implement regulations. Federal regulatory schemes can be quite complex, and establishing rules and completing adjudications can sometimes require substantial agency resources and significant amounts of time. However, critics point out that sometimes an agency can simply take too long to a complete task. Commentators and courts have noted that such agency delay can impact the effectiveness of a regulatory scheme. It can also impact regulated entities that must wait for final agency action. In some circumstances, a court may have to determine whether an agency has violated the law by unreasonable delay in taking action. Substantial case law has emerged for how courts will treat agency delay in a variety of circumstances. Under the Administrative Procedure Act (APA), agency actions must be completed "within a reasonable time." Courts have jurisdiction under the APA to hear claims brought against an agency for unreasonable delay, and the APA provides that courts shall compel any action unreasonably delayed or unlawfully withheld. When an agency has delayed, but does not have to act by any statutorily imposed deadline, courts are more deferential to the agency's priorities and are less willing to compel an agency to take action. However, if a delay becomes egregious, courts will compel an agency to take prompt action. Generally, courts follow the TRAC factors, from Telecommunications Research & Action Center v. FCC, to determine whether a delay is unreasonable. The court will see if Congress has established any indication for how quickly the agency should proceed; determine whether a danger to human health is implicated by the delay; consider the agency's competing priorities; evaluate the interests prejudiced by the delay; and determine whether the agency has treated the complaining party disparately from others. A court balances these TRAC factors to reach a conclusion on a case-by-case basis. It can be difficult to predict which way a court will decide any particular case. There is no strict rule on how long is too long to wait for an agency action. Therefore, it is important to look at previous cases to see what kinds of delays are determined to be unreasonable. In addition to the APA's general requirement to act within a reasonable time, Congress may also establish specific deadlines for agency actions by statute. When an agency fails to meet a statutory deadline, courts generally compel the agency to take prompt action. Some courts have determined that a court has no choice but to compel agency action in the face of a missed statutory deadline. For these courts, no balancing is permitted when a deadline has been violated. However, other courts note that a statutory deadline is merely one of the factors to consider when determining whether the delay is unreasonable. For these courts, the TRAC factors are still evaluated to determine whether the court should compel the agency to act after a deadline has been missed. Judicial remedies for delayed agency actions are somewhat limited. The Supreme Court has ruled that a court is permitted to compel an agency to take action, but cannot determine what conclusion the agency shall ultimately reach on the issue. Furthermore, the Supreme Court has also established that agency rules still maintain the force of law, even when they are promulgated after a statutory deadline. Therefore, a court's only remedy for unreasonable agency delay is essentially to impose a deadline on the agency. | 5,660 | 744 |
Native Hawaiian recognition bills have been considered in the 106th-108th Congresses,and at least one of the bills has been reported in each Congress (see Table 1 below). (128) All the billsprovided for a recognition process very similar to that in S. 147 and H.R. 309 , but differed in various other provisions, including the determinationof land transfers to, and the jurisdictional powers of, a Native Hawaiian political entity. Thenature of the federal government's relationship to Native Hawaiians was an issue long beforethe 106th Congress, however, in both the Department of the Interior (129) and the halls ofCongress. Congress came closest to enacting a Native Hawaiian recognition bill in the 106thCongress, when the House passed H.R. 4904 . While the Senate did not passH.R. 4904, the bill would have been enacted through a provision in theConsolidated Appropriations Act, 2001 ( H.R. 4577 , P.L. 106-554 ), until a Senateconcurrent resolution removed the provision by correcting the enrollment of H.R.4577 ( S.Con.Res. 162 ). Table 1. Native Hawaiian Recognition Bills inCongress Congress has enacted a number of programs for Native Hawaiians, in addition to theHawaiian Home Lands program. (130) One concern among proponents of Native Hawaiianrecognition is that many or all of these federal programs for Native Hawaiians may beendangered if a Native Hawaiian political entity is not created. (131) Federal NativeHawaiian programs either are solely for Native Hawaiian communities or organizations orexplicitly include Native Hawaiian communities or organizations among the eligibleapplicants. Some of these programs benefit Indians as well. The programs provide a notinsignificant amount of federal dollars for Native Hawaiians. A 2003 report of the Councilfor Native Hawaiian Advancement estimated that in FY2002 over $70 million flowed intoHawaii because of such Native Hawaiian programs. (132) Among themajor federal Native Hawaiian programs listed in the Catalog of Federal Domestic Assistance (CFDA) (133) are the following. Native Hawaiian Education Act ( P.L. 107-110 , Title VII, Part B); F2004obligations were $33.3 million, according to the CFDA. Higher Education Act, Title III, Institutional Aid for Alaska Native andNative Hawaiian serving institutions. Native Hawaiian Health Care Improvement Act ( P.L. 102-396 ); F2004obligations were $10.5 million, according to the CFDA. Native Hawaiian Housing Block Grants ( P.L. 106-569 , HawaiianHomelands Homeownership Act, SS513); F2004 obligations were $9.6 million, according tothe CFDA. Loan Guarantees for Native Hawaiian Housing ( P.L. 106-569 , HawaiianHomelands Homeownership Act, SS514); F2004 loan guarantees were $39.7 million, accordingto the CFDA. Native American Programs Act of 1974 ( P.L. 93-644 , as amended);shared program with Indians and Native American Pacific Islanders; total program FY2004obligations were $35 million, according to the CFDA. Native American Employment and Training ( P.L. 105-220 , SS166);shared program with Indians; total program FY2004 obligations were $55 million, accordingto the CFDA. | S. 147 / H.R. 309 , companion bills introduced in the 109th Congress,represent an effort to accord to Native Hawaiians a means of forming a governmental entity thatcould enter into government-to-government relations with the United States. This entity would beempowered to negotiate with the State of Hawaii and with the federal government regarding thetransfer of land and the exercise of governmental power and jurisdiction. There was similarlegislation in the 106th, 107th, and 108th Congresses; the House passed a Native Hawaiian recognitionbill, H.R. 4904 , in the 106th Congress. While the Senate did not pass H.R.4904, the bill would have been enacted through a provision in the Consolidated Appropriations Act,2001 ( H.R. 4577 , P.L. 106-554 ), until a Senate concurrent resolution removed theprovision by correcting the enrollment of H.R. 4577 ( S.Con.Res. 162 ). This report describes the provisions of the reported version of S. 147 ; outlinessome federal statutes and recent cases which might be relevant to the issue of federal recognition ofa Native Hawaiian entity; and recounts some legal arguments that have been presented in the debateon this legislation. It includes a brief outline of the provisions of a substitute amendment expectedto be offered in lieu of the reported version of S. 147, when Senate debate, which wasinterrupted by the filing of a cloture motion on July 29, resumes. The substitute amendment is theproduct of discussions that have included congressional, executive, and State of Hawaii officials. S. 147 has again been placed on the Senate Calendar. This report will be updated aswarranted by legislative activity. | 761 | 399 |
During the final year of the Clinton Administration, proposals by the National Park Service to enforce long-standing policies that regulated the use of snowmobiles in national parks raised a number of questions regarding the potential regulation of such vehicles. These questions continue to be debated, as the National Park Service (NPS) explores optional winter use plans for Yellowstone and other units of the national park system, and as various parties challenge the actions of the NPS in court. National Park System units account for only about 3% of the land mass of the United States and possess few trails and roads suitable for snowmobiles, compared to areas available on other federal lands; but--for both proponents and opponents--the question of snowmobile access to the parks has taken on a far greater importance. To the snowmobile industry and to many in communities neighboring national parks, "Snowmobiling is an important part of the economic engine that supports northern communities, winter tourism." To environmental groups, snowmobiling "is one of the most environmentally devastating recreational activities permitted by the Park Service .... resulting in adverse impacts to Park wildlife, air and water quality, vegetation, Park ecology, and Park users." Underlying the debate are broader questions concerning regulation of emissions and noise from the vehicles and the degree to which restrictions may serve as a precedent or stigma affecting snowmobile and motorized recreation use more generally. In the 1990s, snowmobiles were allowed access to 43 units of the National Park System, including such major parks as Yellowstone, Grand Teton, Rocky Mountain, Acadia, Zion, Mount Rainier, and Sequoia. While numerous park units allowed such access, recreational use of snowmobiles has not been widespread in the park system as a whole. The National Park Service administers 391 units (parks, seashores, monuments, etc.). Of these, 348 (89%) have not been open to snowmobiles. Many units are located in climates unsuitable for them or are too small to be used for such recreation. Others (e.g., Glacier National Park and Yosemite) have banned snowmobiles since the 1970s. According to the National Parks Conservation Association, use of snowmobiles outside of Alaska has mostly been concentrated in five units of the park system: Yellowstone National Park, Voyageurs National Park, Rocky Mountain National Park, Pictured Rocks National Lakeshore, and the John D. Rockefeller Memorial Parkway. Yellowstone accounted for about 40% of the snowmobile visitors at these five parks, with a total of 76,571 in the 1999-2000 winter season. Comparative data for all five of these units are not available for years after 1999-2000. One of the five, Rocky Mountain National Park, has closed all but one snowmobile route since 2004--the one route remaining being a 2-mile trail that provides access to National Forest land heavily used by snowmobiles. Snowmobile visits to Yellowstone increased during the 2000-2001 and 2001-2002 winter seasons, peaking at 87,206 in the latter winter. In subsequent years, snowmobile visitors to Yellowstone plummeted, to a low of 24,049 in 2004-2005. Changes in access policy (described later in this report) as well as drought and low snow pack in recent years contributed to the decline. Two other Yellowstone area park units, Grand Teton National Park and the Rockefeller Memorial Parkway, experienced an even more steep decline, from a combined 35,000 snowmobile visits in 2000-2001 to about 7,500 in 2004-2005. Snowmobile visits have rebounded somewhat since 2004-2005, but in 2007-2008 they remained at only about 35% of visits in the peak years. Although recreational access by snowmobiles has been permitted in units of the national park system, the Park Service, in the late 1990s, concluded that such use has generally been in violation of Executive Orders 11644 and 11989, issued by Presidents Nixon and Carter respectively. The Nixon Order directed that use of off-road vehicles on public lands "be controlled and directed so as to protect the resources of those lands, to promote the safety of all users of those lands, and to minimize conflicts among the various uses of those lands." It specified that off-road vehicle "areas and trails shall be located in areas of the National Park system ... only if the respective agency head determines that off-road vehicle use in such locations will not adversely affect their natural, aesthetic, or scenic values," and it directed the Park Service to "monitor the effects of the use of off-road vehicles" and to rescind or limit this use "as necessary to further the policy of this order." In January 1999, the Park Service received a rulemaking petition from the Bluewater Network and 60 other environmental organizations seeking a ban on snowmobiles from all units of the National Park Service. In response, the Service surveyed units of the System to assess the extent to which they were complying with the Executive Orders. According to Interior Department testimony: "The results graphically demonstrated that the National Park Service was not complying with its statutory and regulatory mandates.... Consequently, maintaining the status quo with regard to snowmobiling was simply not an option." On April 27, 2000, the Department of the Interior and the National Park Service announced that "snowmobiling for general recreational purposes will be prohibited throughout the Park System, with a limited number of narrow exceptions." By July 2000, the Department had backed away from its strict enforcement stance with a clarification: there would be no snowmobile ban in park units pending a formal rulemaking and public comment period, and snowmobile practices prior to the April 2000 announcement (i.e., access to more than 40 parks) would continue through the 2000-2001 winter season. NPS has taken no further action to enunciate a general policy. Since the summer of 2000, the focus has been on Denali National Park in Alaska and the Yellowstone/Grand Teton area. Both of these areas had been considered exceptions subject to special consideration even under the April 2000 policy announced by the Park Service. Whether snowmobile access to these parks will be allowed to continue has generated substantial public interest. In Alaska, vast distances, lack of roads, abundant snow cover, and small dispersed populations make snow machine use ubiquitous. In general, national parks in Alaska allow snowmobile access under the provisions of the Alaska National Interest Lands Conservation Act (ANILCA, P.L. 96-487 ). However, access to the 2 million acres formerly known as Mt. McKinley National Park (now the core of Denali National Park) has been an issue. Prior to passage of ANILCA (1980), snowmobiles had been banned from this park. In 1999, the Park Service reinstated this policy, banning snowmobiles first on a temporary and later on a permanent basis. Litigation regarding access to Denali was initiated by snowmobile user groups, but was withdrawn in June 2001, on the assumption that legislation would be introduced to address the issue. Legislation ( H.R. 4677 / S. 2589 , 107 th Congress) was introduced in the spring of 2002 that would have allowed access to some portions of the old Park, while continuing the ban elsewhere. No action was taken on these bills, however, and similar legislation has not been introduced in subsequent years. In January 2006, the National Park Service published a Final Backcountry Management Plan for Denali National Park and Preserve. The plan notes that as a result of technology improvements that have extended the range of snowmobiles, the use of such machines is now widespread in the southern park additions and "growing rapidly." "... [C]onflicts with other users, especially non-motorized winter recreationists and subsistence users, are increasing, and concerns have been raised about the effects of snowmachine use on wildlife, vegetation, water quality, air quality, natural soundscapes, and other park resources." Despite raising these issues, the plan concludes, "There are currently few guidelines for managing use." The other exception to the National Park Service's general policy was the Yellowstone/Grand Teton National Park area. The NPS had been sued in May 1997 by groups who alleged that the Service was violating the National Environmental Policy Act, the Endangered Species Act, the National Park Service Organic Act, and the Yellowstone Act in allowing use of snowmobiles in the two parks and on the Rockefeller Memorial Parkway (which links them). The lawsuit was settled within months when the NPS agreed to conduct an Environmental Impact Study (EIS) of winter use of the parks. Upon completion of the study, the Clinton Administration promulgated a final rule in January 2001, banning snowmobiles from Yellowstone, Grand Teton, and the Rockefeller Parkway beginning in the winter of 2003-2004, but allowing continued visitor access through the use of "snowcoaches"--guided tour-vans that run on rubber treads. Snowmobile manufacturers, represented by the International Snowmobile Manufacturers Association (ISMA), have suggested that "cleaner, quieter" snowmobiles--a phrase not initially defined--be allowed continued access to the parks. Their suggestion found a receptive audience in the Bush Administration. On June 29, 2001, the Administration responded to a suit filed by ISMA and the State of Wyoming by agreeing to reopen the decision to ban the vehicles from the three Yellowstone area units. The Park Service agreed to prepare a Supplemental EIS and reach a new Record of Decision by November 15, 2002 (a deadline subsequently extended to March 15, 2003). The Record of Decision was signed March 25, 2003, and a final rule implementing it was promulgated December 11, 2003. Despite receiving 104,802 comments on the final proposal, 91% of which "believed the proposed regulation does not adequately protect park resources due to the presence of snowmobiles," the Park Service reversed the ban in favor of daily limits on entrants, emission standards for the snowmobiles, other access requirements, and an "adaptive management strategy," allowing park managers to take remedial action if monitoring indicates unacceptable impacts from implementation. In explaining its position, the NPS stated: "We are trying to provide a range of appropriate activities in the parks, while protecting park resources and values." The 2003 rule would have set a daily limit of 950 snowmobile entrance passes for Yellowstone Park, 115 in Grand Teton National Park, and 400 on Rockefeller Memorial Parkway. On most days, this limit would result in no reduction of snowmobile users; but on weekends and holidays, when as many as 1,700 snowmobiles have entered the three park units, it could limit the number of entrants. Snowmobile users would generally have been required to be accompanied by trained guides (although the regulations would have allowed group members to be as much as 1/3 of a mile from the guide, and the rule preamble conceded, given the noise of a snowmobile, that communication is difficult if not impossible even between passengers on the same machine). To discourage irresponsible behavior, alcohol use by snowmobile users would have been strictly limited. The machines themselves would have been required to achieve a 90% reduction in hydrocarbon emissions and a 70% reduction in carbon monoxide under the 2003 rules. Noise emissions would have been limited to 73 dB(A), which the NPS estimates is about a 50% reduction compared to conventional snowmobiles. To implement these provisions, the Yellowstone Park Superintendent released a list of 10 snowmobile models approved for use during the 2003-2004 winter season, on September 16, 2003. This list has been updated annually. The most recent version, released in February 2008, contains 26 models. A hearing on the 2003 rules was held in the U.S. District Court for the District of Columbia on December 15, 2003. The rules were vacated and remanded to the National Park Service by Judge Emmett Sullivan on December 16. The judge held that there was no evidence in the record to support the Bush Administration reversal of the previous agency position and that the decision, therefore, was "arbitrary and capricious." The court also held that the Supplemental EIS accompanying the changes was "flatly inadequate" under NEPA and that the snowmobile decision was "completely politically driven and result oriented." The judge also ordered NPS to respond to Bluewater Network's 1999 rulemaking petition (seeking a ban on snowmobiles in all National Park System units) by February 17, 2004. Judge Sullivan's decision reinstated the Clinton Administration rule and cut the number of snowmobiles entering the three Yellowstone area park units in half for the 2003-2004 winter season in preparation for a complete ban in 2004-5. Both ISMA and the State of Wyoming appealed the court's ruling. Their request for a stay of the Clinton-era rules pending resolution of their appeal was denied by Judge Sullivan in late December 2003 and by a three-judge panel of the Court of Appeals January 13, 2004. Meanwhile, however, the same groups petitioned the Federal District Court for Wyoming to overturn the Clinton-era rules. That court responded February 10, 2004, when Judge Clarence Brimmer issued a temporary restraining order against the Clinton rules and ordered the National Park Service to develop temporary rules for the remainder of the 2004 winter season. The next day, the Park Service issued such rules, allowing 780 snowmobiles to enter Yellowstone Park each day, an increase of 287 machines. Grand Teton Park and the Rockefeller Parkway were allowed 140 snowmobiles, an increase of 90. An appeal of Judge Brimmer's order was denied by the 10 th Circuit Court in Denver on March 10. (The Wyoming court vacated and remanded the Clinton rules on October 14, 2004.) As a result of the court decisions, snowmobile use in the three parks was substantially reduced during the 2003-2004 winter season. According to NPS, an average of 258 snowmobiles entered Yellowstone in January and February 2004, a reduction of two-thirds from the historic average. In Grand Teton and the Rockefeller Parkway, the reduction was almost total: through February 10, only about 5 snowmobiles a day entered the two parks. After the February 10 court decision, this number increased to about 20. The NPS subsequently issued Temporary Winter Use Plans for the 2004-2005, 2005-2006, 2006-2007, and 2007-2008 winter seasons. The temporary plans, which were intended to guide access policy while additional studies were performed leading to a more permanent solution, allow 720 snowmobiles per day in Yellowstone, all commercially guided, and 140 snowmobiles in Grand Teton National Park and the John D. Rockefeller, Jr., Memorial Parkway. With minor exceptions, all of the snowmobiles are required to meet NPS best available technology (BAT) requirements shown below in Table 2 . Snowcoaches are also allowed. NPS concluded that the combination of snowmobiles and snowcoaches "should provide a viable program for winter access to the parks, and ... the opportunity for achieving historic visitor use levels." The plans also include the prohibition on alcohol use by snowmobilers that the Park Service had promulgated in its remanded 2003 rule. Despite the temporary plans' allowable limits, snowmobile visits continued at levels far lower than in the previous decade in the 2004-2008 winter seasons ( Table 1 ). At 31,420, the number of snowmobiles entering Yellowstone in 2007-2008 was 64% below the peak in 2001-2002, and was less than half of the permitted number. The other two area units (Grand Teton National Park and the Rockefeller Memorial Parkway) have seen even steeper declines. Grand Teton fell to 149 snowmobile visitors in the entire winter of 2004-2005, rising only to 799 in 2007-2008, compared to its peak of 4,800 in 1999-2000. The Continental Divide Snowmobile Trail hosted only 11 snowmobiles last winter, compared to a peak of 2,006 in 2001-2002. The Rockefeller Parkway saw more activity than Grand Teton, but still a marked decrease compared to earlier years: 7,351 snowmobile visitors in 2004-2005, rising to 11,695 in 2007-2008, compared to a peak of 31,011 in 2000-2001. One result of the declining snowmobile use was a marked increase in visitors using other modes of travel. Snowcoach visitors to Yellowstone increased to 22,344 in 2007-2008, up 89% compared to the peak snowmobile year. In Grand Teton, the number of cross country skiers more than doubled (to 13,003) compared to the number in the peak snowmobile year. The Park Service also began additional studies to develop a final winter use plan in 2004, and on November 20, 2007, it finalized the fruits of its effort by issuing a Record of Decision. Termed a "Winter Use Plans/Final Environmental Impact Statement," this latest plan evaluated seven alternatives. It presented additional data on the effects of snowmobiles and snowcoaches on air quality, noise, and wildlife, and evaluated the economic impacts on surrounding communities of restricting snowmobile access to the three Yellowstone area NPS units. The new plan set final rules and access limits somewhat more stringent than those that have been in place during the past four winter seasons, but significantly higher than actual use during that period. It would allow 540 snowmobiles per day access to Yellowstone, and a combined 65 in Grand Teton National Park and the Rockefeller Memorial Parkway. The snowmobiles would be required to meet best available technology requirements for emissions and noise, and it would require that snowmobilers be accompanied by commercial guides. It would also authorize entry to 83 snowcoaches per day. On September 15, 2008, Judge Emmett Sullivan of the U.S. District Court for the District of Columbia vacated the plan, finding it "arbitrary and capricious, unsupported by the record, and contrary to law." The judge found: According to NPS's own data, the WUP [Winter Use Plan] will increase air pollution, exceed the use levels recommended by NPS biologists to protect wildlife, and cause major adverse impacts to the natural soundscape in Yellowstone. Despite this NPS found that the plan's impacts are wholly "acceptable," and utterly fails to explain this incongruous conclusion. With the rule vacated, it is unclear what limits will apply in the coming winter season. On October 1, 2008, NPS announced that it would propose a new temporary Winter Use Plan that would be ready for public comment in early November and would be in place before the December 15 scheduled opening of the winter season. In reversing the Clinton Administration rules on Yellowstone access, the National Park Service set limits on emissions and noise from the snowmobiles that would be allowed in the three Yellowstone area park units. Simultaneously, the Environmental Protection Agency developed emission limits applicable to new snowmobiles offered for sale anywhere in the United States beginning in 2006 and 2007. The following sections of this report describe the EPA regulations and look at the broader issue of snowmobile emissions. The Clean Air Act gives EPA authority to regulate emissions from mobile sources of pollution, including off-road sources such as snowmobiles; but until 2006, snowmobiles (with the exception of those entering the Yellowstone area national parks) were not subject to any federal or state emission regulations. Nor, with the exception of those allowed in Yellowstone since 2004, have they ever been subject to noise regulations. EPA has authority under Section 6 of the Noise Control Act of 1972 to regulate noise from "transportation equipment (including recreational vehicles and related equipment)." But the Agency's Office of Noise Abatement and Control was disbanded in 1982, and EPA has not issued any regulations under the statute in the 26 years since then. Snowmobiles generally run on two-stroke engines--the type of engine that traditionally has powered outboard motors and lawnmowers. In a two-stroke engine, fuel enters the combustion chamber at the same time that exhaust gases are expelled from it. As a result, as much as one-third of the fuel passes through the engine without being combusted. This causes poor fuel economy and high levels of emissions, particularly hydrocarbons and carbon monoxide. In one hour, a typical snowmobile emits as much hydrocarbon as a 2008 model automobile emits in 54,000 miles of driving. In a day of use, a snowmobile may emit as much hydrocarbon as an automobile emits over its entire lifetime. The hydrocarbons (gasoline) emitted by snowmobiles (or other mobile sources, for that matter) are of concern because they contain benzene, formaldehyde, and at least three other substances that are known or suspected human carcinogens. Snowmobiles meeting EPA regulations also emit as much carbon monoxide (CO) in an hour as a 2008 model auto does in 1,050 miles of driving. Carbon monoxide is a poisonous gas that, at low levels, can affect those who suffer from cardiovascular disease, such as angina. The impact of CO emissions on ambient air quality is of at least equal concern as that of hydrocarbons because of the tendency for atmospheric accumulation of CO in winter. In preparing the 2000 Environmental Impact Statement for the decision on snowmobile access to Yellowstone, the National Park Service measured emissions from snowmobiles and compared them to other emission sources in the park. The Service also estimated the concentrations (ambient levels) of carbon monoxide (CO) and particulate matter (PM) present in the air and compared these concentrations to air quality standards. The EIS concluded that the 8-hour maximum concentration of carbon monoxide at the West Yellowstone entrance to the park exceeded the National Ambient Air Quality Standard for CO by nearly 70% (a concentration of 15.15 parts per million vs. the standard of 9). The analysis also concluded that snowmobiles accounted for 97.9% of the CO at West Yellowstone during winter months. Noise has also been an issue. Opponents of allowing snowmobiles in Yellowstone and other units of the national park system argue that the parks are special places whose remoteness, beauty, and quiet inspire reflection and awe. The noise of engines is incompatible with this atmosphere, they argue. As the National Park Service itself states in its Record of Decision, "Snowmobile use, in historical numbers, is inconsistent with winter park landscapes that uniquely embody solitude, quiet, undisturbed wildlife, ... and the enjoyment of these resources by those engaged in non-motorized activities." Snowmobile enthusiasts counter that the parks cover vast areas and that snowmobiles are restricted to a few roads--the same roads traversed by cars, recreational vehicles, and buses in summer. They also assert that snowmobile use is compatible with the NPS responsibility to promote visitor use and enjoyment of park resources. Park Service studies indicate that the sound of snowmobiles can be heard for significantly greater distances than that of automobiles, however, and in the late 1990s was essentially continuous during the winter at key locations in Yellowstone: snowmobile noise could be heard 95% of the time by visitors at Old Faithful and 87% of the time at the Grand Canyon of the Yellowstone, according to NPS's December 2000 Federal Register notice. Regulations for snowmobile and other non-road engine emissions were signed by the EPA Administrator September 13, 2002 and appeared in the Federal Register November 8, 2002. As shown in Table 2 , the regulations require reduction of both carbon monoxide and hydrocarbon emissions from new snowmobiles by a little more than 30% starting in 2006 and by an average of 50% by 2012, with an intermediate step in 2010. (The regulations did not require any controls on snowmobiles sold before 2006.) For comparison, Table 2 also shows the Yellowstone-specific standards that have been imposed by the National Park Service. According to EPA, the 2006/2007 reductions can be achieved without major changes in technology, in part because they apply to the average of a manufacturer's fleet emissions, rather than to individual machines. This allows manufacturers to provide a range of models, some with advanced emission controls and others without: "While some advanced technologies such as two-stroke direct injection and four-stroke engines, would be found in some models, many models would still be equipped with two-stroke engines with relatively minor engine modifications resulting in minimum emission reductions, while some models may not even have any emission controls." EPA estimates the cost of these Phase 1 controls at $73 per snowmobile. Vehicles meeting the standards will be more fuel-efficient, resulting in an average reduction in operating cost of $57, thus offsetting most of the initial cost increase. The 2010 and 2012 standards, which also are fleet averages, can also be met without eliminating two-stroke engines, according to the Agency. Because two-stroke engines produce more power than similar size four-strokes and are easy to start in cold weather, the Agency expects the industry to continue to manufacture mostly two-stroke engines even in 2012, although many would be modified with direct injection technology to reduce emissions. According to the Agency, "A potential scenario for meeting these standards could be a mixture of 50 percent direct injection, 20 percent four-stroke engines, and 30 percent with engine modifications." The cost of these changes would average an additional $131 per snowmobile in 2010, according to EPA, but the costs would be offset by $286 in fuel savings and improved performance, so that lifetime costs would actually be $155 lower. The same is true of the 2012 standards: the added cost of $89 per snowmobile is offset by $191 in fuel savings and improved performance, according to EPA, for a net savings of $102 per vehicle. The costs of each of the three phases are incremental. Thus, when fully implemented, the standards would cost an additional $293 per snowmobile, according to the Agency; lifetime operating costs, however, would decline by $534. Combining these two factors, the standards would decrease total costs by $241 per snowmobile when fully implemented. The standards do not include noise limits. While acknowledging that the Agency has the authority to set noise standards, the proposal stated that "at this time we do not have funding to pursue noise standards for nonroad equipment that does not have an existing noise requirement." An Agency source confirmed that the proposed standards would have essentially no impact on noise. Despite receiving comments from a number of organizations that the standards should address noise, the Agency restated in its response to public comments that it would not address the issue, adding that Congress would need to provide appropriations for the Agency to begin any noise control initiative. As noted, the National Park Service promulgated noise standards applicable to snowmobiles entering its three Yellowstone area park units beginning December 17, 2003, under the winter use rule that was vacated; it restated these standards in its Temporary Winter Use Plan that took effect in 2004. According to Park Service estimates, these standards would require a reduction of about 50% in noise emitted by the affected snowmobiles, compared to conventional uncontrolled snowmobiles. Both the snowmobile industry and environmentalists challenged EPA's standards in court. On June 1, 2004, the U.S. Court of Appeals for the D.C. Circuit vacated the standard for nitrogen oxides and remanded the 2012 standards for hydrocarbons and carbon monoxide. The court directed EPA "to clarify (1) the statutory and evidentiary basis of the Agency's assumption that the standards must be sufficiently lenient to permit the continued production of all existing snowmobile models, and (2) the analysis and evidence underlying the Agency's conclusion that advanced technologies can be applied to no more than 70% of new snowmobiles by 2012." EPA has not yet responded to the remand, and does not expect to do so until 2010 at the earliest. The International Snowmobile Manufacturers Association (ISMA) has argued that EPA grossly underestimated the costs of compliance, and that the standards will lead to the elimination of entry-level snowmobiles from the market. Cleaner, quieter machines can be made, according to ISMA, but they cost more, are heavier, and can only be ridden on groomed roads. ISMA has estimated that the cleanest four-stroke engines cost an additional $1,700 (about 30% more than average prices). Even modest improvements to two-stroke engines will cost $350-$400 per machine, according to the Association. Bluewater Network, on the other hand--the environmental group most identified with snowmobile issues--feels the rules should be much stronger. In comments submitted to EPA, Bluewater encouraged the Agency to set standards "that can only be met using the best available technology, which we believe to be four-stroke engines with particle traps and three-way catalysts." They also want mandatory emission labels for the machines, and are disappointed that the Agency chose not to set noise standards. Bluewater has pointed to the Clean Snowmobile Challenge, an annual design contest open to college engineering students and sponsored by the Society of Automotive Engineers, as demonstrating that machines far cleaner than EPA's standards are feasible. The winning entry in the 2001 Challenge reduced CO 78.8% and unburned hydrocarbons 97.6% and significantly reduced noise, at a cost of $600. In the 2006 contest, the winning entry reduced CO emissions 83% and unburned hydrocarbons more than 99% at a cost of $314. "If college students are able to build cleaner and quieter machines, surely the billion-dollar snowmobile industry can do as well," said Bluewater Public Land Director Sean Smith. Both Bluewater and the snowmobile manufacturers argue that EPA has misinterpreted the legal authority on which the new standards rely. Bluewater (as well as other environmental groups and the National Association of Clean Air Agencies (formerly STAPPA), the association representing state air pollution program administrators, argue that EPA has promulgated standards that are less stringent than the law requires. Section 213(a)(3) of the Clean Air Act requires the Agency to promulgate standards that "achieve the greatest degree of emission reduction achievable ... giving appropriate consideration to the cost ... and to noise, energy, and safety factors...." Four-stroke engine technology, achieving greater emission reductions than the Agency promulgated, is already available, they note--machines using this technology are on the market. Cost, noise, and energy factors cannot be used as arguments against adoption of this technology: the lifetime cost of such engines would be lower than that of current engines, according to the Agency's own analysis; the technology uses far less energy, and could be substantially quieter than current engines. Thus, according to these groups, the Agency's standards do not meet the requirements of the act. Snowmobile and other nonroad-vehicle manufacturers, on the other hand, focus on Section 213(a)(2) of the act, which ties the Agency's authority to regulate nonroad engines to a finding by the Administrator that emissions from such engines or vehicles "are significant contributors to ozone or carbon monoxide concentrations in more than 1 area which has failed to attain the national ambient air quality standards for ozone or carbon monoxide." EPA addressed this issue before beginning the process of developing regulations: on June 17, 1994, the Agency made an affirmative determination that emissions from nonroad engines and vehicles are significant contributors to ozone, CO, and particulate matter in more than one nonattainment area. On December 7, 2000, the Agency issued a finding that recreational vehicles (including snowmobiles) are among the specific categories of nonroad vehicles that contribute to such pollution. In its October 5, 2001 Federal Register notice, which proposed the snowmobile standards, the Agency identified 7 areas in Alaska, Washington, Colorado, Oregon, and Montana that have significant populations of snowmobiles and have failed to attain the air quality standard for CO. Manufacturers of snowmobiles and other nonroad vehicles note, however, that carbon monoxide concentrations have declined [chiefly as a result of auto emission standards] and that none of the 7 areas identified by the Agency has exceeded the CO standard in recent years, even if they were still formally classified as nonattainment at the time of the proposal. CO nonattainment today is essentially a problem in urban "hot spots," according to manufacturers, and snowmobiles make no contribution to that problem. Members of Congress, both from western and other states, have expressed an interest in whether there will be continued snowmobile access to national parks. At least five hearings have been held on these issues since the 106 th Congress, and Congress has on three occasions approved language in appropriations bills to require that NPS Temporary Winter Use Rules permitting snowmobiles in Yellowstone and Grand Teton National Parks and on the Rockefeller Memorial Parkway remain in effect for the year covered by the appropriations bill. The FY2008 Interior appropriations bill ( S. 1696 , SS116), as reported by the Senate Appropriations Committee ( S.Rept. 110-91 ), would have continued this temporary solution, stipulating that Yellowstone's interim winter management rule remain in effect during the 2007-2008 winter season, but the final Consolidated Appropriations Act ( P.L. 110-161 ) did not include such language. Lawsuits challenging the NPS Final Winter Use Plan did not request preliminary injunctions, however, allowing local operations to continue under the same temporary rules that had been in effect for the previous three years. In the 108 th Congress, Representative Holt twice attempted to amend Interior Department Appropriation bills to prohibit spending to manage recreational snowmobile use in the three Yellowstone area park units except in accordance with the Clinton Administration rule phasing out snowmobiles. The first such amendment ( H.Amdt. 266 to H.R. 2691 ) was defeated on a tie vote, 210-210, July 17, 2003. The second attempt ( H.Amdt. 563 to H.R. 4568 ) was defeated on June 17, 2004, by a vote of 224-198. Other legislation to prohibit snowmobile access to national parks and to grant continued access was introduced, but not acted on, in the 107 th and 108 th Congresses. Snowmobile issues remain far from resolved, despite actions by Congress, EPA, the National Park Service, and the courts. Congress and the NPS have provided a temporary resolution of the Yellowstone access issue since 2004, but the issue is now returning to the limelight, as a federal district court has vacated final regulations for Yellowstone access for a third time. The development of these rules showed that public interest in snowmobile issues remains significant, and that the National Park Service's preferred alternatives for snowmobile access to Yellowstone remain overwhelmingly unpopular. The draft Yellowstone area Winter Use Plan that was open for comment from March through June 2007 generated 122,190 public comments, of which only 193 (0.1%) supported the NPS preference. Among those opposed, environmental groups and individuals that want snowmobiles banned from the park form a solid majority. They are joined by 7 of the 8 living former directors of the National Park Service itself. The Environmental Protection Agency was also critical of the spring 2007 preferred alternative, noting that it would result in five times more carbon monoxide emissions and 17 times more hydrocarbon emissions than the exclusive use of multi-passenger snowcoaches. EPA concluded that "either the preferred alternative should be modified or a different alternative should be selected that meets the resource protections identified by the National Park Service." This level of opposition would seem to guarantee that Members of Congress will retain an interest in the resolution of these issues. Continued action is also likely in the courts, as the National Park Service responds to the latest court decision. | For at least a decade, the use of snowmobiles in Yellowstone and other national parks has been controversial because of the potential impacts on wildlife and, until recently, the absence of standards for snowmobile emissions and noise. The National Park Service has attempted to address the issue by developing Winter Use Plans that establish regulations and limits at individual park units. These plans have been the subject of numerous legal challenges. On September 15, 2008, the U.S. District Court for the District of Columbia vacated the National Park Service's most recent Winter Use Plan for Yellowstone National Park. The plan would have allowed up to 540 snowmobiles per day into the park beginning in the 2008-2009 winter season, provided that they met noise and emission standards and that the riders were accompanied by commercial guides. The NPS plan was opposed by environmental groups and the vast majority of public commenters. With the rule vacated, it is unclear what limits will apply in the coming winter season. Current model snowmobiles emit significant quantities of pollution. In one hour, a new model snowmobile emits as much hydrocarbon as a 2008 model auto emits in about four years (54,000 miles) of driving. The Environmental Protection Agency (EPA) promulgated regulations limiting air emissions from snowmobiles in 2002, but the regulations have the effect of allowing the machines to emit as much hydrocarbon pollution in a day as a new auto emits in its lifetime. Snowmobiles also emit significant amounts of noise. EPA has no snowmobile noise standards. The National Park Service has allowed snowmobile use in 43 units of the national park system, in many cases in apparent violation of Executive Orders from the Nixon and Carter years. Outside of Alaska (where snowmobiles are permitted in most national parks by law), the most popular national park for snowmobiling has been Yellowstone, which saw more than 87,000 snowmobile visits in the 2001-2002 winter season. Under the Clinton Administration, the Park Service decided that the emissions and noise from snowmobiling were incompatible with protecting the park, and promulgated rules that would have phased out snowmobiles from Yellowstone by the winter of 2003-2004. The Bush Administration revisited these rules and announced modifications in March 2003 that would have allowed continued use of snowmobiles. The 2003 rules and the Clinton Administration action have been the subject of conflicting court rulings: a federal court in Wyoming has vacated and remanded the Clinton Administration's phaseout, while a D.C. federal court has vacated and remanded the Bush Administration rules. For the last four winters, Yellowstone and two neighboring park units have operated under a temporary plan that permits 720 snowmobiles per day in Yellowstone, but sets standards for their emissions and requires snowmobilers to be accompanied by commercial guides. Under these rules, snowmobile visits have declined by two-thirds. Efforts to reduce snowmobile emissions and noise remain contentious. This report discusses snowmobile access to the parks, snowmobile emissions, EPA's emission standards, and congressional efforts to address these issues. | 7,849 | 666 |
The federal budget deficit has exceeded $1 trillion in each of the last three fiscal years and is expected to exceed that level in FY2012. Concern over these large deficits, as well as the long-term trajectory of the federal budget, has resulted in significant debate during the 112 th Congress over how to achieve meaningful deficit reduction and how to implement a plan to stabilize the federal debt. At the same time, the economy is recovering from its largest downturn since the Great Depression, and concerns have been expressed that growth in the United States may falter to the point where the U.S. economy again experiences recession. This has resulted in some renewed debate over whether additional stimulus may be needed. Over the next few months through the early part of calendar year 2013, Congress will be facing choices on how to deal with numerous expiring provisions, across-the-board spending cuts, and other short-term considerations that will have major effects on the federal budget. Some have referred to this as the "fiscal cliff." Choosing how to address these issues will have a significant impact on the size of the budget deficit and the pace of economic recovery going forward. Further changes to other spending and revenue policies could also address some of the longer-term drivers of projected budgetary imbalance, while simultaneously impacting the economy. This report provides a brief overview of the major tax and spending policy changes set to take effect under current law at the end of 2012 or early in 2013. Collectively, these policies have been referred to by some as the "fiscal cliff." The report also includes links to other CRS reports which provide more information and analysis of the individual provisions discussed below. A variety of revenue and spending provisions are set to expire around the end of calendar year 2012, including the Bush tax cuts and other related tax provisions, extended emergency unemployment benefits, the Social Security payroll tax reduction, the "doc fix," and other tax extenders. If Congress and the President allow all of these measures to expire as scheduled under current law and let the spending cuts under the Budget Control Act (BCA) take effect (see discussion below), the budget deficits beginning in FY2013 will gradually fall as a percentage of gross domestic product (GDP) and are projected to remain at sustainable levels through FY2022. The decline in projected budget deficits is a result of declines in spending levels and increases in revenue levels as a percentage of GDP, relative to the levels seen over the past few fiscal years. Under current law, the budget deficit is estimated to fall $502 billion between FY2012 and FY2013 (see Table 1 ) as a result of fiscal policy changes set to take place at the end of 2012 and early in 2013. This estimated deficit reduction assumes that current law will be implemented as scheduled. If, however, Congress changes the trajectory of these policies by increasing spending (i.e., by eliminating the BCA automatic spending cuts) or decreasing revenue (i.e., by extending a portion of the Bush tax cuts), these policies would increase the deficit relative to the baseline. However, the amount by which the deficit would increase as the result of such policy changes could be different than the figures shown below. This is due to various factors that are taken into account when compiling a cost estimate. Because these factors could be different than the ones assumed in the figures below, the budgetary impact of reversing these policies may not be directly comparable to their impact on the deficit under current law. The full effects of the economic and budgetary impact of these policies may not be felt immediately. Immediate effects would be felt by individuals who have been receiving emergency unemployment compensation who would face the expiration of long-term benefits. The effects of tax changes, such as the expiration of the two-percentage-point payroll tax rate reduction, would be spread out over the course of the year. Likewise, for taxpayers experiencing an increase in tax liability as a result of the expiration of Bush tax cut provisions, these effects may be spread out over the course of the tax year through adjusted tax withholdings, or may be realized when 2013 taxes are paid early in 2014. The effects on the spending side may also be muted in the early part of 2013. The automatic cuts scheduled to be implemented as part of the Budget Control Act will result in agency budget authority being immediately reduced on January 2, 2013. The effects of these reductions will be seen throughout the remaining nine months of the fiscal year, and in future fiscal years, as outlays that would have otherwise occurred, do not. Though these gradual effects may provide Congress with additional time to act to address these policies, delaying such action can increase uncertainty throughout the economy and will further delay the return of the federal budget to a sustainable path. Despite the fact that these spending reductions and revenue increases are spread over the entire year, CBO estimates that if all of these policies go into effect as scheduled under current law, the economy will contract during the first two quarters of calendar year 2013. The Bush tax cuts included provisions to reduce tax rates initially enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16 ) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 ( P.L. 108-27 ). Also included in the Bush tax cuts were provisions that reduced tax rates on long-term capital gains and dividends; reduced and ultimately repealed limitations for personal exemptions (PEP) and itemized deductions (Pease); and expanded certain tax credits, including the Earned Income Tax Credit (EITC), child tax credit, adoption tax credit, and dependent care tax credit. The Bush tax cuts also contained provisions to reduce the marriage tax penalty, as well as modified various education-related tax incentives. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ) made modifications to two provisions of the Bush tax cuts and enacted two new tax provisions. Specifically, ARRA's modifications expanded the refundability of the child tax credit and further reduced the marriage penalty of the EITC. In addition, ARRA increased the EITC for families with three or more children and enacted a new higher education tax credit--the American Opportunity Tax Credit (AOTC). The original Bush tax cut provisions, as well as the modifications enacted by ARRA, were extended through 2012 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). Under current law, beginning in January 2013, marginal tax rates and tax credits and deductions will return to the 2001 levels that existed prior to the enactment of EGTRRA. For more information on how changing current law with regard to these tax provisions could change federal revenue levels, see CRS Report R42020, The 2001 and 2003 Bush Tax Cuts and Deficit Reduction , by [author name scrubbed] and CRS Report R42485, An Overview of Tax Provisions Expiring in 2012 , by [author name scrubbed]. For a comparison of recent legislative proposals to extend the Bush tax cuts, see CRS Report R42622, An Overview and Comparison of Proposals to Extend the "Bush Tax Cuts": S. 3412, S. 3413, H.R. 8 , by [author name scrubbed]. EGTRRA enacted provisions to phase out the estate and generation-skipping taxes over a 10-year period. In 2010, there was no federal estate or generation-skipping tax. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 temporarily reinstated, through 2012, the estate and generation-skipping taxes. As reinstated, the top rate for the estate tax was lower than it had been in 2009 (35%, as opposed to 45%). The exemption amount, as reinstated, was also higher than it had been in 2009 ($5.0 million, as opposed to $3.5 million). Absent legislative action, after 2012 the estate tax will return to pre-EGGTRA rules, with a top rate of 55% and a $1 million exemption. Extending current estate tax provisions would increase the budget deficit, relative to current law. For additional information on the estate tax, see CRS Report R41203, Estate Tax Options , by [author name scrubbed]; CRS Report 95-416, Federal Estate, Gift, and Generation-Skipping Taxes: A Description of Current Law , by [author name scrubbed]; and CRS Report 95-444, A History of Federal Estate, Gift, and Generation-Skipping Taxes , by [author name scrubbed]. When the alternative minimum tax (AMT) was enacted, the exemption amounts were not indexed for inflation. This means that absent legislative action, the cumulative effect of inflation will result in an estimated 27 million additional taxpayers to being subject to the AMT in 2012. Congress has regularly increased the AMT exemption amount to adjust for inflation (this adjustment is also known as the AMT "patch"). The 2001 and 2003 Bush tax cuts temporarily increased the basic exemption for the AMT. This exemption amount has been extended and adjusted a number of times over the past decade. In 2005, the Tax Increase Prevention and Reconciliation Act of 2005 ( P.L. 109-222 ) allowed nonrefundable personal tax credits to offset AMT liability in full. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 patched the AMT and extended provisions allowing nonrefundable personal tax credits to offset AMT liability through 2011. Patching the AMT for 2012 and beyond will increase the budget deficit relative to current law. Indexing the AMT for inflation permanently, as proposed in the President's FY2013 budget, would cost an estimated $1.9 trillion over the 2013 to 2022 budget window, as measured against current law. For more information, see CRS Report RL30149, The Alternative Minimum Tax for Individuals , by [author name scrubbed]. In an effort to stimulate the economy, Congress, in December 2010, temporarily reduced the employee and self-employed shares of the Social Security payroll tax by two percentage points (to 4.2% for employees and 10.4% for the self-employed). Social Security trust funds were "made whole" by a transfer of general revenue, so that Social Security did not lose revenues as a result of the payroll tax rate reduction. The temporary reduction was scheduled to expire at the end of 2011, but the reduction was extended for two months as part of the Temporary Payroll Tax Cut Continuation Act of 2011 ( P.L. 112-78 ). Congress later extended the payroll tax rate reduction through the remainder of 2012 as part of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). CBO estimates that allowing the two-percentage-point payroll tax reduction to expire would reduce the budget deficit by $95 billion between FY2012 and FY2013 (see Table 1 ). Further extensions of the payroll tax rate reduction would increase the budget deficit, unless the cost of the extension were offset. For more information on the temporary payroll tax rate reduction, see CRS Report R42103, Extending the Temporary Payroll Tax Reduction: A Brief Description and Economic Analysis , by [author name scrubbed] and [author name scrubbed] and CRS Report R41648, Social Security: Temporary Payroll Tax Reduction , by [author name scrubbed]. A number of temporary tax provisions expired at the end of 2011, and more are scheduled to expire at the end of 2012. A tax extender package was included as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). This legislation extended a number of temporary provisions that had been allowed to expire at the end of 2009, as well as several temporary provisions that were set to expire at the end of 2010. In August 2012, the Senate Finance Committee voted to approve a package that would extend more than 50 expired and expiring tax provisions through 2013. Amongst provisions that would be extended under the Family and Business Tax Cut Certainty Act of 2012 ( S. 3521 ) are those that benefit research and development (R&D), increased expensing allowances designed to encourage investment, provisions related to the tax treatment of foreign-source income such as the active financing exception under subpart F, and a number of energy-related tax incentives, among others. Extending temporary tax provisions that have expired or are scheduled to expire will increase the budget deficit, relative to current law. CBO estimates that allowing other expiring tax provisions to expire as scheduled would reduce the budget deficit by $65 billion between FY2012 and FY2013 (see Table 1 ). For additional background on expired or expiring provisions, see CRS Report R42105, Tax Provisions Expiring in 2011 and "Tax Extenders" , by [author name scrubbed] and CRS Report R42485, An Overview of Tax Provisions Expiring in 2012 , by [author name scrubbed]. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 as amended) will, among other things, increase access to health insurance coverage (with most coverage provisions effective in 2014). In addition to financial penalties imposed on most individuals who do not purchase health insurance coverage and certain employers who do not provide affordable and/or adequate coverage, the law includes a number of explicit revenue provisions to pay for expanded coverage. One-third of those revenues will be derived from taxes and fees on health insurers, plan administrators, and employers, with initial effective dates varying from 2011 up to 2018. However, nearly half of those revenues are to be derived from taxes on high-income taxpayers that will be effective in 2013, the same year in which the Bush Tax cuts expire. These include a Medicare payroll tax and a tax on unearned income. According to CBO, these two taxes are projected to raise $18 billion in revenue in 2013. Under current law, employers and employees each pay a payroll tax of 1.45% to finance Medicare Hospital Insurance (Part A). ACA includes additional hospital insurance taxes on high-income taxpayers. Specifically, ACA imposes an additional payroll tax of 0.9% on high-income workers with wages over $200,000 for single filers and $250,000 for joint filers effective for taxable years after December 31, 2012. The additional payroll tax only applies to wages above these thresholds. Thus, the hospital insurance portion of the payroll tax will increase from 1.45% to 2.35% for wage income over the threshold amounts. These revenues will be credited to the Medicare Hospital Insurance Trust Fund (Part A). ACA as amended also imposes an additional tax on net investment income. Households with modified adjusted gross income (MAGI) under specified thresholds will not be subject to the investment income tax. Specifically, effective for taxable years after December 31, 2012, the law will impose a tax equal to 3.8% of the lesser of (1) net investment income for such taxable year, or (2) the excess of MAGI over $250,000 for joint filers and $200,000 for single filers. For more information about these taxes, see Archived CRS Report R41128, Health-Related Revenue Provisions in the Patient Protection and Affordable Care Act (ACA) , by [author name scrubbed] and CRS Report R41413, The 3.8% Medicare Contribution Tax on Unearned Income, Including Real Estate Transactions , by [author name scrubbed]. In addition to the expiring provisions discussed above, additional spending cuts are scheduled to take effect beginning on January 2, 2013. On August 2, 2011, President Obama signed into law the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The BCA contained a variety of measures intended to reduce the deficit by at least $2.1 trillion over the FY2012-FY2021 period, along with a mechanism to increase the debt limit. The deficit reduction provisions included $917 billion in savings from statutory caps on discretionary spending and the establishment of a Joint Select Committee on Deficit Reduction (Joint Committee) to identify further budgetary savings of at least $1.2 trillion over 10 years. On November 21, 2011, the co-chairs of the Joint Committee announced that they were unable to reach an agreement before the committee's deadline. As a result, a $1.2 trillion automatic spending reduction process has been triggered to begin in January 2, 2013, unless Congress and the President act to eliminate or change the process. In FY2013, across-the-board spending reductions amounting to $109 billion are scheduled to take effect, with $54.7 billion being cut from defense spending and $54.7 billion cut from non-defense spending through a sequester. Spending reductions of a similar amount are also scheduled to occur in each year between FY2014 and FY2021. There have been several measures proposed to cancel or modify this process including the Sequester Replacement Reconciliation Act, H.R. 5652 , which was passed by the House on May 10, 2012. If the 2013 sequester is fully canceled, in other words, the reductions in spending no longer occur, the deficit would increase as a result by roughly $65 billion in FY2013. Eliminating the entire automatic reduction process from FY2014 to FY2021 would cost an additional $1.105 trillion through FY2022. For more information on how the Budget Control Act's automatic spending reductions effect the budget deficit, see CRS Report R42506, The Budget Control Act of 2011: The Effects on Spending and the Budget Deficit When the Automatic Spending Cuts Are Implemented , by [author name scrubbed] and [author name scrubbed]. The Unemployment Compensation (UC) program is a joint federal-state effort with basic income support for unemployed workers provided through the state-funded UC benefit. Once UC benefits are exhausted, the temporarily authorized Emergency Unemployment Compensation (EUC08) and the permanently authorized Extended Benefit (EB) programs may provide additional unemployment benefits, depending on worker eligibility, state law, and state economic conditions. States provide funds for the regular UC benefit (approximately the first 26 weeks of benefits) and the state share of the EB payments. The federal government provides funds for UC program administration, the federal share of EB payments, and the EUC08 program. Under permanent law (P.L. 91-373), the EB program is funded 50% by the federal government and 50% by the states. P.L. 111-5 , as amended most recently by P.L. 112-96 , temporarily provides for 100% federal funding of the EB program until the end of 2012 when the federal share reverts back to 50%. The 100% federally funded EUC08 program was first authorized by P.L. 110-252 . The EUC08 program's structure and authorization have been amended numerous times, most recently by P.L. 112-96 . Currently, the entire EUC08 benefit structure is scheduled to expire at the end of 2012. The EUC08 program provides up to four tiers of additional weeks of unemployment benefits to certain workers who have exhausted their rights to UC benefits in states with high unemployment. While the authorization for the temporary provisions ends on December 31, 2012, CBO has projected that federal spending would be lowered by $26 billion in FY2013 if those provisions were not extended through FY2013. For more information on unemployment insurance benefits, including benefits from the EUC08 and EB programs, see CRS Report RL33362, Unemployment Insurance: Programs and Benefits , by [author name scrubbed] and [author name scrubbed]. Reductions in payment rates to physicians under the Medicare program, as required under the Sustainable Growth Rate (SGR) system, were averted through December 31, 2012 as part of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). The SGR system, the statutory method for determining the annual updates to the Medicare physician fee schedule, was established as part of the Balanced Budget Act of 1997 ( P.L. 105-33 ) in an attempt to maintain Medicare physician spending levels close to a "sustainable" target level that reflected growth in GDP per capita, efficiency in delivering health care, and other measures. In the first few years of the SGR system, the actual expenditures did not exceed the targets and the updates to the physician fee schedule were close to the Medicare economic index (MEI, a price index of inputs required to produce physician services). For the next two years, in 2000 and 2001, the actual physician fee schedule update was more than twice the MEI for those years. Beginning in 2002, the actual expenditure exceeded allowed targets, and the discrepancy has grown with each year. With the exception of 2002, when a 4.8% decrease was applied, Congress has enacted a series of laws to override the reductions. However, legislative overrides since 2002 have only provided temporary reprieve from projected reductions in payments under the SGR calculation, requiring even steeper reductions in payment rates in the future. Unless Congress enacts legislation to override projected SGR changes, physician fees would be reduced by 27% in calendar year 2013. Allowing for a reduction in Medicare payment rates for physicians would reduce the budget deficit by $11 billion between FY2012 and FY2013. For additional background information and history on the SGR system, see CRS Report R40907, Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System , by [author name scrubbed] and [author name scrubbed]. In addition to the policies discussed above, there are several other policy items that Congress may consider late in 2012 or early in 2013. By the start of FY2013, October 1, 2012, Congress must agree to and the President must sign a set of 13 appropriations bills or a continuing resolution, which will provide discretionary funding to departments and agencies for the fiscal year. If there is a funding gap due to the absence of an agreement to provide appropriations or as a result of the expiration of a continuing resolution at a later date, government activities will cease, except for emergency operations. In the past, government shutdowns have necessitated furloughs of several hundred thousand federal employees, required cessation or reduction of many government activities, and affected numerous sectors of the economy. Dealing with issues related to a potential shutdown may divert legislative attention from other activities awaiting consideration. In addition to the specific fiscal policies discussed above, Congress will likely have to consider an increase to the debt limit sometime in late 2012 or early 2013. Negotiations on this issue in 2011 led to the passage of the BCA, which included a debt limit increase and deficit reduction provisions shortly before the limit was reached. Some in Congress have expressed a desire to see a similar agreement accompanying the next debt limit increase. The debt subject to limit will generally continue to rise as long as the budget remains in deficit or trust funds remain in surplus. Further, seasonal fluctuations could still require Treasury to sell debt even if the annual level of federal debt subject to limit does not increase. The current debt limit stands at $16.394 trillion. CBO estimates that the debt subject to limit at the end of FY2013 could reach $16.796 trillion, or $402 billion above the current limit. However, this estimate is based on maintaining current law. Changes in fiscal policy, as discussed throughout this paper, would impact the budget deficit and resulting levels of federal debt. For more information on the debt limit and potential consequences of not increasing it, see CRS Report R41633, Reaching the Debt Limit: Background and Potential Effects on Government Operations , coordinated by [author name scrubbed] and CRS Report RL31967, The Debt Limit: History and Recent Increases , by [author name scrubbed] and [author name scrubbed]. Many budget analysts are concerned about future levels of federal debt and acknowledge that the current spending and revenue collection cannot continue at current or projected future levels. However, making significant changes to spending or revenue policies at this time may be harmful to the ongoing economic recovery. The effects on the economy of certain policies enacted to combat the economic downturn, such as extended emergency unemployment benefits and the spending and revenue provisions of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ), are waning under current law. CBO recently projected that economic output (as measured by GDP) will not return to its potential until FY2018. Further, they estimate that allowing the policies included in Table 1 to take effect as scheduled under current law, would result in real GDP growth of 0.5% in calendar year 2013. In contrast, CBO estimates that reversing these policy changes as scheduled under current law would lead to real GDP growth of 4.4% in calendar year 2013. There are also timing issues associated with various tax and spending policies scheduled to take effect under current law that have potential implications on the economy. Policies that are felt immediately, such as those that would reduce unemployment benefits, are more likely to have an immediate adverse effect on the economy than those policies that are spread out over the course of the year or beyond, such as the BCA's automatic spending cuts and income and payroll tax increases. Thus, the timing associated with various tax and spending policies scheduled to change under current law at the end of 2012 or early in 2013 has important consequences for the expected economic effects of individual policy choices. The contraction economists expect will occur should current law fiscal policies take effect can likely be dampened with action taken to prevent spending cuts or tax increases. There are differences, however, in the level of expected growth and employment given different policy choices. A 2010 CBO report concluded that policies designed to increase aid to the unemployed are more effective at boosting unemployment than across-the-board income tax reductions. Similar results were presented by Mark Zandi of Moody's Analytics in 2010 testimony before the Senate Finance Committee. This result reflects the general tendency for policies that increase income of lower-income households to have greater short-run stimulative impacts than policies that benefit higher-income households. Lower-income households are more likely than higher-income households to spend additional disposable income, thus providing a greater contribution to aggregate demand in the short-run. While spending cuts and tax increases are generally contractionary, there are differences in the potential magnitude of the growth and employment effects of allowing different fiscal policies to take effect as scheduled. Federal Reserve Chairman Ben Bernanke, among others, has told Congress that they should take steps to "work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery." He stated that the spending and tax policies set to take effect in 2013 could endanger the recovery and recommended that Congress work to implement a credible medium-term plan for deficit reduction. Table A-1 below provides a list of the major expiring provisions discussed above, the Budget Control Act's automatic spending reductions scheduled to begin in January 2013, and other short-term considerations , which will confront Congress around the end of the calendar year. It illustrates how specific deficit reduction plans or budget outlines propose to deal with these fiscal issues. The table examines the Debt Reduction Task Force (Domenici-Rivlin; November 2010), the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles; December 2010), the President's FY2013 budget (February 2012), and the House FY2013 Budget Resolution ( H.Con.Res. 112 ; March 2012). Using any of the proposals or recommendations in the plans listed in Table A-1 to sort out fiscal issues comes with certain constraints. First, outside of the President's Budget proposal and the House Budget resolutions, none of these plans were accompanied by legislative language. Therefore, specific language would have to be written and agreed to. Second, budget resolutions do not become law. Therefore, separate legislation would have to be enacted in order to make the policy changes specified in the resolution, even if the House and Senate were to come to an agreement on the resolution itself. If an agreement were to be reached but certain provisions in the budget resolution did not become law, the spending, revenue, and deficit levels projected could change significantly. Finally, given the fairly lengthy time horizon over which these proposals were written and that fiscal conditions changed significantly, it is difficult to compare the amount of deficit reduction between plans. Both the Domenici-Rivlin and Simpson-Bowles plans include comprehensive tax reform as part of broader debt or deficit reduction packages (see Table A-1 ), and thus do not present explicit recommendations regarding current fiscal policy choices. The substantial tax policy considerations being faced at the end of 2012 continue to stimulate interest in fundamental tax reform. Depending on its design, tax reform may or may not contribute to deficit reduction. Comprehensive tax reform that is revenue-neutral would not directly contribute to a longer-term deficit reduction strategy. | This report provides a brief overview of the major tax and spending policy changes set to take effect under current law at the end of 2012 or early in 2013. Collectively, these policies have been referred to by some as the "fiscal cliff." Extending current revenue policies (e.g., extending the Bush tax cuts) and changing current spending policies (e.g., not allowing the BCA sequester to take effect) would increase the projected budget deficit relative to current law. The Congressional Budget Office (CBO) estimates that if current law remains in place, the budget deficit will fall by $502 billion between FY2012 and FY2013. Revenue provisions that are set to expire at the end of 2012 include the "Bush tax cuts," as well as provisions related to the estate tax and the Alternative Minimum Tax (AMT). Collectively, the Bush tax cuts reduced income taxes by reducing tax rates, reduced the marriage penalty, repealed limitations on personal exemptions and itemized deductions (PEP and Pease, respectively), expanded refundable credits, and modified education tax incentives. The Bush tax cuts also reduced estate tax liabilities by increasing the amount of an estate exempt from taxation and by lowering the tax rate. The two-percentage-point reduction in the Social Security payroll tax is also set to expire at the end of 2012 and a number of temporary tax provisions (also known as "tax extenders") expired at the end of 2011 with more scheduled to expire at the end of 2012. Under current law, these provisions are collectively estimated to reduce the budget deficit by nearly $400 billion between FY2012 and FY2013. There are a variety of spending policies set to change at the end of 2012 or early in 2013. These include the federal share of extended benefit payments for unemployment and the authorization for temporary emergency unemployment benefits. Payments to physicians under Medicare are scheduled to be reduced by 27% in 2013 under the Sustainable Growth Rate (SGR) system. Automatic spending cuts enacted as part of the Budget Control Act of 2011 (BCA; P.L. 112-25) are scheduled to reduce spending beginning in FY2013. Under current law, these policy changes are collectively estimated to reduce the budget deficit by over $100 billion between FY2012 and FY2013. In making fiscal policy choices, Congress will have to weigh the benefits of deficit reduction against the potential implications of fiscal policy choices for the ongoing economic recovery. Maintaining current revenue and spending policies will add to the deficit, while increasing revenues and reducing spending, as under current law, could slow economic growth. Thus, deficit reduction measures must be balanced against concerns that spending cuts or tax increases could dampen an already weak economic recovery. CBO has concluded that allowing current law fiscal policies to take effect will dampen short-term economic growth, but accelerate long-term economic growth. Conversely, CBO has concluded that postponing the fiscal restraint would accelerate short-term economic growth, but dampen long-term economic growth. In that context, several policy observers have recommended implementing a credible medium-term plan that balances economic considerations with deficit reduction. | 6,214 | 658 |
RS21948 -- The Director of National Intelligence and Intelligence Analysis Updated February 11, 2005 The fundamental responsibility of intelligence services is to provide information to support policymakers and military commanders. In reviewing theperformance of the U.S. Intelligence Community prior to the terrorist attacks of September 11, 2001, the 9/11Commission, the National Commissionon Terrorist Attacks Upon the United States, concluded that greater coordination of the nation's intelligence effortis required to enhance thecollection and analysis of information. Specifically, the 9/11 Commission recommended that a new position ofNational Intelligence Director (NID)be established to ensure greater inter-agency coordination. A number of legislative proposals were introduced in2004 to establish such an officeseparate from the Director of the Central Intelligence Agency (CIA). (1) The NID was envisioned by the 9/11 Commission as having a number of budgetary and managerial responsibilities. (2) In addition, the occupant of theposition would "retain the present DCI's role as the principal intelligence adviser to the president." (3) The Commission also envisioned that the NIDwho would "be confirmed by the Senate and would testify before Congress, would have a relatively small staff ofseveral hundred people, taking theplace of the existing community management offices housed at the CIA." (4) The Commission adds, however, that "We hope the president will cometo look directly to the directors of the national intelligence centers [the National Counterterrorism Center, and othercenters focusing on WMDproliferation, international crime and narcotics, and China/East Asia] to provide all-source analysis in their areasof responsibility, balancing theadvice of these intelligence chiefs against the contrasting viewpoints that may be offered by department heads atState, Defense, Homeland Security,Justice, and other agencies." (5) There is some debate whether the 9/11 Commission envisioned the NID as having the responsibility for coordinating national intelligence estimatesand other community products. The Director of Central Intelligence (DCI) has been responsible for providingintelligence to the President, to theheads of departments and agencies of the Executive Branch, the Chairman of the Joint Chiefs of Staff and seniormilitary commanders, and "whereappropriate" the Senate and House of Representatives and the committees thereof. The statute provides that "suchnational intelligence should betimely, objective, independent of political considerations, and based upon all sources available to the intelligencecommunity." (6) Draft legislation inthe fall of 2004 did include the assignment of responsibilities for preparing national intelligence estimates to theDNI. On December 17, 2004, the President approved the Intelligence Reform and Terrorism Prevention Act of 2004 (hereafter the "Intelligence ReformAct")( P.L. 108-458 ). The Act incorporated many of the proposals of the 9/11 Commission, including theestablishment of a Director of NationalIntelligence (DNI) separate from the Director of the CIA. Although most of the debates prior to passage of thelegislation addressed the DNI'sresponsibilities for managing the intelligence budget, the Act also made a number of changes affecting thepreparation of analytical products forconsumers at the highest levels of government. The DNI will serve as head of the Intelligence Community and asthe principal adviser to thePresident and the National Security Council, and the Homeland Security Council for intelligence matters relatedto the national security. (7) Under the new legislation, the Office of the DNI will include the National Intelligence Council (NIC), composed of senior analysts within theIntelligence Community and substantive experts from the public and private sector. (8) The members of the NIC "shall constitute the seniorintelligence advisers fo the Intelligence Community for purposes of representing the views of the [I]ntelligence[C]ommunity within the United StatesGovernment." The members of the NIC are to be appointed by, report to, and serve at the pleasure of the DNI. The Intelligence Reform Act, provides that the DNI, when appointed, will be responsible for NIEs and other analytical products prepared under theauspices of the NIC. The three statutory responsibilities of the NIC have been to: produce national intelligence estimates for the Government, included, whenever the Council considers appropriate, alternativeviews held by elements of the intelligence community; evaluate community-wide collection and production of intelligence by the intelligence community and the requirements andresources of such collection and production; and otherwise assist the [DNI] in carrying out responsibilities established in law. (9) The DCI historically, and the DNI in the future, has a unique responsibility for the quality of intelligence analysis for consumers at all levels ofgovernment. While a number of agencies produce analytical products, the most authoritative intelligence productsof the U.S. IntelligenceCommunity are published under the authority of the DCI and potentially the DNI. NIEs are the primary, but not thesole, form in which theIntelligence Community forwards its judgments to senior officials, and they are the only one prescribed in statute. NIEs are produced at the NIC'sinitiative or in response to requests from senior policymakers. NIEs are sometimes highly controversial. They are designed to set forth the best objective judgments of the Intelligence Community, but theyoccasionally are more closely related to policy rationales than some analysts would prefer. An NIE produced inOctober 2002 on Iraq's ContinuingPrograms for Weapons of Mass Destruction has been much criticized; a more recent NIE on prospects for Iraq hasbeen the source of significantmedia attention. (10) Although the importance of particular NIEs to specific policy decisions may be debatable, (11) the NIE process provides a formal opportunity fortheIntelligence Community's input to policy deliberations. Arguably, it is the responsibility of policymakers to seekthe input of the IntelligenceCommunity, but most observers would argue that the DNI should not be reticent in presenting intelligenceinformation and judgments on majorpolicy issues when difficult decisions are under consideration. The most recent chairman of the NIC is Ambassador Robert L. Hutchings, who had previously served in the State Department and in academicinstitutions. (12) In addition, there are senioranalysts, known as National Intelligence Officers (NIOs), for Africa, East Asia, Economics and GlobalIssues, Europe, Intelligence Assurance, Latin America, Military Issues, Near East and South Asia, Russia andEurasia, Transnational Threats,Warning, and Weapons of Mass Destruction and Proliferation. The NIOs, who do not receive Senate confirmation,come from a variety ofgovernment agencies, inside and outside the Intelligence Community, and from the private sector. National Intelligence Officers supervise the production of NIEs and other community-wide products. Typically, an analyst in one agency isdesignated by the relevant NIO to prepare a draft analytical product; the draft then is reviewed by relevant analyststhroughout the Community. Subsequently, if approved by the leadership of the Intelligence Community (the National Foreign Intelligence Board)and the DCI, the draft has beencirculated to policymakers in the Executive Branch and, on occasion, to Members of Congress. NIEs set forth thebest information and judgments ofthe Intelligence Community and are usually directed at significant issues that may require policy decisions. The NIOs have worked for the DCI in his capacity as head of the Intelligence Community rather than in his capacity as director of the CIA. (In thefuture they will report to the DNI.) Thus, NIEs and related analytical products have not been CIA products; theyhave represented the consolidatedviews of the Intelligence Community (with alternative views held by elements of the Intelligence Community noted,in accordance with the statutorymandate (13) ). It may be reasonably assumed that the NIC will continue to depend heavily on the resources of the CIA. The CIA contains the most extensiveanalytical capability across the board on all subjects that might concern national policymakers, as well asconsiderable capability to support militarycommanders and mid-level desk officers. The CIA was originally designed to be "central," without obligations tosupport departmental objectives ashas been considered to be the case with the intelligence arms of the military services and the State Department. Insome areas, however, otheragencies have more extensive capabilities and can make an equal or greater contribution to NIEs and other productsdesigned to express thejudgments of the entire Intelligence Community. Some critics, moreover, charge that CIA on occasion developsan agency "position" that tends todiscourage alternate perspectives. (14) On many topics, there are inevitably different perspectives, and according to many observers, policymakers are best served by rigorous presentationsof alternative positions. (15) At the same time,however, some NIEs reflect an effort to craft language that all agencies can agree on and thus to avoidairing differences that might draw agencies into policy arguments between and among government departments. Agency managers understand thattoo close involvement in a policy argument by intelligence analysts can make their analyses unwelcome across theboard. In addition, they wellunderstand that analysis is an uncertain science and art and that even the best analysts can miss developments thatloom large in retrospect and leavetheir agencies open to harsh criticism or retribution. Concern is often expressed about the extent to which intelligence products can become "politicized," i.e., be drafted to support or undermine certainpolicy options. A charge of politicization is difficult to prove and is often dependent upon a reader's subjectiveviewpoint. Most observers believethat analysts make a conscientious effort to avoid policy advocacy, but note that they are fully aware of policydisputes and may have their own viewsthat may, subconsciously or otherwise, influence their products. There is, according to some observers, a tendencyto avoid making intelligencejudgments that directly conflict with policy options that have been chosen. Observers caution that placingintelligence analysis at the center of policydisputes can undermine the effectiveness of the analytical contribution; they suggest that intelligence can best serveby informing policy debates, butanalysts cannot be expected to provide definitive judgments that will resolve disputes that may involve a myriadof different factors, some farremoved from intelligence questions. In addition, observers note that it should be recognized that policymakingsometimes involves makingjudgments based on incomplete intelligence or on a willingness to accept risks and uncertainties beyond the ken ofanalysts. Analysis can have asubjective quality to some degree and can be undermined by unreasonable expectations. The Intelligence Reform Act provides several provisions designed to ensure that analysis is well-prepared and not politicized. In addition to havingauthority to establish an Office of Inspector General, the DNI is to assign an individual or entity to ensure thatagencies conduct alternative analysesof information and conclusions in intelligence products (section 1017). The DNI is also to assign an individual orentity to ensure that intelligenceproducts are "timely, objective, independent of political considerations, based on all sources of availableintelligence, and employ the standards ofproper analytic tradecraft" (section 1019). Another section requires that the DNI assign an individual to addressanalysts' concerns about "real orperceived problems of analytic tradecraft or politicization, biased reporting, or lack of objectivity in intelligenceanalysis" (section 1020). Left uncertain are responsibilities for preparing the written brief on current intelligence that is prepared daily for the President and a very few othersenior officials. The President's Daily Brief (PDB), along with the Senior Executive Intelligence Brief (SEIB) thathas a somewhat widerdistribution, have been prepared by CIA's Directorate of Intelligence (DI) and are considered that directorate's"flagship products." Nonetheless,should the DNI be responsible for daily substantive briefings at the White House rather than the CIA Director, itmight be considered appropriate thatthe DNI staff draft the PDB and the SEIB, based on input from the CIA and other agencies. The number of analystswho actually prepare thePBD/SEIB is not large, but their work reflects ongoing analysis in the CIA and other parts of the IntelligenceCommunity. Some might argue,moreover, that close and important links between CIA desk-level analysts and the PDB would be jeopardized shouldthe briefs be prepared outside ofthe CIA. In addition, there are myriads of other analytical products: reports, memoranda, briefings, etc. that are prepared on a routine basis. The IntelligenceReform Act does not transfer extensive analytical efforts to the NID; leaving such duties to existing agencies; theNIC will be responsible forassessments that set forth the judgments of the Intelligence Community as a whole. The Intelligence Reform Act provides that the DNI will assume responsibilities for managing the NIC. The DNI will be support by the NIC staff(probably numbering less than 100 positions). This gives the DNI the capability to oversee the preparation of NIEsand to ensure that the views of allagencies have been taken into consideration in inter-agency assessments. A major change will be the fact that theNIOs and their staff will work forone person (the DNI) while CIA analysts will report to a separate Director of the CIA. Congress may ultimatelyassess whether these changes, as theyare implemented, have improved the efforts of the Intelligence Community and its analytical products. The future responsibility for the production and presentation of the PDB/SEIBs is uncertain. They are currently prepared by CIA's Directorate ofIntelligence, and that responsibility could be continued. On the other hand, if the DNI, rather than the CIA Director,is to conduct the daily briefingfor the President and senior White House officials, it might be argued that the DNI and the DNI's immediate staffshould have responsibility for thedocument that provides the basis for the daily briefings. | The 9/11 Commission made a number of recommendations to improve the quality ofintelligenceanalysis. A key recommendation was the establishment of a Director of National Intelligence (DNI) position tomanage the national intelligenceeffort and serve as the principal intelligence adviser to the President -- along with a separate director of the CentralIntelligence Agency. Subsequently, the Intelligence Reform and Terrorism Prevention Act of 2004, P.L. 108-458, made the DNI theprincipal adviser to the President onintelligence and made the DNI responsible for coordinating community-wide intelligence estimates. Some observersnote that separating the DNIfrom the analytical offices may complicate the overall analytical effort. This report will be updated as newinformation becomes available. | 3,125 | 161 |
Section 2 would have addressed the problem of regional shortages of petroleum and natural gas products by amending the Clayton Act to make it unlawful for "any person to refuse to sell, or to export or divert, existing supplies of petroleum, gasoline, or other fuel derived from petroleum or natural gas with the primary intention of increasing prices or creating a shortage in a geographic market." The provision set out the circumstances that were to be considered by a court in determining whether the actions made unlawful were done "with the intent of increasing prices or creating a shortage...." Sections 3-5 would have imposed review, reporting, and study requirements on the Federal Trade Commission (FTC), the Attorney General, and the Government Accountability Office (GAO). Section 3 would have required the FTC and the Attorney General, to (1) conduct a study of section 7 of the Clayton Act (15 U.S.C. SS 18), the so-called antimerger section, in order to determine "whether [that] section ... should be amended to modify how that section applies to persons engaged in the business of exploring for, producing, refining ... or otherwise making available petroleum, gasoline or other fuel derived from petroleum or natural gas"; and, within 270 days of S. 2557 's enactment, (2) report to Congress the study's findings, "including recommendations and proposed legislation, if any." The report was to be based, in addition to the parties' own study of section 7 of the Clayton Act, on the Section 4-required GAO study. Section 4 would have required the GAO, within 180 days of enactment, to evaluate "the effectiveness of divestitures required under" consent decrees entered into within the past 10 years between either the FTC or the Department of Justice and "persons engaged in" the same segments of the petroleum or natural gas industries as those subject to study (as noted above) by the Attorney General and the FTC. The GAO study, was to have been submitted to Congress, the Attorney General, and the FTC, within 180 days of S. 2557 's enactment. Further, section 4 of S. 2557 would have required that the Attorney General and the FTC, in addition to reviewing the report for purposes of their report to Congress mandated in section 3(b) of S. 2557 , also "consider whether any additional action is required to restore competition or prevent a substantial lessening of competition occurring as a result of any transaction that was the subject of the [GAO] study...." Section 5 would have required the Attorney General and the FTC to establish a "joint federal-State task force" with any state Attorney General who chose to participate, to investigate information sharing (including [that facilitated] through the use of exchange agreements and commercial information services), among persons [described in the mandates for the above-cited studies, and] (including any person about which the Energy Information Administration collects financial and operating data as part of its Financial Reporting System). Section 6 would have created the "No Oil Producing and Exporting Cartels Act of 2006" ("NOPEC") as an amendment to the Sherman Antitrust Act (15 U.S.C. SSSS 1-7) by inserting new provisions to make illegal, and an antitrust violation, actions by "any foreign state, or any instrumentality or agent of any foreign state, ... to act collectively or in combination with any other foreign state, ... or any other person, whether by cartel or any other association or form of cooperation or joint action--" to engage in certain, specified actions with respect to natural gas or petroleum products, including those to (1) limit either "the production or distribution," (2) "set or maintain the price of," or (3) "take any [other] action in restraint of trade"-- if any of those actions "has a direct, substantial, and reasonably foreseeable effect on" U.S. commerce. Pursuant to proposed section 8(c) of the Sherman Act, the doctrine of sovereign immunity would not protect any foreign state from "the jurisdiction or judgments" of U.S. courts in any action brought on account of conduct alleged to be in violation of the foregoing prohibitions. Proposed section 8(d) would prohibit use of the act of state doctrine as a court's rationale for "declin[ing] ... to make a determination on the merits in an action brought under this section." The final provisions of section 6 would add language to 28 U.S.C. SS 1605(a), which lists exceptions to the Foreign Sovereign Immunities Act, to clarify that sovereign immunity does not apply in instances "in which [an] action is brought under section 8 of the Sherman Act." Technical matters concerning references to existing statutes or to statutory provisions (several of which have been renumbered in the past several years, including editorial renumbering after enactment) are best addressed by the Senate Office of Legislative Counsel. Similarly, that Office might also best provide U.S. Code citations to accompany the statutory section references so as to clarify exactly which provisions are being named, amended, or added. In addition, that Office's familiarity with legislative drafting considerations should enable them to suggest the most advantageous placement of proposed provisions. Making it unlawful for "any person to refuse to sell, export or divert, existing supplies of petroleum..." would likely be challenged by those who would note that the courts, beginning with the Supreme Court's 1919 decision in United States v. Colgate & Co., have long acknowledged the right of an individual businessman to do business, or not, with whomever he likes, and on whatever terms and conditions he deems acceptable: In the absence of any purpose to create or maintain a monopoly, the [Sherman] act does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal; and, of course, he may announce in advance the circumstances under which he will refuse to sell. Section 1 of the Sherman Act prohibits "contracts or conspiracies in restraint of trade" --in other words, collusion. Section 2 prohibits "monopolization" or "attempted monopolization"--which may entail unilateral, "guilty behavior" by either a would-be monopolist in his quest to become one (attempt), or an existing monopolist acting to maintain his monopoly position by other than the "superior product, business acumen, or historic accident" which served to create the monopoly in the first place. Presently, absent either the collusion (joint action) made unlawful by section 1 of the Sherman Act, or the "guilty behavior" which might constitute violation of section 2, there is not any statutory constraint on unilateral business decisions, and the courts have been reluctant to infer one. The Federal Trade Commission has released two reports--in July 2005 and March 2006 - concerning the gasoline industry. The former "analyze[d] in detail the multiple factors that affect supply and demand--and thus prices for gasoline ...; the latter, an interim report, was produced in response to Congressional directives, and outlines the Commission's rationale and methods for combining the mandated studies. Tasking the FTC with the study and reporting requirements contained in sections 3 and 4, in addition to those contained in other legislation, might result in the Commission's inability to conduct timely enforcement activities and/or continue its program to monitor "weekly average gasoline and diesel prices in 360 cities nationwide to find and, if necessary, recommend appropriate action on pricing anomalies that might indicate anticompetitive conduct." Provisions similar to the NOPEC provisions of S. 2557 , an apparent attempt to nullify the courts' refusal, in 1979, to sanction a suit against OPEC by the International Ass'n of Machinists and Aerospace Workers (IAM), would not necessarily accomplish the presumed goal of precluding OPEC's influence on gasoline prices. First, a provision that would add language to the Sherman Act to make certain actions unlawful under that statute, may be redundant: those actions taken abroad by a non-sovereign that have the requisite effect on U.S. commerce are already reachable under the U.S. antitrust laws, even absent specific statutory authorization. As stated by the United States Court of Appeals for the Second Circuit in 1945: We should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States. American Banana Co. v. United Fruit Co., 213 U.S. 347, 357, .... On the other hand , it is settled law ... that any state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders that has consequences within its borders which the state reprehends; and these liabilities other states will ordinarily recognize. In addition, the Foreign Sovereign Immunities Act (FSIA) of 1976 contains a commercial activity exception to the general rule that a foreign state is protected from the jurisdiction of U.S. courts by the doctrine of sovereign immunity. There is no sovereign immunity, according to existing statute (28 U.S.C.A. SS 1605(a)(2)), in circumstances in which the [judicial] action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States; S. 2557 , for example, would have stated specifically that actions brought pursuant to the Sherman Act do not trigger sovereign immunity, but the provision did not define OPEC as a "country" for purposes of the act; such a lack could present a problem for two reasons. The S. 2557 language did not, seemingly, add meaningfully to the general "commercial activity exception" language of FSIA. The IAM's unsuccessful attempt to use FSIA to sue OPEC for, inter alia , price fixing under the antitrust laws is a useful illustration; it foundered for reasons that do not seem to have been remedied by the bill's proposed statutory provisions. The district court found that because OPEC was not a country, FSIA was inapplicable, and no action could be brought against OPEC under it. Further, and perhaps more important, the court found that the "indirect purchaser" doctrine denied the IAM standing to sue (477 F.Supp. at 560-61). Congress has not granted indirect purchasers standing under the federal antitrust laws, although several states have done so with regard to their own antitrust laws. Although proposed section 8(e) of the Sherman Act would allow suits to be brought by the Attorney General, it would not alter a current prohibition on private actions--the indirect purchaser doctrine. Affirming the district court's dismissal of the IAM suit, the appeals court reasoning was based on non-FSIA, non-antitrust factors, and couched in language that does specifically mention the act of state doctrine, indicating the questionable effectiveness of proposed section 8(d)'s direction that courts not "decline, based on the act of state doctrine, to make a determination on the merits in an action brought on this section." While the case is formulated as an anti-trust action, the granting of any relief would in effect amount to an order from a domestic court instructing a foreign sovereign to alter its chosen means of allocating and profiting from its own valuable natural resources. On the other hand, should the court hold that OPEC's actions are [antitrust] legal this "would greatly strengthen the bargaining hand" of the OPEC nations in the event that Congress or the executive chooses to condemn OPEC's actions. | This report addresses one of several approaches to the issue of rising gasoline prices put forward in the 109th Congress. S. 2557 was introduced on April 6, 2006, by Senator Specter, Chairman of the Senate Judiciary Committee, reported by that committee on April 27, but was not scheduled for floor action. The bill sought to amend the antitrust laws to accomplish four things. Mitigate regional shortages of petroleum and natural gas products Mandate federal agency reviews to (a) fine-tune the statutory provision most concerned with mergers (Section 7 of the Clayton Act, 15 U.S.C. SS 18, which makes unlawful any merger or acquisition in or affecting commerce that may "substantially" lessen competition or "tend to create a monopoly" in any line or commerce in any section of the country) so that it would be particularly applicable to mergers in the oil and gas industry, and (b) examine the effectiveness of the divestiture remedy for mergers in that industry Establish a federal-state task force to examine information-sharing in the oil and gas industries; and Make U.S. antitrust law applicable to certain actions carried out by the Organization of Petroleum Exporting Countries (OPEC). | 2,667 | 263 |
In its quest to enhance the U.S. government's capacity to address future conflict settlements, the Bush Administration seeks congressional support for the establishment of a multi-component, civilian "ready reserve" for peacebuilding abroad. The Bush Administration is expected to present a concrete proposal for such a reserve in February 2008 with its FY2009 budget request. In his State of the Union address on January 23, 2007, President Bush invited the 110 th Congress to work with the Administration on the design and establishment of a volunteer Civilian Reserve Corps which would function "much like our military reserve." This Corps "would ease the burden on the armed forces by allowing us to hire civilians with critical skills to serve on missions abroad when America needs them," he stated. "It would give people across America who do not wear the uniform a chance to serve in the defining struggle of our time." On June 1, 2006, the Congressional Research Service held a workshop, entitled Civilian Forces for Stabilization and Reconstruction: U.S. Proposals and International Experience, in order to clarify the issues involved in forming such a reserve. The following report, first issued in 2006, summarizes the main points of workshop proceedings and concludes with a short discussion of related issues for Congress. It will not be updated. The lead speaker was Christopher J. Hoh, the Director for Response Strategy and Resource Management in the State Department Office of the Coordinator for Reconstruction and Stabilization (S/CRS). The Administration has tasked the S/CRS to develop the concept of a civilian reserve force that could rapidly deploy to conflict-torn areas to carry out state-building efforts. This is often referred to as a "surge capability." Personnel in such a force would include rule of law practitioners (police, judges, lawyers, prison administrators), civil administrators and governance experts (people with experience involving local and state government agencies) and infrastructure experts (e.g., civil engineers and planners). Mr. Hoh explained current State Department plans for a civilian reserve. These plans envision the civilian reserve as a group that would fill the gap between permanent U.S. government employees, who could be deployed immediately, and contractors, who take much longer to deploy. (Permanent government employees would be comprised of two groups, an active force of employees dedicated solely to such operations and a stand-by reserve of government employees who have volunteered to be detailed from their permanent jobs to such operations as needed.) Civilian reservists would be deployable within 30 to 60 days, mobilized as government employees, paid at a comparable level with government employees doing the same work and offered comparable incentives such as death and dismemberment insurance and diplomatic privileges, according to the Administration plans outlined by Mr. Hoh. They would be chosen for their expertise in the areas needed for "transitional security," rule of law, essential public services, and civil administration. They would be screened and trained for the capacity to work effectively from the very beginning of their assignment and to function in teams. Because they would be government employees, they would be accountable under U.S. government ethics laws and other regulations and could form part of the U.S. government management structure, e.g., supervising and managing permanent U.S. government employees and contractors. (Mr. Hoh did not provide an estimate of the number of reservists contemplated under current plans. The numbers contemplated by studies prepared for S/CRS are discussed in the " Related Issues for Congress " section, below.) Noting that the State Department had just received a lengthy report (of well over 600 pages) from BearingPoint, Inc. outlining detailed plans for a civilian reserve, Mr. Hoh stated that the Administration would consult with Congress on specific plans for the reserve once intra-executive branch consultations are completed. He said that the Administration would consult with Congress on issues regarding specific functional specialty areas (i.e., rule of law, civil administration, economic development), the types of situations in which the reserve should be deployed, and the period of time over which to build a comprehensive reserve force. Subsequent discussion centered on examining the lessons that the United Nations and others have learned in developing their own roster systems to deploy civilians to peace operations. The speaker from the United Nations was Catherine Rolland, Chief of the newly created Recruitment and Outreach Unit of the United Nations (U.N.) Department of Peacekeeping Operations' (UNDPKO) Personnel Management and Support Service. The Recruitment and Outreach Unit is responsible for the screening of candidates and the maintenance of a roster for U.N. peacekeeping and peacebuilding operations. There were also speakers from the two largest and most sophisticated national roster systems: Jens Behrendt, Head of Recruitment since 2003 at the Center for International Peace Operations (ZIF) in Berlin, a recruitment, training and analysis agency established by the German government, and Christine Vincent, Deputy Executive Director and Director of Operations at CANADEM, the Canadian-government funded recruitment and placement agency which she helped establish in 1997. (CANADEM is the official name of the agency, even though it appears to be an acronym.) These two agencies are government-established and funded, but independent. Neither country has a civilian reserve for stabilization and reconstruction (S&R) operations, such as that contemplated by the Bush Administration or by a Senate bill passed shortly before the workshop was held. (The Reconstruction and Stabilization Civilian Management Act of 2006, S. 3322 , passed by the Senate on May 26, 2006, but never considered in the House, would have provided for the continued development of an extensive expert civilian response capability for S&R activities as a core mission of the State Department and USAID.) Nevertheless, these two organizations recruit civilians from their respective countries to serve in peacekeeping and peacebuilding operations run by international organizations, such as the United Nations, the European Union (EU), and the Organization for Security and Cooperation in Europe (OSCE). Like the United Nations, ZIF and CANADEM pre-screen all candidates and they offer some level of training. (Details on the United Nations, ZIF, and CANADEM rosters can be found in the Table 1 at the end of this report.) While these agencies are not equivalent to the civilian reserve proposals currently under study in the United States, the recruitment and other problems they face may well have implications for the issues that the United States will confront in forming a civilian reserve. A fourth speaker knowledgeable about roster systems was Scott R. Feil, a retired U.S. Army Colonel and an adjunct research staff member at the Institute for Defense Analysis (IDA), a non-profit institute supporting the Department of Defense. He directed a forthcoming study for S/CRS on civilian post-conflict reserve forces which examined the roster systems of various international organizations and countries, as well as in the United States. Two other experts with experience in recruiting and screening civilian volunteers for post-conflict missions were invited to participate in the discussion following speakers' presentations: Elizabeth Anderson, Executive Director, and Michael Maya, Principal Deputy Director, of the American Bar Association's Central European and Eurasian Law Initiative (CEELI). CEELI deploys lawyers to post-conflict zones and new democracies in the Balkans and elsewhere to help establish or reestablish the rule of law. An underlying premise of the development of civilian rosters and reserves in that the quality of people who are deployed in post-conflict and other stability operations is crucial to their success. Mr. Feil stated that while he does not believe any study has yet been done measuring the effectiveness of personnel in post-conflict missions, he believes that such an evaluation would demonstrate that the more experienced, well-qualified people are more successful at their tasks than those less qualified. Participants discussed their organizations' experiences and methods for obtaining and retaining well-qualified people. As the purpose of creating a civilian roster is to provide the best possible person for a specific task in a foreign operation and usually within a short period of time, speakers agreed that proactive recruitment is necessary. According to participants, it is not enough to establish an online application website and to develop a roster based on those who apply. Even though many persons may apply, unsolicited, through an online application link, many may not be qualified. (Mr. Behrendt estimated that ZIF gets some 50 to 80 applicants a month for placement on the roster, and rejects some 60% to 70% immediately as unsuited to the needs of the requesting organizations.) Ms. Vincent of CANADEM said that targeted recruitment is essential to the development of a roster of well-qualified experts, an assessment in which others concurred. Mr. Behrendt described "head-hunting" as an important task of ZIF's six recruiters. One targeted recruitment method cited by CANADEM and ZIF is to build networks in professional communities. For example, CANADEM contacts professional associations in order to build networks. In the future, it may survey its expatriates in business and professional work for potential candidates. ZIF uses networks of Eastern European professionals to work where the Russian language is useful and is also looking to recruit among German Arabic speakers. Another recruitment method is through word-of-mouth contacts with well-qualified individuals: the recruiters request these individuals to recommend others who would be well-suited for such jobs. ZIF representatives talk to corporate leaders in order to persuade them to grant leaves of absence for overseas deployments that would allow qualified individuals to participate in peacebuilding missions. ZIF is also considering recruiting among its expatriate communities. Roster size and depth is also an important determinant in an organization or nation's ability to provide well-qualified people on short notice for specific missions. A sizable roster with some depth in each specialty was recommended by participants. Several participants noted that a large roster was needed, with several people who would be qualified for any one slot. Ms. Vincent stated that a large database increases the chances of being able to deploy a well-qualified person because, in CANADEM's experience, "really good people are not readily available quickly." Ms. Rolland stated that it is very difficult to recruit well-qualified people with the requisite language skills. Whether a roster is of adequate size to fulfill the needs of a particular nation or organization will depend on the number of those sent abroad. For example, CANADEM has drawn the 400 people it currently has abroad from a "core" roster of 4,000. (It considers these the most suited for missions, although its total roster numbers 7,600.) This is a ratio of 10 persons on the core roster to each person deployed. ZIF has a roster of 900 persons and has 200 persons deployed, for a ratio of 4 1/2 to one. (The United Nations, which is making a concerted effort to increase its roster, has a ratio at this time of less than one on the roster to one deployed.) While sizable rosters are necessary, ZIF has decided to limit its roster to no more than 1,500 people. That, it believes, is the maximum number of participants that it can manage with its six recruitment officers, who also provide continuing points of contact for people deployed in the field and returnees. The purpose of continuing contacts is to provide the support necessary to encourage personnel on the roster to participate in future deployments. The ZIF representative also expressed concern that the lack of entry level positions was cutting off a potential source of roster recruits. Because Germany's domestic labor market is tight, ZIF receives a large number of applications from junior professionals. However, entry level positions in peacekeeping and peacebuilding operations are quickly disappearing and the greatest demand is for mature, mid-career professionals. Thus, bringing people in at an entry level and having them develop expertise on the job is difficult. Because ZIF and the other organizations usually limit their rosters to those with overseas experience, they may face a shortage of qualified professionals when current members begin to retire. Participants stressed the need to employ multiple layers of screening in order to ensure that only applicants who are well suited to the extraordinary demands and rigors of peacekeeping and related missions are placed on rosters. Such missions demand people who are not only experts in their fields, but who also have the interpersonal skills necessary to develop rapidly productive working relationships with people from varied cultural backgrounds. (Screening includes references checks and personal interviews, and in the case of ZIF, testing in a hostile environment (see below). See the Table 1 at the end of this report for details on CANADEM, ZIF, and U.N. screening processes.) Screening is used to identify those who seek and are well-qualified for the professional challenge that such positions entail, weeding out those merely looking for adventure or seeking to escape troubled personal lives. Even those recruited directly by an organization because of their expertise must be screened for their ability to withstand the physically demanding environments and psychologically taxing situations presented by such missions. People who are not fit for such missions can pose unnecessary risks to themselves, their colleagues, and others. Not only is intensive screening cited as important in mitigating the risks involved in sending unsuitable people to missions, but it is also necessary to ensure that personnel are able to fulfill their commitments. One speaker noted that two deployed persons had returned from missions in Sudan and the rural areas of Sierra Leone because they were unable to tolerate the situations. The speakers from the United Nations and CANADEM stated that their organizations are currently enhancing their screening efforts. Part of the improved U.N. screening system will enable potential applicants to make better decisions about whether they are suitable for a position by providing greater online information about the circumstances and requirements of a mission as part of the application information. The United Nations is also beginning to use technical experts to screen applications before applicants are included in the roster. CANADEM has also begun to establish a system to assess the performance of those it deploys in order to evaluate them for future deployments. Mr. Behrendt of ZIF stated that he thought it important to personally know each person on the ZIF roster. Ms. Vincent of CANADEM said that she knew everyone on the CANADEM roster when it listed 2,000 names, but knowing everyone personally was impossible when the roster grew far beyond that. The United Nations, ZIF, and CANADEM all offer some level of training to those going on missions. The U.N. training is generally provided in the field at the site of the mission. ZIF has the most extensive initial training, which it also uses as a screening mechanism in its recruitment process. ZIF applicants are required to take a two-week training program, of which four days are spent at a German Army base that requires them to work with police and military personnel. There, they are put through stressful situations that simulate a hostile environment. For instance, applicants must deal with passing through legal checkpoints and encountering illegal checkpoints. They must demonstrate that they can adapt to the sound of weapons fire. During their training ZIF observes whether they have the interpersonal skills and the capacity needed to deal with stress in a difficult mission. CANADEM views it as essential to provide training courses to those without any international experience. Those who have served in previous missions, however, are given predeployment briefings tailored specifically to their new mission. CANADEM is exploring the possibility of increasing the training it offers, and is considering online training. The discussion revealed some ambiguity regarding the extent to which participation in a peacekeeping/peacebuilding roster should be treated as a career path. The United Nations, CANADEM and ZIF representatives all felt that their organizations are in competition for qualified personnel with organizations that offer a career track in related areas, with benefits and incentives. Such competitors include the United National Development Program (UNDP) and other international or non-profit development agencies. This is especially true in cases where participants must quit their jobs in order to deploy. ZIF said that virtually all of those that it deploys must leave their jobs, while in the case of CANADEM this is less true as the Canadian government is disposed to granting leaves of absence for such experiences. Where leaves of absence are not available, participants are likely to extend their commitments or seek another position after their first assignment ends, making a de facto career of a patchwork of overseas deployments. Because of this competition, benefits such as health insurance and life insurance can be important recruitment assets. While Ms. Rolland judges the UNDPKO to have attractive benefits in this respect, CANADEM and ZIF are trying to secure higher benefits for those they send on missions. Follow-up work with those deployed and their families is necessary in order to encourage people to volunteer for future missions, according to Ms. Vincent. The psychological stress of missions on the deployed person and of the deployed person's absence on the family makes "reintegration work" necessary to retain people for second tours, others also observed. On the other hand, the speakers also cautioned against repeated redeployments to hostile situations, noting that working in abnormal situations can extract a psychological toll that is damaging for many people over the long run. The ZIF representative cautioned that at times roster participants showing signs of psychological fatigue had to be dissuaded from seeking an immediate new post-conflict posting after completing an assignment. While ZIF seeks a long-term relationship with the people on its roster, with people deploying to multiple assignments over a period of many years, it seeks to discourage applicants from viewing peacebuilding as a career or even as a source of employment for long periods of time, such as ten continuous years. According to the workshop discussion, determining the appropriate length for a deployment is critical. Even the best people are unlikely to be successful if their deployments are not long enough to build the relationships needed to perform a job adequately. In addition, much time is lost with shorter tours of duty as successive experts duplicate work which was done by a previous person. U.N. contracts are for six months, the length of the standard mission mandate, but are renewable as the missions are generally extended. Mr. Hoh of S/CRS stated that results improved during his tour in Bosnia as the lengths of time for which civilians were retained increased. Ms. Anderson of the ABA commented during discussions that the ABA asks for an initial commitment of one year and offers incentives for a person to remain for another year. Where that is not possible, the ABA tries to arrange for an overlap in order to eliminate duplication of effort. CANADEM and ZIF were both established by and continue to be funded by their respective governments, but both exist as autonomous non-profit organizations. Such arrangements are desirable, according to participants, because they allow the organizations to protect themselves from possible political demands, such as lobbying on behalf of the nominations or appointments of individuals for desirable posts. It also makes them less bureaucratic and able to respond more rapidly, according to the workshop discussion. In addition, CANADEM and ZIF enjoy continuity of managers and personnel, which would not be possible if they were government agencies whose personnel were secured by political appointments or diplomatic rotations. The major points emerging from the workshop raise questions of Congressional interest about the appropriate size, screening, and resourcing of a potential civilian reserve, and additional authorities needed. These questions are especially relevant when compared with the recommendations made by the S/CRS-commissioned BearingPoint study mentioned by Mr. Hoh. The workshop discussion squares with two conclusions of the BearingPoint study: first, that decisions on roster size must evolve over time, and second, that the S/CRS planned roster of 3,000 (according to the study) "is a fraction of what will ultimately be needed to fulfill the program's mission." The entire roster would be deployed if reservists were sent to two large and one small operations, according to BearingPoint estimates of the size of operations. The ratio could be as high as five persons on the roster to one person deployed if reservists were deployed to one small operation or during a year of small operations. Workshop discussion indicated that the BearingPoint ratio, which is about the same as the ZIF ratio and about half of the CANADEM ratio for its core roster, might well be workable for a small operation but problematic for larger and multiple operations. The BearingPoint study states that S/CRS will need to closely track deployment refusal rates as one determinant of optimal roster size. The IDA study contemplates a rule of law reserve of 6,000 people, including police units and judicial teams, and a civilian response corps of 2,500 in other specialities, according to Mr. Feil. In developing its concept, the IDA study looked not only at international rosters, including ZIF and CANADEM, but also several domestic models that are used for a variety of purposes. One that Mr. Feil pointed to as working well is the large online roster of the National Wildfire Coordinating Group, with some 75,000 firefighters available for national emergencies. Mr. Feil spoke highly of another as a possible model for a U.S. civilian reserve--one built on the concept of "directed overstrength" in local agencies, where U.S. government provides funding for or reimburses positions in non-federal agencies whose occupants could be called up when needed for deployments abroad. The emphasis placed by participants on the need to screen personnel, with special observation of their reaction to stress, raises the question as to whether the ZIF model might be more appropriate than the less extensive Bearing Point model. As noted earlier, ZIF screens applicants extensively, placing potential reservists on its roster only after they have successfully completed a training exercise that places them in stressful situations. The Bearing Point model recommends a written exam for applicants as a first screening step and an in-person evaluation relying on multiple screening methods. The BearingPoint model calls for four to six training events while reservists are in service: "baseline training, orientation, annual training, pre-deployment readiness, leadership training and in-country training." One question is whether baseline training should be made part of the screening process, before applicants are actually accepted into the reserve. The workshop discussion indicates that the most extensive training recommended by BearingPoint may well be desirable. There seemed to be a consensus that the longer deployments of a year or more are better than shorter ones. The BearingPoint study contemplates a standard maximum deployment length of one year in the field for most U.S. civilian reservists, with provisions for renewals. BearingPoint found that most participants in its focus groups would be willing to join a civilian reserve that required a commitment to deploy on one tour for a maximum of twelve months over a four year contractual period, although some were also interested in the possibility of extending tours and of additional deployments. The BearingPoint study states that "the experience of comparative organizations indicates that six months to one year as a standard tour length adequately satisfies the requirement for continuity of operations and the [critical] relationship building with local and partner organizations." (BearingPoint did recommend shorter three-to-six-month standard deployment commitments for law enforcement personnel, particularly constabulary police, because "performance can erode" over time in high threat environments. ) A one-year deployment length is consistent with current Administration thinking, which views the civilian reserve as an add-on to the force of permanent employees that fill the gap before contractors can be mobilized. Nevertheless, and despite the BearingPoint assessment that most potential reservists would be unwilling to sign on for longer than a one-year tour, the workshop speakers stress that the need for continuity of personnel may argue for a somewhat altered version of the model. One-year deployments may be adequate for most people in specialties where relationships are not crucial to success, such as infrastructure engineers and other more technical experts. Longer deployments may be considered, however, for positions and specialties where long-term personal relationships and mentoring are important for a successful outcome. Ms. Andersen of the ABA indicated that in rule of law areas involving the courts and rule of law reform, where relationships are crucial to success, tours of one year or more are desirable. (She noted that about one-half of those deployed on ABA missions volunteer for a second year.) Longer deployments may especially be needed when civilian reservists serve as managers or supervisors, as is contemplated by the proposal to activate them as federal employees. Further studies which test for the willingness of potential reservists in different specialties and at different levels of experience and pay to deploy for longer periods may be useful. Workshop discussion raises questions regarding the appropriate use of contractors. For the most part, CANADEM and ZIF rosterees are not government employees. Representatives from both organizations noted their consequent lack of control over deployed rosterees as occasionally problematic and one of the factors that make extensive screening necessary. According to the current civilian S&R deployment concept for the United States outlined by Mr. Hoh, federalized reservists would be deployed to cover the time "gap" before contractors could be deployed. Because the U.S. government similarly lacks control over contractors operating abroad on its behalf, policymakers may wish to consider whether the only factor to consider in choosing civilian reservists over contractors is relative deployment times. Reservists might be considered in circumstances where hostilities persist over a long period of time or where U.S. interests are particularly sensitive. Alternately, because deploying reservists for greater lengths of time would have implications for the size of the civilian reserve force, policymakers may wish to consider greater controls over deployed contractors and greater oversight over contractor rosters. | The Bush Administration is expected to submit a proposal for a civilian reserve with the February 2008 budget request. On June 1, 2006, CRS gathered a group of experts on the recruitment and deployment of civilians to peacekeeping operations, now generally referred to by the broader term "stabilization and reconstruction" operations. The purpose of the three-hour workshop was to clarify issues that might be involved in the formation of a civilian reserve force for such operations. The Bush Administration is developing proposals for a civilian reserve. Shortly before the workshop was held, the Senate passed the Reconstruction and Stabilization Civilian Management Act of 2006 (S. 3322) to establish such a civilian reserve. The workshop began with a presentation by State Department official, Christopher J. Hoh, who explained Administration plans for a civilian reserve. As outlined by Mr. Hoh, these plans called for the creation of a reserve of civilians from the private and public sector to deploy with or soon after permanent government employees and before contractors. Reservists would train together with U.S. military and civilian government personnel before deployments, and would be mobilized as federal employees. They would be provided a range of benefits and incentives. The workshop included speakers from the U.N. and from two national agencies that recruit civilians for peacekeeping and related missions: the German Center for International Peace Operations (known by its German acronym, ZIF) and Canada's CANADEM, as well as from the Alexandria, VA-based Institute for Defense Analysis. The U.N., ZIF, and CANADEM all have rosters of professionals in rule of law and civil administration to send on missions. The rosters are not equivalent to the reserve force proposed by the Bush Administration or by a Senate bill (S. 3322), the Reconstruction and Stabilization Civilian Management Act of 2006, but all candidates are pre-screened and provided predeployment training. The recruitment and other problems they have faced may be similar to those that the United States may encounter if it forms a reserve. Participants pointed to several needs to attract and retain highly qualified people: (1) proactive recruitment methods; (2) in-depth screening; (3) sufficient training; and (4) retention incentives. To meet the needs of requester organizations, participants agreed on the need for (1) sizable rosters, (2) sophisticated databases, and (3) insulation from political pressures. To enhance the prospects for mission success, participants agreed that deployments should be set for at least a year in order to provide continuity. The workshop discussion raised several questions about the desirability of Bush Administration plans. Among the questions are whether recent plans and proposals on roster size and recommendations by a private firm regarding the screening process and deployment length are adequate. This report will not be updated. | 5,642 | 593 |
On September 26, 2006, President Bush signed into law S. 2590 , the Federal Funding Accountability and Transparency Act ( P.L. 109-282 ). According to supporters of the new law, P.L. 109-282 was an attempt to reduce "wasteful and unnecessary spending" by the federal government, including spending on funds earmarked for special projects. To that end, the legislation required the Office of Management and Budget (OMB) to establish a publicly available, online database containing information about entities that are awarded federal grants, loans, contracts, and other forms of assistance. Using the database, supporters asserted, a citizen or watchdog group would be able to easily determine how much money was given to which organizations, and for what purposes. The premise of the new law was that by making the details of federal spending available to the public, government officials would be less likely to fund projects that might be perceived as wasteful. Supporters of the legislation also suggested that the new database would give citizens the opportunity to better understand how the government distributes funds and enable the public to become more involved in the discussion of federal spending priorities. Three of the primary categories of federal expenditures and obligations to be included in the database--federal grants, loans, and contracts--represent a significant element of federal spending. According to the most recently published Consolidated Federal Funds Report (CFFR), federal agencies award over $880 billion in those three categories of financial assistance alone: $470 billion in grants, $381 billion in contracts, and $29 billion in direct loans. OMB launched the database, USAspending.gov , on December 13, 2007. While the new database has been praised as a step toward a worthy objective--enhancing the transparency of government expenditures--government officials and members of the public have expressed concern about the quality of the data it provides, and about the cost of enhancing and expanding data collection efforts. This report initially discusses the background of S. 2590 , noting in particular how it compared to similar legislation in the House of Representatives. It then discusses the Federal Funding Accountability and Transparency Act's provisions, noting what types of assistance are to be part of the new database, the primary sources of the data, and deadlines for implementation. Finally, the report identifies and discusses issues that might affect the act's implementation, and that therefore might prove to be areas for future congressional oversight. Senator Tom Coburn, along with three cosponsors, introduced S. 2590 on April 6, 2006. On August 2, 2006, the Senate Committee on Homeland Security and Governmental Affairs unanimously reported S. 2590 , with an amendment in the nature of a substitute. That same day, the committee's chair, Senator Susan Collins, and its ranking member, Senator Joseph Lieberman, requested that the bill be brought to the floor for a unanimous consent vote before the August recess commenced. This motion was blocked by an unnamed Senator, which delayed action on the bill until after the recess. On September 7, all holds were lifted and the Senate passed S. 2590 by unanimous consent. The House approved S. 2590 , as passed by the Senate, by voice vote on September 13. Later that same day both chambers agreed to S.Con.Res. 114 , making enrollment corrections to S. 2590 . As noted previously, the President signed the bill into law on September 26, 2006. S. 2590 received extensive bipartisan support at each stage of the legislative process. In the Senate, the bill was introduced with bipartisan sponsors, voted unanimously out of committee, and passed by unanimous consent. The legislation was ultimately cosponsored by 47 Senators, including Majority Leader Bill Frist and Minority Leader Harry Reid. In the House, S. 2590 was passed by voice vote under suspension of the rules, with members of both parties speaking in support of the Senate bill and none speaking against it. The White House did not issue a Statement of Administrative Policy on S. 2590 , but President Bush did express his support in a press release distributed the same day the bill was enrolled, making it apparent he would sign the measure once he received it. According to Senator Coburn, S. 2590 was endorsed by over 150 organizations with a wide range of political leanings. The Senator's list of supporters included representatives of private enterprise, such as the U.S. Chamber of Commerce; unions, like the American Federation of State, County, and Municipal Employees; media groups, such as the American Society of Newspaper Editors; and government watchdog organizations, like OMB Watch. As evidence of the unusual alliance in support of S. 2590 , the list indicated that both People for the Ethical Treatment of Animals (PETA) and Gun Owners of America supported the bill, as did both the National Gay and Lesbian Task Force and the Traditional Values Coalition. S. 2590 was a companion bill to H.R. 5060 , which Representative Roy Blunt introduced on March 30, 2006, as an amendment to the Federal Financial Assistance Management Improvement Act of 1999. On June 21, 2006, the House passed H.R. 5060 , as amended, by voice vote. According to Representative Blunt, the bill was intended to "increase accountability and transparency in the federal awards process" by establishing a public database with information on award recipients. While both S. 2590 and H.R. 5060 had similar objectives, the bills differed in important ways. Table 1 highlights three of the most important differences between the engrossed bills. Most notably, contracts were exempt from the public database under the House bill, but were covered in S. 2590 . Since contracts are one of the largest categories of federal domestic assistance, their exclusion would have significantly reduced the comprehensiveness of the database. When H.R. 5060 was first brought to the House floor in June, critics argued that a database without information on federal contracts was "missing a key component that is essential to public oversight." Even some Members who ultimately voted to pass the bill expressed concern that it did not include contracts. Supporters of H.R. 5060 maintained that a database primarily covering grants would still be a valuable tool, and the bill's sponsors reportedly pledged to develop separate legislation enhancing public access to federal contract information. After S. 2590 passed the Senate, some House members expressed a clear preference for the Senate version, which they argued was "stronger and more comprehensive" because it included contracts. Both S. 2590 and H.R. 5060 required the public database to include information on subrecipients, but only the Senate bill provided funding to cover the costs associated with collecting and reporting that information. Currently, data on subgrantees and subcontractors are not gathered uniformly across the government. Some experts believe that recipients of federal financial assistance--particularly states and local governments--will incur substantial costs as they begin to collect and report information on their subrecipients. Under S. 2590 , recipients and subrecipients of federal assistance might recover the costs associated with new reporting requirements by incorporating those costs into their indirect cost rates; H.R. 5060 had no similar feature, leaving it open to the charge of being an unfunded mandate imposed on award recipients by the federal government. Because no uniform method of collecting detailed information on subcontractors and subgrantees existed, S. 2590 directed OMB to conduct a pilot program to determine the most cost-effective and least administratively burdensome approach to implementing a government-wide subaward reporting process. The pilot program was not included in the Senate bill when it was first introduced by Senator Coburn. It was added after concerns were raised about the potential administrative and financial burden new reporting requirements would place on grant award recipients. H.R. 5060 did not contain provisions for a pilot program, and was criticized in congressional hearings as being "an attack" on federally funded grantees. The database required in the act was to be implemented in two phases. By January 1, 2008, the new database was required to provide information on entities that were awarded funds directly from the federal government. Entities covered in the first phase of the database include corporations, associations, partnerships, sole proprietorships, limited liability companies, limited liability partnerships, states, and localities. By January 1, 2009, the database must include information on subgrantees and subcontractors that receive federal funds through a primary award recipient. The act excluded individual recipients of federal assistance, and organizations with less than $300,000 in total income were not required to report on subawards. Consistent with the objective of providing to the public comprehensive information on federal financial assistance, virtually all categories of awards will ultimately be covered by the database, including grants, contracts, subgrants, subcontracts, loans, cooperative agreements, delivery orders, task orders, and purchase orders. Two special provisions addressed particular types of transactions: individual transactions of less than $25,000 are exempt, and credit card transactions will not be included until October 1, 2008. To achieve greater transparency, the act required the database to provide the following information about each federal award: Name of entity receiving award Amount of award Type of award (e.g., grant, loan, contract) Agency funding award A North American Industry Classification System (NAICS) code for contracts or a Catalog of Federal Domestic Assistance (CFDA) number for grants and loans Program source Award title that describes the purpose of the funding Location of recipient City, state, congressional district, and country in which award performance primarily takes place Unique identifier for entity receiving award and of the parent entity of recipient, if one exists Any other information specified by OMB S. 2590 's sponsors, mindful of the criticism that government databases are often difficult for non-experts to use, included language that required OMB to ensure the database is accessible through a "searchable website." The act thus required that the website permit users to (1) conduct a search of federal funding by any of the data elements listed above, and (2) determine the total amount of federal funding awarded to an entity by fiscal year. In addition, the act stipulated that the website must provide information in a downloadable format, and that agencies must post new information to the website within 30 days of making an award. The legislation also required the new website to allow the public the opportunity to provide input on the site and recommend improvements. Three major financial assistance databases were identified in the act as likely sources of information for the new website--the Federal Procurement Data System-Next Generation (FPDS-NG), the Federal Assistance Award Data System (FAADS), and Grants.gov . According to the provisions in S. 2590 as initially passed by the House and Senate, a user must be able to access information from all three databases in a single search. The bill was explicit on this point; it was not acceptable merely to provide links to these or other databases, because that would force users to search for information at different websites. The "single search" provision of S. 2590 was modified by S. Con Res. 114, allowing grants and contracts to be searched separately on the new public website. S.Con.Res. 114 also added another reporting requirement: the Government Accountability Office is to provide Congress with a compliance report on P.L. 109-282 no later than 2010. As previously noted, the act did not require information on subcontractors and subgrantees to be included in the database until January 1, 2009. The delay reflected the fact that information on subrecipients was not collected consistently across federal agencies and programs. To address existing gaps in the data on subawards, the act required OMB to implement a pilot program that tested the feasibility of having primary recipients provide information on their subgrantees and subcontractors. There was a provision in the legislation that allowed federal award recipients and subrecipients to be reimbursed for the costs associated with collecting and reporting data on subrecipients. The act also specified that any requirements for collecting data on subawards made by state and local governments under block and formula grants be cost-effective. According to CBO, no unfunded mandate would be placed on recipients or subrecipients for complying with the act. The act also required OMB to submit an annual report to the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Government Reform. The report must include data on public usage of the website, an assessment of the reporting burden on federal award and subaward recipients, and an explanation of any extension of the subaward reporting deadline. The act also required OMB to post a copy of the report on the Web. On December 13, 2007, OMB launched the FFATA-mandated website, USAspending.gov . The website, as required by the FFATA, allows users to search for detailed information on grants, contracts, loans, and other forms of assistance. The data, however, are not complete and some observers question their accuracy. The possible cost to improve the data quality is unclear. Also unclear is the possible cost to collect information that might not currently be available, such as data on subcontractors and subgrantees, which must be available to the public through the website by January 1, 2009. The ability of users to identify earmarks through USAspending.gov also appears to be limited. A database of the breadth and depth contemplated by the Federal Funding Accountability and Transparency Act is only as useful as the quality of the information it contains. As noted previously, the act referred to three existing databases as likely sources of information for the new public database: FAADS, FPDS-NG, and Grants.gov . USAspending.org draws extensively from FAADS and FPDS-NG, but it is unclear whether data from Grants.gov is also incorporated. A number of observers have cautioned that a database of federal assistance relying on information from FAADS and FPDS-NG would be of limited value. Both government officials and knowledgeable members of the public describe significant weaknesses in FAADS and FPDS-NG--such as incomplete and inaccurate information--that cannot be quickly corrected. These observers suggest that substantial changes in the collection, reporting, and verification of information relating to federal assistance awards would likely be necessary before FAADS and FPDS-NG might be considered reliable sources of information. In a 2005 report, GAO noted that FPDS-NG users lacked confidence in the data provided, largely because there was no rigorous system in place to ensure the data were accurate and complete. A panel of procurement experts recently attempted to use FPDS-NG in their evaluation of federal contracting operations, but reportedly found so many errors in the data that the chairman declared that "FPDS-NG is not a reliable database." One reason the data are inaccurate is human error; contract information might be incorrectly entered into FPDS-NG by inexperienced users who have received minimal training. Moreover, agencies might vary in the degree to which they fill out the fields in the database, resulting in data of uneven quality. In one instance, FPDS-NG users reportedly complained that the database failed to consistently identify contracts related to Hurricane Katrina recovery efforts that were awarded without competition. The problem has not been fixed, and gaps in FPDS-NG data are now evident in USAspending.gov . A recent editorial stated that the new database might not provide information on whether $70 billion in FY2007 contracts was awarded with or without competition. By OMB's own estimation, individual agencies have submitted only 61% to 73% of the information on contracts required by the FFATA. Similar problems affect FAADS, the government's primary source of grant award information. In a recent review of 86 federally funded grant programs, GAO determined that in the majority of cases, the administering agencies provided no data, incomplete data, or inaccurate data to FAADS over a three-year period. The report concluded that these problems occurred because (1) the Census Bureau lacked the resources to ensure agencies were submitting accurate and timely data, (2) agency program officials lacked knowledge of FAADS reporting requirements, and (3) agencies had not implemented sufficient oversight to ensure they were submitting accurate data. A Census Bureau official concurred with these findings, adding that a number of data elements required by S. 2590 are not uniformly captured by federal agencies or grant award recipients, such as information on subrecipients and the congressional district in which federal funds are spent. The official also noted that agencies are currently required to update their information in FAADS on a quarterly basis, so it might take time for agencies to develop the capability to update FAADS within 30 days of making an award, as S. 2590 requires. OMB estimates that individual agencies' have submitted only 53% to 65% of the grants data required by the FFATA. Members of Congress have also expressed concerns about FPDS-NG and FAADS. During floor debate of the bill in the House, one supporter cautioned that S. 2590 's potential to improve oversight of Federal funds, while substantial, would be largely determined by the degree to which improvements in FPDS-NG and FAADS were made during implementation. Another supporter expressed concern that the problems with FPDS-NG and FAADS were so significant, that "if the Administration is not committed to making this legislation work, all we will get is another incomplete and hard-to-use database." OMB, acknowledging that data submitted and posted to FPDS-NG and FAADS in the past have been "incomplete, untimely, and inaccurate," has issued guidance on improving data quality so that agency submissions meet the requirements of the FFATA. The guidance, issued November 9, 2007, required agencies to submit a plan to OMB by December 1, 2007, that identified gaps in their data on grants, contracts, and loans, and outlined their plans to address any deficiencies. In addition, agencies were required to implement internal controls to ensure the accuracy, integrity, and timeliness of their submissions. The guidance also indicated that agency compliance with the data reporting requirements of the FFATA would be formally and publicly evaluated through inclusion in OMB's scorecard initiative, beginning in January, 2008. Concerns have been expressed regarding the cost of implementing USAspending.gov . Two types of costs are at issue: the costs of implementing the act as a whole and the costs associated with the development of information on subawards. In response to concerns about the reliability and completeness of the FPDS-NG and FAADS databases, Clay Johnson, the deputy director for management at OMB, reportedly said the new database will meet the requirements of the act within the time frame established by the legislation. Johnson was also quoted as saying that implementing the new public database will "cost a little money, not a lot" because "most of the data exists" already--a view that appears somewhat at odds with previously discussed evidence that there are significant gaps in the data. Moreover, while the database was launched prior to the statutory deadline, the information is so incomplete that some have questioned whether it meets the objectives of the FFATA. According to CBO, it will cost $15 million to establish and maintain the new database of federal assistance between 2007 and 2011. The CBO estimate, however, was based on OMB's assurance that "the government currently collects all of the information needed to create a comprehensive database on federal spending." The estimate might thus reflect the cost of simply combining existing systems without fully accounting for other costs associated with improving the quality of the data in those systems. One expert familiar with FPDS-NG and FAADS said that "an enormous amount of data cleanup" will be necessary to correct inaccurate information in those systems. Another industry observer was quoted as saying that enhancing and integrating existing data sources to meet the requirements of the FFATA was a "complex" problem, and that implementing the database might exceed the $15 million projected by CBO. In a letter to Senator Coburn, the National Association of State Auditors, Comptrollers, and Treasurers (NASACT) expressed strong reservations about the potential financial and administrative burden that the bill's reporting requirements would impose on state and local governments. In particular, NASACT noted that collecting data on subgrantees would be "very, very costly" for state and local governments, since federal grant funds are often passed down multiple levels (e.g., a state receiving federal assistance gives a subgrant to organization A, which in turn gives a subgrant to organization B). Additional costs might be incurred under the bill, NASACT said, if state and local grant recipients were required to modify their financial systems to collect and report any other new information. After S. 2590 was amended to include the pilot program for collecting information on subgrantees, NASACT said it supported the bill with the new language, but also noted that it still believed "obtaining all the required information will be a challenge." Some trade groups have made similar arguments regarding the collection of subcontractor information. The Council of Defense and Space Industry Associations (CODSIA), for example, has reportedly stated that prime contractors do not normally collect subcontractor information at the level of detail required by the FFATA, and that doing so would become a significant administrative burden on both contractors and subcontractors. Although one of the stated purposes of the legislation was to enable the public to use the on-line database to identify congressional "earmarks," it is unclear how users of USAspending.gov might actually do this, since neither FAADS nor FPDS-NG collect that information. Not all grants, loans, or contracts are congressionally directed; some are at the discretion of the responsible federal agency. Unless the congressionally-directed items in the new database are specifically identified as such, the database will be of limited value for purposes of earmark identification. Also, the manner in which a funding action is described under the "award title" field might lead the public to draw different conclusions about the value of a given federally funded project. For example, an earmarked project that some believe has merit might be described in a manner that puts it in an unfavorable light. In this way, award descriptions might influence the public's perception of whether a funding action is "wasteful" or not. As noted previously, the underlying logic of the Federal Funding Accountability and Transparency Act is that, by providing citizens with information on federal assistance awards through an online database, government officials will be less likely to fund earmarks and arguably "wasteful" projects. To put this argument succinctly: greater transparency will yield greater accountability. Most observers agree that in order for a public database of federal awards to provide maximum transparency, it must encompass as broad a range of financial assistance categories as possible. The FFATA database would presumably provide substantial transparency, since it covers all forms of federal financial assistance, including contracts. Arguably, the database would also provide transparency by phasing in information on subcontractors and subgrantees, thus allowing the public to track the flow of federal funds down to the level of the ultimate recipient. Although the creation of the database might require more time or money than some estimates suggest, President Bush, the deputy director of OMB, and Senator Coburn have all indicated they will provide support and oversight during implementation. In remarks prior to signing the legislation, President Bush said the act was an "important step" that "empowers the American taxpayer" with information that can be used to "demand greater fiscal discipline" from both the executive and legislative branches of government. The President also linked the act to a broader agenda of increasing accountability in federal spending, including earmark reform and the line-item veto. President Bush's comments suggest that the Administration is committed to the act and might be prepared to provide the resources needed to implement the database with complete and accurate information, even if the costs exceed OMB's current expectations. The Administration's commitment might also be reflected in OMB's guidance that required agencies to develop and implement data quality improvement plans. The original sponsor of S. 2590 , Senator Coburn, was also quoted as saying that "there will be oversight to make sure we're making progress" implementing the database in accordance with the legislation. Finally, the new law might direct attention to increased transparency on the revenue side of federal fiscal operations. In the Senate report accompanying S. 2590 , the additional views of Senators Coburn and Lautenburg included the statement that, "Transparency in government decision-making should not be limited to simply spending; it should be extended ... to the tax code." This sentiment was echoed by Senator Obama, who said during floor debate on the bill that "greater transparency of targeted tax benefits" was another step in improving government accountability and performance. Given this objective, legislation seeking to increase transparency in the tax code might be supported by some of the same government officials and advocacy groups that supported S. 2590 . | On September 26, 2006, President Bush signed S. 2590, the Federal Funding Accountability and Transparency Act, into law (P.L. 109-282). In an attempt to expand oversight of federal spending, including earmarks, the new law required the Office of Management and Budget (OMB) to establish a publicly available online database containing information about entities that are awarded federal grants, loans, contracts, and other forms of assistance. Federal agencies award over $880 billion dollars annually in three of the primary categories of financial assistance to be included in the database--$470 billion in grants, $381 billion in contracts, and $29 billion in direct loans. The FFATA was endorsed by leaders of both parties and an array of business, union, and watchdog organizations. OMB launched the new database, USAspending.gov, on December 13, 2007. While the database has been praised as a step toward a worthy objective--enhancing the transparency of government expenditures--government officials and members of the public have expressed concern that issues surrounding its implementation have not been adequately addressed. In particular, many observers question the reliability of information taken from the Federal Assistance Award Data System (FAADS) and the Federal Procurement Data System - Next Generation (FPDS-NG), which are important sources of information for USAspending.gov. They note that information in FAADS and FPDS is often incomplete and inaccurate, and therefore might limit transparency. Some observers also believe that the cost of establishing and maintaining the new database might grow as agencies seek to improve data quality and collect new information on subawards. This report initially discusses the background of S. 2590, noting in particular how it compared to similar legislation in the House of Representatives. It then discusses the Federal Funding Accountability and Transparency Act's provisions, noting what types of assistance are to be part of the new database, the primary sources of the data, and deadlines for implementation. Finally, the report identifies and discusses issues that have been raised regarding the act that might affect its implementation, and that therefore might prove to be areas for future congressional oversight. This report will be updated as events warrant. | 5,454 | 469 |
This report provides policy and historical background about Puerto Rico's political status --referring to the relationship between the federal government and a territorial one. Congress has not altered the island's status since 1952, when it approved a territorial constitution. Status is the lifeblood of Puerto Rican politics, spanning policy and partisan lines in ways that are unfamiliar on the mainland. Puerto Rico has been in political flux in recent years, culminating most recently in the 2017 plebiscite. Momentum toward that outcome began in the 2016 elections, when Puerto Ricans selected a prostatehood New Progressive Party (NPP/PNP) Governor, Resident Commissioner, and majorities in the Legislative Assembly. Shortly after assuming office, the Governor and legislature enacted a territorial law authorizing a plebiscite containing two ballot choices: statehood or free association/independence. (Free association is a form of independence entailing negotiated close ties between two countries.) After the U.S. Department of Justice declined to certify the release of federal funds to support the plebiscite, Puerto Rico amended its plebiscite law to add a status-quo option on the ballot. Some political parties and other groups on the island encouraged their supporters to boycott the plebiscite. On June 11, 23.0% of voters turned out for the plebiscite, where 97.2% selected statehood; 1.5% selected free association/independence; and 1.3% chose the "current territorial status." In anticipation of a statehood victory in the plebiscite, the territorial legislature enacted, and the Governor signed, legislation in June 2017 to pursue a "Tennessee Plan" path to statehood. That method traditionally involves sending an appointed or elected "delegation" to Washington to lobby Congress to grant statehood. Because the U.S. Constitution grants Congress broad discretion over territories, the House and Senate may choose to reexamine Puerto Rico's political status, or to decline to do so. If Congress chose to alter Puerto Rico's political status, it could do so through statute regardless of whether a plebiscite were held or what sentiment such a vote revealed. As with all CRS reports, this product provides background information and analysis for Congress. It emphasizes those facets of the status policy debate that historically have been most relevant for House and Senate consideration, and that appear to remain most relevant for Members and staff who are considering those issues. It emphasizes the current status debate in Puerto Rico specifically rather than examining status in all U.S. territories. This report is not intended to substitute for a comprehensive analysis of the complex and culturally sensitive issues surrounding Puerto Rico's more than 100-year affiliation with the United States. The report also is not intended to be an analysis of the various legal, economic, or social issues that might arise in considering Puerto Rico's political status or a change in its relationship with the United States. Parts of this report are adapted from another CRS product, which provides additional discussion of the 2012 plebiscite. Puerto Rico has been the subject of strategic and political attention for more than 500 years. Spain was the first colonial power to claim the island. Christopher Columbus landed on the west coast of the main island of present-day Puerto Rico on November 19, 1493. There, he encountered native Taino Indians, who called the island "Borinquen" (or, in some spellings, "Borinken"). As one scholar has noted, "[a] permanent foothold was finally established in 1508, when Juan Ponce Leon led a group of settlers from Hispaniola." Spanish colonizers forced the Taino into servitude, and "[b]y 1521, the Indian Borinquen had become another Spanish settlement in an expanding empire." For the next 400 years, Puerto Rico served as a Spanish agricultural and mining outpost in the Caribbean. When the United States defeated Spain in the Spanish-American War (1898), the United States acquired Puerto Rico, Guam, and the Philippines from Spain via the Treaty of Paris. Puerto Rico provided the United States with a central location from which to exercise military and strategic power in the Caribbean, particularly before World War II. The U.S. military briefly administered the island until Congress established a civilian government in 1900. Today, Puerto Rico is both deeply integrated into American society and insulated from it. On one hand, the American flag has flown over San Juan, the capital, for more than 100 years. In addition, those born in Puerto Rico are U.S. citizens. Many live and work on the mainland and serve in the military. On the other hand, as shown in Figure 1 , the island is geographically isolated from the mainland United States; it lies approximately 1,500 miles from Washington and 1,000 miles from Miami. Residents of Puerto Rico lack full voting representation in Congress, typically do not pay federal income taxes on income earned on the island, do not have the same eligibility for some federal programs as those in the states, do not vote in presidential elections (although they may do so in party primaries), and enjoy a culture and predominant Spanish language that some argue more closely resembles Latin America than most of the 50 states. Some regard status as the fundamental political question that drives everything else about the Puerto Rico-U.S. relationship. Others see status as a distraction from more compelling everyday policy and economic challenges. Perhaps because that debate remains unsettled, status is an undercurrent in virtually every policy matter on the island. Federal policy debates generally are less affected by status, but here, too, status often arises at least tangentially. As such, even a basic knowledge of the topic may be helpful in multiple policy areas. In the foreseeable future, oversight of Puerto Rico is likely to be relevant for Congress as the House and Senate monitor the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) enacted during the 114 th Congress (discussed elsewhere in this report and in other CRS products) in response to the island's financial crisis. Legislation introduced in the 115 th Congress, discussed elsewhere in this report, could affect the island's political status. In addition, the House and Senate could choose to respond to the 2017 plebiscite through oversight, legislation, or both. (Congress also could choose to take no action.) Finally, before proceeding, it is noteworthy that much of the status debate in Puerto Rico concerns attitudes surrounding past or future plebiscites. Whether in the past or future, Puerto Rico may choose to hold its own plebiscites without congressional authorization. Recently, however, plebiscite supporters have argued that federal support for a plebiscite could increase the perceived legitimacy of the results. Plebiscites are not required to revisit status. Whether or not a plebiscite were held, Congress could admit Puerto Rico as a state, or decline to do so, at its discretion, through statute. Puerto Rico is a U.S. territory subject to congressional authority derived from the Territory Clause of the U.S. Constitution. The Territory Clause grants Congress "Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States." Congress has enacted various statutes to address specific matters concerning the island's political status. Puerto Rico's current political status, as determined by federal statute (or otherwise, as noted), is summarized briefly below. After military governance since the United States acquired Puerto Rico in 1898, Congress established a civilian government on the island in 1900. Among other points, the Foraker Act established an "executive council" consisting of a presidentially appointed civilian governor and various department heads. The new government also included a popularly elected House of Delegates (which shared decisionmaking power with the executive council) and a U.S.-style judiciary system. The Foraker Act also established the Resident Commissioner position to represent island interests in Washington. These duties came to include nonvoting service in the U.S. House of Representatives (the primary role of the Resident Commissioner today). Through the Jones Act (1917), Congress authorized appropriations for legislative staff and franking privileges for the Resident Commissioner. Devoted primarily to strengthening Puerto Rico's civil government, the Jones Act also extended U.S. citizenship to Puerto Ricans and established a bill of rights for the island. Major governmental changes included establishing a three-branch government similar to the one on the mainland. Congress recognized island authority over matters of internal governance in 1950 through the Federal Relations Act (FRA) and when it approved the island's Constitution in 1952. No major status changes have occurred since. After enactment of the FRA and approval of the territorial constitution, Puerto Rico became known formally as the "Commonwealth of Puerto Rico." Use of the word "commonwealth" and whether the term carries particular legal or political significance is a topic of substantial historical and scholarly debate--most of which is not addressed herein. A brief summary of the competing major perspectives, however, provides important context for understanding the ongoing status debate. Some contend that Puerto Rico's commonwealth status signifies a unique recognition somewhere between territory and state. This perspective is often called "enhanced commonwealth" or "new commonwealth." As longtime territories scholar Arnold H. Leibowitz has summarized, those holding this view have argued that more than local self-government was achieved by the 1950-1952 legislation. It contends that a new legal entity was created with a unique status in American law: the Commonwealth, a status which is an internationally recognized non-colonial status.... Most important, in this view, Commonwealth is not a "territory" covered by the 'Territory Clause' of the Constitution, nor quite obviously is it a state; rather, Commonwealth is sui generis and its judicial bounds are determined by a "compact" which cannot be changed without the consent of both Puerto Rico and the United States. Others, however, contend that, at least in the Puerto Rican context, the term "commonwealth" does not hold particular legal or political significance. From this viewpoint, "commonwealth" is a stylistic or historical term of art, as used in the formal names of states such as the Commonwealth of Pennsylvania. Some also suggest that commonwealth refers to a form of government, but does not designate a unique nonterritorial status. As Leibowitz has observed, From the outset the non-Commonwealth parties in Puerto Rico, seeking either Statehood or independence ... questioned the concept of the Commonwealth. They have argued that although Congress may delegate powers to a territorial government, the broad powers granted to Congress under the Territorial Clause of the Constitution and the implied powers of the national government remain and may be exercised should the need arise. Further they cite the legislative history of Public Law 600 [the FRA] to challenge the compact and Commonwealth concept. Debate over significance of the "commonwealth" term notwithstanding, action by Congress would be necessary to alter Puerto Rico's political status. Doing so, of course, would require passage of legislation by Congress and approval by the President. Finally, those rejecting the status quo also generally suggest that Puerto Rico's current status was not intended to be--or perhaps should not be--permanent, and that statehood or independence are natural next steps. The dominant Democratic and Republican party labels found in the mainland United States do not necessarily translate to Puerto Rican politics. In Puerto Rico, politics tends to revolve around three status perspectives represented by the three most established political parties: The status quo or "procommonwealth" position is generally associated with the Popular Democratic Party (PDP/PPD). The prostatehood position is generally associated with the New Progressive Party (NPP/PNP). The independence position is generally associated with the Independence Party (PIP or Independ en t istas ). In recent years, the PIP has not received sufficient electoral support to be certified a major party, but the independence perspective continues to be a factor in the status debate. Views within the three major parties, as well as among other parties and interest groups, are not necessarily uniform. These differences regularly produce active factional groups or officially recognized minor parties. The PDP, NPP, and PIP nonetheless remain the most consistent partisan forces in Puerto Rican politics. Other options that call for modified versions of the current commonwealth status or independence may appeal to members of one or more parties. Typically, the two major perspectives other than the status quo, statehood, or independence are (1) "enhanced commonwealth" and (2) "free association." The former arguably signals a semiautonomous status whereas the latter suggests independence with closer ties to the United States than a more traditional independence option. The viability of the "enhanced commonwealth" position is not universally accepted. At the federal level, positions on status do not necessarily follow clear partisan patterns. For those Members of Congress who have firm positions on status, personal preference or constituent issues appear to be key motivations. Particularly in recent years, members of both parties in Congress have generally argued that if the island is to choose a different status, clear consensus is necessary among the Puerto Rican people, regardless of the selected option. Before the 2017 plebiscite, Puerto Rico had held five status plebiscites or referenda since adopting its current relationship with the United States. These votes were held in 2012, 1998, 1993, 1991, and 1967. Ballot wording and options during each plebiscite or referendum differed. Most recently, in 2012, voters were asked to answer two questions: (1) whether they wished to maintain Puerto Rico's current political status; and (2) regardless of the choice in the first question, whether they preferred statehood, independence, or to be a "sovereign free associated state." Figure 2 shows a sample ballot. According to results certified by the Puerto Rico State Elections Commission, approximately 54.0% of those who cast ballots answered "no" to the first question. In the second question, approximately 61.2% of voters chose statehood. However, results of the plebiscite were controversial. Debate focused on whether almost 500,000 blank answers on the second question should be included in the total, thereby affecting whether any option received a majority. A concurrent resolution approved by the territorial legislature and supported by PDP Governor Alejandro Garcia Pad illa (who was elected on the same day as the plebiscite) contended that the results were "inconclusive." Another CRS report provides additional detail about the 2012 plebiscite. After Governor Garcia Padilla assumed office in 2013, momentum toward revisiting status waned on the island. As explained below, interest in status rebounded in 2016. In Washington, the House and Senate provided federal funds to support a future plebiscite. Specifically, in the FY2014 omnibus appropriations law, Congress appropriated $2.5 million for "objective, nonpartisan voter education about, and a plebiscite on, options that would resolve Puerto Rico's future political status." These plebiscite-education funds remain available until expended, but Congress placed conditions on their release that appear to exclude the "enhanced commonwealth" status option as a choice on the ballot. As discussed below, the Justice Department determined in 2017 that enhanced commonwealth remained inconsistent with the U.S. Constitution. In the 2016 general election, Puerto Rico voters selected NPP candidates for both the Governor and Resident Commissioner posts. The prostatehood NPP also retained majorities in the territorial House and Senate. Governor-Elect Ricardo Rossello announced that he "intend[ed] to make joining the union [as a state] the central focus of his administration." Soon after the November election, some in the NPP began urging congressional action to admit Puerto Rico as a state. In his election night victory speech, according to one media report, Rossello called his election an "'unequivocal mandate to tell the world that the transition to statehood has started,' which he will promote through the Tennessee Plan." The "Tennessee Plan" is a term of art referring to the method by which Tennessee and six other states joined the union. Each territory employed this method somewhat differently, but the central thrust of the Tennessee Plan involves organizing a political entity that is essentially a state in all but name. Steps typically include drafting of a state constitution, election of state officers, and sending an elected congressional delegation to Washington to lobby for statehood. These developments notwithstanding, there is no single path to statehood. Changing Puerto Rico's political status by the Tennessee Plan or any other method ultimately would require a statutory change by Congress with presidential approval. In January 2017, Rossello assumed the governorship and the NPP assumed the majority in the legislature. Puerto Rico was thus now primarily represented by a Governor, legislative majority, and Resident Commissioner who publicly favored statehood. On February 3, 2017, the legislature enacted, and the Governor subsequently signed, legislation setting the June 11, 2017, plebiscite date. The new NPP government framed the 2017 plebiscite as the first "sanctioned" by the federal government (through the FY2014 appropriations language discussed above). The legislature also characterized the 2017 plebiscite as a way to "reassert the desire for decolonization and the request for Statehood" from 2012. Similar arguments that had surrounded the previous plebiscite language resurfaced in 2017. Similar criticisms also emerged from those who opposed the plebiscite. As explained below, the initial ballot was subsequently amended after the U.S. Department of Justice (DOJ) declined to certify the federal funds appropriated in FY2014 (discussed above) to administer the plebiscite. NPP supporters argued that the 2012 plebiscite established that Puerto Rican voters preferred a nonterritorial option, and that statehood or a form of independence were the only constitutionally permissible choices. The plebiscite law thus included two "non-territorial and non-colonial political status" options on the ballot: (1) "Statehood" and (2) "Free Association/Independence." The law further specified that only ballots marking one of those options would be counted--a reference to controversy over "blank" ballots believed to be cast in protest in 2012. The law also directed that if the "Free Association/Independence" option received a majority in the June 11 plebiscite, an October 8, 2017, referendum would be held for voters to select from these two choices. Both free association and independence would entail Puerto Rico becoming an independent country. The former suggests an ongoing, mutually negotiated relationship in which the United States might continue to provide some benefits or services, such as the United States today has with the Western Pacific nations of the Federated States of Micronesia (FSM), the Republic of Micronesia, and the Republic of Palau. PDP supporters objected to the ballot wording and choices. They argued that the ballot improperly omitted a status-quo option and was biased to favor a statehood outcome. After the legislature enacted the initial law establishing the plebiscite date and ballot, attention turned to whether the U.S. Justice Department would approve releasing the federal funds appropriated in FY2014. Importantly, Puerto Rico does not require federal approval to conduct a plebiscite or to otherwise reconsider its political status, but plebiscite supporters argued that federal approval would enhance the vote's perceived legitimacy in Washington. On April 13, 2017, Acting Deputy Attorney General Dana Boente wrote to Governor Rossello that "multiple considerations preclude [DOJ] from notifying Congress that it approves of the plebiscite ballot and obligating the funds." According to the letter, "the Department does not believe that the results of the 2012 plebiscite justify omitting Puerto Rico's current status as an option on the [2017] ballot." Boente explained that DOJ also had determined that the ballot language included "several ambiguous and potentially misleading statements, which may hinder voters' ability to make a fully informed choice as well as efforts to ascertain the will of the people from the plebiscite results." In particular, DOJ raised concerns about what it regarded as deficiencies in how U.S. citizenship rights were explained in the "statehood" ballot description; and the chance that voters could "misperceive" the "free association" option as a constitutionally impermissible form of "enhanced commonwealth." After DOJ issued its determination, attention shifted back to the island. As discussed briefly below, the prostatehood government amended the plebiscite law to include a commonwealth option. Soon after the DOJ issued its April 13 letter, the Rossello Administration and the NPP majority in the legislature announced that they would amend the plebiscite law. The amended "statement of motives" declared that,"[D]ue to the position stated by the U.S. Department of Justice, [the Legislative Assembly has] acted, under protest, on [DOJ's] recommendation to include the current territorial status among the options, so that the Plebiscite may be fully supported by the Federal Government." As Figure 3 below shows, the revised ballot included three options: (1) statehood, (2) "free association/independence," and (3) "current territorial status." The Justice Department did not formally respond to the ballot changes before voters went to the polls. However, supporters framed the new ballot options as tantamount to federal endorsement for the plebiscite. Opponents noted that the department had not approved the language. Changing the ballot language was intended to address the Justice Department's concerns, but it also reignited political controversy among the island's political parties. The Independence Party (PIP), which initially announced that it would encourage its supporters to participate in the plebiscite in hopes of defeating statehood, changed its position. In light of what it regarded as a colonial "commonwealth" ballot option now being included, the PIP announced that it would boycott the plebiscite, as did the PDP, in addition to some other nonparty groups. PDP leadership called for repealing the plebiscite law and beginning anew. On June 11, 2017, voters in Puerto Rico chose among the three options on the revised plebiscite ballot. 97.2% of voters chose statehood, 1.5% of voters chose free association/independence, and 1.3% of voters chose the "current territorial status." Turnout for the plebiscite was 23% (approximately 518,000 of 2.3 million voters). In anticipation of a statehood victory in the plebiscite, the territorial legislature enacted, and the Governor signed, legislation in June 2017 to pursue a "Tennessee Plan" path to statehood, including appointing a "delegation" to advocate for statehood before the House and Senate in Washington. The PDP opposition criticized the law and vowed to challenge it in court and in future elections. As discussed elsewhere in this report, the House and Senate may determine how or whether to respond to these developments. Two status bills have been introduced in the 115 th Congress. One proposes statehood, while the other proposes a form of independence. Brief discussion appears below. One day after assuming office, Puerto Rico's newly elected Resident Commissioner, Jenniffer Gonzalez-Colon, introduced legislation to admit the island as a state. H.R. 260 proposes that if voters choose statehood in the plebiscite provided for in the FY2014 omnibus appropriations law (discussed previously), Puerto Rico would join the union as a state by January 3, 2025. Separate legislation, introduced in February 2017, would require the Puerto Rico legislature to "provide for a referendum" between two status options. Specifically, H.R. 900 , introduced by Representative Gutierrez, proposes a popular vote between independence and free association. The bill also authorizes treaty negotiations to implement either outcome. Unlike H.R. 260 , H.R. 900 would permit mainlanders (or others) of Puerto Rican descent to participate in the referendum. The bill specifies voting eligibility for those "born in Puerto Rico" or those who "[have] a parent who was born in Puerto Rico." Status was not a major component of debate in the 114 th Congress. Status was, however, a contextual issue as Congress considered legislation related to the island's ongoing economic crisis. The 114 th Congress did not enact any legislation directly affecting Puerto Rico's political status, but committees held hearings that partially addressed the topic. One bill devoted to Puerto Rico's political status was introduced in the 114 th Congress. H.R. 727 (Pierluisi) would have authorized the Puerto Rico State Elections Commission to "provide for a vote" in the territory on admitting Puerto Rico as a state. The bill did not advance beyond introduction. H.R. 727 specified that the proposed ballot "shall" include a single question: "Shall Puerto Rico be admitted as a State of the United States? Yes___ No___." The bill further specified a statehood admission process to be followed, to conclude on January 1, 2021, if a majority of voters selected statehood. Much of the status debate emphasizes governance, political participation, and democratic principles rather than economic issues or other policy matters. Furthermore, the relationship between status and economics is subject to ongoing debate, with some arguing that the two issues are inextricably linked and others replying that the status debate distracts from long-standing economic problems. Most recently, Puerto Rico's ongoing financial crisis has, however, shaped some aspects of recent attention to status, as discussed briefly below. As noted previously, economic issues are otherwise beyond the scope of this report. In June 2016, Congress enacted legislation responding to an ongoing economic crisis in Puerto Rico. The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187 ) establishes a process for restructuring the island government's public debt. PROMESA also establishes a federal oversight board, formally known as the Financial Oversight and Management Board for Puerto Rico, with "broad powers of budgetary and financial control over" the island. Status was not a central component of the congressional deliberation over PROMESA, although some Members addressed status in testimony or floor statements. Some hearings also addressed the topic. Perhaps most consequentially for the status debate, some of those who opposed PROMESA, including some Members of Congress, characterized the broad powers provided to the oversight board as undemocratic. In particular, opponents objected to the board's powers to approve fiscal plans submitted by the Governor and to approve territorial budgets, among others. Although not necessarily addressing the oversight board explicitly, proponents generally argued that, in the absence of bankruptcy protection for territories, PROMESA was necessary to help the island's government to restructure its debts in an orderly fashion. Critics, on the other hand, contended that the oversight board undermines the mutually agreed status relationship established in 1952. Connections between PROMESA and status also were a component of the 2016 Puerto Rico elections (discussed previously). One brief section of PROMESA explicitly addresses status. Section 402 of the law states that "[n]othing in this Act shall be interpreted to restrict Puerto Rico's right to determine its future political status, including" through another plebiscite as authorized in the FY2014 omnibus appropriations law ( P.L. 113-76 ). A December 2016 report released by a congressional task force established in PROMESA (devoted primarily to economic issues) recommended that if such a plebiscite is held, Congress "analyze the result ... with care and seriousness of purpose, and take any appropriate legislative action." Just as status provides context for debates about other areas of public policy, status also can arise in legal cases that primarily concern other topics. In June 2016, the Supreme Court of the United States issued an opinion in Puerto Rico v. Sanchez Valle . This report does not provide a legal overview of the case, which concerned the application of the U.S. Constitution's Double Jeopardy Clause to criminal prosecutions in Puerto Rico. As another CRS product explains, the case examined "whether defendants in a criminal case can be prosecuted under the local laws of Puerto Rico if they have been previously convicted under federal criminal law for the same conduct." The Court's opinion did not alter Puerto Rico's political status. However, those interested in the status debate followed the case closely in anticipation of how the Court would describe the island's relationship with the United States. The majority opinion addressed the island's political and status history to establish background for the double-jeopardy analysis. Particularly important for status discussions, the Court traced the "ultimate source" of Puerto Rico's prosecutorial power to Congress. As the Court summarized, Puerto Rico's "Constitution, significant though it is, does not break the chain" of congressional authority. As CRS has written elsewhere, although Sanchez Valle was "limited [and] did not address broader issues of Puerto Rico's sovereignty," the holding suggests that "when Congress passes legislation affecting Puerto Rico's government, as it did recently with the passage of ... PROMESA, Sanchez Valle would not appear to suggest a limit on Congress's constitutional authority over Puerto Rico." Puerto Rican politicians representing diverse perspectives have suggested that Sanchez Valle signals that the commonwealth status does not provide the local autonomy that some, particularly in the PDP, have long suggested. In addition, some have suggested that Sanchez Valle is inconsistent with the U.S. government's previous characterization to the United Nations (U.N.) of Puerto Rico's status. In brief, the U.N. determined in 1953 that Puerto Rico, in light of enactment of the territorial constitution and the Federal Relations Act, was sufficiently self-governing to terminate a previous U.S. reporting requirement that applied to non-self-governing territories. However, meetings of the U.N. Special Committee on Decolonization remain a venue for debating the island's political status and for U.N. monitoring of the island's relationship with the United States. At the Special Committee's June 2016 meetings, after Sanchez Valle , representatives of various Puerto Rican parties and interest groups testified that the ruling suggested the need to reexamine the island's relationship with the United States. In particular, Governor Garcia Padilla (PDP) has suggested that in light of Sanchez Valle and "through PROMESA, the United States has effectively backtracked from the democratic accomplishments of 1953 and must respond for this new position before the international community." The Special Committee's attention to Puerto Rico post- Sanchez Valle is not necessarily remarkable in and of itself, as the committee and the U.N. regularly examine territorial issues worldwide. Furthermore, as a practical matter, the Decolonization Committee's inquiries on Puerto Rico tend to be comparatively less prominent in Washington policy debates than in those held on the island. Consequently, the topic might or might not be a prominent aspect of future congressional attention to Puerto Rico's status debate. Nonetheless, it is potentially noteworthy that both the departing and incoming Governors, representing two opposing political parties (PDP and NPP, respectively), testified that Sanchez Valle raises questions about the island's degree of self-governance. | Puerto Rico lies approximately 1,000 miles southeast of Miami and 1,500 miles from Washington, DC. Despite being far outside the continental United States, the island has played a significant role in American politics and policy since the United States acquired Puerto Rico from Spain in 1898. Puerto Rico's political status--referring to the relationship between the federal government and a territorial one--is an undercurrent in virtually every policy matter on the island. In a June 11, 2017, plebiscite (popular vote), 97.2% of voters chose statehood when presented with three options on the ballot. Turnout for the plebiscite was 23.0% of eligible voters. Some parties and other groups opposing the plebiscite had urged their bases to boycott the vote. (These data are based on 99.5% of precincts reporting results.) After initially including only statehood and free association/independence options, an amended territorial law ultimately permitted three options on the plebiscite ballot: statehood, free association/independence, or current territorial status. Before the latest plebiscite, Puerto Ricans most recently reconsidered their status through a 2012 plebiscite. On that occasion, voters were asked two questions: whether to maintain the status quo, and if a change were selected, whether to pursue statehood, independence, or status as a "sovereign free associated state." Majorities chose a change in the status quo in answering the first question, and statehood in answering the second. The results have been controversial. If Congress chose to alter Puerto Rico's political status, it could do so through statute. Ultimately, the Territory Clause of the U.S. Constitution grants Congress broad discretion over Puerto Rico and other territories. Congress has not enacted any recent legislation devoted specifically to status. Two bills have been introduced during the 115th Congress. H.R. 260 proposes to admit Puerto Rico as a state if residents choose statehood in a plebiscite. H.R. 900 proposes a popular vote between independence and free association (which entails an ongoing relationship between independent countries). In the 114th Congress, H.R. 727, which did not advance beyond introduction, would have authorized a plebiscite on statehood. Even in seemingly unrelated federal policy debates, Puerto Rico status often arises at least tangentially. In the foreseeable future, oversight of Puerto Rico is likely to be relevant for Congress as the House and Senate monitor the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187; 48 U.S.C. SS2101 et seq.) enacted during the 114th Congress. Status also shaped the policy context surrounding the U.S. Supreme Court's decision in the 2016 Sanchez Valle case. This report does not provide an economic or legal analysis of these topics; instead, it provides policy and historical background for understanding status and its current relevance for Congress. This report will be updated in the event of significant legislative or status developments. | 7,022 | 676 |
The Employee Retirement Income Security Act of 1974 (ERISA) provides a comprehensive federal scheme for the regulation of private-sector employee benefit plans. While ERISA does not require an employer to offer employee benefits, it does mandate compliance with its provisions if such benefits are offered. Besides the regulation of pension plans, ERISA also regulates welfare benefit plans offered by an employer to provide medical, surgical and other health benefits. ERISA applies to health benefit coverage offered through health insurance or other arrangements (e.g., self-funded plans). Health plans, like other welfare benefit plans governed by ERISA, must comply with certain standards, including plan fiduciary standards, reporting and disclosure requirements, and procedures for appealing a denied claim for benefits. However, these health plans must also meet additional requirements under ERISA. This report discusses some of these additional requirements for group health plans, as well as health insurance issuers that provide group health coverage. As enacted in 1974, ERISA's regulation of health plan coverage and benefits was limited. However, beginning in 1986, Congress added to ERISA a number of requirements on the nature and content of health plans, including rules governing health care continuation coverage, limitations on exclusions from coverage based on preexisting conditions, parity between medical/surgical benefits and mental health benefits, and minimum hospital stay requirements for mothers following the birth of a child. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) added a new Part 6 to Title I of ERISA, which requires the sponsor of a group health plan to provide an option of temporarily continuing health care coverage for plan participants and beneficiaries under certain circumstances. Under ERISA section 601, a plan maintained by an employer with 20 or more employees must provide "qualified beneficiaries" with the option of continuing coverage under the employer's group health plan in the case of certain "qualified events." A qualifying event is an event that, except for continuation coverage under COBRA, would result in a loss of coverage, such as the death of the covered employee, the termination (other than by reason of the employee's gross misconduct) or reduction of hours of the covered employee's employment, or the covered employee becoming entitled to Medicare benefits. Under section 602 of ERISA, the employer must typically provide this continuation coverage for 18 months. However, coverage may be longer, depending on the qualifying event. Under ERISA 602(1), the benefits offered under COBRA must be identical to the health benefits offered to "similarly situated non-COBRA beneficiaries," or in other words, beneficiaries who have not experienced a qualifying event. The health plan may charge a premium to COBRA participants, but it cannot exceed 102% of the plan's group rate. After 18 months of required coverage, a plan may charge certain participants 150% of the plan's group rate. However, the American Recovery and Reinvestment Act of 2009 includes provisions to subsidize health insurance coverage through COBRA. ARRA provides for COBRA premium subsidies of 65% to help the unemployed afford health insurance coverage from their former employer. The subsidy is available for up to nine months to those individuals who meet the income test and who are involuntarily terminated from their employment on or after September 1, 2008, and before January 1, 2010. For more information on the COBRA premium subsidies, see CRS Report R40420, Health Insurance Premium Assistance for the Unemployed: The American Recovery and Reinvestment Act of 2009 , coordinated by [author name scrubbed]. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) added a new Part 7 to Title I of ERISA to provide additional health plan coverage requirements. Other federal legislation amended Part 7 of ERISA to require plans that offer specific health benefits to meet certain standards. The requirements of Part 7 generally apply to group health plans, as well as health insurance issuers that offer group health insurance coverage. HIPAA was enacted in 1996 in part to "improve the portability and continuity of health insurance coverage in the group and individual markets." One of the ways that HIPAA implements this goal is by amending ERISA, as well as other federal laws, to limit the circumstances under which a group health plan or insurer providing group health coverage may exclude a participant or beneficiary with a preexisting condition from coverage. A preexisting condition exclusion under a group health plan or group health insurance coverage can be applicable to an individual as a result of information relating to an individual's health status before the effective date of coverage, such as a condition identified as a result of a pre-enrollment questionnaire, a physical examination given to the individual, or review of medical records relating to the pre-enrollment period. Under Section 701 of ERISA, as created by HIPAA, an exclusion period for an individual's preexisting condition may be applied if medical advice, diagnosis, care, or treatment was recommended or received within the six months before the enrollment date in the plan. This exclusion from coverage cannot be for more than 12 months after an employee enrolls in a health plan (or 18 months for late enrollees). Further, this 12-month period must be reduced by the number of days that an individual has "creditable coverage," with no significant break in this coverage. A significant break is a 63-day continuous period in which the individual had no creditable coverage after the termination of prior health coverage and before the enrollment date of the new coverage. In other words, if an individual maintains certain creditable coverage, the individual cannot be subject to an exclusion period when moving from one group health plan to another. HIPAA prohibits plans and insurers from imposing preexisting condition exclusions under certain circumstances. For instance, pre-existing condition exclusion may not be imposed for any conditions relating to pregnancy. Similarly, newborns and adopted children cannot be subject to a preexisting condition exclusion if they were covered under "creditable coverage" within 30 days after birth or adoption, and there has not been a gap of more than 63 days in this coverage. HIPAA also requires health plans to provide a special enrollment opportunity to allow certain individuals to enroll in a health plan without waiting until the plan's next regular enrollment season. For example, special enrollment rights must be extended to a person who becomes a new dependent through marriage, birth, adoption or placement for adoption, or to an employee or dependent who loses other health coverage. Effective April 1, 2009, the Children's Health Insurance Program Reauthorization Act of 2009 amended ERISA to provide that group health plans must permit employees and dependents who are eligible for, but not enrolled in, coverage under the terms of the plan to enroll in two additional circumstances: (1) the employee's or dependent's coverage under Medicaid or SCHIP is terminated as a result of loss of eligibility, or (2) the employee or dependent becomes eligible for a financial assistance under Medicaid or SCHIP, and the employee requests coverage under the plan within 60 days after eligibility is determined. Under these two circumstances, an employee must request coverage within 60 days after termination of Medicaid or SCHIP coverage, or becoming eligible for this coverage. HIPAA also created ERISA Section 702, which provides that a group health plan or health insurance issuer may not base coverage eligibility rules on certain factors, including health status (physical or mental), claims experience, receipt of health care, medical history, genetic information, evidence of insurability, or disability. In addition, a health plan may not require an individual to pay a higher premium or contribution than another "similarly situated" participant, based on these health-related factors. The Genetic Information Nondiscrimination Act (GINA), passed in the 110 th Congress, amended Section 702 of ERISA to prevent certain types of genetic discrimination. Under this section, a health plan may not adjust premiums or contribution amounts for an entire group covered by the plan on the basis of genetic information. "Genetic information," as defined by the act, includes information about a genetic test of an individual or a family member of an individual, the manifestation of a disease or disorder in the family members of an individual, as well as request for, or receipt of, genetic services. GINA restricts a health plan from requiring or requesting an individual or a family member of an individual to undergo a genetic test. The act includes an exception to this provision, under which a health plan may request a genetic test for research purposes, but only if certain conditions are met. Further, GINA prohibits a plan from requesting, requiring, or purchasing genetic information for underwriting purposes or with respect to an individual prior to the individual's enrollment in the plan. The amendments made by GINA apply to health plans for plan years beginning after May 21, 2009. HIPAA also added Section 703 of ERISA, which provides that certain health plans covering multiple employers cannot deny an employer (whose employees are covered by the plan) coverage under the plan, except for certain reasons, such as an employer's failure to pay plan contributions. In 1996, Congress enacted the Mental Health Parity Act (MHPA), which added section 712 of ERISA to create certain requirements for mental health coverage, if this coverage was offered by a health plan. Under the MHPA, health plans are not required to offer mental health benefits. However, plans that choose to provide mental health benefits must not impose lower annual and lifetime dollar limits on these benefits than the limits placed on medical and surgical benefits. The MHPA allows a plan to decide what mental health benefits are to be offered; however, the parity requirements do not apply to substance abuse or chemical dependency treatment. Certain plans may be exempt from the MHPA. Plans covering employers with 50 or fewer employees are exempt from compliance. In addition, employers that experience an increase in claims costs of at least 1% as a result of MHPA compliance can apply for an exemption. Recently, Congress enacted legislation which expands the MHPA's requirements. The new requirements apply to group health plans for plan years beginning after October 3, 2009. These requirements, included as part of the Emergency Economic Stabilization Act of 2008, expand the parity requirements under the current version of the MHPA for mental health and substance use disorder coverage if such coverage is offered by a group health plan. In general, the act amends section 712 of ERISA, as well as other federal laws, to require parity between mental health/substance use disorder benefits and medical/surgical benefits in terms of the predominant (1) financial requirements and (2) treatment limitations imposed by a group health plan. As defined by the act, financial requirements include requirements such as deductibles, co-payments, co-insurance and out-of-pocket expenses; treatment limitations include limits on the frequency of treatment, number of visits, days of coverage, or any other limits on the duration or scope of treatment. The parity requirements of the act apply to mental health and substance use disorder benefits as defined by the health plan or applicable state law. Health plans may qualify for an exemption from the parity requirements if it is actuarially determined that the implementation of the act's requirements would cause a plan to experience an increase in actual total costs of coverage that exceed 2% of the actual total plan costs during the first plan year, or exceed 1% of the actual total plan costs each subsequent year. In 1996, Congress passed the Newborns' and Mothers' Health Protection Act (NMHPA), which amended ERISA and established minimum hospital stay requirements for mothers following the birth of a child. In general, the NMHPA prohibits a group health plan or health insurance issuer from limiting a hospital length of stay in connection with childbirth for the mother or newborn child to less than 48 hours, following a normal vaginal delivery, or to less than 96 hours, following a cesarean section. The Women's Health and Cancer Rights Act, enacted in 1998, amended ERISA to require group health plans providing mastectomy coverage to cover prosthetic devices and reconstructive surgery. Under section 713 of ERISA, this coverage must be provided in a manner determined in consultation between the attending physician and the patient. On October 9, 2008, President Bush signed legislation, known as "Michelle's Law," that extends the ability of dependents to remain on their parents' plan for a limited period of time during a medical leave from full-time student status. The act requires group health plans and health insurance issuers that provide group health coverage to continue coverage for a child dependent on a medically necessary leave of absence for a period of up to one year after the first day of the leave of absence or the date on which such coverage would otherwise terminate under the terms of the plan, whichever is earlier. A dependent child for purposes of the act is a dependent under the terms of the plan who was both enrolled in the plan on the first day of the medically necessary leave of absence and as a full-time student at a postsecondary education institution until the first day of the medically necessary leave of absence. Michelle's law applies to plan years beginning on or after October 9, 2009 (one year after enactment), and to medically necessary leaves of absence beginning during such plan years. | The Employee Retirement Income Security Act (ERISA) sets certain federal standards for the provision of health benefits under private-sector, employment-based health plans. These standards regulate the nature and content of health plans and include rules on health care continuation coverage as provided under the Consolidated Omnibus Budget Reconciliation Act (COBRA), guarantees on the availability and renewability of health care coverage for certain employees and individuals, limitations on exclusions from health care coverage based on preexisting conditions, and parity between medical/surgical benefits and mental health benefits. This report discusses these health benefit requirements under ERISA. | 2,883 | 129 |
Farmers and scientists have a history of modifying animals to maximize desirable traits. Genetic modification is one of the current approaches for modifying animals to increase their beneficial traits. In the broadest sense, genetic modification refers to changes in an organism's genetic makeup not occurring in nature, including the production of conventional hybrids. With the advent of modern biotechnology (e.g., genetic engineering or bioengineering), it is now possible to take the gene (or genes) for a specific trait either from an organism of the same species or from an entirely different one and transfer it to create an organism having a unique genetic code. This technique can add both speed and efficiency to the development of new foods and products. Genetically engineered plant varieties, such as herbicide-resistant corn and soybeans, have already been widely adopted by U.S. farmers, and some advocate using similar techniques to produce genetically engineered fish or seafood for the aquaculture industry. A number of environmental concerns have been raised related to the development of genetically modified (GM) fish, including the potential for detrimental competition with wild fish, and possible interbreeding with wild fish so as to allow the modified genetic material to escape into the wild fish population. Sterilization and bioconfinement have been proposed as means of isolating GM fish to minimize the potential for harming wild fish populations. In the process of congressional oversight of executive agency regulatory action, concerns have been raised about the adequacy of the U.S. Food and Drug Administration's review of applications for approval of GM animals, with respect to the potential for environmental harm. In response to these concerns, several bills were introduced in the 112 th Congress seeking to declare GM fish unsafe or require that GM fish be specifically labeled as such. No final action was taken on these bills in the 112 th Congress. Scientists are seeking ways to genetically engineer fish and other seafood species to introduce or amplify economically valuable traits. Fish are of particular interest to food researchers since many fish produce large quantities of eggs; those eggs, being external to the animal (as opposed to mammals that produce a few eggs internally), make it relatively simple to insert novel DNA. Research on transgenic strains is currently under development for at least 35 species of fish worldwide, as well as for a variety of mollusks, crustaceans, plants, and marine microorganisms. Fish are being modified to improve the production of human food, to produce pharmaceuticals, to test water contamination, and for other uses. The U.S. Food and Drug Administration (FDA) regulates GM fish under the Federal Food, Drug, and Cosmetics Act (FFDCA) provisions on new animal drugs (21 U.S.C. SS321). Under these provisions, FDA must keep all information about a pending drug application confidential, with the exception of information publicly disclosed by the manufacturer. This approach limits the opportunity for public comment before approval. Some critics are calling for more transparency in this process and for more authority to be given to environmental and wildlife agencies. One GM fish has been marketed to date. Glofish™️, a genetically altered version of the popular aquaria zebrafish ( Danio rerio ), fluoresce after the insertion of a sea anemone gene into the zebrafish egg. This fish is currently legal to be sold in all states except California. Since Glofish™️ are not meant for human consumption, FDA determined that the Glofish™️ was not under its jurisdiction. Another private research company has taken genetic information from Chinook salmon and ocean pout (an eel-like, edible fish) and inserted this material into Atlantic salmon to create a fish that grows to market size twice as fast as its non-GM counterparts. This company, AquaBounty Technologies, Inc., is currently seeking regulatory approval from the FDA to sell its AquAdvantage salmon for human consumption in the United States and received a grant from the U.S. Department of Agriculture's National Institute of Food and Agriculture for work on transgenic tilapia. Other examples of GM fish that have been developed, but for which regulatory approval has not yet been sought, include fish that would produce a blood-clotting factor to treat individuals with hemophilia and disease-resistant channel catfish. In addition to its responsibility for assuring food safety, FDA is charged with assessing the potential environmental impacts of newly engineered plants and animals. To fully assess these potential impacts, FDA consults with the Fish and Wildlife Service and the National Marine Fisheries Service (NOAA Fisheries). Despite this consultation, critics question whether FDA has the mandate and sufficient expertise to identify and protect against all potential ecological damage that might result from the widespread use of transgenic fish. The possible impacts from the escape of GM organisms from aquaculture facilities are of great concern to some scientists and environmental groups. A National Research Council report stated that transgenic fish pose the "greatest science-based concerns associated with animal biotechnology, in large part due to the uncertainty inherent in identifying environmental problems early on and the difficulty of remediation once a problem has been identified." Critics and scientists argue that GM fish could breed with wild populations of the same species and potentially spread undesirable genes. One study postulated a "Trojan gene hypothesis" after observing that GM Japanese medaka, a fish commonly used as an experimental model, were able to out-compete nonaltered fish for mates in a laboratory environment. However, the resulting offspring of this mating between GM fish and wild fish were less fit, lacking certain physical or behavioral attributes that resulted in the eventual demise of the modified population. The ecological risks of stocking GM shellfish in the wild have not yet been thoroughly examined, since confining and isolating these organisms is more difficult than confinement of many fish species, due to their methods of reproduction and dispersal. Even if fast-growing GM fish do not spread their genes among their wild counterparts, critics fear GM fish could disrupt the ecology of streams by competing with native fish for scarce resources. Escaped transgenic fish could harm wild fish through increased competition or predation. In addition, some argue that transgenic fish, especially if modified to improve their ability to withstand wider ranges of salinity or temperature, could be difficult or impossible to eradicate, similar to an invasive species. The consequences of such competition would depend on many factors, including the health of the wild population, the number and specific genetic strain of the escaped fish, and local environmental conditions. Critics maintain that an indication of the magnitude of this potential problem may be noted where non-GM Atlantic salmon from nearshore net pens in the northwest United States and British Columbia have escaped and entered streams, in some cases outnumbering their wild Pacific salmon counterparts. However, it is not known whether GM fish could survive in the wild in sufficient numbers to inflict permanent population damage. One study indicated that, when food supplies were low, GM fish might have the ability to harm a wild population, although the authors caution that laboratory experiments may not reflect what would happen in the wild. Biotechnology proponents argue that GM fish, if they escape, would be less likely to survive in the wild, especially when they are reared in protected artificial habitats and have not learned to avoid predators. A number of potential safeguards to address these environmental concerns exist and could be required. FDA could require that only sterile GM fish be approved for culture. Fertilized fish eggs that are subjected to a heat or pressure shock retain an extra set of chromosomes. The resulting triploid fish do not develop normal sexual characteristics and, in general, the degree of sterility in triploid females is greater than males. Thus, all-female lines of triploid fish are considered to be one of the best current methods to insure nonbreeding populations of GM fish. Nonetheless, there are batch-to-batch variations, and it is uncertain whether this method could be effective for all species; it has not been successful for shrimp, for example. Also, critics question whether escaped triploid fish, which in some species have sufficient sex hormone levels to enable normal courtship behavior, could mate with wild individuals, lowering reproductive success of the wild population. Other sterilization methods are currently under study, and it is likely that research in this area will increase options. Critics of GM fish counter that the risks to native fish populations, however small, may outweigh the potential benefits of this technology, especially where native fish populations are already threatened or endangered. To be most effective in reducing ecological risk, the National Research Council report on Bioconfinement of Genetically Engineered Organisms recommends that each individual species have its own bioconfinement plan. Also, since no single method is likely to be 100% effective, bioconfinement redundancy significantly increases the likelihood of control, especially if it will not be combined with physical confinement. Growing GM marine fish in isolated onshore tanks rather than in offshore or nearshore pens may substantially lower the risk of escape into the wild. Biotechnology proponents maintain that genetic modification techniques have many advantages over traditional breeding methods, including faster and more specific selection of beneficial traits. Because scientists are able to directly select traits they wish to create or amplify, the desired change can be achieved in very few generations, making it faster and lower in cost than traditional methods, which may require many generations of selective breeding. Genetic modification techniques allow scientists to precisely select traits for improvement, enabling them to create an organism that is not just larger and faster-growing, but potentially improved, for example, by increasing nutritional content. Proponents claim that faster-growing fish could make fish farming more productive, increasing yields while reducing the amount of feed needed, which in turn could reduce waste. With intense exploitation of wild fish stocks, GM fish and seafood could be important means to meet increasing human nutrition needs and address food security concerns. Shellfish and finfish, genetically modified to improve disease resistance, could reduce the use of antibiotics. Increased cold resistance in fish could lead to the ability to grow seafood in previously inhospitable environments, allowing aquaculture to expand into previously unsuitable areas. Research efforts are also under way to improve human health by genetically modifying fish to produce human drugs like a blood clotting factor and to create shellfish that will not provoke allergic reactions. Biotechnology proponents claim that these advantages could translate into a number of potential benefits, such as reduced costs to producers, lower prices for consumers for edible fish and pharmaceuticals, and environmental benefits, such as reduced water pollution from wastes. Food scientists and the aquaculture industry may support the introduction of genetic engineering, provided that issues of product safety, environmental concerns, ethics, and information are satisfactorily addressed. On the other hand, while the majority of consumers in the United States appear to have generally accepted GM food and feed crops, it is uncertain whether consumers will be as accepting of GM fish. Although such fish may taste the same and are expected, like their traditionally bred counterparts, to be less expensive than wild-caught fish, ethical concerns over the appropriate use of animals, in addition to environmental concerns, may affect public acceptance of GM fish as food. Ongoing campaigns by environmental and consumer groups have asked grocers, restaurants, and distributors to sign a pledge to not sell GM fish products, even if they are approved by FDA. In addition, the commercial fishing industry says that it has successfully educated the public to discriminate among fish from different sources, such as wild and farmed salmon. It is possible that a publicized escape of GM fish could lead to reduced public acceptance of their wild product. Environmental and consumer groups are asking that genetically engineered products be specially labeled. However, industry groups are concerned that such labeling might lead consumers to believe that their products are unsafe for consumption. A National Research Council study maintains that there is a low to moderate food safety risk from GM seafood. Since genetic engineering can introduce new protein into a food product, there are concerns that this technique could introduce a previously unknown allergen into the food supply or could introduce a known allergen into a "new" food. Within FDA, the Center for Veterinary Medicine regulates transgenic animals intended for human consumption under the same authority it uses to regulate new animal drugs. In addition, GM fish must adhere to the same standards of safety under the FFDCA and the FDA's Center for Food Safety and Applied Nutrition that apply to conventionally bred fish. Under the adulteration provisions in Section 402(a)(1) of the FFDCA, FDA has the power to remove a food from the market or sanction those marketing the food if that food poses a risk to public health. This CRS report does not consider the food safety regulation of GM fish; for background on food safety regulation, see CRS Report RS22600, The Federal Food Safety System: A Primer , by [author name scrubbed]. By early 2010, AquaBounty Technologies, Inc., had provided FDA with almost all of the data required by the agency to consider approving the company's GM AquAdvantage salmon. The approval debate has focused on whether GM animals should be allowed, and if so, whether they should be labeled as such. The question of how to label the food derived from the AquAdvantage salmon is separate from the decision about whether to approve the new animal drug application. If the Commissioner determines that the new animal drug meets the approval standard, she "shall issue an order approving the application." Issues related to the question of whether a food from the AquAdvantage salmon is misbranded, based on its labeling, are separate. Although FDA is not required to address these issues prior to the food being marketed, FDA is considering these two issues simultaneously. The AquAdvantage salmon, all sterile females, are proposed to be grown only in isolated contained facilities, not in ocean pens that have a higher risk of escape into the wild. More specifically, AquaBounty has proposed producing eggs on Prince Edward Island, Canada, shipping these eggs to Panama, growing and processing the fish in Panama, and shipping table-ready, processed fish to the United States for retail sale. If approved, it could take two to three years for the AquAdvantage salmon to reach supermarkets. As a first step in the approval process, FDA held public hearings on AquAdvantage salmon by its Veterinary Medicine Advisory Committee on September 19-21, 2010. Although the public comment period on FDA approval was open through November 22, 2010, there was no deadline for FDA's decision on AquaBounty's application. Meanwhile, critics claimed the convoluted 16-year FDA review process was scientifically unjustified, and threatened to rob society of both environmental and economic benefits. In an effort to broaden the evaluation of the AquaBounty application, a coalition of environmental groups called on FDA to prepare an environmental impact statement (EIS) on this action and to consult with federal agencies about possible threats to endangered wild Atlantic salmon. Subsequently, on May 25, 2011, these groups filed a formal citizen petition urging FDA to withhold approval until an EIS has been completed. Some scientists also expressed concern for a broader evaluation, including pointing out that potential price decreases from technological innovation in producing GM fish could promote health benefits from increased consumption. Concern has also increased in Canada over the possible effects of producing these GM fish. On December 20, 2012, FDA announced the availability for public comment of (1) a draft environmental assessment of the proposed conditions specified by AquaBounty and (2) FDA's preliminary finding of no significant impact (FONSI) for AquaBounty's conditions. A 60-day public comment period initially ran through February 25, 2013, but was extended through April 26, 2013. If significant new information or challenges arise in the public comments, FDA must decide whether or not a full EIS is required prior to approval of AquaBounty's application. If FDA approves AquaBounty's application, FDA retains the authority to withdraw its approval should significant concerns arise subsequently. States have also taken steps to regulate the use and transport of GM fish. For example, Maryland, Washington, Oregon, Minnesota, Wisconsin, and California have passed laws banning the release of GM fish in some or all state waters. In addition, Alaska requires GM fish to be labeled. No federal law specifically addresses GM fish and seafood. In the 112 th Congress, several bills were introduced to address concerns related to GM fish. S. 229 , H.R. 520 , and H.R. 3553 would have amended the Federal Food, Drug, and Cosmetic Act to require labeling of genetically engineered fish. S. 230 and H.R. 521 would have amended the Federal Food, Drug, and Cosmetic Act to prevent the approval of genetically engineered fish for human consumption. Section 744 of H.R. 2112 , as passed by the House on June 16, 2011, would have prohibited the Food and Drug Administration from spending FY2012 funds to approve any application for genetically engineered salmon. On September 7, 2011, the Senate Committee on Appropriations reported H.R. 2112 , without the prohibition on FDA related to genetically engineered salmon ( S.Rept. 112-73 ), and this provision was not in the subsequently enacted P.L. 112-55 . S. 1717 would have prohibited the sale of genetically altered salmon. On December 15, 2011, the Senate Commerce, Science, and Transportation Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard held an oversight hearing on the environmental risks of genetically engineered fish. On May 24, 2012, S.Amdt. 2108 to S. 3187 was defeated, proposing to prohibit approval by FDA of genetically engineered fish unless NOAA concurred with such approval. No further action was taken on any of these bills by the 112 th Congress. | In the process of congressional oversight of executive agency regulatory action, concerns have been raised about the adequacy of the FDA's review of a genetically modified (GM) salmon. More specifically, concern has focused on whether and how potential environmental issues related to this GM salmon might be addressed. In response to these concerns, several bills were introduced in the 112th Congress seeking to declare GM fish unsafe and thus prevent FDA approval of this salmon for human consumption or to require that GM fish be specifically labeled. No final action was taken on these bills by the 112th Congress. Genetic engineering techniques allow the manipulation of inherited traits to modify and improve organisms. Several GM fish and seafood products are currently under development and offer potential benefits such as increasing aquaculture productivity and improving human health. However, some are concerned that, in this rapidly evolving field, current technological and regulatory safeguards are inadequate to protect the environment and ensure public acceptance that these products are safe for consumption. (The safety of GM foods for human consumption is not addressed in this report.) In the early 2000s, several efforts began to develop GM fish and seafood products, with a GM AquAdvantage salmon developed by AquaBounty, Inc., in the forefront of efforts to produce a new product for human consumption. By September 2010, requested data had been provided to the U.S. Food and Drug Administration (FDA) by AquaBounty, and FDA's Veterinary Medicine Advisory Committee held public hearings on the approval of AquAdvantage salmon for human consumption. The public comment period on FDA approval closed on November 22, 2010. Environmental concerns related to the development of GM fish include the potential for detrimental competition with wild fish, and possible interbreeding with wild fish so as to allow the modified genetic material to escape into the wild fish population. Sterilization and bioconfinement have been proposed as means of isolating GM fish to minimize harm to wild fish populations. To address these concerns, AquaBounty proposed producing salmon eggs (all sterile females) in Canada, shipping these eggs to Panama, growing and processing fish in Panama, and shipping table-ready, processed fish to the United States for retail sale. On December 20, 2012, FDA announced the availability for public comment of (1) a draft environmental assessment of the proposed conditions specified by AquaBounty and (2) FDA's preliminary finding of no significant impact (FONSI) for AquaBounty's conditions. A 60-day public comment period initially ran through February 25, 2013, but was extended through April 26, 2013. If significant new information or challenges arise in the public comments, FDA must decide whether or not a full environmental impact statement is required prior to approval of AquaBounty's application. If approved, AquAdvantage salmon would be the first GM animal approved for human consumption. | 3,963 | 621 |
The United States remains the only major industrialized country in which a nonmetric measurement system is predominantly employed. Thus, while miles, pounds, and degrees Fahrenheit (i.e., the English system of measurement) are widely used in the United States, kilometers, grams, and degrees Celsius are favored throughout the rest of the industrialized world. Voluntary use of the metric system, also known as the International System of Units or SI, has been legal in the United States since 1866, and certain segments of society (particularly scientists and industries involved in international trade) have embraced metric units for many years. Calls for widespread metric conversion intensified during the mid-1960s, particularly after the United Kingdom began its conversion from the English system to metric. In 1968, Congress passed the Metric Study Act of 1968 (P.L. 90-472) which authorized a three-year Department of Commerce study on the feasibility of metric conversion in the United States. The study concluded that conversion to the metric system was in the best interests of the Nation, particularly in view of the increasing importance of technology and international trade to the U.S. economy. In 1975, the Metric Conversion Act ( P.L. 94-168 ) was passed by Congress. The Act established a U.S. Metric Board whose purpose was to coordinate and plan a process of voluntary metric conversion throughout the Nation. However, there appeared to be widespread public antipathy to conversion to the metric system and the Metric Board's efforts were largely ignored (and in some instances, vociferously opposed) by the American public. In 1982, the Metric Board was abolished by the Reagan Administration. By the late 1980s, however, concern over U.S. industrial competitiveness in world markets led Congress to again encourage metric conversion, this time by requiring federal agencies to go metric in their respective activities. Section 5164 of the Omnibus Trade and Competitiveness Act of 1988 ( P.L. 100-418 ) amended the Metric Conversion Act of 1975 to designate the metric system as the "preferred system of weights and measures for United States trade and commerce." The amended Act required all federal agencies to begin using the metric system in procurements, grants, and other business-related activities, except when such use is impractical or is likely to cause significant inefficiencies or loss of markets to U.S. firms. Agencies were also required to report annually to Congress on actions taken to implement fully the metric system of measurement. As follow-up to P.L. 100-418 , Executive Order 12770 ("Metric Usage in Federal Government Programs"), issued in 1991 by President Bush, further required federal agencies to formulate and implement metric conversion plans. Federal agencies were initially slow in responding to the metric conversion mandate. A March 1990 General Accounting Office (GAO) report found that most federal agencies had not shown a commitment to metric conversion. After Executive Order 12770 was issued, agency compliance measurably improved. A Committee Print issued December 1993 by the House Committee on Science, Space and Technology, reported that 29 out of 36 federal agencies had reported their metric activities to Congress (as required by P.L. 100-418 ). The study concluded that a "general commitment toward converting to the metric system by each federal government agency reporting appears clearly evident." Meanwhile, a January 1994 GAO report on metric conversion found that while federal preparations for metric conversion were well underway, basic problems limited federal metric procurement; grants and other business activities showed mixed progress; and federal agencies indicated a need for greater support from the private sector and the public. The Metric Program at the Department of Commerce's National Institute of Standards and Technology (NIST) is responsible for coordinating the metric transition activities of all federal agencies. NIST chairs the Interagency Committee on Metric Policy (ICMP) and is required by Executive Order 12770 to report to the President annually regarding metric conversion progress made by individual federal agencies. The most recent report, the 1993 Metric Progress Report, concluded that metric conversion progress among agencies is widely variable, and depends upon the metric readiness of the industries a particular agency's programs affect, budget limitations, and the amount of visible high level leadership within the agency. Notable examples of metric conversion activities in the federal government include: the proposed metric conversion of federal highways (discussed below), a requirement that all new federal building construction projects be conducted in metric units, and a Federal Trade Commission (FTC) rule requiring consumer product packaging to be labeled with dual (English and metric) units. Other agencies, however, have determined it unfeasible or unpractical to convert particular activities to metric at this time. The GAO found that "[metric conversion] problems encountered by federal agencies frequently involve opposition from the private sector or the public. Generally speaking, the more directly a proposed conversion affects the private sector or the public, the greater the resistance." Thus, for example, the Secretary of Agriculture has granted a general exemption from metric conversion for projects or programs that directly affect individual farmers or farm programs. The National Weather Service in the Department of Commerce, while gathering all of its data in metric units, converts back to the inch-pound system before providing its data to the public. An issue that has received much attention from congressional policy makers and the public is the proposed metric conversion of the federal highway system. On June 11, 1992, the Federal Highway Administration (FHWA) announced its metric conversion policy, which stipulated that all highway construction plans, specifications, and estimates be prepared in metric units of measurement by September 30, 1996. After that date, Federal Aid Highway Program funds would not be authorized for nonmetric projects, unless a specific exception was issued by FHWA. Many state highway agencies have been working with FHWA and the American Association of State Highway & Transportation Officials (AASHTO) to meet the September 30, 1996, deadline for metric conversion. However, on November 28, 1995, the President signed the National Highway System Designation Act of 1995 ( P.L. 104-59 ), which provides that before September 30, 2000, the Secretary of Transportation shall not require any state to use or plan to use the metric system with respect to designing or advertising, or preparing plans, specifications, estimates or other documents for a federal-aid highway project. Legislation introduced into the 104 th Congress by Representative Duncan ( H.R. 3617 ), and reintroduced into the 105 th Congress by Representative Bachus ( H.R. 813 ) and Senator Baucus ( S. 532 ) would indefinitely remove the federal mandate for metric conversion in federal highway projects (see discussion in next section of this report). The issue of highway sign conversion was considered separately from FHWA's overall metric conversion policy, and was not subject to the September 30, 1996 deadline. On August 31, 1993, the FHWA announced in the Federal Register a solicitation of public comments on options it was considering for "coordinating an orderly transition of distance, weight, and speed traffic control sign legends from English to metric units." In response to the FHWA notice, a series of bills were introduced in Congress which sought to prohibit the use of federal funds for metric conversion of highway signs. Additionally, Department of Transportation Appropriation bills for FY1994 ( P.L. 103-122 ), FY1995 ( P.L. 103-331 ), and FY1996 ( P.L. 104-50 ) specifically prohibited use of appropriated funds for metric conversion of highway signs. On June 27, 1994, the FHWA announced its decision in the Federal Register not to require the implementation of metric signs until "at least after 1996, or until further indication of the intention of Congress on this subject is received." The FHWA stated that one of the factors in its decision was "a possible future congressional restriction on using Federal funds for metric signs." Accordingly, the National Highway System Designation Act of 1995 ( P.L. 104-59 ) prohibits FHWA from requiring the states to expend any federal or state funds for metric conversion of highway signs. Meanwhile, an April 1996 Battelle study commissioned by FHWA has estimated that the cost of metric highway sign conversion could range from $15.6 million for routine replacement, to $826 million for dual posting. Similar to the metric provisions of the National Highway System Designation Act, much of the metric-related legislation introduced in the 104 th Congress sought to limit metric conversion activities in the federal government, particularly in cases where the federal government is seen to be imposing metric conversion mandates on the States. Section 302 of the Unfunded Mandate Reform Act of 1995 ( P.L. 104-4 ), signed into law on March 22, 1995, directed the Advisory Commission on Intergovernmental Relations (ACIR) to study specific federal mandates, including "requirements of the departments, agencies, and other entities of the federal government that state, local, and tribal governments utilize metric systems of measurement." On January 24, 1996, the ACIR issued its preliminary report on federal mandates. The Commission identified FHWA metric conversion requirements for federal highway construction as a federal mandate, and recommended the repeal of "requirements that state and local governments convert to metric on a Federal timetable as a condition of receiving Federal aid." Metric proponents have objected to the ACIR findings, asserting that metric conversion has already been implemented by most states, that the metric system is becoming increasingly accepted by the construction community, and that metric conversion costs constitute a tiny percentage of total federal highway funds received. Other legislation in the 104 th Congress sought to amend the Metric Conversion Act. The Federal Reports Elimination and Sunset Act of 1995 ( P.L. 104-66 ), which was signed into law on December 21, 1995, repeals section 12 of the Metric Conversion Act requiring federal agencies to report to the Congress on their metric conversion activities. A further amendment to the Metric Conversion Act was included in Department of Commerce dismantling legislation, which was attached to the House version of the debt limit extension bill ( H.R. 2586 , subsequently vetoed by the President). This provision would have repealed the provision of the Metric Conversion Act which requires federal agencies to use the metric system in their procurements, grants, and other business-related activities. Additionally, the Metric Program at NIST would have been abolished. Finally, a bill passed by the 104 th Congress ( P.L. 104-289 ) sought to curb some federal agency requirements that businesses convert their modular construction products to a hard metric specification in order to supply federal construction contracts. While the vast majority of products procured for federal construction are soft converted (which means that an existing product is relabeled in metric units but does not change size), some modular products are required in hard metric sizes in order to be dimensionally coordinated with other building components. A hard metric conversion requires, in addition to the expression of the dimensions of a product in metric units, a physical change in the dimension of that product in order to conform to a rounded metric unit. Certain construction materials industries (primarily makers of concrete masonry block and recessed lighting fixtures) objected to hard metric requirements, arguing instead for soft metric conversion. The Savings in Construction Act of 1996 ( P.L. 104-289 ), signed into law on October 11, 1996, applies only to concrete masonry units and recessed lighting fixtures. The law prohibits federal agencies from specifying hard metric dimensions for concrete block and lighting fixtures, unless certain criteria are met, including a determination by the agency that the costs of the modular metric components are estimated to be equal to or less than the total installed price of using non-hard metric products. Additionally, P.L. 104-289 directs each executive agency awarding construction contracts to designate a metrication ombudsman who will respond to industry complaints and concerns regarding construction metrication issues. In the 105 th Congress, metric related legislation remains focused on the federal highway construction issue. H.R. 813 (introduced by Representative Bachus) would remove the extended deadline of September 30, 2000 from the National Highway System Designation Act ( P.L. 104-59 ), thereby indefinitely prohibiting FHWA from requiring the states to convert their federal highway projects to metric units. Section 303 of the Surface Transportation Authorization and Regulatory Streamlining Act ( S. 532 , introduced by Senator Baucus), contains identical language. Similarly, there are plans in the House to attach such language to legislation reauthorizing the Intermodal Surface Transportation Efficiency Act (ISTEA). Proponents of removing the federal mandate for metric conversion cite the costs of conversion experienced by highway contractors, and maintain that metric conversion decisions should be left to the states. Opponents of H.R. 813 , including the Department of Transportation, point out that over 40 states are already surveying and designing their new projects in metric units, and that states have spent nearly $71 million to convert standard plans, specifications, and computer programs. Removing the federal mandate, they argue, would create confusion in the highway construction industry, and reverse progress that most states have already made in converting to the metric system. | The United States remains the only major industrialized country in which a nonmetric measurement system is predominantly employed. Section 5164 of the Omnibus Trade and Competitiveness Act of 1988 (P.L. 100-418) amended the Metric Conversion Act to require federal agencies to use the metric system in their activities. Legislation in the 104th and 105th Congress limits federal metric conversion activities, particularly in instances where states, local governments, and the private sector may be required to convert to the metric system in order to participate in federally funded programs. | 2,934 | 120 |
Federal law, commonly known as the Hatch Act, regulates certain government employees' participation in partisan political activities. When enacting the current provisions regulating employees' political participation, Congress expressly stated that the policy underlying the statute recognized employees' right to engage freely "in the political processes of the Nation." Employees in the executive branch of the federal government have been subject to certain limitations and restrictions on their partisan political activities for over a century. A general ban on voluntary, off-duty participation in partisan politics by merit system employees was instituted by executive order in 1907. Specifically, the executive order prohibited employees from using "official authority or influence for the purpose of interfering with an election or affecting the result thereof." Employees retained their right to vote and privately express political opinions, but were prohibited from taking "active part in political management or in political campaigns." Known as Civil Service Rule 1, this restriction and all of the administrative interpretations under it were eventually codified in 1939 and made applicable to most federal executive branch employees under a law commonly known as the Hatch Act. Since 1940, state and local government employees whose official jobs are connected with activities that receive federal funding have come within the purview of a part of the federal Hatch Act regarding partisan political activities. The Hatch Act and civil service restrictions were seen in some respects as protections of federal employees from coercion by higher level, politically appointed supervisors to engage in political activities against their will, as well as an effort by Congress and the Executive to assure a nonpartisan and evenhanded administration of federal laws and programs. With the advent of the modern, more independent and merit-based civil service, and the adoption of increased statutory and regulatory protections of federal employees against improper coercion and retaliation, the need for a broad ban on all voluntary, outside activities in politics as a means to protect employees was seen as less necessary and more restrictive of the rights of private expression of millions of citizens than was needed to accomplish the goals of the Hatch Act. Accordingly, Congress made significant changes to the law in the Hatch Act Reform Amendments of 1993. The 1993 amendments allow most federal employees to engage in a wide range of voluntary, partisan political activities in their time off-duty, away from their federal jobs, and off of any federal premises. While many limitations on employees' political activity were removed, the amendments retained strict restrictions for some employees of designated agencies and provided more express statutory prohibitions on workplace politicking. Most recently, Congress made changes to the Hatch Act in the Hatch Act Modernization Act of 2012. These amendments did not include significant changes to the substantive prohibitions on federal employees' political activity. However, these amendments did change the status of employees of the District of Columbia, who previously were subject to Hatch Act restrictions but now are expressly excluded from coverage, and made changes to the mechanisms for enforcement of Hatch Act violations. In its current form, the Hatch Act generally prohibits some categories of political activities for all covered employees. These restrictions generally prohibit such employees from the following: using their "official authority or influence for the purpose of interfering with or affecting the result of an election"; soliciting, accepting, or receiving political campaign contributions from any person; running "for election to a partisan political office"; soliciting or discouraging participation in political activity of any person who either has an application for a grant, contract, or other status pending before the employing agency or is the subject of an ongoing audit, investigation, or enforcement action by the employing agency; engaging in partisan political activity on official duty time; on federal property; while wearing a uniform or insignia identifying them as federal officials or employees; or while using a government vehicle. Specific political activities that are permitted or prohibited for each category of federal employees covered by the Hatch Act are provided in the Appendix of this report. Notably, employees are not prohibited from all forms of political activity, and the Hatch Act expressly preserves an employee's "right to vote as he chooses and to express his opinion on political subjects and candidates." The U.S. Office of Special Counsel (OSC), an independent executive agency, is responsible for administering the Hatch Act provisions, including investigating complaints and interpreting the parameters of permissible and prohibited political activities. If OSC believes that disciplinary action is warranted, it provides a complaint and statement of facts to the employee and the Merit Systems Protection Board. Employees, if subject to such a complaint, are entitled to certain procedural rights, including representation and a hearing. Penalties under the Hatch Act are generally in the nature of administrative, personnel actions. Following criticism of the penalty structure as "overly-restrictive," current penalties include removal, reduction in grade, debarment from federal employment for up to five years, suspension, reprimand, or a civil fine. The Hatch Act defines employee for purposes of the act as "any individual, other than the President and Vice President, employed or holding office in--(A) an Executive Agency other than the General Accounting Office [Government Accountability Office]; or (B) a position within the competitive service which is not in an Executive agency...." The definition expressly excludes members of the uniformed services and individuals employed or holding office in the government of the District of Columbia. Furthermore, by definition and design, the Hatch Act does not apply to employees in the legislative or judicial branches of the federal government. Notably, although not all employees of the federal government are subject to the Hatch Act, some provisions of the federal criminal code relating to political corruption and campaign finance apply to all federal officers and employees in all three branches of government. The broad definition means that the Hatch Act generally applies to all civilian officers and employees in the executive branch of the federal government. With the exception of the President and Vice President themselves, individuals who are subject to Hatch Act restrictions include rank-and-file employees in the executive branch; all officials of the executive agencies and departments, including agency and department heads appointed by the President with advice and consent of the Senate; and all officials, staff, and aides in the offices of the President and Vice President. There are limited exceptions for applicability of the Hatch Act under certain circumstances, as discussed below. Following the relaxation of limitations on participation in political activity, the majority of individuals identified as "employees" subject to the Hatch Act are considered "less restricted employees." That is, these employees are subject to the standard rules provided by the Hatch Act, whether by statute or regulation, and generally are permitted to "take an active part in political management or in political campaigns," except for the general restrictions outlined above. Some employees covered by the Hatch Act are subject to additional restrictions under current law, and may be referred to as "further restricted employees." These designations mean that such employees are subject not only to the standard rules noted above, but also to additional restrictions in the relevant statutory provisions and regulations. These employees are subject to more restrictive provisions similar to the former "no politics" rule of the original Hatch Act discussed earlier. Further restricted employees are identified by the agencies for which they work or particular positions within the executive branch. The designated agencies generally deal with law enforcement or national security matters and include the following: the Federal Election Commission; the Election Assistance Commission; the Federal Bureau of Investigation; the Secret Service; the Central Intelligence Agency; the National Security Council; the National Security Agency; the Defense Intelligence Agency; the Merit Systems Protection Board; the Office of Special Counsel; the Office of Criminal Investigation of the Internal Revenue Service; the Office of Investigative Programs of the United States Custom Service; the Office of Law Enforcement of the Bureau of Alcohol, Tobacco, and Firearms; the National Geospatial-Intelligence Agency; the Office of the Director of National Intelligence; the Criminal Division of the Department of Justice; and the National Security Division of the Department of Justice. The heightened restrictions also apply to employees holding certain designated positions, including the following: career appointees in an Senior Executive Service position; administrative law judges; contract appeals board members; and administrative appeals judges. Employees in these agencies may not "take an active part in political management or political campaigns," unless the employee was appointed by the President with the advice and consent of the Senate. The law specifies that this prohibition means that these employees are subject to the rules in place under the original Hatch Act provisions (e.g., "no politics" even if off duty or away from their official jobs or workplace). However, further restricted employees are not entirely excluded from political action under the Hatch Act. That is, they may engage in a number of political activities in their capacity as private citizens (i.e., while not on duty, in the federal workplace, or otherwise representing or appearing to represent the government) if the activity "is not performed in concert with a political party, partisan political group, or a candidate for partisan political office." The Hatch Act provides a few limited exceptions, including for employees in certain high-ranking positions and for employees seeking to engage in political activities in certain municipalities. The Hatch Act provides an exception to allow certain high-ranking officials to "engage in political activity otherwise prohibited ... if the costs associated with that political activity are not paid for by money derived from the Treasury of the United States." The exception is available to employees who hold positions with responsibilities that "continue outside normal duty hours and while away from the normal duty post," such as presidential advisers or Cabinet officers appointed by the President with the advice and consent of the Senate. In other words, these officials may engage in political activities during what would be considered official working time, as long as federal funds are not used for such activities. Any such official must reimburse the U.S. Treasury for the federal resources used in campaign activities. Congress authorized regulations that would permit employees otherwise covered by the Hatch Act's restrictions "to take an active part in political management and political campaigns involving the municipality or other political subdivision in which they reside" in certain cases. Generally, this exception may be applied only to municipalities and political subdivisions that have a majority of voters employed by the federal government and expressly includes the District of Columbia and those in Maryland or Virginia that are also "in the immediate vicinity of the District of Columbia." While the Hatch Act includes several categories of restrictions, the restriction on political activities while on duty, in the federal workplace, or otherwise representing the government has been of particular interest in recent years, given various developments in the nature of federal employment. The changing nature of the workplace may raise questions regarding the balance between personal and professional activity, including various platforms of political activity such as email, mobile devices, social media, and telework. One of the categories of restrictions imposed by employees covered by the Hatch Act is commonly known as the prohibition on political activities on duty. That provision states the following: [a]n employee may not engage in political activity--(1) while the employee is on duty; (2) in any room or building occupied in the discharge of official duties by an individual employed or holding office in the Government of the United States or any agency or instrumentality thereof; (3) while wearing a uniform or official insignia identifying the office or position of the employee; or (4) using an vehicle owned or leased by the Government of the United States or any agency or instrumentality thereof. The Hatch Act includes very few definitions of its terms, and the meanings of its provisions are detailed in federal regulations. The scope of the prohibition on political activities on duty, including such activities conducted in the federal workplace, depends largely on the general definitions of these terms. Political activity is defined as "activity directed toward the success or failure of a political party, candidate for partisan political office, or partisan political group." Employees are considered to be on duty during any "time period when an employee is: (1) [i]n a pay status other than paid leave, compensatory time off, credit hours, time off as an incentive award, or excused or authorized absence (including leave without pay); or (2) [r]epresenting any agency or instrumentality of the United States Government in an official capacity." The federal workplace, that is, " a room or building occupied in the discharge of official duties by an individual employed or holding office in the Government of the United States or any agency thereof ," is defined to include federally owned or leased space in which employees regularly perform official duties and public areas of buildings controlled by the General Services Administration. These terms are particularly relevant when applying the Hatch Act to new work scenarios. For example, a mobile device used by an employee during the workday may not be used for partisan political activity, even if the employee does so using a personal device during a break, if the employee remains in the workplace during that break because it would violate the second prong of the prohibition. The Hatch Act does not specify how it is to be applied to various types of communication and methods of engaging in political activity. In other words, the manner in which an employee participates in political activity appears to be irrelevant to whether the activity is permissible. Thus, whether an employee meets with a subordinate in person or calls the subordinate over the phone to solicit contributions for a particular political activity, the employee could be in violation of the Hatch Act. Examples include the increased use of mobile devices (e.g., Blackberry, smartphones), incorporation of social media as a professional tool, and the growth of federal telework programs. Although email has been a common tool in federal offices for decades, the prevalence of smartphones, both for personal and professional use, over the last decade has highlighted new issues in regulation of political activity under the Hatch Act. For instance, to what extent may an employee use his or her official email account or a personal account on a work computer or smartphone to engage in political activity? Accordingly, OSC has offered guidance on the use of email to engage in political activity. In an advisory opinion, the agency examined an email sent by a federal employee entitled "Who is Barack Obama?," which included a number of opinions about then-presidential candidate Obama that OSC found to be in violation of the Hatch Act. OSC noted that the email included "very negative statements about Senator Barack Obama, specifically warn[ed] recipients to 'stay alert' about his candidacy, and stat[ed] that it has information recipients should consider in their 'choice.'" The opinion appears to indicate that the source of the content is at least a consideration in the analysis, highlighting that the "e-mail was not created by a federal employee. Rather, a federal employee received it and then forwarded it to others without adding any content." However, this notation has been considered irrelevant if the employee sends the email while on duty or in a federal workplace. While employees are permitted to receive partisan political emails to any account as well as forward an email from a government account to their own personal account, certain email activities are barred under Hatch Act restrictions. These include sending or forwarding a partisan political email while on duty or in a federal workplace. The prohibition applies to any account, meaning that employees are not only barred from sending such emails from their government accounts, but also prohibited from using personal accounts while at work, even if using their personal phone or tablet. Additionally, employees cannot send or forward such emails to subordinates, nor can they use email to send invitations to political fundraising events. The increased use of mobile communications has expanded the opportunity not only for employees to call or email while in a work environment, but also for use of other applications that may be used to engage in political activity, particularly various outlets of social media. In both their personal and professional capacities, the federal workforce also relies more heavily on the use of social media now than ever. Accordingly, application of the Hatch Act to these methods of communication has been of particular interest. Under OSC guidance, employees may engage in political activity on social media, with some restrictions. All employees are barred from doing so while on duty or in the federal workplace, from using their official titles, or from recommending or soliciting campaign contributions. Further restricted employees also must refrain from posting or linking to campaign or other partisan material, sharing Facebook pages of campaigns or other partisan groups, or retweeting posts from such entities' Twitter accounts. Specific rules apply with regard to social media contacts between supervisors and subordinates, which permit statements directly generally from a supervisor's account, but prohibit statements directed at subordinates in particular. Furthermore, OSC has identified some limitations on the biographical content of users' accounts, such as use of official title, photographs indicating political preferences, and profile information. OSC has announced a number of disciplinary measures related to these new platforms of activity after investigations into some federal employees' activities revealed violations of applicable prohibitions on political activities. In one case, OSC "intended to pursue prosecution" of an employee who used Twitter to advocate for a candidate and to solicit contributions. The employee had issued over 30 tweets but resigned before the prosecution moved forward. In another case, an employee at the Federal Election Commission (FEC) resigned after evidence showed that the employee had issued "dozens of partisan political tweets" and participated in an "internet broadcast via webcam from an FEC facility, criticizing the Republican Party and then-Presidential candidate Mitt Romney." OSC barred the employee from employment in the executive branch for two years in that case. In both of these examples, specific details of the settlements reached were not released. For instance, it is not clear whether the employees used a personal Twitter account or an official account to engage in the restricted activities. Congress has enacted statutory requirements that direct federal agencies to adopt telework policies, and in the most recent report to Congress, the U.S. Office of Personnel Management (OPM) indicated that federal telework programs have expanded accordingly, both in eligibility and participation of employees. Telework has raised several questions with regard to the applicability of the Hatch Act. In congressional testimony, OSC explained that a significant number of employees work from home while using government-issued equipment. Thus, application of Hatch Act restrictions to teleworking employees could be analyzed under several possible frameworks: (1) determination of whether the employee is on duty; (2) clarification of whether the telework location is a federal workplace; and (3) potential expansion of the prohibition on the use of government vehicles to include other government equipment (e.g., laptops, smartphones). Current law does not identify which of these frameworks may be most appropriate, but OSC guidance indicates that "[f]ederal employees are considered 'on duty' during telecommuting hours." OSC has previously recommended that Congress consider clarifying these definitions as a matter of legislative authority rather than relying on the administrative regulations and interpretation. It suggested that "extending the definition of the federal workplace to an employee's home would be inappropriate," and noted the statute's silence with regard to government resources other than vehicles. Accordingly, it suggested that "[a]gencies should be encouraged to develop clear computer-usage and government equipment policies" including the use of official email addresses. However, the issue was not included in the most recent amendments to the Hatch Act. The Office of Special Counsel has provided guidance, including examples, to illustrate what types of activities are permitted and prohibited for less restricted and further restricted employees. Less Restricted Employees Permissible Political Activities May be candidates for public office in nonpartisan elections. May register and vote as they choose. May assist in voter registration drives. May contribute money to political campaigns, political parties, or partisan political groups. May attend political fundraising functions. May attend and be active at political rallies and meetings. May join and be an active member of political clubs or parties. May hold office in political clubs or parties. May sign and circulate nominating petitions. May campaign for or against referendum questions, constitutional amendments, or municipal ordinances. May campaign for or against candidates in partisan elections. May make campaign speeches for candidates in partisan elections. May distribute campaign literature in partisan elections. May volunteer to work on a partisan political campaign. May express opinions about candidates and issues. If the expression is political activity, however--that is, activity directed at the success or failure of a political party, candidate for partisan political office, or partisan political group--then the expression is not permitted while the employee is on duty, in any federal room or building, while wearing a uniform or official insignia, or using any federally owned or leased vehicle. Prohibited Political Activities May not use their official authority or influence to interfere with or affect the result of an election. For example: May not use their official titles or positions while engaged in political activity. May not invite subordinate employees to political events or otherwise suggest to subordinates that they attend political events or undertake any partisan political activity. May not solicit, accept, or receive a donation or contribution for a partisan political party, candidate for partisan political office, or partisan political group. For example: May not host a political fundraiser. May not collect contributions or sell tickets to political fundraising functions. May not be candidates for public office in partisan political elections. May not knowingly solicit or discourage the participation in any political activity of anyone who has business pending before their employing office. May not engage in political activity--that is, activity directed at the success or failure of a political party, candidate for partisan political office, or partisan political group--while the employee is on duty, in any federal room or building, while wearing a uniform or official insignia, or using any federally owned or leased vehicle. For example: May not distribute campaign materials or items. May not display campaign materials or items. May not perform campaign related chores. May not wear or display partisan political buttons, T-shirts, signs, or other items. May not make political contributions to a partisan political party, candidate for partisan political office, or partisan political group. May not post a comment to a blog or a social media site that advocates for or against a partisan political party, candidate for partisan political office, or partisan political group. May not use any e-mail account or social media to distribute, send, or forward content that advocates for or against a partisan political party, candidate for partisan political office, or partisan political group. Further Restricted Employees Permissible Political Activities May register and vote as they choose. May assist in nonpartisan voter registration drives. May participate in campaigns where none of the candidates represent a political party. May contribute money to political campaigns, political parties, or partisan political groups. May attend political fundraising functions. May attend political rallies and meetings. May join political clubs or parties. May sign nominating petitions. May campaign for or against referendum questions, constitutional amendments, or municipal ordinances. May be a candidate for public office in a nonpartisan election. May express opinions about candidates and issues. If the expression is political activity, however--that is, activity directed at the success or failure of a political party, candidate for partisan political office, or partisan political group--then the expression is not permitted while the employee is on duty, in any federal room or building, while wearing a uniform or official insignia, or using any federally owned or leased vehicle. Prohibited Political Activities May not be a candidate for nomination or election to public office in a partisan election. May not take an active part in partisan political campaigns. For example: May not campaign for or against a candidate or slate of candidates. May not make campaign speeches or engage in other campaign activities to elect partisan candidates. May not distribute campaign material in partisan elections. May not circulate nominating petitions. May not take an active part in partisan political management. For example: May not hold office in political clubs or parties. May not organize or manage political rallies or meetings. May not assist in partisan voter registration drives. May not use their official authority or influence to interfere with or affect the result of an election. For example: May not use their official titles or positions while engaged in political activity. May not invite subordinate employees to political events or otherwise suggest to subordinates that they attend political events or undertake any partisan political activity. May not solicit, accept, or receive a donation or contribution for a partisan political party, candidate for partisan political office, or partisan political group. For example: May not host a political fundraiser. May not invite others to a political fundraiser. May not collect contributions or sell tickets to political fundraising functions. May not engage in political activity--that is, activity directed at the success or failure of a political party, candidate for partisan political office, or partisan political group--while the employee is on duty, in any federal room or building, while wearing a uniform or official insignia, or using any federally owned or leased vehicle. For example: May not wear or display partisan political buttons, T-shirts, signs, or other items. May not make political contributions to a partisan political party, candidate for partisan political office, or partisan political group. May not post a comment to a blog or a social media site that advocates for or against a partisan political party, candidate for partisan political office, or partisan political group. May not use any e-mail account or social media to distribute, send, or forward content that advocates for or against a partisan political party, candidate for partisan political office, or partisan political group. | Federal officers and employees historically have been subject to certain limitations when engaging in partisan political activities. Although they have always retained their right to vote and privately express political opinions, for most of the last century, they were prohibited from being actively involved in political management or political campaigns. At the beginning of the 20th century, civil service rules imposed a general ban on voluntary, off-duty participation in partisan politics by merit system employees. The ban prohibited employees from using their "official authority or influence for the purpose of interfering with an election or affecting the result thereof." These rules were eventually codified in 1939 and are commonly known as the Hatch Act. By the late 20th century, such broad restrictions were seen as unnecessary due to other changes in the nature of the federal workforce, including the advent of a more independent and merit-based civil service and adoption of increased protections for employees against coercion and retaliation. Accordingly, the Hatch Act was significantly amended in 1993 to relax the broad ban on political activities, and now allows most employees to engage in a wide range of voluntary, partisan political activities in their free time, while away from the federal workplace. Some employees may be subject to additional restrictions depending on the employing agency or an employee's specific position. The nature of the federal workforce and work environment has continued to evolve since these amendments, and new issues have arisen for congressional consideration in recent years. In particular, the increased use of technology has raised questions about how email and mobile communications may be regulated under the Hatch Act. The increased availability and use of smartphones may be seen as blurring an employee's time, either by using a personal device while working or using a government device while off-duty. Additionally, alternative work arrangements, for example, telework, have presented similar dilemmas in understanding how Hatch Act restrictions might be applied in the modern workplace. This report examines the history of regulation of federal employees' partisan political activity under the Hatch Act and related federal regulations. It discusses the scope of the application of these restrictions to different categories of employees and provides a background analysis of the general restrictions currently in place. Finally, it analyzes potential issues that have arisen and interpretations that have been offered related to the application of these restrictions to new platforms of activity, for example, email, social media, and telework. | 5,564 | 501 |
Encryption and other technologies can foster increased privacy and heightened security. Simultaneously they have been cited as presenting hurdles for law enforcement and intelligence officials. On the one hand, some contend that technological developments have resulted in a " golden age of surveillance " for law enforcement; the large amount of information that investigators have at their fingertips--access to location data, information about individuals' contacts, and a range of websites--collectively form " digital dossiers " on individuals. On the other hand, some argue that law enforcement is " going dark " as their capabilities are outpaced by the speed of technological change, and thus they cannot access certain information they are otherwise legally authorized to obtain. The tension between the benefits and challenges of encryption is not new. It started in the 1990s and was reinvigorated in 2014 when companies like Apple and Google implemented automatic full-device encryption for mobile devices and automatic encryption for certain communications systems. Companies using such strong encryption assert they do not maintain encryption keys and therefore cannot unlock, or decrypt, the devices or communications--not even when presented with a court authorized wiretap order. Law enforcement concerns about the lack of encryption keys were highlighted by the November and December 2015 terrorist attacks in Paris, France , and San Bernardino, CA . Questions arose as to whether the attackers used strong encryption and, more importantly, if they did, whether and how this might have hindered investigations. These questions have reopened larger discussions on how encryption and quickly advancing technologies could impact law enforcement operations. This report specifically examines certain encryption issues that have been raised in the investigation of the December 2, 2015, terrorist attack in San Bernardino, CA. Following the attack, U.S. investigators recovered a cell phone reportedly used by one of the shooters. Federal Bureau of Investigation (FBI; Bureau) Director James B. Comey testified before Congress two months later, indicating that the Bureau was still unable to access the information on the device. This report highlights certain issues that policymakers may examine as they follow the ongoing dispute between law enforcement and technology companies. While this is a fast-moving issue with many components, this report focuses on questions related to the government's request. The topics discussed are based on developments in the case as of the date of this report. On February 16, 2016, the U.S. District Court for the Central District of California ordered Apple, Inc. under the All Writs Act to provide "reasonable technical assistance to assist law enforcement agents in obtaining access to the data" on the cell phone for which the government had already obtained a probable cause warrant. The order directs Apple's assistance to feature three components: bypass or disable the iPhone's auto-erase after 10 incorrect passcode attempts function (even if the function has not been enabled); enable the FBI to electronically input passcodes for testing; and ensure there is no added delay between passcode attempts. In other words, it essentially asks Apple to create an operating system update that will allow the FBI to (1) enter more than 10 passcodes without the risk of the data being wiped after the tenth incorrect try; (2) automate the entry of those passcode combinations rather than entering them manually; and (3) try back-to-back passcode attempts without the gradually increasing delays between attempts that is currently programmed into the system. This would allow the FBI to try and "brute force" open the iPhone by continuously entering passcode attempts until the correct one is identified. Notably, the order is not asking Apple to provide an encryption key or to break the encryption on the device. The company sees this as "an overreach by the U.S. government" and is opposing the order. An operating system allowing law enforcement to use brute force to open the phone in this case could potentially be replicated and used to open other phones in cases where law enforcement demonstrates lawful need. If the technology then falls into the wrong hands, it could potentially be exploited by criminals and other malicious actors. There is much debate over whether the government's request in the San Bernardino case would constitute the creation of a so-called "back door" or "master key" to the iPhone's encryption. Apple views the government's order as directing a back door be built into its product. It sees the access of any entity, including a government agency, to encrypted user data without the user's explicit authorization, as a back door. In Apple's view, the government is a third party, and only those who are authorized by either the owner/sender of the information (first party) or the recipient of the information (second party) have a right to that information. Apple's view is shared by other technology companies. The government, however, does not consider its request to enable a back door. The order does not request that Apple create a master key, or create a new decryption key in the software that can be used against any iPhone. It narrowly limits the request to Apple's assistance to the specific phone, with the updated operating system only being applicable to the iPhone with the serial number and other unique identifiers in this case. Since 2014, Apple has enabled full disk encryption on iPhones. This ensures the data on a given phone are safe from unauthorized disclosure while at rest . This is different from the encryption of iMessage communications, which ensures the data in transit are safe from authorized disclosure. Examples of information protected on the iPhone with full-disk encryption include geographic location data (where the phone has been) as well as contacts and pictures that were not backed up to an online service. Longer passwords offer more potential combinations, and thus it can be potentially more time-consuming to identify the correct password. Using an automated password guesser, and given the hardware limits of the iPhone 5c, if the phone has a four-digit passcode, it would take about 13 minutes to guess every possibility (10,000 passcode combinations). If that passcode is six-digits, it would take roughly 22 hours to guess all of the one million combinations. If the phone is secured with an eight-character password (letters and numbers, upper and lower case), it would take over 500,000 years to guess every combination. To accomplish what is requested in the court order, the FBI needs Apple, rather than a different entity, to develop this software update. This is because of the method Apple uses to ensure the integrity of all the software that runs when an iPhone is turned on. iPhones look for an Apple certificate which is cryptographically signed before it will boot into the operating system. Without that certificate of assurance, the data would remain encrypted on the device and inaccessible. While it is possible to reverse engineer a software update to the operating system in order to enable unlimited passcode attempts, it is computationally expensive (i.e., time and energy) to recreate that cryptographically signed certificate. Some have suggested that if Apple chooses not to comply, the FBI could likely employ hackers to develop a system. Of note, the court order does not request or compel Apple to compromise implementation of encryption on all iPhones. The order directs Apple to insert a weakness into the implementation--unlimited passcode attempts and no danger of the phone being wiped because of incorrect guesses--only for the iPhone in question. The legal question in the San Bernardino case turns primarily on whether the All Writs Act can be interpreted broadly enough to require Apple to help the government in accessing the data on the device against its wishes. The All Writs Act, enacted as part of the Judiciary Act of 1789, provides that federal courts "may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." The Supreme Court has observed that "[t]he All Writs Act is a residual source of legal authority to issue writs that are not otherwise covered by statute." A writ is a court order to do or not do something. Although the All Writs Act was penned 226 years ago, the debate in the San Bernardino case, and similar past litigation, has centered on a much more recent, although pre-digital 1977 case, United States v. New York Tel. Co . Relying on the All Writs Act, the Court in New York Tel. Co . upheld an order directing the New York Telephone Company to assist the government in installing a pen register--a device for recording the outgoing numbers dialed on a telephone--for which it already obtained a probable cause warrant to do so. The Court observed that the act extends "to persons who, though not parties to the original action or engaged in any wrongdoing, are in a position to frustrate the implementation of the order or the proper administration of justice." While the Court accepted that the All Writs Act can apply to third parties, it observed that "unreasonable burdens may not be imposed." To determine the reasonableness of the order in that case, the Court assessed a seemingly non -exhaustive list of factors, including (1) the company was not "so far removed from the underlying controversy" to avoid compliance; (2) the order required only "meager assistance" from the company; (3) the telephone company was a "highly regulated public utility with a duty to serve the public"; (4) the company had not proffered a "substantial interest in not providing assistance"; the use of the pen register was not "offensive" to the company; (5) the company regularly employed such devices for billing purposes: (6) the company had previously promised to provide the FBI instructions on how to install its own pen register; (7) the order was in no way "burdensome"; (8) the order provided the company be fully reimbursed for its efforts; (9) compliance with the order required "minimal effort" by the company; and (10) there were "no disruptions to its operations." Additionally, the Court observed that the order was "consistent with the intent of Congress." As noted by one commentator, although the Court established a list of factors to consider, it is not clear, among other things, how much weight should be given to each factor, or how these factors might apply to future cases, like the request before the Central District of California. In recent years, courts have been required to apply the All Writs Act and the N ew York Tel. Co. factors to requests by the government to access data stored on various locked electronic devices. For instance, in an unreported 2014 ruling, the Southern District of New York (S.D.N.Y.) read New York Tel. Co. and subsequent lower court case law to require an unnamed company to unlock a smart phone. However, in a pending case in the Eastern District of New York, a magistrate judge issued a preliminary ruling in October 2015 rejecting the government's request to unlock an iPhone 5c running an earlier version of iOS. In the latter case, the magistrate judge was largely persuaded by the fact that "Congress has done nothing that would remotely suggest an intent to force Apple, in the circumstances of this case, to provide the assistance the government now requests." While the San Bernardino case is not the first in which Apple has been ordered to assist the government in unlocking an iPhone, it appears to be the first time Apple has been asked to write and install unique software on a specific device. Without congressional action, the Central District of California and future courts must apply the New York Tel. Co. factors, with minimal guidance provided by lower court case law. Of the New York Tel. Co. factors, two appear especially relevant to the San Bernardino case. First, is whether a reviewing court would view the "unreasonable burden" test as including an assessment of not only the burden on Apple in creating and installing new software on this particular phone, but also the burden on Apple's business as a whole. While one factor from New York Tel. Co is the extent to which the legal order would "disrupt[] ... the operations" of the business in question, it is not certain whether the focus should be on the disruption posed by the immediate need to unlock the phone, or the potentially larger disruption to Apple's financial bottom line. Apple has acknowledged that it has the technical capacity to unlock the device, but asserts that the desire to protect the privacy and security of its customers is sufficient to warrant its opposition to the court's order. Second, is how much weight, if any, a reviewing court should place on the fact that Congress has debated, but not enacted, a law mandating forced decryption on U.S technology companies. The Supreme Court has noted that "where a statute specifically addresses the particular issue at hand , it is that authority, and not the All Writs Act, that is controlling." The question here is whether the Communications Assistance for Law Enforcement Act (CALEA) can be read as "specifically address[ing]" the relief the government seeks. Although Congress failed to include companies like Apple in CALEA's mandate that a "telecommunications carrier" must assist the government in "intercept[ing]" communications carried by the provider, this issue was on Congress's radar in 1994 during passage of CALEA. Congress explicitly excluded "information services" from CALEA's scope. The government takes the position, however, that unless and until Congress actually enacts legislation on this issue, congressional silence does not suffice to limit the authority of the federal courts to require Apple to help the government access potentially vital information on this and other devices. Apple has informed the court that it will contest the February 16 order. Its motion and opposition to the government's brief are due by February 26, 2016, and a court hearing with both parties is to be held on March 22, 2016. In response to this legal debate, policymakers may ask a number of questions with respect to the order from the Central District of California and the larger ongoing encryption debate. Apple has indicated that it is possible to develop an alternate operating system for the iPhone in question that would accomplish the items in the court order. As such, the focus now has been on whether it should be done. Will doing so effectively create a "back door" to the encryption? Creating a one-time software update is not without risks. Apple employees and others who have access to the software used to reduce the security of the iPhone may use that knowledge for malicious purposes later. The insider threat has long been considered the greatest threat to cybersecurity--an authorized employee who has access and knowledge of the company has the ability to do far greater harm than someone from the outside. Once Apple creates such a software update to inhibit its encryption implementation, it exists in the world and there is no guarantee that a disgruntled employee or one who is bought would not leak the code to an adversary who may use it against the U.S. or its interests in the future. And even though this particular case is for the iPhone (limited by its unique identifiers), it is conceivable that those identifiers can be swapped with other identifiers in the future to make the compromised operating system more widely applicable to the universe of iPhones in the world. If Apple develops an operating system update to comply with the court order, what precedent does this set for Apple and other companies' compliance with future law enforcement investigations? The FBI has indicated that encryption is not only an issue in terrorism investigations, but in cases against kidnappers, murderers, drug traffickers, and others. Would Apple, Google, and others need to help the FBI develop operating systems to circumvent security features in every case where the FBI requests assistance? If Apple complies with the U.S. court order to help the FBI, would this set a precedent for Apple to help law enforcement in other countries? Apple is a multi-national corporation that manufactures phones sold around the world. Would Apple now need to help international law enforcement entities with similar requests? What burden might this place on Apple and other companies going forward? | The tension between the benefits and challenges of encryption has been an issue for law enforcement and policymakers since the 1990s, and was reinvigorated in 2014 when companies like Apple and Google implemented automatic enhanced encryption on mobile devices and certain communications systems. Companies using such strong encryption do not maintain "back door" keys and, therefore, now cannot easily unlock, or decrypt, the devices--not even when presented with a valid legal order. Law enforcement concerns about the lack of back door keys were highlighted by the November and December 2015 terrorist attacks in Paris, France, and San Bernardino, CA. Questions arose as to whether the attackers used strong encryption and, more importantly, if they did, whether and how this might have hindered investigations. Following the December 2, 2015, terrorist attack in San Bernardino, CA,, U.S. investigators recovered a cell phone reportedly used by one of the shooters. Federal Bureau of Investigation (FBI) Director James B. Comey testified before Congress two months later, indicating that the Bureau was still unable to access the information on that device. On February 16, 2016, the U.S. District Court for the Central District of California ordered Apple to provide "reasonable technical assistance to assist law enforcement agents in obtaining access to the data" on the cell phone. The order directs Apple's assistance to feature three components: bypass or disable the iPhone's auto-erase after 10 incorrect passcode attempts function (even if the function has not been enabled); enable the FBI to electronically input passcodes for testing; and ensure there is no added delay between passcode attempts. The order is not for Apple to decrypt the device itself, something which Apple has publicly stated it cannot do. Instead, this order would enable the FBI to automate the attempts of every possible passcode for the device until the right combination of characters is hit upon by pushing a software update to the iPhone in question's operating system. Apple is contesting the order, which will require the magistrate judge, and perhaps the district and appeals courts, to assess whether the All Writs Act (28 U.S.C. SS1651) can be interpreted broadly to grant the relief the government seeks. The All Writs Act, enacted as part of the first Judiciary Act of 1789, provides a residual source of legal authority to federal judges to enforce the orders of their courts. Whether the All Writs Act can be read to include such an order will largely depend on two inquiries: first, whether a reviewing court would view the FBI's request as an "unreasonable burden" on Apple under the 1977 Supreme Court case United States v. New York Tel. Co.; and, second, whether such a command is consistent with the intent of Congress. This is a fact-intensive inquiry, the contours of which are uncertain. Policymakers may ask a number of questions with respect to the order from the Central District of California and the larger ongoing encryption debate. Apple has indicated that it is possible to develop an alternate operating system for the iPhone in question that would accomplish the items in the court order. As such, a main question now is whether it should be done. Will doing so effectively create a "back door" to the encryption? What precedent might be set by Apple providing the court-ordered assistance? If Apple develops an alternate operating system to comply with this order, would Apple and other companies have to comply with similar requests in other law enforcement investigations? In addition, as a multinational corporation, would Apple need to comply with requests from other national governments? | 3,508 | 772 |
The Judgment Fund (or Fund) is a permanent appropriation enacted by Congress in 1956. The Fund is an unlimited amount of money set aside to pay judgments against the United States. It is only accessible when the United States has waived its sovereign immunity and certain statutory conditions are met. The Fund has evolved in administration and function over the last half century and has been subject to limiting principles. Most importantly, the Judgment Fund cannot be used in place of a specific appropriation. The Fund remains a source of continued controversy and discussion, especially in the current fiscal environment. During the budget uncertainties in the 1990s, federal agencies became increasingly concerned about the Judgment Fund's solvency, as statutory and constitutional constraints precluded the agencies from obligating funds where appropriated money is not available. This report reviews the history of the Judgment Fund, which has been administered through different agencies and with variable levels of congressional oversight since its inception. This report also outlines specific instances in which the Fund may be accessed, and when costs other than the principal award may be paid. Finally, this report provides examples of how and when the Judgment Fund may be accessed, as well as instances of when tribal judgment funds are implicated. The U.S. government has sovereign immunity, meaning it cannot be sued unless it has waived immunity or consented to suit. Article III, Section 2 of the U.S. Constitution immunizes federal officials from lawsuit, disallows suits against the federal government by the states, and has been interpreted to prohibit suits against the federal government generally. Under limited circumstances, the United States has waived sovereign immunity; it has done so in a constitutional provision, by express statutory authority, or through a contract. Therefore, the United States can be sued pursuant to certain statutes, most commonly the Federal Tort Claims Act. The Tucker Act, the Military Personnel and Civilian Employees Claims Act, and the Federal Employees Compensation Act are other examples of sovereign immunity waivers passed in the last century. These statutes often contain substantial limiting principles and have been narrowly construed by courts. Congress must make provisions to pay judgments when suits against the United States are successful. Appropriated funds may not be used to satisfy claims unless there is specific statutory authority that allows the claim to go forward and provides a source of funds to pay any award. In the wake of several legislative enactments waiving the United States' sovereign immunity, Congress enacted the Judgment Fund in an effort to reduce the need to allocate specific appropriations for payment of claims. While waiver of sovereign immunity was less common in the early Republic than it is today, determining and settling claims against the United States occupied a substantial amount of Congress's time since its first session. As early as the Continental Congress, the legislature established committees to audit and settle claims against the United States. The structure and staffing of these committees left most of them with an overwhelming workload, as claims from the War for Independence multiplied and dragged on. Therefore, one of Congress's first priorities after the ratification of the Constitution was establishing an executive branch agency that could manage payments of claims against the United States. In its first session, Congress established the Treasury Department in the Treasury Bill of 1789, with an extremely detailed enabling statute that left Congress with substantial control over monetary policy but little ministerial responsibility. Among other things, the act authorized the Treasury Department to settle all claims and accounts, delegating to the Auditor the duty to examine claims and to the Comptroller the duty to approve or disapprove of the Auditor's finding. In the event a claim was disputed by the government, the Treasury Department disallowed the claim and accepted the government's facts. If the claim was denied by the Treasury Department, the claimant could petition Congress directly. Congress, in turn, made specific appropriations for each claim validated by the department or through the petition process. This resulted in many claims waiting in limbo, where the Auditor and Comptroller had agreed to pay the claim, but where Congress had yet to make an appropriation to satisfy the judgment. By 1855, Congress was still dedicating a large portion of its resources to passing appropriations to satisfy claims against the United States, and hearing petitions from claims that were denied by the Treasury Department. In order to reduce its workload, Congress established the Court of Claims, which served in an advisory capacity. Rather than issuing binding decisions, the court simply considered the merits of claims filed against the United States, and recommended appropriations to Congress. At President Lincoln's urging, Congress subsequently empowered the Court of Claims to issue binding decisions, though the Supreme Court found that the Treasury Department could decline enforcement of the decisions. Once Congress repealed this authority, the Supreme Court could hear appeals from the Court of Claims, and the Court of Claims' decisions carried finality and enforcement on par with other Article III courts. Congress also clarified that certifications from the Treasury Department were final and conclusive. However, in 1921, desiring a tighter hold on the payment of claims, Congress again changed the administration of the settlement process. In the Budget Accounting Act of 1921, Congress transferred authority to the General Accounting Office (GAO) for all claims settlement duties previously held by the Treasury Department. GAO, in turn, sought appropriations from Congress, so that Congress could strengthen controls over expenditures. This allowed Congress to regain structural control over the payments process. However, Congress was left with considerable involvement in appropriating funds for each claim, which encumbered committees and ultimately proved untenable. In 1956, Congress passed the Judgment Fund enabling statute, a permanent and indefinite appropriation available to pay all judgments against the United States not covered by a specific appropriation. Congress aimed to reduce the time lapse between judgments entered against the United States and actual payment, so that agencies would pay less post-judgment interest on awards. Originally, the Fund was available only for judgments for claims of less than $100,000 entered in the Court of Federal Claims or a U.S. district court. Congress anticipated that the Fund would cover over 98% of all claims, thereby drastically reducing the need for individual appropriations and also streamlining the payment process. The House report accompanying the bill indicates that a permanent appropriation "will permit a simplification of the payment procedure, will provide uniformity in interest computation, and will serve to reduce the total amount of interest paid by the government." The Senate report underscored the limitations in the bill on what payments could be made from the Judgment Fund, emphasizing the audit, review, and finality requirements. Administration of payments from the Fund changed significantly in the latter 20 th century. In 1961, Congress authorized payment from the Judgment Fund for settlements negotiated by the Department of Justice on behalf of the United States, where litigation could have resulted in a monetary judgment. In addition, the Judgment Fund could also pay for judgments against the United States from state and foreign tribunals subject to certification by the Attorney General. By the mid-1970s, the Fund's $100,000 payment ceiling proved too low to cover many settlements and judgments, and Congress raised the allowable damages to avoid making specific appropriations for larger awards. In 1996, Congress transferred certification of payment from the Judgment Fund from GAO to the Financial Management Service in the Department of the Treasury. GAO retained administrative settlement authority for settlement of non-litigative claims. In recent years, Congress has taken an interest in the amount of money that has been spent from the Judgment Fund. Generally, these bills deal with transparency and improved agency accountability, including the Judgment Fund Transparency Act and proposed amendments to the No FEAR Act. In 2011, the Financial Management Service, the bureau in charge of administering the Fund, published a 2011 fiscal report, which included information about payments made from the Judgment Fund. The Judgment Fund is a permanent, indefinite appropriation. By definition, it requires no further congressional action and does not expire at the close of any fiscal year. The appropriation makes an unlimited amount of funds available for payment of certain judgments against the United States. Awards are only paid out of the Judgment Fund when payment is not otherwise provided for in a specific appropriation. All judgments must be final, meaning the award will not be overturned on appeal. In addition, all settlements paid out of the Judgment Fund must represent the final and comprehensive award for the actual or threatened litigation, negotiated and agreed to by the Department of Justice. Finally, the Judgment Fund may be used to pay certain costs to the prevailing party in litigation, as enumerated in 28 U.S.C. SS1920. These costs typically include court fees and compensation for court-appointed experts. The Judgment Fund statute sets out four requirements for accessing the Fund. First, the Fund may only be used to pay judgments or settlements involving money judgments. For example, if a court ordered an agency to hire a consultant to implement fair employment practices, the Judgment Fund could not be used to pay costs and fees associated with fulfilling this requirement. The judgment must also be final, so that payments are not made from the Fund when there is a chance the award could be changed or overturned. This has been interpreted to mean that the judgment must come out of action by the court of last resort or that the parties have declined to seek further review. Most often, the time for appeal simply expires before payment from the Judgment Fund. However, the statute exempts payment for an "irreducible minimum amount," meaning an amount that has been assessed as final. For example, in Trout v. Garrett , the D.C. Circuit Court of Appeals found that payment from the Judgment Fund was proper for interim attorneys' fees in a Title VII employment discrimination action against the government. The court found that the Judgment Fund statute was intended to serve as a mechanism for payment rather than to interfere with the ordinary course of litigation. The Judgment Fund may not be used for payments if the award is otherwise provided for, by appropriation or statute. For example, courts have held that annual appropriations to the Land and Water Conservation Fund must be used where there is a land condemnation judgment against the U.S. Park Service. Courts look for an appropriation that has programmatic specificity, regardless of the agency's use of the funds. The actual funding level is irrelevant; so long as the appropriation exists, it precludes payment from the Judgment Fund. For example, if an agency had already spent an appropriated sum on other litigation or expended the money elsewhere, the Judgment Fund still could not be used. Under these circumstances, the agency would have to seek an additional appropriation from Congress. Lastly, the Judgment Fund is limited to litigative awards, meaning awards that were or could have been made in a court. Litigative awards are distinguished from administrative awards because the latter are provided for by statute and are paid from the agency's appropriation. These include EEOC claims, awards under the Military Claims Act, and Merit Systems Protection Board matters. The primary exception to this rule is claims under the Federal Tort Claims Act that are over $2,500, which Congress exempted in the statute. Permissible awards include the principal amount, some attorneys' fees, allowable costs, and interest as stated in the judgment or settlement. For settlement awards to be considered litigative, the settlement must be negotiated by the Department of Justice (or any person authorized by the Attorney General) and based on a claim that could have resulted in a monetary judgment in court. There are nearly 100 statutes that impact payment from the Judgment Fund, 17 of which specifically dictate denial of payment from the Fund. For example, administrative awards less than $2,500 arising under the Federal Tort Claims Act may not be paid from the Judgment Fund. When there is a specific appropriation, the Judgment Fund may not be used. The most common example of an award against the United States to which the Judgment Fund is inapplicable is tax judgments. Congress makes special, term-limited appropriations to pay tax refunds and judgments, and therefore, they may not be paid out of the Judgment Fund. Neither judgments against the Postal Service, nor those against government corporations, such as the P ension Benefit Guaranty Corporation, are payable from the Judgment Fund. This is in part because government corporations segregate their revenues from the general fund and operate largely without appropriated funds. Therefore, the rationale for using the Judgment Fund, which was intended to reduce the need for Congress to make appropriations, would be inapplicable. In addition, the Judgment Fund may not be used for land condemnation judgments or certain court-awarded contempt citation awards. Since 1996 , the Judgment Fund has been administered by the Financial Management Service (FMS) in the Treasury Department. Once a party has received a final court judgment or negotiated settlement, FMS requires the responsible agency to submit a request for certification of payment from the Fund. FMS considers the proposed payment in light of the aforementioned rules, d etermining whether payment out of the Fu nd is proper or whether it is an obligation chargeable to agency funds. In this respect, FMS is the primary enforcer for the limits on the Judgment Fund 's use. FMS also determines whether the judgment is final, and calculates interest subject to the above limitations. If the payee is indebted to the United States, FMS may offset that amount before payment. Generally, unless the claim arises under the Contract Disputes Act (CDA) or the No FEAR Act, the agency does not reimburse the Judgment Fund; therefore, payment ends the process. The certification and payment is pr imarily a ministerial function. A t no point in the process does FMS consider the nature or merit of the underlying action except to the extent necessary to determine the propriety of payment from the Fund . FMS makes a payment directly to the plaintiff, without an intermediary. This substantially ends the agency's involvement. However, if FMS does not render payment to the correct party, this does not discharge the United States' obligation. In the event FMS refuses to make payment, the submitting agency is notified , and it may alter and resubmit claims as appropriate. Most commonly, rejections result from errors in the submission forms, absence of underlying documents , or other technical issues. A claim is only denied if, during administration, FMS determines that payment from the Judgment Fund is not proper. Claims are most commonly denied because payment has been provided for by a specific appropriation or the award is less than the legal thresholds for statutes such as the Military Justice Act. Federal courts have some discretion when deciding at the end of litigation whether to charge the losing party with costs for the prevailing party . However, the categories of costs that may be awarded are strictly circumscribed and the subject of considerable debate . Under 28 U.S.C. SS 1920, the clerk of the court may award costs for court fees, transcripts, fees related to witnesses, materials for presentation in the case, compensation for court-appointed experts , and docket fees. To obtain costs for suc h items in payment fro m the Judgment Fund, the submitting agency must include a bi ll of costs or the c ourt's order awarding costs with the request for payment. Courts have limited payment to the enumerated items in SS1920 and the specific exemptions in applicable statutory authority when awarding costs. Payments of interest and attorneys' fees have caused considerable debate with respect to this issue. As a preliminary matter, the U.S. legal system does not generally allow recovery of attorneys' fees by the prevailing party. Termed the "American Rule," this approach distinguishes the U.S. system, making each party responsible for payment of their own legal fees, regardless of the result, unless specifically authorized by statute or contract. In most legal systems around the world, the losing party pays the prevailing party's legal fees as part of the damages award. The American Rule applies with two major common law exceptions and numerous statutory provisions exempting certain classes of cases. The common benefit rule allows federal courts to award attorneys' fees when a party prevails in a suit at his own expense that benefits a large class of other persons. This shifts the cost of attorneys' fees to those who benefit from the suit, not the opposing party. This allows for so-called private attorneys general to effectuate policy in litigation, benefitting a large class of people, with the added incentive that attorneys' fees will be paid if they prevail. The bad faith exception allows a federal court to award counsel fees to a successful party when his opponent acted vexatious or for oppressive reasons, making the award of fees punitive. This requires proof of malice and a showing that the claim had virtually no chance of success. Specific statutory exemptions, called fee-shifting provisions, make the federal government responsible for attorneys' fees in a wide variety of suits. Statutes that allow for award of attorneys' fees often do so with an eye towards equalizing two unevenly matched parties, and often apply to environmental and consumer protection litigation. This has the effect of implementing public policy through private litigation. In some instances, statutes specifically limit the awards of attorneys' fees. For example, the Federal Tort Claims Act allows for attorneys' fees up to 20% for administrative settlements and up to 25% for judicial awards . The Freedom of Information Act statute limits attorneys ' fees to actual litigation (as opposed to administrative remedies). When attorneys ' fees are statutorily authorized, payment may generally be authorized from the Judgment Fund , unless otherwise provided by law. The parties may not alter the source of payment by stipulation or other agreements in the settlement. Payment from the Judgment Fund includes principal awards and, in limited cases, post-judgment interest. However, payment of interest must be considered in light of special considerations for awards entered against the United States. In Library of Congress v. Shaw , the Supreme Court held that interest cannot be recovered in a suit against the government unless Congress has expressly waived sovereign immunity for an award, and has specifically contemplated an award of interest on damages. Prejudgment interest is considered in the calculation of damages, and is not awarded separately. Historically, courts have treated post-judgment interest as a separate element of damages unrelated to the substantive claim, and therefore awarded only upon agreement of the parties. Because the United States is immune from suit absent its consent, this rule especially applies in awards against the government. With respect to the Judgment Fund, payment of interest is authorized in certain instances. If a district court award is awaiting appeal by the government, the Judgment Fund statute authorizes payment of interest if the plaintiff sends a trial transcript to the Treasury Department and payment is limited to the period from the date Treasury receives the transcript until judgment is mandated or affirmed. In Library of Congress v. Shaw , the Court also identified two widely recognized exceptions to the no-interest rule, which are not drawn from specific statutes but have been found to be a constitutional waiver of sovereign immunity. The Fifth Amendment provides that private property shall not be taken for public use without "just compensation." Courts have determined that this exception inherently recognizes interest in order to make the person whole. However, courts have not been receptive to the Fifth Amendment as a means to obtain interest when a takings claim is not otherwise involved. The second constitutional exception where interest may be allowed is the commercial venture exception, set out in Standard Oil Company v. United States , whereby a plaintiff may recover attorneys' fees from a commercial government enterprise. The commercial venture exception requires that the government entity involved in the suit have a sue-and-be-sued clause. Therefore, the commercial venture exception is limited to litigation where the agency has been opened to suit by statute and is engaged in a primarily commercial, as opposed to governmental, function. Therefore, to determine whether interest is payable from the Judgment Fund, a plaintiff bringing suit against the government must engage in a three-step analysis. First, the statute under which suit was brought should first be considered. If the statute authorizes payment of interest, then it may be payable from the Fund. For example, if a plaintiff prevailed under the Back Pay Act, the Fund would pay interest on the claim from the date of the withdrawal or reduction of pay, because this is specifically authorized in the statute. Second, if the case was pending appeal, the plaintiff should consider the interest allowance in 31 U.S.C. SS1304(b). If a plaintiff won in district court, and filed a transcript of judgment with the Treasury Department, interest may be paid in the time between the judgment and when the government decides not to appeal. Finally, a plaintiff should determine whether the cause of action amounts to a taking under the Fifth Amendment or falls under the commercial venture exception. As discussed above, the Judgment Fund enabling statute limits an agency's ability to access the Fund. This section provides examples of statutes that prevent an agency from relying on the Judgment Fund as the source of payment, and briefly outlines the legislative intent of these statutes. The Equal Access to Justice Act (EAJA) provides for award of attorneys' fees for individuals and small entities that prevail in cases against the federal government. EAJA applies only when the claimants are the "prevailing party," or when they are successful on a significant issue in the litigation. The party must also show that the result of the lawsuit was not a gratuitous act by the government. The act also contains specific size requirements, so that larger entities may not recover under the act. Since the passage of EAJA, agencies have disputed whether payments under the act must be made out of their appropriations or whether attorneys' fees may be charged to the Judgment Fund. In Cienega Gardens v. United States , the Federal Circuit ordered an award for the plaintiffs, finding that amendments to the Department of Housing and Urban Development's (HUD's) low income housing program constituted a taking. EAJA provides for payment, by directing that a fee award "be paid by any agency over which the party prevails from any funds made available to the agency by appropriation or otherwise." However, the plaintiffs sued the United States, instead of the agency, and HUD argued that they should not be liable because the Department of Justice did not seek review on a facially questionable ruling. HUD proposed that no agency should be responsible under these rare facts, and therefore, payment under EAJA should be made from the Judgment Fund instead of the agency's appropriations. The Treasury Department countered that the Judgment Fund is not responsible for payment when the party prevails over the agency, and denied payment. In an opinion by its Office of Legal Counsel (OLC), the Justice Department concluded that the Judgment Fund could not pay the award for attorneys' fees, because HUD was the agency over which the party prevailed. OLC had previously concluded that an agency could only seek payment from the Judgment Fund when payment of attorneys' fees would constitute a heavy financial blow to the agency, a loophole that was closed in a subsequent version of EAJA. The opinion looked to congressional intent underlying EAJA, which was in part to create agency accountability when taking a regulatory or adverse action which was not substantially justified. In addition, Congress left no statutory mechanisms for payment of EAJA claims from the Judgment Fund. The opinion did not leave open the possibility that agencies could be reimbursed for awards made pursuant to EAJA from the Judgment Fund and strongly suggested they would have to use their own appropriations. Congress has passed two statutes that require agencies to reimburse the Judgment Fund for payment of claims. The Contract Disputes Act of 1978 (CDA) allows payment from the Judgment Fund when a contractor for an agency wins a judgment from a court or a contract appeals board, or reaches a settlement with an agency on a contract dispute. The agency must then reimburse the Judgment Fund from its operating appropriations. If the agency has insufficient funds available to reimburse the Funds, CDA requires that the agency seek additional funding from Congress. Congress wanted to incentivize agencies to engage in settlement talks and keep them accountable for the costs of judgments. The Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002 (No FEAR Act) covers whistleblower and employment discrimination suits for federal employees, creating a cause of action for federal employees who have been subjected to harassment or discrimination in the workplace. The act requires the agency to reimburse the Judgment Fund within a reasonable time. In 2008, the GAO released a report on reimbursements to the Judgment Fund from CDA and No FEAR payments. The report concluded that, while virtually all agencies have reimbursed the Fund for No FEAR payments since it was made mandatory in 2002, CDA payments are considerably less consistent. Typically, CDA payments are much larger, perhaps keeping agencies from reimbursing the Fund. GAO recommended that the FMS take steps to make agency payments more transparent, and that it report to Congress periodically on the status of payments. Congress created a separate but similar system for payment of judgments awarded to tribes under Title XXV of the U.S. Code. The Indian Tribal Judgment Funds Use or Distribution Act created a trust to be administered by the Secretary of the Interior, which would distribute all funds appropriated in judgments in favor of tribes. Courts have held this is the exclusive trust for all such payments, and that no additional congressional action is necessary. The Interior Department holds funds in trust until Congress makes an appropriation to the tribe. When two or more tribes benefit from a single judgment, the Bureau of Indian Affairs submits a plan to Congress recommending a division of the funds, prior to the appropriation. The Judgment Fund has changed many times in its over-50-year history, and recent legislative proposals in Congress could again alter certain payments and processes. In the 113 th Congress, the Judgment Fund Transparency Act of 2013 has been introduced to amend the Judgment Fund enabling statute. The act would require the Secretary of the Treasury to post on a publicly accessible website the claimant, agency, fact summary, and payment amount for each claim from the Judgment Fund, within 30 days after the payment was made, unless a law or court order otherwise prohibits the disclosure of such information. Recently, FMS released its 2011 Fiscal Report, which included all of the information from the Transparency Act except for fact summaries, pursuant to the House Appropriations Committee's recommendations that accompanied the Financial Services and General Government Appropriations Act of 2012. The committee instructed FMS to report online each claim paid from the Judgment Fund in the given fiscal year. In the 112 th Congress, the Government Transparency and Recordkeeping Act of 2012 was introduced but not enacted. The bill would have amended the Judgment Fund enabling statute to require the Secretary of the Treasury to publicly report all Judgment Fund payments since 2003, and report all future payments from EAJA. The bill's provisions called for the disclosures to be made online and include those required under the Judgment Fund Transparency Act, as well as specific details about attorneys' fees and interest paid from the Judgment Fund. Legislation in the 110 th and 111 th Congress would have amended the No FEAR Act to require agencies to reimburse the Judgment Fund for payments for claims within two years of a final finding of discrimination. Claims under the No FEAR Act are paid from the Judgment Fund; however, the law does not specify a definitive period for agencies to reimburse the Fund. The stated purpose of the legislation was to "encourage timely resolution or settlement of complaints." These bills saw no action. | The Judgment Fund is a permanent, indefinite appropriation that was created by Congress in 1956 to pay judgments entered against the United States. Generally, the United States cannot be sued unless it has waived its sovereign immunity. Originally, such waivers were rare, so individual claims were assigned to congressional committees, which in turn appropriated funds to satisfy the judgments. Prior to the creation of the Judgment Fund, the number of claims grew rapidly, taking up an increasing amount of Congress's time and resources. Eventually, the Judgment Fund was created to reduce Congress's workload, so that individual appropriations were not needed for each award entered. The Fund's administration has changed substantially since its inception, with varying degrees of control and oversight by Congress, the Government Accountability Office, and the Treasury Department. Originally, the Fund was limited to claims of less than $100,000, entered by the Court of Federal Claims or a U.S. District Court. As payments grew in size, Congress transferred authority to the Justice Department to make payments on behalf of the United States, as certified by the Attorney General. Today, the Fund is administered by the Financial Management Service in the Treasury Department and is only accessible when certain closely circumscribed statutory requirements are met. Most importantly, an agency may not access the Fund when there is another appropriation that may be applied or when the plaintiff prevailed through an administrative remedy. In addition, the fund can only be used for monetary awards that are final, meaning the award cannot be changed or overturned. The awards must result from claims that were or could have been litigated in court. This report sets out specific instances in which the Fund can be accessed and illustrates the procedural mechanisms for obtaining payment under certain statutory causes of action. Although primarily used for the payment of principal awards, attorneys' fees and interest on awards may also be paid from the Fund. At the court's discretion, certain costs enumerated in 28 U.S.C. SS1920 may be awarded to the prevailing party. In addition, certain statutes, such as the Federal Tort Claims Act, provide that attorneys' fees may be recovered by the prevailing party. In addition, interest that accrues after the judgment may also be payable from the Fund. This report provides examples of how the payments from the Fund may be made under the Equal Access to Justice Act, Contract Disputes Act, Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002 (No FEAR Act), and through tribe-specific judgment funds. In addition, this report will briefly highlight several recently proposed changes to the Judgment Fund's administration. In the 113th Congress, the Judgment Fund Transparency Act of 2013 (H.R. 317) would require the Secretary of the Treasury to post on a public website the claimant, agency, fact summary, and payment amount for each claim paid out of the Fund. Introduced but not enacted in the 112th Congress, the Government Transparency and Recordkeeping Act of 2012 (S. 3415) would have required the Treasury Secretary to publicly report all payments from the Fund under the Equal Access to Justice Act since 2003 and all future claims. Amendments to the No FEAR Act that were proposed in H.R. 6780 (110th Congress) and H.R. 67 (111th Congress) would have impacted reimbursement of the Fund for payments under the No FEAR Act. | 6,320 | 755 |
When farm commodity prices fall and costs of production rise, farmers can get caught in a "farm price-cost squeeze." The potential for such a financial bind dates to the first half of the 20 th century when farmers began purchasing more of their farm inputs such as fertilizers, improved seeds, and feed concentrates. Since the 1930s, U.S. agriculture has been supported through the ups and downs of the market by federal farm policy, most recently set under the 2008 farm bill. In 2009, some farmers found themselves in difficult financial circumstances, following high farm prices and relatively prosperous times in 2007 and 2008. Livestock, dairy, and poultry producers faced particularly low or negative returns based in part on input prices, primarily for feedstuffs, that did not fall as fast as output prices. In order to survive, many farmers have been drawing on equity built up in recent years. Meanwhile, producers of crops, both federally supported ones such as grain, oilseeds, and cotton and non-program crops such as fruits and vegetables, continue to deal with volatile costs of energy and fertilizer, which are affecting their returns. In some instances, Members of Congress and policymakers in the U.S. Department of Agriculture (USDA) are being asked by farm groups to consider additional support to farmers. This report discusses the current farm price-cost squeeze, how it varies across commodities, and the factors behind the current situation. The report also considers the cyclical nature of agricultural markets, effects on producers, and the government's role in addressing the situation. The cyclical nature of agricultural markets plays a large role in the farm price-cost squeeze. The cause of short-term cycles is often weather. Periods of good weather can result in large crop yields that drive down prices. Conversely, widespread drought can create shortages that drive up farm prices. When prices rise and remain elevated, following poor weather or strong demand, for instance, periods of profitability typically ensue, eventually encouraging producers to add more acreage, increase inputs such as fertilizer, or buy additional cows to produce more milk. Once additional supplies enter the marketplace, prices tend to retreat. These cyclical price movements are captured in the commodity marketing adage that states "the cure for high prices is high prices." The saying makes the economic argument that the circumstance of high prices will eventually change once high prices attract additional production resources. Similar economic reasoning applies once the cycle turns down. In this case, as profitability declines or goes negative, farmers no longer have the economic incentive to produce as much, so they cut back on the volume or quality of inputs or, if financial conditions are bad enough, go out of business altogether. As economists, commodity marketers, and farmers alike have generally found, prices eventually turn higher, profitability returns, and the cycle repeats. Over the long run, farmers find ways to stay in business, sometimes by taking another job so they can continue to operate their farm enterprises even at a loss. Others, less willing or unable to find ways to survive unprofitable situations, will exit the industry. The farmers' role in the cyclical nature of commodity markets was noted more than 50 years ago by Agriculture Secretary Ezra T. Benson. After declaring that farmers were in a "serious price-cost squeeze," he said that farmers could work their way out of the situation by making production and marketing decisions that would solve the current surplus and low price problems. The role of government policy and farm commodity subsidies is also debated and advocated to respond to cycles in agricultural markets. Some say it preserves farms that otherwise would fail at the low point of a cycle; other say it disproportionately helps large farms to the detriment of small farms. These policy issues are addressed later in this report. Rising productivity has also contributed to the cyclical nature of agricultural markets. Over the decades, the adoption of new technology--both mechanical (e.g., better farm equipment) and biological (e.g., improved seed varieties)--and management approaches have resulted in farmers producing more commodities with relatively fewer inputs. As additional product arrives on the market, prices fall until consumer demand catches up with advances in supply. Along the way, weather can create short-term market disruptions and price volatility. In general, large economies of scale in U.S. agriculture encourage producers to expand their operations in order to spread fixed costs over more acreage, take advantage of technology, and reduce per-unit input costs through bulk purchasing. This boosts output and reduces profit margins (a phenomenon seen in many other industries as well). These technology-driven economies of scale put tremendous economic pressure on small operators who are unable to take advantage of them. Over time, the end result of continued advancements in farm productivity is declining farm prices, when adjusted for inflation. Consequently, farm profits are difficult to sustain. Under this repeated market volatility, farmers who are not able to reduce their costs struggle to remain viable as a business operation, causing some to go out of business. Farm sector performance, right down to the individual producer, depends to a large extent on supply and demand factors. Together these factors establish overall price levels, for commodities which farmers sell and for inputs they buy. Changes in agricultural supply and demand stem from many sources. Because U.S. agriculture is a major net exporter of agricultural products, developments in the international market help determine prices farmers receive for most products. Domestic market changes are also key, such as increased consumer demand for certain fruits and vegetables (e.g., avocados, berries, and peppers), income growth that affects demand for meat, or the demographics of an aging population. On the farm input side, energy costs, primarily for fuel and fertilizer, are determined largely in the global oil market. Prevailing wages can also dramatically affect costs for farms using large amounts of manual labor (e.g., fruits and vegetables). Finally, all farms likely incur costs, either directly or indirectly, associated with environmental compliance requirements. Overall price levels and other factors--such as technology, government policy, transportation, and marketing issues--together affect a farmer's decision to increase or decrease investments in his or her operation. Importantly, in the most difficult times, farm program payments and other support from the government, as well as off-farm income for the farm household, may prove decisive for farm profitability when business survival is at stake. Farm profitability is specific to a farm's cost structure and marketing ability. A small farm, for example, may have relatively high per-unit costs because overhead, such as buildings and maintenance, is spread over fewer units of output. Or, considering marketing skills, some farmers may be more adept than others at maximizing prices received from the market. When considering both the revenue and cost sides of a farm business, the range of per-unit costs and prices received can vary considerably by producer. Further complicating the assessment of financial prospects for an individual farm is its commodity mix, preferences for risk, and levels of equity and debt, among other financial variables. Because of the potential for differences across farms, a simplified measure is often needed by policymakers and analysts as a rough gauge of the farm price-cost squeeze, especially when market conditions are changing rapidly. The most basic way to measure the farm price-cost squeeze is to directly compare prices received by farmers with prices they pay for inputs. By ignoring the volume of a farm's sales and input purchases, the comparison only considers how current prices for each relate to one another, which can be particularly insightful for policymakers over a short period (e.g., less than three years) when financial fortunes reverse. Over longer periods of time, however, technology changes and efficiency gains make such comparisons less relevant. Determining whether or not a sector is actually encountering a price-cost squeeze can sometimes be a matter of opinion. Instead, knowing how much worse (or better) conditions are relative to the recent past can be helpful when policymakers are trying to get a sense of how particular groups of farmers are faring financially. Measuring the price-cost squeeze is simply a comparison of the price of the output (for example, a crop, animal, or animal product such as milk sold by a farmer) and the price of inputs used to grow the crop or raise the livestock. The comparison is often expressed as a ratio of the output price divided by the input price. Conceptually, the ratio describes how much input--measured in pounds or other unit of measure--can be purchased with a single pound of output. A higher number corresponds with a more favorable (profitable) relationship for farmers. For example, assume the farm price of milk is $0.12/lb. and the price of feed is $0.06/lb. The milk-feed price ratio is then 2 ($0.12/lb. divided by $0.06/lb.). The resultant number of 2 means that each pound of milk has the same value as 2 pounds of feed. Or stated another way, 2 pounds of feed can be purchased with 1 pound of milk. As a rule of thumb in the dairy industry, a ratio close to 3 is sufficient for profitability to encourage herd expansion. A ratio near or below 2 indicates low or negative profitability and hence a greater likelihood of herd liquidation and industry contraction. For livestock production, feed is often a leading and highly variable contributor to overall costs, making it the most relevant variable when considering farm financial prospects over the short run. Other charges are important as well, such as overhead costs, including buildings and equipment, but these costs are spread over a number of years and typically do not change rapidly from year to year. For the crop sector, no one single input dominates financial prospects as feed costs do for livestock production. As an alternative, a ratio of price indices can be used. Another way to measure the price-cost squeeze is to compare (1) an index of prices received (i.e., the current farm price divided by the farm price received in an earlier base period), and (2) an index of input prices paid by farmers. A comparison is made by dividing the first index by the second. Movements in this ratio (i.e., an index of prices received divided by index of prices paid) essentially measure output prices relative to input prices over a particular period. If a ratio increases over a certain period, farm prices are rising faster than the cost of inputs such as fuel and fertilizer. In the short run (e.g., less than three years), a declining ratio indicates a financially unfavorable circumstance for farmers. Over the long run, the ratio typically declines as improved yields (or other technological advances) result in greater output per unit of input and lower farm prices. Depending on how returns are changing for other crops a farmer produces, acreage for a particular crop may decline if returns are not as attractive as the previous year. A host of other factors, such as crop rotation for managing soil productivity, equipment availability, and management expertise, also play into farm profitability as well as a farmer's decision of what to plant. Output and input prices are captured in indices published each month by USDA's National Agricultural Statistics Service (NASS). For major livestock species, prices of livestock (or products such as milk and eggs) are reported relative to feed prices. These include the "milk-feed" price ratio (see above), as well as similar indices for broilers, eggs, hogs, steers and heifers, and turkeys. For some of the ratios, the price of feed is a composite price of several crops weighted by shares of a typical ration that add to 100% (e.g., for milk-feed price ratio, it is corn, 51%; soybeans, 8%; and alfalfa, 41%). For others, the livestock price is relative to the price of corn alone. For crops, output price indices for major categories published by NASS include food grains (primarily wheat and rice), feed grains (primarily corn and sorghum) and hay, cotton, oil-bearing crops, fruits and nuts, commercial vegetables, and potatoes and dry beans. An "other crop" category is also published. NASS constructs the published indices from the agency's estimates of farm prices, which are based on surveys of farmers and points of first sale. On the cost side, USDA publishes a "crop sector" index that represents the average cost of inputs purchased by farmers. Conceptually, USDA says the average price multiplied by the quantity purchased should equal total producer expenditures for the sector. The drawback with using these indices is that, as with all sector-wide measures, they represent industry averages that combine the actions of various production and marketing activities into a single number. As a result, some producers may be much better off or much worse off than the numbers would indicate. Also, some output categories are too aggregated for specific analysis (e.g., food grains instead of wheat or, even more specifically, hard red winter wheat). Similarly, the prices paid index for the crop sector covers all reported crops on an aggregated basis. Because the mix of inputs varies considerably across crops, such as a high labor share for vegetables compared with crops such as feed grains, the index reflects overall input prices without crop-specific adjustments. As a result, the crop-related ratios calculated in this report can be used only as a general indicator of the price-cost squeeze in the crop sector, while the livestock price-feed ratios more closely correspond with changes in economic prospects for producers. More detailed analyses, particularly for livestock, could be done at the state level using available data. While these ratios are clearly an overly simplified approach to gauging economic conditions in the farm sector, the measures do provide a quick snapshot of current economic conditions. In contrast, national farm income statistics and financial indicators such as the debt-to-equity ratio, also published by USDA, are updated only a few times per year and provide only an agricultural sector-wide view that can hide commodity-specific conditions. Concerned policymakers can monitor the economic situation of U.S. farmers on a monthly basis by observing the farm price-feed ratios and the prices received and prices paid indices. Across agriculture in 2009, the price-cost squeeze was most evident in the livestock sector, particularly dairy. Since 2007, the livestock sector has seen dramatic changes in its farm prices relative to input costs, in part because producer prices have fallen from record levels in late 2007 (milk) and mid-2008 (beef cattle and eggs), but also because feed costs, which also hit record highs in 2008, have been slower to recede. Prices in the feed complex, led by corn and soybeans, have risen since 2005 following sharp increases in demand for corn used for ethanol under the U.S. biofuels policy. Other factors have supported foreign demand for grains and oilseeds, including growth in global incomes (prior to being interrupted in fall 2008 following the economic crisis) and a weaker U.S. dollar exchange rate. Overall, farm prices of livestock, poultry, and milk generally have not kept pace with grain and feed prices during this time. Dairy is a prime example of the recent boom and bust of an agricultural market. Record milk prices in late 2007, stemming from high export demand, more than offset higher feed costs during that year. The milk-feed price ratio rose during 2007 and remained elevated for several months ( Figure 1 ). Once feed costs climbed in late 2007 and rose even higher in 2008, the ratio plummeted from 3.0 to below 2.0. In late 2008 and the first half of 2009, as demand for U.S. dairy products weakened and milk prices fell, the ratio plunged further, hitting bottom in mid-2009 as milk production remained greater than demand, creating significant financial stress for dairy farmers. Milk prices strengthened considerably during the second half of 2009 as production slowed and demand recovered somewhat. Recent movements in the farm price-cost ratios for hogs, poultry, and cattle have been similar ( Figure 2 , Figure 3 , Figure 4 ). However, the declines started earlier (2005). The broiler-feed index has seen some recovery after broiler prices adjusted upward following the sector's production pullback from sharply higher feed prices. Compared with cattle and hog production, changes in the poultry sector occur more quickly because the poultry production cycle is shorter than that for cattle and hogs. The crop story differs from that of livestock. In general, farm prices for crops relative to costs had been either steady or rising in years prior to the 2008 price spike, not falling. For most crop categories covered under federal farm programs, prices received by farmers at the end of 2009 relative to prices paid were near levels seen in 2007. Farm prices relative to costs were even higher during the price spike of mid-2008. The crop categories include food grains (e.g., wheat and rice) ( Figure 5 ), feed grains (e.g., corn and sorghum) and hay ( Figure 6 ), and oil-bearing crops ( Figure 7 ). The only exception for field crops is cotton ( Figure 8 ), which has seen a long-term decline in domestic mill use. Price index data for fruits and nuts ( Figure 9 ) and for commercial vegetables ( Figure 10 ) are also compiled by NASS. Farm prices relative to costs have held within historical ranges (since 2000), although the fruit and nut category has seen a downward trend since 2007 as costs climbed. Costs rose sharply in 2008 following a run-up in prices for fertilizer, fuel, and seeds. When farm prices fail to keep pace with the cost of inputs, individual farmers begin making business decisions that affect the farm's output. The collective decision by farmers translates into a sector-wide supply response which, because of substantial lags in the production cycle for both crops and livestock, plays a large part in prices that farmers receive in future months. U.S. agriculture is also governed in part by federal polices that affect the markets and farmers' production decisions. Finally, farmers often depend on off-farm income to help insulate their household from financial difficulties their farms may encounter. As with any business, farmers focus on both the revenue and cost sides of their operations when faced with declining returns. Because farmers are generally price takers, that is, commodity markets determine the price at which they can sell, farmers often focus on selling their products in ways that avoid seasonal lows and/or maximize potential revenue. This can be accomplished through forward pricing with a buyer who is willing to pay a small premium to secure future needs. A plethora of marketing options is also available through brokers and marketing companies who monitor the market, establish marketing plans with producers, and execute them with the intention of obtaining a higher per-unit price than if a farmer simply sells the crop at harvest time. Farmers also seek cost changes to improve their bottom lines. Cutting back on inputs (e.g., fertilizer for crops or high quality hay for dairy cows) is one option. Delaying equipment upgrades or other investments is another. Selling less productive assets, such as older beef or dairy cows, is yet another. All three actions save the farmer money, but from a farm management perspective, the farmer is attempting to reduce costs proportionately more than revenue and needs to pay attention to efficiency ratios when making these choices. Farmers may also draw on equity or savings built up in previous periods or generate more off-farm income (see section below). Once negative market signals are sufficient to encourage farmers to change their production plans, the collective action of farmers eventually manifests itself in lower sector-wide supplies. For crops, it may mean pulling out old grapefruit trees after a string of unprofitable years or shifting from cotton to soybean plantings in recent years as domestic cotton mill use and farm prices decline. For most crops, the positive price impact of reduced supplies shows up in the market as soon as traders sense that supplies will in fact decline. Sometimes this takes up to a year to unfold because planting and harvest generally occur once a year (or for an extended period during a year in the case of citrus, for example). Weather and other factors help determine the final level of supply and prices. On the livestock side, producers will either send animals to slaughter or feed less expensive rations. The former action, at least in the case of dairy operations, has an immediate impact on production because the cows are no longer producing milk. For other livestock markets, such as beef cattle or hogs, herd liquidation temporarily increases meat supplies, further driving prices down. But once the market works through the initial supply surge, prices tend to rise because those animals no longer generate product for the market. This is especially true when breeding animals are sent to slaughter because they will no longer produce offspring that would add to meat or dairy supplies in future months or years. Feeding less expensive (and hence less nutritious) rations can also reduce production because animals convert lower quality feed into meat and milk less efficiently. The federal government provides a number of programs to help farmers. Most of these, however, focus on specific crops that have a long history of federal support. Farmers who plant wheat, corn, cotton, rice, and a number of other "program crops" receive payments and other forms of support through programs under the 2008 farm bill, which has roots in farm legislation from the 1930s and 1940s. The support comes primarily in the form of program payments to agricultural landowners who have elected to participate, plus additional payments that depend in part on current levels of farm prices. Total price and income support payments to agriculture averaged $15.5 billion per year in FY2001-FY2009. The sugar industry is supported primarily through domestic supply control and import barriers. In contrast to program crops, federal program support for fruits, vegetables, and horticulture crops is generally limited to crop insurance, disaster assistance, and funding for research, marketing, and promotion projects. Similarly, in the livestock sector, the only extensive federal policy is for dairy, with price supports, direct payments to producers, and milk pricing regulations under federal milk marketing orders. However, policy analysts and observers have commented that crop subsidies over the years have encouraged grain production, thereby benefiting livestock producers through lower feed prices, although increases in crop prices and feed costs in recent years may raise doubts among livestock producers about prospective "pass through" benefits from crop subsidies. Concerning the impact of federal policies on agricultural production, some analysts suggest that government efforts can be counterproductive when federal policies attempt to stabilize markets by providing support to producers. Altering or overriding market signals, they say, can distort production incentives that originate from consumers. The result is a disconnect between what consumers want and what farmers produce, which can lead to surplus production and low prices. In addition, critics say that government programs likely keep inefficient resources in the sector and work against the underlying natural forces motivated by technology and economies of scale that are inherent in most of production agriculture. Further government intervention might be needed that is otherwise contrary to economic rationale, such as paying for surplus commodity storage, giving away commodities the market does not want, or subsidizing exports to move product out of the domestic market (in the case of dairy). The counterpoint to limited or no government intervention is that markets are, at times, too volatile and can unnecessarily destroy farms that otherwise benefit society. Supporters of government intervention in agriculture, particularly for small- and medium-sized farms, argue that these operations that tend to have higher costs, and thus are more susceptible to financial losses, are better suited to carry out conservation and other environmental measures because those operators have greater concern for the long-term productivity of their land. Off-farm income can be key to farm survival during a farm price-cost squeeze. As technological advancements have reduced labor requirements on farms, farmers and/or their spouses have sought part-time or full-time jobs off the farm in an effort to make productive use of the available labor time and supplement household income. The overall level of off-farm income received by U.S. farmers is quite high, and it has been for a long time. At the national level, off-farm income as a share of total household income has been at least 80%, on average, for the past 20 years. In some years, it exceeds 90%. For commercial farms (sales of $250,000 or more), farm income accounts for about 75% of household income. For other farms, farm income as a share of household income is often in the single digits or negative. Given these statistics, farming activities, in many cases, assume the role of a "hobby" rather than an income-generating activity, and farming can be considered a lifestyle choice rather than a business. Some farming enterprises lend themselves well to farmers adding an off-farm job to supplement household income. The seasonal nature of crop production, for example, can leave winter months available for a farmer to work "in town." In contrast, livestock producers often need to tend animals daily, leaving only part-time work as an option. Farmers on diversified operations or those without labor contributions from family members may need to focus nearly all of their efforts on the farm. U.S. farm numbers declined from more than 6 million farms in the early 20 th century to just 2 million in recent decades ( Figure 11 ). The transition was most apparent in the 1950s. Farm numbers dropped sharply as mechanization continued to reduce the need for farm labor, efficiency gains from large farm size increased dramatically, and off-farm employment became more available and relatively more attractive. As policymakers developed farm programs to support the farm sector, technological gains over time have resulted in farm production in excess of market demand, leading to a farm price-cost squeeze and a decline in farm numbers. Some would say the price-cost squeeze is essentially due to keeping the same amount of land in production, but with yield-enhancing technology boosting production. Economics would dictate that resources (e.g., people) need to exit the sector if supply is out of balance. The evidence would suggest that this has occurred. While overall U.S. farm numbers have stabilized since the late 1980s, there has been a shift away from the medium-sized farms considered to be modest family operations (sales between $10,000 and $99,999) ( Figure 12 ). Offsetting this decline is growth in the numbers of larger farms (sales at least $100,000), which can push their costs even lower from gains in economies of scale, and small operations with sales less than $10,000--referred to as "hobby" or "lifestyle" farms--that are not as dependent on farm income because ample off-farm income supports their farm lifestyle. Today, relatively large, economically efficient farms provide the bulk of U.S. production. In 2007, according to the Census of Agriculture's definition of a farm (any place from which $1,000 or more of agricultural products were produced and sold), the total number of farms was 2.2 million, while less than half a million farms had sales of $50,000 or greater. The trend has been a declining number of commercial farms driven by economies of scale and technology. In 2007, only about 125,000 of the largest farms (5.7% of total farms) accounted for 75% of the nation's farm sales. Just five years earlier, in 2002, 144,000 farms accounted for 75% of farm sales. In 1992, more than 232,000 farms accounted for 75% of farm sales ( Table 1 ). Since the Great Depression, federal farm policy has attempted to help farmers weather financial difficulties inherent in the industry. More than 75 years ago, when the federal government started addressing low returns in farming, the political thrust was to enact legislation that would offset some of the volatility of agricultural markets and prop up income for a rural population that was highly dependent on the farm economy. In general, the goal has been to help farmers survive market downturns. All the while, farmers have adopted technology that has resulted in a sector-wide transition from a large number of producers, some being high-cost, to a smaller number of lower-cost producers. Most public support for agricultural subsidies stems from the public's desire to help "family farmers." Historically, public support for farm programs has benefited from the country's agrarian roots and generally favorable perception of farmers as being hard workers, honest, and subject to market forces and weather that are beyond their control. However, recent farm bill debates, which occur roughly every five years, have seen heated discussions over levels of payments and eligibility. As for public opinion, a poll by Program on International Policy Attitudes at the University of Maryland indicates that while the public would oppose eliminating farm subsidies in general, the desired scope of subsidies is more narrow than provided under current policy, with a preference for payments to small farmers rather than large farmers. While there are exceptions, government programs for farmers, as currently designed, generally benefit farmers in proportion to their production. Some large operations continue to receive payments even though they may not necessarily need them for economic survival. This in turn creates an economic incentive for a farm to either become a larger commercial operation in order to survive, or contract in size to one that is more manageable, with household income possibly supplemented by off-farm income so the farm can remain in operation regardless of its financial circumstances. Simultaneously, there are general economic and technological pressures--separate from government intervention--that encourage farms to consolidate or become larger, as discussed earlier in this report. When farmers are caught in farm price-cost squeeze, the question for policymakers has been couched, perhaps incorrectly, critics say, in terms of preserving the nation's ability to produce food. This assumes that poor economic returns will result in less overall food production. While some portions of agriculture undoubtedly decline during these times, or would contract substantially if government policy would no longer be protecting it, a wholesale departure from current food production levels is not necessarily at risk, according to agricultural economists. Instead, most resources in agriculture--land, labor, and capital--generally remain in the sector because these resources are relatively abundant in the United States (with the exception of labor, to a certain degree) and do not have a better alternative use. Unless these resources are diminished, say by soil erosion, the nation's capacity for producing food remains intact. Resources continue to shift, though, among the subsectors as well as in and out of the sector as economics and government policies allow. Importantly, gains in productivity mean resources can leave the sector without resulting in an overall reduction in food output. Another concern--and major farm policy question--is one of industry structure. Should federal policy address the long-term trend of large farms producing an increasing share of U.S. agricultural production? More pointedly, who will or should farm? Should the United States government let family farmers fail financially, or should the federal government support them in a way that slows the transition to farms that may be more economically efficient? Shaping this issue is a belief, at least historically, that agriculture is a special segment of the U.S. economy, elevated by its rich history, dedicated people, and role in rural communities. In contrast, others recognize that commercial farming is a business like any other, and federal policy should treat it accordingly. Farm programs fit into a larger policy context that has changed since farm policy was first developed. In the early- and mid-20 th century, farm policy was rural policy because of the importance of agriculture in the rural economy. Now, growth in other rural industries has reduced farming's relative importance in the rural economy. That leaves the larger policy question for both critics and advocates of current farm policy: how does farm policy complement or contradict the goals policymakers have with respect to rural communities and life in what has historically been important agricultural areas? Some critics have questioned whether current farm policy is reinforcing or accelerating trends in U.S. farm structure, intensifying the farm price-cost squeeze that some farmers are experiencing. Others say government assistance is critical in supporting agriculture so that farms can continue operating even when economic conditions are poor and before market prices turn higher. | When farm commodity prices fall and costs of production rise, farmers can get caught in a "farm price-cost squeeze." The potential for such a financial bind dates to the first half of the 20th century when farmers began purchasing more of their farm inputs such as fertilizers, improved seeds, and feed concentrates. Since the 1930s, U.S. agriculture has been supported through the ups and downs of the market by federal farm policy, most recently set under the 2008 farm bill. In 2009, some farmers found themselves in difficult financial circumstances, following high farm prices and relatively prosperous times in 2007 and 2008. Some livestock, dairy, and poultry producers faced particularly low or negative returns in 2009 based in part on input prices, primarily for feedstuffs, that did not fall as fast as output prices. In order to survive, many farmers have been drawing on equity built up in recent years. Meanwhile, producers of crops, both federally supported ones such as grain and cotton and non-program crops such as fruits and vegetables, continue to deal with volatile costs of energy and fertilizer, which are affecting their returns. In some instances, Members of Congress and policymakers in the U.S. Department of Agriculture (USDA) are being asked by farm groups to consider additional support. The cyclical nature of agricultural markets plays a large role in the farm price-cost squeeze. When prices rise and remain elevated, following poor weather or strong demand, for instance, periods of profitability typically ensue, eventually encouraging producers to add more acreage or increase inputs such as fertilizer. Once additional supplies enter the marketplace, prices tend to retreat. Similar economic reasoning applies once the cycle turns down. In this case, as profitability declines or goes negative, farmers no longer have the economic incentive to produce as much, so they cut back on the volume or quality of inputs or, if financial conditions are bad enough, go out of business all together. As economists, commodity marketers, and farmers alike have generally found, prices eventually turn higher, profitability returns, and the cycle repeats. The most basic way to measure the farm price-cost squeeze is to directly compare prices received by farmers with prices they pay for inputs in the form of price ratios. These ratios provide a relatively current indication of economic conditions, and concerned policymakers can monitor them on a monthly basis as USDA releases the data. Across agriculture in 2009, the price-cost squeeze was most evident in the livestock sector, particularly dairy. When farm prices fail to keep pace with the cost of inputs, the collective decision by farmers to reduce output translates into a sector-wide supply response which, because of substantial lags in the production cycles for both crops and livestock, plays a large part in prices that farmers receive in future months. U.S. agriculture is also governed in part by federal polices that affect the markets and farmers' production decisions. Finally, farmers often depend on off-farm income to help insulate their household from financial difficulties. Most public support for agricultural subsidies stems from the public's desire to help "family farmers." Historically, public support for farm programs has benefited from the country's agrarian roots and generally favorable perception of farmers. As Congress developed farm programs to support the farm sector, technological gains over time have generally led to farm production in excess of market demand, creating a farm price-cost squeeze on a periodic basis. To survive, farms often seek lower per-unit costs by expanding the size of their operation. As large farms produce an increasing share of U.S. agricultural production, some critics have questioned whether current farm policy is reinforcing or accelerating this process. | 6,971 | 780 |
Monthly Social Security payments for retired workers, disabled workers, and all other beneficiaries are generally increased annually by a cost-of-living adjustment (COLA) that is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA applies beginning with the second year that a person is eligible to receive benefits. The first-year benefit is based on a formula that is linked to overall wage growth. Under current law, the COLA equals the percentage increase in the average CPI-W from the third quarter of the base year (the last year for which a COLA was applied) to the third quarter of the current year. The Bureau of Labor Statistics (BLS) generally releases the September CPI-W by mid-October, and the Social Security Administration (SSA) then computes and announces the COLA. The COLA becomes effective in December of the current year and is payable in January of the following year. Social Security payments always reflect the benefits due for the preceding month. For example, the payment that a beneficiary received in January 2015 reflected the benefit for December 2014. Since 1975, a COLA has been paid in every year except 2010 and 2011. Because the average inflation as measured by the CPI-W for the third quarter of 2015 as compared with 2014 was negative (-0.4%), the SSA has announced there will be no COLA for 2016. A COLA of 1.7% was payable in January 2015. Inflation is generally measured by computing the increase in the cost of the goods that an average person purchases. The CPI-W is an estimate of the average change in prices of the goods and services purchased by households whose income comes primarily from a clerical or wage occupation. In general, BLS measures the price change of each item in the "basket" of goods, and then computes overall inflation, weighting each of those price changes by the item's share of spending. The consumer price index for all urban consumers (CPI-U) is more broadly used than the CPI-W. BLS uses the same price data and methodology to compute the CPI-W and the CPI-U, but the CPI-U is based on the expenditures of about 87% of the population, whereas the CPI-W reflects expenditures of about 32% of the population. BLS introduced the CPI-U in 1978 and renamed the existing inflation measure the CPI-W. The CPI-W continues to be used for the Social Security COLA even though it measures the inflation facing a population--urban wage earners and clerical workers--that by definition are employed, unlike most Social Security beneficiaries. However, the two measures tend to track each other closely. Some shortcomings of the CPI are inherent in any price measure. For example, the CPI is based on an average of all consumption in the nation, whereas actual purchases and prices paid vary by individual. Therefore, virtually everyone will experience inflation that is either higher or lower than the measured rate. Other shortcomings are technical and can be addressed by changes in methodology. In recent years, BLS has adjusted its processes to reduce an upward bias in the CPI. For example, they have improved the adjustments they make to the index to account for the introduction of new products and changes in the quality of existing products. They have also incorporated procedures that partially account for the "substitution effect"--the fact that consumers cushion themselves from the effect of relative price increases by adjusting their purchasing patterns, and they take advantage of relative price decreases. For example, if the price of apples grows much faster than the price of pears, people often buy more pears. Conversely, if apples go on sale and pears do not, sales of apples would increase. A price increase still reduces consumers' standards of living, but the reduction is smaller than it would be if they were forced to buy the same items every month. BLS has identified two factors that cause the CPI-W (and the CPI-U, which uses the same methodology) to overstate inflation. First, the CPI-W does not fully account for substitution. The BLS calculates price indexes for 211 categories of goods in 87 geographic areas. The CPI-W adjusts for the effects of substitution within those "item-area" categories, but not between them. Second, a "small-sample" bias arises because BLS can collect only a sample of the numerous prices in the economy. This bias is separate from the uncertainty that arises whenever an estimate is based on a limited sample; the small-sample bias causes inflation to be systematically overstated. In contrast, some analysts point out that the CPI-W may understate the average inflation experienced by Social Security beneficiaries because older Americans consume a greater than average share of goods whose prices tend to rise more rapidly than average, most importantly health care and housing. The CPI-W tracks the spending habits of urban wage and clerical workers, but about 80% of Social Security beneficiaries are aged 62 or older and therefore tend to have different spending patterns. Persons aged 62 and older spend around twice as much of their direct outlays on health care as does the rest of the population, a difference that accounts for about half of the difference in the growth rates of the CPI-W and the Experimental Consumer Price Index for Americans Aged 62 and Older (CPI-E), a price index for the elderly. Older Americans also spend more than average on other goods whose prices usually rise faster than average, such as housing. In August 2002, BLS introduced a supplemental index, the Chained CPI for All Urban Consumers (C-CPI-U). Although the series was first published in 2002, BLS has produced monthly values for the index beginning in December 1999. Unlike the CPI-W (and the traditional CPI-U), the C-CPI-U fully accounts for substitution by consumers and effectively eliminates small-sample bias. The weights used for the traditional versions of the CPI are updated every two years to reflect changes in spending patterns. It therefore does not fully incorporate the monthly effects of changing prices on spending patterns. In contrast, when BLS estimates the C-CPI-U, it estimates weights for each month separately, thus "chaining" the two months. The C-CPI-U tends to increase at a slower rate than the CPI-W. The Social Security Administration's Office of the Chief Actuary estimates that the C-CPI-U will grow an average of 0.3 percentage points more slowly than the CPI-W, which is equal to the average differential since 1999. The Congressional Budget Office (CBO) estimates that the differential will average 0.25 percentage points, slightly lower than the historical average, because it excludes some data from the early 2000s, before BLS made some methodological changes. Because data on actual spending patterns are collected every two years, the initial release of the C-CPI-U--which occurs several weeks after the end of the month for which inflation is being measured--is based on estimated spending patterns. Interim estimates are released in February of the next year. The final release, which is based entirely on actual spending data, is released the following February, as much as two years after price data are collected. The lag between the initial and final releases of the C-CPI-U would complicate COLA calculations. SSA announces next year's COLA in mid-October, soon after BLS releases the current year's September CPI-W figure, as described above. To address the issue of the long time lag between initial and final releases of the C-CPI-U for a given month, some have proposed basing the Social Security COLA on the initial release of the C-CPI-U (the initial C-CPI-U is published at the same time as the CPI-U and the CPI-W, i.e., just a few weeks after the end of the month for which price changes are being measured). The difference between the initial and final releases could be reflected in COLAs for subsequent years. Some argue that the low-income elderly have less ability than the average consumer to change what they buy when prices change because they spend most of their income on essential items, such as housing, food, health care, and utilities. These essential items are not good substitutes for each other. For example, if the price of electricity rises, some low-income elderly might not be in a position to reduce electricity purchases, particularly if they are already purchasing little electricity. If it is true that some low-income elderly have less ability to substitute among items in response to relative price changes than other consumers, then the C-CPI-U would not capture the full impact of relative price changes on the low-income elderly. That is, the C-CPI-U would underestimate the impact of inflation facing the low-income elderly. However, there is little research on this question. In response to concerns about how effectively the CPI-W tracks the spending patterns of older consumers, in 1987 Congress directed BLS to introduce an index for the elderly. BLS developed the CPI-E and constructed values for the series for 1982 and later. However, a fully developed price index for the elderly might differ from the CPI-E, which is computed using price data from the same geographic areas and retail outlets as the CPI-W and CPI-U; only the consumption weights differ. BLS commissioner Erica Groshen testified, "We recognize that elderly households live in different places, shop at different retail outlets, buy a different mix of products, and even in many cases qualify for different prices than other urban consumers." The experimental CPI-E index also may not be appropriate for Social Security COLAs because the over-62 population differs from the population of Social Security beneficiaries. Many Social Security beneficiaries are under the age of 62, such as surviving children and most disabled workers. And some people over 62 are not Social Security beneficiaries, such as the substantial portion of persons aged 62 to 64 who have not yet claimed benefits. On average, the CPI-E has increased by an average of about 0.2 percentage points faster than the CPI-W or CPI-U since 1982. SSA's Office of the Chief Actuary expects the differential to remain at that level. Several bills to set Social Security COLAs equal to growth in a CPI for the elderly have been introduced in the 114 th Congress, such as H.R. 1391 , H.R. 1811 , H.R. 1984 , H.R. 3351 , H.R. 3588 , S. 731 , S. 960 , S. 1904 , S. 1940 . This section discusses issues that may inform the debate about whether to base the Social Security COLA on either the C-CPI-U or the CPI-E instead of the CPI-W. It first discusses how the cumulative impact of such a change would grow as individuals aged and how Social Security becomes an increasingly important source of income for older beneficiaries. It then discusses the projected impact on Social Security's overall finances of a change in the COLA. The effect of higher or lower COLAs would be cumulative; that is, the impact on benefits would grow with each additional year of benefit receipt. Benefits for people who had just become entitled, such as 62-year-old retired workers or newly disabled workers, would be unaffected, because first-year benefits are not affected by COLAs. The changes would always be small for people who had only been entitled to benefits for a few years, and they would be small for all beneficiaries in the first few years after a policy change, because those groups would have been subjected to the higher or lower COLAs for only a short time. The changes would be largest for people 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. For example, if the COLA was based on the C-CPI-U and it grew 0.3 percentage points more slowly than the CPI-W, as projected by the SSA, then the benefits of 65-year-olds--who will have experienced three years of COLAs--would be reduced by 0.9% (see Figure 1 ). The reduction would increase as the worker aged: to 3.7% at age 75 and 6.5% at 85. That is, beginning 23 years after the policy was changed, scheduled monthly benefit payments for 85-year-old beneficiaries would be 6.5% lower than they would be under current law. And if, for example, the CPI-E or a similar measure were used to compute the COLA and it grew 0.2 percentage points faster than the CPI-W, as projected by the SSA, then benefits would be 0.6% higher for retirees at age 65, 2.6% higher at 75, and 4.6% higher at 85. Although the cumulative effect of a change in the COLA is largest for people who have been subject to the change for many years, the number of people affected declines with age as people die. For example, only about half of 62-year-olds live to age 84 (see Figure 1 ). Because benefit changes cumulate, the effect of a change in COLAs on lifetime benefits would depend on how long a retiree lives. On average, people who had higher earnings over their lifetime live longer, so they would be most affected. However, older beneficiaries tend to have lower current income and to depend more on their Social Security benefits than younger groups. At advanced ages, most beneficiaries are no longer able to work, and many beneficiaries who had savings at retirement have depleted those savings. For the minority of the elderly with defined benefit pensions, the purchasing power of those payments generally declines over time because it is not usually indexed to inflation. As a result, poverty rates increase with age. Among beneficiaries aged 65 to 69, 5.7% were poor in 2012; the poverty rate for those 80 or older was 9.2%. As shown in Figure 2 , older beneficiaries depend more on their Social Security benefits than do younger ones. For example, for more than half of those aged 80 and older (54%), Social Security benefits are at least 80% of total income. In contrast, for only 29% of the 65-69 age group do Social Security benefits represent at least 80% of total income. Changing how the COLA is computed is one of the few recent Social Security proposals that would affect current beneficiaries. Many options to reduce Social Security benefits would change the way benefits are calculated for new beneficiaries, and many proposals would reduce benefits only for people currently aged 55 or younger. One measure of Social Security's long-term financial status is the system's annual income and cost rates. Under current law, the Social Security cost rate--spending as a share of taxable payroll--is projected to grow from about 14% today to around 17% in 2035 and later. (Taxable payroll is all earnings subject to the Social Security payroll tax.) The income rate, which is all tax revenue as a share of taxable payroll--is projected to remain around its current level of 13%. If the COLA were based on the C-CPI-U beginning in 2016, the Social Security actuary projects that future Social Security benefits that are based on current law would ultimately decline by about 4%, or 0.7% of taxable payroll (see Figure 3 ). Switching to the CPI-E would ultimately increase spending by about 3%, or 0.5% of taxable payroll. A second measure of Social Security's long-term financial status is the system's summarized income and cost rates. The Social Security trustees project the 75-year summarized cost rate to be 16.77% of taxable payroll and the summarized income rate to be 13.89%, resulting in a deficit of 2.88%. Basing the COLA on the C-CPI-U beginning in 2015 would reduce the deficit by 0.56% of taxable payroll, according to the Social Security actuaries (see Table 1 ). Using the CPI-E beginning in 2016 would increase the deficit by 0.38%, according to the Social Security actuaries. Setting the COLA equal to the C-CPI-U for benefits paid in 2016 and later would reduce spending by $116 billion from FY2016 through FY2024, according to CBO. (CBO assumes that the C-CPI-U will grow 0.25 percentage points slower than the CPI-W.) Budget estimates for using the CPI-E are not available, but under the assumption that the CPI-E will grow 0.2 percentage points faster than the CPI-W, basing the COLA on it would increase Social Security outlays by about $93 billion over the same period ($116 billion x (0.2/0.25)=$93 billion). The President's 2014 budget proposed basing the Social Security COLA on the C-CPI-U, but it would also shelter older beneficiaries from the full effect of that change. That proposal was not included in either of the two subsequent proposed budgets. In 2010, similar proposals were made by the National Commission on Fiscal Responsibility and Reform (chaired by former Senator Alan Simpson and Erskine Bowles, hereinafter the "Fiscal Commission") and the Bipartisan Policy Center (chaired by former Senator Pete Domenici and Alice Rivlin). The President's 2014 Budget proposal included a separate provision that would in isolation increase benefits for older beneficiaries. The increase would begin at the age of 76 for retired workers and in the 15 th year of benefit eligibility for disabled workers. The increase would be phased in over 10 years, so it would increase benefits for 85-year-olds by 5% of the average retiree benefit. Because everyone would have the same increase, benefits would increase by more than 5% for people with lower benefits and by less for those with higher benefits. A second benefit increase would apply beginning at the age of 95, although that would affect relatively few people; less than 10% of people aged 62 live until 95. On net, people with the lowest benefits would experience a slight increase in benefits at some ages, because that provision would more than offset the expected effects of the lower COLA. The Fiscal Commission proposed a similar measure; their "20-year benefit bump up" would increase benefits by 5% of the national average benefit for persons who have been eligible for benefits for 20 years (eligibility is defined as a determination of disability, or the earliest eligibility age for retirement benefits, which would rise gradually from the age of 62 to 64 under the commission's proposal). The enhancement would be phased in over the five years from the 20 th through 24 th years after eligibility, in increments of 1% per year. The total 5% increase would continue to apply in all subsequent years of benefit receipt. Both the Fiscal Commission and the Bipartisan Policy Center also include measures that would increase initial benefits for people with lower lifetime earnings. COLAs need not be linked directly to any measure of inflation. Another option would be to have COLAs be greater than inflation, for example by linking them to wage growth, which is on average higher than price inflation. Currently, initial retirement benefits, which workers can claim beginning at age 62, are linked to wage growth through the age of 60. Because COLAs are linked to prices, retirees do not share in any of the increase in the purchasing power of wages that occurs after they are 60 years old. In isolation, such a change would increase Social Security spending, which would ultimately have to be offset either by an increase in taxes or a reduction in initial benefits. Under current law, all beneficiaries receive the same COLA (i.e., the percentage increase), but some proposals would means-test COLAs. People with more income or higher benefit levels would receive a lower COLA than people with lower income or benefits. Other Social Security Provisions Affected by the Social Security COLA Computation The Social Security COLA affects other provisions of the Social Security program. By law, if there is no change over the relevant measuring period in the CPI-W, and consequently no COLA, there can be no change in the following program parameters: The taxable wage base, which is the amount of covered wages subject to the Social Security payroll tax. The taxable wage base is $118,500 in 2015. Exempt wage and salary amounts under the retirement earnings test, which reduces the monthly benefit of Social Security beneficiaries who are below the full retirement age and have earnings that exceed an annual threshold. The exempt amounts are $15,720 for workers under full retirement age in 2015 and $41,880 for workers who reach their full retirement age in 2015. Substantial gainful activity (SGA) amounts for blind individuals who receive Social Security disability benefits. The threshold for these individuals is $1,820 in 2015. (The SGA amount for nonblind individuals may increase even when there is no COLA.) These program elements are adjusted annually based on the increase in the national average wage index only if there is a COLA. As a result, these program elements remained at their 2009 levels in 2010 and 2011, but they were adjusted upwards in subsequent years, when COLAs were paid. Likewise, these program elements will remain at their 2015 levels in January 2016. Other Programs Affected by the Social Security COLA Computation Beneficiaries of other programs are also affected by the absence of a Social Security COLA, including low-income elderly and disabled persons, veterans, and federal civil service annuitants. As a result, beneficiaries of the programs listed below did not receive COLAs in January 2010 and January 2011 and will not receive a COLA in 2016. The Social Security COLA triggers an increase in benefits paid under Supplemental Security Income (SSI), Veterans' Pension Benefit Programs, and Railroad Retirement Board (RRB) Programs. The absence of a COLA increase may impact certain Medicare Part B enrollees. Most Medicare Part B enrollees have their Part B premiums withheld from their monthly Social Security benefits. For these individuals, a hold-harmless provision in the Social Security Act (SS1839(f)) ensures that their benefits will not decrease as a result of an increase in the Part B premium. In most years, the hold-harmless provision has little impact; however, in a year in which there is a 0% Social Security COLA and a Part B premium increase, such as happened in 2010 and 2011, the hold-harmless provision may apply to a much larger number of people. As a result of a 0% Social Security COLA in 2016, an estimated 70% of Medicare beneficiaries would be protected by this provision in the event of an increase in the Part B premium, and their 2016 premiums would be the same as in 2015. However, about 30% of beneficiaries are not protected by this provision. This includes higher-income enrollees, new Medicare Part B enrollees, individuals who do not receive Social Security benefits, and low-income enrollees whose premiums are paid by Medicaid. To ensure that the Part B program has sufficient income from premiums and general revenue contributions, the premiums paid by those not held harmless may be significantly higher than if the hold harmless provision were not in effect. COLAs under the following programs are not triggered by the Social Security COLA, but they use the same measurement period and formula for computing COLAs as the Social Security program: Civil Service Retirement System (CSRS) and Military Retirement System. The Federal Employees Retirement System (FERS) uses the same measurement period for computing its COLA as the Social Security program, although a modified formula is used to limit the COLA. Benefits paid to disabled veterans and to survivors of certain service members and veterans under the following programs are not automatically indexed for inflation. However, Congress enacts legislation each year to provide a COLA equal to the Social Security COLA for Veterans' Disability Compensation and Dependency and Indemnity Compensation (DIC) for Survivors. | Monthly Social Security payments for retired workers, disabled workers, and all other beneficiaries are generally increased annually by a cost-of-living adjustment (COLA), which is based on growth in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure of inflation calculated by the Bureau of Labor Statistics (BLS). Several proposals would base the COLA on other measures of inflation produced by the BLS. Some would set the Social Security COLA equal to growth in the Chained CPI for All Urban Consumers (C-CPI-U), which is projected to reduce Social Security COLAs. Other proposals would use a measure of inflation experienced by older consumers, which is projected to increase benefits. Proponents of using the C-CPI-U have included the 2010 National Commission on Fiscal Responsibility and Reform (chaired by former Senator Alan Simpson and Erskine Bowles) and the Bipartisan Policy Center's 2010 Debt Reduction Task Force (chaired by former Senator Pete Domenici and Alice Rivlin). The President's 2014 budget (but not subsequent budgets) proposed using the C-CPI-U to compute COLAs for Social Security and in some other federal spending programs; it also proposed indexing the tax code to the C-CPI-U, which would increase federal revenues. Proponents of basing the COLA on the C-CPI-U argue that it is a more accurate measure of changes in the cost of living because it more fully accounts for how consumers adjust their purchases as relative prices of various items change and, unlike the traditional CPI, does not have a statistical bias that increases measured inflation. Using the C-CPI-U to compute COLAs is projected to reduce overall Social Security outlays by the government, because the C-CPI-U tends to grow more slowly than does the CPI-W, which in turn would result in lower Social Security COLAs. Other proposals would link 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). The CPI-E grows faster than the CPI-W, on average, because a larger portion of spending by the elderly goes toward health care expenditures and other items whose prices tend to rise more rapidly. As a result, switching to such a measure is projected to result in larger COLAs and higher Social Security benefits. This report explains how the Social Security COLA is computed under current law and explains some criticisms of using the CPI-W to compute COLAs. It discusses two alternative measures of inflation, the C-CPI-U and the CPI-E. The report then explains how using those alternative measures would affect different groups and how it would affect Social Security's finances. It concludes with a review of key recent proposals to change COLA computations and other possible changes to the COLA. | 5,238 | 658 |
On April 19, 2007, the Senate Committee on Armed Services Subcommittee on Strategic Forces held open and closed hearings on military space programs in review of the defense authorization request for fiscal 2008 and the Future Years Defense Program. The 1958 National Aeronautics and Space Act specified that military space activities be conducted by the Department of Defense (DOD). The Undersecretary of the Air Force is DOD's executive agent for space. The intelligence community makes significant use of space-based intelligence collection capabilities. The National Reconnaissance Office (NRO), an agency within DOD, builds and operates intelligence-collection satellites and collects and processes the resulting data, which are provided to users such as the National Geospatial-Intelligence Agency (NGA) and the National Security Agency (NSA). NRO, NGA, and NSA are all under the oversight of the Director of National Intelligence (DNI). DOD and the intelligence community manage a broad array of space activities, including launch vehicle development, communications satellites, navigation satellites (the Global Positioning System--GPS), early warning satellites to alert the United States to foreign missile launches, weather satellites, reconnaissance satellites, and developing capabilities to protect U.S. satellite systems and to deny the use of space to adversaries (called "space control" or "counterspace systems"). The 1990-1991 Persian Gulf War is dubbed by some as the first "space war" because support from space displayed great improvement over what was available during the previous major conflict, Vietnam. These systems continue to play significant roles in U.S. military operations. How to organize DOD and the intelligence community to work effectively on space programs has been an issue for many years. Congress established commissions to review the NRO in the FY2000 intelligence authorization act, P.L. 106-120 ; NGA (then called NIMA, the National Imagery and Mapping Agency) in the classified annex to the FY2000 DOD appropriations act, P.L. 106-79 ; and overall U.S. national security space management and organization in the FY2000 DOD authorization act, P.L. 106-65 . The NRO, NGA/NIMA, and "Rumsfeld Space Commission" reports are discussed below. Although U.S. military and civilian space programs are separated organizationally, the functions performed by satellites and the vehicles that launch them are not easily divided. Both sectors use communications, navigation, weather, and remote sensing/reconnaissance satellites, which may operate at different frequencies or have different capabilities, but have similar technology. The same launch vehicles can be used to launch any type of military, civilian, or commercial satellite. DOD uses some civilian satellites and vice versa. After the Cold War, interest in space weapons to attack satellites (antisatellite, or ASAT, weapons) or ballistic missiles declined initially, but was rekindled beginning with the 104 th Congress. Using satellites to attack ballistic missiles has been controversial since President Reagan's 1983 announcement of a Strategic Defense Initiative to study the viability of building a ballistic missile defense system to protect the United States and its allies. The Clinton Administration changed the name of the Strategic Defense Initiative Organization to the Ballistic Missile Defense Organization to reflect a new focus on theater missile defense in the wake of the Persian Gulf War, rather than national missile defense. The George W. Bush Administration changed the name to the Missile Defense Agency (MDA) to reflect its interest in broad missile defense goals. The concept of placing weapons in space, as part of a missile defense system or otherwise, remains controversial. A May 18, 2005, New York Times article reported that the new national space policy being developed by the Bush Administration would "move the United States closer to fielding offensive and defensive space weapons." Then-White House Press Secretary Scott McClellan, responding to questions at a White House press briefing, stressed that the new policy, still being developed, does not represent a substantial shift in U.S. policy. The same day, Representative Kucinich introduced a bill ( H.R. 2420 ) that would have banned weapons in space and the use of such weapons to damage or destroy objects in orbit. The House rejected (124-302) a Kucinich amendment to the Foreign Relations Authorization Act ( H.R. 2601 ) on July 20, 2005, that was similar to his bill. The issue of using weapons to destroy satellites has received renewed attention after the Chinese successfully destroyed a defunct weather satellite on January 11, 2007. Since the orbit of that satellite was approximately where the United States has many of its reconnaissance satellites, China's actions have caused a great deal of concern. Space is not a line item in the DOD budget and DOD's annual budget justifications do not include a figure for "space activities"; therefore, DOD funding figures must be used cautiously. DOD sometimes releases only partial information or will release without explanation new figures for prior years that are quite different from what was previously reported. A breakdown by program acquisition costs for individual weapon systems in the DOD budget request for FY2008 is available online at http://www.dod.mil/comptroller/defbudget/fy2008/fy2008_weabook.pdf . The FY2007 authorization and appropriations bills contain the authority and funding for DOD space activities, but, as mentioned, do not specify figures for those activities. The House and Senate passed conference agreements on both the FY2007 national defense authorization bill, H.R. 5122 , and the FY2007 defense appropriations bill, H.R. 5631 . The President signed the appropriations bill into law, P.L. 109-289 , on September 29, 2006, and he signed the authorization bill into law, P.L. 109-364 , on October 17, 2006. For many years, questions have arisen about whether DOD effectively manages its space activities, and several commissions and task forces have studied the issue. Congress created a commission in the FY2000 DOD authorization bill to make recommendations on the overall management of national security space programs. Chaired by Donald Rumsfeld, the commission released its report on January 11, 2001, shortly after Mr. Rumsfeld became Secretary of Defense. The "Rumsfeld Space Commission" made sweeping recommendations for management of DOD and intelligence community space programs. According to two reports by the Government Accountability Office (GAO), DOD intended to implement 10 of the 13 organizational recommendations, although no additional updates have been provided. Several DOD space programs have experienced significant cost overruns and schedule delays, raising concerns about DOD's acquisition process for space systems. The Defense Science Board (DSB) and Air Force Scientific Advisory Board (AFSAB) commissioned a task force chaired by retired Lockheed Martin executive Tom Young to review DOD space program acquisition because of significant cost increases in several programs; its May 2003 report was publicly released in September 2003. Four key findings of the report were that cost has replaced mission success as the primary driver in managing acquisition processes, creating excessive technical and schedule risk; the space acquisition system is strongly biased to produce unrealistically low cost estimates; government capabilities to lead and manage the acquisition process have seriously eroded; and there are long term concerns about the space industrial base. According to press reports, the task force produced an update in August 2004 that concluded that some of the space programs it criticized were making progress but still required close review, and that better coordination is needed between the military and intelligence agencies in setting requirements. On April 6, 2006, the Senate Committee on Armed Forces held a hearing on space acquisitions. At that hearing, Cristina T. Chaplain, GAO's Acting Director of Acquisition and Sourcing, testified that DOD's space acquisition programs continue to face substantial cost and schedule overruns. In some cases, according to Ms. Chaplain, cost growth has come close to or exceeded 100%, causing DOD to nearly double its investment with no corresponding increase in functionality. Additionally, many programs have experienced significant schedule delays--as much as six years--postponing delivery of promised capabilities to the warfighter. SBIRS-High is designed as a constellation of five satellites above the equator in geostationary orbit (GEO) plus sensors on two other satellites in highly-elliptical orbits (HEO). DOD still plans to launch the sensors on the two HEO satellites, but will procure, at most, three of the GEO satellites. The funds that would have been spent for the fourth and fifth GEO satellites reportedly will be used instead to design an alternative system using state-of-the-art technologies. Launch is scheduled for 2009. SBIRS-High will eventually replace the DOD's Defense Support Program series of early warning satellites that alert the National Command Authority to foreign missile launches; however, the program has encountered significant schedule delays and cost growth, breaching "Nunn-McCurdy" cost-growth limits several times. The May 2003 report of the Defense Science Board and Air Force Scientific Advisory Board criticized early program management of SBIRS-High and took a cautious attitude concerning whether the restructured program would succeed. An October 2003 GAO report concluded the program remained at "substantial risk of cost and schedule increases." Even though test delays and technical difficulties have become commonplace within SBIRS-High, Congress has continued to acknowledge the program's importance, and has therefore maintained high levels of funding. The President's FY2008 budget request of $1.07 billion represents a total increase of $400.9 million from FY2007, with $587 million reserved for RDT&E and $483 million for procurement. The proposal provides for the continued assembly, integration, and testing of the first two SBIRS geosynchronous (GEO) satellites as well as to the procurement of one SBIRS GEO satellite and two highly elliptical orbit (HEO) satellite payloads. First launch is expected in 2009. The Transformational Communications Satellite program is planned to be a follow-on to the Advanced Extremely High Frequency (AEHF) program, which, in turn, is a follow-on to the current series of Milstar satellites. AEHF itself is controversial because of cost overruns and changing satellite and constellation specifications. TSAT is expected to "transform" DOD communications by providing vastly greater capacity than is available today by operating at much higher (optical) frequencies. If TSAT is delayed, some observers suggest that additional AEHF satellites may be needed. In May 2006, GAO released a report outlining the ongoing issues and problems, in the development and deployment of the TSAT system. Specifically, GAO stated that DOD was not meeting original cost, schedule, and performance goals established for the TSAT program. However, GAO noted that DOD is taking positive steps to lower risk in the TSAT program so it can enter the product development phase with greater chance of success. The FY2007 appropriation for TSAT is $737.1 million, $130 million below the $867 million budget request. Congress also directed the Secretary of the Air Force to submit a report to the congressional defense committees explaining what actions the Air Force has taken to address the remaining concerns raised by the TSAT Program Review Group and the GAO, including (1) the need to significantly refine requirements so that program content can be matched to budget constraints, and how the Department plans to control requirements to prevent problems associated with 'requirements creep'; (2) the need to adequately staff the TSAT program office with experienced space acquisition professionals; (3) the status of refining key performance parameters so they provide specificity and validation metrics; and (4) the implications for other programs, such as Space Radar and Future Combat System, of a less capable initial block of TSAT satellites. This report was delivered February 15, 2007, as required. For FY2008, the President has requested a budget for research and development of $963.6 million--an increase of nearly $234 million over FY2007 funding levels. The total appropriation of $729.9 million in 2007 was a net increase of 43% from FY2006. The first TSAT was planned to launch in late 2014, but the Air Force pushed that date to early 2016. Space Radar is planned to consist of a yet-to-be-determined number of satellites that would track mobile targets (as opposed to fixed targets) on the ground. As of January 2007, the Air Force had not yet decided on the final design of the satellites or the final architecture of the constellation. The House Appropriations Committee has sharply criticized the program for the past several years due to ongoing cost overruns and missed R&D milestones. Congress also directed the Secretary of Defense and the Director of National Intelligence (DNI) to submit a joint report to the congressional defense and intelligence committees describing (1) the respective roles and responsibilities of the intelligence community and the DOD with respect to the development of the Space Radar program, including an updated Memorandum of Agreement between the Secretary and the DNI; (2) the process by which the intelligence community and the DOD coordinate joint development efforts and requirements definition; and (3) the plans for achieving a cost-share agreement between the intelligence community and the Department for the development and acquisition of a Space Radar capability. Congress also asked for a commitment from the Secretary and the DNI that Space Radar would be a single system responsive to the requirements of each organization. This report was due March 1, 2007, but has not yet been submitted. Beginning in FY2008, funding for the Space Based Radar will transfer to the Defense Reconnaissance Support Activities Program and funding amounts have been classified for the FY2008 budget request because of the program's integration into the National Intelligence Community. For FY2007, Congress appropriated $186.4 million for the Space Radar program, nearly twice the FY2006 budget of $98.3 million. The first satellite launch is scheduled for FY2016. Additional information about Space Radar is available in the January 2007 Congressional Budget Office report, "Alternatives for Military Space Radar." This report outlines four alternative system/constellation architectures that would meet the mission requirements of the Air Force. The Space Tracking and Surveillance System (STSS, previously SBIRS-Low) is designed to support missile defense. The goal of an operational STSS is to track missiles through all three phases; discriminate between warheads and decoys; transmit data to other systems that will be used to cue radars and provide intercept handovers; and provide data for intercept hit/kill assessments. Tracking missiles during the mid-course phase is more difficult than during boost, because the missile is no longer firing its engines and hence does not have a strong infrared (heat) signature, making it necessary to track a cold object against the cold background of space. Similarly, tracking warheads after they have been deployed, and discriminating between warheads and decoys, is a technically challenging task. Cost estimates are problematic because there is no final system architecture and the schedule is in flux. In March 2005, GAO reported that DOD's estimate for the program between 2002 and 2011 is approximately $4.5 billion; a life cycle cost was not provided. For FY2008, the president requested a budget of $331 million for the STSS program, an increase from the FY2007 budget of $322 million. Launch information was not available. | The 1958 National Aeronautics and Space Act specified that military space activities be conducted by the Department of Defense (DOD). DOD and the intelligence community manage a broad array of space activities, including launch vehicle development, communications satellites, navigation satellites (the Global Positioning System--GPS), early warning satellites to alert the United States to foreign missile launches, weather satellites, reconnaissance satellites, and developing capabilities to protect U.S. satellite systems and to deny the use of space to adversaries (called "space control" or "counterspace systems"). The 1990-1991 Persian Gulf War is dubbed by some as the first "space war" because support from space displayed great improvement over what was available during the previous major conflict, Vietnam. These systems continue to play significant roles in U.S. military operations. How to organize DOD and the intelligence community to work effectively on space programs has been an issue for many years. Tracking the DOD space budget is extremely difficult since space is not identified as a separate line item in the DOD budget. Additionally, DOD sometimes releases only partial information (omitting funding for classified programs) or will suddenly release without explanation new figures for prior years that are quite different from what was previously reported. A breakdown by program acquisition costs for individual weapon systems in the DOD budget request for FY2008 is available online at http://www.dod.mil/comptroller/defbudget/fy2008/fy2008_weabook.pdf. The FY2007 authorization and appropriations bills contain the authority and funding for DOD space activities, but, as mentioned, do not specify figures for those activities. The House and Senate passed conference agreements on both the FY2007 national defense authorization bill, H.R. 5122, and the FY2007 defense appropriations bill, H.R. 5631. The President signed the appropriations bill into law, P.L. 109-289, (H.Rept. 109-504; S.Rept. 109-292; H.Rept. 109-676: in Congressional Record H6996-7309) on September 29, 2006, and he signed the authorization bill into law, P.L. 109-364, (H.Rept. 109-452; H.Rept. 109-702: in Congressional Record H8061-8540) on October 17, 2006. Specific figures for the programs included in this report are contained in those sections. | 3,376 | 532 |
This report considers population longevity in the United States, as measured by life expectancy. Life expectancy is the expected number of years to be lived, on average, by a particular cohort, if current mortality trends continue for the rest of that cohort's life. It most commonly refers to life expectancy at birth , the median number of years that a population born in a particular year could expect to live. For instance, based on recently released final data, life expectancy at birth in 2003 was 77.5 years. This tells us that, for those born in calendar year 2003 in the United States, 50% will die before that age; the other half will live longer. Life expectancy is also routinely calculated for other ages. Life expectancy at age 60, for instance, refers to the additional number of years that a person who has already attained age 60 will live beyond age 60. Life expectancy at age 60 in the year 2003 was 22.2 years in the United States. A person who reached age 60 in 2003 was expected to live an additional 22.2 years, on average, and would die at age 82.2. While this report concentrates on trends and differentials in life expectancy at birth , Appendix B Table B -2 provides estimates of life expectancy at selected additional ages in 2003 (the most recent final data available). Measures of life expectancy are published in official life tables, which are based on age-specific death rates. In the United States, data on mortality are collected and compiled through the vital statistics system by the Centers for Disease Control and Prevention (CDC)/National Center for Health Statistics (NCHS). The most recently released final data on deaths and mortality are for calendar year 2003; preliminary estimates are often released by NCHS but are generally not referred to in this report. The concept of life expectancy , which considers the average experience for a population, is distinct from the concept of life span , which considers the upper limit of human life that could be reached by an individual. According to the U.S. Census Bureau, International Data Base, the highest attained life expectancy to date for a national population was that of Andorra in 2006, when life expectancy was 83.5 years for the total population (86.6 years for females; 80.6 years for males). The oldest authenticated female life span thus far recorded was for J. Calment of France, who died at age 122 years, 164 days, and, for a man, C. Mortensen (a Danish immigrant to the U.S.), who died at age 115 years, 252 days. There is a lively debate among researchers regarding whether the biological limits of life spans have been reached or whether future increases are probable. Life spans are not considered further in this report. This report documents the improvements in life expectancy that have occurred, analyzing both the underlying factors that contributed to mortality reductions as well as the continuing longevity differentials by sex and race. In addition, it considers whether life expectancy will continue to increase in future years. While this report focuses on describing the demographic context of longevity change in the United States, these trends have implications for a wide range of social and economic issues that are likely to be considered by Congress. For instance, one consequence of lengthening life expectancies is that the older population's needs for care--assistance with daily tasks to allow continued community-living for high-functioning seniors, institutions for those with more severe disabilities or cognitive impairments, training of a specialized work force in geriatric care--are likely to increase, particularly for the oldest-old. There are also questions with respect to ensuring basic income support, medical care, and housing for the older population. At the same time, there is the recognition that government programs, such as Social Security and Medicare, will face financial pressures to meet the increasing needs. What program changes are required to ensure the continued viability of such programs as the number of beneficiaries increases? What will be the federal government's role in an environment of competing demands for limited resources? As seen in Table 1 and Appendix B Table B -1 , life expectancy at birth increased dramatically over the past century in the United States--from 49.2 years (the average for 1900-1902) to 77.5 years in 2003, the most recent year for which official data have been released by the Centers for Disease Control (CDC)/National Center for Health Statistics (NCHS). Gains in longevity were fastest in the first half of the 20 th century. These advances were largely attributed to "an enormous scientific breakthrough--the germ theory of disease" which led to the eradication and control of numerous infectious and parasitic diseases, especially among infants and children . The new theory led to an entirely new approach to preventative medicine, practiced both by departments of public health and by individuals. Interventions included boiling bottles and milk, washing hands, protecting food from flies, isolating sick children, ventilating rooms, and improving water supply and sewage disposal. Beginning in the 1940s, the control of infectious diseases was also aided by the increasing distribution and usage of antibiotics, including penicillin and sulfa drugs. Since mid-century, advances in life expectancy have largely been attributable to improvements in the prevention and control of the chronic diseases of adulthood . In particular, death rates from two of the three major causes of death in 1950--diseases of the heart (i.e., coronary heart disease, hypertensive heart disease, and rheumatic heart disease) and cerebrovascular diseases (stroke)--have fallen by approximately 60% and 70%, respectively, on an age-adjusted basis since 1950 (see Table 2 ), improvements that the CDC has characterized as "one of the most important public health achievements of the 20 th century." The CDC attributes the declines in diseases of the heart and cerebrovascular diseases to a combination of medical advances , including --discoveries in diagnosing and treating heart disease and stroke; --development of effective medications for treatment of hypertension and hypercholesterolemia; --greater numbers of specialists and health-care providers focusing on cardiovascular diseases; --an increase in emergency medical services for heart attack and stroke; and --an increase in coronary-care units. changes in individually controlled behaviors , including --declines in cigarette smoking; --decreases in mean blood pressure levels; --an increase in persons with hypertension who have the condition treated and controlled; --a decrease in mean blood cholesterol levels; and --changes in the American diet (reductions in the consumption of saturated fat and cholesterol). Beyond medical interventions, public health measures, and individual behaviors, a number of additional factors are known to be associated with mortality decline. They are briefly mentioned here, but it is beyond the scope of this report to discuss them in detail or to disentangle them from the factors already described: Socioeconomic status (SES) . Higher SES persons tend to be better educated, have higher incomes, and practice better individual behaviors (less smoking, healthier diets, etc.), and are more likely to have financial resources or health insurance to ensure access to medical care. Social policies . Some social policies, such as Medicare and Medicaid, are oriented to health improvements. Both programs were designed to increase access to health care for vulnerable populations, the elderly and the poor, with the ultimate goal of improving health for these groups. Other social policies, such as Social Security, affect income, and may affect health and well-being through that channel. Finally, some social policies may affect health by changing the access that people have to already-established resources. An example is the combination of civil rights legislation and improved health programs for the poor during the mid-1960s, especially through Medicaid. Life expectancy in the United States, for both men and women, is significantly higher than the global average but is only slightly higher than the average for more developed countries (see Table 3 ). Life expectancy surpasses that of the United States in a large number of countries, including but not limited to Japan, Andorra, Canada, Hong Kong, Macau S.A.R, Singapore, Sweden, Australia, Martinique, Greece, Israel, Aruba, Italy, Netherlands, Norway, France, Liechtenstein, Monaco, Spain, and more. Estimates are provided for a non-comprehensive list of selected counties in Table 3 . The United States was ranked 48 th among 227 countries and territories for both sexes. The Social Security Trustees report to Congress on the actuarial status of the Trust Funds annually. The long-range projections needed for this assessment depend critically on assumptions for the future course of longevity. According to Steven Goss, chief actuary of the Social Security Administration (SSA), their future mortality assumptions are based on the recorded average annual mortality decline for the total U.S. population aged 65 and older between 1900 and 2000. He asserted that assuming future mortality improvement at nearly the same rate as for the last century--a little more than 0.7% annually--is a reasonable assumption, with a roughly equal likelihood of doing better or worse. This rate of improvement is more optimistic--about twice as large--as experienced during the last 18 years of the 20 th century. Goss further suggested that "matching the accomplishments of the past century will not be easy. AIDS, SARS, and antibiotic resistant microbes, along with increasing obesity and declining levels of exercise, remind us that mortality improvements will not be automatic. Gains from replacement organs and genetic engineering will be expensive, and may be difficult to provide for the population as a whole." SSA's projections of period life expectancy are shown in Table 4 . A benefit of the statistical methods that have emerged to extrapolate historical mortality trends to the future is that they have worked well and are relatively simple and efficient. In addition to being utilized by SSA, similar approaches are also used in Canada and in the United Kingdom (UK). Canada's approach assumes that economic productivity is the overall driving factor for sustained longevity improvements, and projects a relationship between future mortality decline and future real growth in employment earnings. The UK extrapolates trends from 15 years of past data to help define base starting points and establish initial rates of mortality improvement for projections. An assumption is also made that there will be a gradual slowing of rates of improvement after the first 10 years. Future mortality and survival are, however, difficult to predict and specialists disagree on not only the level but also the direction of future trends. James Vaupel, director of the Max Planck Institute for Demographic Research, argues that the Social Security projections are too pessimistic. He notes that SSA's forecast is that female life expectancy in the United States will gradually rise from 79.5 years today to 83.4 years in 2050. SSA's projected level of life expectancy in 2050, half-a-century from today, is less than current life expectancy in Japan and France, and is 13 to 14 years less than likely Japanese and French female life expectancy in 2050. Vaupel further suggests that it is unrealistic for SSA to assume that the United States will be unable to match the level of life expectancy in half-a-century that is already attained in other countries today. A number of articles suggested that current models may be too pessimistic in their assumptions about mortality and survival probabilities (i.e., Americans may live longer than currently projected). Two of these studies showed that there has been a tendency for international life expectancy to rise linearly by more than two years per decade over the past 40 years or the last 160 years, a more rapid pace than suggested by current models. Also, useful analyses of the contributions of smoking behavior to mortality trends in the United States suggests that slow female gains in life expectancy over the past few decades may be temporary, and that the pace may pick up fairly soon. Technological advances also have the potential to expand life. The National Institute on Aging supports extensive analyses of genetic contributions to longevity in diverse species, as well as on the diseases and conditions that are responsible for premature death. Life expectancy worldwide is generally higher for females than for their male counterparts. The United States is no exception; female life expectancy exceeded that of males in all years of the past century (see Figure 1 ). The average girl born at the turn of the 20 th century in the United States could expect to live 50.7 years, roughly three years more than an American boy born at the same time. From 1900 to 1975, the difference in life expectancy increased from 2.0 years to 7.8 years, with females continuing to have the longevity advantage. In the absence of war, such large differences between the sexes in life expectancy--which were also being recorded in other developed countries--are a relatively recent phenomenon in demographic history. For the United States, NCHS attributed the increasing gap during these years to increases in male mortality due to ischemic heart disease and lung cancer, which were largely the result of men's early and widespread adoption of cigarette smoking. In the mid- to late 1970s, the average gap in life expectancy approximated the average gap seen in developed countries today--roughly seven years. The gap has been recorded as great as 13 years, as seen in parts of the former Soviet Union in recent years as a result of unusually high levels of current adult male mortality. Since 1979, the "female advantage" in life expectancy between the sexes in the United States has narrowed from 7.8 to 5.3 years, reflecting proportionately greater increases in lung cancer mortality for women than for men and proportionately larger decreases in heart disease mortality among men. The average girl born in 2003 in the United States could expect to live 80.1 years compared to 74.8 years for a boy born in the same year. A now dated, but still informative, study evaluated the contributions of various causes of death to the size of sex differentials in life expectancy in developed countries for the early 1980s. Diseases of the circulatory system were found to account for nearly 40% of the mean sex differential in life expectancy; neoplasms (cancer) for 18%, accidents, suicide, and violence for 19%, and diseases of the respiratory system for nearly 10%. In general, why is life expectancy longer for women? The answer, which is still being investigated, involves the complicated interplay of a host of biological, social, and behavioral conditions. In addition, it differs according to age and to the underlying disease and mortality profiles for men and women. At birth, boys have a clear advantage. In the United States, 104.9 boys were born for every 100.0 girls in 2003. But, male mortality exceeds that of females in every age group and for most major causes of death, beginning in infancy and continuing through the oldest-old age groups. One researcher has suggested that the male advantage at birth is moderated by higher male mortality to "ensure that the number of men and women will be about the same at reproductive age." It has long been argued that hormones play a role in longevity. As described by Desjardins, the female hormone estrogen helps to eliminate "bad" cholesterol (LDL) and thus may offer some protection against heart disease. In contrast, some say, testosterone, found in greater amounts in males, may make men more likely to engage in violence and risk-taking behavior, especially if reinforced by cultural influences. Women may also gain an additional biological advantage because of their two X chromosomes. If a gene mutation occurs on one X, a woman's second X chromosome may be able to compensate. In comparison, genes on men's sole X chromosome may be expressed, even if they are deleterious without compensation. Stindl, however, argues that these classic biological explanations do not withstand critical analysis. He offered an alternative hypothesis that has not yet been subject to long-term scientific scrutiny. He asserts that a strong positive correlation has been reported between sexual size dimorphism (SSD) and male-based mortality, with men being the larger/taller sex globally. A larger body requires more cell doublings, especially due to the ongoing regeneration of tissues over a lifetime. Accordingly, the replicative history of male cells might be longer than that of female cells, resulting in the exhaustion of the regeneration potential and the early onset of age-associated diseases predominantly in males. The underlying mechanism is the gradual erosion of chromosome ends (telomeres). Two recent studies confirm that men do have shorter telomeres than women at the same ages. Numerous studies also demonstrate links between chronic stress and indices of poor health, including risk factors for cardiovascular disease and poorer immune function. Many researchers believe that behavioral and social factors also contribute significantly to the sex differentials observed between men and women. Women's social status and life conditions (such as the hardships associated with childbirth) may have nullified American women's biological advantage at the beginning of the 20 th century but are no longer major factors in gender differentials in life expectancy in the United States, though these explanations are still relevant in a number of other countries. Higher male mortality rates have been attributed to greater male exposure to specific risk factors, such as alcohol consumption and occupational hazards. Life expectancy in Russia, for instance, fell by 6.3 years for Russian men during the period 1990 to 1995--a level of decline that was unprecedented both in Russia and in other industrialized countries. In investigating the cause of the sudden drop, a team of researchers from the London School of Economics and the Russian Academy of Sciences observed that excessive alcohol consumption contributed both directly and indirectly to the marked increases in deaths from fatal events (e.g. accidents, injuries, suicides, poisonings) and in deaths from cardiovascular disease. The most cited behavioral contributor to higher male mortality rates in the United States--and the subject of considerable research interest--has been the greater male exposure to cigarette smoking. Smoking patterns are an obvious place to look for an explanation of sex mortality differences because the health risks are high and long-lasting; large fractions of the population have engaged in the habit; and smoking patterns differ between the sexes. More specifically, women's uptake of smoking lagged behind that of men. In the 1970s, when the sex differential in mortality was increasing, cigarette smoking was implicated. Now, as the sex differential is narrowing, a new body of research is evaluating the role of cigarette smoking in explaining the trend. Pampel, for instance, documented that the rate of decline in female mortality in the United States has slowed since 1980 or so, while that of males has returned to its earlier trend of relatively rapid improvement--thus resulting in a narrowing life expectancy differential by gender. He concludes that smoking behavior lies behind the changing pace of mortality decline not only in the United States, but also in 20 other industrial nations. Extending Pampel's analysis, Lee showed that the rate of decline for deaths not associated with smoking was actually faster for women (than men) while death rates associated with smoking actually increased for women while decreasing for men. Preston and Wang demonstrate that changes in sex mortality differences in the United States have been structured on a cohort rather than a period basis, and that the cohort imprint is closely related to histories of cigarette smoking. Allowance for the smoking histories of cohorts significantly affects the assessment of mortality trends: national mortality levels would have declined more rapidly in the absence of smoking, and they are likely to decline more rapidly in the future as smoking recedes. Life expectancy at birth for whites significantly exceeded that for blacks at the turn of the 20 th century (see Figure 2 and Appendix B Table B -1 ). At that time, the expected longevity of a white newborn girl exceeded that of a black newborn girl by about 16.0 years (with longevity measured at 51.1 years vs. 35.0 years, respectively). For newborn boys, the white advantage was 15.7 years (48.2 years vs. 32.5 years). The gap between whites and blacks in average longevity declined significantly over the past century ( Figure 3 ). For females , the improving situation for black women relative to their white counterparts was dramatic and mostly consistent throughout the century. From the height of the differential in 1904--when white women survived, on average, 17.9 years longer than black women--the gap fell to 4.4 years in 2003. A significant reduction in the life expectancy gap between American white and black men was also observed over the 20 th century. From its height of 17.8 years in 1904, the differential had fallen to 6.3 years in 2003. The improvement was most rapid in the first six decades of the past century. Since the mid-1950s, however, improvements for males have stagnated in the range of roughly 6.0 to 8.5 years. While the male gap has been falling over the past decade, this trend obscures the fact that the differential had already been at or near this level for most of the mid-1950s to mid-1960s. The gap in 1961 was narrower than that observed today--at that time, the gap between white and black men was 5.8 years (as compared to 6.3 now). Factors that contribute to the differential are discussed in later sections of this report. In summary, mortality rates in the United States have declined dramatically over the past century. Black persons, however, still live, on average, 5.3 fewer years than their white counterparts. In 2003, the most recent year for which we have official data, the highest life expectancy was observed for white females, who will live, on average, 80.5 years. The values for black females and white males are quite similar to each other--76.1 years and 75.3 years, with black females having the slight advantage. Of the four race-sex groups considered, black males have the shortest average longevity--69.0 years. Within-sex groupings, whites have the advantage for both females and males. What accounts for the higher mortality, and subsequent lower life expectancy for blacks, and especially for black men in the United States? This has been a subject of research by medical and social scientists for at least a century, and the issue stands at the heart of the current public health agenda in the United States. One of the two primary goals of Healthy People 2010 is to eliminate health disparities. Mortality from most, but not all, causes of death are higher for blacks, and a number of researchers have investigated which specific diseases contribute most to life expectancy differences between the races. Wong and colleagues, for instance, recently calculated potential years of life lost related to specific causes of deaths for blacks and whites in the United States ( Table 5 ). As seen in Table 5 , when considering the major categories of disease, deaths from cardiovascular disease contributed most to the racial disparity in mortality from any cause (34.0%), followed by infection (21.1%), and trauma (10.7%). When looking at specific diseases, the leading sources of the disparity were largely preventable causes of premature death--hypertension (which contributed 15.0% to the disparity), followed by HIV disease (11.2%), diabetes (8.5%), and homicide (8.5%). Note that blacks had a lower mortality risk from respiratory diseases (lung disease), suicide, and certain types of cancer (breast, colon, uterus or ovary, bladder or kidney, and leukemia or lymphoma; figures are in the original source but are not shown in table). These results are consistent with findings from other studies, and are said to show that "most of the influential diseases are ones in which the rates vary based on avoidable risks such as smoking, exposure to HIV, and obesity. [And,] this adds to the credibility of public-health interventions aimed at reducing the exposure to these risk factors." The results may also offer hope for the elimination of racial disparities in health. Beyond describing gross health disparities, scientific inquiry has shifted to explaining the underlying factors that account for these differences in health outcomes. Understanding these underlying causes requires disentangling the complex web of factors connecting the nexus among race, socioeconomic status, behavioral factors, and health. Some have argued that, if pertinent differences between whites and blacks in their underlying social, demographic, familial, and economic circumstances were eliminated, racial differences in mortality would be significantly reduced. , Socioeconomic arguments cite the consequences of lifelong poverty. Relevant factors include both early-life differences, such as birth weight and childhood nutrition, and mid-life variables (such as access to employer-provided health insurance, the strain of physically demanding work, and exposure to a broad range of toxins, both behavioral (e.g., smoking) and environmental (e.g., workplace exposures). Over the life cycle, these factors combine to increase the demand for health care, while potentially limiting consumption of necessary health services. In late life, these factors may affect the age of onset of both morbidity and disability, the severity of symptoms, and ultimately the age at, and cause of death. In addition, Martin and Soldo note that there are differences between racial groups in norms regarding not only lifestyle and self-care behaviors, but also in access to health care providers and treatment compliance. Moreover, the experience of racial discrimination may have adverse psychological and physiological effects, in addition to limiting the quantity and quality of health care received. Some of these factors that contribute to the racial gap in life expectancy will be discussed briefly in the following paragraphs. In general, as income increases, mortality decreases, because high income provides access to high-quality health care, diet, housing, and health insurance. Black households had the lowest median income in the United States in 2003. Their median money income was about $30,000, which was 62% of the median for non-Hispanic White households (about $48,000). Poverty rates among African Americans are persistently higher than those of non-Hispanic whites. In 2003, 24.4% of blacks were poor, compared to 8.2% of non-Hispanic whites. Recent research also highlights the enduring effects of education. Increased education appears to lower the risks for some chronic diseases--most notably, coronary heart disease (which is the leading cause of death in the United States)--while retarding the pace of disease progression for other conditions. In 2003, the proportion of both blacks and non-Hispanic whites who had a high school diploma (of persons in the population aged 25 and over) reached record highs but at different levels for the two racial groups--80% and 89%, respectively. The gap in educational attainment is also apparent among recipients of bachelor's degrees--30% of non-Hispanic whites aged 25 and older had attained a four-year college degree compared to 17% of blacks. Marriage is also a socioeconomic determinant that is related to health outcomes. Married people consistently exhibit lower levels of mortality than those who are not married. Marriage acts to select healthy individuals, but it also enhances social integration and encourages healthful behaviors. Race differences in marital and cohabitational stability are substantial, and may be increasing over time. About 91 percent of white women born in the 1950s are estimated to marry at some time in their lives, compared with 75% of black women. Black married couples are more likely to break up than white married couples, and black divorcees are less likely to remarry than white divorcees. The degree of attachment to marriage among black Americans is similar to that of white Americans as measured by attitudes toward marriage. One explanation offered by some researchers for the lower proportion of time spent in marriage among black Americans is the idea of a "marriage squeeze," in which the "marriageable pool" of black men is low due to high rates of joblessness, incarceration, and mortality. Employed men are more likely than unemployed men to marry. Prolific research over the past two decades has confirmed the link between certain diseases and health outcomes and various health-damaging (such as smoking, alcohol abuse) and health-promoting (exercise, low-fat diet) behaviors. And, some researchers have explored the extent to which health-damaging and health-promoting behaviors explain black-white differences in health status. Berkman and Mullen, for instance, found that, despite greater apparent concern on the part of blacks than whites about their health, blacks do not consistently adopt more beneficial behaviors than whites. Older blacks engage in less physical activity and are more likely to be obese (especially women), but they are less likely to consume alcohol than whites. Racial differences in smoking patterns are complex, with older blacks less likely to have smoked but, if they have, less likely to have quit. Lack of exercise and obesity are associated with hypertension and diabetes, both of which have been reported to be twice as common among blacks than among whites. The United States is the only developed country in the world that does not have national health coverage, and significant numbers of Americans, and especially African Americans, do not have sufficient health care coverage. More specifically, 21.0% of blacks under age 65 and 12.9% of whites of the same age lacked private health insurance in 2003. Beyond health insurance, Chandra and Skinner argue that there is differential access to health services in the United States, especially because of geographic variation in treatment and outcome patterns. Minorities tend to seek care from different hospitals and from different physicians than non-Hispanic whites, in large part a reflection of the general spatial distribution of the United States population with concentrations of minorities in certain hospital referral regions. Some research suggests that there are race-related genetic factors both for predisposing conditions, such as hypertension and diabetes mellitus, and for life-threatening conditions, such as aplastic anemia. As recently noted by the National Research Council, however, "Probably no aspect of the debate about the causes of racial differences in health is potentially more sensitive than the discussion about the extent to which genetic factors are in any way responsible. There are numerous historical examples of scientific mischief in the support of racism." Those in favor of using race assert that there is a useful degree of association between genetic differences and racial classifications, so that the use of race as a research variable is warranted. Opponents, however, argue that bundling the population into four or five categories based on skin color or other traits is not a useful way to summarize genetic variation when we know that there are at least 15 million genetic polymorphisms in humans, of which an unknown number underlie variation in (normal and) disease traits. Research in this area is still in its infancy and tends to reflect two ways that genes may be relevant to the study of health differentials. First , there are a small number of conditions with single-gene disorders in populations that have descended from a relatively small number of people and that remain endogamous (an example is Tay-Sachs Disease among Ashkenazi Jews). Second , genes may be relevant to the study of health differentials through environmental factors, which may vary by racial or ethnic group, and which might interact with genotype to produce different outcomes for different groups. One of the most important public health achievements of the 20 th century in the United States was the dramatic and widespread increase in life expectancy that occurred over the past century in the United States--first as a result of the control of the infectious and parasitic diseases that had plagued mostly infants and children in the early part of the century, and later because of medical advances that led to large decreases in adult mortality, especially from two of the most prevalent causes of death--cardiovascular diseases and cerebrovascular diseases. A consequence of the improved survival, coupled with declining fertility rates, is that the United States is in the midst of a profound demographic change: rapid population aging, a phenomenon that is replacing the earlier "young" age-sex structure with that of an older population. Hastened by the retirement of the "Baby Boom" generation (the cohort born between 1946 and 1964), the inexorable demographic momentum will have important implications for a large number of essential economic and social domains, including work, retirement, and pensions, wealth and income security, and the health and well-being of the aging population. Whether the life expectancy improvements will continue is the subject of intense debate. The Social Security Administration (SSA) assumes that the rate of future mortality improvements will be nearly the same as for the last century--a little more than 0.7% annually--while asserting that it may be difficult to match the accomplishments of the past century, especially in light of increasing obesity, declining levels of exercise, and the introduction of new scourges, such as AIDS, SARS, antibiotic resistant microbes. Some demographers, on the other hand, feel that such projections are pessimistic, and argue, based on historical trends and evidence from other developed countries, that American survival will be longer than that projected by SSA. The outcome of the debate has important implications for determining the number of future beneficiaries and ultimately the financial soundness of the Social Security and the Medicare programs. This report also highlights the continuing differentials in life expectancy by race and sex in the United States, with black males continuing to be the most disadvantaged group on this measure. Life expectancy at birth in 2003 for black males measured 69.0 years, falling short of the comparable figure for white males by 6.3 years. The gap between black and white men has remained relatively stagnant since the mid-1950s. The sources of the racial disparities in life expectancy are complex and require disentangling the complex web of factors connecting the nexus among race, socioeconomic status, behavioral factors, and health. Differences exist on a wide variety of important variables including lifetime income and wealth, marriage patterns, birth weight and childhood nutrition, access to employer-provided health insurance, the strain of physically demanding work, exposure to toxins, risky behaviors (such as smoking, high saturated diet), adherence to preventative health measures (such as maintaining a healthy weight, exercise), and access to and quality of health care. In addition, the experience of racial discrimination may have adverse psychological and physiological effects, in addition to limiting the quantity and quality of health care received. Recent research, however, that shows that the leading specific diseases that are the main sources of the racial disparity in life expectancy are largely preventable causes of premature death offers hope that public-health interventions can reduce the racial disparities. Specifically, the leading causes of the racial disparity were hypertension (which contributed 15.0% to the disparity), followed by HIV disease (11.2%), diabetes (8.5%), and homicide (8.5%) in a recent analysis. Appendix A. Glossary of Terms Appendix B. Detailed Life Expectancy Tables | As a result of falling age-specific mortality, life expectancy rose dramatically in the United States over the past century. Final data for 2003 (the most recent available) show that life expectancy at birth for the total population has reached an all-time American high level, 77.5 years, up from 49.2 years at the turn of the 20 th century. Record-high life expectancies were found for white females (80.5 years) and black females (76.1 years), as well as for white males (75.3 years) and black males (69.0 years). Life expectancy gaps between males and females and between whites and blacks persisted. In combination with decreasing fertility, the life expectancy gains have led to a rapid aging of the American population, as reflected by an increasing proportion of persons aged 65 and older. This report documents the improvements in longevity that have occurred, analyzing both the underlying factors that contributed to mortality reductions and the continuing longevity differentials by sex and race. In addition, it considers whether life expectancy will continue to increase in future years. Detailed statistics on life expectancy are provided. A brief comparison with other countries is also provided. While this report focuses on a description of the demographic context of life expectancy change in the United States, these trends have implications for a wide range of social and economic programs and issues that are likely to be considered by Congress. This report will be updated upon release of final data for 2004 by the National Center for Health Statistics (NCHS). | 7,701 | 326 |
O n August 31, 2015, the New York Times ( Times ) ran a story with the headline "Murder Rates Rising Sharply in Many U.S. Cities." The Times reported that at least 35 cities had seen increases in violent crime compared to 2014, but the story specifically highlighted increases in reported homicides in 10 cities. According to the Times , homicides have increased 76% in Milwaukee, WI; 60% in St. Louis, MO; 56% in Baltimore, MD; 44% in Washington, DC; 22% in New Orleans, LA; 20% in both Chicago, IL, and Kansas City, MO; 17% in Dallas, TX; 9% in New York City; and 4% in Philadelphia, PA. The Times story followed reports from other media outlets about a growing number of violent crimes in some cities. The recent increases in violent crime have grabbed the attention of law enforcement officials. The Major Cities Chiefs Association held a summit in Washington, DC, in August to discuss why it was increasing in some cities and what could be done to reduce it. The Department of Justice (DOJ) held a meeting on October 7 with officials from 15 cities to discuss how DOJ's resources could be utilized to help combat increases in violent crime. After years of declining crime rates, policymakers might consider legislation to reduce or eliminate some mandatory minimum sentences and reduce the number of people held in prison. The changes policymakers might consider could roll back some of the changes Congress made to criminal justice policy during the 1980s and early 1990s in response to long-term rising crime rates. In general, these changes increased sentences, especially for violent and drug offenses, and ensured that inmates served a greater proportion of their sentences in prisons. However, some observers are now concerned that recent reports of an increasing number of violent crimes, especially homicides, in some cities might stymie criminal justice reform in Congress. There has also been a spate of high-profile police-involved deaths over the past year. This has led to calls for legislation to reform police policies and tactics. Some observers are concerned that reports of rising numbers of violent crimes might thwart efforts to increase police accountability if those efforts are viewed as hampering law enforcement's ability to control crime. Has the United States reached the end of, as one criminologist characterized it, the "great American crime decline?" The general consensus is that it is too early to draw any conclusions about the reversal of long-term trends. Also, there are several explanations for why some cities might be experiencing an increase in violent crime other than that the recent era of diminishing violent crime is coming to a close. Reports of an increasing number of violent crimes in some cities do not necessarily mean that the United States is in the midst of a crime wave. Violent crime and homicide rates have been trending downward for more than two decades ( Figure 1 ). The nation's violent crime rate in 2014 was the lowest it has been since 1970, while the homicide rate was the lowest since 1960. Even if homicide and violent crime rates are on the upswing in 2015, the homicide rate would have to increase by 5.7 homicides per 100,000 people to reach the post-1960 high of 10.2 per 100,000, while the violent crime rate would have to increase by 392.7 violent crimes per 100,000 people to equal the post-1960 high-point of 758.2 per 100,000 in 1991. Both of these increases would represent more than a doubling of the 2014 homicide and violent crime rates. As the figures below indicate, Uniform Crime Report (UCR) data from the Federal Bureau of Investigation (FBI) lags by a year. Data on a rising number of homicides or other violent crimes generally comes either from a law enforcement agency or a state UCR program. Data show that since 1990, homicide and violent crime rates in large and medium-sized cities have mirrored national trends ( Figure 2 and Figure 3 ). All cities with populations of 50,000 or more had lower homicide and violent crime rates in 2014 compared to 1990, with the largest cities (i.e., cities with populations of 250,000 or more) experiencing the greatest decreases between those years. In general, crime data should be viewed over longer time periods in order to determine trends. For example, even though violent crime and homicide rates have been on a downward trend since the early 1990s, there were years where one or both increased, but those year-to-year increases did not portend a break in the overall trend. Evaluating crime data in short intervals (quarterly or monthly, for example) can amplify the "noise" in the data and make it harder to distinguish the underlying trend. There are several factors that might help explain some of the reported upticks in violent crime across the country: Year-to-year changes in crime rates can be subject to random fluctuations and not related to how the police do their job . For example, a short-term but intense dispute between rival gangs might lead to an increase in reported violent crimes. Crime is subject to seasonal effects. It tends to increase in the summer and decrease as the year goes on. So a year with a flood of homicides in July may still end up being roughly in-line with the previous year's total by December. Increases in crime might also be indicative of past successes (i.e., many of the reported increases in homicides are from cities where homicide rates are at historic lows, therefore it is possible that, at some point, homicides rates were going to increase compared to the previous year). Percentage change in reported crimes is a relative measure and is sensitive to magnitude. For example, an increase in 10 homicides in a city with 20 homicides the previous year would represent a 50% increase year-over-year, but an additional 10 homicides in a city with 100 homicides the previous year would only represent a 10% increase. In addition, percentage change can sometimes be misleading depending on the time period chosen. For example, if a city had 20 homicides by the end of March 2014 but recorded 25 homicides by the end of March 2015, that would represent a 25% year-to-year increase in the number of homicides. However, if that gap persisted and the city ended the year with 105 homicides compared to 100 homicides in 2014, it would represent a 5% increase in the number of homicides. Also, it is possible that increases in violent crime in some cities do not portend a nationwide increase. An analysis of homicide data from a broader array of cities than those cited in the Times article provides a more nuanced insight into the issue. Data from the nation's 60 most populous cities show that reported homicides were up 16% overall and up by 20% or more in 26 cities. On the other hand, homicides were down in 20 other cities. The majority of cities (44 of 60) have not seen statistically significant increases in homicides, but the overall increase in homicides is statistically significant. Also, it is not rare for there to be large fluctuations in the reported number of homicides from year to year. For example, 17 of today's 60 most populous cities had statistically significant decreases in the number of reported homicides in 2009, and in 2005 there were 15 cities that had statistically significant increases in the number of homicides. It is probably too early to draw any definitive conclusions about whether the country is experiencing a reversal of decreasing violent crime rates. Even if final crime data show an increase in homicides or violent crime in 2015, if history is any indicator a one-year increase does not necessarily suggest a reversal of the nation's two-plus-decade crime decline. While it might be too early to make any definitive conclusions about whether there has been a reversal of the decades-long decrease in violent crime, several commentators have speculated about why some cities are experiencing spikes in violent crime. This section of the report provides a brief overview of some of the more frequently discussed possibilities. The "Ferguson effect" is one of the more widely discussed, and controversial, explanations for the recent increases in violent crime in some cities. It posits that protests over police-involved shootings and attempts to reform how police use force are to blame for the recent increases in some areas. Specifically, this theory suggests that in the wake of recent high-profile officer-involved deaths , the police have become reluctant to engage in proactive policing, thereby emboldening criminals. Proponents of the "Ferguson effect" cite what is largely anecdotal and correlational evidence to support their claim. For example, it has been argued that the police in some cities have limited their use of proactive policing techniques , leading to more homicides. It was reported that by November 2014, arrests were down one-third in St. Louis city and county after the August 2014 shooting of Michael Brown in Ferguson, MO. By early November, homicides in the city were up 42%. Baltimore recorded 43 homicides in May 2015 after rioting resulting from anger over the death of Freddie Gray while he was in police custody. At the same time, arrests were down 57% compared to the previous year. On the other hand, data show that the increase in homicides in St. Louis started before Michael Brown's shooting, and arrests were down and homicides were increasing in Baltimore before Freddy Gray died. Also, arrests might have decreased for reasons other than police officers believing they could not do their jobs due to public criticism of how they use force. For example, the reduced number of arrests in Baltimore can be attributed to staffing shortages and the implementation of a new patrol strategy that preceded Freddy Gray's death. In addition, one criminologist has argued that efforts to reform police and reign in the most egregious abuses have not prevented police from being effective crime fighters. He points to the New York City Police Department (NYPD) as an example. He writes, There is one longer-term test of whether [the "Ferguson effect"] is fact, fiction or something in between. In New York City, concern about police aggressiveness has been a cottage industry for more than two years, as the number of stops has plummeted--yet crime levels that were historically low three years ago have stayed just as low. The police department has been under legal scrutiny and political pressure, but there is no evidence that operational efficiency has suffered. And New York City crime statistics remain astonishingly good compared to other cities. Another theory is that law enforcement is facing a legitimacy problem in communities where residents feel that they are not treated fairly by the police. This might be considered the other side of the argument with respect to the "Ferguson effect": law enforcement's effectiveness is not hampered because police are reluctant to engage in proactive policing, it is hampered because the community does not want to work with law enforcement to prevent or solve crimes. Two criminologists argue that when people lose trust in the police they are more likely to take matters into their own hands when conflicts arise. Specifically, they write, Research finds that law is most effective when it is perceived as having high levels of legitimacy. According to studies, when people have trust and confidence in the criminal justice system, they are more likely to act in accordance with the law. When citizens question whether police and other criminal justice officials act in a fair and impartial manner, when they fear that interactions with the police will result in unwarranted levels of bodily harm, and when they doubt that police will thoroughly investigate questionable actions by fellow officers, legal cynicism, in which people perceive the law as illegitimate, unresponsive, and ill equipped to ensure public safety, is likely to result. These researchers also note that one of the implications of the "Ferguson effect" is that critics of law enforcement practices must support the police or violence will be allowed to grip the city. This approach, however, might reduce police legitimacy is the eyes of some communities because it can make members of those communities, who may believe that they have legitimate complaints about their relationship with the police, feel that their concerns are not valid. A rise in gang violence may be to blame for the increases in violent crime in select urban areas. Half of the 35 cities surveyed by the Major Cities Chiefs Association identified "gang-related activity and retaliatory violence" as a reason for violent crime increases. Gang violence is episodic. For example, a shift in drug markets might trigger fights between rival gangs for control of turf, the murder of one gang member might result in retaliatory violence, or the arrest of a gang leader might lead to a fight for control of the gang. Largely because of its episodic nature, this explanation for increasing violent crime is likely highly localized, meaning that it is unlikely that rising gang violence provides an explanation for any perceived national violent crime wave. It is possible that an increase in gang crime might be driving an increase in violent crime in one city, but it does not necessarily mean that other cities are experiencing a concomitant increase in gang crime, thereby explaining why violent crime might have increased in those cities. For example, it was reported that prescription narcotics were stolen from stores and clinics during riots in Baltimore. This might have led to gangs fighting over turf for distribution of the stolen drugs. If this is true, it might provide an explanation for the increased violent crime in Baltimore , but it might not explain why violent crime increased in another city. Both Washington DC Police Chief Cathy Lanier and Chicago Police Superintendent Garry McCarthy have identified repeat violent offenders as possible sources of the growing number of homicides in their respective cities. Police Chief Lanier was quoted as saying, "[w]e are seeing far too many of our repeat violent offenders out here being reckless with firearms over and over again. There is a push to release a lot of people." Superintendent McCarthy noted, "[a]cross the country, we've all found it's not the individual who never committed a crime before suddenly killing somebody. It's the repeat offenders. It's the same people over and over again." Recidivism amongst violent offenders is a stubborn problem. The most recent data from the Bureau of Justice Statistics (BJS) indicates that approximately 71% of violent offenders released in 2005 were rearrested within five years; though only about one-third (33%) of these offenders were rearrested for a violent offense. Data also suggest that a small proportion of released offenders accounted for a disproportionate number of post-release arrests: 16.1% of released inmates accounted for approximately half (48.4%) of all of post-release arrests of the 2005 release cohort. On the other hand, hundreds of thousands of released inmates have been returning to communities across the country for more than two decades. On average, approximately 595,000 inmates were released from state and federal prisons each year between 1990 and 2014. The number of released inmates increased every year between 1990 and 2008 before decreasing five of the six years between 2009 and 2014. As discussed above, the nation's homicide and violent crime rates were generally decreasing at the same time the number of inmates released from prison was increasing. It is possible that recent cohorts of released inmates included a disproportionate number of ex-offenders with violent proclivities, but currently available data does not provide any insight into this possibility. There is discussion about whether increasing violent crime rates in some cities highlights the lack of nationwide "real time" crime data. As previously mentioned, Uniform Crime Report (UCR) data published by the FBI lags by nearly a year. Research on homicides in the 60 most populous cities in the United States was collected from a variety of sources. Data for the analysis were taken from police departments' websites, state UCR programs, media reports, and the survey conducted by the Major Cities Chiefs Association. In some instances, police departments had to be contacted directly. Also, the data available were not always consistent. Some cities only reported data on the number of homicides that had occurred as of May 31, 2015. Others had data available as of September 7, 2015. More frequent and consistent crime data might be able to provide more insight into crime trends. It has been reported that the FBI is in the process of redesigning and redeveloping the UCR program, with one goal being the more frequent publishing of crime data. Up-to-date national crime data could show whether the increases in homicides in some cities are a part of a national trend or a more localized issue. It could also show whether homicides are increasing as part of an overall increase in violent crime or if the increase in homicides is its own phenomenon. It has been argued that the federal government publishes economic and labor data more frequently than it does crime data. The FBI notes that collecting and reporting data is labor intensive: there are approximately 18,000 law enforcement agencies in the United States and the FBI checks crime data before it is published. It has also been argued that preliminary crime data might not be useful or it could be misleading, because the data can be, and usually is to some extent, revised (e.g., an aggravated assault might be changed to a homicide if the victim later dies from injuries suffered during the assault). However, economic and labor data can also be revised, and a variety of people find value in these preliminary data. | On August 31, 2015, the New York Times ran an article with the headline "Murder Rates Rising Sharply in Many U.S. Cities." The story highlighted double-digit percentage increases in homicide rates in several cities, and came on the heels of reports from other media outlets of recent spikes in violent crime in cities across the country. Accounts of rising violent crime rates in some cities have generated speculation about whether the United States is in the midst of a new crime wave. Overall, homicide and violent crime rates have been trending downward for more than two decades, and both rates are at historic lows. An analysis comparing 2014 and 2015 homicide data from the nation's 60 most populous cities suggests that violent crime is not increasing. Overall, reported homicides were up 16% in 2015, but a majority of cities (44 of 60) have not seen a statistically significant increase in homicides. The general consensus is that it is too early to draw any conclusions about the reversal of long-term trends. Also, even if homicide and violent crime rates do increase this year, it may not portend a break in the long-term trend. Even though both rates have been on a downward trend since 1990, there were years where either the homicide rate or violent crime rate increased. There are several short-term factors that might help explain some of the reported upticks in violent crime across the country. Year-to-year changes in crime rates can be subject to random fluctuations. Crime rates are subject to seasonal effects. Many cities are experiencing increases from historically low levels of crime. Percentage change in reported crimes is a relative measure and is sensitive to magnitude. While it might be too early to make any definitive conclusions about whether violent crime is on the rise, several commentators have speculated as to why some cities are experiencing spikes in violent crimes. Suggested explanations include the following: The "Ferguson effect" (i.e., in the wake of a spate of high-profile officer-involved deaths, police have become reluctant to engage in proactive policing, thereby emboldening criminals). Law enforcement is facing a legitimacy problem in some communities where residents feel that they are not treated fairly by the police, and this may mean that people are more likely to take matters into their own hands when conflicts arise. The increase in violence can be attributed to battles between gangs for control of drug turf or released violent offenders committing new crimes. The recent discussion about the increases in violent crime in some cities might raise the question of whether there is a need for more "real time" nationwide crime statistics. More frequent and consistent crime data might be able to provide greater insight into crime trends. However, there are logistical issues involved with collecting and reporting timely and accurate crime statistics from the nation's approximately 18,000 law enforcement agencies. | 3,911 | 627 |
In Merck KGaA v. Integra Lifesciences I, Ltd ., __ U.S. __, 125 S. Ct. 2372 (2005) , the United States Supreme Court decided, without dissent, that the patent law's safe harbor provision exempts from infringement the preclinical use of patented inventions in drug research. Without this legal immunity, pharmaceutical companies face patent infringement liability when they conduct preclinical experiments using rival companies' patented compounds. The U.S. Court of Appeals for the Federal Circuit had earlier found that the statutory exemption applied only to clinical research activity that contributes "relatively directly" to information the Food and Drug Administration (FDA) considers in approving a drug. This narrow interpretation of the safe harbor provision had raised concerns that the patent law could significantly restrict the development and introduction of new medical treatments and generic drugs. Vacating the appellate court's decision, the U.S. Supreme Court unanimously ruled that the exemption protects all uses of patented inventions that are "reasonably related" to the process of developing any information for FDA submission, which includes preclinical studies. The Court's expansive construction of the safe harbor provision "leaves adequate space for experimentation and failure on the road to regulatory approval" and "provides a wide berth for the use of patented drugs in activities related to the federal regulatory process." It is normally a violation of the Patent Act to use any patented invention without prior authorization of the patent owner. However, a statutory exception to this general rule provides: "It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention ... solely for uses reasonably related to the development and submission of information" to the United States Food and Drug Administration (FDA). Thus, a party that uses a patented invention without the patent owner's permission is committing an infringing act, but if the use comes within the scope of the statutory exception, the party will not be held liable for violating the patent owner's rights. The statutory exception was created by the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act. This legislation modified the Patent Act by creating a new section, 35 U.S.C. SS 271(e), that provides "safe harbor" from infringement for pharmaceutical companies using patented inventions in their drug research and development operations. The Hatch-Waxman Act is widely credited with encouraging and expediting the creation and availability of generic versions of approved patented drugs. Prior to its enactment, pharmaceutical companies had to wait until all relevant patents expired before undertaking the clinical research necessary to obtain FDA approval of generic equivalents. Thus, an established drug's patent term was de facto extended beyond its expiration date by the length of the FDA regulatory process for approving the generic equivalent, which took more than two years. The Hatch-Waxman Act allows generic drug manufacturers to conduct safety and effectiveness tests during the time the brand name drug's patent is still in force, often resulting in immediate introduction of a generic drug into the market upon the pioneer drug's patent expiration. The Federal Food, Drug, and Cosmetics Act (FDCA) regulates the manufacture, use, or sale of drugs. Under the FDCA, the FDA must determine that a drug is safe and effective before it can be marketed to consumers. The FDCA establishes a two-stage approval process for new drugs: an "Investigational New Drug" (IND) application and a "New Drug Application" (NDA). The drug manufacturer must file an IND with the FDA after the company has identified, through preclinical testing on animals and in test tubes, chemical compounds that appear to have beneficial therapeutic effects. The IND is a request for authorization to conduct clinical (human) testing, and it must contain information and data from the preclinical studies that justify the proposed clinical trial. Once the FDA approves the IND, the drugmaker can commence clinical studies. If these studies demonstrate that a new drug is reasonably safe and effective for use, the drugmaker is required to submit a NDA. The NDA must include data from preclinical and clinical studies. After extensive review of the NDA, the FDA issues final approval or denial of the application for manufacturing and selling the new drug to the public. The Patent Act's safe harbor provision has often been compared to the "fair use" defense in copyright law, since it immunizes from liability otherwise infringing acts in order to advance compelling public policy interests. The legislative history of the Hatch-Waxman Act provides the basis for this analogy: "Just as we have recognized the doctrine of fair use in copyright, it is appropriate to create a similar mechanism in the patent law. That is all this bill does." Despite this deceptively simple language of purpose, the safe harbor provision has been the subject of confusion and litigation for many years following its enactment. For over two decades, federal courts struggled to define the breadth and contours of the exemption, particularly concerning the types and uses of patented invention covered by the safe harbor. As for the types of covered patented invention, the United States Supreme Court in Eli Lilly & Co. v. Medtronic, Inc. expansively interpreted SS 271(e)(1) to include not only drug and veterinary products, but also medical devices that are subject to pre-market approval by the FDA. The Eli Lilly Court determined that "[t]he phrase 'patented invention' in SS 271(e)(1) is defined to include all inventions, not drug-related inventions alone." The Court opined that if Congress had wanted the safe harbor to cover only generic drugs, "there were available such infinitely more clear and simply ways of expressing that intent." As written, SS 271(e)(1) applies to the "entire statutory scheme of regulation," including "medical devices, food additives, color additives, new drugs, antibiotic drugs, and human biological products." Concerning the protected uses of a patented invention, a long disputed issue was what kind of research in the drug development process qualified for the exemption: basic research, preclinical research, or clinical studies. These three stages of drug development are described as follows: basic research involves the testing of thousands of compounds to discover any biological activity relevant to understanding the cause of a disease; the preclinical stage involves more focused research on a smaller group of chemical compounds in the hopes of finding the best candidate for clinical development; and clinical studies are the testing of the drug on human subjects in preparation for FDA approval. Following its interpretive lead in Eli Lilly, the Supreme Court in Merck KGaA v. Integra Lifesciences I, Ltd . ( " Integra " ) ruled that SS 271(e)(1) immunizes from infringement both preclinical and clinical use of patented inventions in the drug research and development process. Integra Lifesciences I, Ltd. ("Integra") is a pharmaceutical company that owns five patents related to a sequence of three amino acids, arginine, glycine, and aspartic acid (the "RGD peptide"), which promotes cell adhesion by attaching to receptors on cell surface proteins called integrins. Scientists working for Telios Pharmaceuticals, Inc. discovered that the RGD peptide had potential use in promoting wound healing and biocompatibility of prosthetic devices, prompting Telios to obtain patents for the RGD peptide compositions and methods. However, after failing to develop a viable commercial product, Telios sold the patents to Integra. In the mid-1980s, Dr. David Cheresh at the Scripps Research Institute ("Scripps"), a non-profit corporation that conducts biochemical research, discovered that blocking integrin receptors using the RGD peptide inhibited angiogenesis, a process by which new blood vessels sprout from existing vessels. Angiogenesis plays a critical role in the spread of many diseases, including cancerous tumor growth, diabetic retinopathy, and rheumatoid arthritis. Merck KGaA ("Merck"), a German pharmaceutical corporation unaffiliated with the U.S.-based pharmaceutical company Merck & Co., was interested in developing this discovery into a drug to control angiogenesis. In 1988, Merck entered into an agreement with Scripps to provide funding for Dr. Cheresh's research, in exchange for Scripps granting Merck an option to license future discoveries arising from his research. In 1994, Dr. Cheresh succeeded in reversing tumor growth in chicken embryos using a RGD peptide identified as EMD 66203, which had been provided by Merck. This peptide was covered by Integra's patent. Due to Dr. Cheresh's breakthrough achievement, Merck and Scripps entered into a new collaboration agreement in September 1995 to fund the "necessary experiments to satisfy the biological bases and regulatory (FDA) requirements for the implementation of clinical trials" with EMD 66203 or a derivative thereof. Dr. Cheresh then proceeded to conduct in vivo and in vitro experiments on EMD 66203 and two derivatives of it, EMD 85189 and EMD 121974, in order to evaluate each peptide as potential drug candidates. These "tests measured the efficacy, specificity, and toxicity of the particular peptides as angiogenesis inhibitors, and evaluated their mechanism of action and pharmacokinetics in animals." Based on these tests, in November 1996 Merck's pharmaceutical steering committee selected EMD 85189 for pre-clinical development; in April 1997, Merck switched to EMD 121974 as its most promising candidate for clinical testing. In October 1998, Merck reached an agreement with the National Cancer Institute (NCI) to sponsor the clinical trials, and later that year, the NCI filed an IND application with the FDA for EMD 121974. When Integra became aware of Merck's agreement with Scripps to conduct angiogenesis research for commercial purposes, Integra offered Merck the opportunity to purchase licenses to use its patented RGD peptides. In July 1996, after Merck had declined the offer, Integra sued Merck, Scripps, and Dr. Cheresh, seeking monetary damages for Merck's alleged patent infringement and a declaratory judgment against Scripps and Dr. Cheresh. In defense, Merck asserted that its actions involving the RGD peptides came within the common-law research exemption and the statutory safe harbor afforded by SS 271(e)(1). At the conclusion of trial, the U.S. District Court for the Southern District of California dismissed Integra's claim for declaratory judgment and held that the common-law research exemption protected Merck's pre-1995 use of the RGD peptides. However, the court found that a question of fact remained as to whether Merck's post-1995 actions fell within the scope of the SS 271(e)(1) safe harbor. The district court instructed the jury that, for Merck to prevail on the safe harbor defense, it must prove by a preponderance of the evidence that it was objectively reasonable for the company to believe that "there was a decent prospect" that the experiments "would contribute, relatively directly," to the generation of information likely to be relevant to the drug approval regulatory process. The jury found Merck liable for infringing Integra's patents and that Merck had failed to show that SS 271(e)(1) protected its post-1995 research activities. The jury awarded damages of $15 million in royalties. In response to post-trial motions, the district court dismissed Integra's suit against Scripps and Dr. Cheresh, but affirmed the jury's monetary award, explaining that there was substantial evidence to show that the connection between the experiments and FDA review was "insufficiently direct to qualify for the [SS 271(e)(1) exemption]." In June 2003, a divided panel of the Court of Appeals for the Federal Circuit affirmed the district court's determination as to liability but reversed the court's refusal to modify the damages award. The panel majority found that safe harbor does not "reach any exploratory research that may rationally form only a predicate for future FDA clinical tests." In confining the SS 271(e)(1) exemption to research activities that contribute "relatively directly" to information "reasonably related" to clinical testing for the FDA, the appellate court stated: In this case, the Scripps work sponsored by Merck was not clinical testing to supply information to the FDA, but only general biomedical research to identify new pharmaceutical compounds. The FDA has no interest in the hunt for drugs that may or may not later undergo clinical testing for FDA approval. Furthermore, the court expressed concern that construing the safe harbor provision more expansively "would effectively vitiate the exclusive rights of patentees owning biotechnology tool patents," since patented research tools are often used in general research to identify candidate drugs and experiments on those drugs. On January 7, 2005, the U.S. Supreme Court granted certiorari to review the court of appeals' interpretation of the safe harbor provision. The question presented to the Supreme Court was "whether uses of patented inventions in preclinical research, the results of which are not ultimately included in a submission to the Food and Drug Administration (FDA), are exempted from infringement by 35 U.S.C. SS 271(e)(1)." In a unanimous opinion written by Justice Scalia, the Court vacated the judgment of the Federal Circuit and held that the SS 271(e)(1) safe harbor protected the preclinical use of patented compounds "as long as there is a reasonable basis for believing that the experiments will produce 'the types of information that are relevant to an IND or NDA'" submission to the FDA. The Court explained: [W]e think it apparent from the statutory text that SS 271(e)(1)'s exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA. ... This necessarily includes preclinical studies of patented compounds that are appropriate for submission to the FDA in the regulatory process. There is simply no room in the statute for excluding certain information from the exemption on the basis of the phase of research in which it is developed or the particular submission in which it could be included. The Court rejected Integra's argument that the scope of the safe harbor is limited only to preclinical studies pertaining to the safety of a drug in humans. Since the FDA requires an IND to be filed before human trials can begin, IND applications must include summaries of a drug's efficacy, pharmacokinetics, pharmacology, and toxicological effects in animals. This data would necessarily have to be developed in preclinical studies--information that is "reasonably related" to an FDA submission and thus covered by SS 271(e)(1). The Court further disagreed with Integra's claim that Merck's preclinical research is disqualified from safe harbor protection because the experiments were not conducted in conformity with the FDA's "good laboratory practices" (GLP) regulations. Two reasons supported the Court's reasoning: first, the FDA's GLP regulations concerning preclinical studies apply only to experiments on drugs "to determine their safety," and not to studies of a drug's efficacy, mechanism of action, pharmacology, or pharmacokinetics; second, even non-GLP compliant safety-related studies are suitable for submission in an IND, when such studies are accompanied by a reason for the noncompliance. The Court placed an outer limit to the safe harbor provision by endorsing the Federal Circuit's conclusion that the exemption does not reach all experimental activity that at some point, however attenuated, may lead to an FDA approval process. For example, safe harbor does not embrace basic scientific research performed on a patented compound without the intent to develop a particular drug or without a reasonable belief that the compound will cause a particular physiological effect that the researcher desires. Thus, the boundary line between unprotected basic research and protected preclinical research is reached when a scientist discovers that a patented compound produces a "particular" physiological effect through a "particular" biological process. In denying safe harbor protection for Merck's preclinical activities, the Federal Circuit had relied upon the fact that the "Scripps-Merck experiments did not supply information for submission to the [FDA], but instead identified the best drug candidate to subject to future clinical testing under the FDA processes." The Supreme Court dismissed the appellate court's narrow interpretation of the "reasonably related" requirement in SS 271(e)(1). Such a construction, the Court explained, "disregards the reality that ... scientific testing is a process of trial and error," and that "neither the drugmaker nor its scientists have any way of knowing whether an initially promising candidate will prove successful over a battery of experiments." Thus, under certain conditions, the Court noted that the safe harbor provision is "sufficiently broad" to protect the use of patented compounds in experiments that are not ultimately submitted to the FDA or drug experiments that are not ultimately the subject of an FDA submission. The Court announced a standard for construing SS 271(e)(1)'s reasonable relation requirement in a way that "leaves adequate space for experimentation and failure on the road to regulatory approval": At least where a drugmaker has a reasonable basis for believing that a patented compound may work, through a particular biological process, to produce a particular physiological effect, and uses the compound in research that, if successful, would be appropriate to include in a submission to the FDA, that use is "reasonably related" to the "development and submission of information under ... Federal law." Research tools are defined as "tools that scientists use in the laboratory, including cell lines, monoclonal antibodies, reagents, animal models, growth factors, combinatorial chemistry and DNA libraries, clones and cloning tools (such as PCR), methods, laboratory equipment and machines." Smaller biotechnology companies and universities that invent research tools are concerned that a broader construction of SS 271(e)(1) encompassing these tools will deprive them of licensing fees that they collect from larger pharmaceutical firms. Moreover, some companies rely on such fees for their financial existence, since many of these research tools have little commercial value beyond usage in drug research. The Federal Circuit in Integra had specifically identified this potential negative consequence for patented research tools, in its support for a more limited safe harbor: [T]he context of this safe harbor originally keyed its use to facilitating expedited approval of patented pioneer drugs already on the market. Extending SS 271(e)(1) to embrace all aspects of new drug development activities would ignore its language and context with respect to the [Hatch-Waxman Act] in an attempt to exonerate infringing uses only potentially related to information for FDA approval. Moreover, such an extension would not confine the scope of SS 271(e)(1) to de minimis encroachment on the rights of the patentee. For example, expansion of SS 271(e)(1) to include the Scripps-Merck activities would effectively vitiate the exclusive rights of patentees owning biotechnology tool patents. Thus, exaggerating SS 271(e)(1) out of context would swallow the whole benefit of the Patent Act for some categories of biotechnological inventions. Needless to say, the [Hatch-Waxman Act] was [not] meant ... to deprive entire categories of inventions of patent protection. In its amicus curiae brief submitted to the Supreme Court, the U.S. Government suggests that SS 271(e)(1) does not apply to patented research tools. The Government's brief explains that the safe harbor section, by its own terms, applies only to "a patented invention." The Patent Act defines the term "invention" to mean any "invention or discovery," " unless the context otherwise indicates." The brief asserts that the context of SS 271(e)(1) indicates that Congress may not have intended to include patented research tools within the scope of the safe harbor exemption. Since most research tools are used to study or develop other compounds for submission to the FDA regulatory approval process, rather than being themselves the subject of FDA regulatory review, it is plausible to conclude that research tools are not "patented inventions" within the meaning of the statute. In Integra, the Supreme Court expressly declined to decide whether or to what extent the exemption applies to patented research tools since the matter was not at issue in the case. The Court explained that Integra had never argued that the RGD peptides were used by Merck/Scripps as research tools, "and it is apparent from the record that they were not." Thus, without a definitive judicial determination from the Court , the use of patented research tools in drug research and development may or may not fall under the SS 271(e)(1) exemption from infringement. Such uncertainty over the patent rights of makers of research tools could serve as a source of continued confusion and litigation in this area. The original legislative intent behind the Hatch-Waxman Act that created SS 271(e)(1) was to facilitate the introduction of a generic drug upon the patent expiration of the brand name drug. However, as the Supreme Court explained in the Eli Lilly case that broadened SS 271(e)(1) beyond generic drugs to the entire statutory scheme of FDA regulation: "[I]t is not the law that a statute can have no effects which are not explicitly mentioned in its legislative history." The consequences of the Supreme Court's decision in Integra are significant. Some observers argue that if the Federal Circuit's opinion had not been vacated, its narrow interpretation of the patent law's safe harbor potentially would have created a chilling effect on the development of innovative, pioneer drugs and new generic drugs. Limiting SS 271(e)(1) to only clinical research appears contrary to the objectives of the Hatch-Waxman Act: If a drug manufacturer could not perform the preclinical studies needed to obtain FDA approval to conduct clinical studies, "the [SS 271(e)(1)] exemption would never be reached because the underlying preliminary research and development work could not be undertaken" without risking patent infringement liability. The Supreme Court's more expansive construction of SS 271(e)(1) avoids this result. Since "it will not always be clear to parties setting out to seek FDA approval for their new product exactly which kinds of information, and in what quantities, it will take to win that agency's approval," the safe harbor provision is needed to immunize certain preclinical studies that use patented compounds. The Court also provided an articulated standard for courts, scientists, drug companies, and patent holders to follow concerning the scope of SS 271(e)(1) coverage: Safe harbor applies if there is a reasonable basis to believe that the preclinical experiments will produce information that is relevant to an IND or NDA submission with the FDA. Failure to meet this standard would constitute infringing conduct not exempted by SS 271(e)(1). By unanimous opinion, the Integra Court has emphatically clarified that preclinical use of patented compounds in pharmaceutical research is not categorically unprotected and can qualify for the patent law's safe harbor as long as it comes within this enunciated standard. However, the Integra Court left unresolved the issue of whether research tools come within the scope of the safe harbor exemption. It is important to note that Integra does not affect the validity and value of patented research tools when they are employed in basic research or for purposes unrelated to an FDA submission. Yet the unauthorized use of research tools in the development of information for the FDA regulatory process may constitute infringing conduct or could be exempted by the patent law's safe harbor. This legal uncertainty raises concerns about the enforceability of research tool patents in this circumstance. Unless or until the Supreme Court answers this question in a future case, Congress may desire to clarify SS 271(e)(1)'s applicability to research tools. | In Merck KGaA v. Integra Lifesciences I, Ltd ., __ U.S. __, 125 S. Ct. 2372 (2005), the United States Supreme Court unanimously held that the preclinical use of patented inventions in drug research is exempted from patent infringement claims by the "safe harbor" provision of the Patent Act, 35 U.S.C. SS 271(e)(1). (Merck KGaA is a German company unaffiliated with the U.S.-based pharmaceutical company Merck & Co.) This decision potentially may help expedite the development of new medical treatments and lower the cost of some drugs for consumers. In 2003, the U.S. Court of Appeals for the Federal Circuit had narrowly construed the safe harbor provision as protecting only clinical research activities that produce information for submission to the Food and Drug Administration (FDA) in the regulatory process. In vacating that decision, the U.S. Supreme Court ruled that the exemption applies to all uses of patented inventions that are "reasonably related" to the process of developing any information for FDA submission. The Court explained that, under certain conditions, the safe harbor provision is even "sufficiently broad" to protect the use of patented compounds in experiments that are not ultimately submitted to the FDA or drug experiments that are not ultimately the subject of an FDA submission. Finally, the scope of the exemption is not limited only to preclinical studies pertaining to a drug's safety in humans, but also includes preclinical data regarding a drug's efficacy, mechanism of action, pharmacokinetics, and pharmacology. However, the Court cautioned that the exemption does not reach all experimental activity that at some point, however attenuated, may lead to an FDA approval process. For example, the safe harbor provision does not embrace basic scientific research performed on a patented compound without the intent to develop a particular drug or without a reasonable belief that the compound will cause a particular physiological effect that the researcher desires. In addition, because the matter was not at issue in the case, the Court expressly declined to decide whether or to what extent the exemption applies to patented "research tools" that are often used to facilitate general research in developing compounds for FDA submissions. | 5,526 | 513 |
The United States is recovering from a broad recession that is considered the longest-lasting economic downturn since World War II. The National Bureau of Economic Research (NBER) determined that the recession officially began in December 2007 and ended in June 2009, followed by a period of recovery. While NBER declared an end to the recession, it has not reported favorable economic conditions or a return to economic strength. The United States remains in a period of recovery--what some have characterized as slow and uneven. Various indicators of economic strength, such as the unemployment rate and foreclosures, reached their worst showings in decades during the recession and the following months. While some newspapers across the country have published stories linking the depressed economy with localized increases in crime, others have reported decreases in crime. The current state of the economy has continued to spark debate concerning whether economic factors can affect crime. Any increase in crime rates during a period of economic uncertainty could exacerbate an already difficult situation for communities across the United States. Congress has voiced concern over this issue and deliberated funding for federal programs that provide support for state and local law enforcement agencies. Advocates of increasing funding for state and local law enforcement assistance believe that additional funding is needed for a number of reasons, including that crime rates tend to increase during periods of economic uncertainty and that state law enforcement agencies facing budget cuts may be forced to stop hiring new officers or filling vacated positions. Opponents of this funding argue that there is no documented link between economic downturns and increases in crime rates, and that the federal grant programs in question are inefficient. This report examines the relationships between selected variables of economic strength and crime. It begins with an overview of crime rates during times of economic recession in the United States. It then reviews the existing literature in the field analyzing various data sets that examine whether the unemployment rate and foreclosures can be related to increases in the national crime rate. This report focuses primarily on national-level data rather than on state- or local-level data. Because of the aggregation of national-level data, local trends may be lost. Therefore, this report presents a picture of the relationship between crime and economic indicators for the nation as a whole, but it does not discuss these relationships that may exist at the state or local level. Further, conclusions drawn about the relationship between national crime rates and economic variables may not be able to be generalized to the relationship between the economy and crime in all states and localities around the country. In essence, there may exist a relationship between the economy and crime in specific areas of the country, even if this relationship is not visible at the national level. The report also considers other economic indicators that may warrant further research with respect to their relationship with crime. Lastly, the report raises several issues that Congress may debate should it consider the relationship between the current state of economic recovery and crime, including whether crime rates are related to periods of economic turmoil and whether hiring additional police officers can reduce crime. According to NBER, "[a] recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough." NBER has identified seven recessions in the United States since 1960. Figure 1 and Figure 2 illustrate the violent and property crime rates, respectively, from 1960 through 2009. Both figures identify each of the seven recessions identified by NBER. In general, property crime rates increased fairly steadily from the early 1960s through the mid-1980s and violent crime rates continued to increase through the early 1990s. Both property crime and violent crime rates have generally been decreasing since the early 1990s. Figure 1 and Figure 2 show that, since 1960, there has been no consistent relationship between periods of economic recession and the crime rates. While the violent crime and property crime rates did increase during some recessions (generally in the 1970s), during others they either remained relatively stable or actually decreased. CRS was unable to find any literature examining potential links between recessions in the United States and crime rates. Instead, the literature in the field tends to focus on the impact that macroeconomic trends have on crime rates. With a recession defined as "a significant decline in economic activity spread across the economy," this leaves open the possibility that any number or combination of economic variables may be affected in a recession. It also suggests that no two recessions may be the same, and thus some economic variables may be at greater flux during some recessions than during others. This poses challenges in analyzing the relationship between recessions--in general--and crime. Consequently, researchers tend to use individual economic indicators, such as the unemployment rate, as a proxy for the state of the economy. However, any given indicator may not be generalizable to the state of the economy as a whole during any one given recession or across recessions. Despite the limitations in using specific economic variables as proxies for a complex economic state, this methodology does allow researchers to isolate variables and analyze their individual effects. Specifically, during the most recent economic downturn, many referred to the unemployment rate and the proportion of home foreclosures as proxies for economic health. The following sections will examine these particular economic indicators in order to see whether they can be linked to changes in the crime rates. The unemployment rate is one of the most widely referenced economic indicators. In discussions of potential impacts of the economy on crime rates, many scholars and policy makers use the unemployment rate as a proxy for economic strength. Congress has shown interest in the relationship between the economy--unemployment, in particular--and crime rates since the 1970s. The most recent recession, which was accompanied by a rise in the unemployment rate, once again focused attention on the relationship between unemployment and crime rates. In fact, according to the Bureau of Labor Statistics, at the beginning of the most recent recession in December 2007, the national unemployment rate was 5.0%. This rate continued to increase throughout the recession, reaching 9.5% at the official end of the recession in June 2009. This rate grew further and peaked at 10.1% in October 2009 before decreasing slightly. The most recent data indicates that unemployment in November 2012 was at 7.7%. The current unemployment rate represents the highest level of unemployment in the United States since the early 1990s. Researchers and scholars have several theories concerning the relationship between unemployment and crime. One of these theories, the economic theory of crime, assumes that people make rational choices between legitimate activities and criminal activities as a source of economic gain. More specifically, the comparison is between the economic benefit of legitimate work versus that of violent or property crime, after accounting for crime-related costs such as incarceration. Although the theory was originally formulated with an application to all crimes, many researchers have used it in discussions of unemployment and property crime. This theory predicts a positive correlation between unemployment and property crime; in other words, that increases in the unemployment rate will be correlated with increases in property crime rates. The reason for this positive correlation, according to the economic model, is that during periods when there are fewer opportunities for legitimate income, people may turn to illegal activities, while when more jobs are available, the risks of committing a crime may be weighed against the opportunity for legitimate work. A second theory factors both the motivation to commit crimes as well as the opportunities available to commit crimes. On one hand, this theory concurs with the economic theory of crime in predicting that the unemployment rate may be positively correlated with the crime rates because of increased criminal motivation (with potential benefits of legitimate work weighed against potential costs of crime). However, the theory simultaneously predicts that unemployment may be negatively correlated with the property crime rate, because during periods of increasing unemployment, there may be decreased criminal opportunities for reasons including that potential targets/victims may also be unemployed and thus better able to guard their property. Similarly, the theory predicts that unemployment may be negatively correlated with the violent crime rate using two assumptions: (1) during periods of unemployment, individuals may have more time to spend in situations (i.e. home and neighborhood) where people may be more close-knit, and (2) violent crimes more often involve casual acquaintances or strangers rather than individuals with close relations (based on Department of Justice and Uniform Crime Report data). If unemployment had an equal effect on increasing criminal motivation and decreasing criminal opportunity, this theory would predict no correlation between unemployment and crime rates. If the effects on increased motivation were stronger than the effects on decreased opportunity, this theory would predict (as does the economic model of crime) a positive correlation between unemployment and the property crime rate. A number of studies analyzing the relationship between unemployment and crime rates tend to find small statistically significant correlations between unemployment and the property crime rate but not between unemployment and the violent crime rate. During congressional hearings on unemployment and crime in 1979 and 1981, Congress heard testimony that there is a positive, but generally insignificant, relationship between unemployment and crime rates, and that this relationship holds true more often for the property crime rate than for the violent crime rate. A review of the literature found large disparities in the magnitude of the correlation between unemployment and the property crime rate. Some researchers found a small relationship (unemployment accounts for about 2% of the change in the property crime rate); other researchers found a large relationship (unemployment may account for up to 40% of the change in the property crime rate), while still others found no relationship. Steven Levitt examined empirical studies on the relationship between unemployment and the property crime rate between 1973 and 2001. Assimilating the findings across five studies including his own research, Levitt concluded that controlling for other factors, almost all of these studies report a statistically significant but substantively small relationship between unemployment rates and property crime. A typical estimate would be that a one percentage point increase in the unemployment rate is associated with about a one percent increase in property crime. Levitt estimated that changes in the economy (unemployment) accounted for only about 2% of the changes in the property crime rate between 1991 and 2001. He argued that most of the decline in the property crime rate during the 1990s can be attributed to non-economic factors (increases in the number of police, increases in the prison population, the receding crack epidemic, and increases in abortion ) rather than the declining unemployment rate. In reviewing the literature examining the relationship between unemployment and the property crime rate, CRS identified several issues that may affect policy makers' abilities to draw conclusions about the true relationship between unemployment (as a proxy for economic strength) and crime. For one, the effects of the unemployment rate on the property crime rate may better explain property crime trends during some time periods than during others. For example, Theodore Chiricos reviewed 63 studies, some of which evaluated the unemployment-crime relationship between 1960 and 1970, and some of which evaluated this relationship after 1970. Although the 1960s saw a decrease in unemployment and the 1970s saw an increase in unemployment, both decades witnessed a general increase in the property crime rate. Consequently, Chiricos's research suggests an "inconsistent" relationship between unemployment and property crime rates during the 1960s and a positive relationship during the 1970s. Eric Gould and his colleagues evaluated the relationship between unemployment and the property crime rate between 1979 and 1997, and similarly found that the significance of the relationship was dependent on the time period. They found a strong, short-term correlation for the years 1993 through 1997, but determined that there was no evidence for a long-term relationship between unemployment and the property crime rate between 1970 and 1997. Further, Steven Levitt concluded that there was a statistically significant, but substantively small, impact of unemployment on the property crime rate during the 1990s. Even looking within the 1990s, there is a stronger correlation between unemployment and the property crime rate in the late 1990s than in the early 1990s. Because the conclusions drawn about the relationship between unemployment and the property crime rate differ not only across larger time periods, but across shorter segments of time, it is difficult for researchers to predict the effect--if any--that recent unemployment rates may have on the property crime rate. Secondly, the source of the data and its level of aggregation, both for unemployment and for crime statistics, appears to affect the strength of the relationship between these variables. For example, Theodore Chiricos found that the "level of aggregation" of the data influenced the conclusions. Of the studies he examined using state-level data, 21% revealed a significant positive relationship between unemployment and the property crime rate, while 14% of the studies showed a significant negative relationship. Of those studies that relied on city-level data, a larger proportion showed a significant positive relationship, while a smaller proportion of the studies showed a significant negative relationship. Chiricos suggested that whereas state-level data may be relatively heterogeneous (e.g., it includes a wider variety of socioeconomic variables), city-level data may be more homogenous and thus more likely to reflect the specific trends observed within a given group of individuals in the city. Therefore, in considering potential effects of the most recent economic downturn and its after-effects on crime rates, it may be that the unemployment-crime relationship differs across various parts of the country. If this relationship is not consistent across the country, it may affect conclusions drawn about unemployment-crime trends across the nation as a whole. Thirdly, there may be external factors that affect the unemployment-crime relationship. If there were a direct link between unemployment and the property crime rate, varying one would necessarily vary the other. The lack of conclusive evidence for a strong, or even significant, correlation between the two suggests that the unemployment rate may have an indirect relationship with the property crime rate. Although unemployment is correlated with overall economic conditions, it may not fully capture other key economic indicators such as work hours, employment stability, and wages. Some researchers, for example, have found that employment stability and wages may correlate more strongly with the property crime rate than does unemployment. Eric Gould and colleagues demonstrated that, although the increased unemployment of non-college-educated men was associated with an increase in the property crime rate, a decrease in wages for this demographic group was actually more strongly correlated. The most recent recession has been linked by some to falling home prices and increases in mortgage delinquencies that led to home foreclosures. Essentially, as home prices fell over several years, homeowners across the country increasingly found themselves owing more on their mortgages than the market value of their homes. This, in turn, led to a rapid increase in the delinquency rate on mortgage payments and to the rate at which banks entered into the foreclosure process. As mentioned earlier, NBER indicates that the economic recession began in December 2007. Home foreclosure data from that time (the fourth quarter of 2007) indicate that 2.04% of all home loans were in foreclosure. At the official end of the recession in June 2009, 4.30% of all home loans were in foreclosure. Data indicate that this percentage continued to increase beyond the recession itself, as 4.43% of all home loans were in foreclosure at the end of September 2011. Foreclosures have since begun to decline, and at the end of September 2012, 4.07% of all home loans were in foreclosure. Given the still-elevated percentage of home foreclosures across the nation--relative to foreclosure rates before the most recent economic downturn--there has been interest concerning what kind of impact foreclosures, which can lead to houses sitting empty for some time, have on crime rates. Although a number of newspaper articles have cited anecdotal evidence that crime rates increase in neighborhoods where many foreclosures have occurred, there is a dearth of scientific studies on the impact that home foreclosures have on crime rates. For example, one academic study addressing the link between foreclosures and crime examined this foreclosure-crime relationship in one particular locale rather than on a national level. The main literature analyzing crime rates through the spectrum of the housing market has descended from the "broken windows" theory elucidated by James Wilson and George Kelling in 1982. According to this theory, physical signs of disorder in a neighborhood (such as broken windows, graffiti, and abandoned buildings) generate apathy and fear among the residents of that neighborhood. Wilson and Kelling argue that "at the community level, disorder and crime are usually inextricably linked, in a kind of developmental sequence." The authors reason that as more houses become abandoned in a neighborhood, the neighborhood begins to feel untended to its residents, leading to an increase in the delinquent activities and ultimately the crime that will occur there. Wilson and Kelling suggest that by focusing policing on minor misdemeanor laws (such as graffiti, vandalism, and loitering), urban police departments could help reduce more serious crime. This has come to be known as "order maintenance" policing, and it has been adopted as a strategy by many urban police departments across the country. A number of studies have shown a relationship between physical signs of disorder in a neighborhood and increasing crime. However, there is mixed evidence concerning whether there is a causal link between neighborhood disorder and crime, and whether "order maintenance" policing can reduce crime rates. It is important to note, however, that the neighborhood declines measured in many of these studies usually take place over an extended period of time--often longer than a decade--while home foreclosures can occur suddenly. However, if foreclosed properties remain on the market for extended periods of time, or become abandoned or blighted, they may accelerate the process of neighborhood decline. The impact that foreclosures have on neighborhoods can also differ widely depending on the characteristics of the particular neighborhood involved. In neighborhoods where demand for residential property is strong, or neighborhoods where foreclosures are not heavily concentrated, foreclosures may not have much of an impact. On the other hand, if foreclosures are concentrated heavily in one particular neighborhood, or if foreclosures take place in neighborhoods with low demand for residential property, the impact on the neighborhood may be significant. One academic study addressing the link between foreclosures and crime that CRS was able to identify analyzed the housing market and crime rates in Chicago. After controlling for a number of socioeconomic factors, the authors concluded that violent crime--but not property crime--was linked to increases in neighborhood foreclosures. The authors noted that, given their statistical analysis, a 1% increase in foreclosures would be accompanied by a 2.3% increase in violent crime. They also noted that property crimes may have been underreported because they were related to vacant or abandoned houses, or because they took place in lower-income neighborhoods, where residents may be less likely to report property crimes than residents in comparable higher-income neighborhoods. Because the study was restricted to a large urban center, however, it has limited generalizability to other, less urban parts of the country. Moreover, the study analyzed one year of data. This focus on one year of data may make it difficult to extrapolate the study's results over a longer period; instead, the study represents a snapshot of one place in time. Similar findings regarding the relationship between home foreclosures and crime rates come from the Charlotte-Mecklenburg Police Department (CMPD) in North Carolina. The CMPD examined a five-year period from 2003 through 2007 and concluded that "[v]iolent crime rose consistently during the 5-year period in the high-foreclosure neighborhoods, but remained significantly lower in the low-foreclosure neighborhoods, except in 2004." Property crime rates did not appear to be as closely linked to foreclosures as were violent crime rates. Moreover, the authors did not control for other factors (such as the age of homes in foreclosure) that may have contributed to the difference in violent crime between the high-foreclosure neighborhoods and other neighborhoods. Another study identified by CRS from the 1990s examined the relationship between foreclosures and crime--specifically, the impact of crime on foreclosures rather than the impact of foreclosures on crime. The study concluded that increases in crime rates led to increases in mortgage delinquencies and foreclosures. The authors found that crime rates were inversely related to property values in the United States; decreases in property values were one of the chief determinants of increases in mortgage delinquency rates leading to foreclosures. It should be noted that this is not a direct relationship between crime and foreclosures, but rather an indirect relationship; crime is linked to property values, and property values are linked to mortgage delinquencies, which are in turn linked to foreclosures. The author concluded that increases in violent crime had a three-year lag effect on decreasing property values, while increases in property crime had a more immediate one-year lag effect on decreasing property values. However, the author did not control for other socioeconomic, neighborhood, and financial characteristics that could have contributed to or accounted for the decreases in property values. Conversely, as previously noted, the use of aggregate data could have had a dampening effect on the study's results. While much research on the relationship between economic variables and crime rates has focused on macroeconomic variables such as unemployment and home foreclosures, some research suggests that other economic variables could fluctuate more strongly with crime rates and could thus serve as better proxies for evaluating the relationship between the economy and crime. For example, in examining factors affecting the property crime rate between 1980 and 1997, Reza Fadaei-Tehrani and Thomas Green ran a correlation between six different independent variables (GDP, median income, education expenditures, poverty rate, drug seizures, and unemployment) and the property crime rate. They did not find a significant relationship between unemployment--the most highly examined economic variable--and the property crime rate. They did, however, determine that a decrease in the property crime rate was significantly related to an increase in public expenditures for education, median income, and gross domestic product (GDP). Together, these three variables accounted for about 74% of the variation in the property crime rate from 1980 through 1997, and the GDP accounted for about 28%. These results suggest that crime rates--the property crime rate, in particular--may be linked to the economy, but that researchers may not see the relationship by studying traditional macroeconomic factors such as unemployment. Thomas Arvanites and Robert Defina utilized inflation-adjusted, per capita gross state product (GSP) as an indicator of economic strength and found a significant relationship between GSP and the property crime rate from 1986 through 2000. They argue that GSP may be a more valid proxy for economic strength than the unemployment rate because while the unemployment rate may correlate with overall economic conditions, it may not reflect changes in other economic indicators such as work hours, wages, job mobility, and job security--other key indicators of economic conditions. One particular limitation of using this data range (1986-2000) is that crime rates were generally declining during that time; a larger range would allow the researchers greater generalizability of their findings. Like many of the other studies, the correlational nature of these studies does not allow for conclusions about causality. Researchers have suggested that consumer sentiment may correlate with crime rates, particularly for those crimes that may be, to some extent, economically motivated. The idea behind the use of a broader gauge for the economy than concrete macroeconomic factors is the notion that "[a]s the economy deteriorates, one's ability to meet their financial and emotional needs, regardless of her/his employment status, may become strained." In direct response to this idea, Richard Rosenfeld and Robert Fornango used annualized values from the Index of Consumer Sentiment (ICS) as a proxy for how individuals perceived the economy and contrasted it with UCR data for crimes they deemed to be economically motivated, such as robbery, burglary, and larceny. Results from their analyses indicated that consumer sentiment was more highly correlated with robbery and property crimes than more traditional measures of the economy, such as the unemployment rate. These results underscore the importance of analyzing perceived economic conditions in addition to actual economic conditions. One particular limitation of this study, however, is that the researchers did not consider the effect of consumer sentiment on violent crimes other than robbery. Many violent crimes, including murder and assault, may have a nexus to economic motivation, such as a robbery that ends up with the victim being accidentally killed. However, most of the research reviewed by CRS failed to establish a reliable link between economic variables and violent crimes. As discussed earlier, no two recessions are identical, and thus some economic variables may be at greater flux during some recessions than during others. Similarly, as illustrated in Figure 1 and Figure 2 , crime rates may fluctuate more during some recessions than during others. As also mentioned, while research is inconclusive regarding the true relationship between economic indicators and crime rates, some have found lag or time-delay relationships between changes in economic indicators and subsequent changes in crime rates. As such, if crime rates were to increase in the wake of the most recent recession, policy makers may focus on the nature of the relationship between this recession and crime rates. Of note, however, in the immediate years following the recession, 2010 and 2011, crime rates--both violent and property crime rates--have continued to decline. The literature reviewed by CRS has several possible implications for policy makers. It does not appear that recessions--as measured by macroeconomic variables such as the unemployment rate or home foreclosures--can be definitively linked to increases in crime rates. However, preliminary research on other (though less-studied) factors, such as GDP (or GSP) as well as consumer sentiment, indicates there may be some correlation between these factors and crime rates, and these relationships warrant further research. In addition, research on economic indicators and crime rates using aggregate data--particularly on the national level--appears to produce less conclusive results than research using state or city-level data. Congress may also consider issues including whether the current state of the country's economic health is linked to crime rates and, if so, whether changes in the number of law enforcement officers may impact crime rates. The most recent economic downturn led some to speculate that increases in unemployment and home foreclosures could lead to increases in crime. However, CRS found little historical evidence of correlation between broad macroeconomic trends or foreclosures and crime rates, and the literature on the relationship between unemployment and crime rates provided mixed results. However, as noted, research using city- and state-level data rather than aggregate national data demonstrated stronger relationships between economic variables and crime rates--particularly property crime rates. This suggests that some areas of the country may experience a greater relationship between various economic indicators of the ongoing recovery from the economic downturn and crime rates than other areas. Consequently, one policy option may involve determining those localities that are experiencing larger increases in crime and directing state and local law enforcement assistance to those areas. As mentioned earlier, the CRS review did find limited evidence of some correlation between crime and microeconomic indicators such as consumer sentiment. This could suggest that how people perceive the economy may be more related to increases in crime than any tangible economic trends. This may be of interest to Congress, given the negative view of the economy revealed by recent surveys of consumer sentiment. The University of Michigan consumer sentiment survey used by CRS in this report, for example, reached 55.3--its lowest level in almost three decades--in November 2008. Consumer sentiment then rebounded and reached 76.0 in June 2010 before declining again. The most recent data indicate that in November 2012, consumer sentiment was at 82.7, still lower than consumer sentiment levels for most of 2007 before the start of the recession. If the past correlation between consumer sentiment and crime holds true, and if consumer sentiment remains on an upswing, policy makers may choose to follow whether crime rates--and in particular, the property crime rate--may continue to trend downward in the future. If crime rates do in fact increase during times of economic decline or instability (something that the literature and data are inconclusive about), policy makers may be interested in what measures can be taken to address such increases in specific localities that may be related to the economic decline. As mentioned, there may be stronger relationships between economic variables and crime rates--particularly property crime rates--when looking at city- and state-level data rather than at national level data. While the FBI's UCR data indicated that both violent and property crime rates fell in all regions of the country in 2011, some regions of the country may have experienced localized increases in property and violent crimes. It is unknown, however, whether any of these trends may be related to lingering impacts of the most recent economic downturn. Some have suggested that additional funding be made available for state and local law enforcement agencies to hire additional police officers in order to counteract any potential increases in crime rates that may be generated during the recovery from the economic downturn. This line of thought is related to the deterrence theory of crime, which predicts that increasing law enforcement (in this case by increasing the police force) has a deterrent effect on crime. Policy makers have often discussed whether increasing the number of police on the streets will subsequently decrease the incidence of crime. CRS reviewed the empirical literature that has evaluated the impact of the size of the police force on crime rates. Overall, the results of these investigations indicate that there is no conclusive evidence regarding the impact of police force size on national crime rates; the studies reported all possible results--law enforcement increased crime, decreased crime, and had no effect on crime. The total body of research suggests that law enforcement may have little impact on the amount of crime. However, researchers have acknowledged that past research suffered from a series of methodological and analytical problems, which could mean that any conclusions drawn from those studies are dubious. Some of the most recent research--which some argue is more methodologically sound than past research--suggests that more law enforcement officers could have a negative impact on crime. Yet, as some experts have noted, the ability to study the relationship between law enforcement levels is limited by the amount of data available and the current theory about what factors impact crime rates. Congress may face the issue of whether funding additional law enforcement officer positions is a cost-effective method of reducing crime, or whether there may be other ways to support the states' criminal justice systems. Congress may also consider whether it might be more effective to fund programs that address other correlates of crime rather than funding state and local law enforcement hiring programs such as Community Oriented Policing Services (COPS). | The United States is currently recovering from a broad recession that is considered the longest-lasting economic downturn since World War II. Various indicators of economic strength, such as the unemployment rate and foreclosures, reached their worst showings in decades during the recession and the following months. The state of the economy has generated debate concerning whether economic factors can affect crime. This report examines research on how selected economic variables may or may not be related to crime rates. There are multiple macroeconomic indicators, such as the consumer price index or real earnings, that can serve as estimates of economic strength. Specifically, during the most recent economic downturn, many referred to the unemployment rate and the proportion of home foreclosures as proxies for economic health. Therefore, most of the discussion in this report utilizes unemployment and foreclosure data in discussing the relationship between the economy and crime. A number of studies have analyzed the link between the unemployment rate and crime rates (with a greater focus on property crime), some theorizing that in times of economic turmoil, people may turn to illicit rather than licit means of income. However, a review by CRS found a lack of consensus concerning whether the unemployment rate has any correlation with the property crime rate. A number of studies analyzed by CRS that did find a correlation between the unemployment rate and the property crime rate generally examined time periods during which the unemployment and property crime rates moved in tandem. Conversely, some studies that used longer time-horizons tended to find no direct link between the unemployment rate and the property crime rate. The link between foreclosures and crime rates has not been reviewed as comprehensively by social scientists as other broader macroeconomic variables--namely, unemployment. Most of the literature in the field focuses on whether abandoned houses can be linked to increases in crime rather than looking at the particular role that foreclosures may play. The literature reviewed suggests that there is some correlation between abandoned houses and the property crime rate (but not, however, the violent crime rate). With respect to the relationship between foreclosures and crime rates, some of the studies found that foreclosures did have an impact on the violent crime rate (but not the property crime rate). However, the limited number of studies examining the relationship between foreclosure rates and crime rates complicates any attempt to draw firm conclusions. While much research on the relationship between economic variables and crime rates has focused on macroeconomic variables such as unemployment and home foreclosures, some research suggests that other economic variables, such as gross domestic product (GDP) or gross state product (GSP), as well as consumer sentiment, could fluctuate more closely with crime rates and could thus serve as better proxies for evaluating the relationship between the economy and crime. Policy makers continue to be concerned with potential impacts--such as increased crime--that the economic climate may have on the nation. As a result, some have suggested that focus should be placed on increasing the resources of state and local police departments (i.e., increasing the number of police officers). In addressing this concern, however, Congress may opt to consider whether economic downturns can be linked to crime rates. | 6,611 | 654 |
American consumers increasingly rely on credit and debit cards to pay for goods and services. Between 1997 and 2011, card payments rose from accounting for 23% of payments to 48%. During the same period, payment by cash and checks dropped from 70% to 35%. In 2011, consumers made 49 billion debit transactions totaling $1.8 trillion and 26 billion credit transactions totaling $2.1 trillion. This shift makes card security and fraud prevention more important than ever. In 2012, MasterCard and Visa--also called "payment brands" --set October 1, 2015, as the date by which U.S. card issuers--banks and credit unions--would need to have replaced existing credit and debit magnetic stripe cards with chip cards, and for merchants to begin accepting them. Chip cards are formally known as "EMV" cards, named for the coalition of three companies, Europay, MasterCard, and Visa, that developed the specifications for the standard. EMVCo membership has now expanded to include the payment brands of American Express, JCB, Discover, and UnionPay. There were four significant drivers of EMV adoption in the United States: L iability Shift. The October 1, 2015, deadline that shifted liability to the party that has not switched to chip cards is seen as a strong incentive for merchants and issuers to make the switch. Increasing Financial Impact of Fraud. In 2012, credit card losses in the United States totaled $5.33 billion, an increase of 14.5% from 2011. Between 2004 and 2010, fraud using U.S.-issued bank credit cards rose 70%. Merchants, card issuers, and consumers are adversely affected by increases in fraud. Increasing Concern o ver Data Breaches. Although the number of breaches dipped significantly between 2011 and 2012, there has been a modest increase between 2012 and 2013. Although the number of incidents in 2013 (198) is small compared to 2011 (855), a lot of attention has been paid to those breaches in the news. That attention appears to have created the perception that the number of breaches is increasing more than it actually is, raising concern among consumers, as well as policymakers. Better Security for Cards and Transactions. Chip cards make data stolen in a breach much more difficult to use: Counterfeiting is significantly more difficult than with stripe cards. Most observers, including the Federal Reserve Bank, agree that chip cards, "regardless of the verification method used, will provide a more secure payment environment." The cost of a complete transition in the United States is expected to be at least $6 billion, but the costs for issuers and merchants that do not meet the adoption deadline could be even greater: Now that the deadline has passed, the liability for fraudulent transactions will shift to the party that has not switched to chip cards. For example, if a merchant does not accept chip cards and the customer has a chip card, the transaction will still be processed using the magnetic stripe still present on the back of the card, but the merchant will bear responsibility for any fraudulent activity. If the merchant has a chip point-of-sale (POS) terminal, but the bank has not issued a chip card to the customer, the bank will be liable. If neither or both parties have complied, the fraud liability will remain the same as it is today. Historically, the issuer has paid about 60% of losses and retailers have paid 40%. Issuers picked up most of the losses when the card was present but was fraudulent, while merchants picked up the bulk of losses when cards were not present. Now that October 1, 2015, has passed, exploring and understanding the ramifications of the transition--or the failure to transition--is likely to become increasingly important for Congress, especially if additional major breaches occur. Additionally, new deadlines are coming in 2016 and 2017 for card-branded ATM cards. There are many policy issues related to EMV adoption in the United States and elsewhere in the world. This report describes the financial harm caused by data breaches and explains how those breaches are carried out. It provides information about the effect of the transition in selected foreign countries. The report also discusses resolved and remaining impediments to completing the EMV transition in the United States and identifies areas of potential congressional interest. EMV cards offer a significantly higher level of data security than stripe cards: Data on the chip is secured using both hardware and software security measures, so even if the card data is compromised, the chip itself will still be difficult to counterfeit. The EMV chip carries cardholder and account data, and is programmed to make decisions about a transaction and control its outcome, that is, approve or decline it. Chip cards can be produced as "chip-and-PIN," "chip-and-signature," or "chip-and-choice" (which allows the use of either a personal identification number [PIN] or signature). Transactions are verified in the method programmed into the chip. If the card is to have a PIN associated with it, the PIN is programmed into the chip before it is embedded in the card and sent to the cardholder. EMV is the global standard for the chip technology embedded in financial payment cards. Much of the rest of the world--Europe, Canada, Latin America, and the Asia-Pacific region--has already transitioned to chip cards. In the fourth quarter of 2012, there were 1.62 billion chip cards in use across 80 countries, leaving the United States as the last major country to implement what is now the de facto global standard. Globally, card fraud totaled $11.3 billion in 2012, an increase of 15% from 2011. In the United States, although fraud constituted less than 1% of total expenditures, credit card losses totaled $5.33 billion in 2012, an increase of 14.5% from 2011. The United States has been disproportionately affected by fraud: Since 2003, the United States has consistently accounted for about half of the total global loss, but for only about a quarter of the total volume of card payments ( Figure 1 ). Between 2004 and 2010, fraud committed on U.S.-issued bank credit cards rose 70% ( Figure 2 ). Debit card fraud also rose, with cards using a signature for verification accounting for 91% of the fraud and cards using a PIN for verification accounting for 9% ( Figure 3 ). Card fraud can be conducted in a number of ways, but it always begins with the theft of card information. The scale of the theft can range from small, such as stealing a wallet, to large, such as skimming or a data breach. Data breaches can be carried out in more than one way (and for reasons other than committing fraud), but the most common method is hacking into a POS system used to make card-based purchases. These breaches are called "POS intrusions." In 2013, 75% of breaches in the travel/hospitality sector and 31% in the retail sector were POS intrusions aimed at stealing credit and debit card data. POS intrusions and the ensuing card fraud are facilitated by what many consider to be the weak link in the U.S. card payment process: the continued use of magnetic stripe cards that carry unencrypted data. A hacker can gain access to a company's POS systems in a number of ways. Sometimes the hacker will use a "brute force" approach, systematically checking all possible keys or passwords until the correct one is found, or exploiting inadequately managed Internet connections to the POS system. Another common way is through the use of stolen third-party (vendor) credentials (sign-on information). For example, some POS system vendors do not change the default password to access the system. That password is often included in the system documentation, making it easy for anyone, especially a hacker, to find the information online. Once the hacker has gained access to the computer system used to manage the POS system, he or she installs malware that copies the unencrypted data on cards as they are swiped. The most common type of malware used in POS intrusions is called a "RAM scraper," so named because it allows the hacker to "scrape" data out of the memory of the POS system. The RAM scraper exploits the very brief period that the card data is in the POS reader, before it is encrypted and sent to complete the payment process. Europe has transitioned between about 73% and 80% of cards and about 95% of POS terminals to EMV technology. Other regions around the world have transitioned to varying degrees ( Figure 4 ). A 2012 study of five countries by the Federal Reserve Bank (FRB) of Atlanta examined fraud trends experienced by the United Kingdom, Canada, France, Australia, and the Netherlands as they transitioned from stripe cards to chip-and-PIN cards; none of the countries studied issued chip-and-signature cards. Three of the five countries studied in the report experienced decreases in both the rates and total amounts of card fraud ( Figure 5 ), with some exceptions attributed to factors other than the security of the chip itself. For example, when the United Kingdom began issuing chip cards, the cards continued to carry a magnetic stripe, too. If the card was swiped to make a purchase and the card data was compromised, it could be used in card-not-present (CNP) environments or to make counterfeit cards for use in non-chip countries. The data analyzed in the study showed that chip-and-PIN is most effective in reducing certain types of fraud, notably-- card-present fraud ; domestic counterfeit card fraud , committed by manufacturing cards created with valid information from lost or stolen cards, but most often carried out using data stolen in a data breach or "skimming"; and lost and stolen card fraud , committed using an original, activated, and valid card after it is lost or stolen, in both "card present" (e.g., retail) and certain "card-not-present" (e.g., Internet purchase) scenarios. Additionally, mail non-receipt fraud , committed by stealing a card before it is activated by the rightful owner, has also decreased with the introduction of chip cards. For example, since 2004, this type of fraud has decreased 91% in the United Kingdom. Most U.S. issuers have stated that they plan to issue chip-and-signature credit cards, rather than chip-and-PIN cards. It is uncertain how this decision may affect fraud in the United States. In all but one of the countries studied (France), the switch to chip cards caused two types of fraud to increase: domestic CNP fraud , e.g., catalog or Internet purchases, and c ross-border counterfeit card fraud . This type of fraud uses data stolen from cards issued in chip countries to produce physical counterfeit cards for use in non-chip countries. This is a phenomenon referred to as "fraud migration," with the fraud migrating primarily to the United States, the last major market to transition to chip cards. In the countries where CNP fraud eventually decreased, many merchants have adopted fraud prevention measures. There are two simple prevention measures: requiring cardholders to authenticate their identities by entering the card's verification/security code and/or expiration date. A card's security code and expiration are shown only on the card and are not encoded on either the magnetic stripe or the EMV chip. An additional measure is "Address Verification Service" (AVS). AVS matches the billing address information provided at check-out with that on file with the card issuer. Other options to mitigate CNP fraud are also available and have been adopted in varying degrees. Some of these are discussed below. Visa, MasterCard, and American Express have developed and adopted proprietary security measures to make CNP fraud more difficult to perpetrate: Verified by Visa, SecureCode, and SafeKey, respectively. All three are based on the 3-D Secure protocol and are only used for Internet-based purchases. They work by redirecting the payment transaction to the issuer's website to perform user authentication by requiring the cardholder to provide additional credentials before approving a transaction. The merchant, the cardholder, and the card issuer all must use the system for it to work. In 2013, only about 3% of U.S. merchants employed an authentication method based on 3-D Secure. The 3-D Secure protocol allows the card issuer to define what those credentials will be. For example, the cardholder might be required to enter a password. The password can be permanent or transaction specific. Transaction-specific passwords can be generated in a number of ways. Issuer-generated passwords can be sent via text message and email to the cardholder's registered mobile device and email account. This method can be used with both stripe and chip cards. With a chip card, the cardholder can generate a password by inserting the card into a cardholder-owned reader and entering the card's permanent PIN. The reader will then generate a one-time PIN for use with that specific transaction. In Europe, about 30 million people use chip cards and readers for Internet transactions. Although 3-D Secure provides an extra layer of security for CNP transactions, it still has vulnerabilities. For example, in the past, hackers successfully used malware to direct cardholders signing up for 3-D Secure to a fake enrollment window, allowing theft of the card data. While this specific vulnerability can be avoided using additional security methods, hackers are likely to continue looking for any vulnerability they can find and exploit in POS systems. There are also new security measures available that were developed by third-party companies not associated with the card companies. Two such examples are "D-FACTOR," by DeviceAuthority, and "TranSecure," a partnership between Quatrro and NorseCorp. Using D-FACTOR, cardholders link their credit cards to one or more devices, such as a mobile phone or home computer. Before a CNP purchase is approved, D-Factor verifies that the purchase is being made using a cardholder-registered device. TranSecure is not a transaction authentication method, but provides ongoing monitoring for fraud. This system uses fraud-detection software paired with fraud analysts to thwart CNP and other types of card fraud. Neither of these systems has been widely adopted at this time. Cross-border counterfeit fraud increased in the countries studied by FRB Atlanta, as counterfeiters used data stolen in chip-and-PIN markets and produced stripe cards for use in those markets still using them. The FRB Atlanta report attributed the increase to issuers providing cards with both chips and magnetic stripes. For instance, when the United Kingdom transitioned to EMV cards, credit and debit cards were issued with both a chip and a magnetic stripe, which rendered them as easy to exploit and clone as stripe cards. The stolen data could then be used to manufacture counterfeit stripe cards for use in places such as the United States, where the transition had not yet begun. To mitigate the chance that this vulnerability will exist, cards issued in the U.K. now include a small "flag" on the magnetic stripe to indicate that the card has a chip on it. If swipe card data is stolen, the flag would be copied along with the other stolen data onto the cloned card. The POS system would then recognize the flag if the card were swiped, alerting the merchant that a cloned card was being used. The United Kingdom and Australia reported an initial increase in counterfeit fraud after EMV implementation, but it later decreased. It is too soon to say whether the United States could have this same "immunity" from such an increase: Since the United States is the only remaining major market still using at least some stripe cards, there will not be any other major markets where stolen information could be used. Unlike CNP fraud, counterfeit fraud appears to diminish as more countries eliminate stripe cards. The upcoming liability shifts for branded ATM cards and the ongoing debate over signature versus PIN are two areas of continued work toward a complete shift to chip cards. On October 1, 2016, a new liability shift will occur: Automated teller machines (ATMs) that accept MasterCard-branded debit cards must be EMV operational. ATMs that accept Visa-branded debit cards will have an additional year to be operational. As nearly all ATMs in the United States accept both Visa-branded and MasterCard-branded cards, the 2016 date for MasterCard essentially forces all ATMs to be operational. As with the 2015 shift date, this date is not a mandate, but most ATMs are likely to be EMV operational to avoid possible fraud liability. There is some concern that the complexity of updating payment processing software to accommodate both debit (PIN) and credit (signature) processing of debit card transactions could contribute to the delay or cause a decrease in the number of ATMs. Many retailers are frustrated with the delays in certifying their payment systems. Retailers made significant investments to upgrade their systems to avoid the possibility of having the liability for fraudulent transactions shift to them after October 1, 2015. For instance, in New York City, one supermarket chain spent about $700,000 to upgrade their systems in time to meet the October 1, 2015, deadline, but their systems remain uncertified as of March 2016 and they have now begun incurring the costs associated with fraud liability. The banks and retailers have differing opinions on the cause or causes for the delay in retail-outlet certification: Banks say that retailers waited till the last minute to update their terminals. Retailers point to financial ties between the banks and the companies that provide certification, saying there is no motivation to move faster. Although most issuers are currently providing chip-and-signature cards, some experts predict that could change. Along with some retailers, the federal government supports PIN use in EMV transactions, stating: Currently, not all EMV cards are issued to consumers with the PIN capability and not all merchant PoS terminals can accept PIN entry. EMV transactions at chip PoS terminals provide more security of consumers' personal data than magnetic strip PoS transactions.... Although EMV cards provide greater security than traditional magnetic strip cards, an EMV chip does not stop lost and stolen cards from being used in stores, or for online or telephone purchases when the chip is not physically provided to the merchant. As yet, there has been no legislation introduced in the 114 th Congress that would affect the EMV transition. In the 113 th Congress, no legislation was introduced that would have directly affected the manner in which the transition is taking place. Four bills contained language that would have addressed concerns about improving protection from credit card data theft in other ways. These bills would have, for example-- increased protection for consumers whose card data had been compromised (e.g., free credit monitoring for a year); increased penalties for those convicted of identity theft and certain other violations of data privacy and security; provided for criminal penalties against entities that fail to provide required notice of a breach of personally identifiable information; defined thresholds for when public notification would be required after a breach; and/or defined thresholds for when notification of law enforcement or other government entities (e.g., Secret Service, Federal Bureau of Investigation, Congressional Judiciary Committees, Federal Trade Commission) would be required. A resolution was also introduced that would have expressed "the sense of the Senate that the President should pursue extradition authority for international cybercriminals committing credit card theft targeting United States citizens." No further action was taken. To date, there has been one hearing in the 114 th Congress on the EMV transition. On October 7, 2015, the House of Representatives Committee on Small Business held a hearing, "The EMV Deadline and What It Means for Small Businesses." The 113 th Congress held three hearings that addressed data breaches, both generally and in response to specific breaches. Each hearing included questions and discussion about the status of EMV adoption in the United States, such as how the transition was expected to affect the frequency and seriousness of data breaches and the progress being made towards a full EMV migration in the United States. Privacy in the Digital Age--Preventing Data Breaches and Combating Cybercrime. This hearing was held by the Senate Committee on the Judiciary on February 4, 2014. It consisted of two panels of witnesses, the first composed of representatives from the consumer protection, retail, and data security sectors, and the second composed of representatives from federal government agencies charged with investigating the breaches. Of particular interest to committee members was the Target Corporation data breach, as well as the Personal Data Privacy and Security Act, which was reintroduced by Senator Leahy, Judiciary Committee Chair, on January 8, 2014. Among other issues, the hearing explored how quickly companies inform their customers after a data breach, and whether current reporting requirements are adequate or whether legislation is needed. Protecting Consumer Information: Can Data Breaches Be Prevented? This hearing was held on February 5, 2014, by the House Committee on Energy and Commerce and its Subcommittee on Commerce, Manufacturing, and Trade. This hearing was prompted by the Target Corporation data breach. Among other issues, the hearing explored: the relationship between federal law enforcement and the private sector in tracking and responding to breaches of consumer information; how private sector entities work among themselves and with the federal government to develop and maintain best practices; how the tactics and efforts of cybercriminals have changed over time; whether it is possible or realistic for a company to be impervious to data breaches; and whether additional regulation of data security might be necessary. Protecting Consumer Information: Can Data Breaches Be Prevented? Can Technology Protect Americans from International Cybercriminals? This hearing was held on March 6, 2014, by the House Committee on Science, Space, and Technology Subcommittee on Oversight and Subcommittee on Research and Technology. This hearing focused on the consumer privacy and national security aspects of data breaches. Witnesses included federal government officials, payment industry representatives, and a privacy advocacy organization. Members were particularly interested in whether the payments industry was on track to meet the October 1, 2015, deadline. Other issues discussed included the current state of technology and standards to protect consumers from international cybercriminals, and the evolution of cyberattacks against the U.S. industry from rogue hackers to sophisticated international crime syndicates and foreign governments. Questions and concerns remain that Congress might choose to monitor. Data on the impact of EMV signature verification on fraud reduction do not exist because signature verification was not adopted in other countries (they chose to adopt PIN verification). So, while the primary driver of the transition is fraud reduction, it remains to be seen if signature verification will produce the same level of fraud reduction in the United States as PIN verification has produced in other countries. Congress may follow the renewed interest by some states to encourage PIN adoption. The delay reaching agreement over debit card programming could cause the EMV debit card transition to lag behind the EMV credit card transition. One study found that fraud reduction in POS transactions was achieved more quickly by migrating all card products at or near the same time. The payments industry will need to stay on track to achieve the simultaneous transition, which could have an impact on overall fraud reduction, and the relative level of fraud between credit cards and debit cards. Given the broad interest in reducing data breaches and fraud, and the October 1, 2015, transition deadline, the 114 th Congress might examine the effectiveness of the transition to determine whether legislative action may be needed, especially if major breaches continue to occur. Many questions were raised in hearings during the 113 th Congress, including: Are companies implementing the additional security safeguards recommended to decrease c ard- n ot- p resent f raud ? CNP fraud decreased significantly in countries where both card issuers and merchants implemented additional safeguards on such transactions. Card issuers here have implemented various methods to offer those safeguards, but success will be largely dependent on widespread use by merchants. Are companies taking adequate steps to prepare for a data breach? Data breaches will likely continue, but there are steps that companies can take to prepare for them and mitigate their damage. For example, Experian has published a preparation guide for companies that could make post-breach activity easier and more conducive to assisting law enforcement. Are existing post-breach consumer notification procedures adequate and consistent? Consumers might reasonably expect to receive all the information needed, in a timely manner, to protect themselves after a data breach. Additionally, they might expect to receive the same information after every breach, regardless of the company who had been breached or where they are located. Are existing legal and regulatory post-breach thresholds that trigger mandatory reporting to law enforcement adequate and consistent ? Law enforcement is unable to begin investigating breaches until they have been notified that a breach has occurred by the affected company. In addition, nearly all states have their own laws requiring notification; there are no federal laws or guidelines. Of the states that have laws, the circumstances that "trigger" reporting differ. For example, some states define "personal information" narrowly, while others have adopted more expansive definitions. So, in effect, a company might be required to report in some states, but not all, when their data has been breached, as well as report different information in each state. These differing requirements can present a challenge to companies with a presence in more than one state. This is one reason that some in the federal government, including some in Congress and the Federal Trade Commission, have advocated a single federal law to address all aspects of data breach reporting nationwide. Many states with existing, and in many cases long-standing laws, though, have expressed concerns about enacting a federal law. They believe such a law, which would likely supersede state laws, might offer consumers less protection. One compromise that policymakers have discussed would be to allow existing state laws with more stringent protections to take precedence over a federal law. The cost of the EMV transition, the slow pace of adoption, and other issues may have hampered both issuer and retailer efforts to meet the October 2015 deadline. Disagreements over transaction verification methods for credit transactions, chip programming, and the fee structure for debit transactions all played roles in delaying EMV transition planning and adoption. Most issues have been resolved through industry negotiation or litigation. There have been four impediments to EMV adoption in the United States: High Cost of Implementation . Both card issuers and merchants in the United States have balked at transitioning to chip cards. They have already made significant financial investments in existing technology, and the transition will impose immediate, short-term costs on them. The cost of the transition to chip cards for financial institutions and businesses that use POS readers will be significant. Although opinions differ greatly as to the actual amount, most industry observers agree that it will cost between $6 billion and $8 billion. Of that amount, 75% is likely to be paid by merchants, making the transition three times as expensive for them as for the issuers. Costs for Card Issuers: Chip and Card Production . Some analysts have stated that manufacturing chip cards costs between $1.00 and $4.00 per card--2 to 16 times as much as traditional stripe cards, which cost about 25C/ to 50C/ each. Adding to that cost, personalizing the card with the holder's name and other details is about twice as expensive with chip cards as with stripe cards. While the issuing institution would pay initially for the chip and personalization of the card, those costs might be passed down to the consumer. Issuers will also face consideration of the one-time and ongoing costs associated with each type of implementation. Costs for Merchants: POS System Replacement . In addition to the costs to issuers of producing the cards, merchants have to purchase new POS equipment (i.e., chip readers) to process chip card transactions. In 2015, cost estimates ranged from about $100 to $600 each, depending on the number ordered and specific product features. Stripe readers cost approximately $50 to $100 when purchased individually, but less than $20 when purchased in bulk. Estimates prior to the transition were that only 25%-44% of retailers would meet the deadline, with the majority of those being the larger retailers. Minimal Implementation Prior to October 1, 2015 . There are about 1.1 billion credit and debit cards in use in the United States. At the time of the transition, estimates of the share of cards with EMV chips stood between 7% and 15%. Some believe that issuers would have had to replace, on average, about 2 million cards every day until the deadline to achieve 100% transition. Despite the slow start, some experts have predicted that by the beginning of 2016, 90%-95% of cards could be chip cards. About 33% of POS machines are now EMV compliant and that figure would have to increase significantly before the benefits of the chip cards can be realized. Transaction Verification: PIN versus Signature. Despite initial resistance from the retail community, which asserted that PIN verification would be far more likely to reduce fraud, card issuers largely decided to implement chip-and-signature. This could change, however. First, in a June 2015 speech, Federal Reserve System Governor Jerome H. Powell expressed his support for the use of PINs. Then, on November 17, 2015, nine state attorneys general asked leaders at companies including MasterCard, Visa, Discover Financial Services, Bank of America, Capital One, Citigroup, American Express, and JP Morgan Chase--who have collectively begun the nationwide transition to a chip-and-signature card--to move to full chip and PIN technology as soon as possible. This latest renewed interest could indicate a possible shift in the future. Dual Debit Applications . Visa and MasterCard use one proprietary debit processing application, and the major PIN debit networks use another. After lengthy negotiations, both sides finally agreed to cross-license their applications in July 2013, resolving most of the technical issues hampering transition planning. This issue is no longer a matter of contention. Debit Transaction Fees: Delay in Regulatory Certainty . In 2010, as part of a larger financial reform law, the Federal Reserve Board (FRB) was charged with developing rules setting maximum transaction fees ("interchange fees") that merchants can be charged for debit card transactions. In addition, the law specified the framework the FRB was to use in developing those rules. The rules went into effect in October 2011, but the National Retail Federation, representing merchants, appealed the ruling, stating that it believed the fee ceiling had been set too high. In July 2013, a judge for the U.S. District Court for the District of Columbia (D.C.) rejected the FRB's regulations, stating that the agency had set the cap too high on debit-card transactions, and that it had disregarded congressional intent in its proceeding. However, in March 2014, the Court of Appeals for the D.C. Circuit reversed the lower court's decision and upheld the FRB's rules. The merchants again appealed the decision, this time to the U.S. Supreme Court, filing for a writ of certiorari in August 2014. On January 20, 2015, the Court denied the merchants' petition, allowing the FRB's original rules to go into effect. Because of the long-running court case and the other problems described, card issuers lost more than three years of planning time to meet the October 2015 deadline for debit cards (credit cards are unaffected by the fee structure under consideration by the Court). Some issuers were thought to be hesitant to replace their stripe-based debit cards until the issue was resolved. The delay has the potential to cause a lag between when chip-based credit cards are issued and chip-based debit cards are issued. Issuing debit and credit chip cards simultaneously was cited by the FRB as a key to maximizing the benefits of chip cards in reducing fraud: Based on the experiences of chip-and-PIN migrations in other countries, it is imperative that all card-based products should be migrated at, or near, the same time to have a positive impact on reducing face-to-face fraud within a country's borders. As witnessed in Canada, migrating credit before debit resulted in a significant increase in fraud perpetrated with debit cards, ultimately resulting in a minimal reduction of total card fraud. If the United States migrates to chip-and-PIN without market consensus, agreement, or in a timely and concerted effort; those issuers, networks, or merchants who are slow to migrate will see increased fraud levels and the impact on overall fraud levels could be minimal. Ultimately, it remains to be seen what impact the court case will have on debit card replacement. | Consumer financial card fraud due to data breaches of card information is an ongoing problem in the United States. The majority of breaches are carried out against point-of-sale (POS) systems, and are facilitated by what many consider to be the weak link in the U.S. retail sales payment process: the continued use of magnetic stripe cards (also referred to as stripe-and-signature cards). These cards are still what most U.S. consumers think of when referring to financial cards. In much of the rest of the world, cards that provide a much higher level of security for conducting sales transactions have been used for many years: EMV cards, named for the coalition of card brands Europay, MasterCard, and Visa (the EMV Coalition or EMVCo) that developed the specifications for the system in the 1990s. EMV cards store card information on an embedded microchip and are more commonly called chip cards. With these cards, instead of swiping and signing to make a payment, the cardholder inserts the card into the POS machine, then either enters a personal identification number (PIN) or signs to verify the transaction. On October 1, 2015, the liability for fraudulent transactions involving magnetic stripe cards shifted to the entity--card issuer (e.g., bank, credit union) or merchant--that had not yet made the transition. The transition makes U.S.-issued cards compatible with POS systems and automated teller machines in much of the rest of the world. On October 1, 2016, a new liability shift will occur: automated teller machines (ATM) that accept MasterCard branded cards must be EMV operational. ATMs that accept Visa-branded cards have an additional year to be operational. The 114th Congress may examine the transition and its effectiveness to determine whether any legislative action is needed, especially if major breaches continue to occur despite the transition. | 7,150 | 411 |
As attention continues to focus on juvenile offenders, some question the way in which they are treated in the U.S. criminal justice system. Since the late 1960s, the juvenile justice system has undergone significant modifications as a result of United States Supreme Court decisions, changes in federal and state law and the growing perception that juveniles were increasingly involved in more serious and violent crimes. As a result, federal and state juvenile justice systems have focused less on rehabilitation and more on punishment, which may have significant ramifications for juvenile offenders once they reach adulthood. For example, recidivist statutes such as the Armed Career Criminal Act (ACCA) impose mandatory minimums based on prior convictions, including juvenile adjudications. As such, adult criminal defendants are exposed to longer terms of imprisonment based on prior juvenile misconduct. Despite this shift in focus to one more closely resembling the adult criminal justice system, juvenile offenders are not generally afforded the full panoply of rights provided to adult criminal defendants. The establishment of a juvenile court in Cook County, Illinois, in 1899 marked the first statewide implementation of a separate judicial framework whose sole concern was the problems and misconduct of children. The juvenile court was designed to be more than a court for children. The underlying theory behind a separate juvenile court system was that the state has a duty to assume a custodial and protective role over individuals who cannot act in their own best interest. As such, the separate system for juvenile offenders was predicated on the notion of rehabilitation--not punishment, retribution, or incapacitation. Because the juvenile court focused on protection rather than punishment, the juvenile proceeding was conceptualized as a civil proceeding (not a criminal one), with none of the trappings of an adversarial proceeding. By the mid-20 th century, questions arose regarding the fairness and efficacy of the juvenile justice system and its ability to effectively rehabilitate young offenders. Concerns that the differences between the adult and juvenile systems were illusory prompted the need to preserve the legal rights of children adjudicated in the juvenile justice system. As such, state courts began to expand the legal rights of juvenile offenders. The emerging focus on juveniles' rights in the state courts prompted intervention from the U.S. Supreme Court, which had traditionally deferred to the states. Beginning in the mid-1960s, the Court examined the due process rights of minors in four landmark cases: Kent v. United States , In re Gault , In re Winship , and McKeiver v. Pennsylvania . Through these cases, the Court left an indelible mark on the juvenile justice system by restricting the discretion of juvenile court judges and enumerating the constitutional rights retained by juveniles during adjudication. These decisions resulted in a hybrid juvenile justice system that renders some of the procedural rights afforded to adult criminal defendants. Some argue that this hybrid system blurs the historical distinction between the juvenile justice and adult criminal systems. The Court first recognized that the U.S. Constitution guaranteed juveniles due process rights in Kent v. United States . In Kent , the Court reviewed a District of Columbia case in which the petitioner challenged the validity of the juvenile court's decision to waive jurisdiction over him, on the ground that the procedure used by the court in reaching its decision constituted a denial of due process of law. The U.S. Supreme Court held that the waiver of jurisdiction was a "critically important" stage in the juvenile process and must be attended by minimum requirements of due process and fair treatment required by the Fourteenth Amendment. In reaching its decision, the Court expressed concern that the non-criminal nature of the juvenile proceeding was an invitation to "procedural arbitrariness" including broad judicial fact-finding. In In re Gault , the Court held that the informal procedures of juvenile courts amount to a denial of juveniles' fundamental due process rights. Although the Court recognized that juvenile courts were attempting to help juveniles, it reasoned that this worthy purpose failed to justify informal procedure, particularly when a juvenile's liberty was threatened. After a thorough examination of the history of the juvenile court system, the Court reiterated much of the criticism it raised in Kent , specifically expressing concern about the juvenile court's informality and the broad discretion of its judges. To ensure that juveniles receive the essentials of fair treatment during an adjudicatory hearing, the Court found that juveniles were entitled to certain due process rights afforded to adult criminal defendants under the U.S. Constitution. These rights include the right to reasonable notice of the charges, the right to counsel, the right to confrontation, and the right against self-incrimination. In In re Winship , the Court continued to expand the rights of juveniles by holding that the state must show proof beyond a reasonable doubt to adjudicate a minor as delinquent for an act that would be a crime if committed by an adult. The state of New York charged Samuel Winship with delinquency for stealing $112 from a woman's pocketbook in a furniture store. Having already established that juvenile proceedings must conform to due process and fair treatment, the Court considered a single issue: whether due process and fair treatment require a state to demonstrate proof beyond a reasonable doubt to hold a juvenile accountable for committing an adult criminal act. Although a New York juvenile court found Winship to be delinquent under a statute that required the state to show guilt merely by a preponderance of the evidence, the Court reversed, emphasizing that criminal charges have always required a higher burden of persuasion than civil cases. The Court expressly held that the Due Process Clause of the Fourteenth Amendment protects the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he or she is charged. Finding that juveniles are constitutionally entitled to the reasonable doubt standard, the Court stated, "[t]he same considerations that demand extreme caution in fact-finding to protect the innocent adult apply as well to the innocent child." The Court rejected the state's argument that the delinquency adjudication is a civil proceeding that did not require due process protections, calling this argument the "civil label of convenience." By 1970, the Supreme Court had ruled that the due process notion of fundamental fairness entitled juveniles to various procedural protections in juvenile court. However, in McKeiver v. Pennsylvania , the Court held that juveniles do not have a fundamental right to a jury trial when being adjudicated in the juvenile justice system. McKeive r was a consolidation of three similar appeals involving minors adjudicated delinquent in juvenile court by judges who had rejected their requests for a jury to serve as fact-finder at their hearing. The Court narrowed the issue presented to whether the Due Process Clause of the Fourteenth Amendment ensured the right to trial by jury in the adjudicative phase of a juvenile court delinquency proceeding. After reviewing its previous juvenile court jurisprudence, the Court first considered whether the right to a jury was automatically guaranteed to minors by the Sixth and Fourteenth Amendments. Although it had never expressly characterized juvenile court proceedings as criminal prosecutions within the meaning and reach of the Sixth Amendment, the Court reiterated that the juvenile court system reflected many of the adult criminal court's punitive aspects. However, a plurality of the Court rejected the argument that adjudicatory proceedings were substantively similar to criminal trials, reasoning that a jury trial was only constitutionally required if due process required fact-finding by a jury. In support of its conclusion that a jury is unnecessary for fair fact-finding, the plurality noted that equity cases, workmen's compensation cases, probate matters, deportation cases, and military trials, among others, had been traditionally decided by judges without juries. In reaching its decision, the Court expressed doubt as to whether imposing such a right would improve the fact-finding ability of juvenile courts. In addition, the Court reasoned that imposing such a right would jeopardize the unique nature of the juvenile system and blur the distinctions between juvenile court and adult criminal court. To do so would make the juvenile system obsolete. The plurality's holding signaled the Court's return to the more paternalistic approach it had rejected in its previous opinions and marked the end of the era of expansion of procedural rights in juvenile adjudications. Arguably, the absence of a jury trial requirement in adjudicatory proceedings presents a host of questions that may warrant a reexamination of the issue. First, some are likely to argue that the increasingly punitive nature of cases adjudicated in the juvenile justice system calls into question the validity of the Court's reasoning underlying its holding in McKeiver that juveniles are not entitled to the right to a jury trial. When the Court decided McKeiver , it did so to maintain the civil and rehabilitative nature of the juvenile justice system. At the time of the decision, juvenile adjudication hearings were closed to the public, the system was informal, and the records of the juvenile adjudications were confidential and not relied on in criminal prosecutions. Currently, some juvenile adjudication hearings are open to the public, the system is more formal and adversarial, and juvenile adjudications are frequently used in criminal prosecutions for sentence enhancement. From their perspective, the civil and rehabilitative nature of the juvenile justice system has shifted to a more punitive one which more closely resembles the adult criminal justice system. Central to the McKeiver ' s holding was the Court's conclusion that juries were not essential to accurate fact-finding. However, this premise may be called into question in light of the Court's reemphasis on the importance of a jury. In a series of cases, the U.S. Supreme Court has recognized and emphasized the important role that juries play in criminal proceedings. In Duncan v. Louisiana , the U.S. Supreme Court held that the right to jury trial is fundamental and guaranteed by due process. In Williams v. Florida , the Court reaffirmed that the "purpose of the jury trial ... is to prevent oppression by the Government." The U.S. Supreme Court recognized the superiority of group decision-making over individual judgments in Ballew v. Georgia , which defined the constitutional minimum number of jurors that a state must empanel in a criminal prosecution. In Ballew , the Court, relying on empirical data, found that a jury composed of less than six members was less likely to foster effective group deliberation and more likely to lead to inaccurate fact-finding and incorrect application of the community's common sense to the facts. In addition, the court concluded that a smaller panel could increase the risk of convicting an innocent person. More recently, the Court has stressed the constitutional necessity of juries, rather than judges, making factual determinations upon which sentences are based. The Court's reasoning in Ballew and subsequent cases regarding fact-finding by juries during sentencing may call into question the Court's conclusion in McKeiver that a jury would not improve the fact-finding ability and fairness of juvenile courts. An argument can also be made that the absence of a jury trial in the adjudicatory process could lead to inequities in other criminal proceedings. For example, recidivist statutes such as the Armed Career Criminal Act impose mandatory minimums based on prior convictions, which by definition include juvenile adjudications. As such, adult criminal defendants are subjected to longer terms of imprisonment based on prior juvenile misconduct. Some state and lower federal courts have found that equating juvenile adjudications with a conviction as a predicate offense for the purposes of state recidivism statutes subverts the civil nature of the juvenile adjudication to an extent that makes it fundamentally unfair and, thus, violative of due process. One way to remedy the perceived inequities in using non-jury juvenile adjudication as sentence enhancements, critics of the current system maintain, might be to grant juveniles a right to a jury trial during adjudicatory hearings. | As more attention is being focused on juvenile offenders, some question whether the justice system is dealing with this population appropriately. Since the late 1960s, the juvenile justice system has undergone significant modifications resulting from U.S. Supreme Court decisions, changes in federal and state law, and the growing belief that juveniles were increasingly involved in more serious and violent crimes. Consequently, at both the federal and states levels, the juvenile justice system has shifted from a mostly rehabilitative system to a more punitive one, with serious ramifications for juvenile offenders. Despite this shift, juveniles are generally not afforded the panoply of rights afforded to adult criminal defendants. The U.S. Constitution requires that juveniles receive many of the features of an adult criminal trial, including notice of charges, right to counsel, privilege against self-incrimination, right to confrontation and cross-examination, proof beyond a reasonable doubt, and double jeopardy. However, in McKeiver v. Pennsylvania, the Court held that juveniles do not have a fundamental right to a jury trial during adjudicatory proceedings. The Sixth Amendment explicitly guarantees the right to an impartial jury trial in criminal prosecutions. In Duncan v. Louisiana, the U.S. Supreme Court held that this right is fundamental and guaranteed by the Due Process Clause of the Fourteenth Amendment. However, the Court has since limited its holding in Duncan to adult defendants by stating that the right to a jury trial is not constitutionally required for juveniles in juvenile court proceedings. Some argue that because the Court has determined that jury trials are not constitutionally required for juvenile adjudications, courts should not treat or consider juvenile adjudications in subsequent criminal proceedings. In addition, some argue that the use of non-jury juvenile adjudications in subsequent criminal proceedings violates due process guarantees, because juvenile justice and adult criminal proceedings are fundamentally different. Has the juvenile justice system changed in such a manner that the Supreme Court should revisit the question of jury trials in juvenile adjudications? Are the procedural safeguards in the juvenile justice system sufficient to ensure their reliable use for sentence enhancement purposes in adult criminal proceedings? To help address these questions, this report provides a brief background on the purpose of the juvenile system and discusses procedural due process protections provided by the Court for juveniles during adjudicatory hearings. It also discusses the Court's emphasis on the jury's role in criminal proceedings and will be updated as events warrant. | 2,767 | 546 |
T he Social Security system provides monthly benefits to qualified retirees, disabled workers, and their spouses and dependents. Before 1984, Social Security benefits were exempt from the federal income tax. Congress then enacted legislation to tax a portion of those benefits, with the share gradually increasing as a person 's income rose above a specified income threshold. In 1993, a second income threshold was added that increased the share of benefits that are taxable. These two thresholds are often referred to as first tier and second tier. In general, the Social Security and Tier I Railroad Retirement benefits of most recipients are not subject to the income tax. However, up to 85% of Social Security benefits can be included in taxable income for recipients whose "provisional income" exceeds either of two statutory thresholds (based on filing status). Provisional income is adjusted gross income, plus certain otherwise tax-exempt income (tax-exempt interest), plus the addition (or adding back) of certain income specifically excluded from federal income taxation (interest on certain U.S. savings bonds, employer-provided adoption benefits, foreign earned income or foreign housing, and income earned in Puerto Rico or American Samoa by bona fide residents), plus 50% of Social Security benefits. The first tier thresholds, below which no Social Security benefits are taxable, are $25,000 for taxpayers filing as single, head of household, or qualifying widow(er) and $32,000 for taxpayers filing a joint return. In the case of taxpayers who are married filing separately, the threshold is also $25,000 if the spouses lived apart all year, but it is $0 for those who lived together at any point during the tax year. If provisional income is between the first tier thresholds and the second tier thresholds of $34,000 (for single filers) or $44,000 (for married couples filing jointly), the amount of Social Security benefits subject to tax is the lesser of (1) 50% of Social Security benefits or (2) 50% of provisional income in excess of the first threshold. If provisional income is above the second tier threshold, the amount of Social Security benefits subject to tax is the lesser of (1) 85% of benefits or (2) 85% of provisional income above the second threshold, plus the smaller of (a) $4,500 (for single filers) or $6,000 (for married filers) or (b) 50% of benefits. Because the threshold for married taxpayers filing separately who have lived together any time during the tax year is $0, the taxable benefits in such a case are the lesser of 85% of Social Security benefits or 85% of provisional income. None of the thresholds are indexed for inflation or wage growth. Table 1 summarizes the thresholds and calculation of taxable benefits. The two examples in Table 2 illustrate how taxable Security benefits may be calculated for a single retiree in tax year 2016. The retiree is at least 62 years of age and receives $15,000 in annual Social Security benefits--about the average for a retired worker. The examples include other (non-Social Security) income of $20,000 or $30,000. The calculation of taxable Social Security benefits depends on the level of benefits and the level of non-Social Security income. Holding benefits constant, as non-Social Security income increases, provisional income increases, and therefore the amount of taxable Social Security benefits increases. Holding non-Social Security income constant, as Social Security benefits increase, the amount of Social Security benefits that is taxable increases. Those two perspectives are illustrated in the two figures below. (The figures are for single retirees only, but they would be similar for married couples.) Figure 1 shows taxable Social Security benefits for single retirees with four different amounts of annual Social Security benefits ($10,000, $15,000, $20,000, and $25,000) as non-Social Security income increases from zero to $45,000. (Provisional income, which equals non-Social Security income plus half of Social Security benefits, is not shown directly in the figure.) Once provisional income exceeds the first tier threshold of $25,000, each additional dollar of non-Social Security income results in 50 cents of additional taxable income. For example, for someone with Social Security benefits of $10,000, no benefits are taxable unless non-Social Security income exceeds $20,000, in which case provisional income would exceed $25,000 (which equals $20,000 plus half of $10,000). Once provisional income exceeds the second tier threshold, each additional dollar of non-Social Security income results in an additional 85 cents of taxable income. As described above, the second tier threshold occurs when provisional income exceeds $34,000, at which point taxable Social Security benefits exceed $4,500. In the figure, a horizontal line marks $4,500 of taxable Social Security benefits. The amount of Social Security benefits that are taxable continues to increase as non-Social Security income increases until 85% of Social Security benefits are taxable. After that, the amount of taxable benefits is constant, as shown by the flat portions of the lines on the right-hand side of the figure. Note that the additional tax owed is less than the additional taxable income . The additional tax owed equals the additional taxable income multiplied by the taxpayer's marginal tax rate. Figure 2 shows taxable Social Security benefits for single retirees with three different levels of non-Social Security income ($20,000, $30,000, and $40,000) as Social Security benefits increase. (Provisional income, which equals non-Social Security income plus half of Social Security benefits, is not shown directly in the figure.) For people with $10,000 of Social Security benefits, those benefits would be untaxed unless non-Social Security income exceeded $20,000, at which point provisional income would exceed the $25,000 threshold (which equals half of $10,000 plus $20,000). As noted above, the additional tax owed is less than the additional taxable income , because the additional tax owed equals the additional taxable income multiplied by the taxpayer's marginal tax rate. For the same levels of non-Social Security income and Social Security benefits, a married couple will have lower taxable Social Security benefits than a single retiree. Consequently, Figure 1 and Figure 2 do not reflect the impact of taxation on a married couple filing a joint tax return. There are special considerations in which the application of the taxation of benefits formula may vary. These include lump sum distributions, repayments, coordination of workers' compensation, treatment of nonresident aliens, and withholding from wages. Each of these issues is discussed in more detail in the Appendix to this report. Although the Railroad Retirement Act prohibits states from taxing railroad retirement benefits, including any federally taxable Tier I benefits (45 U.S.C. SS231m), states may tax Social Security benefits. In general, state personal income taxes follow federal taxes. That is, many states use as a beginning point for the state income tax calculations either federal adjusted gross income, federal taxable income, or federal taxes paid. All of these beginning points include the federally taxed portion of Social Security benefits. States with these beginning points for state taxation must then make an adjustment, or subtraction from income (or taxes), for railroad retirement benefits. A state may also make an adjustment for all or part or the federally taxed Social Security benefits. Some states do not begin the calculation of state income taxes with these federal tax values but instead begin with a calculation based on income by source. The state may then include part or all of Social Security benefits in the state calculation of income. As shown in Table 3 , 30 states and the District of Columbia fully excluded Social Security benefits from the state personal income tax. Seven states tax all or part of Social Security benefits but differ from the federal government, and six states follow the federal government in their tax treatment of Social Security benefits. The remaining seven states have no personal income tax. Because the income thresholds to determine the taxation of Social Security benefits are not indexed for inflation or wage growth, the share of beneficiaries affected by these thresholds increases over time. The Congressional Budget Office (CBO) projected that 49% of Social Security beneficiaries (25.5 million people) were affected by the income taxation of Social Security benefits in tax year 2014. That share has almost doubled since 1998, when 26% of beneficiaries were affected by taxation of benefits. Table 4 shows CBO's estimates for tax year 2014 of the number of Social Security beneficiaries and of the number and share of beneficiaries affected by the taxation of Social Security benefits, by level of income. The percentage of Social Security beneficiaries affected increases sharply with income. Table 5 shows how the share of benefits that are taxed increases with income. The proceeds from taxing Social Security and Railroad Retirement benefits at the 50% rate are credited to the Social Security's two trust funds--the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds--and to the Railroad Retirement system, on the basis of the source of the benefits taxed. Proceeds from taxing benefits at higher rates are credited to Medicare's Hospital Insurance (HI) trust fund. In 2016, the OASI and DI (collectively referred to as OASDI) trust funds were credited with $31.6 billion from taxation of benefits, or 3.4% of the funds' total income. Income from the taxation of benefits in the HI fund in 2016 was $20.2 billion, or 7.3% of total HI fund income. Because the income thresholds used to determine the share of benefits that is taxable are not indexed for inflation or wage growth, income taxes on benefits will become an increasingly important source of tax revenues for Social Security and Medicare. Currently, about 35% of the total Social Security benefits are subject to income tax. CBO estimates that proportion will increase to over 50% by 2046. The income taxes collected from Social Security benefits are projected to grow from 0.2% of GDP in 2016 to 0.3% of GDP in 2046. Under the intermediate assumptions, the Social Security and Medicare trustees project that over the next 30 years, income taxes will grow from 4% of Social Security's tax revenue (i.e., non-interest income) to 6.5%. Additionally, the share will continue to grow, to over 7% by 2095. For Medicare, income tax on benefits as a share of total tax revenue (non-interest income) increases from just over 3% to around 4.7% in 2040 and later. Revenue from benefit taxes will be a smaller share of total Medicare program revenues, because in addition to tax revenue, it receives interest on trust fund balances (as does OASDI), and Medicare receives income from premiums and from general revenue. Until 1984, Social Security benefits were exempt from the federal income tax. The exclusion was based on rulings made in 1938 and 1941 by the Department of the Treasury, Bureau of Internal Revenue (the predecessor of the Internal Revenue Service). The 1941 Bureau ruling on Social Security payments viewed benefits as being for general welfare and reasoned that subjecting the payments to income taxation would be contrary to the purposes of Social Security. Under these rules, the treatment of Social Security benefits was similar to that of certain types of government transfer payments (such as Aid to Families with Dependent Children (AFDC), Supplemental Security Income (SSI), and benefits under the Black Lung Benefits Act). This was in sharp contrast to then-current rules for retirement benefits under private pension plans, the federal Civil Service Retirement System (CSRS), and other government pension systems. Benefits from those pension plans were fully taxable, except for the portion of total lifetime benefits (using projected life expectancy) attributable to the employee's own contributions to the system (and on which he or she had already paid income tax). Currently (and as in 1941), under Social Security the worker's contribution to the system is half of the payroll tax, officially known as the Federal Insurance Contributions Act (FICA) tax. The amount the worker pays into the Social Security system in FICA taxes is not subtracted to determine income subject to the federal income tax, and is therefore taxed. The employer's contributions to the system are not considered part of the employee's gross income, and are deductible from the employer's business income as a business expense. Consequently, neither the employee nor the employer pays taxes on the employer's contribution. The 1979 Advisory Council on Social Security concluded that because Social Security benefits are based on earnings in covered employment, the 1941 ruling was wrong and that the tax treatment of private pensions was a more appropriate model for tax treatment of Social Security benefits. The council estimated that the most anyone who entered the workforce in 1979 would pay in payroll taxes during his or her lifetime would equal 17% of the Social Security benefits he or she would ultimately receive. (This was the most any individual would pay; in the aggregate, workers would make payroll tax payments amounting to substantially less than 17% of their ultimate benefits.) Because of the administrative difficulties involved in determining the taxable amount of each individual benefit and to avoid "taxing more of the benefit than most people would consider appropriate," the council recommended instead that half of everyone's benefit be taxed. They justified this ratio as a matter of "rough justice" and noted that it coincided with the portion of the tax (the employer's share) on which income taxes had not been paid. This position to tax Social Security benefits was in contrast to the position of the National Commission on Social Security, established by Congress in the Social Security Amendments of 1977 ( P.L. 95-216 ). The commission did not, in its 1981 final report, include a recommendation to tax Social Security benefits. The National Commission on Social Security Reform (often referred to as the "Greenspan Commission"), appointed by President Reagan in 1981, recommended in its 1983 report that, beginning in 1984, 50% of Social Security cash benefits and Railroad Retirement Tier I benefits be taxable for individuals whose adjusted gross income, excluding Social Security benefits, exceeded $20,000 for a single taxpayer and $25,000 for a married couple, with the proceeds of such taxation credited to the Social Security trust funds. The commission did not include any provisions for indexing the thresholds. The commission estimated that 10% of Social Security beneficiaries would be subject to taxation of benefits. The commission acknowledged that the proposal had a "notch" problem, in that people with income at the thresholds would pay significantly higher taxes than those with only one dollar less, but trusted that it would be rectified during the legislative process. In enacting the 1983 Social Security Amendments ( P.L. 98-21 ), Congress adopted the commission's recommendation to tax Social Security benefits, but with a formula that gradually increased the taxable share as a person's income rose above the thresholds, up to a maximum of 50% of benefits. The formula calculated taxable benefits as the lesser of 50% of benefits or 50% of the excess of the taxpayer's provisional income over thresholds of $25,000 (for single filers) and $32,000 (for married filers). Provisional income equaled adjusted gross income plus tax-exempt interest plus certain income exclusions plus 50% of Social Security benefits. In 1993, the Social Security Administration's Office of the Actuary estimated that, if pension tax rules were applied to Social Security, the ratio of total employee Social Security payroll taxes to expected benefits for current recipients (in 1993) would be approximately 4% or 5%. The actuarial estimates were that for workers just entering the workforce, the ratio would be, on average, about 7%. Because Social Security benefits replaced a higher proportion of earnings of workers who were lower paid and had dependents, and because women had longer life expectancies, the workers with the highest ratio of taxes to benefits would be single, highly paid males. The estimated ratio for these workers (highly paid males) entering the workforce in 1993 was 15%. Applying the tax rules for private and public pensions presents practical administrative problems. Determining the proper exclusion would be complex for several reasons, including the difficulty of calculating the ratio of contributions to benefits for each individual when several people may receive benefits on the basis of the same worker's account. President Clinton proposed (as part of his FY1994 budget proposal) that the portion of Social Security benefits subject to taxation be increased from 50% to 85%, effective in tax year 1994. As under then-current law, only Social Security recipients whose provisional income exceeded the thresholds of $25,000 (for single filers) and $32,000 (for married filers) were to pay taxes on their benefits. Also as under then-current law, the first step was to add 50%, not 85%, of benefits to adjusted gross income. Because the thresholds and definition of provisional income did not change, the measure would only affect recipients already paying taxes on benefits. However, the ratio used to compute the amount of taxable benefits was increased from 50% to 85%. Taxing no more than 85% of Social Security benefits (the estimated portion not based on contributions by a recipient, including highly paid males) would ensure that no one would have a higher percentage of Social Security benefits subject to tax than if the tax treatment of private and civil service pensions were actually applied. The proceeds from the increase (from 50% to 85%) were slated to be credited to the Medicare Hospital Insurance program, which had a less favorable financial outlook than Social Security. Doing so also avoided possible procedural obstacles (budget points of order that can be raised regarding changes to the Social Security program in the budget reconciliation process). This measure was included in the 1993 Omnibus Budget Reconciliation Act (OBRA), which passed the House on May 27, 1993. The Senate version of the bill included a provision to tax Social Security benefits up to 85% but imposed it only after provisional income exceeded new thresholds of $32,000 (for single filers) and $40,000 (for married filers). When the House and Senate versions of the budget package were negotiated in conference, the conference agreement adopted the Senate version of the taxation of Social Security benefits provision and raised the thresholds to $34,000 (for single filers) and $44,000 (for married filers). President Clinton signed the measure into law (as part of P.L. 103-66 ) on August 10, 1993. Although other changes in tax law have since affected the amount of taxes paid on Social Security benefits, there have been no direct legislative changes regarding taxation of Social Security benefits since 1993. Lump Sum Distributions A Social Security beneficiary may receive a lump sum distribution of benefits owed for one or more prior years. In this situation, a beneficiary may choose between two methods for calculating the taxable portion of the lump-sum distribution: (1) include all of the benefits for prior years in calculating the taxable benefits for the current year or (2) re-calculate the prior year taxable benefits using prior year income and take the difference between the recalculated taxable benefits and the taxable benefits reported in each prior year. In either case, the additional taxable benefits are included in taxable income for the current year. In computing the taxable portion of benefits in prior years, some income sources generally excluded from the provisional income calculation are included. Repayments Sometimes a Social Security beneficiary must repay a prior overpayment of benefits. In this case, the calculation of taxable Social Security benefits is based on the net benefits--gross benefits less the repayment--even if the repayment is for a benefit received in a previous year. For married taxpayers filing a joint return, net benefits equal the sum of the couple's Social Security gross benefits less the repayment. If, however, the repayment results in negative net Social Security benefits, there are two consequences: (1) there are no taxable benefits and (2) the taxpayer may take a miscellaneous deduction as part of itemized deductions or a credit for the negative net Social Security benefits. Coordination of Workers' Compensation For individuals under the full retirement age, Social Security benefits are reduced by a portion of any workers' compensation payments (or payments from some other public disability program) received by the individual. Workers' compensation is generally not taxable. Any reduction in Social Security benefits due to the receipt of workers' compensation is still considered to be a Social Security benefit, however, so income taxes are computed based on the full (unreduced) benefit amount. Treatment of Nonresident Aliens Citizenship is not required for receipt of Social Security benefits. Nonresident aliens, under IRS definitions, may receive benefits provided they have engaged in covered employment and otherwise meet eligibility requirements. The IRS defines a nonresident alien as a noncitizen who (1) is not a lawful permanent resident (this is known as the Green Card Test) and (2) has been physically present in the United States for fewer than 31 days in the previous calendar year and 183 days in the previous three-year period, counting all the days in the calendar year and a portion of the days in the two previous calendar years (this is known as the Substantial Presence Test). In general, 85% of the Social Security benefits for nonresident aliens is taxable (i.e., none of the thresholds apply) at a 30% rate. However, there are a number of exceptions to this general rule on the basis of tax treaties such that nonresident aliens or U.S. citizens living abroad may not have U.S. Social Security benefits subject to U.S. income taxes. Withholding In general, withholding for a wage earner is based on the estimated income taxes for a full year of earnings at the periodic (weekly, bi-weekly, monthly, etc.) rate. Taxable Social Security benefits, and the associated taxes, are based on the amount of non-Social Security income earned by a recipient during the tax year. The Social Security Administration, without knowledge about the amount of other income received by a beneficiary, is unable to properly determine the amount of taxes that should be withheld from Social Security benefits. Like other taxpayers, Social Security recipients can make quarterly estimated income tax payments. The Uruguay Round Agreements Act ( P.L. 103-465 ) amended the Internal Revenue Code (IRC) to allow individuals to request that monies be withheld from certain federal payments to satisfy their income tax liability; this is commonly referred to as voluntary tax withholding. An amendment to Section 207 of the Social Security Act allowed this voluntary tax withholding from Social Security benefits. Voluntary tax withholding became effective with payments issued in February 1999. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16 ) permitted voluntary withholding from Social Security benefits at rates of 7%, and equal to the bottom three tax bracket tax rates (currently 10%, 15%, and 25%). The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended the EGTRRA provisions to tax year 2012. The American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ) made the EGTRRA provisions permanent. Nonresident aliens residing outside the United States are subject to different tax withholding rules. Section 871 of the Internal Revenue Code imposes a 30% tax withholding rate on almost all of the U.S. income of nonresident aliens, unless a lower rate is fixed by treaty. Thus, 30% of 85% (or 25.5%) of a nonresident alien's Social Security benefits may be withheld for federal income taxes. | Social Security provides monthly cash benefits to retired or disabled workers and their family members and to the family members of deceased workers. Those benefits were exempt from federal income tax, but in 1983, Congress approved recommendations from the National Commission on Social Security Reform (also known as the Greenspan Commission) to tax the benefits of some higher-income Social Security beneficiaries. Beginning in 1984, up to 50% of Social Security and Railroad Retirement Tier I benefits became taxable for individuals whose provisional income exceeds $25,000. The threshold is $32,000 for married couples. Provisional income equals adjusted gross income (total income from all sources recognized for tax purposes) plus certain otherwise tax-exempt income, including half of Social Security and Railroad Retirement Tier I benefits. The proceeds from taxing Social Security and Railroad Retirement Tier I benefits at up to the 50% rate are credited to the Old-Age and Survivors Insurance (OASI) Trust Fund, the Disability Insurance (DI) Trust Fund, and the Railroad Retirement system, respectively, based on the source of the benefit taxed. In 1993, the Omnibus Budget Reconciliation Act (OBRA) increased the share of some Social Security and Railroad Retirement Tier I benefits that are taxable. That law taxes up to 85% of benefits for individuals whose provisional income exceeds $34,000 and for married couples whose provisional income exceeds $44,000. The additional proceeds from that law are credited to the Medicare Hospital Insurance (HI) Trust Fund. In 2016, the federal government received $51.8 billion in revenue from taxation of those benefits. Of that, $31.6 billion was credited to the Social Security trust funds, accounting for 3.4% of its total income. The remaining $20.2 billion was credited to the Medicare HI trust fund, which equaled 7.3% of its total income. The Congressional Budget Office (CBO) projected that 49% of Social Security beneficiaries (25.5 million people) were affected by the income taxation of Social Security benefits in tax year 2014. That share will grow over time because the income thresholds used to determine the share of benefits that is taxable are not indexed for inflation or wage growth. As a result, income taxes on benefits will become an increasingly important source of income for Social Security and Medicare. | 5,102 | 473 |
Figure 1. DOD Share of Federal R&D Source: CRS analysis of FY2017 data from Analytical Perspectives, Budget of the United States Government, Fiscal Year 2019. The Department of Defense (DOD) receives nearly 40% of all federal research and development (R&D) appropriations, and more than 43% that of the next largest federal recipient, the Department of Health and Human Services. The work funded by these appropriations plays a central role in the nation's security as well as an important role in U.S. global leadership in science and technology. This report provides an introduction to the structure of DOD's research, development, test, and evaluation (RT&E) budget for staff attempting to understand DOD RDT&E appropriations. In its annual budget request to Congress, DOD presents its RDT&E by organization and program and by the character of the work to be performed. The RDT&E request is summarized in a supporting budget document titled "Research, Development, Test, & Evaluation Programs (R-1)," which is often referred to simply as the R-1. DOD RDT&E appropriations are provided annually through the defense appropriations act, one of the 12 regular appropriations acts that provide most of the discretionary funding for operation of the federal government. Generally, DOD RDT&E funding is provided in four of the act's titles (see box). More than 95% of DOD's RDT&E funding is appropriated in Title IV (Research, Development, Test, and Evaluation), which includes RDT&E appropriations for the Army, Navy, Air Force, a Defense-wide RDT&E account, and the Director of Operational Test and Evaluation. Within each of these accounts are dozens of program elements (PEs) that specify funding for particular activities (e.g., night vision technology, aviation survivability, cyber operations technology development). RDT&E funds are also appropriated for programs in other parts of the act. For example, RDT&E funds are appropriated as part of the Defense Health Program and the Chemical Agents and Munitions Destruction Program, and sometimes as part of the National Defense Sealift Fund. The Defense Health Program (DHP) supports the delivery of health care to DOD personnel and their families. DHP funds (including any RDT&E funds) are appropriated in Title VI. The program's RDT&E funds support congressionally directed research on breast, prostate, and ovarian cancer; traumatic brain injuries; orthotics and prosthetics; and other medical conditions. The Chemical Agents and Munitions Destruction Program supports activities to destroy the U.S. inventory of lethal chemical agents and munitions. Funds for this program are requested through the Defense-wide Procurement appropriations request. Congress appropriates funds for this program in Title VI (Other Department of Defense Programs). The National Defense Sealift Fund supports the procurement, operation and maintenance, and research and development of the nation's naval reserve fleet and supports a U.S.-flagged merchant fleet that can serve in time of need. The RDT&E funding for this effort is requested in the Navy's Procurement request and appropriated in Title V (Revolving and Management Funds) of the appropriation act. RDT&E funds also have been requested and appropriated as part of DOD's separate funding to support Overseas Contingency Operations (OCO, formerly the Global War on Terror (GWOT)). Typically, the RDT&E funds appropriated for OCO activities in Title IX support specified PEs in Title IV. However, they are requested and accounted for separately. The Bush Administration requested these funds in separate GWOT emergency supplemental requests. The Obama Administration included these funds as part of its regular budget request, not in emergency supplemental requests, although it sometimes asked for additional OCO funds in supplemental requests. The Trump Administration included these funds as part of its regular budget requests. The Joint Improvised-Threat Defeat Fund (JITDF, formerly the Joint Improvised Explosive Device Defeat Fund) works to counter improvised threats (e.g., improvised explosive devices (IEDs)) through tactical responsiveness and anticipatory, rapid acquisition. Some of the funds appropriated to JIDF are used for RDT&E. Under the President's FY2019 request, "In accordance with congressional intent ... all appropriations requested for the [Joint Improvised-Threat Defeat Organization] will be transitioned to Defense-wide appropriation accounts," including the RDT&E account. In addition, OCO-related requests and appropriations have included funds for a number of transfer accounts. In the past, these have included the Iraqi Freedom Fund (IFF), the Iraqi Security Forces Fund, the Afghanistan Security Forces Fund, and the Pakistan Counterinsurgency Capability Fund. Congress typically makes a single appropriation to each of these funds and authorizes the Secretary of Defense to make transfers to other accounts, including RDT&E, subject to certain limitations. These transfers are eventually reflected in prior-year funding figures for DOD Title IV. While DOD Title IV appropriations are made by organization (e.g., Research, Development, Test and Evaluation, Army), the DOD R-1 and congressional appropriations reports and explanatory statements also typically characterize this funding by the character of work to be performed. This characterization is provided in seven categories, each with a budget activity code (6.1 through 6.7) and a description (see Table 1 ). DOD's Financial Management Regulation (DoD 7000.14-R) provides a detailed description of the types of activities supported in each budget activity category: [6.1] Basic Research. Basic research is systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications towards processes or products in mind. It includes all scientific study and experimentation directed toward increasing fundamental knowledge and understanding in those fields of the physical, engineering, environmental, and life sciences related to long-term national security needs. It is farsighted high payoff research that provides the basis for technological progress. Basic research may lead to: (a) subsequent applied research and advanced technology developments in Defense-related technologies, and (b) new and improved military functional capabilities in areas such as communications, detection, tracking, surveillance, propulsion, mobility, guidance and control, navigation, energy conversion, materials and structures, and personnel support... [6.2] Applied Research. Applied research is systematic study to understand the means to meet a recognized and specific need. It is a systematic expansion and application of knowledge to develop useful materials, devices, and systems or methods. It may be oriented, ultimately, toward the design, development, and improvement of prototypes and new processes to meet general mission area requirements. Applied research may translate promising basic research into solutions for broadly defined military needs, short of system development. This type of effort may vary from systematic mission-directed research beyond that in [6.1] to sophisticated breadboard hardware, study, programming and planning efforts that establish the initial feasibility and practicality of proposed solutions to technological challenges. It includes studies, investigations, and non-system specific technology efforts. The dominant characteristic is that applied research is directed toward general military needs with a view toward developing and evaluating the feasibility and practicality of proposed solutions and determining their parameters. Applied Research precedes system specific technology investigations or development. ... [6.3] Advanced Technology Development (ATD). This budget activity includes development of subsystems and components and efforts to integrate subsystems and components into system prototypes for field experiments and/or tests in a simulated environment. [6.3] includes concept and technology demonstrations of components and subsystems or system models. The models may be form, fit, and function prototypes or scaled models that serve the same demonstration purpose. The results of this type of effort are proof of technological feasibility and assessment of subsystem and component operability and producibility rather than the development of hardware for service use. Projects in this category have a direct relevance to identified military needs. Advanced Technology Development demonstrates the general military utility or cost reduction potential of technology when applied to different types of military equipment or techniques. Program elements in this category involve pre-Milestone B efforts, such as system concept demonstration, joint and Service-specific experiments or Technology Demonstrations and generally have Technology Readiness Levels of 4, 5, or 6. (For further discussion on Technology Readiness Levels, see the Assistant Secretary of Defense for Research and Engineering's Technology Readiness Assessment (TRA) Guidance.) Projects in this category do not necessarily lead to subsequent development or procurement phases, but should have the goal of moving out of Science and Technology (S&T) and into the acquisition process within the Future Years Defense Program (FYDP). Upon successful completion of projects that have military utility, the technology should be available for transition. [6.4] Advanced Component Development and Prototypes (ACD&P). Efforts necessary to evaluate integrated technologies, representative modes, or prototype systems in a high fidelity and realistic operating environment are funded in this budget activity. The ACD&P phase includes system specific efforts that help expedite technology transition from the laboratory to operational use. Emphasis is on proving component and subsystem maturity prior to integration in major and complex systems and may involve risk reduction initiatives... [6.5] System Development and Demonstration (SDD). System Development and Demonstration (SDD) programs [conduct] engineering and manufacturing development tasks aimed at meeting validated requirements prior to full-rate production. This budget activity is characterized by major line item projects... Prototype performance is near or at planned operational system levels. Characteristics of this budget activity involve mature system development, integration, demonstration... conducting live fire test and evaluation, and initial operational test and evaluation of production representative articles.... [6.6] RDT&E Management Support. This budget activity includes management support for research, development, test, and evaluation efforts and funds to sustain and/or modernize the installations or operations required for general research, development, test, and evaluation. Test ranges, military construction, maintenance support of laboratories, operation and maintenance of test aircraft and ships, and studies and analyses in support of the RDT&E program are funded in this budget activity. Costs of laboratory personnel, either in-house or contractor operated, would be assigned to appropriate projects or as a line item in the Basic Research, Applied Research, or ATD program areas, as appropriate. Military construction costs directly related to major development programs are included in this budget activity. [6.7] Operational System Development. This budget activity includes development efforts to upgrade systems that have been fielded or have received approval for full rate production and anticipate production funding in the current or subsequent fiscal year... Funding in budget activity codes 6.1-6.3 is referred to by DOD as the science and technology (S&T) budget. This portion of DOD RDT&E is often singled out for attention by analysts as it is seen as the pool of knowledge necessary for the development of future military systems. In contrast, 6.4, 6.5, and 6.7 funds are focused on the application of existing scientific and technical knowledge to meet current or near-term operational needs. The funds in 6.6 are for RDT&E management may support work in any of the other RDT&E budget accounts. Within the S&T program, basic research (6.1) receives special attention, particularly by the nation's universities. DOD is not a large supporter of basic research when compared to the National Institutes of Health or the National Science Foundation. However, nearly half of DOD's basic research budget is spent at universities. DOD funding represents a substantial source of federal funds for R&D at institutions of higher education in some fields, including 60.6% of aerospace, aeronautical, and astronautical engineering R&D; 53.9% of electrical, electronic, and communications engineering R&D; 52.5 of industrial and manufacturing engineering R&D; 42.9% of mechanical engineering R&D; and 41.9% of computer and information sciences R&D. For FY2017 and subsequent years, the Office of Management and Budget (OMB) replaced the R&D category "development" with a subset referred to as "experimental development" in an effort that OMB asserts would better align its data with the survey data collected by the National Science Foundation, and to be consistent with international standards. Using this standard omits DOD budget activities 6.6 and 6.7 funding from federal calculations of research and development funding. The Office of Management and Budget characterizes federal R&D funding in four categories: basic research, applied research, development, and facilities and equipment. With respect to Title IV funding, in general, DOD 6.1 funding is reported under OMB's basic research classification and 6.2 funding is reported as applied research. Historically, 6.3-6.7 funding has been reported as development. However, OMB no longer includes 6.7 funding in its R&D reporting. Some DOD 6.1-6.5 funding may be reported under OMB's facilities and equipment classification. The National Science Foundation (NSF) collects R&D appropriations and performance data from all federal R&D agencies through its annual Survey of Federal Funds for Research and Development . The survey requests most agencies to identify their R&D activities in three categories: basic research, applied research, and development. NSF uses a modified survey for collecting DOD R&D data in which the development category is divided into two subcategories: advanced technology development and major systems development. DOD uses the following crosswalk to respond to the NSF survey: 6.1 funding is reported under NSF's basic research category, 6.2 funding is reported as applied research, 6.3 is reported as advanced technology development (experimental development), 6.4-6.6 funding is reported as major systems development (experimental development), and 6.7 is reported as operational systems development (non-experimental development). This section provides a number of figures that illustrate DOD RDT&E expenditure trends for the FY1996-FY2017 period. Figure 3 illustrates DOD Title IV and OCO RDT&E expenditures in current dollars by character of work. DOD RDT&E funding provided in other appropriations titles are not included in the character of work (6.1-6.7) taxonomy; inclusion of these funds might affect the balance among the categories. Figure 4 illustrates DOD RDT&E funding for FY1996-FY2017 in constant FY2017 dollars. Between FY2000 and FY2007, total DOD RDT&E funding rose by 73% in constant dollars, remained flat through FY2010, then fell by 27% between FY2010 and FY2015. Between FY2015 and FY2017, total DOD RDT&E funding rose by 13.5% in constant dollars. Figure 5 illustrates the composition of RDT&E in FY2017 by character of work. Operational System Development was the largest component (36.7%). Science and technology (6.1-6.3) accounted for 18.8% of total RDT&E. Figure 6 illustrates the composition of Title IV RDT&E funding by organization in FY2017. Title IV (base) and OCO appropriations provided $73.8 billion of $76.4 billion (96.6%) of total DOD RDT&E in FY2017. Through the authorization and appropriations processes, Congress grapples with a wide-variety of issues related to the magnitude, allocation, and strategic direction of defense RDT&E. These decisions play an important role in U.S. national security and economic strength. This section identifies several of these issues: the level of DOD RDT&E funding, the level of DOD S&T funding, the level of DOD basic research, and the balance between incremental-focused and revolutionary-focused DOD RDT&E. While S&T and basic research are integral components of the DOD RDT&E whole, these elements are treated separately in this analysis. In practice, appropriations decisions are generally made about specific programs within the context of the available funding. The levels of RDT&E, S&T, and basic research funding are the result of many decisions made during DOD budget formulation and congressional appropriations, and in the end, are calculated on a post-facto basis. Nevertheless, an analysis of the kind that follows may be useful in assessing the "big picture" and in seeing funding trends in the context of an historical arc that may provide strategic insight and guidance. Each year Congress makes decisions about funding for DOD RDT&E. Authorization and appropriations levels, as well as programmatic priorities, are influenced by a wide range of factors, including current military engagements and international commitments, near-term national security threats, the perceived need for technology capabilities to address emerging and unanticipated threats, RDT&E funding and capabilities of adversaries and potential adversaries, RDT&E funding of allies, prior commitments to multi-year programs, competing demands for resources to support non-RDT&E DOD (e.g., personnel, acquisitions) and other federal non-DOD activities, the prior year's funding level, anticipated government revenues, and appropriations constraints (e.g., budget caps). The question "What is the appropriate funding level for DOD RDT&E?" does not lend itself to a clear objective answer, in part because such an assessment necessarily depends on subjective assumptions about need and adequacy. Nevertheless, the question has been a focus of analysis and debate in Congress and DOD for some time. For example, in June 1998, the Defense Science Board (DSB) Task Force on the Defense Science and Technology Base for the 21 st Century proposed the use of a standard industry benchmark--R&D as a share of sales--substituting total DOD funding for sales. The report stated: Using the pharmaceutical industry as a model, [the data show] about 14% of revenue devoted to research and development. With current DoD funding of about $250 billion, a total DoD research and development funding level of about $35 billion is indicated or close to the current DoD level. Figure 7 illustrates DOD Title IV RDT&E for the period FY1996-FY2017. Between FY1996 and FY2001, RDT&E grew slowly. Between FY2000 and FY2010, RDT&E grew more rapidly, more than doubling in current dollars from $38.8 billion to $80.7 billion. (In constant dollars, RDT&E grew by 68.1% from FY2000 to FY2010.) Between FY2010 and FY2015, RDT&E fell 20.5%to $64.1 billion, and then rose 16.7% to $74.8 billion in FY2017. As a percentage of DOD's total obligational authority (TOA), RDT&E generally ranged between 13% and 14% between FY1996 and FY2006, but then slid to around 11% in FY2011 and remained there through FY2015. Between FY2015 and FY2017, RDT&E's percentage of TOA grew from 11.3% to 12.3%. (See Figure 8 .) One challenge of using the metric of RDT&E as a share of DOD TOA is that during times of conflict, DOD TOA can increase substantially due to the cost of operations, replacing expended munitions, and increased force size. Thus even when RDT&E is increasing, it may decline as a share of DOD TOA. This is illustrated in Figure 7 and Figure 8 between FY2004 and FY2008, a period in which RDT&E grew by 23.4% and DOD TOA grew by 46.8% in support of U.S. post-9/11 military operations in the Middle East. Congress and others have also expressed concerns about the adequacy of funding for the piece of DOD RDT&E known as defense science and technology (6.1-6.3). The scientific and technological insights that emerge from this funding, often referred to as the department's "seed corn," are seen by many as the pool of knowledge available to DOD and the industrial base for future defense technology development. For this reason, defense S&T funding has sometimes been singled out for attention by Congress. As with overall RDT&E, the DSB's June 1998 report suggested two conceptual frameworks for S&T funding. The first approach, using industrial practice as a guide, proposed setting S&T funding at 3.4% of total DOD funding: The DoD S&T budget corresponds most closely to the research component of industrial R&D. Using 3.4% of revenue (typical of high-tech industries shown [elsewhere in the report]), the DoD S&T funding should be about $8.4 billion, which is a billion dollars greater than the FY98 S&T funding. To address this perceived shortcoming in funding, the FY1999 defense authorization bill ( P.L. 105-261 , Section 214) expressed the sense of Congress that DOD S&T funding should be increased by 2% or more above the inflation rate each year from FY2000 to FY2008. Subsequently, the FY2000 defense authorization bill ( P.L. 106-65 ) expressed the sense of Congress that the Secretary of Defense has failed to comply with the funding objective for the Defense Science and Technology Program, especially the Air Force Science and Technology Program, as stated [P.L. 105-261], thus jeopardizing the stability of the defense technology base and increasing the risk of failure to maintain technological superiority in future weapon systems. The act further expressed the sense of Congress that the Secretary of Defense should increase DOD S&T, including the S&T programs within each military department, by 2% or more above the inflation rate each year from FY2001 to FY2009. In 2009, the Senate-passed version of the National Defense Authorization Act ( S. 1390 ) included a provision (Sec 217) that would have stated a sense of Congress that the Secretary of Defense should increase DOD S&T by a percent that is at least equal to inflation. Congress embraced the DSB's three percent recommendation and underlying rationale in the conference report accompanying the National Defense Authorization Act for Fiscal Year 2003: The conferees commend the Department of Defense commitment to a goal of three percent of the budget request for the defense science and technology program and progress toward this goal. The conferees also note the finding in the Defense Science Board report that successful high technology industries invest about 3.5 percent of sales in research (equivalent to the DOD S&T program) and the recommendation that S&T funding should be increased to ensure the continued long-term technical superiority of U.S. military forces in the 21 st Century. The conferees believe that the Department must continue to provide the necessary investments in research and technologies that ensure a strong, stable, and robust science and technology program for our Armed Forces. Other organizations have proposed using the same metric, but with a 3% as the level for S&T funding as a share of total DOD funding. A 2001 report based on the Quadrennial Defense Review (QDR), a legislatively mandated review by DOD of its strategies and priorities , called for "a significant increase in funding for S&T programs to a level of three percent of DOD spending per year." In 2004, the Council on Competitiveness, a leadership organization of corporate chief executive officers, university presidents, labor leaders, and national laboratory directors, reiterated the 3% recommendation of the QDR. Following a period of strong growth in the early 2000s, S&T funding peaked in current dollars at $13.3 billion in FY2006, then declined to $11.0 billion in FY2013 before rebounding to $13.4 billion in FY2017. (See Figure 9 .) In constant dollars, S&T funding peaked in FY2005 before falling 27.8% through FY2013; between FY2013 and FY2017, S&T funding recovered somewhat, growing by 14.9%. Viewed as a share of DOD total obligational authority (TOA), S&T declined from about 3.0% in the late 1990s to about 1.7% in 2011, rebounding to about 2.2% in FY2017. (See Figure 10 .) While the growth in the absolute amount of S&T funding that was sought in P.L. 105-261 (red line, Figure 9 ) was achieved, S&T funding would have been higher under the QDR recommendation (3% of DOD TOA, green line, Figure 9 ). The DSB's second proposed framework, also based on industrial practice, was to use the metric of S&T as a share of DOD RDT&E: Another approach to this question is to note that the ratio of research funding to total R&D funding in high-technology industries, such as pharmaceuticals, is about 24%. When this percentage ratio is applied to the FY98 R&D funding of about $36 billion, the result is about $8.6 billion, well above the actual S&T funding. In 2015, a coalition of industry, research universities, and associations, the Coalition for National Security Research, asserted that DOD S&T funding should be 20% of DOD RDT&E. Figure 11 illustrates S&T's share of DOD RDT&E for FY1996-FY2017. At the time of the DSB report, S&T's share of DOD RDT&E was approximately 20%. After rising to 21.5% in FY2000, the share fell to 15.2% in FY2011, recovering to 18.8% in FY2015. The share fell to 18.1% in FY2016 and to 17.9% in FY2017. Within the S&T program, basic research (6.1) is singled out for additional attention, due in part to its perceived value in advancing breakthrough technologies and in part to the substantial role it plays in supporting university-based research in certain physical sciences and engineering disciplines. Basic research funding is seen by some to be particularly vulnerable to budget cuts or reallocation to other priorities because of the generally long time it takes for basic research investments to result in tangible products and other outcomes (i.e., reductions in funding can be made with minimal short term consequences) and to the uncertainty of the benefits that will be derived from the results of basic research. In 2004, the Council on Competitiveness asserted that DOD basic research should be at least 20% of DOD S&T. In 2015, the Coalition for National Security Research also recommended 20% of DOD S&T. DOD basic research funding grew steadily from FY1998 through FY2015, more than doubling in current dollars, then fell somewhat in FY2016 and FY2017. (See Figure 12 .) As a share of S&T, basic research declined from 14.6% in FY1996 to 11.0% in FY2006, then began a steady rise to 18.4% in FY2015, its highest level in 20 years, then fell in FY2016 to 17.4% and in FY2017 to 16.4%. (See Figure 13 .) Another key issue of concern to Congress is the balance in the RDT&E portfolio between funding focused on incremental or evolutionary improvements and funding focused on exploratory research that might lead to revolutionary technologies. The latter is frequently referred to as "high risk, high reward" research as it involves R&D activities that have low or unknown likelihood of success, but that, if successful, may yield revolutionary technological advances. The DSB's 1998 report noted industry's practice of allocating about 1/3 of the total available research funding to exploratory or potentially revolutionary projects. The other 2/3 of the effort is typically focused on identified product needs in the form of evolutionary improvements in current product lines. In accordance with this industrial practice, DSB recommended that DOD [ensure] that approximately 1/3 of the S&T program elements are devoted to revolutionary technology initiatives. DARPA should play a major role in executing these efforts along with the Services. Applied to the FY2017 S&T budget, this formula would allocate approximately $4.5 billion to revolutionary technology initiatives. In 2004, S.Rept. 108-46 accompanying the National Defense Authorization Act for Fiscal Year 2004 ( S. 1050 ) expressed the committee's concerns that the DOD "investment in basic research has remained stagnant and is too focused on near-term demands." DOD does not report funding for revolutionary research. The Defense Advanced Projects Research Agency (DARPA) has been the lead DOD agency focused on revolutionary R&D since its establishment in 1958 following the Soviet launch of the first man-made satellite, Sputnik, in 1957. For this report, CRS examined DARPA funding as a surrogate measure of at least a portion of DOD's investments in revolutionary research. DARPA describes its mission as making "pivotal investments in breakthrough technologies for national security." DARPA funding has remained generally steady since FY2003, ranging between $2.5 billion and $3.0 billion. (See Figure 14 .) Similarly, DARPA's funding as a share of defense S&T has remained generally steady since FY1999, between 22% and 25%. In FY1996, DARPA funding accounted for about 30% of S&T funding, before sliding to 22% in FY2000 (See Figure 15 .) In its 2007 Rising Above the Gathering Storm report, the National Academies recommended that At least 8% of the budgets of federal research agencies should be set aside for discretionary funding managed by technical program managers in those agencies to catalyze high-risk, high-payoff research. Using DARPA once more as a surrogate measure of a portion of DOD's high risk, high payoff research, Figure 16 shows DARPA funding as a percent of DOD RDT&E. Between FY1996 and FY2008, DARPA's share of RDT&E fell by nearly half, from 6.4% in FY1996 to 3.4% in FY2008. DARPA's share subsequently rose to 4.5% in FY2015, and then fell again in FY2016 to 4.1% and in FY2017 to 3.9%. Based solely on DARPA funding, DOD funding for high risk, high payoff research is well below the 8% recommended by the National Academies. It is unclear how investments in high risk, high payoff research from other DOD accounts might affect this picture. DOD RDT&E investments are highly complex and can be parsed in many ways. Some of these are highlighted in this report. Other ways of parsing RDT&E funding--such as allocation by performing organization (e.g., industry; universities; government-owned, government-operated facilities; federally-funded research and development centers (FFRDCs)), size of industrial performers, intramural and extramural performance--may also be important for the effective allocation of DOD RDT&E resources. Similarly, many DOD RDT&E stakeholders have asserted the importance of stability in funding streams. Among the many other factors that may affect the effectiveness of the performance of RDT&E are: organizational structures and relationships; management; workforce recruitment, training and retention; and policies related to cooperative research and technology transfer. As Congress undertakes defense annual authorization and appropriations, it may wish to consider the issues raised in this report related to the magnitude and composition of funding for DOD RDT&E, as well as the other issues such as those identified above. | The Department of Defense (DOD) conducts research, development, testing, and evaluation (RDT&E) in support of its mission requirements. The work funded by these appropriations plays a central role in the nation's security and an important role in U.S. global leadership in science and technology. DOD alone accounts for nearly 40% of all federal R&D appropriations ($49.2 billion of $125.3 billion, or 39.3%, in FY2017). In its annual congressional budget requests, DOD presents its RDT&E requests by organization and by its own unique taxonomy aligned to the character of the work to be performed. More than 95% of DOD RDT&E funding is provided under Title IV of the annual defense appropriations act. These funds are appropriated for RDT&E in the Army, Navy, Air Force, a Defense-wide RDT&E account, and the Director of Operational Test and Evaluation. RDT&E funding is also provided for the Defense Health Program in Title VI; the Chemical Agents and Munitions Destruction Program in Title VI; and previously the National Defense Sealift Fund in Title V, though the President's FY2019 budget does not request RDT&E funds for this purpose. In addition, some of the funds appropriated to the Joint Improvised-Threat Defeat Fund (JIDF, formerly the Joint Improvised Explosive Device Defeat Fund) have been used for RDT&E though the fund does not contain an RDT&E line item. In some years, RDT&E funds also have been requested and appropriated as part of DOD's separate funding to support Overseas Contingency Operations (OCO, formerly the Global War on Terror (GWOT)). These funds have typically been appropriated for specific activities identified in Title IV. Finally, some OCO funds have been appropriated for transfer funds (e.g., the Iraqi Freedom Fund (IFF), Iraqi Security Forces Fund, Afghanistan Security Forces Fund, and Pakistan Counterinsurgency Capability Fund) which can be used to support RDT&E activities, among other things, subject to certain limitations. Parsing RDT&E funding by the character of the work, DOD has established seven categories identified by a budget activity code (numbers 6.1-6.7) and a description. Budget activity code 6.1 is for basic research; 6.2 is for applied research; 6.3 is for advanced technology development; 6.4 is for advanced component development and prototypes; 6.5 is for systems development and demonstration; 6.6 is for RDT&E management support; and 6.7 is for operational system development. DOD uses crosswalks to report its RDT&E funding to the Office of Management and Budget and to the National Science Foundation. These crosswalks use different taxonomies than DOD's for accounting for R&D funding. | 6,899 | 635 |
Under the authorization of the Adult Education and Family Literacy Act (AEFLA), the federal government makes grants to states to support services to improve literacy and other basic skills among adults who are not enrolled in school. Commonly called "adult education," the activities funded by AEFLA provide educational services to adults at the secondary level and below, as well as English language training. AEFLA-supported adult education services are typically provided by local entities. Students include those seeking to develop basic skills, those seeking to obtain a secondary credential, and English language learners of various educational backgrounds. Curricula and other programmatic details vary based on local student needs and objectives. AEFLA programs are administered at the federal level by the U.S. Department of Education (ED) through its Office of Vocational and Adult Education (OVAE). AEFLA was originally enacted as Title II of the Workforce Investment Act of 1998 (WIA, P.L. 105-220 ). AEFLA authorized such sums as necessary to carry out its functions from FY1999 through FY20003. The General Education Provisions Act (GEPA) automatically extended AEFLA authorization through FY2004. After this extension expired, the programs authorized by the act continued to be funded through the annual appropriations process. In July 2014, AEFLA was reauthorized as Title II of the Workforce Innovation and Opportunity Act of 2014 (WIOA, P.L. 113-128 ). WIOA authorizes appropriations through FY2020. The AEFLA provisions of WIOA are scheduled to be incrementally implemented over the next several years. This means that, as of this writing, both the federal government and states are operating their adult education programs under the WIA provisions of AEFLA while preparing to implement the WIOA provisions. This report will focus on the WIOA provisions of AEFLA, though it will discuss prior WIA provisions as necessary. Note on terminology : Both WIA and WIOA authorized a group of workforce programs. In each law, Title II was called the Adult Education and Family Literacy Act. This report will refer to the prior adult education law as "the AEFLA provisions of WIA" and the 2014 provisions as "the AEFLA provisions of WIOA." The AEFLA provisions of WIOA maintained the general program structure established by the AEFLA provisions of WIA in 1998: the large majority of funding under the act is granted to state agencies that are required to subgrant the bulk of their federal funds to local agencies that provide the actual services. Smaller portions of the funds support activities of statewide and national significance. WIOA amended AEFLA to increase emphasis on transitions from adult education programs to employment and postsecondary education. As part of this increased emphasis, WIOA requires states to develop a unified state plan that coordinates and aligns the group of core WIOA-authorized workforce programs, including adult education. Previously, states developed a dedicated adult education plan. WIOA also aligns workforce programs by establishing a set of common performance indicators across the core WIOA programs that emphasizes employment outcomes and the attainment of credentials. Under prior law, adult education programs had their own set of indicators. WIOA authorizes AEFLA appropriations from FY2015 through FY2020. Nominal authorization levels increase each year. The authorization level for FY2015 is $577,667,000. Between FY2015 and FY2016, the authorization level increases 7.7%. Between FY2016 and FY2020, annual increases in authorization levels are between 2.1% and 2.4%. In FY2020, the authorization level is $678,640,000. Exact authorization levels for each year are in the "Authorization Level" row of Table 1 . Under the WIOA provisions, Section 202 of AEFLA specifies that the purpose of the legislation is to create a partnership between the federal government, states, and localities to provide services to (1) assist adults to become literate and obtain the knowledge and skills necessary for employment and economic self-sufficiency; (2) assist adults who are parents or family members to obtain the education and skills that- (A) are necessary to becoming full partners in the educational development of their children; and (B) lead to sustainable improvements in the economic opportunities for their family; (3) assist adults in attaining a secondary school diploma and in the transition to postsecondary education and training, including through career pathways; and (4) assist immigrants and other individuals who are English language learners in- (A) improving their- (i) reading, writing, speaking, and comprehension skills in English; and (ii) mathematics skills; and (B) acquiring an understanding of the American system of Government, individual freedom, and the responsibilities of citizenship. These provisions in WIOA represent an expansion of the purpose specified in the WIA version of AEFLA. Paragraph (3) expands the program purpose to include transition to postsecondary education and training. Paragraph (4) is a new provision in WIOA and has no direct counterpart in prior law. WIOA also amended the definition of "adult education" in statute to reflect an increased emphasis on the relationship between AEFLA-funded services and subsequent transitions to postsecondary education and employment. Under WIOA, adult education is defined as: [A]cademic instruction and education services below the postsecondary level that increase an individual's ability to-- (A) read, write, and speak in English and perform mathematics or other activities necessary for the attainment of a secondary school diploma or its recognized equivalent; (B) transition to postsecondary education and training; and (C) obtain employment. Under WIA, the definition of adult education did not include employment or postsecondary education, though other provisions of the bill did mention these outcomes. Under the AEFLA provisions of WIOA, Sections 211 and 221 reserve or limit funds for specific purposes or activities. The collective effects of these provisions, as specified in statute, are summarized below. Total Appropriation Reservation for National Leadership Activities (2% of total appropriation) Unreserved funds (98% of total appropriation) English Literacy and Civics Education State Grants (12% of unreserved funds) Adult education state grant funds (88% of unreserved funds) Subgrants to local providers (at least 82.5% of adult education state grant funds) State leadership activities (up to 12.5% of adult education state grant funds) Administrative costs (up to 5% of adult education state grant) As noted in Table 1 , the AEFLA provisions of WIOA repealed two reservations that were enacted in the AEFLA provisions of WIA. Under the AEFLA provisions of both WIA and WIOA, statute specifies that the state grant funds that are allotted to the states are the funds that remain after the statutory reservations. As such, the repeals of two "off-the-top" reservations have the practical effect of increasing the portion of the AEFLA appropriation that is allotted to the states. Under the AEFLA provisions of WIOA, the 98% of the annual AEFLA appropriation that is not reserved for National Leadership Activities is granted to the states via two formula grants. Of the formula grant funds, 12% are reserved for English Literacy and Civics Education State Grants (EL-Civics) and allotted to the states via formula. (See the " English Literacy and Civics Education State Grants " section later in this report.) The remaining 88% of the unreserved funds is allocated to adult education state grants and allotted to the states using a second formula. The AEFLA provisions of WIOA specify a two-step process by which state grant funds are distributed. First, there is an initial allotment of $250,000 to each state and $100,000 to each eligible outlying area. The second step of the allotment process distributes the remainder of the funding by formula, which is based on each state's share of qualifying adults. Qualifying adults are individuals who are at least 16 years of age, are beyond the age of compulsory school attendance in their state, do not have a secondary school diploma or its recognized equivalent, and are not enrolled in secondary school. States must match their grants so that 25% of the state's total adult education resources are from non-federal sources. Non-federal matches may be cash or in-kind. In outlying areas, the non-federal share must be at least 12%. AEFLA's hold harmless provisions specify that states and outlying areas shall receive grants equal to at least 90% of the grant they received in the previous fiscal year. AEFLA's maintenance of effort provisions require each state and outlying area to expend at least 90% of what it spent in the prior year on adult education activities. WIOA did not change the factors, weights, or hold harmless provisions from the formula in the AEFLA provisions of WIA. Statute specifies that states may allocate up to 12.5% of their grants for state leadership activities and up to 5% for administrative expenses. At least 82.5% of their grants must be subgranted to local providers of adult education services. States may allocate up to 12.5% of their grants to state leadership activities (activities of statewide significance). The AEFLA provisions of WIOA specify four required state leadership activities: The alignment of adult education activities with other WIOA core programs and One-Stop partners to implement strategies identified in the unified state plan. (See " Unified State Plans " section later in this report.) The establishment or operation of professional development programs to improve instruction by local providers and dissemination of information and promising practices related to such programs. Technical assistance to local service providers, including the development and dissemination of instructional and programmatic practices, information on the role of adult education providers as partners in the workforce system, and assistance in the use of technology. The monitoring and evaluation of adult education activities and dissemination of models and proven or promising practices within the state. In addition to the required state leadership activities, AEFLA lists a number of allowable statewide activities related to program development, alignment with other programs, and "other activities of statewide significance that promote the purpose of this title." At least 82.5% of a state's formula grant must be subgranted to local providers through a competitive grant process. States must provide "direct and equitable access" to all eligible providers. When selecting subgrantees, states must consider a group of 13 factors detailed in law. Many of these considerations relate to a provider's ability to serve high-need populations, deliver high-quality services, and coordinate with other programs and services. AEFLA defines an eligible provider as "an organization that has demonstrated effectiveness in providing adult education and literacy activities[.]" Eligible providers may include a local educational agency; a community-based organization or faith-based organization; a volunteer literacy organization; an institution of higher education; a public or private nonprofit agency; a library; a public housing authority; and a nonprofit institution that has the ability to provide adult education and literacy activities to eligible individuals. A consortium or coalition of entities in the above list is also considered to be an eligible provider, as is a partnership between an employer and an entity in the above list. Local subgrantees are required to establish or operate programs that provide adult education and literacy activities. AEFLA defines these activities as [P]rograms, activities, and services that include adult education, literacy, workplace adult education and literacy activities, family literacy activities, English language acquisition activities, integrated English literacy and civics education, workforce preparation activities, or integrated education and training. Section 225 of WIOA specifies that each state will subgrant funds to support educational activities for individuals in correctional institutions and for other institutionalized individuals. Statute does not specify a minimum funding level and no more than 20% of subgrants to local providers may support these activities. Under WIOA, 12% of AEFLA formula grant funds are reserved for "Integrated English Literacy and Civics Education" (EL-Civics State Grants). The AEFLA provisions of WIOA define EL-Civics activities as [S]ervices provided to English language learners who are adults, including professionals with degrees and credentials in their native countries, that enables such adults to achieve competency in the English language and acquire the basic and more advanced skills needed to function effectively as parents, workers, and citizens in the United States. Such services shall include instruction in literacy and English language acquisition and instruction on the rights and responsibilities of citizenship and civic participation, and may include workforce training. EL-Civics grant funds are allotted to the states by formula on the basis of each's state relative share of recent immigrants admitted for legal permanent residence (LPR). Specifically 65% of EL-Civics funds are allotted on the basis of each state's share of LPRs for the 10 most recent years; 35% of EL-Civics funds are allotted on the basis of each state's share of LPRs for the 3 most recent years; and no state may receive an EL-Civics grant of less than $60,000. While the codification of EL-Civics State Grants was new to WIOA, EL-Civics grants had been funded through set-aside provisions in annual appropriations legislation since FY2000. The allotment formula in WIOA is the same as the formula that was typically specified in appropriations legislation for allotting EL-Civics State Grant funding. To be eligible for AEFLA grant funds, a state must have an approved state plan. A major change in WIOA is the state-level alignment and coordination of AEFLA-funded programs with other WIOA-authorized programs. Under the new law, programs are coordinated through a single unified state plan and performance is aligned through a set of common measures. Under the AEFLA provisions of WIOA, each state had an AEFLA-specific state plan as well as separate plans for other programs authorized under WIA. Similarly, the performance accountability system under AEFLA was limited to adult education programs and not directly comparable to data from other WIA-authorized programs. Under WIOA, each state must submit a unified state plan (USP) that establishes a four-year strategy for the core WIOA-authorized programs in the state, including adult education. Generally, these plans must assess the state's labor needs and workforce development system and describe how the core WIOA programs will be aligned and coordinated to meet these needs. The plan must also describe how each program will be assessed each year. The unified state plan is developed by the State Workforce Development Board (WDB). The WDB includes representatives from business, the workforce, and government. Government representatives include the lead state official from each core program and, as such, the lead official from each state's adult education agency will be on the state WDB. In addition to the unified components of the state plan, WIOA also requires state plans to address several specific issues related to activities carried out under AE FLA. These requirements include descriptions of how the state will if applicable, align content standards for adult education with state-adopted academic content standards, as adopted under Title I-A of the Elementary and Secondary Education Act (ESEA); apply statutory considerations when awarding subgrants, including subgrants for correctional education, EL-Civics, and integrated education and training; use the funds to carry out state leadership activities; use funds to carry out EL-Civics activities; and assess the quality of providers and actions to improve such quality. Similar to the unified state plans, WIOA also developed common performance accountability measures across all core WIOA-authorized programs. Generally, these metrics focus on employment and credential attainment. The alignment of performance indicators for adult education and other employment programs reflects WIOA's increased emphasis on the transition from adult education to employment and/or postsecondary education. Section 116 of WIOA specifies six performance accountability measures: 1. the percentage of program participants who are in unsubsidized employment during the second quarter after exit from the program; 2. the percentage of program participants who are in unsubsidized employment during the fourth quarter after exit from the program; 3. the median earnings of program participants who are in unsubsidized employment during the second quarter after exit from the program; 4. the percentage of program participants who, during participation in or within one year after exit from the program, obtain either (1) a recognized postsecondary credential or (2) a secondary school diploma or its recognized equivalent and subsequently enter employment or are in a program leading to a recognized postsecondary credential; 5. the percentage of program participants who, during a program year, are in an education or training program that leads to a recognized postsecondary credential or employment and who are achieving measurable skill gains toward such a credential or employment; and 6. the indicators of effectiveness in serving employers (to be established by the Secretary of Education and the Secretary of Labor). Each state must identify an expected level of performance for each indicator for each core WIOA program. In practice, this means that data limited to AEFLA grantees will be reported on each of the six performance metrics. Expected levels of performance are negotiated between the state and the Secretary of Labor in conjunction with the Secretary of Education and will be included in each unified state plan. Under WIOA, 2% of AEFLA appropriations are reserved for National Leadership Activities (NLA). Section 242 of WIOA describes NLA as "activities to enhance the quality and outcomes of adult education and literacy activities and program nationwide." Statute establishes four required activities: providing assistance to help states meet the performance accountability requirements in Section 116 of WIOA; upon request by a state, providing assistance to local providers in using performance accountability measures and data systems for the improvement of adult education activities; carrying out research on and evaluation of adult education activities and estimating the number of adults functioning at the lowest levels of literacy proficiency, which shall be coordinated across relevant federal agencies, including the Institute for Education Sciences; and carrying out an independent evaluation of the programs and activities under AEFLA at least once every four years. Statute also specifies a group of allowable activities under NLA. These include using NLA funds for technical assistance to states and local providers as well as supporting activities to identify best practices, support networks of providers, increase program effectiveness, and evaluate programs. Appendix A. AEFLA Funding, FY2000-FY2014 Under the Workforce Investment Act Appendix B. Estimated Allotments of State Grant Funds, FY2014 | The Adult Education and Family Literacy Act (AEFLA) is the primary federal legislation that supports basic education for out-of-school adults. Commonly called "adult education," the programs and activities funded by AEFLA typically support educational services at the secondary level and below, as well as English language training. Actual educational services are typically provided by local entities. AEFLA was created by Title II of the Workforce Investment Act of 1998 (WIA; P.L. 105-220). The authorization of appropriations under WIA lapsed after FY2003, though the program continued to be funded through the appropriations process. In 2014, AEFLA was reauthorized by Title II of the Workforce Innovation and Opportunity Act of 2014 (WIOA, P.L. 113-128). This report will discuss AEFLA as amended by WIOA. WIOA made a number of changes to the authorizing law but maintained the program's primary function of authorizing federal grants to state agencies for adult education activities. State agencies may use a portion of federal funds for statewide activities, but the bulk of their grants must be subgranted to local providers. Eligible local providers include local educational agencies, institutions of higher education, community-based organizations, and other qualified entities. Under WIOA, federal AEFLA grants are allotted to states via two formula grants: 88% of state grant funds are allotted to the states based on a formula that considers each state's relative share of adults who do not have a high school diploma or equivalent and who are not enrolled in school. These funds may support basic education services, coursework toward a secondary school diploma or equivalent, English language training or other adult education services. 12% of funds are allotted to the states based on a formula that considers each state's relative share of immigrants who were admitted for legal permanent residence in past years. These funds support "integrated English literacy and civics education" for English language learners. WIOA requires that state agency grantees submit and have an approved unified state plan that aligns adult education with other core WIOA programs to meet local labor force needs. State grantees must also report on program performance using a set of metrics that applies across core WIOA programs, including adult education. While the large majority of annual appropriations support grants to state agencies, statute reserves 2% of annual AEFLA appropriations for National Leadership Activities. These national activities include technical support for state agencies and assistance in meeting the performance accountability requirements of WIOA. Congress appropriated $578 million for AEFLA-authorized activities in FY2014. WIOA authorizes the same appropriation level for FY2015. Between FY2015 and FY2020, WIOA authorizes annual increases in AEFLA appropriations, with an authorization level of $679 million in FY2020. | 4,050 | 611 |
On February 2, 2012, the Senate passed S. 2038 , the Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act). Title II of the STOCK Act, added as the Leahy-Cornyn amendment on the Senate floor, carries forward much of what had appeared in S. 401 , when it emerged from the Senate Judiciary Committee. Title II, styled the Public Corruption Prosecution Improvements Act, closely tracks the amended language of H.R. 2572 , which the House Judiciary Committee unanimously approved on December 1 of last year. The House, however, stripped Title II from S. 2038 , and the bill was enacted into public law without it. In the discussion that follows, Title II refers to Title II of the STOCK Act as initially passed by the Senate. H.R. 2572 refers to the bill ordered to be reported as reflected in the Manager's Amendment in the Nature of a Substitute, as amended in Judiciary Committee markup. Federal officials prosecute corruption--public and private; federal, state, local, territorial, and tribal--under a number of statutes including those that outlaw bribery, bribery involving federal programs, mail fraud, and/or wire fraud. The bills would expand the scope of these and related federal statutes, increase the penalties for those convicted, and amend related procedures to facilitate prosecution. The bills represent a merger of two prior efforts. One involved reactions to the Supreme Court's Skilling decision which limited honest services mail and wire fraud prosecutions to cases of bribery and kickbacks. The other involved a more general concern over the state of law in the area of public corruption. The Senate Judiciary Committee addressed this second concern when it reported S. 1946 to the floor during the 110 th Congress. The bills are reminiscent of many of the provisions in that earlier proposal. They also mirror proposals offered in the last Congress in the wake of Skilling . Public Officials: Undisclosed Self-Dealing : Federal public corruption statutes have a long history. Federal bribery statutes date back almost to the dawn of the Republic. The mail fraud statute, which forbids the use of the mail in conjunction with a scheme to defraud another of money or property, originated in the mid-eighteenth century. The mail fraud statute's companion, the wire fraud statute, was not enacted until the mid-twentieth century. Shortly thereafter, federal officials had begun to prosecute corrupt state and local officials under the federal mail and wire fraud statutes. Application of the statutes to public corruption was based on the theory that the mail and wire fraud statutes protected both tangible as well as intangible property and that such intangible property included the right of an employer or the public to the honest services of an employee or public official. The Supreme Court, however, found that interpretation too open ended. In McNally , it declared that, "[r]ather than construe the statute in a manner that leaves its outer boundaries ambiguous and involves the Federal Government in setting standards of disclosure and good government for local and state officials, we read SS1341 as limited in scope to the protection of property rights." Congress answered McNally with the enactment of 18 U.S.C. 1346, which defines the term "scheme to defraud" in mail and wire fraud statutes to include schemes to "deprive another of the intangible right to honest services." Faced with vagueness challenges, the lower federal courts devised a number of standards to limit the scope of honest services mail and wire fraud. Rather than endorse any of these standards, the Supreme Court in Skilling opted for a narrow construction of honest services fraud. It concluded that "[i]n proscribing fraudulent deprivations of 'the intangible right to honest services,' SS1346, Congress intended at least to reach schemes to defraud involving bribes and kickbacks. Construing the honest-services statute to extend beyond that core meaning ... would encounter a vagueness shoal." As it had done in McNally , the Court in Skilling urged Congress to speak clearly should it elect to expand the reach of honest services mail and wire fraud. H.R. 2572 and Title II both would expand the mail and wire fraud definition of the term "scheme to defraud" to include a scheme "by a public official to engage in undisclosed self-dealing." The proposals cover federal, state, and local officials, employees, and agents. "Undisclosed self-dealing" has two components. One involves a conflict of interest; the other an obligation to disclose it. The first encompasses a public official's performance of an official act for the purpose, at least in material part, of furthering his own financial interest or that of a spouse, minor child, close business associate, or in some instances, that of someone from whom the official has received something of value. Official acts include those actions, decisions, and courses of action that come within the official's duties. The second element of undisclosed self-dealing consists of the public official's knowingly failing to disclose material information that he is required by law to disclose. "Material information," as the term is used in the second element is defined to include information relating to pertinent financial matters of the covered officials and those covered by virtue of their relation to those officials. The proposal defines neither "material," "any thing or things of value," nor "financial interest," as those terms are used in the first element. The omissions may not be problematic. In the absence of a statutory definition, interpretation begins with the ordinary meaning of a term, and may take into account how the term is defined or understood in similar contexts. The dictionary describes "material" as something "having real importance or great consequences." In the context of other statutes relating to fraudulent conduct, something is considered material "if it has a natural tendency to influence" a decision. The bills speak of a public official performing an act for "the purpose, in whole or in material part, of furthering or benefitting a financial interest." This would seem to mean that an intent to further or benefit a particular financial interest must play an important or influential part in the official's decision to perform the act. The terms "thing of value," or "anything of value" are likewise used with some regularity elsewhere in federal criminal law. There is some suggestion that "anything of value" should be read more broadly as "all things of value." In any event, the terms "thing of value" and "anything of value" are understood to refer to a diverse range of both tangible and intangible things including campaign contributions, employment, sex, expunged criminal records, and casual pretrial release supervision. The meaning of "financial interest" may be a little less transparent. It is not a term regularly used or defined in federal criminal law, but it is a familiar concept in federal conflict of interest provisions. A Justice Department witness emphasized this point when she testified at a congressional hearing on the House bill: "[I]n order to define the scope of the financial interests that underlie improper self-dealing, the provision draws content from the well-established federal conflict-of-interest statute, 18 U.S.C. SS208, which currently applies to the federal Executive Branch." Perhaps more to the point, the proposed undisclosed self-dealing section only applies to those financial interests which the law obligates the public official to disclose. The qualifying reporting statute or regulation would ordinarily make clear the financial interests whose disclosures it requires. In the Justice Department's endorsement of the proposal the same witness testified that, "[U]nder the proposed statute, no public official could be prosecuted unless he or she knowingly conceals, covers up, or fails to disclose material information that he or she is already required by law or regulation to disclose. Because the bill would require the government to prove knowing concealment and that any defendant acted with the specific intent to defraud, there is no risk that a person can be convicted for unwitting conflicts of interest or mistakes." A representative of the criminal defense bar, however, criticized the proposal as constitutionally suspect, contrary to federalism principles, duplicative, and overly simplistic. He argued that the section fails to heed Skilling Court's plea for clarity. He envisioned First Amendment implications in the proposal's application to campaign contributions to elected officials. He also characterized the proposal as a "classic example of overcriminalization" that would replicate existing law and intrude upon state prerogatives. Finally, the witness contended that the proposal is at odds with the realities of part-time legislators and other state and local officials. Even after Skilling , the honest services mail and wire fraud statutes reach bribery and kickbacks. The proposal adds unreported self-dealing in public corruption cases. It leaves unchanged the law governing self-dealing in private cases. Section 20 1 : The bills also seek to overcome Sun Diamond and Valdes , two judicial interpretations of the basic federal bribery and illegal gratuities statute, 18 U.S.C. 201. Subsection 201(b) outlaws soliciting or offering anything of value in exchange for an official act. Subsection 201(c) outlaws soliciting or offering anything of value in gratitude ("for or because of") for the performance of an official act. The distinction between the two is the corrupt bargain, the illicit quid pro quo, that marks bribery. The issue in Sun Diamond was whether an illegal gratuities conviction might be based solely on gifts given a public official because of his office, without reference to any particular official act, or whether the conviction could only stand if gifts were sought or provided with a specific official act in mind. The Court unanimously concluded that "in order to establish a violation of 18 U.S.C. SS201(c)(1)(A), the Government must prove a link between a thing of value conferred upon a public official and a specific 'official act' for or because of which it was given." Justice Scalia, writing for the Court, asserted this construction, along with the definition of a qualifying "official act," precludes unintended application of the gratuities subsection. The official act requirement plays no less significant a role in avoiding unintended coverage, for as the Court observed, "when the violation is linked to a particular 'official act,' it is possible to eliminate the absurdities through the definition of that term . When, however, no particular 'official act' need be identified, and the giving of gifts by reason of the recipient's mere tenure in office constitutes a violation, nothing but the Government's discretion prevents the foregoing examples from being prosecuted." The bills would enlarge both the illegal gratuities prohibition and the definition of "official acts." They would also devise an alternative means of avoiding the type of unintended results mentioned in Sun Diamond . First, they would amend the proscriptions of subsection 201(c) to prohibit offering or soliciting a gift for or because of "the official's or person's official position," in order to supplement the existing prohibition against gifts for or because of an "official act." The amendment would bring within the scope of the illegal gratuities subsection "status" and "good will" gifts and contributions, without requiring prosecutors to show that they were sought or provided with an eye to any specific official act. As the earlier committee report explained, "This would allow the statute to reach its intended range of corrupt conduct, including benefits flowing to public officials designed to curry favor for non-specified future acts or to build a reservoir of good will." Second, they would amend the gratuities offense to create a safe harbor for gifts and campaign contributions permitted by rule or regulation, a term they would define for both bribery and illegal gratuities purposes. The earlier committee report noted that in any event most campaign contributions would not be implicated by the gratuities prohibition. The prohibition is confined to things given to the official personally, and campaign contributions ordinarily are not. The report also confirmed that the exception would help avoid the "horribles" found in Justice Scalia's Sun Diamond opinion. The report may have introduced a hint of ambiguity in the exception when it suggested that rules or regulations would rest beyond the pale if they left the particulars of an exception to individual Member or agency discretion. Third, the bills would establish a $1,000 threshold for the illegal gratuities offenses, although each does so in its own distinctive manner. H.R. 2572 would limit the offenses in 18 U.S.C. 201--bribery and illegal gratuities alike--to cases involving $1,000 or more. Title II would apply the $1,000 limitation only in the case of illegal gratuity status gifts. Finally, the bills would amend the definition of official act, applicable to both the bribery and gratuities offenses. The change is designed to repudiate the construction of the term "official act" announced by the D.C. Court of Appeals in Valdes . Valdes, a police officer, had received cash in connection with license plate identification and outstanding warrant information he had provided an informant he believed to be a judge. Indicted for bribery, Valdes was convicted of the lesser included offense of receiving an illegal gratuity. The Court of Appeals reversed, declaring, "SS201 is not about officials' moonlighting, or their misuse of government resources, or the two in combination." Instead, the term "any question, matter, cause, suit, proceeding or controversy" in the definition of official act "refers to a class of questions or matters whose answer or disposition is determined by the government," the court held. Not every subsequent federal appellate court has concurred. The phrase in the bills, "any act within the range of official duty," is designed to overcome the Valdes interpretation of "official act," and "to ensure that the bribery statute applies to all conduct of a public official within the range of the official's duties." The bills would add the term "course of conduct" to the definition of official act to avoid requiring prosecutors to "establish a one-to-one link between a specific payment and a specific official act." The change would apply to both bribery and illegal gratuity offenses. The bills' illegal gratuity subsection would feature a safety valve for campaign contributions. The bribery subsection would not. Yet, bribery would be prosecutable only in the presence of a corrupt proposal to influence official conduct in exchange of something of value. The House bill would change the word "means" to the word "includes." The Senate bill would not. Under the Senate bill the definition limits; under the House bill it exemplifies. Section 666 : Section 666 outlaws bribery, embezzlement, and other forms of theft, involving more than $5,000, in relation to federal programs. The bills propose several changes in the language of Section 666. They would lower the threshold for federal prosecution from $5,000 to $1,000. The new threshold corresponds to that found in the statute that outlaws embezzlement or other theft of federal property. The defense bar contends, however, that the modification would undo a limitation imposed in the interest of federalism and to avoid federal over criminalization. The bills would increase the maximum term of imprisonment associated with the offense from, 10 to 20 years. The new maximum would match those under the mail and wire fraud statutes as well as the 20-year maximum that the bills would establish for the bribery of federal officials under Section 201. Section 641 outlaws the embezzlement or other theft of money or anything else of value belonging to the United States or one of its agencies or departments. The District of Columbia Code outlaws embezzlement or other forms of theft, regardless of the victim. Violations of the D.C. provision carry a maximum 10-year term of imprisonment, if the value of the property exceeds $1,000 and a maximum of 180 days in other cases. The bills would increase the maximum term of imprisonment for a violation of Section 641 from 10 to 20 years. Only H.R. 2572 would also fold the property of the D.C. government and its agencies and departments into the coverage of Section 641. When penalty increases were proposed for various federal public corruption offenses during the 110 th Congress, the committee report noted that the increases would reflect "the Committee's view of the serious and corrosive nature of these crimes, and ... harmonize the punishment of these public corruption-related offenses with similar statutes." Moreover, the committee was of the opinion that "[i]ncreasing penalties in appropriate cases sends a message to would-be criminals and to the public that there are severe consequences for breaching the public trust." Reacting to the same proposals replicated in the House and Senate bills, a representative of the defense bar contended that the proposals would "dramatically expand already lengthy prison sentences ... without any evidence of whether such an expansion is necessary or what the costs of such an expansion would be." Specifically, the House and Senate bills would increase the maximum term of imprisonment for the following existing federal public corruption offenses: bribery/theft relating to a federal program (10 years increased to 20); theft of U.S. property (10 years increased to 20); promise of a U.S. job for political activity (1 year increased to 3 years); denial of U.S. benefit for want of political contribution (1 year increased to 3 years); soliciting political contributions from fellow U.S. employees (3 years increased to 5); intimidation to secure political contributions (3 years increased to 5); soliciting political contributions in U.S. buildings (3 years increased to 5); coercion of U.S. employees for political activities (3 years increased to 5). H.R. 2572 , alone, would increase the penalty for bribery of U.S. officials from 15 to 20 years, and for illegal gratuities from 2 to 5 years. The bills would direct the United States Sentencing Commission to examine the Guidelines applicable in the case of a conviction under 18 U.S.C. 201 (bribery of federal officials), 641 (theft of federal property) and 666 (theft or bribery in relation to federal programs). The Commission would be instructed to amend the Guidelines "to reflect the intent of the Congress that such penalties be increased in comparison to those currently provided." Statute of Limitations : Capital offenses and certain child abduction and sex offenses have no statute of limitations and can be tried at any time. Elsewhere statute of limitations have been established to encourage prompt law enforcement and to avoid the need to defend against stale charges. Most other federal crimes must be prosecuted within five years. The statute of limitations for certain securities fraud cases, for instance, is six years. Both bills would establish a six-year statute of limitations for the following public corruption offenses or conspiracies or attempts to commit them: 18 U.S.C. 201 (bribery and illegal gratuities involving federal officials or employees); 18 U.S.C. 666 (bribery or theft involving federal programs); 18 U.S.C. 1341 (mail fraud) (honest services fraud involving public officials only); 18 U.S.C. 1343 (wire fraud) (honest services fraud involving public officials only); 18 U.S.C. 1951 (Hobbs Act) (extortion under color of official right only); 18 U.S.C. 1952 (Travel Act) (bribery cases only); and 18 U.S.C. 1962 (RICO) (only when the predicate offenses include bribery under state law, or violations of one of the offenses listed above other than the Travel Act). The proposal in both bills has certain drafting eccentricities. It would establish a six-year statute of limitations for a series of bribery offenses, but only one embezzlement offense (18 U.S.C. 666). It would apply to honest services mail and wire fraud, but not the proposed self-dealing mail and wire fraud. It would apply to the more narrow money laundering statute (18 U.S.C. 1952), but not the more general (18 U.S.C. 1956). Finally, the bills would create a six-year statute of limitations for attempt to commit any of the listed crimes. Yet it is not a crime to attempt to commit some of them. It is a crime to attempt to violate the mail or wire fraud statutes, the Hobbs Act, or the Travel Act; but it is not a separate crime to attempt to violate the bribery provisions of 18 U.S.C. 201 or 666 or the RICO provisions. Nevertheless, the proposal purports to set a six-year statute of limitations for crime and noncrime alike. Venue : The Constitution insists that federal crimes be tried in the states and districts in which they are committed. Congress may provide by statute for the trial of any crime committed outside any state. In the case of continuous crimes or crimes otherwise committed in more than one place, the Supreme Court in Rodriguez-Moreno held that the offense may be tried wherever a conduct element of the offense occurs. Thus, conspiracy may be tried in any district in which an overt act in furtherance of the scheme is committed. The bills would amend the venue statute to permit trial of an offense, involving use of the mail or interstate commerce or entry of individual or goods into the United States, "in any district in which an act in furtherance of the offense is committed." The proposal would extend both to federal public corruption offenses and to any other federal offenses where federal jurisdiction is predicated on interstate commerce or use of the mail. The representative of the defense bar objected that the proposal would impose an unfair hardship upon the accused under some circumstances and might lead to forum shopping for that purpose. The Constitution, however, may limit the proposal's scope to acts in furtherance that constitute conduct elements of the offense. In this context, a recent Second Circuit case may be instructive. In Tzolov , the court rejected the argument that venue was necessarily proper where the defendants committed an act in furtherance of the crime charged. In doing so, it distinguished an earlier case in which the act in furtherance case had been a conduct element of the offense. The House and Senate bills contain other venue proposals, relating to perjury and the obstruction of justice, that would apply in federal public corruption cases and elsewhere. The Supreme Court in Rodriguez-Moreno expressly declined to rule on whether venue may lie in the district impacted by the crime charged. The witness tampering statute now has a subsection under which witness tampering and the obstruction of judicial proceedings may be prosecuted "in the district in which the official proceeding ... was intended to be affected or in the district in which the conduct constituting the alleged offense occurred." The bills would amend the subsection to permit similar treatment for the prosecution of obstructions in violation of 18 U.S.C. 1503 (obstructing judicial proceedings), 1504 (writing to influence a federal juror), 1505 (obstructing Congressional or federal administrative proceedings), 1508 (eavesdropping on federal jury deliberations), 1509 (obstructing the execution of federal court orders), 1510 (obstructing federal criminal investigations). At the same time, they would create a new section that would afford federal perjury and subornation prosecutor the same options. The federal appellate cases announced after Rodriguez-Moreno suggest that the proposal's obstruction and perjury amendments may be limited to cases in which a conduct element occurs. W iretap Authority : Existing law authorizes federal courts to issue orders approving law enforcement installation and use of devices to intercept wire, oral, and electronic communications. The orders are available upon a showing that interception is likely to result in evidence of one of a list specific predicate offenses. Bribery of federal officials, mail fraud, and wire fraud are already predicate offenses. The bills would add offenses under Section 641 (theft of federal property), Section 666 (theft or bribery involving federal programs), and Section 1031 (major fraud against the United States). The Justice Department has testified that "[p]rosecutors often have lamented their inability to use these tools in such cases." Appeals : The United States Attorney must certify that any appeals by the Government are not taken for purposes of delay and that in the case of an appeal relating to the exclusion of evidence must certify that the evidence is substantial proof of a material fact in the pending case. The bills would permit certification as well by the Attorney General, the Deputy Attorney General, or an Assistant Attorney General. H.R. 2572 and Title II are almost identical. There are a few differences, however. The penalty for bribery under 18 U.S.C. 201(b) is now imprisonment for not more than 15 years. The penalty for illegal gratuities under 18 U.S.C. 201(c) is now imprisonment for not more than two years. Title II would leave those penalties in place. H.R. 2572 would increase the maximum term of imprisonment for bribery under subsection 201(b) to 20 years and the maximum term of imprisonment for illegal gratuities under subsection 201(c) to five years. Status gifts now fall outside the illegal gratuities proscriptions of subsection 201(c). Moreover, existing law places no minimum on the value of the bribe or illegal gratuity condemned under subsections 201(b) or (c). Both bills would extend the illegal gratuities offense to include status gifts, but both would limit the offense in status gift cases to gifts of $1,000 or more. H.R. 2572 , unlike Title II, would also limit all other Section 201 bribery or illegal gratuities offenses to cases involving $1,000 or more. Subsection 201(c) now outlaws illegal gratuities "otherwise than as provided by law.... " Both bills would amend the clause to read "otherwise than as provided by law ... or by rule or regulation." Section 641 now prohibits the theft or embezzlement of federal property. H.R. 2572 , unlike Title II, would expand the section to cover property of the District of Columbia. Sponsors have made a number of changes in the provisions of H.R. 2572 and Title II since they were first proposed. Examples include provisions for additional RICO predicates, the Cleveland fix, and penalty increases for certain public corruption offenses. The federal Racketeer Influenced and Corrupt Organizations (RICO) provisions outlaw conducting the affairs of an enterprise whose activities affect interstate commerce through the patterned commission of various state and federal crimes (predicate offenses). Violations are punishable by imprisonment for up to 20 years; may result in as well as the confiscation of related property; and may trigger the application of federal money laundering provisions. Both H.R. 2572 , as introduced, and the predecessor to Title II, S. 401 as approved by the Senate Judiciary Committee, would have enlarged the RICO predicate offense list to include violations of 18 U.S.C. 641 (relating to the theft or embezzlement of federal property), 666 (relating to theft or bribery in connection with federally assisted programs), and 1031 (relating to major fraud against the United States). The mail and wire fraud statutes outlaw the use of mail or wire communications as part of a scheme to defraud another of money or property. The Supreme Court in Cleveland held that the statutes do not reach fraudulent schemes to induce a state to issue licenses, since in the hands of the state unissued licenses do not constitute money or property. H.R. 2572 (as introduced) and S. 401 featured sections apparently designed to overcome the limitation identified in Cleveland . Neither Title II nor H.R. 2572 has comparable sections. | The House Judiciary Committee has approved an amended version of the Clean Up Government Act (H.R. 2572). The Senate has passed nearly identical provisions as Title II of the Stop Trading on Congressional Knowledge Act (STOCK Act; S. 2038). Title II, however, was dropped from the bill prior to its enactment as P.L. 112-105, 126 Stat. 291 (2012). Among other things, Title II and H.R. 2572 would each: Expand the scope of federal mail and wire fraud statutes to reach undisclosed self-dealing by public officials--in response to Skilling. Amend the definition of official act for bribery purposes--to overcome the Valdes decision. Adjust the federal gratuities provision to reach "goodwill" gifts--in response to Sun Diamond. Increase the criminal penalties that attend various bribery, illegal gratuities, embezzlement statutes, and related provisions. Extend the statute of limitations from five to six years for several corruption offenses. Authorize the trial of perjury and obstruction charges in the district of the adversely effected judicial proceedings. Authorize the trial of multi-district cases in any district in which an act in furtherance is committed. Increase the number of public corruption offenses considered and wiretap predicate offenses. H.R. 2572, alone, would: Increase the maximum penalties under the federal bribery and illegal gratuities statute. Amend the federal law criminalizing the theft or embezzlement of federal property to include property of the District of Columbia. Limit the prosecution of bribery and illegal gratuity cases under 18 U.S.C. 201 to cases involving $1,000 or more. This is an abridged version of a longer report, CRS Report R42016, Prosecution of Public Corruption: An Overview of Amendments Under H.R. 2572 and S. 2038, by [author name scrubbed], without the footnotes, attribution, or citations to authority found in the longer report. Related CRS reports include CRS Report R40852, Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions, by [author name scrubbed], and CRS Report R41930, Mail and Wire Fraud: A Brief Overview of Federal Criminal Law, by [author name scrubbed]. | 6,293 | 529 |
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